Exhibit 10.7

CONFIDENTIAL TREATMENT REQUESTED

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

DEVELOPMENT AND SUPPLY AGREEMENT

This Development and Supply Agreement (“Agreement”) is dated and made effective
as of the Effective Date (as defined below) by and between Luna Innovations
Incorporated, a Delaware corporation, together with Luna Technologies, Inc., a
Delaware corporation (acting jointly and severally, individually and
collectively, “Luna”), and Hansen Medical, Inc., a Delaware corporation
(“Hansen”). Luna and Hansen are referred to herein each individually as a
“Party” and collectively as the “Parties”.

RECITALS

WHEREAS, Luna and Hansen are parties to the case Hansen Medical Inc. v. Luna
Innovations Inc., no. 07-088551, in the Superior Court of the State of
California, County of Santa Clara relating to certain disputes arising out of
those certain Terms and Conditions of Sale and Service executed by Hansen on
September 27, 2006 and Luna on September 28, 2006 and that certain Mutual
Nondisclosure Agreement between Hansen and Luna dated April 1, 2006 (the
“Litigation”);

WHEREAS, Luna and Hansen wish to settle the Litigation in the context of the
First Amended Joint Plan of Reorganization of Luna Innovations Incorporated, et
al. under Chapter 11 of the Bankruptcy Code (as may be amended, “Amended Plan”)
in Luna’s Chapter 11 Case No. 09-71811 (“Chapter 11 Case”) pending in the U.S.
Bankruptcy Court for the Western District of Virginia (“Bankruptcy Court”) which
Amended Plan was approved by the Bankruptcy Court’s Order Confirming First
Amended Joint Plan of Reorganization of Luna Innovations Incorporated, et al.
(“Confirmation Order”). This Agreement is one of the “Hansen Settlement
Documents” (as defined in the Settlement Agreement) referenced and incorporated
in the Amended Plan and Confirmation Order (“Settlement Documents”);

WHEREAS, in connection with the settlement of the Litigation through the Amended
Plan, Luna and Hansen are entering into that certain License Agreement Between
Hansen and Luna dated of even date herewith (the “License Agreement”), and Luna
and Intuitive are entering into that certain License Agreement between Intuitive
and Luna dated of even date herewith (the “Intuitive-Luna License”) in each case
regarding the grant of certain licenses to fiber optic shape sensing or
localization technologies; and

WHEREAS, also in connection with the settlement of the Litigation through the
Amended Plan, Luna and Hansen desire that Luna develop for Hansen a localization
and shape sensing solution for Hansen’s robotic system, and to manufacture and
supply such system for Hansen, all in accordance with the terms and conditions
hereof.

NOW, THEREFORE, in view of the mutual covenants, representations, warranties and
other terms and conditions contained herein and for other valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Parties hereto agree as follows:

AGREEMENT

1. Definitions. The following initially capitalized words shall have the
following meanings (and derivative forms shall be interpreted accordingly), and
the terms “include,” “includes,” “including” and derivative forms of them shall
be deemed followed by the phrase “without limitation” regardless of whether such
phrase appears there (and with no implication being drawn from its inconsistent
inclusion or non-inclusion):

1.1 “Additional Performance Period” has the meaning given to such term in
Section 4.1.3.

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1.2 “Affiliates” means any corporation or other entity that is directly or
indirectly controlling, controlled by or under common control with a Party. For
purposes of this definition, “control” of an entity means the direct or indirect
ownership of securities representing fifty percent (50%) or more of the total
voting power entitled to vote in elections of such entity’s board of directors
or other governing authority, or equivalent interests conferring the power to
direct or cause the direction of the governance or policies of such entity.

1.3 “Amended Plan” has the meaning given to such term in the recitals.

1.4 “Applicable Laws” means all applicable laws, rules and regulations.

1.5 “Bankruptcy Court” has the meaning given to such term in the recitals.

1.6 “Budget Cap” has the meaning given to such term in Section 4.1.3.

1.7 “Chapter 11 Case” has the meaning given to such term in the recitals.

1.8 “Commercial Supply Agreement” has the meaning given to such term in
Section 3.3.1.

1.9 “Commercial Transfer Price” has the meaning given to such term in
Section 3.3.2.

1.10 “Confidential Information” has the meaning given to such term in
Section 7.1.

1.11 “Confirmation Order” has the meaning given to such term in the recitals.

1.12 “[****] Fees” has the meaning given to such term in Section 4.1.1.

1.13 “[****] Milestones” means the development milestones and corresponding
timelines set forth on Exhibit A, as may be amended from time to time in
accordance with Section 2.2.

1.14 “Development Plan” means the development plan described in Section 2.

1.15 “Development Program” means the efforts and activities relating to
development of Luna Products to be conducted under this Agreement.

1.16 “[****] Price” has the meaning given to such term in Section 3.2.

1.17 “Discloser” has the meaning given to such term in Section 7.1.

1.18 “Effective Date” means the Effective Date of the Amended Plan after entry
of the Confirmation Order by the Bankruptcy Court, which the Parties hereby
confirm to be January 12, 2010.

1.19 “End Product” means any Product developed, marketed, manufactured or sold
by or for Hansen or its Affiliates incorporating or utilizing any Luna Product.

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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1.20 “[****] Field” has the meaning given to such term in the License Agreement.

1.21 “[****] Product” has the meaning given to such term in Section 3.8.1.

1.22 “Fiber Optic Shape Sensing/Localization Technology” has the meaning given
to such term in the License Agreement.

1.23 “Hansen Indemnitees” has the meaning given to such term in Section 8.2.

1.24 “Hansen Licensed IP” has the meaning given to such term in the License
Agreement.

1.25 “Holdback Amount” has the meaning given to such term in Section 4.1.1.

1.26 “Indemnifying Party” has the meaning given to such term in Section 8.3.

1.27 “Intellectual Property Rights” means any and all of the following in any
jurisdiction throughout the world (and any rights or interests therein):
(a) patents, patent applications and patent and invention disclosures, together
with all issuances, continuations, continuations-in-part, divisions, revisions,
supplementary protection certificates, extensions and re-examinations thereof,
and any other United States or foreign patent rights entitled to the same
priority claim (in whole or in part) as any of the foregoing; (b) confidential
or proprietary information, know-how and trade secrets; (c) copyrights and all
applications, registrations, and renewals in connection with the foregoing;
(d) trademarks, service marks, trade names, trade dress and all registrations to
and applications for registration of any of the foregoing; and (e) any and all
other intellectual or industrial property or proprietary rights.

1.28 “Interrogator” has the meaning given to such term in Section 1.36.

1.29 “Joint Patents” has the meaning given to such term in Section 5.2.2.

1.30 “License Agreement” has the meaning given to such term in the recitals.

1.31 “Licensed IP” has the meaning given to such term in the License Agreement.

1.32 “Licensed Patent” has the meaning given to such term in the License
Agreement.

1.33 “Litigation” has the meaning given to such term in the recitals.

1.34 “Losses” has the meaning given to such term in Section 8.1.

1.35 “Luna Indemnitees” has the meaning given to such term in Section 8.1.

1.36 “Luna Product” means [****].

1.37 “[****] Field” has the meaning given to such term in the License Agreement.

1.38 “New Inventions” has the meaning given to such term in Section 5.2.

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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1.39 “[****] Field” has the meaning given to such term in the License Agreement.

1.40 “[****] Product” has the meaning given to such term in Section 3.8.1.

1.41 “[****] Field” has the meaning given to such term in the License Agreement.

1.42 “Product” means any device, instrument, diagnostic, therapeutic, product,
system and application and any related service and/or process.

1.43 “Project Manager” has the meaning given to such term in Section 2.3.

1.44 “Promissory Note” means that certain Secured Promissory Note entered into
between the Parties as one of the Settlement Documents.

1.45 “Recipient” has the meaning given to such term in Section 7.1.

1.46 “Section 365(n) Contract” has the meaning given to such term in
Section 10.6.

1.47 “Sensor” has the meaning given to such term in Section 1.36.

1.48 “Settlement Agreement” means that certain Confidential Settlement Agreement
and Mutual Release entered into by the Parties concurrently herewith.

1.49 “Settlement Documents” has the meaning given to such term in the recitals.

1.50 “Specifications” means the technical and functional specifications for the
applicable Luna Product (including applicable tests to confirm compliance
therewith) set forth in the Development Plan and as otherwise provided for in
Section 2.2.

1.51 “Subsidiaries” has the meaning given to such term in the License Agreement.

1.52 “Support Memorandum” has the meaning given to such term in Section 2.6.

1.53 “Technology” means any technical information, know-how, processes,
procedures, methods, formulae, protocols, techniques, software, computer code
(including both object and source code), documentation, works of authorship,
data, designations, designs, devices, prototypes, substances, components,
inventions (whether or not patentable), mask works, ideas, trade secrets and
other information or materials, in tangible or intangible form.

1.54 “Third Party Claim” has the meaning given to such term in Section 8.1.

1.55 “Third Party Technology” means any Technology (together with all
Intellectual Property Rights therein or thereunder) owned or controlled by a
third party that is included by or for Luna in or with any Luna Product or
provided to Hansen by Luna in connection with the Development Program or is
otherwise necessary for the manufacture, use or sale of any Luna Product.

1.56 “[****] Field” has the meaning given to such term in the License Agreement.

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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2. Development

2.1 Development Program. Luna shall use its commercially reasonable best efforts
to develop for Hansen a [****] for Hansen’s system in accordance with the
Development Plan and the Development Milestones. As a part of such commercially
reasonable best efforts, Luna shall provide reasonably adequate and
appropriately-skilled staffing for Luna’s development work for Hansen hereunder,
which in any event shall include Luna devoting to the Development Program the
services of the key personnel designated in the Development Plan at the minimum
percentage amounts of their total work time set forth therein (as measured over
each calendar quarterly period during the Development Program by reference to
direct labor time records). Furthermore, Luna shall use its commercially
reasonable best efforts to perform the activities, and develop the Technology,
as and when described in the Development Plan and the Amended Plan, and Luna
shall use its commercially reasonable best efforts to achieve each Development
Milestone within the applicable timelines and/or by the applicable deadlines for
such Development Milestone set forth on Exhibit A. Without limiting the
foregoing, (i) the Parties acknowledge that Luna already has certain ongoing
development obligations to Intuitive Surgical, Inc., certain internal product
development efforts, and under certain government contracts as of the Effective
Date but Luna shall give the Development Program for Hansen at least equal
priority to such other obligations (and balance its development work for Hansen
and such other parties accordingly), (ii) Luna shall give the Development
Program for Hansen at least equal priority to any other development project or
similar activities (whether for itself, its Affiliates or for third parties) not
described in (i) above, including pursuant to an agreement entered into after
the Effective Date, and (iii) Luna may need to hire additional highly qualified
employees, possibly because of the loss of employees, and the ability and timing
of hiring such employees cannot be guaranteed. The Parties acknowledge that
technical and scientific issues and realities may make either or both the
Development Plan or the Development Milestones impractical or infeasible. Hansen
shall compensate Luna for such development and related activities solely as
provided for in Article 4 below.

