EXHIBIT 10.20
DISTRIBUTOR AGREEMENT
This Distributor Agreement is made, effective as of the 24th day of January 2006
(the “Effective Date”), by and among Medtronic USA, Inc. (“Medtronic”) and VNUS
Medical Technologies, Inc. (“VNUS”).
RECITALS
     a)    Medtronic. Medtronic is a Minnesota corporation with its principal
place of business at 710 Medtronic Parkway, Minneapolis, MN 55432-5604.
Medtronic is a leading manufacturer of medical technologies including products,
therapies and services used to treat conditions such as heart disease,
neurological disorders, and vascular illnesses. The maintenance of Medtronic’s
reputation as the industry leader in performance and quality is a material
element of this Agreement.
     b)    VNUS. VNUS is a Delaware corporation, with its principal place of
business at 2200 Zanker Road, Suite F, San Jose, CA 95131. VNUS is in the
business of manufacturing and selling products for minimally invasive treatment
of venous disease. VNUS has an existing marketing and sales force which can
economically and effectively address the Market Segment (as defined below).
NOW, THEREFORE, the parties agree as follows:
I. DEFINITIONS
Whenever the following terms appear capitalized in this Agreement they shall
have the indicated meanings.
1.1    Market Segment and Territory. The terms “Market Segment” and “Territory”
shall have the meanings described on Schedule 1.1, attached hereto and may be
revised from time to time as mutually agreed in writing by Medtronic and VNUS.
1.2    Product(s). The terms “Product” or “Products” shall mean those Products
described in Schedule 1.2 as amended from time to time (the “Products”).
1.3    User Warranty. The term “User Warranty” shall mean the written Medtronic
warranty or disclaimer of warranty which accompanies the Product when sold to a
customer as such warranty is established or revised by Medtronic from time to
time, including all restrictions and limitations on damages and remedies.
1.4    Customer. The term “Customer” shall mean any potential or existing
customer of Product in the Market Segment in the Territory except those existing
Medtronic accounts that decline to be converted to VNUS accounts pursuant to
Sections 2.5 and 2.6.
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II. APPOINTMENT OF DISTRIBUTOR
2.1    Appointment of VNUS as Distributor. Subject to the terms and conditions
of this Agreement, Medtronic hereby appoints VNUS, and VNUS accepts such
appointment, as Medtronic’s authorized exclusive distributor with the exclusive
right (even as to Medtronic but subject to Sections 2.5 and 2.6 below) to
promote, market, sell, and distribute Products in the Market Segment in the
Territory. The parties acknowledge and agree that VNUS shall not sublicense any
of its rights or obligations to distribute Products in the Territory.
2.2    Term. Subject to the termination provisions in Article 9, VNUS’
appointment shall be effective as of the Effective Date and shall continue for
an initial term of five (5) years (the “Initial Term”). This Agreement will
automatically renew for two (2) additional twelve (12) month terms (“Renewal
Terms”) unless either party has given the other party written notice at least
one hundred twenty (120) days prior to the end of either the Initial Term or the
first Renewal Term that it intends to not renew the Agreement; provided,
however, Medtronic may only give notice of non-renewal if VNUS fails to satisfy
its Minimum Annual Quota pursuant to Section 3.15. As used in this Agreement,
the Initial Term and any Renewal Term shall collectively be referred to as the
“Term”.
2.3    Products. If Medtronic decides to cease manufacture and sale of any
particular Product, Medtronic may delete such Product from Schedule 1.2,
provided (i) Medtronic provides VNUS with at least ninety (90) days prior
written notice of such proposed removal of a particular Product from
Schedule 1.2, and (ii) such Product does not represent ten percent (10%) or more
of VNUS’ averaged unit sales during the six consecutive months immediately
preceding Medtronic’s written notice to VNUS of such proposed removal.
Notwithstanding the removal of a particular Product from Schedule 1.2, VNUS
shall have the right to continue selling its existing inventory of any such
removed Product. At any time Medtronic may offer to add new products to those
authorized for promotion and distribution by VNUS, and VNUS may elect whether or
not to accept such new product (in which instance Schedule 1.2 shall be amended
to add such new Product). Without limiting the foregoing, Medtronic shall
promptly notify VNUS of any new U-CLIP technology-related products that are in
development (or that otherwise become available to Medtronic) and are applicable
for use in the Market Segment and Territory, and in accordance with the
foregoing provision, VNUS may elect whether or not to accept such new product
(in which instance Schedule 1.2 shall be amended to add such new Product). If
VNUS elects not to accept such Product, Medtronic may, in its sole discretion,
market such Product or seek and retain other distributors for such Product.
2.4    Direct Sales to New Customers. If Medtronic receives orders or requests
for Products from New Customers, Medtronic will refer such Customers to VNUS for
the sale. Sales by VNUS to Customers using Products in the Territory but outside
the Market Segment (such as cardiac, bariatric and other non-vascular
applications) will not be included in the total sales by VNUS for purposes of
determining whether VNUS has met the Minimum Annual Quota pursuant to
Section 3.15 for the period in which the sale is made.
2.5    Medtronic Limited Right to Sell in Market Segment. Notwithstanding VNUS’
appointment as the exclusive distributor of Product, Medtronic may sell Products
in the Market Segment in the Territory if such Products are sold as part of a
kit or other combination with another Medtronic product for use in a procedure
in which the other Medtronic product is used. Medtronic may also sell Products
in the Market Segment in the Territory solely to those existing Medtronic
accounts that decline to be
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converted to VNUS accounts pursuant to Section 2.6. Except for Medtronic’s
limited foregoing right, Medtronic shall not sell in the Market Segment in the
Territory any Products, either alone or in combination, that are used in
arterial-venous access grafts (AVG), arterial-venous access fistulas (AVF), and
peripheral bypass procedures.
2.6    Existing Medtronic Accounts. Medtronic shall, upon execution of this
Agreement, provide to VNUS in writing a list of existing Medtronic accounts for
Products that are within the VNUS Market Segment and Territory as defined in
Schedule 1.1. It is understood and agreed by the Parties that VNUS shall
affirmatively contact these accounts and offer to convert them to VNUS accounts.
III. DISTRIBUTOR’S RESPONSIBILITIES
     Subject to the other terms and conditions of this Agreement, VNUS shall
perform the following responsibilities:
3.1    Promote and Sell. VNUS shall use commercially reasonable efforts to
promote, sell and support the Products in the Market Segment in the Territory.
Without limiting the generality or extent of the foregoing, VNUS and anyone
acting on its behalf shall not knowingly make any false or misleading statements
with regard to the Products of Medtronic or any of its competitors. All
representations and claims that VNUS or any of its representatives makes with
respect to the Products shall be fully consistent with all Medtronic labeling
and shall conform to any commercially reasonable policies or guidelines that
Medtronic may from time to time reasonably establish for its Products and inform
VNUS in writing thereof.
3.2    Clinical Trials. Upon obtaining prior written approval from Medtronic,
not to be unreasonably withheld or delayed, VNUS may conduct and participate in
the design, implementation, analysis and publication of all studies and clinical
trials associated with the Product(s) in the Market Segment in the Territory.
3.3    Facility and Staff. VNUS shall maintain a place of business sufficient to
carry out its duties hereunder in a manner consistent with the standards
commonly required of a company that sells medical devices of commercial
potential similar to the Products. VNUS shall also maintain a trained sales
staff that is (i) capable of promoting and selling the Products in a manner
consistent with all applicable laws and regulations, (ii) trained on the use and
function of the Products, and (iii) skilled and experienced in selling medical
devices to the medical practice areas in which the Products are used within the
Market Segments and the Territory. To assure that VNUS possesses thorough
knowledge on the safe and effective use of the Products, VNUS shall participate
in Product training courses as reasonably requested by it or by Medtronic
pursuant to Section 4.4 below.
3.4    Inventory. VNUS shall maintain an inventory of Products reasonably
necessary to fill its forecasted sales under this Agreement. To assure the
effectiveness and quality of the Products, Medtronic may establish, and inform
VNUS in writing of, reasonable policies or guidelines with regard to the
rotation, storage, or shelf life of Products. VNUS shall use commercially
reasonable efforts to comply with all such policies or guidelines and shall
properly dispose of any Products (consistently with all applicable laws and
regulations concerning waste and the environment) which are not useable as a
result of the application of such policies or guidelines. Such policies may
include a requirement for minimum
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remaining shelf life at the time such Product is delivered to a Customer. In no
event shall Medtronic be responsible to accept return of or reimburse VNUS as a
result of any Product which becomes unusable due to the expiration of such
minimum shelf life; provided, however, the foregoing limitation shall not apply
to any Product that has a shelf life less than six (6) months when received by
VNUS from Medtronic. All returned Products shall be dealt with pursuant to
Medtronic’s Returned Inventory Policy which is attached hereto as Schedule 3.4,
as amended from time to time.
3.5    Product In-Service. VNUS shall perform post-sale delivery, instruction,
and training to Customers in a manner that is consistent with commercially
reasonable standards or guidelines which Medtronic may from time to time
establish and inform VNUS in writing thereof.
3.6    No Modification of Products. VNUS shall sell the Products only in the
form, condition and packaging as provided or approved by Medtronic. VNUS shall
not alter, modify or change any Product or its package without Medtronic’s prior
written consent.
3.7    User Warranty Delivery to Customer. VNUS shall deliver to each of the
Customers the User Warranty furnished by Medtronic with each Product, as revised
from time to time.
3.8    Credit/Finance. VNUS shall make full payment to Medtronic of the purchase
price for each shipment of Product and of any other payment obligations it owes
to Medtronic when due. VNUS shall initially be granted credit terms of **** from
date of receipt of invoice for its purchase of Product. Such credit terms are
contingent upon VNUS’ continued material compliance with all of its monetary
obligations to Medtronic. If, at any time in the reasonable opinion of
Medtronic, VNUS’ creditworthiness has materially deteriorated, Medtronic may
modify or terminate such credit terms; provided that such modification or
termination shall not apply to any order which has been previously accepted by
Medtronic.
3.9    Device Tracking. VNUS shall maintain a system to track each Product in
accordance with applicable law, including 21 CFR 821, as amended, and such other
reasonable requirements as Medtronic may from time to time establish with
respect to Product tracking. Such system will, at a minimum, be able to track a
Product to its final destination and shall have procedures in place which
facilitate locating each Product shipped in the event customer notifications or
product modifications are required. By the 15th of each calendar month during
the term of this Agreement, VNUS shall provide Medtronic with a written report
identifying all Products which were placed in service the preceding calendar
month (“Product Tracking Report”). Such Product Tracking Report shall be in the
form requested by Medtronic but at a minimum shall include the name of the
Customer, the specific address where the Product was delivered, the date the
Product was delivered, the serial number (if any), model and Product name. The
tracking system and the records documenting the tracking shall be subject to
audit by Medtronic at reasonable times upon reasonable notice. Upon termination
or expiration of this Agreement, VNUS shall, at Medtronic’s request, deliver all
then current records to Medtronic relating to the location of Products sold by
VNUS in the Market Segment in the Territory.
3.10    Customer Complaints, Incident Reports, and Recalls. VNUS shall use
diligent, commercially reasonable efforts to resolve all Customer complaints
that relate solely to the quality of services provided by VNUS in connection
with Products. VNUS shall refer all complaints relating to Products and all
requests for service to Products to the Medtronic Product Complaint Coordinator
at ****, or such other number as Medtronic may from time to time designate in
writing to
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VNUS. Medtronic shall resolve all such complaints and requests for service as
soon as practicable using diligent, commercially reasonable efforts. VNUS shall
immediately report to Medtronic any incident of which VNUS becomes aware that
involves or may involve the failure or malfunction of a Product or might
constitute a reportable event under 21 CFR Section 803 (Medical Device
Reporting). Medtronic as the manufacturer of the Products shall be solely
responsible for all medical device reporting to regulatory agencies with respect
to the Products. In the event either party has reason to believe that one or
more of the Products might be the subject of a recall or withdrawal from
distribution, such party shall immediately notify the other. Any decision as to
whether or not to initiate a recall or product replacement or product
enhancement in accordance with Section 4.5, shall be Medtronic’s, in its sole
discretion. If such recall is required because of the negligent act or wrongful
omission of VNUS, then the costs and expenses of such recall shall be reimbursed
by VNUS to Medtronic. VNUS shall provide, at Medtronic’s expense, assistance
reasonably requested by Medtronic in connection with any reporting, recall,
legal, or regulatory matter relating to the Products. If VNUS in good faith
disagrees in writing with Medtronic’s decision not to withdraw or recall the
Product, then VNUS may discontinue its distribution of such Product under this
Agreement until the issue is resolved.
3.11    Restriction on Sales of Competitive Products.

