Exhibit 10.29
Confidential Treatment Requested:
Confidential portions of this document have been redacted and have been filed
separately with
the Commission.
STOCK PURCHASE AGREEMENT
     THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is made and entered into
as of the 26th day of October 2007, by and among Micrus Endovascular
Corporation, a Delaware corporation (“Purchaser”), The Cleveland Clinic
Foundation, a non-profit Ohio corporation (“Stockholder”) and Revasc
Technologies, Inc., a Delaware corporation (the “Company”). Certain capitalized
terms used in this Agreement are defined on Exhibit A hereto.
RECITALS
     A. The Stockholder is the sole beneficial owner of all of the shares of
common stock (the “Shares”) of the Company, which comprise all of the issued and
outstanding shares of capital stock of the Company and/or rights to acquire
shares of capital stock of the Company.
     B. The Board of Directors of Purchaser believes it is in the best interests
of Purchaser and its stockholders to acquire all of the Shares upon the terms
and subject to the conditions set forth herein (the “Acquisition”), such that,
upon consummation of the Acquisition, Purchaser will own 100% of the issued and
outstanding capital stock of the Company.
     C. As an inducement for Purchaser to consummate the Acquisition, the
Stockholder has agreed to make certain representations, warranties, covenants
and other agreements in connection with the Acquisition, all as set forth
herein.
     D. As a further inducement for Purchaser to consummate the Acquisition, the
Stockholder and the Company have entered into the Amended and Restated
Technology License Agreement by and between the Stockholder and the Company
effective as of July 31, 2006 and amended and restated of even date herewith
(the “License Agreement”) in the form of Exhibit B hereto.
     E. As a further inducement for Purchaser to consummate the Acquisition,
each party listed on Exhibit C hereto (each a “Consultant” and together the
“Consultants”) has entered into a Noncompetition and Consulting Agreement of
even date herewith in the form of Exhibit D hereto (the “Noncompetition and
Consulting Agreements”).
AGREEMENT
     In consideration of the mutual promises, agreements, warranties and
provisions contained in this Agreement, the parties hereto, intending to be
legally bound, hereby agree as follows:

 

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SECTION 1
PURCHASE AND SALE OF SHARES
     1.1 Purchase and Sale of Shares. Subject to the terms and conditions of
this Agreement, Purchaser hereby agrees to purchase at the Closing (as defined
below) and the Stockholder agrees to sell, convey, transfer, assign and deliver
to Purchaser at the Closing, the Shares owned by Stockholder, free and clear of
all liens, encumbrances or other defects of title, such that on the Closing Date
(as defined below) Purchaser shall be the record owner of 100% of the
outstanding shares and rights to acquire shares of the Company’s capital stock.
     1.2 Closing Payment.
          (a) The initial consideration to be paid by Purchaser for the Shares
shall be One Million U.S. Dollars (US $1,000,000) (the “Closing Payment”). At
the Closing, Purchaser shall pay the Closing Payment either by check or wire
transfer in immediately available funds pursuant to wire transfer instructions
delivered by the Stockholder to Purchaser prior to the Closing Date.
     1.3 Milestone Payments.
          (a) Subject to the occurrence of the Closing, Purchaser will pay
Stockholder the following additional payments, subject to and contingent upon
the occurrence of the following subsequent events (each, a “Milestone Payment”
and collectively, the “Milestone Payments” and together with the Closing
Payment, the “Purchase Price”):
               (i) $[***] upon the confirmation of reperfusion in an appropriate
animal model;
               (ii) $[***] upon the success of the Device in a human patient;
               (iii) $[***] upon the achievement of design freeze for the final
human version of the Device;
               (iv) $[***] upon the receipt by the Company of the CE Mark for
the Device;
               (v) $[***] with respect to the first commercial sale of the
Device outside the United States; and
               (vi) $[***] upon receipt by the Company of final approval by the
U.S. Food and Drug Administration of the Device.
          (b) Each Milestone Payment shall be due and payable by Purchaser to
Stockholder within 15 days of the achievement of the applicable milestone event.
Payment due

 

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hereunder shall be made in cash or cash equivalents (at the election of
Purchaser). The achievement of any milestone shall be determined in good faith
by Purchaser.
          (c) Notwithstanding the foregoing, upon the third anniversary of the
Closing Date (i) Purchaser shall pay Stockholder the amount determined by
subtracting (A) the sum of the Milestone Payments made as of such date with
respect to subsections 1.3(a)(i)-(iii) from (B) $[***], and (ii) Purchaser shall
have no further payment obligations hereunder with respect to the milestone
events described in subsections 1.3(a)(i)-(iii).
SECTION 2
CLOSING
     2.1 Closing Date. The closing of the Acquisition (the “Closing”) shall be
held at the offices of Orrick, Herrington & Sutcliffe LLP, 1000 Marsh Road,
Menlo Park, CA 94025 at 10:00 a.m. California time on the date hereof (the
“Closing Date”), unless another date, time or place is agreed to in writing by
Purchaser and the Stockholder.
     2.2 Actions at the Closing. At the Closing, Stockholder and Purchaser shall
take such actions and execute and deliver such agreements and other instruments
and documents as necessary or appropriate to effect the transactions
contemplated by this Agreement in accordance with its terms, including without
limitation the following:
          (a) At the Closing, Stockholder shall deliver or cause to be delivered
to Purchaser the following:
               (i) a certificate or certificates representing all of the Shares,
together with stock powers duly endorsed in blank for transfer of the Shares to
Purchaser, with any required transfer stamps affixed thereto;
               (ii) the License Agreement executed by the parties thereto;
               (iii) the Noncompetition and Consulting Agreements executed by
the parties thereto;
               (iv) letters of resignation from each of the directors and
officers of the Company in office immediately prior to the Closing, which
resignations in each case shall be effective as of the Closing;
               (v) certified copies of (A) the then effective certificate of
incorporation and by-laws of the Company and (B) all board and shareholder
resolutions approving the entering into and completion of the transactions
contemplated by this Agreement, including without limitation the License
Agreement and the Noncompetition and Consulting Agreements;

 

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               (vi) certified copies of (A) the then effective certificate of
incorporation and by-laws of the Stockholder and (B) a certificate of authority
of the officer(s) of the Stockholder executed by the Secretary of the
Stockholder in the form of Exhibit E hereto;
               (vii) a certificate of good standing issued by the secretary of
state or other appropriate government officials in each jurisdiction in which
the Company does business, including without limitation Delaware and Ohio;
               (viii) duly and validly executed copies of all agreements,
instruments, certificates and other documents, in form and substance reasonably
satisfactory to Purchaser, that are necessary or appropriate to evidence the
release of any and all liens and other encumbrances on the Shares or the assets
of the Company arising out of, resulting from or in connection with any loans,
guarantees or other similar arrangements between or among the Company, the
Stockholder or any third party creditors of the Company;
               (ix) duly and validly executed copies of all consents, waivers,
approvals or authorizations, in form and substance reasonably satisfactory to
Purchaser, from third parties whose consent or approval are required to
consummate the transactions contemplated by this Agreement; and
               (x) all other documents, certificates, instruments or writings
required to be delivered by the Stockholder pursuant to this Agreement,
including without limitation those documents set forth in Section 7.3 hereof.
          (b) At the Closing, Purchaser shall deliver or cause to be delivered
to the Stockholder the following:
               (i) the Closing Payment; and
               (ii) all other documents, certificates or writings required to be
delivered by Purchaser pursuant to this Agreement, including without limitation
those documents set forth in Section 7.2 hereof.
          (c) All deliveries, payments and other transactions and documents
relating to the Closing (i) shall be independent and none shall be effective
unless and until all are effective (except to the extent that the party entitled
to the benefit thereof has waived satisfaction or performance thereof as a
condition precedent to Closing), and (ii) shall be deemed to be consummated
simultaneously.
     2.3 No Further Ownership Rights in Shares. All consideration paid in
respect of the surrender for exchange of the Shares in accordance with the terms
of this Agreement shall be deemed to be full satisfaction of Stockholder’s
rights pertaining to such Shares.

 

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SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND STOCKHOLDER
     In this Agreement, any reference to any event, change, condition or effect
being “material” with respect to any entity or group of entities means any
material event, change, condition or effect related to the condition (financial
or otherwise), properties, assets (including intangible assets), liabilities,
business, operations or results of operations of such entity or group of
entities that is the subject matter of the applicable representation or warranty
. In this Agreement, any reference to a “Material Adverse Effect” with respect
to any entity or group of entities means any event, change or effect that, when
taken individually or together with all other adverse changes and effects, is or
is reasonably likely to be materially adverse to the condition (financial or
otherwise), properties, assets, liabilities, business or results of operations
of such entity and its subsidiaries, taken as a whole, or to prevent or
materially delay consummation of the transactions contemplated under this
Agreement or otherwise to prevent such entity and its subsidiaries from
performing their obligations under this Agreement other than any such event,
change or effect, directly or indirectly, resulting from or arising in
connection with general political, economic, financial, capital market or
industry-wide conditions which do not have a disproportionate impact on the
business of the Company taken as a whole.
     In this Agreement, any reference to a party’s “knowledge” means such
party’s actual knowledge after reasonable inquiry of the officers and directors
of such party reasonably believed to have knowledge of such matters.
     The Company and Stockholder hereby represents and warrants to Purchaser
that the statements contained in this Section 3 are true and correct, except as
expressly set forth in the disclosure schedule delivered by the Stockholder to
Purchaser and attached to this Agreement (the “Company Disclosure Schedule”).
The Company Disclosure Schedule shall be arranged in paragraphs corresponding to
the numbered and lettered paragraphs contained in this Section 3 to which the
disclosure relates, provided, that any information disclosed under any paragraph
of the Company Disclosure Schedule shall be deemed disclosed and incorporated
into any other paragraph of this Section 3 where it is reasonably apparent that
such disclosure, without reference to extrinsic documentation, is relevant to
such other paragraph.
     3.1 Organization, Standing and Power; Subsidiaries.
          (a) The Company is an entity duly organized, validly existing and, to
the extent applicable, in corporate good standing under the laws of its
jurisdiction of organization and has the requisite corporate power and authority
and all necessary government approvals to own, lease and operate its properties
and to carry on its business as now being conducted and as proposed to be
conducted, except where the failure to have such power, authority and
governmental approvals would not, individually or in the aggregate, have a
Material Adverse Effect on the Company. The Company is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each of the jurisdictions listed in Section 3.1(a) of the Company Disclosure
Schedule, which are all the jurisdictions in which the nature of the

 

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activities conducted or the character of the properties and assets which it
owns, leases or uses makes such qualification or licensing necessary or
appropriate, except where the failure to be so qualified or licensed would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
Section 3.1(a) of the Company Disclosure Schedule contains a true and complete
listing of the locations of all offices or facilities of the Company and a true
and complete list of all jurisdictions in which the Company maintains any
employees. The Company does not own, directly or indirectly, any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for, any equity or similar interest in, any corporation,
partnership, limited liability company, joint venture or other business
association or entity. The Company does not have any subsidiaries.
          (b) Section 3.1(b) of the Company Disclosure Schedule sets forth all
fictitious names (if any) under which the Company or its predecessors has
conducted business.
     3.2 Governing Documents. The Stockholder has delivered to Purchaser a true
and correct copy of the Certificate of Incorporation or equivalent
organizational documents of the Company, each as amended to date, and no
amendments have been made thereto or have been authorized since the date
thereof. The Company is not violation of any of the provisions of its
Certificate of Incorporation or equivalent organizational documents.
     3.3 Capital Structure.
          (a) The authorized capital stock of the Company consists of 1000
shares of Common Stock, par value $0.01 per share, of which 100 shares are
issued and outstanding as of the date hereof (the “Company Common Stock”). Other
than the Company Common Stock, the Company has no other capital stock
authorized, issued or outstanding and no outstanding commitments to issue any
shares of capital stock. The Stockholder is the sole owners of all outstanding
shares of Company Common Stock. All outstanding shares of Company Common Stock
are duly authorized, validly issued, fully paid and non-assessable and are free
of any liens or encumbrances, and are not subject to and were not issued in
violation of any preemptive rights, purchase option, call option, right of first
refusal, subscription right or any similar right, whether created by statute,
the Certificate of Incorporation, Bylaws or equivalent organizational documents
of the Company or any agreement to which the Company is a party or by which it
is bound. All outstanding shares of Company Common Stock were issued in
compliance with applicable federal, provincial, territorial and state laws and
regulations, including, without limitation, securities laws and regulations.
There are no options, warrants, calls, rights, commitments, agreements or
arrangements of any character to which the Company is a party or by which the
Company is bound relating to the issued or unissued capital stock of the Company
or obligating the Company to issue, deliver, sell, repurchase or redeem, or
cause to be issued, delivered, sold, repurchased or redeemed, any shares of
capital stock of the Company or obligating the Company to grant, extend,
accelerate the vesting of, change the price of, or otherwise amend or enter into
any such option, warrant, call, right, commitment or agreement.
          (b) Immediately following the Closing, Purchaser will own one hundred
percent (100%) of the issued and outstanding capital stock of the Company, free
and clear of all liens, encumbrances or other defects of title.

 

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     3.4 No Conflict. Except as disclosed in Section 3.4 of the Company
Disclosure Schedule, the execution and delivery of this Agreement by the
Stockholder does not, and the consummation of the transactions contemplated
hereby will not, conflict with, or result in any violation of, or default under
(with or without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
benefit under (any such event, a “Conflict”) (i) any provision of the
Certificate of Incorporation, Bylaws or equivalent organizational documents of
the Company, in each case as amended to date, or (ii) any mortgage, indenture,
lease, contract or other material agreement or instrument, permit, concession,
franchise or license to which the Company, the Stockholder or any of their
respective properties or assets is subject, or (iii) any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to the Company,
the Stockholder or their respective properties or assets.
     3.5 Consents. Except as disclosed in Section 3.5 of the Company Disclosure
Schedule, no consent, waiver, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any court,
administrative agency or commission or other federal, state, county, local or
other foreign governmental authority, instrumentality, agency or commission
(“Governmental Entity”) or any third party, including a party to any agreement
with the Company or the Stockholder (so as not to trigger any Conflict), is
required by or with respect to the Company or the Stockholder in connection with
the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
     3.6 [Intentionally Omitted].
     3.7 Financial Statements; Liabilities. The Company has not prepared any
balance sheet, income statement, statement of operations, statement of changes
in financial position and stockholders’ equity or other financial statement. The
Company does not have any liability, indebtedness, obligation, expense, claim,
deficiency, guaranty or endorsement of any type, whether accrued, absolute,
contingent, matured, unmatured or of any other nature (whether known or unknown,
accrued, absolute, contingent, asserted, liquidated or otherwise), except as
disclosed in Section 3.7 of the Company Disclosure Schedule. None of the assets
of the Company are or have been pledged, hypothecated, delivered for
safekeeping, subjected to a security interest or otherwise provided in any way
as security for payment or performance of any obligation.
     3.8 [Intentionally Omitted].
     3.9 No Operations.
          (a) Except as disclosed in Section 3.9(a) of the Company Disclosure
Schedule, since inception, the Company has not been party to or been otherwise
bound by any agreement, contract, covenant, instrument, lease, license,
commitment, arrangement, bid, proposal or understanding, whether written or
otherwise (each, a “Company Contract”). A true, correct and complete copy of
each such written document and a true, correct and complete written description
of each such oral relationship having heretofore been delivered by the
Stockholder to Purchaser. Section 3.9(a) of the Company Disclosure Schedule
describes any Company Contract with any federal, state or local government
agency. The Company is in

 

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compliance in all material respects with and has not breached, violated or
defaulted under, in each case in any material respect, or received notice that
it has breached, violated or defaulted under, any of the terms or conditions of
any Company Contract, nor has there occurred any event that would constitute
such a breach, violation or default with the lapse of time, giving of notice or
both. Each Company Contract is in full force and effect and is not subject to
any default thereunder by any party obligated to the Company pursuant thereto.
The Company has obtained or will obtain prior to the Closing all necessary
consents, waivers and approvals of parties to any Company Contract to which it
is a party as are required thereunder in connection with the Acquisition for
such Company Contract to remain in effect without modification after the date
hereof. Any Company Contract requiring such consents, waivers and approvals are
described in Section 3.9(a) of the Company Disclosure Schedule.
          (b) Except as disclosed in Section 3.9(b) of the Company Disclosure
Schedule, since the date of incorporation of the Company there has not been,
occurred or arisen any:
               (i) amendment or change to the Certificate of Incorporation,
Bylaws or equivalent organization documents of the Company;
               (ii) capital expenditure or capital commitment by the Company;
               (iii) hiring or retention by the Company of any employee(s),
consultant(s), advisor(s) or agent(s);
               (iv) destruction of, damage to or loss of any material assets,
material business or material customer of the Company (whether or not covered by
insurance);
               (v) declaration, setting aside or payment of a dividend or other
distribution with respect to Company Common Stock or any direct or indirect
redemption, purchase or other acquisition by the Company of its capital stock;
               (vi) compensation paid or payable by the Company to any of its
officers or directors, or the declaration, payment or commitment or obligation
of any other kind for the payment, by the Company, of a bonus or other
additional salary or compensation to any such person;
               (vii) sale, lease, license or other disposition of any of the
material assets or properties of the Company or any creation of any security
interest in such assets or properties;
               (viii) loan by the Company to any person or entity, incurring by
the Company of any indebtedness, guaranteeing by the Company of any
indebtedness, issuance or sale of any debt securities of the Company or
guaranteeing of any debt securities of others; or
               (ix) waiver or release of any right or claim of the Company
material to its business, including any write-off or other compromise of any
account receivable of the Company.