2.2 Development Plan. Luna’s development work hereunder shall be conducted
pursuant to a written development plan (the “Development Plan”). The Development
Plan shall include a detailed workplan (including incorporation of, or reference
to, the Development Milestones) and budget covering the Development Program
activities to be conducted under this Agreement. The initial Development Plan is
attached hereto as Exhibit B (and the Development Milestones are attached as
Exhibit A). The Parties may from time to time modify the Development Plan
(including the Development Milestones), as mutually agreed. Furthermore, the
Development Plan and Development Milestones may be modified in accordance with
the process described below in Sections 2.2.1 through 2.2.4. The Specifications
shall be part of the Development Plan, or, to the extent not so specified in the
Development Plan, independently established in writing in a document executed by
both Parties, and any changes thereto (and/or any initial determination thereof)
shall be done in accordance with this Section 2.2. The Development Plan
(including the Specifications) and Development Milestones may not be modified
other than in accordance with this Section 2.2.

2.2.1 If Hansen wishes to request changes to the Development Plan (including the
Specifications) and/or the Development Milestones, Hansen shall notify Luna and
propose a draft of the modified Development Plan and/or modified Development
Milestones for review by Luna. Luna shall provide reasonable consultation and
assistance to Hansen in Hansen’s efforts to modify the Development Plan and the
Development Milestones. Luna shall provide Hansen with any comments on the
proposed modifications and a reasonable estimate of changes to the budget, if
any, necessitated by the modifications within [****] days of Hansen’s request.
If Luna has concerns with respect to the timelines for any substantial new
Development Milestones or substantial modifications to existing Development

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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Milestones (whether on their own or as a result of modifications to the
Development Plan) proposed by Hansen, Luna shall provide Hansen with a
reasonably detailed explanation for Luna’s concerns and a proposal with
reasonably estimated timelines for such Development Milestones. Hansen shall
consider Luna’s concerns and proposed budget and timelines in good faith in
finalizing the modified Development Plan and/or Development Milestones. No
sooner than [****] days after first providing to Luna Hansen’s proposed
modifications to the Development Plan and/or the Development Milestones in
accordance with the foregoing, Hansen may formally propose a final modified
Development Plan and/or modified Development Milestones by providing a copy
thereof to Luna. Luna shall thereupon have [****] days to approve such modified
Development Plan and/or Development Milestones, such approval not to be
unreasonably withheld.

2.2.2 Upon any such approval by Luna under Section 2.2.1, such modified
Development Plan (including modified Specifications if applicable) and/or
modified Development Milestones shall become the Development Plan and/or
Development Milestones (as applicable) hereunder and shall replace the previous
Development Plan and/or previous Development Milestones (as applicable), except
to the extent the modified version expressly incorporates such previous
Development Plan and/or Development Milestones or otherwise expressly provides
for existing portions thereof to remain in effect.

2.2.3 If Luna does not approve the proposed modifications under Section 2.2.1
within the [****] day period specified above, the Parties shall discuss in good
faith for a period of at least [****] days to reach mutual agreement on the
proposed modifications. Otherwise, absent such agreement within such [****] day
period, Hansen shall have the right at any time after such [****] day period to
submit its proposed modifications (including any determination of
Specifications, if applicable) to binding dispute resolution under Section 2.6
hereunder, and (to the extent not otherwise resolved prior to completion of any
arbitration thereunder) the arbitrator under any arbitration pursuant to
Section 2.6 shall be empowered hereunder to determine whether or not Luna’s
failure to approve is reasonable (and therefore if Hansen’s proposed
modifications shall become effective hereunder) and/or determine an alternative
form of the modifications that is fair to Luna in light of Luna’s objections to
Hansen’s formally proposed modifications but which also most nearly achieves
Hansen’s goals and objectives of such proposed modifications.

2.2.4 If Luna wishes to request changes to the Development Plan (including the
Specifications) and/or Development Milestones, it shall notify Hansen thereof
and inform Hansen of the proposed modifications. Luna and Hansen shall thereupon
discuss such modifications. No sooner than [****] days after first providing to
Hansen Luna’s proposed modifications to the Development Plan and/or the
Development Milestones in accordance with the foregoing, Luna may formally
propose a final modified Development Plan and/or modified Development Milestones
by providing a copy thereof to Hansen. Hansen shall thereupon have [****] days
to approve such modified Development Plan and/or Development Milestones, such
approval not to be unreasonably withheld so long as such proposed modifications
are consistent with the reasonable development of a commercially viable End
Product and do not significantly increase the budget. If Hansen approves such
modification, such modified Development Plan (including modified Specifications
if applicable) and/or modified Development Milestones shall become the
Development Plan and/or Development Milestones (as applicable) hereunder and
shall replace the previous Development Plan and/or previous Development
Milestones (as applicable), except to the extent the modified version expressly
incorporates such previous Development Plan and/or Development Milestones or
otherwise expressly provides for existing portions thereof to remain in effect.
If Hansen does not approve the proposed modifications within the [****] day
period specific above, Section 2.2.3 shall apply with respect thereto, with the
Parties in such section reversed.

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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2.3 Project Managers. Each Party shall appoint a principal point of contact to
be its project manager (each, a “Project Manager”) who shall coordinate and act
as liaison with the other Party with respect to Development Program activities
under this Agreement. The initial Project Managers for each Party shall be
[****] for Hansen and [****] for Luna. A Party may replace its Project Manager
by written notice to the other Party. The Project Managers, in and of
themselves, shall not have any decision-making authority and shall have no power
to amend or waive compliance with this Agreement or the Development Plan or
create any estoppel or defense. Each Party’s respective Project Managers shall
meet or confer at mutually agreeable times (but at least [****]) to discuss the
status of the Development Program. Luna’s Project Manager shall have no direct
role in or with respect to any products or services provided by Luna to
Intuitive Surgical, Inc., a Delaware corporation.

2.4 Reports; Source Code Escrow. Luna shall keep Hansen informed of its progress
with respect to its Development Program activities under this Agreement at the
junctures set forth in the Development Plan and as follows. Luna shall provide
Hansen with written development reports upon Hansen’s reasonable request (made
no more frequently than once per month) and also to the extent provided for in
the Development Plan or Development Milestones, but in any event no less
frequently than within [****] days after the end of each calendar month, which
reports will include a meaningful summary of progress against the Development
Plan and activities accomplished by Luna in relation thereto through the end of
the applicable month, including a summary of Technology generated or developed
under the Development Program since the date of the last report, significant
results, adverse event reports, information and data generated, manufacturing
developments, significant challenges anticipated and updates regarding
significant intellectual property matters. Upon Hansen’s reasonable request at
reasonable intervals, Luna will provide Hansen with a copy of tangible and
intangible embodiments of Technology generated or developed under the
Development Program, including prototypes and models, documents (including
specifications and diagrams) and software object code (and, to the extent
provided below, software source code), at such times as are reasonable under the
circumstances (e.g., after completion of a new version thereof or when a
reasonable stopping point in development is reached with respect thereto or a
pause in development thereof is warranted); provided, however, that, to the
extent the cost of such embodiments, prototypes and models is not included in
the Development Plan or is not otherwise covered by Section 3.2, Hansen shall
reimburse Luna for the cost (calculated at the same rate as the rate described
in Section 4.1) thereof (without any effect on any Budget Cap in the case of
such reimbursement). Luna shall make its personnel working on the Development
Program reasonably available to Hansen for periodic consultations, by phone or
in person (which shall be part of the services provided pursuant to Section 2.1
and compensated for under Section 4.1 (including subject to the budget
provisions therein)), as provided for in the Development Plan and Development
Milestones, and otherwise as reasonably requested by Hansen. With respect to
source code, the following shall apply:

2.4.1 Luna shall cooperate with Hansen to provide any software source code with
respect to the Luna Product to the extent required by any Applicable Laws,
including regulatory requirements of the FDA and other applicable governmental
entities in respect of the Luna Product and/or the End Product within such time
periods as reasonably required for compliance. Luna shall provide to Hansen the
portions of software source code with respect to the Luna Product to the extent
set forth as a deliverable in the Development Plan (including in the Development
Milestones) in accordance with the schedule therefore in the Development Plan
(including in the Development Milestones).

2.4.2 Following the Effective Date, Luna shall deposit in escrow all source code
for software necessary to operate the Luna Product (including source code for
software within the Interrogator, as may exist as of the Effective Date and as
updated), as imaged on a hard drive with all of

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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the files and utilities necessary to compile or synthesize the source code,
together with any documentation, libraries, tools, utilities and other related
materials reasonably necessary for the installation, testing, deployment,
operation, modification or use of such software source code (collectively, “Luna
Product Deposit Materials”) with [****] (or, if [****] is not reasonably
available, with another reputable software escrow company to be mutually agreed
by the Parties). Luna shall periodically update such Luna Product Deposit
Materials with the latest versions thereof, but no less frequently than once
each [****]. The Luna Product Deposit Materials shall be released to Hansen in
the event any of the following occurs (but not in any other case): (i) refusal
of Luna to perform continued development, maintenance, upgrading and support of
the software within the Luna Product Deposit Materials under Luna’s standard
rates and under other reasonable and customary terms (it being understood that
Luna has no obligation to do so hereunder outside of the Development Program) or
failure of Luna to provide such services after agreeing to do so (following
notice and an opportunity to cure such failure within [****] days), and (ii) the
bankruptcy, liquidation or insolvency of Luna or an assignment for the benefit
of creditors by Luna. All fees and expenses payable to [****] (or such other
escrow company, if any) for the establishment and maintenance of such escrow
arrangement shall be borne and paid by Hansen.