      a.) Restriction. VNUS, including without limitation its employees,
officers, and agents, shall not sell, handle, promote, or be involved, directly
or indirectly, in the offering for sale, promotion, or manufacture of any
product which may be used in creating anastomoses or vascular approximation in
the Territory (such product, a “Competitive Product”). If VNUS, upon Medtronic’s
offer, elects to add a new Product to Schedule 1.2, VNUS shall have ninety
(90) days after such amendment to cease distributing any Competitive Product to
the new Product added to Schedule 1.2. Failure by VNUS to abide by the terms of
this Section 3.11 shall be deemed a material failure of VNUS’ obligations under
this Agreement; provided, however, VNUS may cure such failure immediately by
ceasing to sell, distribute, and promote such Competitive Product.         b.)
Duration of Restriction. The restriction contained in this Section shall
continue for ****; provided, however, that if this Agreement is terminated by
VNUS for Medtronic’s Breach under Section 9.1(c), the restriction shall end upon
termination of the Agreement.

3.12    Accessories and Other Supplies. VNUS shall sell only Medtronic approved
accessories, supplies and consumables for use with the Products. VNUS may seek
Medtronic’s approval to sell other accessories, and such approval shall not to
be unreasonably withheld.
3.13    Compliance with Laws and Medtronic Policies. VNUS recognizes that
compliance with all applicable laws and maintaining a high standard of ethical
behavior in the conduct of its activities under the Agreement is an essential
requirement of this Agreement. VNUS, therefore, agrees as follows:
     (a) To comply with all applicable laws, rules, and regulations in its
activities relating to the marketing, promotion, and sale of Products, including
without limitation, those promulgated by the U.S. Food and Drug Administration
as applicable to the Products,
     (b) To conduct all activities under this Agreement in accordance with the
provisions of the Medtronic Code of Conduct and U.S. Business Conduct Standards
attached hereto as Schedule 3.13 (the
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“Medtronic Compliance Requirements”) as amended from time to time by Medtronic
with written notice to VNUS,
     (c) To require its employees who interact with customers who purchase
Products, or who are in a position to influence customer purchasing decisions
regarding Products, to complete training on the Medtronic Compliance
Requirements, and
     (d) To provide Medtronic access to VNUS’ relevant books and records
relating to the sale of Products for the sole purpose of verifying VNUS’
compliance with the requirements of this Article 3, provided, such access shall
be conducted after reasonable prior notice by Medtronic to VNUS during VNUS’
ordinary business hours and shall not be more frequent than twice during any
calendar year.
Failure to comply with any requirement of this Article shall be deemed a
material breach of this Agreement by VNUS and shall entitle Medtronic to
terminate this Agreement in accordance with Section 9.1(b).
3.14    Exclusive Source for Medtronic Products. VNUS shall only sell Products
obtained directly from Medtronic to Customers; that is, VNUS may not sell any
new or used Product that has been obtained from any source other than Medtronic.
3.15    Purchase Quota. During the Term, VNUS shall purchase the minimum annual
requirements specified in Schedule 3.15 (the “Minimum Annual Quota”), provided
that Medtronic supplies on a timely basis the amounts of Product ordered by
VNUS. The Minimum Annual Quota will be allocated over the applicable year in
minimum quarterly amounts also specified in Schedule 3.15 (the “Minimum
Quarterly Quota”). Subject to Section 5.6 and the remaining terms of this
Section 3.15, if VNUS fails to purchase the Minimum Annual Quota in any contract
year or the Minimum Quarterly Quota for any two consecutive quarters (whether or
not the quarters are in the same contract year), that failure shall be deemed a
material breach of the Agreement and Medtronic shall have the right to terminate
this Agreement upon ninety (90) days written notice to VNUS; provided that VNUS
may cure the breach within the ninety (90) day notice period by paying Medtronic
an amount equal to **** of the amount by which VNUS failed to meet the
applicable Minimum Quota. Waiver by Medtronic of its right to terminate this
Agreement under this Section 3.15 in any one or more instance shall not be
deemed a waiver of such right for any subsequent failure by VNUS to meet the
Minimum Annual Quota or the Minimum Quarterly Quota. The parties agree that for
**** of this Agreement, the Minimum Annual Quota will increase at a rate of ****
year-over-year.
3.16    Product Sales Outside Market Segment or Territory. If VNUS receives
orders or requests for Products from customers outside the Territory and Market
Segment, VNUS will refer such customers to Medtronic for the sale. During the
Term, VNUS shall not sell Products outside the Market Segment or Territory
without Medtronic’s prior written consent which may be granted in Medtronic’s
sole discretion.
3.17    Business Review. A VNUS representative shall meet quarterly with Vice
President, Sales for Medtronic Cardiac Surgery (or such other person designated
by Medtronic) to report on and discuss sales and operations during the prior
quarter and discuss future objectives, plans and strategies.
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IV. MEDTRONIC’S RESPONSIBILITIES
     Subject to the other terms and conditions of this Agreement, Medtronic
shall undertake to perform the following responsibilities:
4.1    Manufacture and Provide Products. Medtronic shall use commercially
reasonable efforts to manufacture (or have manufactured) the Products and shall
supply the Products to VNUS, subject to availability, upon the terms and
conditions of this Agreement. Products shall, at the time of delivery to VNUS,
(i) have been manufactured in accordance with the specifications and all
applicable laws and regulations including without limitation all FDA regulations
and QSR and cGMP (as applicable); (ii) be sterile; (iii) have the standard
minimum shelf life customarily applicable to such Products when sold by
Medtronic; and (iv) be packaged in accordance with the Product labeling
provisions of Section 4.2. Upon VNUS’ reasonable request, Medtronic shall
provide access to Medtronic’s facilities that manufacture and distribute the
Product; such access shall be conducted after reasonable prior notice by VNUS to
Medtronic during Medtronic’s ordinary business hours and shall not be more
frequent than twice during an annual period.
4.2    Product Labeling. All Product labeling shall be mutually acceptable to
both parties and shall be in compliance with all Medtronic policies and all
applicable laws and regulations. In order to minimize the potential for
cross-selling in the Market Segment in the Territory, Products shall be labeled
and packaged as VNUS product with VNUS look and styling, including different
part numbers and statements that the Products were manufactured by Medtronic for
distribution by VNUS.
4.3    Promotional Materials. Medtronic shall provide to VNUS such sales
literature, advertising and promotional materials, and other information,
programs, and sales support by VNUS in selling the Products. Notwithstanding the
foregoing, VNUS may develop and/or use unique promotional materials and sales
tools other than those supplied by Medtronic, provided VNUS has received
Medtronic’s prior written approval, such approval not to be unreasonably
withheld. Medtronic agrees to review all marketing and promotional materials
within ten (10) business days after initial receipt from VNUS. If editing
changes or approval are not received within the aforementioned period,
Medtronic’s approval will be deemed granted. VNUS shall comply with applicable
Medtronic policies with regard to the use of Medtronic’s copyright notice. Other
than the cost for materials provided by Medtronic pursuant to this section, VNUS
will be responsible for all expenses associated with its advertising and
promotion of the Products, unless otherwise agreed to in writing prior to the
expenditure.
4.4    Training and Support. Medtronic shall offer such general and specialized
sales and technical training, materials and support as necessary to adequately
train all appropriate VNUS personnel. The costs and expenses of training VNUS
representatives shall be ****. Such clinical and technical support shall be
provided by Medtronic to VNUS personnel at reasonable locations of VNUS’ choice,
and shall include at a minimum (a) **** of technical and Product training of
appropriate VNUS personnel during **** of this Agreement; (b) an additional ****
of follow up training during the subsequent ****; and (c) appropriate training
as the parties mutually determine is necessary for any and all new Products.
4.5    Product Changes. Medtronic may, at any time, modify, alter, change, or
improve a Product. Any such change shall be effective sixty (60) days after
Medtronic provides VNUS with a written notice
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to that effect however changes to a Product based upon requirements under
applicable federal law or regulation shall not be subject to a sixty (60) day
notice requirement.
4.6    Sales outside the Market Segment and Territory. Except as provided in
Sections 2.5 and 2.6, in the event that either party becomes aware that Products
are being sold or have been sold at any time within the previous six (6) month
period by Medtronic or its distributors, licensees or agents in the Market
Segment in the Territory, such party shall provide the other party with written
notice of such sales activity. Medtronic shall cease such sales activity in the
Market Segment and in the Territory within thirty (30) days of such notice.
Within sixty (60) days of the foregoing written notice, Medtronic will
compensate VNUS in an amount equal to **** of the sale price of all such
products in the Market Segment in the Territory. Likewise, in the event that
either party becomes aware that Products are being sold or have been sold at any
time within the previous six (6) month period by VNUS outside the Market Segment
and Territory, such party will provide written notice to the other party of any
such VNUS sales activity outside of the Market Segment and Territory. VNUS shall
cease such activity within thirty (30) days. Within sixty (60) days of the
foregoing notice, VNUS will compensate Medtronic in an amount equal to **** of
the sale price of all such products outside the Market Segment and Territory.
V. ORDERING; DELIVERY AND ACCEPTANCE
5.1    Initial Stocking Order. VNUS shall be entitled to purchase a one-time
initial stocking order of Products at a **** discount off of the Product
Transfer Price set forth in Schedule 6.1.
5.2    Purchase Orders. VNUS shall order Products from Medtronic by submitting
written purchase orders identifying the number(s) and type(s) of Products
ordered, the requested delivery date(s) and any additional information required
to enable Medtronic to fill the order. All orders for Products will be pursuant
to such standard terms as the parties may establish from time to time at the
prices set forth in Section 6.1 below. All orders for Products will be subject
to acceptance by Medtronic, provided Medtronic will not unreasonably reject any
purchase order for Products that meet this Section 5.2 and is for a quantity of
Products not in excess of **** of VNUS’ most recent forecast pursuant to
Section 5.5. Medtronic will accept or reject each such order submitted by VNUS
within ten (10) business days after receipt of the order. Accepted orders will
be non-cancelable. For clarity, any documents submitted to Medtronic in addition
to Medtronic’s standard terms are for informational purposes only and are not
part of the terms of sale.
5.3    Delivery. Medtronic shall use commercially reasonable efforts to deliver
accepted orders for Products on time pursuant to the purchase order. However, in
no event shall Medtronic be responsible for any loss or damage which is claimed
to have been caused by a delay in shipping an order, whether or not Medtronic
may have been advised of the possibility of such loss or damages. Medtronic
shall not be responsible for any loss or damage which is claimed to have been
caused by a delay in shipping an order, whether or not Medtronic may have been
advised of the possibility of such loss or damages, provided Medtronic performed
its manufacture and delivery obligations with commercially reasonable care.
Medtronic shall ship Product by a commercially reasonable carrier of VNUS’
choice. All Products shall be shipped to VNUS FOB (Incoterms 2000) Medtronic’s
distribution facility. Title and risk of loss shall transfer to VNUS upon
delivery of Product to the carrier for transport to VNUS.
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5.4    Inspection and Rejection.
     (a) Returned Goods. If any Product does not conform to the order or is
defective at the time it was shipped to VNUS then VNUS may return the defective
Product to Medtronic within thirty (30) days of receipt by VNUS; provided that
VNUS (i) notifies Medtronic or such agent as Medtronic may designate,
(ii) describes the defect or non-conformity, (iii) obtains approval for return
in accordance with Schedule 5.4, and (iv) complies with such other return
instructions as Medtronic may reasonably require. Upon receiving return
authorization VNUS may ship the defective or non-conforming Product to the
Medtronic location authorized by Medtronic, properly labeled, freight prepaid,
and fully insured at face value. Subject to Medtronic’s right to verify that the
Product was defective or non-conforming at the time of shipment to VNUS,
Medtronic shall, at VNUS’ option, either replace the Product and reimburse VNUS
for its out of pocket shipping and insurance expenses or refund the purchase
price paid for by VNUS for the Product involved. In the event that VNUS elects
replacement, Medtronic shall supply such replacement Product at no additional
cost within fifteen (15) days of Medtronic’s receipt of such Product. In no
event shall Medtronic be responsible to replace or refund for any Product
(a) that has been damaged by abuse or misuse, (b) for which any unauthorized
