Exhibit 10.6

 

[*] = 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 TO LICENSE AGREEMENT AND POTENTIAL Development Agreement

 

This AMENDMENT TO LICENSE AGREEMENT AND POTENTIAL Development Agreement (the
“Development Agreement”) is made and entered into as of December 30, 2015 (the
“Effective Date”) by and between Cardica, Inc., a Delaware corporation having
its principal place of business at 900 Saginaw Drive, Redwood City, CA 94063
(“Cardica”), and Intuitive Surgical Operations, Inc., a Delaware corporation
having its principal place of business at 1266 Kifer Road, Sunnyvale, California
94086 (“IS Ops”) and Intuitive Surgical International, Ltd., a Cayman Islands
company and an indirect and wholly-owned subsidiary of the Intuitive (“ISI”),
collectively as “Intuitive”). Cardica and Intuitive are individually referred to
as a “Party” or collectively as the “Parties”.

 

Whereas, Cardica is engaged in the design and manufacturing of proprietary
stapling devices for surgical procedures;

 

Whereas, Intuitive designs, manufactures, and sells systems, instruments and
accessories for robotic-assisted minimally invasive surgery;

 

Whereas, Cardica and Intuitive are parties to that certain License Agreement,
dated August 16, 2010 (the “License Agreement”), under which Cardica granted to
Intuitive an exclusive license in the Field of Use to intellectual property
rights of Cardica;

 

Whereas, the License Agreement contemplates, inter alia, that the Parties will
enter into a development agreement, pursuant to which Cardica and Intuitive will
co-develop cutting and stapling devices and clip applier devices;

 

Whereas, the Parties now wish to enter into this Development Agreement to set
forth the terms and conditions to evaluate the feasibility of such development
work, to potentially engage in such development work, to amend certain terms and
conditions of the License Agreement, and to provide a mutual release of past
obligations under the License Agreement.

 

Now therefore, in consideration of the mutual promises and agreement set forth
herein, and for other good and valuable considerations, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

1.

Definitions. Capitalized terms used but not defined herein shall have the
meanings set forth 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.  

 

--------------------------------------------------------------------------------

 

 

2.

Extension of Improvement Period under the License Agreement, Feasibility
Evaluation and Mutual Release.

 

2.1     Extension of Improvement Period. The Parties agree to extend the
“Improvement Period” in the License Agreement through August 16, 2018 and hereby
amend the License Agreement accordingly as set forth in Section 8.1 below. As
amended, the Improvement Period includes the entire time period between August
16, 2010 and August 16, 2018.

 

2.2     Feasibility Evaluation. Promptly after the Effective Date, the Parties
shall initiate and collaborate on certain testing activities of Cardica’s
MicroCutter XCHANGE®, in order for Intuitive to evaluate the feasibility of
Cardica’s MicroCutter XCHANGE and decide whether to initiate a Joint Development
Program (“Joint Development Program”) with Cardica to develop a new Reload and
Stapler for use with Intuitive’s Surgical System, as further set forth in
Section 3 (such testing and evaluation, the “Evaluation”). Such Evaluation shall
be completed within the first six (6) months after the Effective Date unless the
Parties otherwise agree in writing (the “Evaluation Period”). During the
Evaluation Period, Cardica shall perform such testing as Intuitive shall
reasonably request that is within the scope of the Evaluation and designed to
evaluate whether Cardica’s MicroCutter XCHANGE will meet Intuitive’s
specifications as specifically set forth in Exhibit A (the “Continuation
Criteria”) and Cardica shall provide Intuitive with all data Intuitive shall
reasonably request. Based on the result of such Evaluation, Intuitive shall
decide whether it wishes to initiate the Joint Development Program by written
notice to Cardica within sixty (60) days after the expiration of the Evaluation
Period. If Intuitive notifies Cardica of its desire to initiate such Joint
Development Program within sixty (60) days after the expiration of the
Evaluation Period, then the Joint Development Program as set forth in Section 3
shall continue. If Intuitive notifies Cardica of its desire not to continue with
such Joint Development Program, or if Intuitive does not provide Cardica with
any notification of its intent within sixty (60) days after the expiration of
the Evaluation Period, then the Joint Development Program as set forth in
Section 3 herein shall not proceed. In the event that the Joint Development
Program does not proceed because the Continuation Criteria have not been met by
the end of the sixty (60) day period after the Evaluation Period, then the
License Agreement shall continue as modified herein (e.g., Extension of the
Improvement Period, the Mutual Release, etc.), but Section 7.3 shall not apply.
In the event that testing during the Evaluation Period satisfies Intuitive that
the MicroCutter XCHANGE is feasible, but Intuitive nevertheless elects not to
proceed with the Joint Development Program, then the License Agreement shall
continue as modified herein (e.g., Extension of the Improvement Period, the
Mutual Release, etc.), and Section 7.3 shall apply.