 

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               (x) commencement or notice, or threat therefor, of any lawsuit or
proceeding, audit or investigation against the Company or its affairs;
               (xi) issuance or sale, or contract to issue or sell, by the
Company of any shares of Company Common Stock or securities exchangeable,
convertible or exercisable therefor, or any securities, warrants, options or
rights to purchase any of the foregoing;
               (xii) pension, profit sharing, employee stock ownership, stock
bonus, cafeteria, dependent care, medical reimbursement, vacation, life,
voluntary employee benefit, medical, deferred compensation, severance pay,
bonus, stock option, stock purchase, incentive compensation, retirement, health,
accident or any other welfare, pension or deferred benefit plan (whether formal
or informal) that is subject to any requirements of the Employee Retirement
Income Security Act of 1974, as amended;
               (xiii) product manufactured, processed, distributed, shipped or
sold by or on behalf of the Company;
               (xiv) event or condition of any character that has had or is
reasonably likely to have a Material Adverse Effect on the Company; or
               (xv) agreement by the Company or any officer or employees thereof
to do any of the things described in the preceding clauses (i) through (xiv)
(other than negotiations with Purchaser and its representatives regarding the
transactions contemplated by this Agreement).
     3.10 Tax Matters.
          (a) For purposes of this Section 3.10 and other provisions of this
Agreement relating to Taxes, the following definitions shall apply:
               (i) The term “Taxes” shall mean all taxes, however denominated,
including any interest, penalties or other additions to tax that may become
payable in respect thereof, (x) imposed by any federal, territorial, state,
local or foreign government or any agency or political subdivision of any such
government, which taxes shall include, without limiting the generality of the
foregoing, all income or profits taxes (including but not limited to, federal,
state and foreign income taxes), payroll and employee withholding taxes,
unemployment insurance contributions, social security taxes, sales and use
taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts taxes,
withholding taxes, business license taxes, occupation taxes, real and personal
property taxes, stamp taxes, environmental taxes, transfer taxes, workers’
compensation, and other governmental charges, and other obligations of the same
or of a similar nature to any of the foregoing, which are required to be paid,
withheld or collected, (y) any liability for the payment of amounts referred to
in (x) as a result of being a member of any affiliated, consolidated, combined
or unitary group, or (z) any liability for amounts referred to in (x) or (y) as
a result of any obligations to indemnify another person.
               (ii) The term “Returns” shall mean all reports, estimates,
declarations of estimated tax, information statements and returns required to be
filed in connection with any

 

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Taxes, including information returns with respect to backup withholding and
other payments to third parties.
          (b) All Returns required to be filed by or on behalf of the Company
have been duly filed on a timely basis and such Returns are true, complete and
correct. All Taxes shown to be payable on such Returns or on subsequent
assessments with respect thereto, and all payments of estimated Taxes required
to be made by or on behalf of the Company under Section 6655 of the Code or
comparable provisions of state, local or foreign law, have been paid in full on
a timely basis, and no other Taxes are payable by the Company with respect to
items or periods covered by such Returns (whether or not shown on or reportable
on such Returns). The Company has withheld and paid over all Taxes required to
have been withheld and paid over, and complied with all information reporting
and backup withholding in connection with amounts paid or owing to any employee,
creditor, independent contractor, or other third party. The Company has
received, from each employee who holds stock that is subject to a substantial
risk of forfeiture as of the date hereof, a copy of the election(s) made under
Section 83(b) of the Code with respect to all such shares, and such elections
were validly made and filed with the Internal Revenue Service in a timely
fashion. There are no liens on any of the assets of the Company with respect to
Taxes, other than liens for Taxes not yet due and payable or for Taxes that the
Company is contesting in good faith through appropriate proceedings. The Company
has not at any time been a member of an affiliated group of corporations filing
consolidated, combined or unitary income or franchise tax returns for a period
for which the statute of limitations for any Tax potentially applicable as a
result of such membership has not expired.
          (c) The amount of the Company’s liabilities for unpaid Taxes for all
periods through the date of the financial statements do not, in the aggregate,
exceed the amount of the current liability accruals for Taxes reflected on the
financial statements, and the financial statements properly accrue in accordance
with GAAP all liabilities for Taxes of the Company payable after the date of the
financial tatements attributable to transactions and events occurring prior to
such date. No liability for Taxes of the Company have been incurred or material
amount of taxable income has been realized (or prior to and including the
Closing will be incurred or realized) since such date other than in the ordinary
course of business.
          (d) Purchaser has been furnished by the Company with true and complete
copies of (i) all relevant portions of income tax audit reports, statements of
deficiencies, closing or other agreements received by or on behalf of the
Company relating to Taxes, and (ii) all federal, state and foreign income or
franchise tax returns and state sales and use tax Returns for or including the
Company for all periods since the Company’s inception.
          (e) No audit of the Returns of or including the Company by a
government or taxing authority is in process, threatened or, to the Company’s
knowledge, pending (either in writing or orally, formally or informally). No
deficiencies exist or have been asserted (either in writing or orally, formally
or informally) or are expected to be asserted with respect to Taxes of the
Company, and the Company has not received notice (either in writing or orally,
formally or informally) nor does it expect to receive notice that it has not
filed a Return or paid Taxes required to be filed or paid. The Company is not a
party to any action or proceeding for assessment or collection of Taxes, nor has
such event been asserted or threatened (either in

 

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writing or orally, formally or informally) against the Company or any of its
respective assets. No waiver or extension of any statute of limitations is in
effect with respect to Taxes or Returns of the Company.
          (f) The Company is not (nor have they ever been) parties to any tax
sharing agreement. The Company has been a distributing corporation or a
controlled corporation in a transaction described in Section 355(a) of the Code.
          (g) The Company is not, nor has it been, a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. The
Company has not entered into any compensatory agreements with respect to the
performance of services which payment thereunder would result in a nondeductible
expense to the Company pursuant to Section 280G of the Code or an excise tax to
the recipient of such payment pursuant to Section 4999 of the Code. The Company
has not agreed to make, nor is it required to make, other than by reason of the
purchase of the Shares by Purchaser, any adjustment under Code Section 481(a) by
reason of, a change in accounting method, and the Company will not otherwise
have any income reportable for a period ending after the Closing Date
attributable to a transaction or other event (e.g., an installment sale)
occurring prior to the Closing Date with respect to which the Company received
the economic benefit prior to the Closing Date.
          (h) The Company Disclosure Schedule contains accurate and complete
information regarding the Company’s net operating losses for federal and each
state tax purposes. The Company has no net operating losses or credit carryovers
or other tax attributes currently subject to limitation under Sections 382, 383,
or 384 of the Code.
          (i) The Company has not participated, within the meaning of Treasury
Regulation Section 1.6011-4(c), in (x) any “reportable transaction” within the
meaning of Section 6011 of the Code, and the Treasury Regulations thereunder,
(y) any “confidential corporate tax shelter” within the meaning of Section 6111
of the Code and the Treasury Regulations thereunder, or (z) any “potentially
abusive tax shelter” within the meaning of Section 6112 of the Code and the
Treasury Regulations thereunder.
          (j) Schedule 3.10(j) lists all jurisdictions (whether foreign or
domestic) to which any Tax is properly payable by the Company. No claim has ever
been made by a Governmental Entity in a jurisdiction where the Company does not
file Returns that the Company is or may be subject to Tax in that jurisdiction.
     3.11 Restrictions on Business Activities. There is no agreement
(non-compete or otherwise), commitment, judgment, injunction, order or decree to
which the Company or the Stockholder is a party or otherwise binding upon the
Company or the Stockholder which has or may reasonably be expected to have the
effect of prohibiting or impairing in any material respect any business practice
of the Company, any acquisition of property (tangible or intangible) by the
Company or the conduct of business by the Company. Without limiting the
foregoing, neither the Company nor the Stockholder has entered into any
agreement pursuant to which the Company is, or reasonably could be, restricted
from selling, licensing or otherwise distributing any of its technology or
products to or providing services to, customers or potential customers or

 

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any class of customers, in any geographic area, during any period of time or in
any segment of the market.
     3.12 Title to Properties; Absence of Liens and Encumbrances. The Company
has good and marketable title to all of its properties and assets, real,
personal and mixed, or with respect to leased properties and assets, valid
leasehold interests in, free and clear of all mortgages, liens, pledges, charges
or encumbrances of any kind or character.
     3.13 Intellectual Property.
          (a) For the purposes of this Agreement, the following terms have the
following definitions:
               (i) “Intellectual Property” shall mean any or all of the
following and all rights in, arising out of, or associated therewith: (i) all
United States and foreign patents and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof; (ii) all inventions (whether patentable or not),
invention disclosures, improvements, trade secrets, proprietary information,
know how, technology, technical data, clinical data and customer lists, designs,
methods, techniques, and all documentation relating to any of the foregoing;
(iii) all copyrights, copyright registrations and applications therefor and all
other rights corresponding thereto throughout the world; (iv) all mask works,
mask work registrations and applications therefor; (v) all industrial designs
and any registrations and applications therefor throughout the world; (vi) all
trade names, logos, common law trademarks and service marks; trademark and
service mark registrations and applications therefor and all goodwill associated
therewith throughout the world; (vii) all databases and data collections and all
rights therein throughout the world; (viii) all blueprints, drawings, chemical
compositions, formulae, diaries, notebooks, specifications, designs, methods of
manufacture; (ix) all computer software including all source code, object code,
firmware, development tools, test suites, files, records and data, all media on
which any of the foregoing is recorded, all Web addresses, sites and domain
names; and (x) all documentation related to any of the foregoing irrespective of
the media on which it is recorded.
               (ii) “Company Intellectual Property” shall mean any Intellectual
Property that is owned by or exclusively licensed to the Company or has been
used, is used, or is held for use in the business of the Company as previously
or currently conducted, including without limitation the Intellectual Property
that is owned by or exclusively licensed to the Company or has been used, is
used, or is held for use in the business of the Company as previously or
currently conducted related to the Device.
               (iii) “Registered Intellectual Property” shall mean all United
States, international and foreign: (i) patents and patent applications
(including provisional applications), including without limitation the Device
Patents; (ii) registered trademarks, applications to register trademarks,
intent-to-use applications, or other registrations or applications related to
trademarks; (iii) registered copyrights and applications for copyright
registration or domain names; (iv) any mask work registrations and applications
to register mask works; and (v) any other Intellectual Property that is the
subject of an application, certificate, filing, registration or

 

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other document issued by, filed with, or recorded by, any state, government or
other public legal authority.
          (b) Section 3.13(b) of the Company Disclosure Schedule lists (i) all
Registered Intellectual Property owned by, or filed in the name of, the Company
(the “Company Registered Intellectual Property”) (ii) any commencement or notice
or to the knowledge of the Stockholder, threat of any proceedings or actions
before any court, tribunal (including the United States Patent and Trademark
Office or equivalent authority anywhere in the world) related to any of the
Company Registered Intellectual Property; and (iii) all products, tools and
services that are currently sold, published, offered for sale, or under
development by the Company.
          (c) Each item of the Company Intellectual Property, and all
Intellectual Property licensed to the Company, is free and clear of any Liens
and is either (i) owned solely by the Company or (ii) rightfully used by the
Company and its permitted successors and assigns pursuant to valid and
enforceable written licenses. The Company is the exclusive owner of all
trademarks, service marks, logos, and trade names used in connection with the
operation or conduct of its business as presently conducted, including the sale
of any products or technology or the provision of any services by the Company,
and owns exclusively, and has good title to, all copyrighted works that are
Company products or other works of authorship that such Company otherwise
purports to own.
          (d) Except as set forth in Section 3.13(d) of the Company Disclosure
Schedule, to the extent that any Intellectual Property has been developed,
authored, discovered, produced, conceived, reduced to practice, or created
(alone or jointly) by any Person other than the Company on the Company’s behalf,
or who have created any portion of or otherwise would have any rights in or to,
the Company Intellectual Property owned by the Company, the Company has a valid
and enforceable written agreement with such Person with respect thereto and the
Company thereby has obtained ownership of, and is the exclusive owner of, all
such Intellectual Property by operation of law or by valid assignment.
          (e) The Company has not transferred ownership of or, except pursuant
to the contracts, licenses and agreements listed in Section 3.13(g) of the
Company Disclosure Schedule granted any exclusive license of or exclusive right
to use or authorized the retention of any rights to use any Intellectual
Property that is or was Company Intellectual Property to any other Person.
          (f) The Company owns, or has the right to use, all the Intellectual
Property necessary to the conduct of its business as it currently is conducted
or is reasonably contemplated to be conducted by the Company and owned or had
the right to use all the Intellectual Property necessary to carry out the
Company’s former and current activities, including, without limitation, all
rights to make, distribute, display, license, sublicense, design, develop,
manufacture, market, use, import and sell all of the products, technology and
services of the Company (including products, technology or services currently
under development) and associated Company Intellectual Property worldwide in all
fields of use.
          (g) Other than (i) “shrink-wrap” and similar widely available
commercial end-user licenses for binary code or (ii) other third party shareware
that is generally available to the public and does not impose any monetary
obligations on the Company in each case that are not

 

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used for software development or incorporated into any software products or
services provided by the Company to its customers, the contracts, licenses and
agreements listed in Section 3.13(g) of the Company Disclosure Schedule include
all contracts, licenses and agreements to which the Company is a party with
respect to any Intellectual Property. Except as set forth in Section 3.13(g) of
the Company Disclosure Schedule, no person who has licensed Intellectual
Property to the Company has ownership rights or license rights to improvements,
modifications, adaptations, translations, or derivative works made by the
Company in such Intellectual Property that has been licensed to the Company.
          (h) Section 3.13(h) of the Company Disclosure Schedule lists all
contracts, licenses and agreements between the Company and any other Person
wherein or whereby the Company has agreed to, or assumed, any obligation or duty
to warrant, indemnify, reimburse, defend, hold harmless, guaranty or otherwise
assume or incur any obligation or liability or provide a right of rescission
with respect to the infringement or misappropriation by the Company or such
other Person of the Intellectual Property of any Person other than the Company.
          (i) The operation of the business of the Company as it formerly was
conducted, currently is conducted, or as is currently contemplated to be
conducted by the Company, including but not limited to the Company’s design,
development, use, import, manufacture and sale of the products, technology or
services (including products, technology or services currently under
development) of the Company has not and does not infringe upon or misappropriate
the Intellectual Property of any Person, violate the rights of any Person
(including rights to privacy or publicity), or constitute unfair competition or
trade practices under the laws of any jurisdiction, and the Company has not
received notice or threat in writing thereof from any person claiming that such
operation or any act, product, technology or service (including products,
technology or services currently under development) of the Company infringes or
misappropriates the Intellectual Property of any Person or constitutes unfair
competition or trade practices under the laws of any jurisdiction (nor is the
Stockholder aware of any valid basis therefor) or, except as set forth in
Section 3.13(i) of the Company Disclosure Schedule, any claim challenging the
validity, enforceability, or ownership by the Company of any Company
Intellectual Property owned by the Company.
          (j) There are no contracts, licenses or agreements between the Company
and any other Person with respect to Company Intellectual Property under which
there is any dispute regarding the scope, breach, or violation of such
agreement, or performance under such agreement, including with respect to any
payments to be made or received by the applicable Company thereunder, nor is
there any event or occurrence that would reasonably be expected to constitute
such a breach or violation. The transaction contemplated by this Agreement will
not alter, impair, or otherwise affect any rights of the Company in the Company
Intellectual Property and Purchaser will be permitted to exercise all of the
Company’s rights under such contracts, licenses, or agreements without the
payment of additional amounts or consideration.
          (k) No Person is infringing, making unauthorized use of, or
misappropriating any Company Intellectual Property.

 

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          (l) The Company has taken reasonable steps to establish and preserve
its ownership of and rights in all Company Intellectual Property owned by the
Company and to protect its rights (using at least reasonable care) in
confidential information and trade secrets of the Company or provided by any
other Person to the Company. All Persons that had any involvement in the
development of Company Intellectual Property have signed an agreement pursuant
to which all Intellectual Property Rights developed by such Person within the
scope of their employment or other relationships with the Company are assigned
to the Company.
          (m) No Company Intellectual Property or product, technology or service
of the Company is subject to any proceeding or outstanding decree, order,
judgment, agreement or stipulation that restricts in any manner the use,
transfer or licensing thereof by the Company or may affect the validity, use or
enforceability of the Company Intellectual Property.
          (n) There are no escrow agreements or other arrangements between the
Company and any Person that would permit such Person or any other party to
obtain access to a copy of the Company’s source code, source code related to any
Company Intellectual Property, or program documentation.
     3.14 [Intentionally Omitted].
     3.15 Governmental Authorization. Section 3.15 of the Company Disclosure
Schedule accurately lists each consent, license, permit, grant or other
authorization issued to the Company by a Governmental Entity presently held by
the Company in connection with the conduct of its business (herein collectively
called “Company Authorizations”). The Company Authorizations are in full force
and effect and constitute all Company Authorizations required to permit the
Company to operate or conduct its business as presently conducted or hold any
interest in its properties or assets.
     3.16 Compliance with Laws. The Company is conducting and has always
conducted its business in compliance, in all material respects, with all
applicable laws.
     3.17 Litigation. There is no action, suit or proceeding of any nature
pending or threatened before any court or administrative agency against any of
the Company’s properties or any of its officers or directors. There is no
investigation pending or threatened against the Company, its properties or any
of its officers or directors in their capacities as such by or before any
Governmental Entity. No Governmental Entity has at any time asserted any
material challenges or questions relating to the legal right of the Company to
conduct its operations as presently or previously conducted.
     3.18 Minute Books. The copy of the minute books of the Company provided to
the Purchaser’s counsel contains minutes of all meetings of directors and
holders of capital stock and all actions by written consent without a meeting by
the directors and holders of capital stock since the date of incorporation and
accurately reflects all actions by the directors (and any committee of
directors) and holders of capital stock with respect to all transactions
referred to in such minutes in all material respects.