service or repair was performed or attempted, (c) that was repossessed, (d) has
been used as a demonstration unit, or (e) was damaged by or during transport to
VNUS. The repair and replacement provided for in this section shall be VNUS’
sole and exclusive remedy for any claim relating to any alleged defect or
nonconformity in the Products. In the case of Product having latent defect(s)
that are not reasonably detectable at the time of acceptance, VNUS may reject
such Product by giving written notice to Medtronic of VNUS’ rejection of such
Product within ten (10) days after discovery of such defects, but such notice
may in no event be later than one (1) year after receipt of such shipment.
     (b) Notwithstanding anything to the contrary in Section 5.4(a), Medtronic
shall not be responsible for replacing or refunding any Product (i) that has
been damaged in transit by VNUS’ carrier or by abuse or misuse by VNUS or its
agent or customer, (ii) for which any unauthorized service or repair was
performed or attempted, (iii) that was re-processed, (iv) has been used as a
demonstration unit, or (e) was damaged by or during transport to VNUS. The
repair and replacement provided for in this Section 5.4 shall be VNUS’ sole and
exclusive remedy for any claim relating to any alleged defect or nonconformity
in the Products, but subject to Article 10.
5.5    Forecasts. VNUS will provide Medtronic with a **** month rolling
non-binding forecast of Product purchases on a **** basis by ****.
5.6    Failure to Supply. If Medtronic fails to supply on a timely basis any
material amounts of Product(s) ordered by VNUS, the parties shall confer in good
faith to solve the supply problem and Medtronic shall use its best efforts to
cure such problem and to keep VNUS informed on a regular basis until such cure
is implemented. If Medtronic is forced to allocate production and distribution
of the Products among its various distributors and customers, Products will be
allocated to VNUS in a share proportional to that percentage of Medtronic’s
total sales of the Product, which VNUS’ sales comprised in the preceding twelve
(12) month period, with the exception of the initial twelve month period of this
Agreement, which proportion shall be determined on the basis of projected twelve
(12) month sales. If, as a result of such allocation, VNUS is unable to purchase
on a timely basis the Minimum Annual Quota or Minimum Quarterly Quota (as
applicable), the applicable Quota will be reduced by the amount of bona fide
orders from VNUS that Medtronic is unable to fill.
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asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
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VI. PRICE AND RESALE TERMS
6.1    Product Transfer Pricing. For all orders of Product other than the
initial stocking order pursuant to Section 5.1 above, Medtronic will charge VNUS
the current list price for the Products, less the discount set forth on
Schedule 6.1 (the result, the “Product Transfer Price”). The current list price
for the Products is attached hereto in Schedule 6.1. All Product pricing
information, including list price, distributor discount, and Product Transfer
Prices, shall be deemed Confidential Information under this Agreement. The
Product Transfer Prices set forth on Schedule 6.1 shall be applicable for ****
following the Effective Date. After ****, the Parties agree that the Product
Transfer Price may increase once every **** months for the remaining term of the
Agreement, at a maximum rate of **** .
     (a) Increased Product Transfer Prices will not apply to purchase orders
accepted by Medtronic before the effective date of the price increase unless
such orders provide for delivery more than thirty (30) days after the date of
acceptance of the order. ****.
     (b) All listed Product Transfer Prices are exclusive of delivery charges,
freight, insurance, state and local use, sales and similar taxes. When such
charges apply they may appear as separate items on Medtronic invoices.
6.2    Resale Price. VNUS retains the sole and exclusive right to establish the
prices at which it distributes and resells the Products in the Market Segment in
the Territory, in its sole discretion.
VII. WARRANTY; DISCLAIMER; LIMITATION OF LIABILITY
7.1    Mutual Representation and Warranties. Each of Medtronic and VNUS
represents and warrants to the other that as of the Effective Date (a) it has
the full corporate power to enter into and perform this Agreement; and (b) this
Agreement constitutes a legal, valid and binding obligation.
7.2    Medtronic Representations and Warranties. Medtronic represents, warrants,
and covenants that:
     (a) at the time of shipment, Product supplied by Medtronic hereunder
(i) shall meet the specifications provided by Medtronic for such Product,
(ii) shall not be adulterated or misbranded within the meaning of the U.S.
Federal Food, Drug and Cosmetic Act (the “Act”), and (iii) shall be manufactured
in accordance with QSR and cGMP (as applicable) and as defined by the Act;
     (b) as of the Effective Date, (i) Medtronic has not granted any rights to
any third party to promote or sell Products in the Market Segment in the
Territory, and (ii) all Products listed on Schedule 1.2 have been approved by
the FDA for sale and distribution in the Territory; and
     (c) during the Term, (i) neither Medtronic nor its affiliates shall, nor
shall they cause, license, or permit others to, promote, license, sell or cause
to be sold Products within the Market Segment in the Territory, except to the
extent permitted under Section 2.6 hereto, and (ii) Medtronic shall obtain and
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maintain all necessary approvals and clearances for all Products that are
promoted and/or sold by VNUS in the Market Segment in the Territory.
7.2    VNUS Representations and Warranties. VNUS represents, warrants, and
covenants that it will direct its sales and marketing personnel to promote
and/or sell Products for use solely in the Market Segment in the Territory.
7.3    User Warranty. The User Warranty, attached hereto as Schedule 7.3, is the
only warranty granted by Medtronic to a Customer of a Product covering such
Product. Medtronic will provide a copy of the User Warranty with each Product
sold hereunder to which it applies. In addition, Medtronic may supply VNUS with
point-of-sale copies of the User Warranty for pre-sale disclosure to prospective
users. VNUS shall comply with all applicable federal or state laws relating to
disclosure of product warranties and limitations, including but not limited to
those of the Federal Trade Commission. NO WARRANTY OTHER THAN THE USER WARRANTY
IS EXPRESSED OR IMPLIED BY MEDTRONIC. MEDTRONIC SPECIFICALLY DISCLAIMS ANY
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. The
User Warranty shall be deemed to commence on the earlier of (1) the date VNUS
delivered the Product to the Customer as reported to Medtronic in the monthly
Product Tracking Report or (2) six (6) months from the date on which the Product
was received by VNUS from Medtronic.
VIII. INTELLECTUAL PROPERTY
8.1    Rights to Intellectual Property. Except as expressly set forth in
Section 8.2 below, VNUS shall have no right or license under this Agreement to
utilize any information, know-how, proprietary data, trademarks, or patent
rights which VNUS may have or may secure in the future relating to any of the
Products, except as may be incidental only to the marketing, promotion,
distribution and/or sale of the Products and the right to use such Products by
VNUS’ Customers. VNUS may not reproduce any copyrighted material of Medtronic
without the prior written consent of Medtronic.
8.2    Trademark Use. Subject to the terms and conditions of this Agreement,
including with limitations of this Section 8.2 below, Medtronic hereby grants to
VNUS a non-exclusive license under the Medtronic logos, trademarks, and service
marks that appear on the Products or in any Medtronic-furnished marketing
collateral specific to the Products (“Medtronic Marks”) in the Territory solely
to market and promote the Products to the Market Segment in the Territory for
the Term. VNUS shall not use Medtronic’s name, or any other similar name or any
other trademark of Medtronic except in advertising, pamphlets, or other
materials promoting the Products. VNUS may label the Products with the statement
“Manufactured by Medtronic for Distribution by VNUS.” All such materials
referencing Medtronic or Products must be approved in writing by Medtronic prior
to their use or dissemination, such approval not to be unreasonably withheld.
VNUS may not use Medtronic’s name or any of Medtronic’s trademarks in its
corporate or business name, or in any other manner which Medtronic deems adverse
to its interests. Use of any Medtronic trademark or trade name associated with
the Products may be done only in accordance with usage guidelines as established
by Medtronic from time to time. Upon the termination of VNUS’ appointment it
shall immediately discontinue any further use or display of Medtronic
trademarks, trade names or any mark or name (except as to sales of remaining
inventory of Products as permitted in Section 9.3). VNUS shall notify Medtronic
if it becomes aware of any unauthorized use of Medtronic trademarks or trade
names or of the use of any mark or name which might
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confuse the public.
IX. TERMINATION
9.1    Termination. This Agreement may be terminated prior to the expiration of
its Term pursuant to any of the following provisions:
     (a) Failure to Satisfy Minimum Annual Quota or Minimum Quarterly Quota.
          (i) Subject to Section 3.15, and only after giving effect to any
payment by VNUS to Medtronic pursuant to such Section 3.15, if VNUS does not
satisfy the applicable Minimum Annual Quota or the Minimum Quarterly Quota for
two consecutive quarters (but provided such inability was not caused by
Medtronic failing to timely supply Products ordered by VNUS), Medtronic shall
have the right to terminate the Agreement.
     (b) Breach of Agreement. If either party materially fails to perform an
obligation or condition of this Agreement (other than VNUS’ failure to satisfy
the Minimum Annual Quota and/or the Minimum Quarterly Quota) and fails to cure
such default within sixty (60) days of receipt of written notice of such default
from the other party specifying the nature of such default, then the party
giving the notice may terminate this Agreement by sending a separate written
notice of termination to the defaulting party. Any material violation of any
material law or regulation applicable to this Agreement or any violation of the
Medtronic Code of Conduct or U. S. Business Conduct Standards shall be deemed an
incurable breach. In the event of a breach that cannot reasonably be cured
within sixty (60) days of receipt of written notice of a breach, then the
alleged breaching party shall have such additional time as necessary not to
exceed an additional thirty (30) days (for a total of ninety [90] days) to cure
the breach if the alleged breaching party (i) during such sixty (60) day period
has submitted a plan, that if successfully carried out, would be effective in
curing such breach, and has commenced execution of such plan, and (ii)
diligently pursues such plan thereafter.
     (c) Bankruptcy. Either party may terminate this Agreement effective
immediately upon delivery of written notice to the other party, if the other
party (i) ceases to actively conduct its business, (ii) files a voluntary
petition for bankruptcy or has filed against it an involuntary petition for
bankruptcy, (iii) makes a general assignment for the benefit of its creditors,
or (iv) applies for the appointment of a receiver or trustee for substantially
all of its property or assets or permits the appointment of any such receiver or
trustee who is not discharged within thirty (30) days of such appointment.
9.2    Effect of Termination. Upon the effective date of termination or
expiration of VNUS’ appointment for any reason, VNUS shall immediately cease to
be an authorized Medtronic distributor (except as to sales of remaining
inventory of Products as permitted in Section 9.3 below) and there shall be
nothing payable by either party except as may be due as a result of prior sales
and these shall be paid as they become due. Either party may, at its option,
cancel any outstanding orders for purchase which have not been shipped by the
effective date of the termination. All obligations with respect to
Confidentiality, return of intellectual property and other obligations which by
their nature are continuing shall survive the termination of this Agreement.
Neither party shall be liable to the other for damages of any kind resulting
from or caused by said termination, including, but not limited to, damages
related to losses through commitments on obligation or leases, loss of
investment, or present or prospective profits,
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inability to meet obligations, or any other causes or reasons whatsoever.
9.3    Repurchase/Sale of Inventory. Upon any termination of this Agreement,
Medtronic shall have the right, exercisable in its sole discretion, to buy back
from VNUS all or any of the Products owned by VNUS on the date of termination.
The price Medtronic shall pay for the Products will be ****. Products
repurchased from VNUS by Medtronic pursuant to this Section 9.3 shall be shipped
promptly by VNUS as instructed by Medtronic, at Medtronic’s commercially
reasonable expense, to a location specified by Medtronic. For a period not to
exceed six (6) months from the date of termination, VNUS may in its sole
discretion, sell or otherwise properly dispose of any Products which are not
purchased by Medtronic, provided such sales and disposal are performed in
accordance with the terms set forth in this Agreement.
9.4    Return of Materials. Upon termination of its appointment, VNUS shall
immediately return to Medtronic all promotional and other Product related
materials previously provided by Medtronic to VNUS (except for a reasonable
quantity as needed by VNUS to sell the remaining inventory of Products, as
permitted in Section 9.3). If VNUS has paid Medtronic for any of the materials
returned, Medtronic shall reimburse VNUS the purchased price of such returned