2.4.3 Following the Effective Date, Luna shall deposit in escrow all source code
for software included within the Licensed IP, as imaged on a hard drive with all
of the files and utilities necessary to compile or synthesize the source code,
together with any documentation, libraries, tools, utilities and other related
materials reasonably necessary for the installation, testing, deployment,
operation, modification or use of such software source code (collectively,
“Technology Deposit Materials”) with [****] (or, if [****] is not reasonably
available, with another reputable software escrow company to be mutually agreed
by the Parties). Luna shall periodically update such Technology Deposit
Materials with the latest versions thereof at least annually. The Technology
Deposit Materials shall be released to Hansen in the event any of the following
occurs (but not in any other case): (i) a default occurs under the Promissory
Note which default is not cured within any time allotted for such cure under
such Promissory Note, and (ii) the bankruptcy, liquidation or insolvency of Luna
or an assignment for the benefit of creditors by Luna. The escrow arrangement
for the Technology Deposit Materials shall terminate upon payment in full of the
Promissory Note (at which point all such Technology Deposit Materials, if not
already released to Hansen, shall be returned to Luna). All fees and expenses
payable to [****] (or such other escrow company, if any) for the establishment
and maintenance of such escrow arrangement shall be borne and paid by Hansen,
except that Luna shall pay any annual escrow maintenance fees of [****] (or such
other escrow company).

2.4.4 Within [****] days following the Effective Date, the Parties shall
negotiate and enter into an escrow agreement between the Parties and [****] (or
such other escrow company, if any) to establish the escrow arrangement described
above under the terms and conditions described above (and other reasonable and
customary terms and conditions). Luna shall make the initial deposit of the
materials described above into escrow within [****] days after such agreement is
entered into. In the event the Parties fail to execute such escrow agreement
within [****] days after the Effective Date, either Party may refer the matter
to dispute resolution under Section 2.6 for the purpose of finalizing and
executing such escrow agreement (with the arbitrator being someone with
expertise in software transactions and/or the negotiation of escrow agreements
with respect thereto and with each Party submitting their last proposed draft of
the escrow agreement with their Support Memorandum thereunder).

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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2.5 Liquidated Damages.

2.5.1 The Parties acknowledge that Hansen is relying on Luna performing its
obligations under Section 2.1 above in order to provide Hansen with important
technical solutions that are critical to Hansen’s business and that Hansen would
suffer significant harm, and lose the benefit of a critical development and
supply arrangement, if Luna fails to meet its obligations under Section 2.1. The
Parties acknowledge that the liquidated damages set forth in this Section 2.5
are reasonable under the circumstances existing on the Effective Date and
reasonably approximate the amount of damage that would be sustained by Hansen as
a result of Luna’s failure to meet its obligations under Section 2.1, and that
it is impracticable or extremely difficult to determine the actual damages that
would be sustained by Hansen as a result thereof. The Parties further
acknowledge and agree that the amount of the liquidated damages set forth in
this Section 2.5 is not a penalty. If a court of competent jurisdiction
nonetheless determines, by a final, non-appealable judgment, that the amount of
the liquidated damages exceeds the maximum amount permitted by law, then the
amount of the liquidated damages shall be reduced to the maximum amount
permitted by law in the circumstances, as determined by such court of competent
jurisdiction.

2.5.2 In the event Luna breaches Section 2.1 of this Agreement and (a) Luna
fails to cure such breach within sixty (60) days after notice thereof from
Hansen to Luna describing such breach in reasonable detail as well as those
steps known to Hansen, if any, that Luna could take to cure such breach (or,
within only thirty (30) days after such a notice with respect to a second (same
or similar) breach of Section 2.1 described in such a Hansen notice in the event
a first breach of the same or similar nature subject to a Hansen notice
hereunder was duly cured by Luna), or (b) such breach is the third (same or
similar) breach of Section 2.1 described in a Hansen notice of breach following
Luna’s timely cure of two prior breaches of the same or similar nature described
in previous Hansen notices hereunder, then, in the case of either (a) or (b),
Luna shall pay Hansen without offset, recoupment or defense, which are hereby
waived by Luna, liquidated damages in the amount of Ten Million Dollars
($10,000,000) plus the amount of Development Fees actually paid by Hansen
pursuant to Section 4.1 below, due and payable within five (5) days after the
end of the applicable cure period described above (in the case of (a)), or, with
respect to the third breach under (b), within five (5) days of Hansen’s notice
referencing such third breach. In the event that Luna disputes that Luna has
breached Section 2.1 of the Agreement or disputes that it has failed to cure
such breach within the applicable cure period (or Luna otherwise disputes the
payment of liquidated damages that Hansen claims are due hereunder), either
Party may by written notice submit the matter to resolution pursuant to
Section 2.6 below. For the avoidance of doubt, if Luna breaches Section 2.1 but
subsequently cures such breach and/or achieves the next Development Milestone on
a timely basis, in either case prior to a notice of breach from Hansen under
this Section 2.5.2, Hansen shall thereupon have no right to provide notice of
such breach to Luna under this Section 2.5.2.

2.5.3 [****].

2.6 Certain Development Disputes. If either Party has any dispute regarding
Luna’s performance under Section 2.1 above, or any failures with respect thereto
(including the payment of liquidated damages under Section 2.5 and any dispute
regarding if and when a given Development Milestone is achieved or otherwise
with respect to payments owed under Section 4.1 (without limiting Section 4.2))
or otherwise pursuant to Sections 2.4, 3.3 and 3.8, then prior to taking any
other action with respect to such dispute (e.g., litigation), except as may be
required to preserve a Party’s rights with respect to the dispute process
described in the Amended Plan, the complaining Party shall refer the dispute to
the Chief Executive Officers of the Parties for good-faith discussions over a
period of not less than [****] days. Each Party will make such executives
reasonably available for such discussions. If the

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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Parties are unable to resolve any such dispute through such discussions within
such [****] days, then either Party may initiate resolution of the matter in
accordance with the following expedited dispute resolution process (which shall
be the exclusive dispute resolution process for any such dispute, except for, to
the extent applicable, the dispute process described in the Amended Plan). Upon
either Party’s request at such point, the Parties shall submit such dispute to
arbitration proceedings under the Comprehensive Arbitration Rules and Procedures
of [****] as modified by this Section. The arbitration shall take place in New
York City, New York before a single arbitrator. The Parties shall jointly select
the arbitrator, and should they fail to agree on such arbitrator within [****]
days of this Section being invoked, the Parties shall request that [****]
appoint an appropriate arbitrator who shall be a neutral, independent and
impartial individual with expertise in the development of medical devices.
Within [****] days after an arbitrator is selected (or appointed, as the case
may be), each Party will deliver to both the arbitrator and the other Party a
memorandum (the “Support Memorandum”) in support of its position with respect to
the dispute (including any data or information in support thereof). Within
[****] days after receipt of the other Party’s Support Memorandum, each Party
may submit to the arbitrator (with a copy to the other Party) a rebuttal to the
other Party’s Support Memorandum. Neither Party may have communications (either
written or oral) with the arbitrator other than for the sole purpose of engaging
the arbitrator or as expressly permitted in this Section; however, the
arbitrator may convene a hearing if the arbitrator so chooses to hear oral
argument and discussion regarding the dispute in question. The Parties shall
direct the arbitrator to decide the applicable dispute within [****] days after
the arbitrator’s selection (or appointment, as the case may be). The decision of
the arbitrator shall be final, binding, and unappealable and shall be deemed the
decision of the Parties hereunder and may be entered by any Party in a court of
competent jurisdiction. Nothing in this Section 2.6 shall limit or restrict
Hansen’s ability to enforce or defend its rights under this Agreement pursuant
to the dispute process described in the Amended Plan.

2.7 Further Assurances and Assistance. Each Party agrees to take or cause to be
taken such further actions, and to execute, deliver and file or cause to be
executed, delivered and filed such further documents and instruments, and to
obtain such consents, as may be reasonably required or requested by the other
Party (to the extent consistent with this Agreement and at the other Party’s
expense) in order to effectuate fully the purposes, terms and conditions of this
Agreement. Without limiting the foregoing, each Party shall provide the other
Party with assistance, information and cooperation reasonably requested by such
other Party (and at such other Party’s expense) in connection with such other
Party’s compliance with regulatory requirements and Applicable Laws with respect
to the Luna Products and/or End Products (with respect to the Luna Product
portion thereof) and as required to obtain regulatory approvals and industry
certifications for Luna Products or End Products (with respect to the Luna
Product portion thereof), including without limitation in connection with all
regulatory filings, approvals and registrations for Luna Products and End
Products (with respect to the Luna Product portion thereof).

3. Manufacture and Supply

3.1 Generally. If Hansen so desires (but subject to Section 3.3.5 below), Luna
shall manufacture and supply Luna Products to Hansen in such amounts requested
by Hansen up to Hansen’s requirements of Luna Products for development and
commercialization of Luna Products or End Products, in accordance with the
Specifications for such Luna Products. Luna represents and warrants that all
Luna Products furnished to Hansen by Luna hereunder (a) shall be manufactured in
accordance with all Applicable Laws (including current Good Manufacturing
Practice regulations and Quality System regulations, in each case promulgated by
the US Food and Drug Administration (or its counterparts in jurisdictions
outside the United States) and applicable International Conference on
Harmonization

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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manufacturing rules and guidelines), the ISO 13485 standard for Medical Devices
and other generally recognized industry standards and certifications, such other
ISO standards (if any) or UL certifications (it being acknowledged that these
other standards and certifications and the cost of meeting them will be
incorporated into the Development Plan), (b) shall be free from defects in
material or workmanship, and (c) shall conform to the Specifications therefor in
all material respects. If Luna wishes to use third party manufacturers to meet
its manufacturing and supply obligations under this Article 3 for Luna Products,
Luna shall provide Hansen with prior written notice of Luna’s intent with
respect thereto specifying the identity of the intended third party manufacturer
and a draft agreement of the terms under which Luna proposes to engage such
third party manufacturer, which draft agreement shall contain at least the terms
and conditions of this Article 3 and other applicable terms and conditions of
this Agreement and shall (at Hansen’s option) include the right for Hansen to be
included as a third party beneficiary to such agreement. All such proposed third
party manufacturers and agreements shall be subject to Hansen’s review and prior
written consent before Luna may use, or validly conclude an agreement engaging,
any third party manufacturer for Luna Products, and Luna acknowledges that
Hansen may reasonably condition or withhold its consent thereto on a
case-by-case basis. This Section 3.1 shall not prevent Luna from including
components in Luna Products purchased from third parties, subject to
Section 5.3. The Parties shall appoint project managers for purposes of the
manufacture and supply arrangements set forth in this Article 3 with similar
roles and authorities as the Project Managers described in Section 2.3 with
respect to the Development Program. For the avoidance of doubt, the manufacture
and supply provisions in this Article 3 shall also include Luna Products that
Hansen desires to order for its Subsidiaries and permitted sublicensees, and the
provisions above and below in this Article 3 shall be interpreted to allow for
the purchasing of Luna Products from Luna by or for such Subsidiaries and
sublicensees, as may be directed by Hansen from time to time. Except to the
extent expressly provided for in Section 3.3.5 and 3.8, nothing in this
Agreement shall be construed (a) as imposing any requirement on Hansen (or its
designees) to order or purchase Products or any other products in any quantity
from Luna or (b) to limit Hansen’s (or its designees’) ability to manufacture,
or have a third party manufacture, Products or any other products.