 

2.3     Payment. In consideration of the extension of the Improvement Period and
the feasibility Evaluation, Intuitive shall pay to Cardica a one-time,
non-refundable and non-creditable payment in the amount of two million dollars
(US$2,000,000) within ten (10) business days after the Effective Date.

 

2.4     Mutual Release In full consideration of and in exchange for the promises
and consideration provided under this Article 2, each of Cardica and Intuitive
hereby fully and unconditionally releases and forever discharges each other from
any and all claims, causes of action, charges, complaints, demands, actions, and
liabilities of any nature whatsoever, known or unknown, suspected or
unsuspected, legal or equitable, that such Party may have against the other
Party prior to and as of the Effective Date. It is further understood and agreed
by the Parties that as a condition of this Development Agreement, Cardica and
Intuitive hereby expressly waive and relinquish any and all claims, rights or
benefits that they may have under California Civil Code Section 1542, which
provides as 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.   
 

--------------------------------------------------------------------------------

 

 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.”

 

In connection with such waiver and relinquishment, the Parties hereby
acknowledge that they or their attorneys may hereafter discover claims or facts
in addition to, or different from, those which they now know or believe to
exist, but that they expressly agree to fully, finally and forever settle and
release any and all claims, known or unknown, suspected or unsuspected, which
exist or may exist on their behalf against Releasees at the time of execution of
this Development Agreement. The Parties further acknowledge, understand and
agree that this representation and commitment is essential to each Party and
that this Development Agreement would not have been entered into were it not for
this representation and commitment. For clarity, the License Agreement (as
amended by this Development Agreement) remains in full force and effect, and
nothing contained herein shall be construed to release, waive or discharge any
Party from any of its future obligations under the License Agreement.

 

3.

Potential Joint Development Program.

 

3.1     Overview. Subject to the terms and conditions of this Development
Agreement, and only upon election by Intuitive as described in Section 2.2,
above, the Parties will conduct a Joint Development Program with the goal of
developing and obtaining regulatory approval for an 8mm Reload using Cardica’s
proprietary technology and the corresponding Stapler (such Reload, the “8mm
Reload”, such Stapler, the “8mm Stapler” and collectively, the “8mm Products”)
for use in the Field of Use with Intuitive’s da Vinci Xi robotic surgical system
or any other of Intuitive’s robotic surgical systems (the “Intuitive Surgical
System”). As between the Parties, Cardica shall be responsible for the design
and development of the 8mm Reload according to the specifications provided by
Intuitive (the “Specifications”), and Intuitive shall be responsible for: (a)
developing the 8mm Stapler that deploys the 8mm Reload in the Intuitive Surgical
System; and (b) obtaining regulatory approval of the 8mm Products for use with
the Intuitive Surgical System, all as set forth in the Development Plan. Each
Party shall conduct the activities assigned to it under the Development Plan in
a professional manner and in compliance with all applicable laws and
regulations.

 

3.2     Development Plan. Within ninety (90) days after Intuitive notifies
Cardica of its desire to initiate the Joint Development Program under Article 2,
the Parties will agree on a development plan (the “Development Plan”) that sets
forth the timeline and details of all development work to be conducted by the
Parties in order to obtain regulatory approval for the 8mm Products for use with
the Intuitive Surgical System. Intuitive shall be responsible for development
work on the 8mm Stapler, and Cardica shall be primarily responsible for
development work on the staple cartridges. The Development Plan shall also
include a budget for the development work on the staple cartridges to be
conducted (the “Development Budget”). From time to time, the Parties may amend
or update the Development Plan by mutual 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.   
 