materials to the extent, and only to the extent that such materials are
currently useable by Medtronic.
9.5    Non-solicitation. For a period of twelve (12) months after expiration or
termination of this Agreement for whatever reason, VNUS will not solicit for
employment, directly or through a third party agent, or hire any person who was
a Medtronic Cardiac Surgery employee during the twelve months preceding the
termination date of this Agreement. For a period of twelve (12) months after
expiration or termination of this Agreement for whatever reason, Medtronic’s
Cardiac Surgery business unit will not solicit for employment, directly or
through a third party agent, or hire any person who was an employee of VNUS
during the twelve (12) months preceding the termination date of this Agreement.
Nothing contained in this Agreement will prevent either party from hiring any
employee of the other party if the employee’s application for employment was in
response to an advertisement of general circulation and such employee was not
solicited by the hiring party directly or through a third party agent.
X. INDEMNITIES
10.1    Medtronic’s Indemnification. Medtronic shall indemnify, defend and hold
harmless VNUS and each of its subsidiaries, officers, directors, employees,
shareholders and distributors from and against and in respect of any and all
assessments, losses, damages, liabilities, interest and penalties, costs and
expenses (including, without limitation, reasonable legal fees and disbursements
incurred in connection therewith and in seeking indemnification therefore, and
any amounts or expenses required to be paid or incurred in connection with any
action, suit, proceeding, claim, appeal, demand, assessment or judgment) finally
awarded (“Indemnifiable Losses”), resulting from, arising out of, or imposed
upon or incurred by any person to be indemnified hereunder by reason of any
third party demands, claims, suits, actions or causes of action against such
person based upon: (i) any breach of representation, warranty, covenant or
agreement by Medtronic under this Agreement, (ii) Product Liability Damages with
respect to the Products, or (iii) other negligence or intentional misconduct of
Medtronic, provided that in no event shall Medtronic be liable for matters for
which VNUS is responsible under Section 10.2 below or for punitive or exemplary
damages. Medtronic shall maintain product liability insurance or self-insurance
in such amounts as ordinary good business practice for its type of business
would make advisable and shall upon
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request provide VNUS with evidence of this coverage. “Product Liability Damages”
means any liability, claim or expense, including but not limited to reasonable
attorneys’ fees and medical expenses, arising in whole or in part out of claims
of third parties for personal injury or loss of or damage to property relating
to or arising out of the Products, whether based on strict liability in tort,
negligent manufacture of product, or any other allegation of liability arising
directly from the design, testing, manufacture, packaging, labeling (including
instructions for use), or sale of the Products.
10.2    VNUS’ Indemnification. VNUS shall indemnify, defend and hold harmless
Medtronic and each of its subsidiaries, officers, directors, employees,
shareholders and suppliers from and against and in respect of any and all
Indemnifiable Losses resulting from, arising out of, or imposed upon or incurred
by any person to be indemnified hereunder by reason of any third party demands,
claims, suits, actions or causes of action against such person based upon:
(i) any breach of representation, warranty, covenant or agreement by VNUS under
this Agreement, (ii) product claims whether written or oral, made or alleged to
be made, by VNUS in its advertising, publicity, promotion, or sale of any
Products where such product claims were not provided by or approved by
Medtronic, (iii) negligent handling by VNUS of the Products or changes,
additions or modifications to the Products by VNUS, (iv) Product Liability
Damages with respect to the Products to the extent they are caused by the
negligent or intentionally wrongful acts of VNUS, (v) Product Liability Damages
caused by non-Medtronic products sold by VNUS, or (vi) other negligence or
intentional misconduct of VNUS; provided that in no event shall VNUS be liable
for matters for which Medtronic is responsible under Section 10.1 above or for
punitive or exemplary damages. VNUS shall maintain liability insurance or
self-insurance in such amounts as ordinary good business practice for its type
of business would make advisable and shall provide Medtronic with evidence of
this coverage.
10.3    Procedure. If a claim by a third party is made and a party (the
“Indemnitee”) intends to claim indemnification under this Article 10, the
Indemnitee shall promptly notify the other party (the “Indemnitor”) in writing
of any claim in respect of which the Indemnitee or any of its subsidiaries,
directors, officers, employees, shareholders, suppliers or distributors intends
to claim such indemnification and the Indemnitor shall have sole control of the
defense and/or settlement thereof, provided that the Indemnitee may participate
in any such proceeding with counsel of its choice at its own expense. The
indemnity agreement in this Article 10 shall not apply to amounts paid in
settlement of any Indemnifiable Losses if such settlement is effected without
the consent of the Indemnitor, which consent shall not be withheld unreasonably.
The failure to deliver written notice to the Indemnitor within a reasonable time
after the commencement of any such action, if adversely prejudicial to its
ability to defend such action, shall relieve such Indemnitor of any liability to
the Indemnitee under this Article 10, but the omission to so deliver written
notice to the Indemnitor shall not relieve the Indemnitor of any liability that
it may otherwise have to any Indemnitee other than under this Article 10. If the
Indemnitor fails to provide defense of the claim, and diligently defend or
settle the same, the Indemnitee may defend or settle the claim without prejudice
to its rights to indemnification hereunder. The Indemnitee under this
Article 10, its employees and agents, shall cooperate fully with the Indemnitor
and its legal representatives and provide full information in the investigation
of any Indemnifiable Losses covered by this indemnification.
10.4    Patent. Medtronic shall indemnify, defend and hold harmless VNUS from
any cost, expense, liability or damage to the extent that it is based upon a
claim that any Product purchased or sold by VNUS infringes a patent of the
United States (or the manufacture or use of such Product infringes such a
patent); provided that VNUS shall promptly notify Medtronic of such claim,
permit Medtronic to assume control
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Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
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of the defense of such claim, and fully cooperate in the defense of such claim.
If the use or sale of a Product is enjoined by order or settlement, then
Medtronic shall have the option to (1) procure for VNUS the right to continue
using or selling the Product, (2) replace the Product with a non-infringing
Product or to modify the Product, (3) modify the Product so it becomes
non-infringing, or (4) accept return of the infringing Product and grant VNUS a
credit for VNUS’ purchase price of such Product. The foregoing shall be the
entire liability of Medtronic for patent infringement by Products furnished
hereunder.
THIS SECTION 10.4 STATES MEDTRONIC’S TOTAL RESPONSIBILITY AND LIABILITY, AND THE
VNUS’ SOLE REMEDY, FOR ANY ACTUAL OR ALLEGED INFRINGEMENT OF ANY PATENT,
TRADEMARK OR COPYRIGHT BY ANY PRODUCT DELIVERED HEREUNDER OR ANY PART THEREOF.
THIS ARTICLE IS IN LIEU OF AND REPLACES ANY OTHER EXPRESS, IMPLIED OR STATUTORY
WARRANTY AGAINST INFRINGEMENT. IN NO EVENT SHALL MEDTRONIC BE LIABLE FOR ANY
INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING FROM ANY SUCH
INFRINGEMENT.
10.5    LIMITATION OF LIABILITY
     IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR COSTS OF
PROCUREMENT OF SUBSTITUTE GOODS BY ANYONE. IN NO EVENT SHALL EITHER PARTY BE
LIABLE TO THE OTHER PARTY OR ANY OTHER PERSON FOR ANY SPECIAL, CONSEQUENTIAL,
INDIRECT OR INCIDENTAL DAMAGES, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY
ARISING OUT OF THIS AGREEMENT, AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGE. THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING
ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY PROVIDED HEREIN.
NOTWITHSTANDING THE FOREGOING PROVISIONS OF THIS SECTION, THE LIMITATIONS OF
LIABILITY SET FORTH IN THIS SECTION SHALL NOT APPLY TO (i) CLAIMS ARISING UNDER
ARTICLE 8 (INTELLECTUAL PROPERTY) OR (ii) THIRD PARTY CLAIMS FOR PERSONAL
INJURY, DEATH OR PHYSICAL DAMAGE TO PROPERTY WHICH ARE SUBJECT TO THE
INDEMNIFICATION PROVISIONS OF ARTICLE 10.1 OR 10.2.
XI. CONFIDENTIAL INFORMATION
11.1    Definition. A party’s “Confidential Information” is defined as any
information of one party (the “Disclosing Party”) that is disclosed to the other
party (the “Receiving Party”), including without limitation, technical product
data, business plans, product pricing, sales goals, marketing information and
other information not generally available to the public. Notwithstanding
anything to the contrary in this Agreement, Confidential Information does not
include information that (a) is already known by the Receiving Party at the time
of disclosure by evidence of such Receiving Party’s written records;
(b) becomes, through no act or fault of the Receiving Party, publicly known;
(c) is received by the Receiving Party without restriction on the Receiving
Party’s disclosure or use, from a third party which itself had no obligation to
keep such information confidential; or (d) is independently developed by the
Receiving Party without access or reference to the Confidential Information of
the Disclosing Party.
11.2    Restrictions. Each party shall maintain in confidence any Confidential
Information received
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from the other party or, in the case of Medtronic, of any of its suppliers or
purchasers during the Term and shall not publish, disseminate, or disclose such
Confidential Information except to the extent necessary to carry out its duties
hereunder without the express written permission of the Disclosing Party. Each
Receiving Party shall use at least the same degree of care to protect the
Confidential Information of the Disclosing Party as it does to protect its own
Confidential Information and in all cases shall use commercially reasonable
efforts to protect such information. This obligation of confidentiality shall
expire five (5) years after the termination or expiration of this Agreement.
11.3    Exceptions. A party may disclose Confidential Information of the other
party to the extent required to be disclosed by a court or governmental agency
pursuant to a statute, regulation, or valid order; provided, however, that the
Receiving Party first notifies the Disclosing Party and gives the Disclosing
Party the opportunity to seek a protective order, or to contest such required
disclosure.
11.3    Return of Confidential Information. All Confidential Information shall
be returned to the Disclosing Party at the request of the Disclosing Party upon
the termination or expiration of this Agreement.
XII. GENERAL PROVISIONS
12.1    Independent Contractor Relationship. VNUS is and shall remain an
independent contractor and is not and shall not be deemed to be an employee,
joint venturer, partner, or franchisee of Medtronic for any purpose.
Accordingly, VNUS shall be exclusively responsible for the manner in which it
performs its duties under this Agreement and for the profitability or lack
thereof of its activities under this Agreement. All financial obligations
associated with VNUS’ business are the sole responsibility of VNUS. VNUS does
not have, and shall not represent itself as having, any right or authority to
obligate or bind Medtronic in any manner whatsoever.
12.2    Waivers. Failure of either party at any time to require strict
performance of the other party of the provisions of this Agreement shall not act
as a waiver of such provisions, nor shall the waiver of a breach of the
Agreement by either party constitute a waiver of such provision for any
subsequent breach.
12.3    Entire Agreement and Modifications. This Agreement, together with its
schedules, exhibits and addendums, if any, contains the entire and only
agreement between the parties with respect to the sale and purchase of Medtronic
products. Any representations or terms and conditions not incorporated in this
Agreement shall not be binding upon either party. No attempted modification of
this Agreement shall be binding upon either party unless in writing and signed
in the same manner as the original Agreement. If any provision of this Agreement
is held to be invalid, it shall not affect the enforceability of the remaining
provisions.
12.4    Assignment. VNUS may not transfer, assign, nor delegate the rights or
the duties of this Agreement without the prior written consent of Medtronic.
Notwithstanding the foregoing, either party may assign its rights and
obligations under this Agreement with the prior written consent of the
non-assigning party, such consent not to be unreasonably withheld or delayed, to
any person or entity with which such party is merged or by which it is acquired
or which purchases all or substantially all of its assets or stock; provided, if
the non-assigning party does not give its consent, this Agreement is
automatically terminated at the time of the merger, acquisition, or sale, as
applicable.
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12.5    Governing Law. This Agreement and the relationship between the parties
shall be governed by the laws of the State of New York, without giving effect to
its conflicts of law provisions.
12.6    Dispute Resolution. All disputes and disagreements between the parties
arising out of or relating to any provision of this Agreement or the breach,
termination, or validity thereof, shall be resolved in accordance with the
following provisions:

  a)   For any dispute that cannot be resolved in the normal course of business,
the parties shall attempt in good faith to resolve such dispute by negotiation
between senior level executives who have authority to settle the controversy and
who are at a higher level of management than the persons with direct
responsibility for administration of this Agreement. Any party may give the
other party written notice that a dispute has not been resolved in the normal
course of business.     b)   Any dispute which has not been resolved within a
reasonable time by negotiation under subsection (a), above, shall be resolved
through binding arbitration in accordance with the Center for Public Resources
Non-Administered Arbitration Rules in effect on the date of this Agreement.
Unless the parties agree otherwise, the arbitration shall be conducted by three
independent and impartial arbitrators who shall be appointed by CPR in
accordance with CPR’s rules governing the arbitration. The arbitration shall be
governed by the United States Arbitration Act, 9 U.S.C. 1-16. The place of
arbitration shall be New York County, New York, USA and shall be conducted in
the English language. The arbitrators are not empowered to make any award in
excess of compensatory damages and each party hereby irrevocably waives any
right to recover such damages with respect to any dispute resolved by
arbitration. Any judicial proceeding to enforce a decision of the arbitrators
under this Agreement shall be instituted and conducted in U.S. District Court in
New York County, New York, U.S.A.     c)   The statute of limitations of the
State of New York applicable to the commencement of a lawsuit shall apply to the
commencement of an arbitration hereunder.     d)   All negotiations pursuant to
this Section 12.6 are confidential and shall be treated as compromise and
settlement negotiations for purposes of applicable rules of evidence.