3.2 Supply for Development. As and to the extent requested by Hansen, Luna shall
manufacture and supply to Hansen, in accordance with Section 3.1, Luna Products
for purposes of developing and/or obtaining regulatory approval of the Luna
Products or End Products (including for non-clinical and clinical studies) and
other similar and related purposes at the Development Transfer Price, but not
for commercial sale. Hansen shall keep Luna reasonably informed of its
anticipated requirements of Luna Products for such purposes, whether through the
Project Manager meetings pursuant to Section 2.3 (if applicable), or otherwise.
Hansen may order Luna Products for the development-related purposes described
above under this Section 3.2 from Luna by providing Luna with a binding purchase
order indicating: (i) the quantities of Luna Product ordered (provided such
quantities are consistent with the terms of this Agreement), (ii) the requested
delivery date [****], and (iii) a delivery location. Upon receipt of any such
conforming purchase order, Luna shall manufacture and supply Luna Product in
accordance therewith. Any term in such purchase order that is inconsistent with
this Agreement shall not be binding upon Luna; otherwise Luna shall send a
confirmation to Hansen within [****] of receiving any such conforming purchase
order. “Development Transfer Price” means [****].

3.3 Commercial Supply

3.3.1 Commercial Supply Agreement. If Hansen commercially launches an End
Product containing a Luna Product Luna shall manufacture and supply to Hansen up
to Hansen’s requirements of Luna Products (but subject to Section 3.3.5 below)
for commercial sale (presumably as incorporated into End Products) in accordance
with this Section 3.3. If Hansen so decides to launch such an End Product
containing a Luna Product, the Parties shall [****].

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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3.3.2 Commercial Transfer Price. Luna shall supply to Hansen Luna Products for
commercial sale (or marketing or promotional purposes) (presumably as
incorporated into End Products) at the Commercial Transfer Price. [****].

3.3.3 Quality Agreement. Promptly upon Hansen’s request, Hansen and Luna (and/or
Luna’s third party manufacturer of Luna Product if applicable for regulatory
purposes) shall negotiate and execute a reasonable and customary quality
agreement governing manufacture of Luna Product consistent with Applicable Laws
(including regulatory requirements).

3.3.4 Advance Requirements Forecasts. Hansen shall provide Luna with reasonable
advance notice (but no less frequently than on a rolling three month basis) of
its forecasted supply needs so as to allow Luna the ability to prepare to meet
such supply needs. The Commercial Supply Agreement shall specify the extent to
which such forecasts are binding and/or can be modified by Hansen.

3.3.5 [****].

3.3.6 Other Provisions. The Commercial Supply Agreement shall contain provisions
governing, inter alia, product recalls and withdrawals, inventory and buffer
stocks, reasonably cost reduction efforts, facility licensures and permits (and
the maintenance thereof), adverse event procedures, term and termination
provisions [****] and government inspections.

3.4 Delivery. All shipments and deliveries of Luna Products shall be made FCA at
the delivery location specified in the purchase order therefor (Incoterms 2000).
[****]. Luna shall provide appropriate documentation (including documentation
required to comply, and for Hansen to comply, with all Applicable Laws
(including regulatory requirements) and to establish compliance with applicable
industry standards and certifications with respect to such Luna Product) as well
as an invoice stating the Development Transfer Price or Commercial Transfer
Price, as applicable, and describing in detail the calculation thereof, with all
shipments of Luna Product hereunder.

3.5 Payment for Luna Product; Acceptance of Luna Product. All payments for Luna
Products (at the Development Transfer Price or Commercial Transfer Price, as the
case may be) shall be due within [****] days from the date Luna delivers Luna
Product to the delivery location specified in the applicable purchase order.
Hansen shall have [****] days from the date of receipt by Hansen to reject any
Luna Product that does not conform to Hansen’s purchase order therefor (with
respect to supply of Luna Products for commercial sale, to the extent the terms
of such purchase order are consistent with those of the Commercial Supply
Agreement) or does not conform in all material respects to the Specifications
therefor or otherwise does not comply in all material respects with the
requirements of Section 3.1, or else such Luna Product shall be deemed accepted.
If Hansen rejects Luna Product in accordance with the foregoing, then, at
Hansen’s election: (i) Hansen shall not be obligated to pay for such rejected
Luna Product (and Luna shall refund to Hansen any amounts paid for such rejected
Luna Product and reimburse Hansen for any amounts incurred for return shipment
or destruction of such rejected Luna Product if Luna requests return or
destruction thereof) or (ii) Luna shall manufacture and deliver replacement
conforming Luna Product within a reasonably prompt period of time, which such
replacement conforming Luna Product shall be subject to the terms of this
Article 3, including the acceptance process set forth in this Section 3.5.

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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3.6 Records; Inspections. Luna shall keep and maintain complete and accurate
records, reports and other documents as may be reasonably required to confirm
its compliance with this Article 3 and Applicable Laws with respect to its
manufacturing activities hereunder. Luna shall permit Hansen representatives to
enter Luna’s facilities upon reasonable prior notice and at reasonable
intervals, during normal business hours for the purpose of reviewing such
records, reports and documents and making quality assurance audits of the
facilities and of the procedures and processes used by Luna in storing,
manufacturing and shipping Luna Products and for the purpose of confirming
compliance with Article 3 and Applicable Laws. Luna shall ensure that any third
party manufacturer to which Luna subcontracts manufacture of Luna Products shall
grant Hansen at least equivalent rights to inspect the facilities of such third
party manufacturer.

3.7 Manufacturing Technology Transfer. Without limiting Hansen’s rights to
manufacture or have manufactured Luna Products, in the event that (a) Luna is
unable to meet Hansen’s reasonable supply needs of Luna Products (to the extent
in accordance with this Agreement) [****].

3.8 [****] Supply Arrangements for Other Products.

3.8.1 [****] Field.

(a) For the period of [****] years after the Effective Date, in the event that
(i) Hansen elects to [****].

(b) During the period beginning on the [****] anniversary of the Effective Date
and continuing thereafter, [****].

3.8.2 Non-Robotic Medical Field Outside Orthopedics, Endoluminal or Vascular.
For a period of [****] years from the Effective Date, in the event that [****].

4. Compensation

4.1 Development Fees. Hansen shall pay Luna for its development work done
pursuant to Section 2.1 above in accordance with this Section 4.1.

4.1.1 [****] Fees. [****].

4.1.2 Invoicing and Payment. [****].

4.1.3 [****].

4.1.4 [****].

4.2 Audit Luna shall keep and maintain complete and accurate books, records and
accounts as may be reasonably required to confirm its compliance with this
Agreement and the amounts payable hereunder (including under Section 4.1 and
under Article 3). Hansen shall have the right once per twelve month period, upon
reasonable advance notice and during normal business hours to have an
independent third party auditor (one that is not otherwise engaged by Hansen for
other auditing or tax purposes) audit such books, records and accounts to verify
the accuracy of the reports and amount of payments payable hereunder. [****].

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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5. Intellectual Property

5.1 Acknowledgement of License Agreement. The Parties acknowledge that they are
concurrently entering into the separate License Agreement governing the terms
and conditions of licenses under certain Technology (and Intellectual Property
Rights therein or thereunder) relevant to the development activities
contemplated under this Agreement, including with respect to Fiber Optic Shape
Sensing/Localization Technology. Nothing herein shall limit the rights and
licenses expressly granted to, acquired by or confirmed for Hansen or Luna in
the License Agreement. For the avoidance of doubt, any Technology (and
Intellectual Property Rights therein or thereunder) developed, made, created,
conceived or reduced to practice (in whole or in part) by or for Luna in
connection with Luna’s development activities or performance under this
Agreement shall be included in the Licensed IP (including as used in Section 2.1
of the License Agreement) for all purposes under the License Agreement,
including for purposes of the licenses granted to Hansen under the terms and
conditions of the License Agreement (except, with respect to Joint Patents, to
the extent assigned to Hansen hereunder). Furthermore, the Parties acknowledge
and agree that the licenses granted to Hansen under the License Agreement are
essential to this Agreement and necessary for Hansen to enjoy the benefits of
the Development Program and other terms and conditions of this Agreement, and
that, without such licenses, the purposes and performance of this Agreement
would be entirely frustrated and materially impaired. Accordingly, without
limiting the terms and conditions of the License Agreement (or any rights or
remedies for any breach thereof), the Parties agree that any termination of the
licenses granted to Hansen under the License Agreement or any narrowing of
(i) the scope of such licenses or (ii) the degree of their exclusivity (which
narrowing results in a material impairment of the purposes or performance of
this Agreement and/or the License Agreement), shall be a material breach of this
Agreement.

5.2 New Inventions. To the extent a Party develops, makes, conceives or reduces
to practice a new patentable invention under the Development Program (“New
Inventions”), subject to the License Agreement, ownership of the patent rights
to such New Invention between the Parties shall be governed as follows:

5.2.1 Hansen Inventions. Hansen shall own all patent rights to any New
Inventions that Hansen solely develops, makes, conceives or reduces to practice
(i.e., no employee or consultant of Luna is an “inventor” thereof under
applicable patent law). Hansen shall have the sole right to file any patent
application on any such New Invention and to control the prosecution and
enforcement thereof. Hansen shall promptly notify Luna in writing of any such
New Inventions within thirty (30) days of documenting same.

5.2.2 Joint Inventions. Hansen shall own all patent rights to any New Inventions
that Hansen and Luna jointly develop, make, conceive or reduce to practice
(i.e., an employee or consultant of each of Hansen and Luna is an “inventor”
thereof under applicable patent law) (to the extent any patent application is
filed thereon, together with any patents issuing thereon and other patent rights
arising therefrom or claiming priority thereto, a “Joint Patent”). Hansen shall
have the sole right to file any patent application on any such New Invention
(and to control the prosecution and enforcement thereof); provided that (i) Luna
shall cooperate in the filing of any such patent application to the extent
consistent with applicable patent law and (ii) Hansen shall provide Luna with a
copy of each such patent application. The Parties acknowledge that any Joint
Patent(s) are subject to the applicable terms and conditions of the License
Agreement and Section 5.2.5 below. Each Party shall promptly notify the other in
writing of any such New Inventions within thirty (30) days of documenting same.