 

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     3.19 Environmental Matters. The Company has, since inception, operated its
business in compliance with all Environmental Laws, except for such failures to
be in compliance with such Environmental Laws that would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on the
Company. The Company has not received, since inception, any written notices of
any violation under any Environmental Law with respect to the operation of its
business. No hazardous substances are, or have been, used, stored, generated,
disposed of, managed or transported on, under or about the Company’s facilities;
there have been no releases or discharges of hazardous materials on, under or
about the Company’s facilities; and no aboveground storage tanks or underground
storage tanks are located on or used by the Company in connection with the
Company’s facilities.
     3.20 Brokers’ and Finders’ Fees; Third Party Expenses. The Company has not
incurred, nor will the Company incur, directly or indirectly, any liability for
brokerage or finders’ fees or agents’ commissions or any similar charges in
connection with the Agreement or the transactions contemplated hereby.
     3.21 [Intentionally Omitted].
     3.22 [Intentionally Omitted].
     3.23 Foreign Corrupt Practices Act. Neither the Company nor Stockholder
have, to obtain or retain business, directly or indirectly offered, paid or
promised to pay, or authorized the payment of, any money or other thing of value
(including any fee, gift, sample, travel expense or entertainment with a value
in excess of one hundred dollars ($100.00) in the aggregate to any one
individual in any year) or any commission payment to: (i) any person who is an
official, officer, agent, employee or representative of any Governmental
Authority or of any existing or prospective customer (whether government owned
or nongovernment owned); (ii) any political party or official thereof; (iii) any
candidate for political or political party office; or (iv) any other individual
or entity; while knowing or having reason to believe that all or any portion of
such money or thing of value would be offered, given, or promises, directly or
indirectly, to any such official, officer, agent, employee, representative,
political party, political party official, candidate, individual, or any entity
affiliated with such customer, political party or official or political office.
     3.24 Insurance. The Company carries no insurance of any kind, nor has it
carried any such insurance in the past, and has made no claims under any policy
of insurance.
     3.25 [Intentionally Omitted].
     3.26 Complete Copies of Materials. The Company or the Stockholder has
delivered or made available true and complete copies of each document (or
summaries of same) that has been requested by Purchaser or its counsel.
     3.27 Representations Complete. None of the representations or warranties
made by the Stockholder in this Agreement, nor any statement made in the Company
Disclosure Schedule or any certificate furnished by the Stockholder pursuant to
this Agreement, when taken together, contains any untrue statement of a material
fact, or omits to state any material fact necessary in

 

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order to make the statements contained herein or therein, in light of the
circumstances under which they were made, and in relation to the Company’s
properties, assets and business as a whole, not misleading.
SECTION 4
FURTHER REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
     The Stockholder further represents and warrants to Purchaser, subject to
such exceptions as are specifically disclosed in the Company Disclosure
Schedule, as follows:
     4.1 Ownership of Shares. The Stockholder is the sole record and beneficial
owner of the Shares and the Shares are to be sold pursuant to this Agreement.
The Shares are not subject to any Liens or to any rights of first refusal of any
kind, and the Stockholder has not granted any rights to purchase the Shares to
any other person or entity. The Stockholder has the sole right to transfer the
Shares to Purchaser. The Shares constitute all of the Company Common Stock
owned, beneficially or of record by the Stockholder, and the Stockholder has no
options, warrants or other rights to acquire Company Common Stock. On the
Closing Date, Purchaser will receive good title to the Shares, subject to no
Liens retained, granted or permitted by the Stockholder or the Company. The
Stockholder has not engaged in any sale or other transfer of any Company Common
Stock in contemplation of the Acquisition.
     4.2 Absence of Claims by the Stockholder. The Stockholder does not have any
claim against the Company, contingent or unconditional, fixed or variable under
any contract or on any other basis whatsoever, whether in equity or at law.
     4.3 Authority. The Stockholder has all requisite power and authority to
enter into this Agreement and any Related Agreements to which it is a party and
to consummate the transactions contemplated hereby. This Agreement and the
Related Agreements to which the Stockholder is a party have been duly executed
and delivered by the Stockholder, and, assuming the due authorization, execution
and delivery by the other parties thereto, constitute a valid and binding
obligation of the Stockholder, enforceable in accordance with their respective
terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and other laws of general
application affecting enforcement of creditors’ rights generally or (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies.
     4.4 No Conflict. The execution and delivery by the Stockholder of this
Agreement and the Related Agreements to which it is a party does not, and the
consummation of the transactions contemplated hereby and thereby will not,
conflict with (i) any mortgage, indenture, lease, contract or other agreement or
instrument, permit, concession, franchise or license to which the Stockholder or
any of its properties or assets is subject, or (ii) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Stockholder or its
properties or assets.
     4.5 [Intentionally Omitted].

 

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SECTION 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER
     Purchaser represents and warrants to the Stockholder that the statements
contained in this Section 5 are true and correct.
     5.1 Organization, Good Standing and Qualification. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business as presently conducted and as proposed to be conducted.
Purchaser is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure so to qualify would have a Material Adverse
Effect on Purchaser.
     5.2 Authorization. All corporate action on the part of Purchaser, its
officers, directors and holders of capital stock necessary for the
authorization, execution and delivery of this Agreement and the Related
Agreements, the performance of all obligations of Purchaser hereunder and
thereunder has been taken or will be taken prior to the Closing, and this
Agreement and the Related Agreements to which Purchaser is a party, when
executed and delivered by Purchaser, shall constitute valid and legally binding
obligations of Purchaser, enforceable against Purchaser in accordance with their
respective terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, or other laws of general
application relating to or affecting the enforcement of creditors’ rights
generally, or (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.
     5.3 Compliance with Other Instruments. Purchaser is not in violation or
default of any provisions of its Amended and Restated Certificate of
Incorporation or Bylaws, or of any instrument, judgment, order, writ, or decree,
or in violation or default under any note, indenture, mortgage, lease,
agreement, contract or purchase order to which it is a party or by which it is
bound or, to its knowledge, of any provision of federal or state statute, rule
or regulation applicable to Purchaser. Neither the execution, delivery and
performance of this Agreement and the Related Agreements to which it is a party
nor the consummation of the transactions contemplated hereby or thereby will
result in any such violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, either a default under any
such provision, instrument, judgment, order, writ, decree, note, indenture,
mortgage, lease, agreement, contract or purchase order or an event which results
in the creation of any lien, charge or encumbrance upon any assets of Purchaser.
     5.4 Financial Wherewithal. Purchaser has sufficient funds to consummate the
transactions contemplated by this Agreement.
     5.5 Brokers. Purchaser has not retained any broker or finder or incurred
any liability or obligation for any brokerage fees, commissions or finders fees
with respect to this Agreement or the transactions contemplated hereby.

 

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SECTION 6
ADDITIONAL AGREEMENTS
     6.1 Expenses. Whether or not the Acquisition is consummated, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including, without limitation, all legal, accounting,
financial advisory, consulting and all other fees and expenses of third parties)
shall be borne by the party incurring such expense (which party, in the case of
such fees and expenses incurred by the Company, shall be the Stockholder if the
Closing occurs).
     6.2 Access; Confidentiality. The Stockholder agrees to make available all
books, records, facilities, employees, non-employee agents (such as patent and
regulatory counsel) and information reasonably necessary for the Purchaser to
evaluate the Company’s businesses, operations, properties and financial
condition. Each party shall keep confidential and shall not make use of any
information treated by the other party as confidential (including, without
limitation, the existence of this Agreement or the consummation of the
Acquisition or the failure of such a consummation), obtained from the other
party concerning the assets, properties, business or operations of the other
party other than to legal counsel, consultants, financial advisors, key
employees, lenders and investment bankers where such disclosure is related to
the performance of obligations under this Agreement or the consummation of the
transactions contemplated under this Agreement (all of whom shall be similarly
bound by the provisions of this Section 6.2), except as may be required to be
disclosed by applicable law or as may be required to obtain the consents,
waivers or releases from any Governmental Entity or other third party.
Notwithstanding the foregoing, the foregoing confidentiality restrictions shall
not apply to any information which (a) becomes generally available to the public
through no fault of the receiving party or its employees, agents or
representatives; (b) is independently developed by the receiving party without
benefit of the above-described information (and such independent development is
substantiated in writing), or rightfully received from another source on a
non-confidential basis; (c) when such disclosure is required by a court or
governmental authority or is otherwise required by law or is necessary to
establish rights under this Agreement or any agreement contemplated hereby (and
the disclosing party has taken all reasonable efforts to limit the scope of such
disclosure and to protect the confidential nature of the information disclosed).
     6.3 Public Announcements. Until the Closing, no party hereto shall without
the prior written consent of the other party (which consent shall not be
unreasonably withheld) disclose to any third party (other than to legal counsel,
consultants, financial advisors, key employees, lenders and investment bankers
where such disclosure is related to the performance of obligations under this
Agreement or the consummation of the transactions contemplated hereunder) the
existence of this Agreement, the identity of the other parties hereto or the
transactions contemplated hereby except (i) as required by law or applicable
national securities exchange regulation, (ii) as reasonably necessary to obtain
any consents, waivers or releases from any Governmental Entity or other third
party, (iii) as reasonably requested by any Governmental Entity. Following the
Closing, (i) the parties shall issue a press release announcing the completion
of the Acquisition in a form and substance prepared by Purchaser, which
announcement shall be reasonably acceptable to the Stockholder and (ii) the
parties agree

 

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that each will have the right of review and consent with respect to any future
use of its name in any such releases or announcements, such consent not to be
unreasonably withheld.
     6.4 Cooperation. Each party hereto will fully cooperate with the other
parties, their counsel and accountants in connection with any steps required to
be taken as part of its obligations under this Agreement.
     6.5 Further Acts. After the Closing Date, each party hereto, at the request
of and without any further cost or expense to the other party, agrees (a) to
furnish upon request to the other party such further information, (b) to execute
and deliver to the other party such other documents, and (c) to do such other
actions and things necessary or desirable to carry out the purposes and intent
of this Agreement and to vest in Purchaser full title to all properties, assets
and rights of the Company transferred pursuant to this Agreement.
     6.6 Consent to Consulting Agreements. Stockholder acknowledges that the
Consultants are each party to a Noncompetition and Consulting Agreement and
affirms that the provision of the Services (as defined in the Noncompetition and
Consulting Agreement ) and the performance of each Consultant’s obligations
thereunder do not conflict with any obligations each Consultant may have as an
employee of or consultant to Stockholder (or an affiliated entity). Stockholder
agrees not to assert any claim against a Consultant or the Purchaser related to
the provision of the Services.
SECTION 7
CONDITIONS TO CLOSING
     7.1 Conditions to Obligations of Each Party to Effect the Acquisition. The
respective obligations of each party to this Agreement to consummate and effect
this Agreement and the transactions contemplated hereby shall be subject to the
satisfaction on or prior to the Closing of each of the following conditions, any
of which may be waived, in writing, by agreement of all the parties hereto:
          (a) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal or regulatory restraint or prohibition
preventing the consummation of the transactions contemplated hereby shall be in
effect, nor shall any proceeding brought by any Governmental Entity, foreign or
domestic, seeking any of the foregoing be pending; nor shall there be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the transactions contemplated hereby, which makes the
consummation of such transactions illegal.
          (b) Governmental Approval. Purchaser, the Company and their respective
subsidiaries shall have timely obtained from each Governmental Entity all
approvals, waivers and consents, if any, necessary for consummation of or in
connection with the transactions contemplated hereby.

 

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     7.2 Additional Conditions to Obligations of the Stockholder. The
obligations of the Stockholder under this Agreement shall be subject to the
satisfaction at or prior to the Closing of each of the following conditions, any
of which may be waived, in writing, by the Stockholder:
          (a) Representations, Warranties and Covenants (i) Each of the
representations and warranties of Purchaser in this Agreement that is expressly
qualified by a reference to materiality shall be true in all respects as so
qualified, and each of the representations and warranties of Purchaser in this
Agreement that is not so qualified shall be true and correct in all material
respects, on and as of the Closing as though such representation or warranty had
been made on and as of the Closing (except that those representations and
warranties which address matters only as of a particular date shall remain true
and correct as of such date), and (ii) Purchaser shall have performed and
complied in all material respects with all covenants, obligations and conditions
of this Agreement required to be performed and complied with by Purchaser as of
the Closing
          (b) Deliverables. Stockholder shall have received each other items to
be delivered by Purchaser to Stockholder at the Closing as set forth in
Section 2.2(b).
     7.3 Additional Conditions to the Obligations of Purchaser. The obligations
of Purchaser to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Closing of each of the following conditions, any of which may be waived, in
writing, by Purchaser:
          (a) Representations, Warranties and Covenants. (i) Each of the
representations and warranties of the Stockholder in this Agreement that is
expressly qualified by a reference to materiality shall be true in all respects
as so qualified, and each of the representations and warranties of the
Stockholder in this Agreement that is not so qualified shall be true and correct
in all material respects, on and as of the Closing as though such representation
or warranty had been made on and as of the Closing (except that those
representations and warranties which address matters only as of a particular
date shall remain true and correct as of such date), and (ii) the Stockholder
shall have performed and complied, or caused the Company to have performed and
complied, in all material respects with all covenants, obligations and
conditions of this Agreement required to be performed and complied with by them
as of the Closing.
          (b) No Material Adverse Effect. There shall not have occurred any
Material Adverse Effect on the Company between the date hereof and the Closing.
          (c) Compliance Certificate of the Stockholder. Purchaser shall have
been provided with a certificate executed by the Stockholder to the effect that,
as of the Closing, each of the conditions set forth in Sections 7.3(a) and (b)
above has been satisfied.
          (d) Third Party Consents. Purchaser shall have been furnished with
evidence satisfactory to it that the Company has obtained those consents,
waivers, approvals or authorizations of those Governmental Entities and third
parties whose consent or approval are required in connection with this
Agreement.

 

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          (e) All Shares Tendered. All of the Shares (representing 100% of the
issued and outstanding capital stock of the Company) shall have been tendered or
sold to Purchaser by the Stockholder at the Closing pursuant to this Agreement
(and shall not have repudiated its obligations hereunder prior to the Closing).
          (f) Injunctions or Restraints; Conduct of Business. No proceeding
brought by any Governmental Entity, foreign or domestic, seeking to prevent the
consummation of the transactions contemplated by this Agreement shall be
pending. In addition, no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal or regulatory restraint provision limiting or restricting Purchaser’s
conduct or operation of the business of the Company and its subsidiaries,
following the Closing shall be in effect, nor shall any proceeding brought by an
administrative agency or commission or other Governmental Entity, domestic or
foreign, seeking the foregoing be pending,
          (g) Deliverables. Purchaser shall have received each other item to be
delivered by Stockholder to Purchaser at the Closing as set forth in
Section 2.2(a).
SECTION 8
INDEMNIFICATION
     8.1 Survival of Representations and Warranties. The representations and
warranties of the Stockholder shall terminate on the second anniversary of the
Closing Date (the “Indemnification Termination Date”); provided, however, that
(i) the representations and warranties relating to the Company’s organization
and capitalization and title to the Shares as set forth in Sections 3.1, 3.2,
3.3, 3.13 and 4.2, shall survive the date hereof and continue for a ten year
period from the date of first commercial sale, and (ii) the representations and
warranties relating or pertaining to any Tax or Returns related to such Tax set
forth in Section 3.10 hereof shall survive until expiration of all applicable
statutes of limitation, or extensions thereof, governing each Tax or Returns
relating to such Tax. The representation and warranties of the Purchaser shall
terminate on the Closing Date, and shall thereafter be of no further force or
effect. If any claims for indemnification have been asserted with respect to any
such representations and warranties prior to the date on which the
representation and warranty to which such claim is based has terminated, the
representations and warranties on which any such claims are based shall continue
in effect until final resolution of such claims. The representations and
warranties contained in this Agreement (and any right to indemnification for
breach thereof) shall not be affected by any investigation, verification or
examination by any party hereto or by any representative of any such party or by
any such party’s knowledge of any facts with respect to the accuracy or
inaccuracy of any such representation or warrant.
     8.2 Indemnification.
          (a) Indemnification of Purchaser.
               (i) Subject to the limitations set forth in Section 8.2(b) below,
the Stockholder shall indemnify and hold the Purchaser and its Affiliates
(which, for purposes of this

 

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Section 8.2(a) shall be deemed to exclude the Company), officers, directors,
employees, representatives and agents (each a “Purchaser Indemnified Person” and
collectively “Purchaser Indemnified Persons”) harmless from and against any and
all claims, losses, liabilities, damages, costs and expenses, including
reasonable attorneys’ fees and expenses of investigation and defense
(hereinafter individually, a “Loss” and collectively “Losses”), that any
Purchaser Indemnified Person incurs by reason of:
                    (A) any inaccuracy or breach of any representation or
warranty made by the Stockholder in this Agreement or the License Agreement;
                    (B) any failure by the Stockholder to perform or comply with
any covenant, which non-compliance has not been waived, contained in this
Agreement or the Related Agreements; or
                    (C) any Tax liabilities of the Company for periods prior to
the Closing Date.
               (ii) The Stockholder shall not have any right of contribution
from the Company with respect to any Loss claimed by any Purchaser Indemnified
Person.
          (b) Indemnification of the Stockholder. Purchaser shall indemnify and
hold the Stockholder and each of its Affiliates, successors, representatives and
agents (each a “Stockholder Indemnified Person” and collectively “Stockholder
Indemnified Persons”) harmless from and against any and all Losses that any
Stockholder Indemnified Person incurs by reason of:
               (i) any inaccuracy or breach of any representation or warranty
made by the Purchaser in this Agreement; or
               (ii) any failure by the Purchaser to perform or comply with any
covenant, which non-compliance has not been waived, contained in this Agreement.
          (c) Indemnification Procedure. Upon receipt by any party obligated to
provide indemnification hereunder (an “Indemnifying Person”) of a certificate
signed by any Stockholder Indemnified Person or any Purchaser Indemnified Person
claiming indemnification hereunder (in either case, an “Indemnified Person”):
(i) stating that such Indemnified Person has paid or incurred Losses and
(ii) specifying in reasonable detail the individual items of Losses included in
the amount so stated, the date each such item was paid or incurred, the basis
for such liability, and the nature of the inaccuracy or breach of warranty or
covenant to which such item is related (such certificate, a “Claim
Certificate”), the Indemnifying Person shall have sixty (60) days to object in a
written statement to the claim made in the Claim Certificate, and such statement
shall have been delivered to the Indemnified Person prior to the expiration of
such sixty (60) day period.

