EXHIBIT 10.4

NORTHSTAR NEUROSCIENCE, INC.

INDEMNIFICATION AGREEMENT

This Indemnification Agreement (the “Agreement”) is entered into on January 1,
2009, between Northstar Neuroscience, Inc., a Washington corporation (the
“Company”), and Brian Dow, an officer of the Company and/or one or more of its
subsidiaries (“Indemnitee”), for good and valuable consideration as set forth
below.

RECITALS

A. The Company recognizes the importance, and increasing difficulty, of
obtaining adequate liability insurance coverage for its directors, officers,
employees, agents and fiduciaries.

B. The Company further recognizes that, at the same time as the availability and
coverage of such insurance has become more limited, litigation against corporate
directors, officers, employees, agents and fiduciaries has continued to
increase.

C. Article 5 of the Company’s Amended and Restated Articles of Incorporation
(the “Articles”) provides for indemnification of the Company’s directors and
officers to the full extent authorized by the Washington Business Corporation
Act (the “Statute”), and that such provisions are not exclusive and may be
supplemented by agreements between the Company and its officers and directors.

D. The Company desires to retain and attract the services of highly qualified
individuals, such as Indemnitee, to serve the Company and, in that connection,
also desires to provide contractually for indemnification of, and advancement of
expenses to, Indemnitee to the full extent authorized by law.

AGREEMENT

1. Indemnification.

a. Scope. The Company agrees to hold harmless and indemnify Indemnitee against
any Damages (as defined in Section 1(c)) incurred by Indemnitee with respect to
any Proceeding (as defined in Section 1(d)) to which Indemnitee is or is
threatened to be made a party or in which Indemnitee is otherwise involved
(including, but not limited to, as a witness), to the full extent authorized by
law, without regard to the limitations in RCW 23B.08.510 through 23B.08.550, and
23B.08.560(2), except that Indemnitee shall have no right to indemnification on
account of: (i) acts or omissions of Indemnitee that have been finally adjudged
(by a court having proper jurisdiction, and after all rights of appeal have been
exhausted or lapsed, herein “Finally Adjudged”) to be intentional misconduct or
a knowing violation of law; (ii) conduct of Indemnitee that has been Finally
Adjudged to be in violation of RCW 23B.08.310; (iii) any transaction with
respect to which it has been Finally Adjudged that

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Indemnitee personally received a benefit in money, property or services to which
Indemnitee was not legally entitled; or (iv) any suit in which it is Finally
Adjudged that Indemnitee is liable for an accounting of profits made from the
purchase or sale by Indemnitee of securities of the Company in violation of the
provisions of Section 16(b) of the Securities Exchange Act of 1934 and
amendments thereto.

b. Changes to Indemnification Right. Indemnitee’s right to be indemnified to the
full extent authorized by law shall include the benefits of any change, after
the date of this Agreement, in the Statute or other applicable law regarding the
right of a Washington corporation to indemnify directors or officers, to the
extent that it would expand Indemnitee’s rights hereunder. Any such change that
would narrow or interfere with Indemnitee’s rights hereunder shall not apply to,
limit, or affect the interpretation of, this Agreement, unless and then only to
the extent that it has been Finally Adjudged that its application hereto does
not constitute an unconstitutional impairment of Indemnitee’s contract rights or
otherwise violate applicable law.

c. Indemnified Amounts. If Indemnitee is or is threatened to be made a party to,
or is otherwise involved (including, but not limited to, as a witness) in, any
Proceeding, the Company shall hold harmless and indemnify Indemnitee from and
against any and all losses, claims, damages, costs, expenses and liabilities
incurred in connection with investigating, defending, being a witness in,
participating in or otherwise being involved in (including on appeal), or
preparing to defend, be a witness in, participate in or otherwise be involved in
(including on appeal), such Proceeding, including but not limited to attorneys’
fees, judgments, fines, penalties, ERISA excise taxes, amounts paid in
settlement, any federal, state, local or foreign taxes imposed on Indemnitee as
a result of the actual or deemed receipt of any payments pursuant to this
Agreement, and other expenses (collectively, “Damages”), including all interest,
assessments or charges paid or payable in connection with or in respect of such
Damages.