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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5.2.3 Luna Inventions. Luna shall own all patent rights to any New Inventions
that Luna solely develops, makes, conceives or reduces to practice (i.e., no
employee or consultant of Hansen is an “inventor” thereof under applicable
patent law). Luna shall have the sole right to file any patent application on
any such New Invention and to control the prosecution and enforcement thereof,
subject to the provisions below. The Parties acknowledge that any such New
Inventions are subject to the applicable terms and conditions of the License
Agreement and the Intuitive-Luna License, to the extent applicable to such New
Inventions (including Sections 5.1 and 5.2 of the License Agreement, but without
limiting the additional terms and conditions regarding patent prosecution and
enforcement below, and including in any event the inclusion of such New
Inventions and Intellectual Property Rights therein or thereto within the
Licensed IP licensed to Hansen under the License Agreement). Luna shall promptly
notify Hansen in writing of any such New Inventions within thirty (30) days of
documenting same. Upon Hansen’s reasonable request, Hansen shall have the right
to review and provide input on all patent filings and responses regarding the
New Inventions prior to their filing or submission with any applicable patent
office. Prior to dropping prosecution of any claim within any patent
applications on any New Inventions, Luna shall notify Hansen thereof and Hansen,
at is option, shall have the right to continue the prosecution of such claim and
Luna shall provide Hansen reasonable cooperation and assistance in connection
therewith. Hansen shall have the sole and exclusive right to enforce any patents
on New Inventions with respect to any infringement or alleged infringement
thereof in the [****] Field, the [****] Field and the [****] Field and the
[****] Field, and the terms and conditions of Section 5.2(b) of the License
Agreement shall otherwise apply with respect thereto.

5.2.4 Patent Ownership. Luna hereby assigns (and agrees to assign, identify,
document and deliver) to Hansen all right, title and interest in and to any
Joint Patent. Luna shall execute and deliver all documents reasonably required
by Hansen to evidence, perfect, record or enforce such assignment and/or the
Joint Patents, and appoints Hansen as its attorney-in-fact to execute and
deliver such documents if Hansen is unable, after making reasonable inquiry, to
obtain Luna’s signature. Hansen shall have the sole right (in its sole
discretion) to control and oversee all filing, prosecuting, maintaining and
enforcing any and all Joint Patents at its own expense, and Luna shall
reasonably cooperate with Hansen and provide all reasonable assistance (and
execute such documents) in connection with any action Hansen may take with
respect thereto, in all cases at Hansen’s sole cost and expense. Notwithstanding
anything to the contrary herein, the Parties agree that applicable patent law
shall govern who is an inventor of any New Invention. In the event of any
disagreement about ownership, inventorship or similar matters arising out of
this Agreement or otherwise related to New Inventions, the Parties hereby agree
first to have their Chief Executive Officers or their designees meet and confer
to attempt to resolve such disagreement. If such disagreement is not resolved
within [****] days of either party’s referral of such disagreement for
resolution by such Chief Executive Officers or their designees, the Parties
agree to submit such disagreement to final and binding arbitration administered
by the American Arbitration Association under its Patent Arbitration Rules
before one single neutral arbitrator. Such arbitration shall occur in New York
City, New York. The decision of the arbitrator shall be final, binding, and
unappealable and shall be deemed the decision of the Parties hereunder and may
be entered by any Party in a court of competent jurisdiction.

5.2.5 [****] License to Joint Patents outside of [****] Fields. Hansen hereby
grants Luna an irrevocable, perpetual, fully paid-up, royalty-free,
nonexclusive, transferable, sublicensable, worldwide license under the Joint
Patent(s) to research, develop, make, have made, use, have used, import, sell,
have sold, offer to sell, sell and transfer and otherwise commercialize and
exploit under any such Joint Patents in all fields of use outside the [****].

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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5.2.6 Retained Rights. For purpose of clarification and not of limitation (and
without limiting any other provisions of this Agreement or any terms and
conditions of the License Agreement), nothing in this Section 5.2 shall assign
the ownership of any Technology of any Party (other than the Joint Patents to
Hansen as provided above) nor limit the use of any Technology of any Party,
except, with respect to Luna, to the extent any such use by Luna is covered by
the valid and enforceable claims of any issued Joint Patent.

5.3 Third Party Technology. Luna shall inform Hansen prior to including Third
Party Technology in or with any Luna Products (or otherwise providing such Third
Party Technology to Hansen in connection with the development of Luna Products
hereunder). To the extent any such Third Party Technology is so included or
provided, Luna shall provide Hansen with written notice informing Hansen thereof
and acknowledging Hansen’s rights thereto (and confirming such rights are as
provided for in the License Agreement). To the extent any such Third Party
Technology is required for Luna to manufacture and supply Luna Products
hereunder, and any royalties with respect thereto are to be included in the
formula for the Development Transfer Price or the Commercial Transfer Price
under Sections 3.2 and 3.3.2, respectively, then Hansen must provide its prior
written consent; provided, however, that if Hansen does not consent thereto,
notwithstanding anything else herein to the contrary, Luna shall have no duty to
supply such Luna Products. If Luna includes Third Party Technology with or in
any Luna Products (or otherwise provides such Third Party Technology to Hansen
in connection with the development of Luna Products hereunder) without such
Third Party Technology having been licensed or sublicensed to Hansen in
accordance with the foregoing, or if Luna infringes any third party patents or
misappropriates any trade secrets in the course of its performance of the
Development Program hereunder, then in all such cases, Luna shall indemnify,
defend and hold harmless the Hansen Indemnitees from and against any loss,
damage, liability, judgment, fine, or amount paid in settlement (with Luna’s
consent) and expense or cost of defense arising from any claim, demand, action,
proceeding, in all such cases suffered or incurred by the Hansen Indemnitees
resulting from Hansen’s use and exploitation of such Third Party Technology.

6. Representations and Warranties

6.1 By Hansen. Hansen hereby represents, warrants and covenants as follows:

6.1.1 Hansen is a corporation duly organized, validly existing and in good
standing under the laws of the state of Delaware.

6.1.2 The execution, delivery and performance of this Agreement by Hansen
(i) are within its corporate powers, (ii) have been duly authorized by all
necessary corporate action on Hansen’s part, and (iii) do not and shall not
contravene or constitute a default under, and are not and shall not be
inconsistent with, any law or regulation, any judgment decree or order, or any
contract, agreement or other undertaking applicable to Hansen.

6.2 By Luna. Luna hereby represents, warrants and covenants as follows:

6.2.1 Luna is a corporation duly organized, validly existing and in good
standing under the laws of the state of Delaware.

6.2.2 The execution, delivery and performance of this Agreement by Luna (i) are
within its corporate power, (ii) have been duly authorized by all necessary
corporate action on Luna’s part, and (iii) do not and shall not contravene or
constitute a default under, and are not and shall not be inconsistent with, any
law or regulation, any judgment, decree or order, or any contract, agreement or
other undertaking applicable to Luna.

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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6.2.3 Luna shall perform under Section 2.1 above in a professional and
workmanlike manner, consistent with industry standards, and in compliance with
Applicable Laws.

6.2.4 Luna is not now nor has in the past been debarred or disqualified or the
subject of debarment or disqualification proceedings by any regulatory authority
having jurisdiction and will not knowingly use in connection with its
Development Program activities hereunder any employee, consultant or
investigator that has been debarred or disqualified or the subject of debarment
or disqualification proceedings by any regulatory authority having jurisdiction.
Luna covenants that it will notify Hansen, subject to any confidentiality
obligations and the preservation of attorney-client privilege, immediately after
Luna’s receipt of information of any debarment or disqualification (or the
initiation of any action or proceeding therefor) of any person performing
Development Program activities for Luna hereunder.

6.2.5 Luna has reviewed and approved the Development Plan and the Development
Milestones as of the Effective Date with the intent and expectation that such
Development Plan and Development Milestones can be successfully achieved and
Luna is not aware as of the Effective Date (as can be shown by clear and
convincing evidence) of any technical or scientific issues or realities that are
likely to render the Development Plan and Development Milestones impractical or
infeasible or likely to not be achieved within the proposed time frames and
budget.

6.3 Disclaimer. EXCEPT AS EXPRESSLY PROVIDED FOR IN THIS AGREEMENT, NEITHER
PARTY MAKES, AND EACH PARTY HEREBY DISCLAIMS, ANY AND ALL REPRESENTATIONS AND
WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO THE SUBJECT MATTER
OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE.

7. Confidentiality

7.1 Definition. “Confidential Information” means all non-public written, visual,
oral and electronic data and information disclosed by one Party (“Discloser”) to
the other Party (“Recipient”) under this Agreement or the License Agreement that
relates to the Discloser’s business, technology, products, processes,
techniques, research, development and marketing and is marked as confidential or
proprietary or disclosed under circumstances reasonably indicating that it is
confidential or proprietary. All Hansen Licensed IP, Hansen New Inventions and
unpublished patent applications for Joint Patents shall be Confidential
Information of Hansen and Hansen shall be the Discloser (and Luna the Recipient)
thereof; and all Licensed IP and Luna New Inventions shall be Confidential
Information of Luna and Luna shall be the Discloser (and Hansen the Recipient)
thereof. All Confidential Information (including without limitation all copies,
extracts and portions thereof) shall remain the property of Discloser. Except as
expressly agreed otherwise by the Parties, Recipient does not acquire any
Intellectual Property Rights under any disclosure hereunder except the limited
right to use such Confidential Information in accordance with this Agreement
and/or the License Agreement.

7.2 Restrictions. Recipient shall hold all Confidential Information of Discloser
in strict confidence and shall not disclose any such Confidential Information to
any third party except as expressly provided in this Section 7.2. Recipient may
disclose the Confidential Information of Discloser

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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only to regulatory authorities and employees, agents, contractors, Subsidiaries
and actual and potential licensees and sublicensees (solely to the extent, in
the case of any such licensee or sublicensee, such Confidential Information to
be disclosed is licenseable or sublicenseable to such licensee or sublicensee),
in all such cases who have a reason to know such information for purposes of
Recipient’s performance of its obligations or exercise of its rights under this
Agreement and/or the License Agreement and (except with respect to regulatory
authorities) who are bound in writing by restrictions regarding disclosure and
use at least as protective of Discloser as the terms and conditions in this
Agreement. Recipient shall not use any Confidential Information of Discloser for
the benefit of itself or any third party or for any purpose other than to
perform its obligations and exercise its rights under this Agreement and/or the
License Agreement. Recipient shall take at least the same degree of care that it
uses to protect its own confidential and proprietary information and materials
of similar nature and importance (but in no event less than reasonable care) to
protect the confidentiality and avoid the unauthorized use, disclosure,
publication, or dissemination of the Confidential Information of Discloser.