 

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          (d) Resolution of Conflicts; Arbitration.
               (i) In the event that the Indemnifying Person shall object in
writing to any claim or claims made in any Claim Certificate within thirty
(30) days after delivery of such Claim Certificate, the parties shall attempt in
good faith to agree upon the rights of the respective parties with respect to
each of such claims.
               (ii) If no such agreement can be reached after good faith
negotiation, either party may demand arbitration of the matter unless the amount
of Loss is at issue in pending litigation with a third party, in which event
arbitration shall not be commenced until such amount is ascertained or both
parties agree to arbitration, and in either such event the matter shall be
settled by arbitration conducted by a panel of a single arbitrator, who shall be
chosen by agreement between the Stockholder and the Purchaser. In the event that
the parties are unable to agree, the arbitrator shall be chosen by agreement
between the two arbitrators nominated by the respective parties.
               (iii) The arbitrator shall set a limited time period and
establish procedures designed to reduce the cost and time for discovery while
allowing the parties an opportunity, adequate in the sole judgment of a majority
of the three arbitrator to discover relevant information from the opposing
parties about the subject matter of the dispute. The arbitrator shall rule upon
motions to compel or limit discovery and shall have the authority to impose
sanctions, including attorneys’ fees and costs, to the same extent as a
competent court of law or equity, should the arbitrator determine that discovery
was sought without substantial justification or that discovery was refused or
objected to without substantial justification. The decision the arbitrator as to
the validity and amount of any claim in such Claim Certificate shall be binding
and conclusive upon the parties to this Agreement. Such decision shall be
written and shall be supported by written findings of fact and conclusions which
shall set forth the award, judgment, decree or order awarded by the arbitrator.
               (iv) Judgment upon any award rendered by the arbitrator may be
entered in any court having jurisdiction. Any such arbitration shall be held in
Chicago, Illinois under the rules then in effect of the American Arbitration
Association for commercial disputes, except that discovery may be had in
accordance with the Federal Rules of Civil Procedure. The non-prevailing party
to an arbitration shall pay its own expenses, the fees of each arbitrator, the
administrative costs of the arbitration and the expenses, including, without
limitation, the reasonable attorneys’ fees and costs, incurred by the other
party to the arbitration.
          (e) Third-Party Claims.
               (i) If any third party shall notify an Indemnified Person with
respect to any matter (hereinafter referred to as a “Third Party Claim”), which
may result in Losses that are indemnifiable by any Indemnifiable Person, then
the Purchaser (if such Indemnified Person is a Purchaser Indemnified Person) or
the Stockholder (if such Indemnified Person is a Stockholder Indemnified Person)
shall give prompt notice to the Indemnifying Person (and in any event within
thirty (30) days) of the Indemnified Person becoming aware of any such Third
Party Claim or of facts upon which any such Third Party Claim will be based
setting forth such material information with respect to the Third Party Claim as
is reasonably available to the Indemnified Person; provided, however, that no
delay or failure on the part of the Indemnified Person in notifying the
Indemnifying Person shall relieve the Indemnifying Person from any

 

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obligation hereunder unless the Indemnifying Person is thereby materially
prejudiced (and then solely to the extent of such prejudice).
               (ii) In case any Third Party Claim is asserted against any
Indemnified Person, and the Indemnified Person notifies the Indemnifying Persons
thereof pursuant to Section 8.2(f)(i) above, the Indemnifying Persons will be
entitled, if they so elect by written notice delivered to the Indemnified Person
within sixty (60) days after receiving the Indemnified Person’s notice, to
assume the defense thereof, at the expense of the Indemnifying Person; provided,
that (A) the Third Party Claim involves only money damages and does not seek an
injunction or other equitable relief, (B) settlement of, or an adverse judgment
with respect to, the Third Party Claim is not, in the good faith judgment of the
Indemnified Person, likely to establish a precedential custom or practice
adverse to the continuing business interests of the Indemnified Person which
could have a material adverse effect on the business or operations of the
Indemnified Person, and (C) counsel selected by the Indemnifying Person is
reasonably acceptable to Indemnified Person. If the Indemnifying Person so
assumes any such defense, the Indemnifying Person shall conduct the defense of
the Third Party Claim actively and diligently. The Indemnifying Person shall not
compromise or settle such Third Party Claim or consent to entry of any judgment
in respect thereof without the prior written consent of the Indemnified Person,
which consent shall not be unreasonably withheld or delayed.
               (iii) In the event that the Indemnifying Person assumes the
defense of the Third Party Claim in accordance with Section 8.2(f)(ii) above,
the Indemnified Person may retain separate outside legal counsel and participate
in the defense of the Third Party Claim, but the fees and expenses of such
outside legal counsel shall be at the expense of the Indemnified Person. The
Indemnified Person will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnifying Person, which consent shall not be unreasonably
withheld or delayed. The Indemnified Person will cooperate in the defense of the
Third Party Claim and will provide full access to documents, assets, properties,
books and records reasonably requested by the Indemnifying Person and material
to the claim and will make available all officers, directors and employees
reasonably requested by the Indemnifying Person for investigation, depositions
and trial.
               (iv) In the event that the Indemnifying Person fails or elects
not to assume the defense of the Indemnified Person against such Third Party
Claim, which the Indemnifying Person had the right to assume under
Section 8.2(f)(ii) above, (A) the Indemnified Person shall have the right to
undertake the defense and (B) the Indemnified Person shall not compromise or
settle such Third Party Claim or consent to entry of any judgment in respect
thereof without the prior written consent of the Indemnifying Person, which
consent shall not be unreasonably withheld or delayed. In the event that the
Indemnifying Person is not entitled to assume the defense of the Indemnified
Person or its affiliates against such Third Party Claim pursuant to
Section 8.2(f)(ii) above, the Indemnified Person or its affiliates shall have
the right to undertake the defense, consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim in any manner it
may deem appropriate (and the Indemnified Person or its affiliates need not
consult with, or obtain any consent from, the Indemnifying Person in connection
therewith); provided, however, that except with the written consent of the

 

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Indemnifying Person, no settlement of any such claim or consent to the entry of
any judgment with respect to such Third Party Claim shall alone be determinative
of the validity of the claim against the Indemnifying Person. In each case, the
Indemnified Person shall conduct the defense of the Third Party Claim actively
and diligently, and the Indemnifying Person will cooperate with the Indemnified
Person or its affiliates in the defense of that claim and will provide full
access to documents, assets, properties, books and records reasonably requested
by the Indemnified Person and material to the claim and will make available all
individuals reasonably requested by the Indemnified Person for investigation,
depositions and trial.
     8.3 Cumulative Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy. Each party agrees not to assert claims for
punitive damages against any other party.
     8.4 Right of Setoff. Upon notice to the Stockholder, Purchaser may set off
any amount to which it may be entitled under this Section 8 against amounts
otherwise payable to the Stockholder, including without limitation, the
Milestone Payments and any amounts owed by Purchaser to the Stockholder under
the terms of the License Agreement. Neither the exercise, nor the failure to
exercise, such right of setoff will constitute an election of remedies or limit
Purchaser in any manner in the enforcement of any other remedies that may be
available to it.
SECTION 9
MISCELLANEOUS
     9.1 Notices. Any notice required or permitted by this Agreement shall be in
writing and shall be deemed sufficient upon receipt, when delivered personally
or by courier, overnight delivery service, confirmed facsimile, confirmed
electronic transmission or forty-eight (48) hours after being deposited in the
regular mail as certified or registered mail (airmail if sent internationally)
with postage prepaid, if such notice is addressed to the party to be notified at
such party’s address or facsimile number as set forth below, or as subsequently
modified by written notice,
          (a) if to Purchaser, to:
Micrus Endovascular Corporation
821 Fox Lane
San Jose, CA 95131
Attention: Carolyn Bruguera, Esq.
Facsimile No.: (408) 433-1448
Telephone No.: (408) 433-1581
Email: cbruguera@micruscorp.com
with a copy to:
Orrick, Herrington & Sutcliffe LLP

 

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1000 Marsh Road
Menlo Park, CA 94025
Attention: Louis D. Soto, Esq.
Facsimile No.: (650) 614-7401
Telephone No.: (650) 614-7400
Email: lsoto@orrick.com
          (b) if to the Stockholder or the Company, to:
Cleveland Clinic Innovations
10265 Carnegie Avenue
Cleveland, OH 44106
Attention: Executive Director
Facsimile No.: (216) 445-6514
Telephone No.: (216) 445-4008
Email: coburnc@ccf.org
with a copy to:
Office of the General Counsel
The Cleveland Clinic Foundation
1950 Richmond Road
Lyndhurst, OH 44124
Facsimile No.: (216) 297-7005
Telephone No.: (216) 297-7005
Email: shanahk@ccf.org
     9.2 Interpretation. When a reference is made in this Agreement to Exhibits,
such reference shall be to an Exhibit to this Agreement unless otherwise
indicated. The words “include,” “includes” and “including” when used herein
shall be deemed in each case to be followed by the words “without limitation.”
The phrase “made available” in this Agreement shall mean that the information
referred to has been made available if requested by the party to whom such
information is to be made available. The phrases “the date of this Agreement”,
“the date hereof,” and terms of similar import, unless the context otherwise
requires, shall be deemed to refer to October 26, 2007. The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
     9.3 Counterparts. This Agreement may be executed in two or more
counterparts (including by facsimile), each of which shall be deemed an original
and all of which together shall constitute one instrument.
     9.4 Entire Agreement; No Third Party Beneficiaries. This Agreement
(including the documents and the instruments referred to herein) (a) constitutes
the entire agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties

 

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with respect to the subject matter hereof, and (b) are not intended to confer
upon any person other than the parties hereto any rights or remedies hereunder.
     9.5 Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith, in order to maintain the economic position enjoyed by
each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.
     9.6 Governing Law. This Agreement and all acts and transactions pursuant
hereto and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the State of Delaware,
without giving effect to principles of conflicts of law.
     9.7 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation, preparation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
     9.8 Amendments and Waivers. Any term of this Agreement may be amended or
waived only with the written consent of the parties or their respective
successors and assigns. Any amendment or waiver effected in accordance with this
Section 9.9 shall be binding upon the parties and their respective successors
and assigns.
[Signature Page Follows]

 

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     The parties have duly executed this Stock Purchase Agreement as of the date
first above written.

              “PURCHASER”   MICRUS ENDOVASCULAR CORPORATION    
 
           
 
  By:        
 
                Name: Robert Stern         Title: President    
 
            “STOCKHOLDER”   THE CLEVELAND CLINIC FOUNDATION    
 
           
 
  By:        
 
                Name: David Strand         Title: Chief Emerging Business
Officer    
 
            “COMPANY”   REVASC TECHNOLOGIES, INC.    
 
           
 
  By:        
 
                Name: Christopher Coburn         Title: President and Chief
Executive Officer    

SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT

 

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COMPANY DISCLOSURE SCHEDULE
Section 3.1(a)

                      Delaware   Ohio
Good Standing Certification
          July 20, 2006
Incorporation:
  July 19, 2006        

Section 3.1(b)
All fictitious names (if any) under which the Company or its predecessors has
conducted business: None
Section 3.4: Conflicts

     
Any provision of the Certificate of Incorporation, Bylaws or equivalent
organizational documents of the Company, in each case as amended to date
  None
 
   
Any mortgage, indenture, lease, contract or other material agreement or
instrument, permit, concession, franchise or license to which the Company, the
Stockholder or any of their respective properties or assets is subject
  None
 
   
Any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company, the Stockholder or their respective properties or
assets.
  None

Section 3.5: Required Consents
None
Section 3.7: Financial Statements; Liabilities
None
Section 3.9(a): Operations/Company Contracts
Amended and Restated Technology License Agreement by and between The Cleveland
Clinic Foundation and Revasc Technologies, Inc. effective as of July 31, 2006,
amended and restated as of October 26, 2007

 

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Section 3.9(b): Operations/Other
None
Section 3.10a: Tax Matters
Section 3.10j: Tax Matters
All jurisdictions (whether foreign or domestic) to which any Tax is properly
payable by the
Company: None
Section 3.13(b): Intellectual Property
(1) None
Section 3.13(d): IP Agreements
No exceptions
Section 3.13(g): Ownership Transfers
None
Section 3.13(g): Licensors
None
Section 3.13(h): IP Clawback Agreements
None

 

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EXHIBIT A
CERTAIN DEFINITIONS
“Acquired Technology” shall mean the Company Intellectual Property acquired upon
the consummation of the Acquisition.
“Affiliates” shall mean any member of the immediate family (including spouse,
brother, sister, descendant, ancestor or in-law) of any officer, director or
member of a Person or any corporation, partnership, trust or other entity in
which any Person has a five percent (5%) or greater interest or is a director,
officer, partner or trustee. The term Affiliate shall also include any entity
which controls, or is controlled by, or is under common control with any of the
individuals or entities described in the preceding sentence.
“Device” shall mean any endovascular bypass medical device and system designed
and developed by Purchaser for use in humans that is based on the Acquired
Technology and is within the scope of the claims of the Device Patents.
“Device Patents” shall mean the following United States, international and
foreign patents and patent applications (including provisional applications):

              Title   Application Number   Publication Number   Date Filed
A Method and Apparatus for Increasing Blood Flow through an Obstructed Blood
Vessel
  60/764,206
(Expired)   —   2/1/2006
 
           
A Method and Apparatus for Increasing Blood Flow through an Obstructed Blood
Vessel
  60/793,588
(Expired)   —   4/20/2006
 
           
A Method and Apparatus for Increasing Blood Flow through an Obstructed Blood
Vessel
  11/700,987   US 20070208367 A1   2/1/2007
 
           
Method and Apparatus for Increasing Blood Flow through an Obstructed Blood
Vessel
  PCT/US2007/002750   WO7089897   2/1/2007

“Related Agreements” shall mean all ancillary agreements required in this
Agreement to be executed and delivered in connection with the transactions
contemplated hereby, including, without limitation, the License Agreement and
any amendments thereto, the Consulting Agreements and the Noncompetition
Agreements.

 

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EXHIBIT B
AMENDED AND RESTATED TECHNOLOGY LICENSE AGREEMENT
          THIS TECHNOLOGY LICENSE AGREEMENT (this “Agreement”) is effective as
of the thirty-first day of July, 2006 (the “Effective Date”), and is amended and
restated as of the 26th day of October, 2007 (the “Restatement Date”), by and
between The Cleveland Clinic Foundation, a non-profit Ohio corporation
(“Licensor” or “CCF”), and Revasc Technologies, Inc., a corporation organized
and existing under the laws of the State of Delaware (“Licensee”). Licensor and
Licensee may each be referred to in this Agreement individually as a “Party” and
collectively as the “Parties.”
          WHEREAS, Licensor’s scientists working at The Cleveland Clinic (the
“Clinic”) have invented certain Licensed Technology with applicability in the
Field of Use and have in accordance with the policies of the Clinic assigned
such Licensed Technology to Licensor;
          WHEREAS, Licensor desires to grant to Licensee a license to the
Licensed Technology in order to develop and commercialize it, and Licensee
desires such license;
          WHEREAS, Licensor is the sole shareholder of Licensee’s equity
interests and has agreed with Micrus Endovascular Corporation (“Micrus”) under
that certain Stock Purchase Agreement dated October 26, 2007 (the “Stock
Purchase Agreement”) to sell 100% of the outstanding equity interests in
Licensee to Micrus;
          WHEREAS, Licensor and Licensee desire that such sale of stock under
the Stock Purchase Agreement be consummated; and
          WHEREAS the amendment and restatement of this License Agreement as
stated herein is a condition to such consummation;
          NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
Section 1
Definitions
     Unless otherwise specifically provided herein, the following terms, when
used with a capital letter at the beginning, will have the following meanings:
1.1. “Agreement” has the meaning set forth in the Preamble.
1.2. “Affiliate” as applied to Licensee means any company or other legal entity
other than Licensee or Licensor, in whatever country organized, controlling or
controlled by or under common control with the Licensee. Whereby the term
“control” means possession of the power to direct or cause the direction of the
management and policies whether through the ownership of voting securities, by
contract, or otherwise.