--------------------------------------------------------------------------------

 

 

3.3     Joint Development Team. In the event Intuitive elects to move forward
under a Development Plan, the Parties shall establish a joint development team
(the “Joint Development Team” or “JDT”) to oversee the Parties’ development work
under this Development Agreement. The JDT shall consist of two (2)
representatives from each Party, and each representative shall have knowledge
and expertise in the development of similar products. The JDT shall coordinate
the Parties’ development activities under the Development Plan, oversee the
implementation of the Development Plan, and provide a forum for and facilitate
communications between the Parties with respect to the development of the 8mm
Products. The JDT shall not have any decision making authority and all decisions
regarding the development of the 8mm Products shall be made by mutual agreement
of the Parties. The JDT shall hold meetings at such times as it elects to do so,
but in no event shall such meetings be held less frequently than once every
quarter. The JDT meetings may be held in person or by audio or video
teleconference. Each Party shall be responsible for all of its own expenses of
participating in the JDT meetings.

 

3.4     Development Costs

 

a)     Intuitive shall be solely responsible for all costs and expenses incurred
in conducting the development work related to the 8mm Stapler (including for any
such work performed by Cardica, at Intuitive’s request).

 

b)     With regard to costs and expenses incurred in conducting the development
work related to the 8mm Reload (“Reload Development Costs”), Intuitive shall
contribute [*] of the Reload Development Costs during the first two and one half
years after the Effective Date (the “Joint Development Period”), up to a maximum
amount not to exceed [*] per year and [*] in total (collectively, the “Cap”).
Within thirty (30) days after the end of each quarter in the Joint Development
Period, each party shall provide the other with documentation setting forth
Reload Development Costs incurred by them during the preceding quarter.
Intuitive will then calculate each Party’s respective share of the Reload
Development Costs and, in the event Cardica incurred more costs than its [*]
share, Intuitive shall pay to Cardica the balance due, subject to the Cap, for
that quarter within thirty (30) days after the receipt of documentation from
Cardica setting forth its Reload Development Costs. In the event that Intuitive
incurred more Reload Development Costs than its [*] share in a given quarter,
then any amount incurred by Intuitive over and above its share shall be applied
as credit to subsequent quarters. For avoidance of doubt, Intuitive shall not be
credited for any Reload Development Costs for Reload Development Work that
Cardica has not authorized. In the event of a dispute between the parties with
regard to Development Costs incurred by either party, the parties shall proceed
as set forth above with respect to the undisputed amount, and any disputed
amounts shall be resolved pursuant to the Article 10 of the License Agreement
(Dispute Resolution).

 

 

[*] = 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.   
 

--------------------------------------------------------------------------------

 

 

c)     Development Costs shall include parties’ internal (calculated at the FTE
rate set forth below) and out of pocket costs and expenses incurred to conduct
the development work under the Development Plan. For the purpose of this
Development Agreement, (i) “FTE Rate” means the cost of an FTE performing
development work under the Development Plan, which rate shall be calculated as
(a) for an employee, [*] of that employee’s annual salary, up to a maximum of
[*] per FTE per year, or (b) for a contractor, that contractor’s hourly rate of
pay, up to a maximum of [*] per hour; and (ii) “FTE” means the equivalent of a
full-time individual’s work, at [*] hours per year, for a twelve (12)-month
period, performing development work under the Development Plan. For clarity, the
Parties intend the FTE to be a unit of measurement used to calculate the amount
of time dedicated to the performance of this Development Agreement. One FTE may
constitute work performed by an individual whose time is dedicated solely to
this Development Agreement or may be comprised of the efforts of several
individuals, each of whom dedicates only part of his or her time to work under
this Development Agreement.

 

3.5     Diligence. Each Party shall use Commercially Reasonable Efforts to
conduct the development work assigned to such Party under the Development Plan.
In particular, Intuitive shall use Commercially Reasonable Efforts to
incorporate the 8mm Products into the Intuitive Surgical System and to obtain
regulatory approval of the 8mm Products for use with the Intuitive Surgical
System. Without limiting the foregoing, Intuitive shall maintain an active and
ongoing development program for the 8mm Products, and for clarity, Intuitive
shall not be deemed to be maintaining an active and ongoing development program
for the 8 mm Product if Intuitive discontinues the development and/or
commercialization activities with respect to the 8mm Product for an aggregate
six (6) month period within any consecutive twelve (12) month period.