7.3 Scope. The foregoing restrictions on disclosure and use shall not apply with
respect to any Confidential Information of Discloser to the extent such
Confidential Information: (a) was or becomes publicly known through no wrongful
act or omission of the Recipient or its Affiliates and their respective
employees, agents and representatives; (b) was rightfully known by Recipient
(except, for purposes of Luna as Recipient, with respect to Joint Patents and
Hansen Licensed IP) before receipt from Discloser; (c) becomes rightfully known
to Recipient (except, for purposes of Luna as Recipient, with respect to Joint
Patents and Hansen Licensed IP) from a source other than Discloser without
breach of a duty of confidentiality to Discloser or its Affiliates; or (d) is
independently developed by Recipient (except, for purposes of Luna as Recipient,
with respect to Joint Patents and Hansen Licensed IP) without the use of or
access to the Confidential Information of Discloser. In addition, Recipient may
use or disclose Confidential Information of Discloser to the extent (i) approved
by Discloser in writing or (ii) Recipient is legally compelled to disclose such
Confidential Information, provided, however, that prior to any such compelled
disclosure, Recipient shall give Discloser reasonable advance notice of any such
disclosure and shall cooperate with Discloser in protecting against any such
disclosure and/or obtaining a protective order narrowing the scope of such
disclosure and/or use of such Confidential Information.

8. Indemnification; Limitation of Liability

8.1 By Hansen. Subject to Section 8.3, Hansen will defend, indemnify and hold
harmless Luna and its officers, directors, shareholders, employees, contractors
and agents (collectively, the “Luna Indemnitees”) from and against any losses,
damages, liabilities, judgments, fines, amounts paid in settlement, expenses and
costs of defense (including reasonable attorneys’ fees and witness fees)
(collectively, “Losses”) resulting from any demand, claim, action or proceeding
brought or initiated by a third party (each a “Third Party Claim”) against any
Luna Indemnitee(s) to the extent arising from: [****]. The foregoing
indemnification shall not apply to the extent that such Losses arise from or
relate to any Luna Indemnitee’s gross negligence, intentionally harmful
misconduct or breach of this Agreement or the Commercial Supply Agreement or to
the extent Luna has an indemnification obligation pursuant to Section 8.2 for
such Losses.

8.2 By Luna. Subject to Section 8.3, Luna will defend, indemnify and hold
harmless Hansen and its Affiliates, officers, directors, shareholders,
licensees, designees, customers, employees, contractors and agents
(collectively, the “Hansen Indemnitees”) from and against any Losses resulting
from any Third Party Claim against any Hansen Indemnitee(s) to the extent
arising from: [****]. The foregoing indemnification shall not apply to the
extent that such Losses arise from or relate to any Hansen

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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Indemnitee’s gross negligence, intentionally harmful misconduct or breach of
this Agreement or the Commercial Supply Agreement or to the extent Hansen has an
indemnification obligation pursuant to Section 8.1 for such Losses.

8.3 Indemnity Procedures. The Party seeking indemnification hereunder shall give
the other Party (the “Indemnifying Party”): (a) prompt written notice of any
Third Party Claim for which indemnification is sought; (b) sole control over the
defense or settlement of such Third Party Claim; and (c) reasonable assistance,
at the Indemnifying Party’s expense, in the defense and settlement of the Third
Party Claim. In no event, however, may the Indemnifying Party settle any Third
Party Claim in a manner that diminishes the rights or interests of the other
Party under this Agreement and/or obligates the other Party to make any payment
or take any action without the written consent of the other Party, which consent
shall not be unreasonably withheld, conditioned or delayed. If the Indemnifying
Party fails to assume the defense, or if the Parties cannot agree as to the
application of Section 8.1 or Section 8.2 in any given instance, then the Party
seeking indemnification may conduct the defense and reserves the right to seek
indemnification under this Agreement upon resolution with the third party of the
underlying matter.

8.4 Limitation of Liability. EXCEPT FOR BREACH OF ARTICLE 7 OR THE
INDEMNIFICATION OBLIGATIONS SET FORTH IN SECTIONS 8.1 OR 8.2, AND EXCLUDING
SECTION 2.5 AND WITHOUT LIMITING ANY LIQUIDATED DAMAGES PAYABLE THEREUNDER, IN
NO EVENT SHALL A PARTY BE LIABLE TO THE OTHER PARTY FOR SPECIAL, CONSEQUENTIAL,
INCIDENTAL, INDIRECT, OR PUNITIVE DAMAGES OR LOST PROFITS ARISING OUT OF OR
RELATED TO THIS AGREEMENT, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY.

9. Term and Termination

9.1 Term. This Agreement shall become effective on the Effective Date and shall
remain in force and effect until [****].

9.2 Termination by Hansen. In addition to any available remedies at law or in
equity, this Agreement may be terminated by Hansen by giving notice of
termination to Luna: (a) in the event that Luna files or institutes any
bankruptcy, liquidation or receivership proceedings, or in the event that Luna
makes an assignment of a substantial portion of its assets for the benefit of
its creditors; provided, however, that, in the case of any involuntary
bankruptcy proceeding such right to terminate shall only become effective if
Luna consents to the involuntary bankruptcy or such proceeding is not dismissed
within sixty (60) days after the filing thereof; (b) if Luna breaches [****] and
fails to cure such breach in accordance with this Agreement within sixty
(60) days after receipt of the initial notification by Hansen of such breach or
such longer period of time as provided in this Agreement; and (c) [****]. Except
as expressly provided in the foregoing or in Section 2.5.3, Hansen shall have no
right to terminate this Agreement.

9.3 Termination by Luna. In addition to any available remedies at law or in
equity, this Agreement may be terminated by Luna by giving notice of termination
to Hansen: (a) in the event that Hansen files or institutes any bankruptcy,
liquidation or receivership proceedings, or in the event that Hansen makes an
assignment of a substantial portion of its assets for the benefit of its
creditors; provided, however, that, in the case of any involuntary bankruptcy
proceeding such right to terminate shall only become effective if Hansen
consents to the involuntary bankruptcy or such proceeding is not dismissed
within sixty (60) days after the filing thereof; and (b) if Hansen breaches
[****] and fails to cure such

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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breach within thirty (30) days after receipt of notification by Luna of such
breach (provided; however, that if Hansen disputes [****], Luna shall not have
the right to terminate this Agreement unless and until it is finally determined,
in accordance with Section 2.6 (or the other applicable dispute resolution
provisions of this Agreement) that Hansen is obligated to [****] and Hansen
subsequently fails to cure such breach (e.g., [****]), within thirty (30) days
of such final determination (it being understood that Luna shall not have the
right to terminate this Agreement if Hansen so cures following such final
determination in dispute resolution). Except as expressly provided in the
foregoing, Luna shall have no right to terminate this Agreement.

9.4 Effect of Termination. Expiration or termination of this Agreement
(including under Section 2.5) for any reason shall not release either Party from
any obligation or liability which, at the time of such expiration or
termination, has already accrued to the other Party or which is attributable to
a period prior to such expiration or termination. The following Sections and
Articles shall survive the expiration or termination of this Agreement for any
reason: Section 2.4, 2.5, 2.6, Article 5, Article 7, Article 8, Article 9, and
Article 10.

10. Miscellaneous

10.1 Entire Agreement. Subject to Section 10.6 below, this Agreement (and its
Exhibits), together with the Settlement Agreement, the other Settlement
Documents, and the Amended Plan and Confirmation Order, contain the entire
agreement and understanding of the Parties with respect to the subject matter
hereof, and supersede and merge all prior and contemporaneous understandings and
agreements between the Parties, whether written or oral, with respect to such
subject matter. This Agreement shall not be modified, amended or cancelled other
than in a writing signed by authorized representatives of both Parties.

10.2 No Implied Waiver. Any waiver of any obligation under this Agreement or any
other Settlement Document must be in writing. The failure of either Party to
enforce at any time any provision of or right under this Agreement shall not be
construed to be a waiver of such provision or right or any other provision, and
shall not affect the right of such Party to enforce such provision or right or
any other provision. No waiver of any breach hereof shall be construed to be a
waiver of any other breach.

10.3 Assignment. This Agreement and the rights of the Parties hereunder may not
be assigned by either Party to this Agreement without the prior written consent
of the other Party; provided, however, this Agreement (along with the rights
granted hereunder) may be assigned by either Party without the other Party’s
consent as part of a merger, consolidation or acquisition of the assigning
Party;

sale of all or substantially all the assets of the assigning Party; or a similar
reorganization of the assigning Party. Subject to the foregoing, the respective
obligations of the Parties hereto shall bind, and the respective rights of the
Parties shall inure to the benefit of, the Parties’ respective permitted
assignees and successors.

10.4 Governing Law; Jurisdiction; Venue.

10.4.1 Choice of Law. This Agreement shall be governed by, and interpreted in
accordance with: (a) the Bankruptcy Code, and (b) in the case of applicable
nonbankruptcy law, the laws of the State of Delaware, without regard to
conflicts of laws, or applicable federal law as to a particular subject where
federal law governs, such as for example, the Patent Act governing patents or
the Copyright Act governing copyrights.

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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10.4.2 Bankruptcy Court Jurisdiction. Except as provided in Section 10.4.3 and
Section 10.4.4, any disputes arising under this Agreement, or related to the
meaning, effect and interpretation of the Amended Plan, the Confirmation Order
or this Agreement (which Agreement is a part of the Amended Plan and
Confirmation Order), shall be subject to the jurisdiction of the Bankruptcy
Court.

10.4.3 Exceptions to Bankruptcy Court Jurisdiction. In the event: (a) the
Bankruptcy Court lacks or declines to exercise jurisdiction over a dispute
arising under this Agreement, for any reason; (b) the reference of jurisdiction
to the Bankruptcy Court is withdrawn, for any reason; (c) the dispute or
enforcement is related to any intellectual property rights of Hansen or Luna,
including without limitation any alleged infringement or misappropriation or
misuse thereof; or (d) the dispute or enforcement arises from or with respect to
any provision of, or incorporated into, any of Sections 2.1, 2.2, 2.3, 2.4, 2.5,
4, 5, or 6.3 of the License Agreement or causes of action relating thereto or
arising therefrom, or any of Sections 2.1, 2.2, 3, 4, 5, 7, 8 or 10.3 of this
Agreement or causes of action relating thereto or arising therefrom, then the
state or federal courts for or in New Castle County, Delaware shall have
jurisdiction over any disputes arising under or related to this Agreement.