 

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1.3. “Confidential Information” means all confidential or proprietary
information received by either Party from the other Party, during the
negotiation of this Agreement, the Agreement itself, or information provided
under this Agreement or relating to the Licensed Technology including any uses,
processes, methods, formulations, clinical data, test results, research and
development plans, pricing policies, business plans, sales, information relating
to customer identities, characteristics and agreements, financial information
and projections, trade secrets, work in progress, future development, marketing,
and investors whether in oral, graphic, electronic or any other media or form.
1.4. “Effective Date” has the meaning set forth in the Preamble.
1.5. “FDA” means the United States Food and Drug Administration or any successor
agency thereto or any foreign governmental regulatory authority in the Territory
involved in the granting of approvals for the manufacture, sale and/or
reimbursement of a Product.
1.6. “Field of Use” Means, worldwide, any and all therapeutic products,
processes, devices, or methods within any of the Valid Claims.
1.7. “Improvement” means any invention, discovery, development, or modification
made during the term of this Agreement by the Investigators or either of them
while an employee of Licensor that falls within the scope of the Field of Use,
is covered by one or more Valid Claims of a Licensed Patent, and is useful to
practice the Licensed Technology.
1.8. “Investigator(s)” means [***].
1.9. “Licensed Know-How” means any information related to the practice and use
of the Licensed Patents in the Field of Use, including research data,
formulations, designs, manufacturing processes, testing and test results,
clinical trial data, process information, trade-secrets and other information
that is known by the Investigator(s) during their respective employment by the
Licensor and owned by the Licensor, including all Improvements, modifications
and enhancements thereto, which Licensor has the right to disclose and license
to the Licensee.
1.10. “Licensed Patents” shall refer to and mean those patent and patent
applications listed on Exhibit A and any U.S. or foreign patent applications,
reissues, extensions, renewals, reexaminations, certificates of invention,
substitutions, divisionals, and continuations thereof or any parent application
thereof, and the foreign equivalents thereof, and having the same priority date
as the parent applications, and all patents and patent applications for
Improvements thereto.
1.11. “Licensed Product” means any device that, if, where, and when made or sold
by someone other than the patent owner or its licensee, would infringe one or
more issued, valid, and unexpired Valid Claims.
1.12. “Licensed Technology” means the Licensed Patents and Licensed Know-How,
together with all intellectual property rights therein.

 

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1.13. “Licensee” has the meaning set forth in the Preamble and in Section 11.2.
1.14. “Licensee’s Material Breach” has the meaning set forth in Section 7.2
(Termination by Licensor).
1.15. “Licensor” has the meaning set forth in the Preamble.
1.16. “Licensor’s Material Breach” has the meaning set forth in Section 7.3
(Termination by Licensee).
1.17. “Net Sales” means the revenues actually received by Licensee (or its
Affiliates and Sublicensees), in accordance with U.S. generally accepted
accounting principles (GAAP), consistently applied by Licensee, for sales of
Licensed Products by or on behalf of Licensee or any of its Affiliates or
Sublicensees, less only the sum of the following: (a) usual trade discounts
granted to and taken by customers; (b) sales, tariff duties and/or use taxes
directly imposed on actual sales of Licensed Products; (c) outbound
transportation costs prepaid or allowed and transportation insurance; and
(d) amounts allowed or credited on returns or rejections, not exceeding the
original invoice amount; provided, however, that the sale by Licensee to its
Affiliates shall not be counted in Net Sales, and resales by distributors shall
not be treated as Net Sales by Sublicensees for purposes of this definition.
1.18. “Patent Costs” means any ongoing out-of-pocket costs incurred or to be
incurred, including government fees and attorneys’ fees, in the course of
preparing, filing, prosecuting and maintaining any of the Licensed Patents.
1.19. “Party” or “Parties” has the meaning set forth in the Preamble.
1.20. “Person” or “Persons” means any individual, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
limited liability company, or other legal entity of any kind, foreign or
domestic.
1.21. “Product” means:
(a) Any product or service that is covered in whole or in part by a Valid Claim
in the Licensed Patents in the country in which the product or service is made,
used, leased, offered for sale, or sold, or incorporates Licensed Know-How;
(b) Any product which is manufactured using a process which is covered in whole
or in part by a Valid Claim in the Licensed Patents in the country in which the
process is used, or where such process incorporates Licensed Know-How; or,
(c) Any product or service which is used according to a method which is covered
in whole or in part by a Valid Claim in the Licensed Patents in the country in
which the

 

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method is used, or where such product or service incorporates or relies upon
Licensed Know-How.
1.22. “Regulatory Approval” has the meaning set forth in Section 3.3 (Regulatory
Approval).
1.23. “Restatement Date” has the meaning set forth in the Preamble, it being
understood that the Restatement Date will be the same as the Closing Date under
the Stock Purchase Agreement.
1.24. “Term” has the meaning set forth in Section 7.1 (Term).
1.25. “Valid Claim” means any pending or issued claim(s) of any Licensed Patent
that has not been (a) permanently revoked, canceled or withdrawn, (b) subject to
a final rejection with no chance of appeal or continuation, (c) nor held
unenforceable or invalid by a decision of a court or other governmental agency
of competent jurisdiction that is unappealable or unappealed in the time allowed
for appeal, and (d) which has not been admitted to be invalid or unenforceable
through reissue or disclaimer or otherwise. In the event that a claim has been
pending for greater than 7 years, such claim shall not be considered a Valid
Claim until such claim is allowed.
Section 2
Licenses

2.1.   License Grant.       Subject to the terms and conditions of this
Agreement, Licensor hereby grants to Licensee for the Term an exclusive,
worldwide license to use the Licensed Technology in the Field of Use to
(i) make, have made, develop, use, import, export, distribute, market, promote,
offer for sale, and sell Products in the Field of Use, and (ii) practice in the
Field of Use any method, process or procedure claimed within the Licensed
Technology.   2.2.   Sublicensing Rights.       Licensor grants to Licensee the
limited right to grant sublicenses to third parties, including Affiliates,
(“Sublicensee(s)”) under this Agreement provided that any such sublicense by
Licensee of its rights shall be in writing, shall be consistent with the terms
of this Agreement, shall contain provisions necessary to effectuate the terms of
this Agreement, and shall include an obligation for the sublicensee to comply
with the applicable obligations of this Agreement as if such provisions used the
word “Sublicensee” in lieu of “Licensee,” including, without limitation,
Section 7 (Termination), Section 8.4 (Infringement of Third Party Rights), 8.5
(Patent Marking), and 8.6 (Confidential Information), and Section 9
(Indemnification and Insurance). Licensee shall promptly notify Licensor in
writing of the existence of any sublicense and of the rights granted herein, and
provide a copy of any such sublicense. Furthermore, Licensee shall notify
Licensor in writing if any Sublicensee fails to reasonably comply with the
provisions of this Agreement. Licensee shall assume the same responsibility for
the activities of its Sublicensees as if the activities were directly those of
Licensee.

 

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2.3.   Retained Rights; Requirements.

     2.3.1. Licensor’s Research Rights. Licensor shall retain an irrevocable,
royalty-free, fully-paid up, nonexclusive right to practice, make and use the
subject matter described and/or claimed in the Licensed Technology for its own
internal, non-commercial educational or research purposes.
     2.3.2. Right to Publish. Licensor shall retain the right to publish
scientific findings from research related to the Licensed Technology subject to
the terms of Section 8.5 (Confidential Information) upon prior notice to
Licensee.
     2.3.3. Research Transfers. Licensor shall retain the right to transfer
Licensed Technology to academic or research institutions for non-commercial
research use subject to the terms of Section 8.6 upon prior notice to Licensee.
Licensor shall provide Licensee with a copy of any agreement directed to such a
transfer of the Licensed Technology within thirty (30) days of its execution.
     2.3.4. Federal Funding. Licensor affirms that none of the Licensed Patents
nor the development of any Licensed Technology was supported by federal funding
in any form.
2.4. Ownership of Improvements.
The Licensor agrees to promptly disclose to the Licensee all Improvements in
writing within thirty (30) days of disclosure of such Improvement. Each Party
agrees to cooperate in any reasonable manner with the other to obtain, perfect
and enforce, Licensor’s right, title and interest in any and all countries in
the Improvements and Licensee’s rights under this Agreement with respect
thereto. Licensor acknowledges that any improvements made by or for the Licensee
shall be the property of the Licensee, and Licensor shall have no right, title
or interest therein.
2.5. No Additional Rights. Nothing in this Agreement shall be construed to
confer any rights on Licensee by implication, estoppel, or otherwise as to any
technology or patent rights of Licensor other than the rights to the Licensed
Technology granted herein, regardless of whether such technology or patent
rights shall be dominant or subordinate to any rights to Licensed Technology.
Section 3
Development, Commercialization and Regulatory Approvals
3.1. Licensee’s Diligence.
  Licensee accepts that commercialization of Products is of utmost importance to
Licensor. Licensee shall use commercially reasonable efforts to bring the
Product(s) to market through a thorough, vigorous and diligent program for
exploitation of the Licensed Technology as timely and efficiently as possible;
provided, however, that:

 

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(i) if Licensor at any time believes that Licensee is out of compliance with its
diligence obligations, Licensor shall, prior to taking any other action with
respect thereto, notify Licensee of such belief and Licensor’s grounds therefor,
including a reasonably detailed written statement of the minimum steps that
Licensor believes Licensee would have to take during the ensuing year to bring
itself into compliance with such obligations. In such event, if Licensee
believes in good faith that it is in compliance with such diligence obligations,
or that such steps are more than would be required in order to bring Licensee
into such compliance during such ensuing year, Licensee may seek to resolve the
matter with Licensor, either through good faith negotiations between the Parties
or pursuant to Section 10. If such resolution is that Licensee must take certain
steps during the then ensuing year in order to be in compliance with its
diligence obligations, Licensee will be required (for the satisfaction of such
diligence obligations) to take those steps during that period, unless, at any
time, the Diligence Safe Harbor described in clause (ii) below in this section
is satisfied; and
(ii) Licensor agrees that Licensee will be deemed for all purposes to have fully
complied with its diligence obligations if the following safe harbor provision
(the “Diligence Safe Harbor”) is satisfied. The Diligence Safe Harbor will be
satisfied if all six of the “Milestones” described in Section 1.3 of the Stock
Purchase Agreement, less any amounts for which CCF is liable pursuant to
Section 8 of the Stock Purchase Agreement, have been paid to CCF, either
pursuant to the payment schedule set forth in the Stock Purchase Agreement or as
follows: (A) Micrus may at any time accelerate the payment to CCF of one or more
of such Milestones (less any such amounts for which CCF is liable pursuant to
Section 8 of the Stock Purchase Agreement), and thereby satisfy the Diligence
Safe Harbor; (B) if Licensee has not, on or before the sixth (6th) anniversary
of the Restatement Date, obtained the CE Mark for any Product and has also at
that time not obtained FDA marketing approval for any Product (whether or not
the same Product), then the criteria for the Diligence Safe Harbor will be
deemed not to be satisfied unless, on or before such sixth anniversary, Micrus
exercises (or has exercised) its option under clause (ii)(A) above to accelerate
the payment all of the six Milestone payments (less any such amounts for which
CCF is liable pursuant to Section 8 of the Stock Purchase Agreement) that have
not theretofore been paid by Micrus to CCF; and
(iii) in any event, Licensor’s sole remedy for any failure of diligence by the
Licensee will be to terminate the licenses granted under this License Agreement.
3.2. Development Reports. Within thirty (30) days following the anniversary of
the Restatement Date, Licensee will provide Licensor with a written statement
summarizing Licensee’s product development activities during the year since the
Restatement Date. Licensee’s obligation to provide Licensor with such annual
reports will continue for a Product until the First Commercial Sale of that
Product.
3.3. Regulatory Approval. Licensee will be solely responsible, at Licensee’s
sole cost and expense, for securing any federal (including FDA), state, or local
regulatory approval necessary for commercial sale of Products (“Regulatory
Approval”). Licensor will provide reasonable cooperation through providing
Licensee, upon Licensee’s written request and in a timely fashion,

 

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with all documentation and information reasonably necessary to secure such
Regulatory Approval.
Section 4
Royalties and Other Consideration
4.1. Royalties on Net Sales. No later than sixty (60) days after June 30 and
December 31 of each year following the first commercial sale anywhere in the
world of a Licensed Product by Licensee or its Affiliates or Sublicensees,
Licensee shall pay to Licensor: (i) a royalty of [***] of Net Sales received by
Licensee and its Affiliates and Sublicensees during the six-month period ending
on such June 30 or December 31 (the respective “Semi-Annual Periods”), as the
case may be; provided, however, that no royalty will accrue or become payable
with respect to any Licensed Product sold anywhere in the world following the
[***] anniversary of such first commercial sale.
4.2. Reporting and Payment. Within sixty (60) days of the end of each
Semi-Annual Period, Licensee shall deliver to Licensor complete and accurate
reports, giving such particulars of the Net Sales of Licensee and its Affiliates
and Sublicensees during such Semi-Annual Period under this Agreement as shall be
pertinent to a royalty accounting hereunder. If no royalties shall be due,
Licensee shall so report. Payments shall be paid in United States Dollars in
Cleveland, Ohio, or at such other place as Licensor may reasonably designate
consistent with the laws and regulations controlling in any foreign country. If
any currency conversion shall be required in connection with the payment of
royalties hereunder, such conversion shall be made by using the exchange rate
stated in the Wall Street Journal on the last business day of the Semi-Annual
Period to which such royalty payments relate.
4.3. No Other Payments. Except as stated in this Section 4, Licensee will have
no obligation to pay Licensor a performance Milestone Payment, a Royalty
payment, or license maintenance fee as a consideration for this license.

 

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Section 5
Recordkeeping
5.1. Books and Records. Licensee will maintain documentation detailing
Licensee’s efforts to develop Products for commercial sale, and thereafter will
maintain accurate records detailing all commercial sales of Licensed Products
for five (5) years following the end of the calendar year to which they pertain.
Such documentation may include, but is not limited to, invoices for studies
advancing development of Products, laboratory notebooks, internal job cost
records, filings made to the Internal Revenue Service to obtain tax credit, if
available, for research and development of Products, submissions and records
relating to obtaining Regulatory Approval, and sales records of Licensee or
Sublicensees. Such books and records shall be preserved for the Term of this
Agreement and for a period of not less than five (5) years after the termination
of this Agreement.
5.2. Audit. Licensee shall have the right to audit the books and records of the
Licensee and all Sublicensees. Upon a minimum notice of fifteen (15) business
days and during regular business hours, Licensor shall have the right to engage
an independent certified public accountant, to which the Licensee or Sublicensee
does not reasonably object, to review all books and records necessary to confirm
Licensee’s and Sublicensee’s compliance with its obligations under this
Agreement, provided that Licensor shall not conduct more than one audit of
Licensee and each Sublicensee in any twelve (12) month period, and such audit
shall not unreasonably disrupt Licensee’s or Sublicensee’s business.
Section 6
Limitation of Liability; Warranty Disclaimer; Indemnification
6.1. EXPRESS DISCLAIMER. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT,
LICENSOR IS PROVIDING THE LICENSED TECHNOLOGY “AS IS” AND WITH ALL FAULTS.
EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, LICENSOR MAKES NO
REPRESENTATIONS, EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED,
INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR ANY
IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE OR VALIDITY OR
ENFORCEABILITY OF ANY INTELLECTUAL PROPERTY RIGHTS OR NON-INFRINGEMENT OF ANY
THIRD PARTY INTELLECTUAL PROPERTY RIGHTS AND ASSUMES NO RESPONSIBILITIES
WHATSOEVER WITH RESPECT TO USE, SALE, OR OTHER DISPOSITION BY LICENSEE OR ITS
VENDEES OR OTHER TRANSFEREES OF PRODUCTS INCORPORATING OR MADE BY USE OF
TECHNOLOGY OR INTELLECTUAL PROPERTY LICENSED UNDER THIS AGREEMENT. IN NO EVENT
WILL LICENSOR, OR ITS TRUSTEES, DIRECTORS, OFFICERS, EMPLOYERS AND AFFILIATES,
BE LIABLE FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES OF ANY
KIND, WHETHER GROUNDED IN TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY,
CONTRACT OR OTHERWISE. LICENSOR WILL

 

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HAVE NO RESPONSIBILITIES OR LIABILITIES WHATSOEVER WITH RESPECT TO PRODUCTS.
6.2. Licensor Representations and Warranties. Licensor hereby represents and
warrants to Licensee that, as of the Effective Date and also as of the
Restatement Date, to its knowledge:
     (i) Licensor is the owner of sufficient right, title, interest in the
Licensed Technology and sufficient authority to grant Licensee the licenses set
forth herein.
     (ii) Licensor has not issued any additional licenses, options,
restrictions, liens, rights of third parties, disputes, royalty obligations,
proceedings or claims in the Field of Use (whether or not outside of the “Field
of Use” as defined prior to the amendment and restatement of this Agreement)
limiting Licensor’s rights or the rights of the Licensee under this Agreement or
which may reasonably lead to a claim of infringement or invalidity regarding,
any part or all of the Licensed Technology or its use; and
     (iii) Licensor has no knowledge of infringement of, or conflict with, any
license, patent, or other intellectual property right of any other third party
and there is no known claim pending, filed or threatened against Licensor, of
infringement, interference or invalidity regarding any part or all of the
Licensed Technology or its use.
6.3. Disclaimer. Except as expressly provided in Section 6.2, nothing in this
Agreement will be construed as:
(a) A warranty or representation by Licensor as to the validity or scope of any
of the Licensed Technology;
(b) A warranty or representation by Licensor that anything made, used, sold or
otherwise disposed of under the licenses granted in this Agreement, or the
practice of the Licensed Technology, will or will not infringe patents or other
intellectual property rights of third parties;
(c) An obligation of Licensor to furnish any know-how or information other than
the Licensed Know-How;
(d) An obligation of Licensor to provide any services to Licensee; or
(e) An obligation of Licensor to bring or prosecute actions or suits against
third parties for infringement of patents or other proprietary rights.
6.4. Licensee Representations and Warranties.
6.4.1. Licensee hereby represents and warrants to Licensor that as of the
Effective Date, to its knowledge, the execution and performance of Licensee’s
obligations under this Agreement does not conflict with, cause a default under,
or violate any existing contractual obligation that may be owed by Licensee to
any third party.