d. Definition of Proceeding. For purposes of this Agreement, “Proceeding” shall
mean any actual, pending, threatened or completed action, suit, claim,
investigation, hearing or proceeding (whether civil, criminal, administrative or
investigative, and whether formal or informal) in which Indemnitee is, has been
or becomes involved, or regarding which Indemnitee is threatened to be made a
named defendant or respondent, based in whole or in part on or arising out of
the fact that Indemnitee is or was a director, officer, member of a board
committee, employee or agent of the Company and/or any of its subsidiaries or
that, being or having been such a director, officer, member of a board
committee, employee or agent, Indemnitee is or was serving at the request of the
Company as a director, officer, partner, employee, trustee or agent of another
corporation or of a foreign or domestic corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise (each, a “Related Company”),
whether the basis of such action, suit, claim, investigation, hearing or
proceeding is alleged action or omission by Indemnitee in an official capacity
as a director, officer, committee member, partner, employee, trustee or agent or
in any other capacity while serving as a director, officer, committee member,
partner, employee, trustee or agent. “Proceeding” shall not, however, include
any action, suit, claim, investigation, hearing or proceeding instituted by or
at the direction of Indemnitee unless pursuant to an Enforcement Action (as
defined in Section 3(a)) or its institution has been authorized by the Company’s
Board of Directors (the “Board”).

 

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e. Notifications.

i. Promptly after receipt by Indemnitee of notice of the commencement (including
a threatened assertion or commencement) of any Proceeding, Indemnitee will, if
it is reasonably foreseeable that a claim in respect thereof will be made
against the Company under this Agreement, notify the Chair of the Board’s Audit
Committee of the commencement thereof (which notice shall be in the form of
Exhibit A hereto) (the “Indemnification Notice”). A failure to notify the
Company in accordance with this subsection (e)(i) will not, however, relieve the
Company from any liability to Indemnitee under this Agreement unless (and then
only to the extent that) such failure is Finally Adjudged to have materially
prejudiced the Company’s ability to defend the Proceeding.

ii. At the same time, or from time to time thereafter, Indemnitee may further
notify the Chair of the Board’s Audit Committee, by delivery of a supplemental
Indemnification Notice (or by checking the second box and providing the
corresponding information on the initial Indemnification Notice), of any
Proceeding for which indemnification is being sought under this Agreement.

f. Determination of Entitlement.

i. To the extent Indemnitee has been wholly successful, on the merits or
otherwise, in the defense of any Proceeding, the Company shall indemnify
Indemnitee against all expenses incurred by Indemnitee in connection with the
Proceeding, within ten (10) days after receipt of an Indemnification Notice
delivered pursuant to subsection (e)(ii).

ii. In the event that subsection (f)(i) above is inapplicable, or does not apply
to the entire Proceeding, the Company shall indemnify Indemnitee within thirty
(30) days after receipt of an Indemnification Notice delivered pursuant to
subsection (e)(ii) unless during such thirty (30) day period the Audit Committee
of the Board delivers to Indemnitee a written notice contesting Indemnitee’s
indemnification claim (the “Contest Notice”), which Contest Notice shall state
with particularity the reasons for the decision to challenge Indemnitee’s
indemnification claim and the evidence the Company would present in any forum in
which Indemnitee might seek review of such decision. The Company’s failure to
deliver a Contest Notice within thirty (30) days after the Company’s receipt of
an Indemnification Notice pursuant to subsection (e)(ii) shall obligate the
Company unconditionally to indemnify Indemnitee to the extent requested in the
Indemnification Notice.

iii. At any time following receipt of a Contest Notice, Indemnitee shall be
entitled to select a forum for the review of, and in which the Company will
defend, the Contest Notice and the Company’s decision to challenge Indemnitee’s
indemnification claim. Such selection shall be made from among the following
alternatives, by delivering a written notice to the Chair of the Board’s Audit
Committee indicating Indemnitee’s selection of forum:

(a) A quorum of the Board consisting of directors who are not parties to the
Proceeding for which indemnification is being sought;

 

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(b) Special Legal Counsel (as defined in subsection (f)(vii) below); or

(c) A panel of three independent arbitrators, one of whom is selected by the
Company, another of whom is selected by Indemnitee and the last of whom is
selected by the first two arbitrators so selected,

provided, that nothing in this Section 1(f) shall prevent Indemnitee at any time
from bringing suit against the Company to recover the amount of the
indemnification claim (whether or not Indemnitee has otherwise exhausted its
contractual remedies hereunder). In addition, any determination by a forum
selected by Indemnitee that Indemnitee is not entitled to indemnification, or
any failure to make the payments requested in the Indemnification Notice, shall
be subject to judicial review by any court of competent jurisdiction, as
described in Section 3.

iv. In any forum in which the Company defends its Contest Notice and its
decision to challenge Indemnitee’s indemnification claim under this
Section 1(f), the presumptions, burdens and standard of review set forth in
Section 3(c) shall apply and are incorporated into this Section 1(f) by
reference, except as otherwise expressly provided in Section 3(c).

v. As soon as practicable, and in no event later than fifteen (15) days after
the forum has been selected pursuant to subsection (f)(iii) above, the Company
shall, at its own expense, submit the defense of its Contest Notice and the
question of Indemnitee’s right to indemnification to the selected forum.

vi. The forum selected shall render its decision concerning the validity of the
Contest Notice and the Company’s decision to deny Indemnitee’s indemnification
claim within thirty (30) days after the forum has been selected in accordance
with subsection (f)(iii).

vii. For the purposes of this Agreement, “Special Legal Counsel” shall mean an
attorney or firm of attorneys, selected by Indemnitee and approved by the
Company (which approval shall not be unreasonably withheld), who must not have
performed other services for the Company or Indemnitee within the last three
years.

2. Expense Advances.

a. Generally. The right to indemnification conferred by Section 1 shall include
the right to have the Company pay Indemnitee’s attorneys’ fees and other
expenses, including but not limited to out of pocket costs and disbursements,
incurred in connection with any Proceeding, or in connection with bringing,
defending and/or pursuing an Enforcement Action (as defined in Section 3(a)), as
such expenses are incurred and in advance of the final disposition of such
Proceeding or Enforcement Action (such entitlement is referred to hereinafter as
an “Expense Advance”).

 

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b. Undertaking. The Company’s obligation to provide an Expense Advance is
subject only to the following condition: if the Proceeding arose in connection
with Indemnitee’s service as a director and/or officer of the Company or member
of a committee of the Board (and not in any other capacity in which Indemnitee
rendered service, including but not limited to service to any Related Company),
then Indemnitee or his or her representative must have executed and delivered to
the Chair of the Board’s Audit Committee an undertaking (in the form of Exhibit
B hereto) (the “Statement of Undertaking”) to repay all Expense Advances if and
to the extent that it may be Finally Adjudged that Indemnitee is not entitled to
be indemnified for such Expense Advance under one or more of clauses (i) through
(iv) of the first sentence of Section 1(a). The Statement of Undertaking need
not be secured and shall be accepted by the Company without reference to
Indemnitee’s financial ability to make repayment. No interest shall be charged
on any obligation to reimburse the Company for any Expense Advance.

c. Service as Witness. Notwithstanding any other provision of this Agreement,
the Company’s obligation to indemnify, or provide Expense Advances under
Section 2, to Indemnitee in connection with Indemnitee’s appearance as a witness
in a Proceeding at a time when Indemnitee has not been made a named defendant or
respondent to the Proceeding shall be absolute and unconditional, and not
subject to any of the limitations on, or conditions to, Indemnitee’s right to
indemnification or to receive an Expense Advance otherwise contained in this
Agreement.