 

3.6     Records. Each Party shall keep complete and accurate records of the
activities conducted by it under the Development Plan. The Parties shall share
the progress of the development program regularly through the JPT meetings, and
each Party shall, at the other Party’s reasonable request, provide the other
Party access to such records in furtherance of the development program and/or to
verify such Party’s compliance with this Agreement.

 

4.

Commercialization; Royalty.

 

4.1     Diligence. Intuitive shall use Commercially Reasonable Efforts to launch
and commercialize the 8mm Products after regulatory approval has been obtained.

 

4.2     Royalty. Intuitive shall pay royalties to Cardica on the sale of the 8mm
Products under the License Agreement, provided however that Section 4.2 of the
License Agreement shall be amended as provided in Section 8.3 below.

 

5.

Special Tooling.

 

5.1     Tooling Costs. The Parties acknowledge that the development and
manufacture of the 8mm Reloads require certain special tooling (“Tooling”) and
Intuitive shall pay for the cost of such Tooling for three (3) sizes of 8mm
Reload (white, blue and green) up to a total of [*]. Cardica shall provide a
request for the planned purchase of such Tooling to Intuitive and Intuitive
shall purchase such Tooling as soon as practicable but in no event later than
thirty (30) days after receiving such request from Cardica. Intuitive shall
retain title to the Tooling, which will be located in Cardica’s third party
vendor, as agreed by Intuitive, until such time as [*], or as otherwise agreed
to by the Parties, at which time Intuitive shall take possession of the Tooling.

 

 

[*] = 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.   
 

--------------------------------------------------------------------------------

 

 

5.2     Use; Maintenance. Cardica shall use the Tooling for the development and
manufacture of the 8mm Reloads under this Development Agreement and for no other
purpose absent the prior written consent of Intuitive. Intuitive shall be
responsible for the maintenance and repair cost for the Tooling.

 

6.

Manufacture and Supply.

 

6.1     Initial Supply; Purchase Order. Cardica will manufacture and supply up
to [*] 8mm Reloads to Intuitive for commercial use. Intuitive shall submit
purchase order(s) for the 8mm Reloads to Cardica, specifying the quantity
ordered and requested delivery date (no earlier than thirty (30) days after the
date of the purchase order). All purchase orders are subject to reasonable
acceptance by Cardica. The term and conditions of this Development Agreement
shall be controlling over any conflicting terms and conditions stated in any
purchase order or any other document submitted by a Party to the other Party
with respect thereto (unless the Parties shall have mutually agreed to the
contrary in writing with respect to a particular instance).

 

6.2     Delivery; Inspection. If Cardica accepts a purchase order, then Cardica
shall manufacture and supply the 8mm Reloads in accordance with the purchase
order. The delivery of the 8mm Reloads shall take place EXW at Cardica’s (or its
third party manufacturer’s) facility (Incoterm 2010) and Intuitive shall
contract and arrange for shipping and insurance from such facility. Intuitive
shall promptly inspect the 8mm Reloads upon receipt and shall notify Cardica if
any 8mm Reload does not conform to the applicable 8mm Reload specifications
within thirty (30) days after receipt. If Cardica agrees that the 8mm Reload
supplied is non-conforming product, then Cardica shall promptly replace such
non-conforming product with conforming product at no additional cost to
Intuitive.

 

6.3     Transfer Price; Payment. Intuitive shall pay for the 8mm Reloads
supplied by Cardica at a transfer price of [*] per Reload. Cardica shall invoice
Intuitive for the transfer price upon delivery and Intuitive shall pay the
invoiced transfer price within thirty (30) days after the receipt of the
invoice.

 

6.4     Manufacture by Intuitive; Technology Transfer. After Intuitive has
purchased up to [*] 8mm Reloads from Cardica, Intuitive will manufacture and
supply the 8mm Reloads itself (or through its own contract manufacturer). Upon
Intuitive’s reasonable request, Cardica shall provide Intuitive (or its third
party contract manufacturer) reasonable technical assistance to transfer the
manufacturing process for the 8mm Reloads. Such technology transfer shall
include reasonable access to Cardica’s technical personnel familiar with the
manufacturing process. Intuitive shall be responsible for and shall reimburse
Cardica for the cost and expenses incurred by Cardica for providing such
technical assistance, including both internal personal cost (at the FTE Rate)
and out-of-pocket costs, except that the first [*] hours of FTE time shall be
provided at no cost to Intuitive.