 

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6.4.2. Licensee hereby represents, warrants and covenants to Licensor that all
Products produced under the licenses granted herein will be manufactured in all
material respects in accordance with applicable federal, state and local laws,
rules and regulations, including, without limitation, in all material respects
in accordance with all applicable rules and regulations of the FDA.
6.4.3. Licensee hereby represents and warrants to Licensor that Licensee is a
corporation duly organized, validly existing and in good standing and has all
requisite corporate power and authority to execute and deliver this agreement.
Section 7
Term and Termination
7.1. Term. Unless terminated earlier under the provisions of this Section 7, the
term (the “Term”) of this Agreement will begin on the Effective Date and end
upon the last to expire Valid Claim of the Licensed Patents. If the term of this
Agreement is not so terminated prior to such expiration, all then-remaining
licenses to Licensee hereunder shall, upon and after such expiration, become
nonexclusive, royalty-free, paid-up and irrevocable.
7.2. Termination by Licensor. Upon Licensee’s Material Breach of this Agreement
by Licensee, Licensor shall have the right to terminate this License by
providing ninety (90) days prior written notice to Licensee. Subject to
Article 10, this termination will become effective at ninety (90) days following
receipt of such notice unless Licensee shall have remedied such breach or is
able to demonstrate, with supportive documentation or evidence, substantial
progress towards remedying such Licensee’s Material Breach; provided, however,
that if Licensee disputes in good faith that the claimed breach exists, such
ninety (90) day period will not start to run until such dispute has been
resolved or can no longer be maintained in good faith. Nothing in this
Section 7.2 shall prohibit Licensor from pursuing any other remedies at law
which it may have in connection with Licensee’s material breach.
7.3. Termination by Licensee. Licensee may, at its option, terminate this
Agreement in its entirety:
(a) By giving at least ninety (90) days written notice of such termination to
Licensor; or
(b) Upon any Licensor’s Material Breach under this Agreement, which Licensor
fails to remedy within sixty (60) days after written notice thereof by Licensee;
provided, however, that if Licensor disputes in good faith that the claimed
breach exists, such ninety (90) day period will not start to run until such
dispute has been resolved or can no longer be maintained in good faith.
Licensor’s Material Breach shall include Licensor’s breach of Section 6.2
(Licensor Representations and Warranties).
Nothing in this Section 7.3 shall prohibit Licensee from pursuing any other
remedies at law which it may have in connection with Licensor’s Material Breach.

 

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7.4. Termination due to Licensee Insolvency. This Agreement shall terminate upon
the filing in any court or agency pursuant to any statute or regulation of any
state, country or jurisdiction, a petition in bankruptcy or insolvency or for
reorganization or for an arrangement or for the appointment of a receiver or
trustee or if Licensee is served with an involuntary petition against it, filed
in any insolvency proceeding, and such petition will not be dismissed within
sixty (60) days after the filing thereof, or if Licensee will propose or be a
party to any dissolution or liquidation, or if Licensee will make an assignment
for the benefit of its creditors, or if at any time Licensee enters into
proceedings for winding up or dissolution of business.
7.5. Effects of Termination.
     7.5.1. Termination of License. Upon a termination of this Agreement in its
entirety under Section 7.2 (Termination by Licensor), Section 7.3(a)
(Termination by Licensee) or Section 7.4 (Termination due to Licensee’s
Insolvency), Licensee’s rights to the Licensed Technology granted hereunder and
all use thereof will terminate and any and all rights in the Licensed
Technology, including Licensee’s rights to Improvements, will revert back to
Licensor.
     7.5.2. Regulatory Approvals. Upon termination of this Agreement for any
reason other than breach by Licensor, Licensee will permit Licensor and its
future licensees to utilize, reference, and otherwise have the benefit of all
Regulatory Approvals of, or clinical trials or other studies conducted on, and
all filings made with regulatory agencies with respect to, the Products. The
Parties agree to negotiate and in good faith arrive at a value to be paid to
Licensee for the preceding upon the termination of this Agreement.
     7.5.3. Accrued Obligations. Expiration or termination of the Agreement will
not release either Party from any obligation that matured prior to the effective
date of such expiration or termination.
7.6. Survival. Upon expiration or termination of this Agreement, Section 6
(Disclaimer), Section 7 (Effects of Termination), Section 8.6 (Confidential
Information), Section 9 (Indemnification and Insurance), Section 10 (Alternative
Dispute Resolution) and Section 11 (Miscellaneous) will, with related
definitions, survive and remain in full force and effect.
Section 8
Protection of Intellectual Property Rights
8.1. Patent Prosecution. Following the Restatement Date, Licensee shall assume
from Licensor all control over the prosecution and maintenance of the Licensed
Patents, unless Licensee reasonably determines that continued maintenance is not
merited or that continued prosecution is not likely to result in the issuance of
a patent in the relevant region. Licensee shall bear all of its expenses for
such activities following the Restatement Date, and shall receive no credits
with respect thereto against any royalties or Milestones that may become owning
to Licensor hereunder or under the Stock Purchase Agreement. Licensor shall,
within fifteen (15) business days following the Restatement Date, provide
Licensee and its counsel with the complete files of Licensor and its counsel
with respect to the prosecution and maintenance of the Licensed Patents, through
that time. Furthermore, both Parties agree to provide reasonable

 

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cooperation to each other to facilitate the application and prosecution of
patents pursuant to this Agreement. In the event that Licensee elects to cease
prosecution or abandon any applications or issued Licensed Patents (hereinafter
“Forsaken Applications and Patents”), Licensee shall provide Licensor at least
thirty (30) days written notice to take over prosecution or maintenance of such
Forsaken Applications and Patents. In such event, Licensor shall have the right,
but not the obligation, to commence or continue to prosecute or maintain the
Forsaken Applications and Patents. At all times Licensor shall retain sole
ownership and control of all Licensed Patents, including all Forsaken
Applications and Patents.
8.2. Patent Extensions. Licensee and Licensor agree that the Licensed Patents
shall be extended by all means provided by law or regulation, including without
limitation extensions provided under 35 U.S.C. §§154(b), 155A, and 156. Licensor
and Licensee hereby agree to provide each other with all necessary assistance in
securing such extensions, including without limitation, providing all
information regarding applications for regulatory approval, approval granted,
and the timing of the same. Licensee and Licensor acknowledge that extensions
under 35 U.S.C. §156 must be applied for within sixty (60) days of the date that
a Licensed Product is permitted to be commercially marketed or used, and that
failure to promptly provide the necessary information or assistance needed
during such sixty (60) day period may result in a loss of patent rights in the
Licensed Patents.
8.3. Patent Costs Payments.
     Commencing on the Effective Date of this Agreement, Licensee shall
reimburse Licensor for all Patent Costs incurred by Licensor after such
Effective Date for such patent related expenses, up to the Restatement Date.
Licensee shall remit payment within thirty (30) days after Licensee’s receipt of
invoices for the same.
8.4. Enforcement/Defense of Licensed Patents.
8.4.1. Notice. Each Party shall provide written notice to the other Party of the
specific details of any alleged infringement by a third party of the Licensed
Patents in the Field of Use or misappropriation of the Licensed Know-How in the
Field of Use.
8.4.2. Licensee Enforcement against Third Party Infringement. During the term of
this Agreement, Licensee shall have the right, but shall not be obligated, to
prosecute at its own expense any infringements of the Licensed Technology in the
Field of Use, provided that Licensee will (i) use counsel reasonably acceptable
to Licensor, (ii) keep Licensor reasonably informed regarding the progress of
any litigation and settlement discussions with any alleged infringer, and
(iii) copy Licensor on all documents and correspondence. In furtherance of such
rights, Licensor hereby agrees that Licensee may join Licensor as a party
plaintiff or defendant, as applicable, in any such suit, or if necessary,
prosecute such suit solely in the name of Licensor, without expense to Licensor.
Licensee shall control any such proceeding and Licensor shall cooperate with
Licensee. Licensee shall hold harmless and indemnify Licensor from and against
any order for costs arising without fault of Licensor that may be made against
Licensor or Licensee in such proceedings. The total cost of any infringement
action commenced or defended solely by Licensee shall be borne by Licensee. No

 

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settlement, consent judgment or other voluntary final disposition of the suit
may be entered into without consent of Licensor, which consent shall not
unreasonably be withheld.
8.4.3. Licensor Enforcement against Third Party Infringement. If within six
(6) months after having been notified of any alleged infringement Licensee shall
have been unsuccessful in causing the alleged infringer to desist or shall not
have brought and shall not be diligently prosecuting an infringement action, or
if Licensee shall notify Licensor at any time prior thereto of its intention not
to bring suit against any alleged infringer, or if Licensor has granted a
license to a third party to the Licensed Technology outside the Field of Use,
then in those events only, Licensor shall have the right, but shall not be
obligated to prosecute at its own expense any infringement of the Licensed
Technology and, in furtherance of such rights, Licensee hereby agrees that
Licensor may join Licensee as a party plaintiff in any such suit, without
expense to Licensee. Licensor shall control any such proceeding and Licensee
shall cooperate with Licensor. Licensor shall hold harmless and indemnify
Licensee from and against any order for costs arising without fault of Licensee
that may be made against Licensee or Licensor in such proceedings. No
settlement, consent judgment or other voluntary final disposition of the suit
that interferes with Licensee’s rights under this Agreement may be entered into
without the consent of Licensee, which consent shall not be unreasonably
withheld.
8.4.4. Recovery. If either Party shall undertake the enforcement and/or defense
of the Licensed Patents by litigation pursuant to Sections 8.4.2 or 8.4.3, any
recovery or damages (whether by way of settlement or otherwise) received as a
result of any such suit shall be applied first in satisfaction of any
unreimbursed expenses and legal fees of either Party, then to reimburse Licensor
for any Earned Royalty withheld pursuant to Section 8.4.5, and then the
remainder shall be divided between the Parties as follows: (i) as to recoveries
obtained in proceedings initiated and controlled by the Licensee, Licensor shall
receive from the portion of such remainder, if any, that represents damages for
lost sales, an amount equal to the Royalty it would have received under
Section 4 if Licensor had earned such revenue through the sale of Licensed
Products (when the royalty percentage stated in Section 4.1 is applied to such
portion of such remainder) and Licensee shall retain the balance; and (ii) as to
recoveries obtained in proceedings initiated and controlled by the Licensor
pursuant to Section 8.4.3, Licensor shall retain such remainder.
8.4.5. Licensee Defense of Infringement. In the event that any action, suit or
proceeding is brought against, or written notice or threat thereof is provided
to Licensee alleging infringement of any patent or unauthorized use or
misappropriation of technology arising out of or in connection with Licensee’s
exercise of Licensed Technology, Licensee shall have the right to defend at its
own expense such action, suit or proceeding. Licensee shall have the right to
offset against fifty percent (50%) of the royalties otherwise due Licensor under
Section 4, including reasonable attorney’s fees, incurred in the defense of the
Licensed Technology. Licensee shall hold harmless and indemnify Licensor from
and against any order for costs arising without fault of Licensor that may be
made against Licensee or Licensor in such proceedings. Licensor agrees to
cooperate with Licensee at Licensee’s expense (excluding salaries, rent,
utilities and other expenses typically treated as overhead), in connection with
Licensee’s response to or defense of such action, suit or proceeding, or notice
or threat thereof.

 

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8.4.6. Party Cooperation. In the event that a Party shall undertake the
enforcement and/or defense of the Licensed Technology by litigation pursuant to
this Agreement, the other Party shall, at the request and reasonable expense
(excluding salaries, rent, utilities and other expenses typically treated as
overhead) of the Party undertaking such enforcement and/or defense, cooperate in
all reasonable respects and, to the extent possible, have its employees testify
when requested and make available relevant records, papers, information,
samples, specimens, and the like.
8.4.7. Settlement Involving a Sublicense of Licensed Technology. Subject to
Licensor’s consent which shall not be unreasonably withheld, Licensee may enter
into a settlement, consent judgment or other voluntary final disposition of a
suit including a sublicense to a third party for use of the Licensed Technology
in the Field of Use, such sublicense being consistent with the terms of this
Agreement as set forth in Section 2.2.
8.5. Patent Marking. Licensee will mark Licensed Products and/or packaging used
in connection with Licensed Products sold or distributed by Licensee in the
Territory with a notice that will provide that such Licensed Products are made
under one or more of the Licensed Patents and will provide such notice in the
manner and with such prominence as is customary for legal proprietary notices.
All marking notices applied hereunder shall comply with applicable law.
8.6. Confidential Information. Each Party will maintain the Confidential
Information of the other Party in confidence, and will not disclose, divulge or
otherwise communicate such Confidential Information to others, or use it for any
purpose, except pursuant to, and in order to carry out, the terms and objectives
of this Agreement or with the express written consent of the Party who provided
such Confidential Information. Except as may be authorized in advance in writing
by the disclosing Party, the receiving Party will only grant access to the
Confidential Information to its employees and sublicensees as necessary to carry
out activities under this Agreement and such employees will have entered into
non-disclosure agreements consistent with the terms of this Section 8.6. The
obligations of confidentiality described above will not pertain to that part of
any Confidential Information to the extent:
(a) such information was lawfully in a Party’s possession or control prior to
the time it received the information from the other Party;
(b) such information was developed by a Party independently of and without
reference to the Confidential Information;
(c) such information was at the time it was disclosed to or obtained by a Party,
or thereafter became, available to the public through no fault of the Party
holding such information;
(d) such information was lawfully obtained by a Party from a third party that
has the right to disclose such information free of any obligations of
confidentiality; or
(e) such information was required to be disclosed under court order or as
otherwise required by law, provided that the party receiving confidential
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disclosing party prior written notice of such required disclosure and takes all
steps reasonably required by the disclosing party to prevent or limit such
disclosure.
8.7. Use of Names. Neither Party may identify the other Party in any promotional
advertising or other promotional materials to be disseminated to the public or
any portion thereof or to use the name of any staff member, employee, or student
or any trademark, service mark, trade name, or symbol or logo, or that is
associated with it, without the other Party’s prior written consent.
Section 9
Indemnification and Insurance
9.1. Indemnification. Licensee will indemnify, defend and hold harmless (and
cause its sublicensees to so indemnify, defend and hold harmless) Licensor and
its respective trustees, directors, officers, medical and professional staff,
employees, students, and agents and their respective successors, heirs, and
assigns (each an “Indemnitee”), against all third party claims and expenses
(including legal expenses and reasonable attorneys’ fees) arising out of the
death of or injury to any person or persons, or out of any damage to property,
against any infringement or misappropriation of intellectual property and
against any other claim, proceeding, demand, expense, and liability of any kind
whatsoever resulting from the production, manufacture, sale, use, lease,
consumption, or advertisement of Products hereunder or from a breach by Licensee
of any of its representations, warranties or obligations under this Agreement,
provided, however, that Licensee will not be obligated to indemnify, defend and
hold harmless any Indemnitee against any claim, proceeding, demand, expense, or
liability to the extent it arises out of, results from, or is increased by,
(a) the material breach of this Agreement by Licensor, or (b) Licensor’s or any
other Indemnitee’s gross negligence or willful misconduct. The Indemnitee will
promptly give notice to Licensee of any claims or proceedings which might be
covered by this Section 9.1 and Licensee will have the right to defend the same,
including selection of counsel and control of the proceedings; provided that
Licensee will not, without the written consent of the Indemnitee, settle or
consent to the entry of any judgment with respect to such third party claims
(i) that does not release the Indemnitee from all liability with respect to such
third party claim, or (ii) which may materially adversely affect the Indemnitee
or under which the Indemnitee would incur any obligation or liability, other
than one as to which Licensee has an indemnity obligation hereunder. Licensor
agrees to cooperate and provide reasonable assistance to such defense at
Licensee’s expense. Licensor at all times reserves the right to select and
retain counsel of its own at its own expense to defend Licensor’s interests.
9.2. Insurance.
9.2.1. Licensee will at all times comply, by obtaining a policy of insurance,
with all statutory workers’ compensation and employers’ liability requirements
covering any and all employees with respect to activities performed under this
Agreement.
9.2.2. Licensee shall obtain at the appropriate time product liability and other
insurance coverage appropriate to the risk involved in marketing Products,
including coverage for human trials, will name the Licensor as additional
insureds, and shall maintain such

 

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insurance coverage for the Term of this Agreement plus an additional six
(6) years of tail coverage. Within ninety (90) days after the Effective Date and
thereafter annually between January 1 and January 31 of each calendar year,
Licensee will present evidence to Licensor that the coverage is being
maintained. In addition, Licensee will provide Licensor with at least thirty
(30) days’ prior written notice of any change in or cancellation of the
insurance coverage.
9.2.3. Licensee shall insert this Section 9 in any sublicense, with the name of
the sublicensee substituted for the name of the licensee therein, and to name
Licensor as an additional insured party for the sale or other dispensation of
Products.
Section 10
Alternative Dispute Resolution
10.1. Good Faith. The Parties will attempt in good faith to resolve any dispute
arising out of or relating to this Agreement promptly between officials who have
authority to settle the controversy.
10.2. Mediation. If the matter has not been resolved by negotiation as set forth
in Section 10.1 above within sixty (60) days following initiation of discussions
between the Parties’ officials, the Parties will attempt in good faith to settle
the dispute by mediation under the then-current rules of the American
Arbitration Association (“AAA”). The neutral third party will be selected from
the panel of neutrals of the AAA in accordance with the selection process of the
AAA.
10.3. Arbitration. If the matter has not been resolved by mediation within sixty
(60) days of the initiation of such procedure, or if either Party will not
participate in a mediation, the dispute will be settled by binding arbitration
in accordance with the then-current Commercial Rules of Arbitration of the AAA,
by a sole arbitrator, mutually agreed upon by the Parties, selected from the AAA
panel of neutrals in accordance with its procedure for the selection of
arbitrators. In the event that the matter being resolved specifically focus on
the scope, construction or validity of a Licensed Patent, the Parties agree that
such sole arbitrator shall be a patent lawyer. The Parties shall have sixty
(60) days in which to arrive at the selection of such arbitrator. The United
States Arbitration Act, 9 U.S.C. §1-16, will govern the arbitration, and any
court having jurisdiction thereof may enter judgment upon the award rendered by
the arbitrator. The Parties agree that any mediation or arbitration will be held
in Chicago, Illinois.
Section 11
Miscellaneous
11.1. Compliance with Law. Licensee agrees to comply with all applicable laws,
rules and regulations. Without limiting the foregoing, by entering into this
Agreement, the Licensee will comply with all applicable laws, rules and
regulations including (i) the federal anti-kickback statute (42 U.S.C.
§1320a-7b) and the related safe harbor regulations; and (ii) the Limitation on
Certain Physician Referrals, also referred to as the “Stark Law” (42 U.S.C.
§1395nn).