12.7    Force Majeure. If the performance of any obligation of this Agreement
except for the payment of money is prevented, restricted, or interfered with by
reason of strike, labor dispute, natural disaster, war, the acts of government
or any other cause outside the reasonable control of the parties, then the party
so affected shall give prompt notice to the other party and shall be excused
from such performance to the extent made necessary by such event.
12.8    Notices. Any notice required or permitted by this Agreement shall be in
writing and shall be sent by prepaid registered or certified mail, return
receipt requested, internationally recognized courier or personal delivery, or
by fax with confirming letter mailed under the conditions described above in
each case addressed to the other party at the address shown below or at such
other address for which such party give notice hereunder. Such notice shall be
deemed to have been given when delivered:
If to Medtronic:
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Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

 

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Medtronic USA, Inc.
7601 Northland Drive North
Minneapolis, MN 55428
Attn: VP and General Manager, Cardiac Surgery
With a copy to:
Medtronic USA, Inc.
7601 Northland Drive North
Minneapolis, MN 55428
Attn: VP and Senior Counsel, Cardiac Surgery
If to VNUS:
VNUS Medical Technologies, Inc.
2200 Zanker Road, Suite F
San Jose, CA 95131
Attn: Chief Financial Officer
12.9    Counterparts. This Agreement may be executed in counterparts, each of
which will be considered an original, but all of which together will constitute
the same instrument.
Signature Page to Follow
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the
date first written above.

       
MEDTRONIC, INC.
  VNUS MEDICAL TECHNOLOGIES, INC.    
/s/ Clifton W. Owens
  /s/ R. McCrae  
 
     
Name
  Name    
Vice President & General Manager RST
  VP, Bus. Dev. & Mfg.  
 
     
Title
  Title    
January 24, 2006
  1/25/06  
 
     
Date
  Date  
 
     
Attachments: Schedules
     

Page 18
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

 

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SCHEDULE 1.1
MARKET SEGMENT & TERRITORY
Market Segment
All vascular surgery procedures.
Exclusions: All non-vascular surgical procedures.
Territory
Entire United States
Exclusions:
Markets outside the United States
Page 19
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

 

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

 

SCHEDULE 1.2
U-CLIP™ PRODUCTS

              UCLIP™ Anastomotic Devices   All U-CLIP™ 2 - pack configurations
are shipped as 24 packs per carton, all 8 - pack configurations are shipped as
18 packs per carton.     Product Order       U-CLIP™ Count Number   Product
Description   (clips per carton)    
****
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Page 20
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

 

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

 

         
****
  ****   ****
****
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****
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****
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****
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****
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****
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****
  ****   ****
****
  ****   ****              UCLIP™ Anastomotic Miscellaneous Products    
****
  ****   ****    

Page 21
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

 

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

 

SCHEDULE 3.13
MEDTRONIC CODE OF CONDUCT
AND
U.S. BUSINESS CONDUCT STANDARDS
(attached)
Page 22
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

 

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

 

(MEDTRONIC LOGO) [f17688f1768801.gif]

 

****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

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

 

Code of Conduct
 

         
Compliance With The Law
    2  
 
       
Employee Responsibility
    2  
 
       
Improper Payments
    2  
 
       
Customer Relationships
    2  
 
       
Fair Dealing
    3  
 
       
Recordkeeping
    3  
 
       
Antitrust/Competition
    4  
 
       
Export Controls, Economic Sanctions,
       
and International Boycotts
    4  
 
       
Conflict of Interest
    4  
 
       
Insider Trading
    5  
 
       
Intellectual Property and Confidential Information
    5  
 
       
Corporate Opportunities
    6  
 
       
Protection and Proper Use of Company Assets
    6  
 
       
Clinical and Regulatory Affairs
    6  
 
       
Quality
    6  
 
       
Environmental Management
    6  
 
       
Safety and Health
    7  
 
       
Productive Work Environment
    7  
 
       
Political Activity
    7  
 
       
People Acting on Behalf of Medtronic
    7  
 
       
Government, Analyst, and Media Inquiries
    7  
 
       
Code of Ethics For Senior Financial Officers
    7  

****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

 

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

 

Code of Conduct
 
Medtronic’s reputation throughout the world for legal, moral, and ethical
behavior is one of our most valuable assets. This reputation has been built upon
a policy of strict compliance with the law and the conduct of the business with
the highest standards of moral and ethical behavior. Medtronic’s Mission
Statement and our code of business conduct (the “Code”) provide the guidance
essential to the successful global operation of Medtronic. Together, they
reflect our shared values and our collective commitment to Medtronic’s
standards.
The Code is intended to inform employees of their legal and ethical obligations
to Medtronic and our customers. Given the legal and regulatory complexity of the
markets in which we do business, the Company has also distributed Business
Conduct Standards which set forth legal compliance requirements on a local
country basis. In addition, Medtronic’s Chief Executive Officer, Chief Financial
Officer, Corporate Controller and Treasurer are subject to additional policies
set forth in Medtronic’s Code of Ethics for Senior Financial Officers, which is
part of this Code.
Each supervisor and manager is responsible for ensuring employee understanding
and compliance with the Code and applicable Business Conduct Standards. Key
management employees will be required each year to confirm that they are not
aware of unreported violations of the Code or the relevant Business Conduct
Standards and to ensure that appropriate training on Code responsibilities has
been properly communicated to each management employee under their direction.
No Code or Business Conduct Standards can cover every possible business
situation which may arise in the complex regulatory environment in which
Medtronic operates. If you have any doubts or concerns regarding the Code or any
conduct, please review these issues with your local management or Medtronic
Legal Counsel. You may also contact the Chief Compliance Officer or use the
“Compliance Line” described in the Code.
Medtronic considers compliance with this Code to be vital. The Company’s
reputation for quality products and high standards and our passion for the
Medtronic Mission Statement can only be maintained by consistently honest and
ethical dealings. All employees of Medtronic and its subsidiaries around the
world must adhere to this Code and the applicable Business Conduct Standards.
Arthur D. Collins, Jr.
Chairman and CEO
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

 

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

 