 

 

[*] = 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.   
 

--------------------------------------------------------------------------------

 

 

7.

Term Termination.

 

7.1     Term. This Development Agreement shall become effective on the Effective
Date and, unless earlier terminated pursuant to Section 7.2, shall remain in
effect until the expiration of Intuitive’s royalty payment obligations under
Section 4.2.

 

7.2     Termination. The Agreement may be terminated: (a) in the event testing
during the Evaluation Period does not establish that Cardica’s MicroCutter
XCHANGE will meet Intuitive’s specifications, (b) in the event testing during
the Evaluation Period establishes that Cardica’s MicroCutter XCHANGE meets the
Continuation Criteria, but Intuitive decides not to initiate the Joint
Development Program or does not provide notification thereof to Cardica within
sixty (60) days after the Evaluation Period; (c) upon written notification by
either Party to the other Party for such other Party’s material breach of its
obligations, representations and/or warranties in this Agreement, unless such
other Party cures such breach within such thirty (30) day period; and/or (d)
upon the termination of the License Agreement.

 

7.3     Effect of Early Termination. Upon any earlier termination (but not
expiration) of this Development Agreement under Section 7.2(b) or a material
breach by Intuitive under Section 7.2(c) (but not upon termination for a
material breach by Cardica under Section 7.2(c), upon termination under Section
7.2(a) or upon termination under Section 7.2(d)):

 

a)     The licenses granted by Cardica to Intuitive under the License Agreement
shall become non-exclusive, and the License Agreement shall be amended as set
forth in Section 8.4.

 

b)     Cardica shall have the right to grant additional licenses under the
Licensed IP. If Cardica grants any additional license to a third party for such
third party to develop and commercialize any staple product covered by Licensed
IP in the Field of Use and receives any Licensing Revenue, then [*] to the
extent [*]. As used herein, “[*]” means [*].

 

7.4     Survival. Expiration or termination of this Development Agreement shall
not affect any rights or obligations of either Party under this Development
Agreement that have accrued before the date of expiration or termination. Except
as expressly set forth herein, expiration or termination of this Development
Agreement shall not affect the License Agreement, which shall continue in full
force and effect (as amended by this Development Agreement). Without limiting
the foregoing, the following provisions shall survive any expiration or
termination of this Development Agreement: Sections 2.1, 2.4, 5, 7.4, 8.1, 8.2,
8.3, 8.4, and 9. In addition, the following provisions shall survive the earlier
termination (but not the expiration) of this Development Agreement: Sections,
7.3 and 8.4.

 

8.

Amendment to Licensed Agreement.

 

8.1     Improvement Period. Section 1(j) of the License Agreement is hereby
deleted and replaced in its entirety with the following:

 

“(j)     “Improvement Period” shall mean the period of time beginning on the
Agreement Date and expiring on August 16, 2018.”

 

 

[*] = 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.   
 

--------------------------------------------------------------------------------

 

 

8.2     Improvement Period Patent Rights. Section 1(k) of the License Agreement
is hereby deleted and replaced in its entirety with the following:

 

“(k)     “Improvement Period Patent Rights” shall mean: (a) any Patent Rights
conceived or applied for by Cardica between August 16, 2010 and August 16, 2013;
and (b) any Patent Rights conceived or applied for by Cardica in the Licensed
Field between August 17, 2013 and August 16, 2018.”