 

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Accordingly, no part of any consideration paid hereunder is a prohibited payment
for the recommendation of or arranging for the referral of business or the
ordering of items or services; nor are the payments intended to induce illegal
referrals of business. In the event that any part of this Agreement is
determined to violate federal, state, or local laws, rules, or regulations, the
Parties agree to negotiate in good faith revisions to the provision or
provisions that are in violation. In the event the Parties are unable to agree
to new or modified terms as required to bring the entire Agreement into
compliance, either Party may terminate this agreement upon sixty (60) days’
written notice to the other Party.
11.2. Assignment. This Agreement will be binding upon and will inure to the
benefit of each Party and each Party’s respective transferees, successors and
assigns. For the avoidance of doubt, Licensor acknowledges and agrees that the
licenses granted hereunder are transferable and assumable, and that Licensee may
transfer or assign all of its rights to this Agreement and all rights or
obligations hereunder with the prior written consent of Licensor, such consent
not to be unreasonably withheld, except that transfer or assignment may be made
without prior written consent if made to one of Licensee’s Affiliates or if made
in connection with any merger, reorganization, or acquisition of all or
substantially all of the assets of the Licensee bearing on this Agreement and
the use or application of the Licensed Technology (except where the acquiror or
surviving entity would be an entity that would, by virtue of doing business with
Licensor, threaten Licensor’s status as a Section 501(c)(3) tax-exempt
corporation). Licensee agrees to notify Licensor within thirty (30) days of any
assignment or transfer of this Agreement by Licensee. Without limiting the
generality of the forgoing, Licensor acknowledges that this Agreement and
Licensee’s rights and obligations hereunder will be unaffected by the
consummation of the transactions contemplated under the Stock Purchase
Agreement, and that, should Licensee be then or thereafter merged or
consolidated with Micrus or any affiliate of Micrus, then Micrus or such
affiliate, as the case may be, shall thereupon become the “Licensee” hereunder.
11.3. Entire Agreement. This Agreement constitutes the entire agreement between
the Parties hereto with respect to the subject matter thereof and will supersede
all previous negotiations, commitments, and writings with respect to such
subject matter. Neither party shall be obligated by any undertaking or
representation regarding that subject matter other than those expressly stated
herein or as may be subsequently agreed to by the parties hereto in writing. All
express or implied agreements and understandings, either oral or written,
heretofore made are expressly merged in and made a part of this Agreement. In
the event of any conflict or inconsistency between any provision of any
Exhibit hereto and any provision of this Agreement, the provisions of this
Agreement shall prevail.
11.4. Amendment. No amendment, modification or supplement of any provision of
this Agreement will be valid or effective unless made in writing and signed by a
duly authorized officer of each Party.
11.5. Notices. Any notice required to be given pursuant to the provisions of
this Agreement will be in writing and will be deemed to have been given at the
earlier of the time when actually received as a consequence of any effective
method of delivery including, but not limited to, hand

 

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delivery, transmission by telecopier, or delivery by a professional courier
service or the time when sent by certified or registered mail addressed to the
party for whom intended at the address below or at such changed address as the
party will have specified by written notice; provided that any notice of change
of address will be effective only upon actual receipt.
If to Licensor:
General correspondence to:
Cleveland Clinic Innovations
10265 Carnegie Avenue
Cleveland, OH 44106
Attn: Executive Director
With copies to:
Office of General Counsel
The Cleveland Clinic Foundation
1950 Richmond Road
Lyndhurst, OH 44124
If to Licensee:
General correspondence to:
Revasc Technologies, Inc.
821 Fox Lane
San Jose, California 95131
Attention: General Counsel
11.6. Governing Law. This Agreement will be governed, construed, and interpreted
in all respects in accordance with the laws of the State of Ohio without regard
to provisions regarding the conflict of laws. If any provisions of this
Agreement are or will come into conflict with the laws or regulations of any
jurisdiction or any governmental entity having jurisdiction over the Parties or
this Agreement, those provisions will be deemed automatically deleted, if such
deletion is allowed by relevant law, and the remaining terms and conditions of
this Agreement will remain in full force and effect. If such a deletion is not
so allowed or if such a deletion leaves terms thereby made clearly illogical or
inappropriate in effect, the Parties agree to substitute new terms as similar in
effect to the present terms of this Agreement as may be allowed under the
applicable laws and regulations.

 

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11.7. Descriptive Headings. The descriptive headings of this Agreement are for
convenience only and will be of no force or effect in construing or interpreting
any of the provisions of this Agreement.
11.8. Independent Contractors. Both Parties are independent contractors under
this Agreement. Nothing contained in this Agreement will be deemed to create an
employment, agency, joint venture or partnership relationship between the
Parties hereto or any of their agents or employees, or any other legal
arrangement that would impose liability upon one Party for the act or failure to
act of the other Party. Neither Party will have any express or implied power to
enter into any contracts or commitments or to incur any liabilities in the name
of, or on behalf of, the other Party, or to bind the other Party in any respect
whatsoever.
11.9. Severability. The illegality or partial illegality of any provision of
this Agreement will not affect the validity of the remainder of the Agreement,
or any provision thereof, and the illegality or partial illegality of any
provision of this Agreement will not affect the validity of the Agreement in any
jurisdiction in which such determination of illegality or partial illegality has
not been made, except in either case to the extent such illegality or partial
illegality causes the Agreement to no longer contain all of the material
provisions reasonably expected by the parties to be contained therein.
11.10. Waiver of Compliance. The failure of either Party to comply with any
obligation, covenant, agreement or condition under this Agreement may be waived
by the Party entitled to the benefit thereof only by a written instrument signed
by the Party on granting such waiver, but such waiver or failure to insist upon
strict compliance with such obligation, covenant, agreement or condition will
not operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. The failure of any Party to enforce at any time any of the provisions
of this Agreement will in no way be construed to be a waiver of any such
provision, nor in any way to affect the validity of the Agreement or any part
thereof or the right of any Party thereafter to enforce each and every such
provision. No waiver of any breach of such provisions will be held to be waiver
of any other or subsequent breach.
11.11. Counterparts. This Agreement may be executed in counterparts, any of
which may be executed and delivered via facsimile or other electronic delivery,
each of which shall be deemed an original, and all of which, taken together,
shall constitute one and the same instrument.
11.12. Authority. The persons signing on behalf of Licensor and Licensee hereby
warrant and represent that they have authority to execute this Agreement on
behalf of the party for whom they have signed.

 

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     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first written above.

            THE CLEVELAND CLINIC FOUNDATION
      By:           Name:   David Strand        Title:   Chief Emerging Business
Officer        REVASC TECHNOLOGY, INC.
      By:           Name:           Title:        

 

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EXHIBIT A
LICENSED PATENTS
U.S. Utility Application No.11/700,987, Filed 2/1/2007, “A METHOD AND APPARATUS
FOR INCREASING BLOOD FLOW THROUGH AN OBSTRUCTED BLOOD VESSEL”, Henry Woo, MD,
David Fiorella, MD, PhD. Publication Number US 20070208361 A1.
U.S. Application No.60/764,206, Filed 2/1/2006, “A METHOD AND APPARATUS FOR
INCREASING BLOOD FLOW THROUGH AN OBSTRUCTED BLOOD VESSEL”, Henry Woo, MD, David
Fiorella, MD, PhD. Expired.
U.S. Application No.60/793,588, Filed 4/20/2006, “A METHOD AND APPARATUS FOR
INCREASING BLOOD FLOW THROUGH AN OBSTRUCTED BLOOD VESSEL”, Henry Woo, MD, David
Fiorella, MD, PhD. Expired.
PCT Application No.WO2007US0002750, Filed 2/1/2007, “A METHOD AND APPARATUS FOR
INCREASING BLOOD FLOW THROUGH AN OBSTRUCTED BLOOD VESSEL”, Henry Woo, MD, David
Fiorella, MD, PhD. Publication Number WO7089897.

 

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EXHIBIT C
SCHEDULE OF PARTIES TO NONCOMPETITION AND CONSULTING AGREEMENTS
[***]

 

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EXHIBIT D
FORM OF NONCOMPETITION AND CONSULTING AGREEMENT
     THIS NONCOMPETITION AND CONSULTING AGREEMENT (the “Agreement”) is entered
into as of October 26, 2007, by and between Micrus Endovascular Corporation, a
Delaware corporation (“Micrus”), and                     , an individual
(“Consultant”).
RECITALS
     A. Micrus, The Cleveland Clinic Foundation, a non-profit Ohio corporation
(the “Clinic”) and Revasc Technologies, Inc., a Delaware corporation and
wholly-owned subsidiary of the Clinic (the “Company”), have entered into a Stock
Purchase Agreement (the “Stock Purchase Agreement”), dated as of October 26,
2007, pursuant to which Micrus acquired all of the outstanding stock of the
Company from the Clinic.
     B. As a condition to its willingness to enter into the Stock Purchase
Agreement and to consummate the transactions contemplated therein, Micrus has
required Consultant to agree, and Consultant has agreed, to the noncompetition,
nonsolicitation and consulting covenants provided in this Agreement.
AGREEMENT
     NOW, THEREFORE, in consideration of the foregoing and to induce Micrus to
enter into the Stock Purchase Agreement and to consummate the transactions
contemplated therein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Consultant hereby covenants
and agrees as follows:
     1. Noncompetition.
          (a) Consultant and Micrus agree that due to the nature of Consultant’s
relationship with Company and the Clinic, Consultant has confidential and
proprietary information relating to the business and operations of the Company
and the Clinic and, following the stock purchase, Consultant will continue to
acquire and will assist in developing additional confidential and proprietary
information for Micrus. Consultant acknowledges that such information is of
utmost importance to the business of Micrus and will continue to be so after the
purchase. Consultant further acknowledges that based on Consultant’s unique
skills, position and exposure to confidential and proprietary information of the
Company and the Clinic and, following the sale, Micrus, the breach or threatened
breach by Consultant of the provisions of this Agreement (including, but not
limited to those set forth in Section 1(b) below) would cause irreparable harm
to Micrus, which harm will not be adequately and fully redressed by the payment
of damages to Micrus. Consultant further acknowledges and agrees that Consultant
will be able to earn a livelihood without violating the restrictions set forth
in this Agreement (including, but not limited to those set forth in Section 1(b)
below).
          (b) During the period which shall commence at the Closing (as defined
in the Stock Purchase Agreement) and shall terminate at the termination of the
Service Period (as defined below).(such period, the “Restricted Period”),
Consultant shall not (A) engage or

 

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participate in the Restricted Business, or (B) directly or indirectly (including
without limitation, through any Affiliate (as defined below) of Consultant),
own, manage, operate, control or otherwise engage or participate in, or be
connected as an owner, partner, principal, creditor, salesman, guarantor,
advisor, member of the board of directors of, employee of or consultant in any
entity or business, division, group, or other subset of any business, engaged
(or to Consultant’s knowledge, planning to engage) in the Restricted Business.
Consultant may, however, render services to the Company, Micrus and/or its
Affiliates solely for the benefit of Micrus at Micrus’s direction pursuant to
this Agreement.
          (c) Notwithstanding the foregoing provisions of Section 1(b) and the
restrictions set forth therein, Consultant may own securities in any publicly
held corporation that is covered by the restrictions set forth in Section 1(b),
but only to the extent that Consultant does not own, of record or beneficially,
more than 1% of the outstanding beneficial ownership of such corporation.
          (d) The restrictions set forth in Section 1(b) shall apply worldwide
(the “Business Area”).
          (e) “Affiliate” as used herein, means, with respect to any person or
entity, any person or entity directly or indirectly controlling, controlled by
or under direct or indirect common control with such other person or entity.
          (f) “Restricted Business” as used herein, means any business related
to mechanical thrombectomy for acute stroke.
          (g) References to “Micrus” herein shall include all subsidiaries of
Micrus and its Affiliates and shall include the Company following the stock
purchase.
     2. Nonsolicitation of Micrus Employees. During the Restricted Period,
Consultant shall not, without the prior written consent of Micrus, directly or
indirectly (including without limitation, through any Affiliate of Consultant),
(i) solicit or request any person who is at the time, or within six months prior
thereto had been, an employee of or a consultant of Micrus to leave the employ
of or terminate such person’s relationship with Micrus or (ii) employ, hire,
engage or be associated with, or endeavor to entice away from Micrus any such
person.
     3. Nonsolicitation of Customers. During the Restricted Period, Consultant
shall not, directly or indirectly (including without limitation, through any
Affiliate of Consultant) (i) solicit any existing customer of Micrus for the
purpose of influencing such customer to cease doing business in whole or in part
with Micrus or (ii) intentionally attempt to limit or interfere with any
business agreement or relationship existing between Micrus and/or its Affiliates
with any third party.

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     4. Consulting Services.
          (a) Consultant will provide consulting services (the “Services”) to
Micrus as described in, and in accordance with the time tables set forth in,
Exhibit A attached to this Agreement (the “Statement of Work”).
          (b) Consultant shall conduct all Services in accordance with all
applicable and generally accepted standards for scientific, preclinical
(including animal studies), and clinical studies, including without limitation
the FDA’s current Good Laboratory Practices (21 CFR, part 58), all as may be
more fully provided in the Statement of Work (the “Applicable Standards”).
Consultant shall at all times be responsible to remain current and updated as to
all changes in the Applicable Standards.
          (c) Micrus may request reasonable changes to the Statement of Work
prior to completion. No such proposed changes, including without limitation any
associated changes in the price, fee schedules, and projected completion dates,
shall be effective unless accepted in writing by authorized representatives of
both Consultant and Micrus.
          (d) Consultant represents and warrants that Consultant is not under
any obligation in conflict or in any way inconsistent with the provisions of
this Agreement or its provision of the Services. Consultant represents and
warrants that Consultant’s performance of the Services and this Agreement will
not breach any agreement to keep in confidence proprietary information acquired
by Consultant in confidence or in trust. Consultant warrants that it shall not,
in the performance of any Services or in preparing to do so, violate any
applicable law or infringe or misappropriate any intellectual properties of any
third party, except to the extent due directly to Consultant’s following
instructions given to it by Micrus. In no event shall Consultant be required
under this Agreement to take any action that Consultant reasonably believes
violates applicable law.
          (e) Consultant agrees to notify Micrus promptly if Consultant knows or
has reason to believe that the Statement of Work or any instructions from Micrus
would, if followed by Consultant, violate any applicable law or infringe or
misappropriate any intellectual properties of any third party or be inconsistent
with the Applicable Standards.
          (f) Consultant shall serve as a consultant to the Company for a period
commencing at the Closing and terminating six months following the first
commercial sale of the Device (as such term is defined in the Stock Purchase
Agreement) (the “Service Period”) provided however the Service Period shall
terminate prior to such date if the Company notifies Consultant that the Company
no longer needs or wants the provision of Consultant’s Services. In the event
that there has been no commercial sale of the Device prior to the fourth
anniversary of the Closing, either party may terminate the Service Period by
notifying the other party in writing of such termination.
     5. Project Materials. Micrus shall provide sufficient quantities of the
Micrus materials, formulations or compounds to be tested, if any (the “Project
Materials”). Consultant agrees that all such Project Material shall be and
remain the sole and exclusive property of

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Micrus. Project Material provided by Micrus will be used by Consultant only for
the purpose described in the Statement of Work and will not be transferred to
any third party without first obtaining written authorization from Micrus in
each instance. Consultant agrees that it shall not, without Micrus’s express
prior written authorization in each instance, analyze, disassemble, decompile,
or otherwise reverse engineer any Project Materials, except to the extent the
Statement of Work explicitly directs Consultant to do so. Upon completion of the
Services, any unused Project Material will be returned to Micrus or destroyed at
the sole discretion of Micrus.
     6. Communication, Visits, Results, and Reports.
          (a) Micrus will designate a Micrus Principal Contact to represent and
coordinate Micrus activities related to performance of the Services. Consultant
will identify a Principal Contact to represent Consultant in all matters
relating to, and to coordinate Consultant’s performance of the Services. Unless
otherwise provided in the Statement of Work, all communication between
Consultant and Micrus regarding technical aspects of the Services shall be
addressed to the designated Principal Contact of each party.
          (b) All results, reports, findings, conclusions, work papers,
notebooks, electronic records, biological samples, prototypes, deliverables, and
any other information or materials in any form or format arising out of
performance of the Services by or for Consultant that relate to the Restricted
Business (the “Project Results”) will be the sole property of Micrus and shall
become part of the Confidential Information to be protected under this
Agreement. Consultant will retain and preserve all Project Results in accordance
with the Applicable Standards and as set forth in the Statement of Work. No
Project Results will be destroyed or otherwise disposed of by Consultant without
authorization in writing in advance from Micrus in each instance. Consultant
shall, upon Micrus’s request from time to time, promptly deliver any and all
Project Results and any work-in-process to Micrus.
          (c) Consultant shall prepare and provide one or more draft and final
report(s) at the intervals, and upon completion of the Services, as more fully
described in the Statement of Work. All reports shall be formatted and delivered
to Micrus in accordance with the Statement of Work.
          (d) Micrus will be solely responsible, at its discretion in accordance
with applicable law, for any reporting to appropriate government agencies any
Project Results generated during performance of the Services.
          (e) Consultant shall notify Micrus and follow up in writing within 24
hours of becoming aware of any planned or actual inspections by the FDA or any
other regulatory agency involving the Services or the facilities in which they
are to be conducted and shall keep Micrus informed of the progress of such
inspections and as to all matters raised by FDA or other regulatory agencies in
respect thereof. Consultant shall notify and provide Micrus with copies of all
correspondence including without limitation FDA form 483s, warning letters, and
debarment notifications which could impact the timely performance of the
Services or the quality or usefulness of any Project Results.