3. Procedures for Enforcement.

a. Enforcement. If a claim for indemnification made by Indemnitee hereunder is
not paid in full (whether or not the provisions of Section 1(f) have been
complied with, or completed), or a claim for an Expense Advance made by
Indemnitee hereunder is not paid in full within twenty (20) days from delivery
of a Statement of Undertaking to the Chair of the Board’s Audit Committee,
Indemnitee may, but need not, at any time thereafter bring suit against the
Company to recover the unpaid amount of the claim (an “Enforcement Action”).

b. Required Indemnification. The court hearing the Enforcement Action shall
order the Company to provide indemnification or to advance expenses to
Indemnitee to the full extent sought in the Enforcement Action if it determines
that (i) the Enforcement Action is brought by Indemnitee to enforce the
Company’s obligation under Section 1(f)(ii) unconditionally to indemnify
Indemnitee to the extent requested in the Indemnification Notice where the
Company has failed timely to deliver a Contest Notice, or (ii) the Company
failed to prove by clear and convincing evidence that Indemnitee is not entitled
to indemnification based on one or more of clauses (i) through (iv) of the first
sentence of Section 1(a).

c. Presumptions, Burdens and Standard of Review in Enforcement Action or Company
Determination. In any Enforcement Action (and, except as otherwise expressly
provided in this Section 3(c), in any review of a Contest Notice by a forum
described in Section 1(f)) the following presumptions (and limitations on
presumptions), burdens and standard of review shall apply:

i. The Company shall conclusively be presumed to have entered into this
Agreement and assumed the obligations imposed hereunder in order to induce
Indemnitee to serve or to continue to serve as an director and/or officer of the
Company and/or one or more of its subsidiaries;

 

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ii. This Agreement shall conclusively be presumed to be valid and Article 5 of
the Articles shall conclusively be presumed to be effective to waive all of the
limitations in RCW 23B.08.510 through RCW 23B.08.550, and RCW 23B.08.560(2);

iii. Submission of an Indemnification Notice in accordance with Section 1(e)(ii)
or a Statement of Undertaking to the Company shall create a presumption that
Indemnitee is entitled to indemnification or an Expense Advance hereunder, and
thereafter the Company shall have the burden of proving by clear and convincing
evidence (sufficient to rebut the foregoing presumption) that Indemnitee is not
entitled to indemnification based on one or more of clauses (i) through (iv) of
the first sentence of Section 1(a);

iv. Indemnitee may establish a conclusive presumption of any objective fact
related to an event or occurrence by delivering to the Company a declaration
made under penalty of perjury that such fact is true, provided, that no such
presumption may be established with respect to the ultimate conclusions set
forth in any of clauses (i) through (iv) of the first sentence of Section 1(a);

v. If Indemnitee is or was serving as a director, officer, employee, trustee or
agent of a corporation of which a majority of the shares entitled to vote in the
election of its directors is held by the Company or in an executive or
management capacity in a partnership, joint venture, trust or other enterprise
of which the Company or a wholly-owned subsidiary of the Company is a general
partner or has a majority ownership, then such corporation, partnership, joint
venture, trust or enterprise shall conclusively be deemed a Related Company and
Indemnitee shall conclusively be deemed to be serving such Related Company at
the request of the Company;

vi. Neither (i) the failure of the Company (including but not limited to the
Board, the Company’s officers, independent counsel, Special Legal Counsel, any
arbitrator or the Company’s shareholders) to make a determination prior to the
commencement of the Enforcement Action whether indemnification, or payment of an
Expense Advance, of Indemnitee is proper in the circumstances nor (i) an actual
determination by the Company, the Board, the Company’s officers, independent
counsel, Special Legal Counsel, any arbitrator or the Company’s shareholders
that Indemnitee is not entitled to indemnification or payment of an Expense
Advance shall be a defense to the Enforcement Action, create a presumption that
Indemnitee is not entitled to indemnification hereunder or be considered by a
court in an Enforcement Action, which shall conduct a de novo review of the
relevant issues; and

vii. If the court hearing the Enforcement Action is unable to make either of the
determinations specified in Sections 3(b)(i) or 3(b)(ii), the court hearing the
Enforcement Action shall nonetheless order the Company to provide
indemnification or to advance expenses to Indemnitee to the full extent sought
in the Enforcement Action if it determines that Indemnitee is fairly and
reasonably entitled to such indemnification or Expense Advance in view of all of
the relevant circumstances, and without regard to the limitations set forth in
clauses (i) through (iii) of the first sentence of Section 1(a). In determining
whether Indemnitee is fairly and reasonably entitled to such indemnification or
expense advance, the court shall weigh (i) the relative benefits received by the
Company and/or any of its subsidiaries or any Related Company, or any of their
affiliates other than Indemnitee, on the one hand, and