 

8.3     Royalty. Section 4.2 of the License Agreement is hereby deleted and
replaced in its entirety with the following:

 

“4.2.     8mm Products. Upon first commercial sale by Intuitive or an Affiliate
or Sublicensee of an 8mm Reload, and for a period not to exceed [*] years from
such first commercial sale, Intuitive or an Affiliate shall pay Cardica a
royalty of [*] per 8mm Reload; provided however that, Intuitive shall have the
right to deduct [*] of such royalty (i.e., [*] per 8mm Reload) until: the total
development cost reimbursement paid by Intuitive to Cardica under Section 3.4 of
that certain Development Agreement between the Parties dated December [__],
2015, minus the total deductions made by Intuitive under this Section 4.2 equals
[*] of the total Cardica Development Costs incurred throughout the term of such
Development Agreement. However, Intuitive is only obligated to pay Cardica any
such royalty in a jurisdiction in which at least one valid granted patent owned
or Controlled by Cardica has one or more claims that (i) include one or more
novel features associated with such 8mm Reload and/or corresponding anvil, and
(ii) would be infringed absent a license from Cardica by the use, sale,
importation, or manufacture of any such 8mm Reload.”

 

8.4     Amendment upon Termination. In addition, upon earlier termination (but
not expiration) of this Development Agreement under Section 7.2(b) or a material
breach by Intuitive under Section 7.2(c) (but not upon termination for a
material breach by Cardica under Section 7.2(c), upon termination under Section
7.2(a) or upon termination under Section 7.2(d)):

 

a)     The first sentence in Section 2.1(a) of the License Agreement shall be
deleted and replaced with the following:

 

“Cardica hereby grants to Intuitive a worldwide, perpetual, irrevocable,
non-exclusive, non-sublicenseable (except for any sublicense(s) granted by
Intuitive prior to the effective date of such termination and to Intuitive
Affiliates) license under the Licensed IP to practice such Licensed IP in the
Field of Use, such non-exclusive license including but not limited to the right
to make, have made, use, offer for sale, sell, market, import, export,
distribute, and Commercialize, in any manner whatsoever, the Licensed IP in the
Field of Use.”

 

b)     Sections 2.1(c), 2.1(d), 2.1(g), 2.2(b) and Section 2.3 are hereby
deleted in their entirety.

 

c)     Section 5 of the License Agreement shall be deleted and replaced in its
entirety 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.   
 

--------------------------------------------------------------------------------

 

 

“5.     Enforcement and Defense of Licensed IP.

 

5.1.     Rights to Enforce. Cardica shall have the sole right but not the
obligation to prosecute or seek to end at its own expense any Infringement of
the Licensed IP.

 

5.2.     Defense of Licensed IP. If Intuitive receives notice by counterclaim,
declaratory judgment action or otherwise, alleging the invalidity,
unenforceability, non-infringement, misuse, or misappropriation with respect to
any Licensed IP, it shall bring such fact to the attention of Cardica. Cardica
shall have the sole right but not the obligation to defend such action at its
own cost and expense, and Intuitive agrees to cooperate with Cardica in such
defense.”

 

5.3.     Amount Recovered. Cardica shall retain any and all amounts recovered
for the enforcement or defense of the Licensed IP.

 

d)     Section 6 of the License Agreement shall be deleted and replaced in its
entirety with the following:

 

“6.     Prosecution of Patent Rights.

 

6.1     Prosecution and Maintenance of Patent Rights. As between the Parties,
Cardica shall have the sole right, but not the obligation to prepare, file,
prosecute and maintain any Licensed Patent Rights, at its own cost and expense.”

 

e)     Sections 9.1, 9.2 and 9.3 are hereby deleted in their entirety.

 

f)     The last sentence in Section 9.4 shall be deleted and replaced with the
following:

 

“This paragraph shall not apply to any violation or infringement by a Party or
its Affiliates of the Intellectual Property of the other Party or its
Affiliates, or to any breach of Section 7.”

 

9.

Miscellaneous.

 

9.1     Confidentiality. All information disclosed by a Party to the other Party
under this Development Agreement shall be deemed disclosed under the License
Agreement and subject to the confidentiality obligations set forth therein.

 

9.2     Dispute Resolution. Any dispute or disagreement between the Parties
under this Development Agreement shall be resolved in accordance with the
dispute resolution mechanism set forth in the License Agreement.

 

9.3     Entire Agreement; Amendment. This Development Agreement, together with
the License Agreement (as amended), constitute the entire agreement between the
Parties with respect to the subject matter hereof and thereof, and supersede all
prior agreements and understandings, whether written or oral, between the
Parties, or any of the Parties, in connection with such subject matter. This
Development Agreement may be amended, modified, or supplemented only by a
written instrument executed by both Parties.