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     7. Compensation. Micrus will, in accordance with the fee schedule set forth
in Exhibit B attached to this Agreement (the “Fee Schedule”), and as complete
compensation to Consultant, pay Consultant the fees set forth in the Fee
Schedule. Consultant will be reimbursed only for expenses which are expressly
provided for in the Fee Schedule or which have been approved in advance in
writing by an authorized Micrus representative. Expense reimbursements will be
made within thirty (30) days of receipt of Consultant’s invoice, provided
Consultant has furnished such documentation for authorized expenses as Micrus
may reasonably request. Otherwise, and except for the Project Materials, if any,
Consultant shall supply without separate charge all facilities, utilities,
equipment, supplies, personnel, information, rights, and other items required
for the timely performance by Consultant of the Services.
     8. Confidentiality.
          (a) The term “Confidential Information” means information and physical
material not generally known or available outside the Company and information
and physical material entrusted to the Company in confidence by third parties.
Confidential Information includes, but is not limited to, the subject matter of
the Statement of Work, all Project Results, all non-public information relating
to the identity, structure, sequence, characteristics, conformation, origin,
biological activity, or potential uses of the Project Materials; inventions
(whether or not patentable or reduced to practice), technology, formulas,
processes, technical data, prototypes, specimens, samples, cell lines, “know
how,” unpublished patent applications, research results or plans, notes and
notebooks, product or development plans, test results or protocols, designs,
drawings, engineering results or plans, market research or analysis, marketing
plans, software (including source and object code), hardware configurations,
algorithms, regulatory information, reagents, chemical formulas, business plans,
personnel data, customer or prospects lists, existing or anticipated agreements
or relationships with third parties, and financial information either disclosed
by Micrus (whether conveyed in writing, orally, or through other tangible
materials) or developed or discovered by or for Consultant in the course of
performing the Services.
          (b) Consultant shall acquire no rights to Confidential Information
except as expressly set forth in this Agreement. Consultant shall hold in
confidence the existence of this Agreement and any Confidential Information
related to this Agreement, the Project Materials, or the Statement of Work.
Consultant shall not, without the prior written approval of an officer of Micrus
in each instance, disclose Confidential Information to any third party nor use
Confidential Information for any purpose, except as provided in the Statement of
Work. Consultant agrees not to make or permit to be made any copies, progeny or
duplicates of any Confidential Information except as Consultant may be directed
to do so under the Statement of Work or as Micrus may otherwise expressly
request. Upon completion of the Services, Consultant shall bring together and
deliver to Micrus all Confidential Information. Notwithstanding the foregoing,
Consultant shall maintain all rights to Confidential Information developed by
Consultant that does not relate to the Restricted Business.
          (c) If Consultant is required to disclose the Confidential Information
by law or court order, it may do so without breach hereof, but Consultant shall
make reasonable efforts

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to notify Micrus sufficiently in advance of any disclosure to provide Micrus
with a reasonable opportunity to seek protective orders related thereto.
          (d) Publication rights to Project Results shall be and remain the
property of Micrus.  Consultant shall have no right to publish, present or
otherwise discuss any data or other results obtained from performance of the
Services without first obtaining the written consent of Micrus, which may be
withheld in Micrus’s sole discretion.
          (e) The confidentiality provisions hereof are intended to supplement,
and not to supersede, any rights Micrus may have in law or equity with respect
to the protection of trade secrets or confidential or proprietary information
and will remain in full force and effect following any termination or expiration
of this Agreement. The provisions of this Section 8 are intended to be for the
benefit of Micrus and any third party that has entrusted information or physical
material to Micrus in confidence.
     9. Intellectual Properties.
          (a) No right or license to Micrus’s intellectual property is granted
or implied as a result of this Agreement or the Services, except to the limited
extent necessary to conduct the Services during the term hereof. The transfer of
Project Material provided herein does not constitute a public disclosure.
          (b) All right, title and interest in all Project Results and any and
all inventions, data, improvements, discoveries, ideas, processes, formulas,
techniques, works of authorship, and know-how, whether patentable or not,
conceived, reduced to practice, authored, or otherwise created or developed by
or for Consultant in the course of performing any Services or otherwise arising
therefrom, and all intellectual property covering such inventions including
without limitation rights to patents, patent applications, patents, and
copyrights, shall be the property of Micrus, and Consultant hereby transfers and
assigns the same to Micrus. Consultant shall communicate to Micrus any of the
same promptly and fully upon their creation or development. Consultant shall
execute all papers and take all actions that Micrus reasonably deems necessary
or advisable for the filing and prosecution of patent applications or copyright
or other registrations and, if appropriate, maintenance of patents or other
rights or properties that may issue therefrom, including without limitation
execution of any assignments or other agreements further evidencing Micrus’s
ownership thereof. Inventorship shall be determined under principles of U.S.
patent law and practice.
          (c) If Consultant uses in the Services or incorporates or causes to be
incorporated into any Project Results any inventions, works of authorship,
developments, improvements, data, materials, or trade secrets owned or
controlled by Consultant, or to the extent that any inventions, works of
authorship, developments, improvements, data, materials, or trade secrets owned
or controlled by Consultant are required for any use or exploitation by Micrus
of the Project Results, Consultant hereby grants to Micrus a nonexclusive,
royalty-free, irrevocable, perpetual, worldwide license, with the right to grant
sublicenses, to make, have made, copy, modify, make derivative works of,
display, perform, publish, use, sell, offer for sale, import and otherwise
exploit such inventions, works of authorship, developments,

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improvements, data, materials, and trade secrets, whether as part of or in
connection with the Project Results or any improvements, derivatives, or
successors to them.
     10. Independent Contractor.
          (a) Consultant shall at all times be an independent contractor under
this Agreement and not an employee or agent of Micrus. Consultant shall have no
authority to obligate Micrus in any manner whatsoever and shall not make any
representations or statements for or about Micrus or any Micrus products or
services.
          (b) Consultant acknowledges and agrees that Consultant will not be
eligible for any Micrus employee benefits and, to the extent Consultant
otherwise would be eligible for any Micrus employee benefits but for the express
terms of this Agreement, Consultant hereby expressly declines to participate in
such Micrus employee benefits.
          (c) Consultant shall have full responsibility for all applicable
withholding taxes for all compensation paid to Consultant, including without
limitation state worker’s compensation insurance coverage requirements and any
immigration or visa requirements. Consultant agrees to indemnify, defend and
hold Micrus harmless from any liability for, or assessment of, any claims or
penalties with respect to such withholding taxes, labor, employment or
immigration requirements.
     10. Indemnification. Consultant shall defend, indemnify and hold Micrus
harmless from and against any and all liability, loss, expense (including
without limitation reasonable attorneys’ fees), or claims for injury or damages
arising out of performance of the Services, except to the extent due directly to
Consultant’s following instructions given to it by Micrus in the Statement of
Work in situations in which Consultant has complied with its obligations under
Section 1(e), in which case Micrus shall similarly defend, indemnify and hold
Consultant harmless to that extent. Each indemnitee must promptly notify the
indemnifying party of any claim and afford it the opportunity to control the
defense and settlement thereof, and must otherwise fully cooperate with the
indemnifying party, or else such indemnitee shall be barred from any remedy
under this indemnity provision.
     11. Injunctive Relief. The remedy at law for any breach of this Agreement
is and will be inadequate, and in the event of a breach or threatened breach by
Consultant of the provisions of Sections 1, 2 or 3 of this Agreement, Micrus
shall be entitled to an injunction restraining Consultant from the conduct which
would constitute a breach of this Agreement. Nothing herein contained shall be
construed as prohibiting Micrus from pursuing any other remedies available to it
for such breach or threatened breach, including, without limitation, the
recovery of damages from Consultant.
     12. Separate Covenants. This Agreement shall be deemed to consist of a
series of separate covenants, one for each line of business included within the
Restricted Business and each county, state, country or other region included
within the Business Area. The parties expressly agree that the character,
duration and geographical scope of this Agreement are reasonable in light of the
circumstances as they exist on the date upon which this Agreement has

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been executed. However, should a determination nonetheless be made by a court of
competent jurisdiction at a later date that the character, duration or
geographical scope of this Agreement is unreasonable in light of the
circumstances as they then exist, then it is the intention and the agreement of
Consultant that this Agreement shall be construed by the court in such a manner
as to impose only those restrictions on the conduct of Consultant that are
reasonable in light of the circumstances as they then exist and as are necessary
to assure Micrus of the intended benefit of this Agreement. If, in any judicial
proceeding, a court shall refuse to enforce all of the separate covenants deemed
included herein because, taken together, they are more extensive than necessary
to assure Micrus of the intended benefit of this Agreement, it is expressly
understood and agreed among the parties hereto that those of such covenants
that, if eliminated, would permit the remaining separate covenants to be
enforced in such proceeding shall, for the purpose of such proceeding, be deemed
eliminated from the provisions hereof.
     13. Severability. If any of the provisions of this Agreement shall
otherwise contravene or be invalid under the laws of any state, country or other
jurisdiction where this Agreement is applicable but for such contravention or
invalidity, such contravention or invalidity shall not invalidate all of the
provisions of this Agreement but rather it shall be construed, insofar as the
laws of that state, country or jurisdiction are concerned, as not containing the
provision or provisions contravening or invalid under the laws of that state or
jurisdiction, and the rights and obligations created hereby shall be construed
and enforced accordingly.
     14. Construction. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of ___, without regard to
principles of conflicts of laws.
     15. Amendments and Waivers. This Agreement may be modified only by a
written instrument duly executed by each party hereto. No breach of any
covenant, agreement, warranty or representation shall be deemed waived unless
expressly waived in writing by the party who might assert such breach. No waiver
of any right hereunder shall operate as a waiver of any other right or of the
same or a similar right on another occasion.
     16. Counterparts; Facsimile Signatures. This Agreement may be executed by
the parties in separate counterparts, each of which, when so executed and
delivered, shall be an original, but all of which, when taken as a whole, shall
constitute one and the same instrument. This Agreement may be executed and
delivered by one party hereto to the other party hereto by facsimile or e-mail
transmission of a photocopy of the original signature page hereto, and upon
receipt of such facsimile or e-mail transmission by the other party hereto, the
photocopy of the original signature page included in such facsimile or e-mail
transmission will be deemed to have the same effect as if the original signature
had been delivered to the other party. The parties shall endeavor to exchange
the original signature copies, but the failure to deliver the original signature
copy and/or the nonreceipt of the original signature copy shall have no effect
upon the binding and enforceable nature of this Agreement.
     17. Section Headings. The headings of each Section, subsection or other
subdivision of this Agreement are for reference only and shall not limit or
control the meaning thereof.

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     18. Assignment. Neither this Agreement nor any right, remedy, obligation or
liability arising hereunder or by reason hereof nor any of the documents
executed in connection herewith may be assigned by any party without the consent
of the other parties; provided, however, that Micrus may assign its rights
hereunder, without the consent of Consultant, to any entity that acquires or
succeeds to its business.
     19. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or two business days
after being mailed by registered or certified mail (return receipt requested) to
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice):

  (a)   if to Micrus:         Micrus Endovascular Corporation
821 Fox Lane
San Jose CA 95131
Attention: General Counsel
        with a copy to (which shall not constitute notice):         Orrick,
Herrington & Sutcliffe LLP
1020 Marsh Road
Menlo Park, CA. 94070
Attn: Louis D. Soto, Esq.     (b)   if to Consultant:         to the address set
forth below the name of Consultant on the signature page hereof.

     20. Effectiveness. Notwithstanding any other provision of this Agreement,
this Agreement shall become effective only upon the Closing, and if such Closing
shall not occur prior to the termination of the Stock Purchase Agreement this
Agreement shall be deemed void ab initio and have no further force or effect
upon such termination of the Stock Purchase Agreement.
     21. Defined Terms. Capitalized terms not otherwise defined herein shall
have the meanings given to them in the Stock Purchase Agreement.
[Signature Page Follows]

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     IN WITNESS WHEREOF, the parties hereto have executed this Noncompetition
and Consulting Agreement as of the date first above written.

                  MICRUS ENDOVASCULAR     CORPORATION, a Delaware corporation
 
           
 
  By:          
 
  Name:  
 
Robert Stern      
 
  Title:   President    
 
                CONSULTANT  
 
                       
 
  Name:        
 
  Address:  
 
   
 
     
 
   
 
     
 
   
 
     
 
   

SIGNATURE PAGE TO NONCOMPETITION AND CONSULTING AGREEMENT

 

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EXHIBIT A
Statement of Work

     
Description of Services:
  To provide consultancy on an as needed basis, as determined and requested by
Micrus, to review design changes and prototypes, assess pre-clinical utility in
in-vitro and in-vivo models, perform pre-clinical and clinical evaluations, help
prepare or review test protocols and/or other submission documents, as well as
other specified activities. Services are estimated to be approximately 3 days
(24 hours) per month and should not exceed 15 days (120 hours) per quarter.
 
   
 
  Unless otherwise agreed upon in writing by Micrus, Consultant shall not
provide Services to Micrus under this Agreement in any business other than the
Restricted Business.

 

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EXHIBIT B
Fee Schedule

     
Fees for Services:
  For Services rendered by Consultant under this Agreement, Micrus shall pay
Consultant at the rate of [***] for a full day (7 or more hours) or [***] per
hour in which less than 7 hours are performed in a day. By the tenth business
day of month, Consultant shall deliver an invoice to Micrus that includes
reasonable documentation of all fees and any expenses payable hereunder for the
previous calendar month . Subject to the terms of this Agreement, Micrus shall
pay the amounts due within 30 days of receipt of the invoice.
 
   
 
  Unless otherwise agreed upon in writing by Micrus, Micrus’s maximum liability
for all Services performed during the term of this Agreement shall not exceed
[***] (excluding the payment of any New Invention Incentive Fees (as defined
below)).
 
   
 
  Subject to the terms of this Agreement and the conditions set forth herein,
Micrus shall pay Consultant [***] (the “New Invention Incentive Fee”) upon
Micrus’ filing of each New Invention Patent. A New Invention Patent is defined
as a patent application (i) for which Consultant is a named inventor or
co-inventor (as determined under principles of U.S. patent law and practice),
(ii) that embodies an invention that resulted from the Services rendered by
Consultant under this Agreement, (iii) that does not claim priority to any
patent or patent application either existing as of the original date of this
Agreement or for which the New Invention Fee has already been paid to
Consultant, (iv) for which Consultant has executed all assignments or other
agreements perfecting Micrus’ ownership thereof, and (v) for which Consultant
has otherwise complied with Consultant’s obligations under this Agreement. For
the avoidance of doubt, no additional amount shall be due upon the filing of any
Subsequent Related Patent Application. A Subsequent Related Patent Application
is any U.S. or foreign patent application, reissue, reexamination,
continuation-in-part and continuation, (and the foreign equivalents thereof),
that claims priority to any patent or patent application owned by Micrus
existing as of the date of this Agreement, that claims priority to any patent or
patent application licensed from the Cleveland Clinic, or any New Invention
Patent for which Micrus has already paid a New Invention Incentive Fee.

 

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EXHIBIT E
THE CLEVELAND CLINIC FOUNDATION
CERTIFICATE OF AUTHORITY OF THE OFFICERS
     I, David W. Rowan, do hereby certify as follows:

  1.   I am the duly elected, qualified and acting Secretary of The Cleveland
Clinic Foundation, a non-profit Ohio corporation (the “Corporation”).     2.  
That David Strand is the Chief Emerging Business Officer of the Corporation and
Michael O’Boyle is the Chief Operating Officer of the Corporation and they are
now acting in those capacities, respectively, and they have the power and
authority, to sign and deliver any agreement in the name of the Corporation and
to otherwise obligate the Corporation in any respect relating to matters
necessary to complete the transactions contemplated between the Corporation and
Micrus Endovascular Corporation.

     IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of October
___, 2007.

         
 
 
 
David W. Rowan    
 
  Secretary    
 
  The Cleveland Clinic Foundation