Code of Conduct
 

COMPLIANCE WITH THE LAW
Medtronic and its employees shall comply with all applicable laws and
regulations. If it is not possible for Medtronic to participate successfully in
any business segment in any part of the world while complying with this policy,
Medtronic will not participate in that business segment.
EMPLOYEE RESPONSIBILITY
Employees are expected to know and follow the laws of each relevant market in
which Medtronic does business. Employees are also expected to comply with the
provisions of this Code and the relevant Business Conduct Standards. Managers
are expected to ensure such compliance. It is the responsibility of every
employee to promptly bring violations and suspected violations of the Code to
the attention of the Company, through management, Medtronic Legal Counsel, or
the Chief Compliance Officer, or by using the Medtronic Compliance Line
described below. Employees at all levels are prohibited from retaliating against
or threatening anyone for reporting or supplying information about a policy or
conduct concern.
Medtronic has established and will maintain a written program to ensure
compliance with the law and with these and other policies the Company may adopt.
The program consists, among other things, of the Medtronic Code and Business
Conduct Standards, training programs, annual Certifications of Compliance to be
completed by key personnel, periodic audit, and a Compliance Line. The toll-free
Compliance Line is available to all employees to report conduct believed to be
in violation of the Code or any applicable Business Conduct Standards.
Information transmitted through the Compliance Line will be investigated
thoroughly and the identity of the source will be maintained in confidence,
unless otherwise required by law. Enclosed is a wallet-sized card, which
includes the U.S. Compliance Line number as well as access codes for countries
outside the U.S. where such a line is permitted.
Adherence to all laws and regulations in the countries in which we operate, and
to the policies in this Code as well as the Business Conduct Standards, is a
condition of employment for every Medtronic employee. Violations could expose
the employee and Medtronic to civil and criminal liability and could harm the
Company’s reputation and competitive position. Violations will be dealt with
promptly and may result in disciplinary measures up to and including the
termination of employment.
Although the Code and Business Conduct Standards provide a framework to guide
business conduct, they do not cover every situation. Please contact Medtronic
Legal Counsel if you need assistance in understanding or interpreting them. The
Audit Committee will consider any request for a waiver of any provision of this
Code for executive officers. Only the Board of Directors or the Audit Committee
may approve a waiver for executive officers. Waivers will be granted only in
exceptional circumstances and will be promptly disclosed as required by law.
IMPROPER PAYMENTS
No bribes, kickbacks, or other payments for illegal purposes shall be made to or
for the benefit of government employees or officials, customers, or others. This
policy extends not only to direct payments, but also to indirect payments made
in any form through consultants or other third parties.
CUSTOMER RELATIONSHIPS
No benefit will be given to a customer with an explicit or implicit requirement
to use or purchase Medtronic products. “Customer” is used throughout these
policies to mean any person or entity that is in a position to purchase or
influence a decision to purchase Medtronic products. Certain discounts, rebates,
free products, demos, equipment loaners, and warranty services furnished in the
ordinary course of business are permitted, provided such benefits comply with
local Business Conduct Standards.

****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

 

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

 

Code of Conduct
 

Donations, Gifts, and Business Courtesies
Donations to customers or organizations closely affiliated with customers shall
entail a benefit to society and shall be made to promote better health care,
demonstrate good corporate citizenship, or serve a genuine educational function.
Such donations must comply with local Business Conduct Standards.
The giving of gifts is generally prohibited. An exception is made in some
countries for gifts which are modest in amount, recognized as a custom of the
trade, and which could in no way cause Medtronic to be embarrassed or obligated.
All gifts must comply with local Business Conduct Standards.
Business courtesies such as meals, transportation, and entertainment provided to
a customer must be modest in amount and related to a legitimate business purpose
(e.g., explanation or demonstration of Medtronic products, application of
products, service capabilities, or training). Such courtesies must be in
compliance with local Business Conduct Standards.
Payments to Customers
Medtronic may compensate customers for consulting, research and other services
rendered, and reasonable costs incurred where the services have value to
Medtronic and are rendered for fair market value. Such arrangements must be in
writing in a form approved by the Medtronic Legal Department and must comply
with local Business Conduct Standards.
Medtronic has a responsibility to provide instruction, education, and training
on the safe and effective use of its products to health care providers. If
Medtronic provides honoraria or reimbursement of travel, living, or meal
expenses to participants, the amount must be reasonable and in compliance with
local Business Conduct Standards.
Medtronic may, under some circumstances, underwrite the cost of continuing
medical education conferences or professional meetings (e.g., registration fees,
travel, living, and meal expenses). The laws regarding this type of support are
complicated and such payments are not allowed in every country. In some
countries, payments can be made only to the sponsor of the event or the
institution of the attendee. All such payments must comply with local Business
Conduct Standards.
FAIR DEALING
All employees should deal fairly with Medtronic’s customers, suppliers,
competitors and employees. No one should take unfair advantage of anyone through
manipulation, concealment, abuse of privileged information, misrepresentation of
material facts, or any other unfair-dealing practice.
RECORDKEEPING
Medtronic entities will maintain accurate Company records and accounts in order
to ensure legal and ethical business practices and to prevent fraudulent
activities. Finance managers for Medtronic businesses, including subsidiaries
worldwide, have the responsibility to express their independent views to, and
raise any significant issues with, the Chief Financial Officer.
Records and accounts must be complete and not misleading. All Company accounting
records, and the reports produced from those records, must be kept and presented
in accordance with all applicable laws and relevant accounting standards.
No undisclosed or unrecorded funds or assets of Medtronic may be maintained for
any purpose. No more than one set of books may be maintained and no false or
artificial entries may be made in any accounts.

****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

 

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

 

Code of Conduct
 

ANTITRUST/COMPETITION
Antitrust laws in the U.S. and competition laws outside the U.S. exist to ensure
free and open competition in the marketplace, a principle that Medtronic fully
supports. Violation of these laws can result in civil liability and criminal
penalties for Medtronic and its employees.
These laws are complex and, consequently, employees may not take any
collaborative action with a competitor, or take any action that could have an
improper anti-competitive effect, without prior advice from Medtronic Legal
Counsel. Examples of prohibited conduct include:

•   Agreements or understandings with competitors, either directly or through
others, to fix prices, divide customers or territories, or restrict sales;   •  
Exchange of pricing or other proprietary information with competitors; and   •  
Illegal tying, illegal price discrimination or refusals to deal.

Medtronic management is expected to maintain basic familiarity with the
principles and purposes of the antitrust laws as they apply to Medtronic
business, and to abstain from any activities that might violate or create any
appearance of intention to violate such laws. Medtronic employees are expected
to understand the antitrust principles that apply to their activities. All
employees are to seek guidance from Medtronic Legal Counsel in any circumstances
where doubt exists.
EXPORT CONTROLS, ECONOMIC SANCTIONS, AND INTERNATIONAL BOYCOTTS
Medtronic must comply with export control and economic sanctions laws of the
United States, as well as those of other countries in which it does business.
These laws restrict transfers, exports, and sales of products or technical data
from the United States to certain prescribed countries and persons as well as
re-exports of certain such items from one non-U.S. location to another. They
also prohibit or restrict other business and financial dealings with certain
countries, governments, and parties. Medtronic and its employees are required to
comply with these laws without exception. These laws are complicated and
employees should contact Medtronic’s Export/Import Compliance Manager and/or
Medtronic Legal Counsel whenever a question arises.
In addition, U.S. law prohibits cooperation with certain boycotts imposed by
some countries against others and further requires that any request in
furtherance or support of such boycotts be reported to the U.S. Government. The
most notable of these is the Arab boycott of Israel. Medtronic employees may not
cooperate with any prohibited boycotts and must report any request for
cooperation immediately to management, the Medtronic Export/Import Compliance
Manager, and/or Medtronic Legal Counsel.
CONFLICT OF INTEREST
Medtronic employees owe a duty of undivided business loyalty to the Company.
This duty is breached when an employee engages in activities that cause a
conflict of interest. Conflicts of interest may arise when considerations of
gain or benefit to an employee or an employee’s immediate family members
conflict with or appear to conflict with the employee’s obligation to serve
Medtronic’s best interest or the employee’s ability to perform company work
objectively and effectively. Anything that would be

****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

 

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

 

Code of Conduct
 

a conflict of interest for an employee may also be a conflict of interest if it
involves an immediate family member. Conflicts of interest can take many forms,
not all of which can be addressed by this Code.
The following are examples of conflicts of interest:

•   Consulting with or employment by a competitor, supplier, or customer of
Medtronic;   •   Holding a substantial equity, debt, or other financial interest
in any competitor, supplier, or customer;   •   Having a financial interest in
any transaction involving the purchase or sale by Medtronic of any products,
materials, equipment, services, or property, other than through
Company-sponsored programs;   •   Using employees, materials, equipment or other
assets of Medtronic for any unauthorized purpose; or   •   Accepting any cash,
gifts, entertainment, or benefits that are more than modest in value from any
competitor, supplier, or customer.

A manager must approve acceptance of any benefit of more than modest value from
a competitor, supplier, or customer.
Each employee is responsible for avoiding conflicts of interest as well as the
appearance of such conflicts. Employees who are unsure whether they are involved
in a conflict of interest or whether an action might create a conflict of
interest should discuss the issue with their manager or with Medtronic Legal
Counsel. A conflict of interest or potential conflict of interest may sometimes
be resolved or avoided if it is appropriately disclosed and approved.
However, in other instances, disclosure may not be sufficient and Medtronic may
require that the conduct be stopped or that actions taken be reversed where
possible.
INSIDER TRADING
All Medtronic employees are prohibited from engaging in insider trading. Insider
trading is trading in Medtronic stock while aware of confidential information
about the Company that could, if it became public, affect the stock price.
Disclosure of any information to another person, such as a spouse or friend,
which would enable them to gain a trading benefit not available to the general
public, is prohibited as well. Similar restrictions apply to trading in the
stock of other companies using confidential information that an employee has
access to because of his or her employment. This conduct is illegal and could
subject the employee and Medtronic to civil liability and criminal penalties.
INTELLECTUAL PROPERTY AND CONFIDENTIAL INFORMATION
Medtronic invests substantial resources in developing proprietary intellectual
property and confidential information. Confidential information is information
that is not generally known or readily available to others. Medtronic protects
its intellectual property by seeking patent, trademark, or trade secret
protection. It protects its confidential information by taking precautions to
prevent inappropriate disclosure or loss of such information.
Medtronic respects the intellectual property of others. Early in the product
development cycle, Medtronic conducts patent searches to avoid infringing
patents of others and, when necessary, makes design changes or seeks licenses.
Confidential information is critical to Medtronic’s competitive advantage. This
includes technical know-how and data, trade secrets, business plans, marketing
and sales programs, and sales figures,