 

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Indemnitee on the other from the transaction from which such Proceeding arose or
to which such Proceeding relates, and (ii) the relative fault of the Company
and/or any of its subsidiaries or any Related Company, or any of their
affiliates other than Indemnitee, on the one hand, and of Indemnitee on the
other in connection with the transaction that resulted in such Damages, as well
as any other relevant equitable considerations. The relative fault of the
Company and/or any of its subsidiaries or any Related Company, or any of their
affiliates other than Indemnitee, on the one hand, and of Indemnitee on the
other shall be determined by reference to, among other things, the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent the circumstances resulting in such Damages. If either (i) the relative
benefits received by the Company and/or any of its subsidiaries or any Related
Company, or any of their affiliates other than Indemnitee, exceed the relative
benefits received by Indemnitee, or (ii) the relative fault of the Company
and/or any of its subsidiaries or any Related Company, or any of their
affiliates other than Indemnitee, exceeds the relative fault of Indemnitee, then
Indemnitee shall be entitled to the full amount of indemnification and/or
Expense Advance sought in the Enforcement Proceeding.

d. Attorneys’ Fees and Expenses for Enforcement Action. In any Enforcement
Action, the Company shall hold harmless and indemnify Indemnitee against all of
Indemnitee’s attorneys’ fees and expenses in bringing, defending and/or pursuing
the Enforcement Action (including but not limited to attorneys’ fees at any
stage, and on appeal); provided, however, that the Company shall not be required
to provide such indemnification for such fees and expenses if it is Finally
Adjudged that Indemnitee knew prior to commencement of the Enforcement Action
that Indemnitee was not entitled to indemnification based on any of clauses
(i) through (iv) of the first sentence of Section 1(a).

4. Defense of Claim.

With respect to any Proceeding as to which Indemnitee has provided notice to the
Company pursuant to Section 1(e)(i):

a. The Company may participate therein at its own expense.

b. The Company (jointly with any other indemnifying party similarly notified, if
any) may assume the defense thereof, with counsel reasonably satisfactory to
Indemnitee. After notice from the Company to Indemnitee of its election to so
assume the defense thereof, the Company shall not be liable to Indemnitee under
this Agreement for any legal fees or other expenses (other than reasonable costs
of investigation) subsequently incurred by Indemnitee in connection with the
defense thereof unless (i) the employment of counsel by Indemnitee or the
incurring of such expenses has been authorized by the Company, (ii) Indemnitee
shall have concluded that there is a reasonable possibility that a conflict of
interest could arise between the Company and Indemnitee in the conduct of the
defense of such Proceeding, which conflict of interest shall be conclusively
presumed to exist upon Indemnitee’s delivery to the Company of a written
certification of such conclusion, or (iii) the Company shall not in fact have
employed counsel to assume the defense of such Proceeding, in each of which
cases the legal fees and other expenses of Indemnitee shall be at the expense of
the Company. The Company shall not be entitled to assume the defense of a
Proceeding brought by or on behalf of the Company or as to which Indemnitee
shall have reached the conclusion described in clause (ii) above.

 

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c. The Company shall not be liable for any amounts paid in settlement of any
Proceeding effected without its written consent.

d. The Company shall not settle any Proceeding in any manner that would impose
any penalty or limitation on Indemnitee without Indemnitee’s written consent.

e. Neither the Company nor Indemnitee will unreasonably withhold its or his or
her consent to any proposed settlement of any Proceeding.