10.4.4 Alternative Dispute Resolution. Notwithstanding Sections 10.4.2 and
10.4.3 above and Section 10.4.5 below, in the event some provision of a
particular Settlement Document expressly creates an alternative dispute
resolution provision as to a particular type of dispute, such as Sections 2.6 or
5.2.4 of this Agreement (or provisions of this Agreement expressly invoking
Section 2.6), then such disputes shall be resolved as so specified in the
applicable Agreement.

10.4.5 Consent to Jurisdiction. Each Party hereby (a) consents and submits to
the venue and co-exclusive jurisdiction of the Bankruptcy Court and the courts
of New Castle County in the State of Delaware and the Federal courts of the
United States sitting in such part of the District of Delaware (without
prejudice to either the retained rights and jurisdiction of the Bankruptcy
Court), (b) agrees that all claims may be heard and determined in such courts,
(c) irrevocably waives (to the extent permitted by applicable law) any objection
that it now or hereafter may have to the laying of venue of any such action or
proceeding brought in any of the foregoing courts, and any objection on the
ground that any such action or proceeding in any such court has been brought in
an inconvenient forum, and (d) agrees that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner permitted by law. Each of the
Parties hereby consents to service of process by any party in any suit, action
or proceeding in accordance with such applicable law.

10.4.6 Resolving Conflicts. If there is any question as to whether the proper
jurisdiction or venue for any dispute is in the Bankruptcy Court or in the
Delaware Court, the Bankruptcy Court may decide that issue.

10.4.7 Miscellaneous. The prevailing Party in any final judgment of any such
controversy, claim or dispute, or the non-dismissing Party in the event of a
dismissal without prejudice, shall be entitled to receive from the other Party
the reasonable attorneys’ fees (and all related costs and expenses) and all
other costs and expenses paid or incurred by such prevailing Party in connection
with such controversy, claim or dispute and in connection with enforcing any
judgment or order with respect thereto.

10.5 Severability. If for any reason a provision of this Agreement, or portion
thereof, is finally determined to be unenforceable under Applicable Laws, that
provision, or portion thereof, shall

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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nonetheless be enforced, as to circumstances, persons, places and otherwise, to
the maximum extent permissible by Applicable Laws so as to give effect to the
intent of the Parties, and the remainder of this Agreement shall continue in
full force and effect.

10.6 Effect of Plan/Confirmation Order. The Parties agree that this
Section 10.6(a) is a settlement proposal that shall apply only to the extent
approved by the Confirmation Order. The Parties each agree to use commercially
reasonable efforts to support the full rights sought by the Parties hereunder,
including without limitation by appropriate proffers or other proof in the plan
confirmation process. To the maximum extent possible under applicable law (as
affected by the Confirmation Order), this Agreement is not an “executory
contract” for the purposes of 11 U.S.C. § 365. Rather, this Agreement
constitutes a settlement allocation and partition of intellectual property and
other rights disputed in the Litigation and in Hansen’s related claims in the
Chapter 11 Case but resolved by the Amended Plan and the Confirmation Order. To
the extent that a final judgment by a court of competent jurisdiction rules
otherwise than that, the executory parts of this Agreement (herein sometimes
called a “Section 365(n) Contract”) shall be interpreted so that the greatest
possible rights and licenses of the licensee Party thereto shall be held to be
“executed,” thereby minimizing any “executory” parts of the Agreement. As to any
Section 365(n) Contract, the parties hereto acknowledge and agree that the
rights and licenses granted by the licensor Party to the licensee Party and its
Affiliates hereunder are rights with respect to intellectual property (including
without limitation “intellectual property” within the meaning of 11 U.S.C. §
101), and: (a) all reports, drawings, samples, prototypes and other books and
records and embodiments of the intellectual property shall be deemed
“embodiments” of the intellectual property protected by 11 U.S.C. § 365
hereunder; (b) any Settlement Document or obligations thereunder that the
licensee Party designates as such an “agreement supplementary” to such
Section 365(n) Contract in its discretion at any time before the Confirmation
Hearing in a “Plan Supplement” to the Amended Plan, shall be, to the extent
permitted by applicable law (as affected by the Confirmation Order) and so
designated by the licensee, an “agreement supplementary” to such Section 365(n)
Contract, but no other Settlement Document or obligations shall be an “agreement
supplementary” to such Section 365(n) Contract; and (c) there are no “royalty
payments” due from Hansen or Luna as a licensee under such Section 365(n)
Contract or, since 11 U.S.C. § 365(n)(2) applies only to the Section 365(n)
Contract, but not to any “agreement supplementary” to such contract, under any
such supplementary agreement. In the event of any conflict between (i) the
provisions of this Section 10.6(a), or (ii) the rights contemplated by 11 U.S.C.
§ 365(n), and the Amended Plan or the Confirmation Order, the Amended Plan and
Confirmation Order shall govern and control. Hansen and Luna each shall be
deemed to have made a request for enforcement of all of its rights and licenses
pursuant to 11 U.S.C. § 365(n)(4), without further action by either licensee
Party.

10.7 Headings. The headings and captions used in this Agreement are for
convenience only and shall not be considered in construing or interpreting this
Agreement.

10.8 Interpretation. This Agreement has been negotiated by all Parties, and each
Party has been advised by competent legal counsel. This Agreement shall be
interpreted in accordance with its terms and without any construction in favor
of or against either Party.

10.9 Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but which collectively shall constitute one and the
same instrument.

10.10 Force Majeure. No Party shall be responsible for delays to the extent
resulting from causes beyond such Party’s control, including without limitation
fire, explosion, flood, war, strike, crisis, terrorist attack, earthquake, power
failure, or riot, provided that the nonperforming Party notifies the other Party
thereof and uses commercially reasonable efforts to mitigate or remove such
causes of nonperformance.

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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10.11 Relationship of the Parties. Luna’s relationship with Hansen shall be that
of an independent contractor and nothing in this Agreement should be construed
to create a partnership, joint venture, agency or employer-employee relationship
between the Parties. Luna is not the agent of Hansen and is not authorized and
shall not have any authority to make any representation, contract or commitment
on behalf of Hansen, or otherwise bind Hansen in any respect whatsoever. Luna
(and its employees and agents) shall not be entitled to any of the benefits
Hansen may make available to its employees, such as group insurance,
profit-sharing or retirement benefits. Luna shall be solely responsible for all
tax returns and payments required to be filed with or made to any federal, state
or local tax authority with respect to Luna’s performance of services and
receipt of amounts under this Agreement. Hansen may regularly report amounts
paid to Luna with the Internal Revenue Service as required by law. Because Luna
is an independent contractor, Hansen shall not withhold or make payments for
social security, make unemployment insurance or disability insurance
contributions, or obtain worker’s compensation insurance on Luna’s (or its
employees’ or agents’) behalf. Luna shall comply with, and agrees to accept
exclusive liability for its own non-compliance with all Applicable Laws
regarding its employees, consultants, taxes, benefits and payroll, including
obligations such as payment of all taxes, social security, disability and other
contributions based on amounts paid to Luna, its agents or employees under this
Agreement. Luna hereby agrees to indemnify, hold harmless and defend Hansen
against any and all such liability, taxes or contributions, including penalties
and interest.

10.12 Notices. Except as may be otherwise provided herein, all notices,
requests, waivers, consents and approvals made pursuant to this Agreement shall
be in writing and shall be conclusively deemed to have been duly given (a) when
hand delivered to the other Party; (b) when sent by facsimile, with receipt
confirmation, to the number set forth below if sent between 8:00 a.m. and 5:00
p.m. recipient’s local time on a business day, or on the next business day if
sent by facsimile to the number set forth below if sent other than between 8:00
a.m. and 5:00 p.m. recipient’s local time on a business day; or (c) the next
business day after deposit with a national overnight delivery service, postage
prepaid, addressed to the applicable parties as set forth below with next
business day delivery guaranteed, provided that the sending Party receives a
confirmation of delivery from the delivery service provider. Each person making
a communication hereunder by facsimile shall attempt to promptly confirm by
telephone to the person to whom such communication was addressed each
communication made by it by facsimile pursuant hereto but the absence of such
confirmation shall not affect the validity or delivery status of any such
communication. A Party may change or supplement the addresses given below, or
designate additional addresses, for purposes of this Section by giving the other
Party written notice of the new address in the manner set forth above.

If to Hansen Medical, Inc.

800 E. Middlefield Road

Mountain View, CA 94043

Attn: Arthur Hsieh

Facsimile: 650-404-5901

Email: Arthur_Hsieh@hansenmedical.com

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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If to Luna Innovations Inc.

One Riverside Circle, Suite 400

Roanoke, VA 24016

Attn:

Facsimile:

If to Luna Technologies, Inc.

One Riverside Circle, Suite 400

Roanoke, VA 24016

Attn:

Facsimile:

10.13 Luna Party. For purposes of this Agreement, Luna Innovations Inc. and Luna
Technologies, Inc. may be treated by Hansen as one entity, such that, for
example, a notice or consent from Luna Innovations Inc. shall be deemed a valid
and effective notice or consent also from Luna Technologies, Inc. (and vice
versa) and a payment from Hansen to Luna Innovations Inc. shall fully satisfy
Hansen’s obligation with respect to such payment hereunder as to both entities.
Luna Innovations Inc. and Luna Technologies, Inc. shall exercise their rights
jointly under this Agreement, and will not take conflicting positions vis a vis
Hansen.

[Signature Page Follows]

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized representatives as of the Effective Date.

 

LUNA INNOVATIONS INCORPORATED     HANSEN MEDICAL, INC. By:  

/s/ Kent. A Murphy

    By:  

/s/ Fred Moll

Name:  

Kent A. Murphy

    Name:  

Fred Moll

Title:  

CEO

    Title:  

CEO

LUNA TECHNOLOGIES, INC.       By:  

/s/ Scott A. Graeff

      Name:  

Scott A. Graeff

      Title:  

President

     

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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Exhibit A

Development Milestones

[****]

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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Exhibit B

Development Plan

[****]

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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CONFIDENTIAL TREATMENT REQUESTED

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

AMENDMENT NO. 1 TO

DEVELOPMENT AND SUPPLY AGREEMENT

This Amendment No. 1 to Development and Supply Agreement (this “Amendment”) is
entered into as of February 17, 2010, by and between Luna Innovations
Incorporated, a Delaware corporation, together with Luna Technologies, Inc., a
Delaware corporation (acting jointly and severally, individually and
collectively, “Luna”), and Hansen Medical, Inc., a Delaware corporation
(“Hansen”).