 

 

[*] = 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.   
 

--------------------------------------------------------------------------------

 

 

9.4     No Waiver. No waiver of any provision of this Development Agreement, or
consent to any departure from the terms of this Development Agreement, shall be
effective unless the same shall be in writing and signed by the Party waiving or
consenting thereto. No failure on the part of any Party to exercise, and no
delay in exercising, any right or remedy under this Development Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or remedy by such Party preclude any other or further exercise
thereof or the exercise of any other right or remedy. The waiver by any Party to
this Development Agreement of a breach of any provision of this Development
Agreement shall not operate as a waiver of any subsequent breach. All rights and
remedies under this Development Agreement are cumulative and are in addition to,
and not exclusive of, any other rights and remedies provided by law.

 

9.5     Severability. If any provision of this Development Agreement is found
invalid or unenforceable by an arbitrator or court of competent jurisdiction,
such provision shall be enforced to the maximum extent permissible by law and
the other provisions of this Development Agreement shall remain in full force
and effect.

 

9.6     Relationship of the Parties. This Development Agreement shall not
constitute either Party the agent or legal representative of the other Party for
any purpose whatsoever, and neither Party shall hold itself out as an agent of
the other Party. This Development Agreement creates no relationship of joint
venturers, partners, associates, employment, or principal and agent between the
Parties, and both Parties are acting as independent contractors. Neither Cardica
nor Intuitive is granted in this Development Agreement any right or authority
to, and shall not attempt to, assume or create any obligation or responsibility
for or on behalf of the other. Neither Cardica nor Intuitive shall have any
authority to bind the other to any contract, whether of employment or otherwise,
and Cardica and Intuitive shall bear all of their respective expenses for their
operations, including the compensation of their employees and the maintenance of
their offices and service facilities. Cardica and Intuitive shall each be solely
responsible for their own employees and salespeople and for their acts and the
things done by them.

 

9.7     No Election of Remedies. Except as otherwise specifically provided in
this Development Agreement, the rights and remedies accorded in this Development
Agreement to Cardica and Intuitive are cumulative and in addition to those
provided by law, and may be exercised separately, concurrently, or successively.

 

9.8     Costs and Expenses. Except as expressly stated otherwise in this
Development Agreement, each Party shall bear its own costs and expenses of
performance of this Development Agreement.

 

9.9     Force Majeure. No Party shall be liable for failure to perform any of
its obligations under this Development Agreement when such failure is due to
fire, flood, strikes, labor troubles or other industrial disturbances, legal
restriction, riot, insurrection, or any other cause beyond the reasonable
ability of the Party affected thereby to control, and without such Party’s fault
or negligence (“Force Majeure”), provided that any Party claiming the existence
of Force Majeure shall give notice to the other Party not more than seven (7)
days after the commencement of the event of Force Majeure, and shall use prompt
and diligent efforts to mitigate the effects of Force Majeure.

 

 

[*] = 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.   
 

--------------------------------------------------------------------------------

 

 

9.10     Notice. All notices, requests, demands, claims, and other
communications under this Development Agreement shall be delivered in accordance
with the requirements set forth in the License Agreement.

 

9.11     Benefits and Burdens; Assignments. This Development Agreement shall be
binding upon and shall inure to the benefit of each of the Parties as well as
their respective legal representatives, successors, and permitted assigns. This
Development Agreement shall not be assignable or transferable, by operation of
law or otherwise, by either Party without the other Party’s written consent,
which consent shall not be unreasonably withheld, conditioned, or delayed, and
with the exceptions that either Party or its permitted assignee(s) may assign
this Development Agreement together with any permitted assignment of the License
Agreement (i) in whole or in part to an Affiliate of the assigning Party so long
as the assigning Party agrees in writing to remain liable for the Affiliate’s
performance of its obligations under this Agreement; or (ii) in whole to a party
who acquires all or substantially all of the assets of the assigning Party or of
the assets of the business of the assigning Party to which this Agreement
relates; or (iii) in whole to any successor to the assigning Party by merger or
consolidations; provided in each case the assignee agrees in writing to assume
the assigning Party’s obligations under this Agreement. Any attempt to assign or
transfer this Development Agreement or any portion thereof in violation of this
Section shall be void.