5. Maintenance of D&O Insurance.

a. Subject to Section 5(c) below, during the period (the “Coverage Period”)
beginning on the date of this Agreement and ending at the later of (i) six
(6) years following the time Indemnitee is no longer serving as either a
director or officer of the Company and/or one or more subsidiaries or any
Related Company, or (ii) at the end of such longer period during which
Indemnitee believes that a reasonable possibility of exposure to a Proceeding or
Damages persists (which extended period must be consented to by the Company,
such consent not to be unreasonably withheld), the Company shall maintain a
directors’ and officers’ liability insurance policy in full force and effect or
shall have purchased or otherwise provided for a run-off or tail policy or
endorsement to such existing policy (“D&O Insurance”), providing in all respects
coverage at least comparable to and in similar amounts, and with similar
exclusions, as that obtained by other similarly situated companies as determined
in good faith by any of the parties referenced in Section 1(f)(iii)(a) through
(c).

b. Under all policies of D&O Insurance, Indemnitee shall during the Coverage
Period be named as an insured in such a manner as to provide Indemnitee the same
rights and benefits, subject to the same limitations, as are accorded to the
Company’s directors or officers most favorably insured by such policy, and each
insurer under a policy of D&O Insurance shall be required to provide Indemnitee
written notice at least thirty (30) days prior to the effective date of
termination of the policy.

c. The Company shall have no obligation to obtain or maintain D&O Insurance to
the extent that such insurance is not reasonably available, the premium costs
for such insurance are disproportionate to the amount of coverage provided, or
the coverage provided by such insurance is so limited by exclusions as to
provide an insufficient benefit, such determination to be made by any of the
parties referenced in Section 1(f)(iii)(a) through (c).

d. It is the intention of the parties in entering into this Agreement that the
insurers under the D&O Insurance, if any, shall be obligated ultimately to pay
any claims by Indemnitee which are covered by D&O Insurance, and nothing herein
shall be deemed to diminish or otherwise restrict the Company’s or Indemnitee’s
right to proceed or collect against any insurers under D&O Insurance or to give
such insurers any rights against the Company or Indemnitee under or with respect
to this Agreement, including but not limited to any right to be subrogated to
the Company’s or Indemnitee’s rights hereunder, unless otherwise expressly
agreed to by the Company and Indemnitee in writing. The obligation of such
insurers to the Company and Indemnitee shall not be deemed reduced or impaired
in any respect by virtue of the provisions of this Agreement.

 

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e. No indemnification pursuant to this Agreement shall be provided by the
Company for Damages or Expense Advances that have been paid directly to
Indemnitee by an insurance carrier under a policy of D&O Insurance or other
insurance maintained by the Company.

f. In the event of payment under this Agreement, the Company shall be subrogated
to the extent of such payment to all of the rights of Indemnitee to recover the
same amounts from any insurer or other third person (other than another person
with indemnification rights against the Company substantially similar those of
Indemnitee under this Agreement). Indemnitee shall execute all documents
required and take all acts necessary to secure such rights and enable the
Company effectively to bring suit to enforce such rights.

6. Partial Indemnification; Mutual Acknowledgment; Contribution.

a. Partial Indemnification. If Indemnitee is entitled under any provision of
this Agreement to indemnification by the Company for some or a portion of any
Damages in connection with a Proceeding, but not for the total amount thereof,
the Company shall nevertheless indemnify Indemnitee for the portion of such
Damages to which Indemnitee is entitled.

b. Mutual Acknowledgment. The Company and Indemnitee acknowledge that, in
certain instances, federal law or public policy may override applicable state
law and prohibit the Company from indemnifying Indemnitee under this Agreement
or otherwise. For example, the Company and Indemnitee acknowledge that the
Securities and Exchange Commission (the “SEC”) has taken the position that
indemnification is not permissible for liabilities arising under certain federal
securities laws, and federal legislation prohibits indemnification for certain
ERISA violations. Furthermore, Indemnitee understands that the Company has
undertaken or may be required in the future to undertake with the SEC to submit
for judicial determination the issue of the Company’s power to indemnify
Indemnitee in certain circumstances; all of the Company’s obligations under this
Agreement will be subject to the requirements of any such undertaking required
by the SEC to be made by the Company.