RECITALS

WHEREAS, Luna and Hansen are parties to that certain Development and Supply
Agreement (the “Agreement”);

WHEREAS, Luna is entering in a loan agreement with Silicon Valley Bank, a
California corporation, pursuant to which Hansen is executing that certain
Subordination Agreement, effective as of February 18, 2010, by and between
Silicon Valley Bank, and Hansen (the “Subordination Agreement”); and

WHEREAS, as an inducement to Hansen to enter into the Subordination Agreement,
Luna and Hansen desire to amend Sections 4.1 and 9.4 of the Agreement to
suspend, under the circumstances as specified in this Amendment, Hansen’s
obligation to make payments to Luna as set forth therein.

NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, Luna and Hansen hereby agree to amend the Agreement as follows:

AMENDMENT

1. Definitions. Except as otherwise provided herein, capitalized terms used in
this Amendment shall have the definitions set forth in the Agreement.

2. Amendments to Article 1.

Article 1 of the Agreement shall be amended to include new Sections 1.57, 1.58
and 1.59 to read in their entirety as follows:

“1.57 “Subordination Agreement” means that certain Subordination Agreement
entered into as of February 18, 2010 by and between Silicon Valley Bank, a
California corporation, and Hansen.”

“1.58 “Blockage Period” has the meaning given to such term in the Subordination
Agreement; provided, however, that for purpose of this Amendment a Blockage
Period shall be deemed to continue until the applicable Deferred Payment is
permitted under the last sentence of Section 3(b) of the Subordination
Agreement.”

 

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“1.59 “Deferred Payment” has the meaning given to such term in the Subordination
Agreement.

3. Amendments to Section 4.1.

The first sentence of Section 4.1.1 of the Agreement shall be amended to read in
its entirety as follows:

“[****]”

The first sentence of Section 4.1.2 of the Agreement shall be amended to read in
its entirety as follows:

“[****]”

In addition, Section 4.1 of the Agreement shall be amended to include a new
Section 4.1.5 that shall read in its entirety as follows:

“Notwithstanding the foregoing, during any Blockage Period and continuing until
the end of the Blockage Period and when Luna has paid Hansen the applicable
Deferred Payment, Hansen may defer any and all payments due to Luna under
Section 4.1 of this Agreement.”

4. Amendment to Section 9.4. Section 9.4 of the Agreement shall be amended to
read in its entirety as follows:

“Expiration or termination of this Agreement (including under Section 2.5) for
any reason shall not release either Party from any obligation or liability
which, at the time of such expiration or termination, has already accrued to the
other Party or which is attributable to a period prior to such expiration or
termination. The following Sections and Articles shall survive the expiration or
termination of this Agreement for any reason: Sections 2.4, 2.5, 2.6, 4.1.5,
Article 5, Article 7, Article 8, Article 9, and Article 10.”

5. Terms and Conditions of Agreement. Except as expressly modified hereby, all
terms, conditions and provisions of the Agreement shall continue in full force
and effect.

6. Conflicting Terms. In the event of any inconsistency or conflict between the
Agreement and this Amendment, the terms, conditions and provisions of this
Amendment shall govern and control.

7. Term and Termination. This Amendment shall become effective upon its
execution by each of Luna and Hansen and shall remain in force and effect until
such date as the Subordination Agreement is terminated in accordance with its
terms.

8. Entire Agreement. This Amendment and the Agreement constitute the entire and
exclusive agreement between the parties with respect to this subject matter. All
previous discussions and agreements with respect to this subject matter are
superseded by the Agreement and this Amendment. This Amendment may be executed
in one or more counterparts, each of which shall be an original and all of which
taken together shall constitute one and the same instrument.

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

2

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[Signature Page to Follow]

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

3

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IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed by
their duly authorized representatives as of the date first listed above.

 

LUNA INNOVATIONS INCORPORATED     HANSEN MEDICAL, INC. By:  

/s/ Kent A. Murphy

    By:  

/s/ Fred Moll

Name:  

Kent A. Murphy

    Name:  

Fred Moll

Title:  

CEO

    Title:  

CEO

LUNA TECHNOLOGIES, INC.       By:  

/s/ Scott A. Graeff

      Name:  

Scott A. Graeff

      Title:  

President

     

SIGNATURE PAGE TO AMENDMENT NO. 1 TO DEVELOPMENT AND SUPPLY AGREEMENT

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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CONFIDENTIAL TREATMENT REQUESTED

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

AMENDMENT NO. 2 TO

DEVELOPMENT AND SUPPLY AGREEMENT

This Amendment No. 2 to Development and Supply Agreement (this “Amendment”) is
entered into as of April 2, 2010, by and between Luna Innovations Incorporated,
a Delaware corporation, together with Luna Technologies, Inc., a Delaware
corporation (acting jointly and severally, individually and collectively,
“Luna”), and Hansen Medical, Inc., a Delaware corporation (“Hansen”).

RECITALS

WHEREAS, Luna and Hansen are parties to that certain Development and Supply
Agreement having an effective date of January 12, 2010 and amended by Amendment
No. 1 to Development and Supply Agreement dated as of February 17, 2010
(collectively, the “Agreement”);

WHEREAS, Luna and Hansen desire to amend Exhibit A and Exhibit B of the
Agreement to clarify certain prototype specifications and to extend the
deadlines for certain milestones.

NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, Luna and Hansen hereby agree to amend the Agreement as follows:

AMENDMENT

1. Definitions. Except as otherwise provided herein, capitalized terms used in
this Amendment shall have the definitions set forth in the Agreement.

2. Amendments to Exhibit A [****]. Exhibit A of the Agreement shall be amended
as follows:

[****]

3. Amendments to Exhibit A and Exhibit B [****].

(a) Exhibit A of the Agreement shall be amended as follows:

(i) In Exhibit A[****]:

“[****]”

shall be replaced with the following sentence:

“[****]”

 

1

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(b) Exhibit B of the Agreement shall be amended as follows:

(i) In Exhibit B[****]:

“[****]”

shall be replaced with the following sentence:

“[****]”

4. Amendments to Exhibit A regarding data interface. Exhibit A of the Agreement
shall be amended as follows:

(a) In Exhibit A[****] containing the following sentence:

“[****]”

shall be replaced with the following:

“[****]”

(b) In Exhibit A[****] containing the following sentence:

“[****]”

shall be replaced with the following:

“[****]”

(c) In Exhibit A[****] containing the following sentence:

“[****]”

shall be replaced with the following:

“[****]”

(d) In Exhibit A[****] containing the following sentence:

“[****]”

shall be replaced with the following:

“[****]”

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

2

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5. Amendments to Exhibit A and Exhibit B regarding milestone deadlines. Exhibit
A and Exhibit B of the Agreement shall be amended as follows:

(a) In Exhibit A[****]:

“[****]”

shall be replaced with the following:

“[****]”

(b) In Exhibit A[****]:

“[****]”

shall be replaced with the following:

“[****]”

(c) In Exhibit A[****]:

“[****]”

shall be replaced with the following:

“[****]”

(d) In Exhibit A[****]:

“[****]”

shall be replaced with the following:

“[****]”

(e) In Exhibit A[****]:

“[****]”

shall be replaced with the following:

“[****]”

(f) In Exhibit B[****]:

“[****]”

shall be replaced with the following:

“[****]”

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

3

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(g) In Exhibit B[****]:

“[****]”

shall be replaced with the following:

“[****]”

(h) In Exhibit B[****]:

“[****]”

shall be replaced with the following:

“[****]”

(i) In Exhibit B[****]:

“[****]”

shall be replaced with the following:

“[****]”

6. Amendments to Exhibit A and Exhibit B regarding [****]. Exhibit A and Exhibit
B of the Agreement shall be amended as follows:

(a) In Exhibit A[****]:

“[****]”

shall be replaced by the following sentence:

“[****]”

(b) In Exhibit B[****]:

“[****]”

shall be replaced with the following language:

“[****]”

(c) For avoidance of doubt[****].

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

4

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7. Amendment to Exhibit A regarding [****]. Exhibit A of the Agreement shall be
amended as follows:

(a) In Exhibit A, [****]:

“[****]”

shall be replaced with the following language:

“[****]”

(b) In Exhibit A, [****]:

“[****]”

shall be replaced with the following language:

“[****]”

(c) In Exhibit A[****]:

“[****]”

shall be deleted in its entirety.

8. Amendment to Exhibit A [****]. Exhibit A of the Agreement shall be amended as
follows:

(a) In Exhibit A[****]:

• [****]

• [****]

(b) In Exhibit A[****]:

“[****]”

shall be replaced with the following language:

“[****]”

(c) In Exhibit A[****]:

“[****]”

shall be replaced with the following language:

“[****]”

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

5

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(d) In Exhibit A, [****]:

“[****]”

shall be replaced with the following language:

“[****]”

(e) In Exhibit A[****]:

“[****]”

shall be replaced with the following language:

“[****]”

(f) In Exhibit A[****]:

“[****]”

shall be replaced with the following language:

“[****]”

9. Terms and Conditions of Agreement. Except as expressly modified hereby, all
terms, conditions and provisions of the Agreement shall continue in full force
and effect.

10. Conflicting Terms. In the event of any inconsistency or conflict between the
Agreement and this Amendment, the terms, conditions and provisions of this
Amendment shall govern and control.

11. Term and Termination. This Amendment shall become effective upon its
execution by each of Luna and Hansen.

12. Entire Agreement. This Amendment and the Agreement constitute the entire and
exclusive agreement between the parties with respect to this subject matter. All
previous discussions and agreements with respect to this subject matter are
superseded by the Agreement and this Amendment. This Amendment may be executed
in one or more counterparts, each of which shall be an original and all of which
taken together shall constitute one and the same instrument.

[Signature Page to Follow]

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

6

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IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed by
their duly authorized representatives as of the date first listed above.

 

LUNA INNOVATIONS INCORPORATED     HANSEN MEDICAL, INC. By:  

/s/ Kent A. Murphy

    By:  

/s/ Fred Moll

Name:  

Kent A. Murphy

    Name:  

Fred Moll

Title:  

CEO

    Title:  

CEO

LUNA TECHNOLOGIES, INC.       By:  

/s/ Scott A. Graeff

      Name:  

Scott A. Graeff

      Title:  

President

     

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

SIGNATURE PAGE TO AMENDMENT NO. 2 TO DEVELOPMENT AND SUPPLY AGREEMENT