 

9.12     Interpretation. When a reference is made in this Development Agreement
to Sections or Exhibits, such reference shall be to a Section of or Exhibit to
this Development Agreement unless otherwise indicated. References to Sections
include subsections, which are part of the related Section (e.g., a section
numbered “Section 5.1(a)” would be part of “Section 5.1”, and references to
“Section 5.1” would also refer to material contained in the subsection described
as “Section 5.1(a)”). The recitals to this Development Agreement constitute an
integral part of this Development Agreement. Headings contained in this
Development Agreement are for convenience of reference only and shall not affect
in any way the meaning or interpretation of this Development Agreement. The
language used in this Development Agreement shall be deemed to be the language
chosen by the Parties to this Development Agreement to express their mutual
intent, and no rule of strict construction shall be applied against any Party
(e.g., ambiguities, if any, in this Development Agreement shall not be construed
by default against either Party simply because one or the other Party is deemed
to have drafted the provision at issue). Whenever the context may require, any
pronouns used in this Development Agreement shall include the corresponding
masculine, feminine, or neuter forms, and the singular form of nouns and
pronouns shall include the plural, and vice versa. Any reference to any federal,
state, local, or foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise. Whenever the words “include,” “includes” or “including” are used in
this Development Agreement, they shall be deemed to be followed by the words
“but not limited to”. No summary of this Development Agreement prepared by any
Party shall affect the meaning or interpretation of this Development Agreement.
All references to dollars in this Development Agreement shall be to United
States Dollars.

 

 

[*] = 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.   
 

--------------------------------------------------------------------------------

 

 

9.13     Public Announcement. Neither Party or any of its Affiliates or
Representatives shall issue any press release or make any public announcement or
disclosure with respect to this Development Agreement or the transactions
contemplated hereby, including the mutual release under the License Agreement,
without the prior written consent of the other Party, which will not be
unreasonably withheld or delayed, provided that in the event that a Party shall
have previously approved the form of a press release or other public disclosure,
the other Party shall be free to continue to disclose substantially the same
information in additional public disclosures without having to obtain such
Party’s consent thereto. Additionally, Intuitive acknowledges that as a public
company, Cardica is required by law to file or disclose certain information with
certain agencies or authorities. In connection herewith, Intuitive acknowledges
that Cardica will be required to file this Development Agreement with the U.S.
Securities and Exchange Commission (“SEC”) as a “material agreement” of Cardica,
but Cardica shall do so with respect to this Development Agreement under a
request for confidential treatment which shall be submitted to Intuitive for its
approval (not to be unreasonably withheld or delayed) prior to submission. Once
information is so disclosed or filed and is thereby made publicly available,
Cardica shall be free to disclose substantially the same information in
subsequent public filings or in public disclosures without having to first
obtain Intuitive’s prior written approval.

 

9.14     Governing Law and Jurisdiction. This Development Agreement and any
dispute arising from the performance or breach hereof shall be governed by,
construed, and enforced in accordance with the laws of the State of California
without regard to conflict of laws provisions.

 

9.15     Counterparts and Facsimile Signatures. This Development Agreement may
be executed in two or more counterparts, all of which shall be considered one
and the same agreement and shall become effective when two or more counterparts
have been signed by each Party and delivered to the other Party, it being
understood that all Parties need not sign the same counterpart. Facsimile
execution and delivery of this Development Agreement by any of the Parties shall
be legal, valid, and binding execution and delivery of such document for all
purposes.

 

[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.   
 

--------------------------------------------------------------------------------

 

 

In Witness Whereof, the Parties have executed this Development Agreement in
duplicate originals by their proper officers as of the Effective Date.

 

 

CARDICA, INC.     INTUITIVE SURGICAL OPERATIONS, INC.  

 

 

 

 

 

By: /s/ Julian Nikolchev

 

 

By: /s/ Bob DeSantis

 

         

Name: Julian Nikolchev

 

 

Name: Bob DeSantis

 

         

Title: President and CEO

 

 

Title: Sr. VP Instrument Engineering

 

 

 

[*] = 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.   
 

--------------------------------------------------------------------------------

 

    

EXHIBIT A

CONTINUATION CRITERIA

  

[*]

 

 

[*] = 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.