c. Contribution. If the indemnification provided under Sections 1, 2 and 6 is
unavailable by reason of any of the circumstances specified in one or more of
clauses (i) through (iii) of the first sentence of Section 1(a) then, in respect
of any Proceeding in which the Company is jointly liable with Indemnitee (or
would be if joined in such Proceeding), the Company shall contribute to the
amount of Damages (including attorneys’ fees) actually and reasonably incurred
and paid or payable by Indemnitee in such proportion as is appropriate to
reflect (i) the relative benefits received by the Company and/or any of its
subsidiaries or any Related Company, or any of their affiliates other than
Indemnitee, on the one hand, and Indemnitee on the other from the transaction or
events from which such Proceeding arose or to which such Proceeding relates, and
(ii) the relative fault of the Company and/or any of its subsidiaries or any
Related Company, or any of their affiliates other than Indemnitee, on the one
hand, and of Indemnitee on the other in connection with the transaction or
events that resulted in

 

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such Damages, as well as any other relevant equitable considerations. The
relative fault of the Company and/or any of its subsidiaries or any Related
Company, or any of their affiliates other than Indemnitee, on the one hand, and
of Indemnitee on the other shall be determined by reference to, among other
things, the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent the circumstances resulting in such Damages.
The Company agrees that it would not be just and equitable if contribution
pursuant to this Section 6(c) were determined by pro rata allocation or any
other method of allocation that does not take account of the foregoing equitable
considerations.

7. Release of Claims Relating to Officer’s Failure to Discharge Duties. If
Indemnitee is an officer of the Company and/or one or more of its subsidiaries,
the indemnification and other rights and benefits provided to Indemnitee by this
Agreement shall apply fully with respect to any Proceeding in which it is
claimed or adjudicated that Indemnitee is liable to the Company and/or one or
more of its subsidiaries by reason of having failed to discharge the duties of
Indemnitee’s office, and the Company hereby irrevocably releases all such claims
and liabilities, agrees to cause its subsidiaries to release all such claims,
and agrees to hold Indemnitee harmless with respect to any such claims;
provided, however, that the foregoing indemnification, release and hold harmless
obligations of the Company shall have no application with respect to claims by
and liabilities to the Company based upon actions or omissions described in one
or more of clauses (i) through (iv) of the first sentence of Section 1(a).

8. Miscellaneous.

a. This Agreement shall be interpreted and enforced in accordance with the laws
of the State of Washington.

b. This Agreement shall be binding upon Indemnitee and upon the Company, its
successors and assigns, and shall inure to the benefit of Indemnitee,
Indemnitee’s heirs, personal representatives and assigns and to the benefit of
the Company, its successors and assigns. The Company shall require any successor
to the Company (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business or assets of the
Company, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if
no such succession had taken place.

c. Indemnitee’s rights to indemnification and advancement of expenses under this
Agreement shall not be deemed exclusive of any other or additional rights to
which Indemnitee may be entitled under the Articles or the Bylaws of the
Company, any vote of shareholders or disinterested directors, the Statute or
otherwise, whether as to actions or omissions in Indemnitee’s official capacity
or otherwise.

d. Nothing in this Agreement shall confer upon Indemnitee the right to continue
to serve as a director and\or officer of the Company or any of its subsidiaries
or any Related Company. If Indemnitee is an officer of the Company, then, unless
otherwise expressly provided in a written employment agreement between the
Company and Indemnitee, the employment of Indemnitee with the Company shall be
terminable at will by either party. The

 

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indemnification and release provided under this Agreement shall apply to any and
all Proceedings, notwithstanding that Indemnitee has ceased to be a director,
officer, partner, employee, trustee or agent of the Company, any of its
subsidiaries or a Related Company, and shall inure to the benefit of the heirs,
executors and administrators of Indemnitee.

e. If any provision or provisions of this Agreement shall be held to be invalid,
illegal or unenforceable for any reason whatsoever, then: (i) the validity,
legality and enforceability of the remaining provisions of this Agreement
(including, without limitation, all portions of any paragraphs of this Agreement
containing any such invalid, illegal or unenforceable provision that are not
themselves invalid, illegal or unenforceable) shall not in any way be affected
or impaired thereby; and (ii) to the fullest extent possible, the provisions of
this Agreement (including, without limitation, all portions of any paragraphs of
this Agreement containing any such invalid, illegal or unenforceable provision,
that are not themselves invalid, illegal or unenforceable) shall be construed so
as to give effect to the intent manifested by the provision held invalid,
illegal or unenforceable.

f. Any notices or communications to be given or required to be given under this
Agreement shall be given by personal delivery or registered airmail, overnight
courier, telex, facsimile or electronic mail at the following address (or such
other address as the relevant party provides the other party in writing and
referencing this Section 8(f)):

Company:

Northstar Neuroscience, Inc.

2401 Fourth Avenue, Suite 300

Seattle, Washington 98121

(Fax) 1-206-902-2019

(Tel) 1-206-902-1477

Attn: Chief Executive Officer

electronic mail:                                              

Indemnitee:

Brian Dow

_____________________________

_____________________________

(Fax)                             

(Tel)                             

electronic mail:                                              

Notices and communications shall be deemed received by the addressee on the date
of delivery if delivered in person, on the third (3rd) day after mailing if
delivered by registered airmail, on the next business day after mailing if sent
by overnight courier, on the next business day if sent by telex or facsimile, or
upon confirmation of delivery when directed to the electronic mail address
described above if sent by electronic mail.

 

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g. No amendment, modification, termination or cancellation of this Agreement
shall be effective unless in writing signed by both parties hereto.

h. If Indemnitee has previously executed an indemnification agreement with the
Company, this Agreement supersedes such prior indemnification agreement in its
entirety.

i. This Agreement may be executed in two counterparts, each of which shall be
deemed an original, but both of which together shall constitute one and the same
instrument.

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
effective as of the day and year first set forth above.

 

“Company”

    NORTHSTAR NEUROSCIENCE, INC.       By:   /s/ John S. Bowers Jr.       Name:
  John S. Bowers Jr.       Its:   President and Chief Executive Officer

“Indemnitee”

    /s/ Brian B. Dow     Brian Dow

 

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EXHIBIT A

INDEMNIFICATION NOTICE

Check the appropriate space below, and provide a brief description of the
Proceeding as requested below:

 

¨    Notice is hereby given by the undersigned, ____________________________,
pursuant to Section 1(e)(i) of the Indemnification Agreement (the “Agreement”)
dated ___________________ between Northstar Neuroscience, Inc., a Washington
corporation (the “Company”), and the undersigned, of the commencement of a
Proceeding, as defined in the Agreement. A brief description of the Proceeding
is as follows: ¨    If indemnification of particular Damages (as defined in the
Agreement) is being sought at this time, pursuant to Section 1(e)(ii) of the
Agreement, the undersigned hereby requests indemnification by the Company under
the terms of the Agreement with respect to the following Damages incurred in
connection with the Proceeding:

Dated:                                 ,                     .

 

  

[Signature of Indemnitee]

Brian Dow

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EXHIBIT B

STATEMENT OF UNDERTAKING

 

STATE OF                                                  )    ) ss.
COUNTY OF                                              )

I,                                 , being first duly sworn, do depose and say
as follows:

1. This Statement is submitted pursuant to the Indemnification Agreement (the
“Agreement”) dated                                  between Northstar
Neuroscience, Inc., a Washington corporation (the “Company”), and me.

2. I am requesting an Expense Advance, as defined in the Agreement.

3. I hereby undertake to repay the Expense Advance if and to the extent it is
Finally Adjudged (as defined in the Agreement) that I am not entitled under the
Agreement to be indemnified by the Company.

4. The expenses for which advancement is requested, and a brief description of
the underlying Proceeding (as defined in the Agreement), are as follows:

[Add brief description of expenses and Proceeding]

DATED:                                              ,                 .

 

      

SUBSCRIBED AND SWORN TO before me this          day of
                                ,

 

    (Seal or stamp)            Notary Signature            Print/Type Name    

Notary Public in and for the State of Washington,

residing at                                          
                                       

My appointment expires