****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

 

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

 

Code of Conduct
 

as well as information relating to mergers and acquisitions, stock splits,
divestitures, licensing activities, and changes in senior management.
Confidential information also includes personal information about Medtronic
employees, such as salaries, benefits, and information contained in personnel
files. Confidential information must not be shared with others outside Medtronic
except pursuant to approved business relationships; nor may Medtronic employees
accept confidential information from third parties, including competitors,
without the authorization of Medtronic Legal Counsel.
CORPORATE OPPORTUNITIES
Employees may not take for personal use opportunities that are discovered
through the use of corporate property, information or position, nor may they use
corporate property, information or position for their own personal gain or to
compete with Medtronic. Employees have a duty to advance Medtronic’s interests
when the opportunity to do so arises.
PROTECTION AND PROPER USE OF COMPANY ASSETS
All employees should protect Medtronic’s assets and promote their efficient use.
Theft, carelessness and waste have a direct impact on Medtronic’s profitability.
All Medtronic assets should be used for legitimate business purposes. Incidental
and occasional personal use of Medtronic assets such as computers, telephones
and supplies is permitted.
CLINICAL AND REGULATORY AFFAIRS
Medtronic products are heavily regulated by governmental agencies, health
ministries, and other regulatory authorities worldwide. Every employee is
responsible for compliance with worldwide product regulation requirements,
including marketing approvals, conduct of
clinical studies, good manufacturing practice requirements and standards, design
controls, labeling and advertising controls, and any other product regulations
and controls promulgated by government agencies. Each employee is responsible
for reporting any significant issues to management and/or the Chief Regulatory
Officer. Regulatory affairs managers have the responsibility to express their
independent views to, as well as raise any significant issues with, the Chief
Regulatory Officer. Medtronic is committed to maintaining an open, constructive
and professional relationship with regulators on matters of regulatory policy,
submissions, compliance, and product performance.
QUALITY
Medtronic is committed to producing the highest quality medical devices in the
interest of patient safety and to maintain its reputation for excellence through
Customer-Focused Quality. Medtronic will comply with all laws and regulations
regarding the safety and efficacy of its products and the standards for its
manufacturing plants.
Each employee is responsible for reporting any concerns that relate to a
compromise of quality to management and/or the Chief Quality Officer. Quality
Managers for Medtronic businesses, including subsidiaries worldwide, have the
responsibility to express their independent views to, as well as raise any
significant quality issues with, the Chief Quality Officer.
ENVIRONMENTAL MANAGEMENT
Medtronic is committed to doing business in an environmentally responsible
manner and will strive to improve its performance to benefit its employees,
customers, communities, shareholders, and the environment. All employees are
responsible for making sure that Medtronic’s business is conducted in compliance
with all applicable laws and in a way that is protective of the environment.

****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

 

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

 

Code of Conduct
 

SAFETY AND HEALTH
Medtronic is committed to a safe, healthy work environment that is in compliance
with all applicable laws and regulations. All employees are expected to develop
a pro-active, cooperative attitude toward issues of health and safety throughout
the Company.
PRODUCTIVE WORK ENVIRONMENT
Medtronic is committed to a productive work environment. Key elements for
developing such an environment include freedom from harassment in any form, a
culture that recognizes and appreciates the advantages of a diverse work force,
and a decision process which seeks to ensure that all employees are treated with
dignity and respect.
Discrimination on the basis of race, religion, gender, color, ethnic or national
origin, age, disability, sexual preference, or marital status will not be
allowed. This includes discrimination in hiring, training, advancement,
compensation, discipline, and termination. Harassment, such as racial or sexual
harassment, will not be tolerated and should be reported to the appropriate
manager or Human Resources Representative.
POLITICAL ACTIVITY
Medtronic supports your right to participate actively in the political process.
However, you must have written approval in advance from the Medtronic Chief
Executive Officer or General Counsel for solicitations made during work hours or
on Medtronic property on behalf of any political party, candidate committee or
other election fund. No corporate funds, or other corporate assets, may be
contributed directly to any political party, political committee, or candidate
for public office at the federal level, or at the state level unless permitted
by law, with the exception of funds used to administer the corporate political
action committee.
PEOPLE ACTING ON BEHALF OF MEDTRONIC
Medtronic expects its independent dealers, distributors and agents to comply
with the policies set out in this Code. The Medtronic manager responsible for
any such relationship must ensure that the terms of the relationship are set out
in a written agreement, provide a copy of the Code, and require compliance with
the Code in all dealings on Medtronic’s behalf. Promoting or engaging in any
practices that violate the principles of this Code may result in termination of
the relationship.
GOVERNMENT, ANALYST, AND MEDIA INQUIRIES
Medtronic must be made aware of any inquiries from the government, the
financial/analyst community, or the media so that it can properly and thoroughly
respond. If a Medtronic employee is contacted by a representative of a
governmental agency seeking an interview or making a non-routine request for
documents, that employee should immediately contact Medtronic Legal Counsel so
that appropriate arrangements can be made to fully comply with the Company’s
legal obligations. All inquiries from the financial/ analyst community should be
referred to Investor Relations. All media inquiries should be referred to
Corporate Media Relations in the U.S. or to the authorized person or department
outside the U.S.
CODE OF ETHICS FOR SENIOR FINANCIAL OFFICERS
In addition to being bound by all other provisions of this Code of Conduct, the
Chief Executive Officer (CEO), the Chief Financial Officer, Treasurer, Corporate
Controller, and other senior financial officers performing similar functions who
have been identified by the CEO (collectively, the “Senior Financial Officers”)
are subject to additional specific policies (collectively, the “Code of Ethics
for Senior Financial Officers”). The Code of Ethics for Senior Financial
Officers

****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

 

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

 

Code of Conduct
 

governs a number of areas including disclosures of material information that
affect the disclosures made by the Company in its public filings; reporting of
internal financial control deficiencies or fraud of which these Senior Financial
Officers become aware; violations of securities laws; and conflicts of interest
between personal and business relationships. The Code of Ethics for Senior
Financial Officers is an addendum to the Medtronic Code of Conduct and may be
found at http://www.medtronic.com/corporate_governance/ code_ethics.html.

****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

 

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

 

Code of Conduct
 
The Medtronic Mission
To contribute to human welfare by application of biomedical engineering
in the research, design, manufacture, and sale of instruments or appliances
that alleviate pain, restore health, and extend life.
To direct our growth in the areas of biomedical engineering where we display
maximum strength and ability; to gather people and facilities that tend to
augment these areas; to continuously build on these areas through
education and knowledge assimilation; to avoid participation in areas
where we cannot make unique and worthy contributions.
To strive without reserve for the greatest possible reliability and quality in
our products; to be the unsurpassed standard of comparison and to be
recognized as a company of dedication, honesty, integrity, and service.
To make a fair profit on current operations to meet our obligations,
sustain our growth, and reach our goals.
To recognize the personal worth of employees by providing an employment
framework that allows personal satisfaction in work accomplished,
security, advancement opportunity, and means to share in
the company’s success.
To maintain good citizenship as a company.
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

 

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

 

VISIT THE COMPLIANCE WEBSITE ON THE MEDTRONIC INTRANET AT
http://mitintra.corp.medtronic.com/cci/index.htm
To order copies of this booklet, send an e-mail to productlit@medtronic.com.
Provide your name, mail stop and cost center number.
Include the number of copies you are ordering.

         
United States of America
  Asia-Pacific   Canada
Medtronic Neurological
  Medtronic International, Ltd.   Medtronic of Canada Ltd.
710 Medtronic Parkway
  Suite 1602 16/F   6733 Kitimat Road
Minneapolis, MN 55432-5604
  Manulife Plaza   Mississauga, Ontario L5N 1W3
USA
  The Lee Gardens, 33 Hysan Avenue   Canada
Internet: www.medtronic.com
  Causeway Bay   Tel. 1-905-826-6020
Tel. 763-505-5000
  Hong Kong   Fax 1-905-826-6620
Fax 763-505-1000
  Tel. 852-2891-4456    
Toll-free 1-800-328-0810
  Fax 852-2891-6830    
 
       
Europe
       
Medtronic Europe Sarl
  Australia    
Route du Molliau 31
  Medtronic Australasia Pty. Ltd.    
Case Postale
  Unit 4/446 Victoria Road    
1131 Tolochenaz
  Gladesville NSW 2111   UC200004136d EN
Switzerland
  Australia   © Medtronic, Inc. 2005
Internet: www.medtronic.co.uk
  Tel. 02-9879-5999   All Rights Reserved
Tel. +41-21-803-8000
  Fax 02-9879-5100   Printed in USA
Fax +41-21-803-8099
  Toll-free 1-800-251-760   July 2005

      (MEDTRONIC LOGO) [f17688f1768802.gif]

****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

 

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(MEDTRONIC LOGO) [f17688f1768800.gif]
Medtronic U.S. Business Conduct Standards — 2004
Customer Relationships
 
Standard #1
General Provisions
 
No Medtronic employee or agent may offer or give a benefit to a Customer with an
explicit or implicit requirement to use or purchase Medtronic products, or as a
reward for prior use or purchase of Medtronic products.
Scope of Standards. These Standards are mandatory for interactions involving a
transfer of anything of value from Medtronic to a Customer (a “Customer
Interaction”). If you are unsure about the legality of a Customer Interaction or
the Customer Interaction is not specifically allowed by these Standards, you
must consult with Medtronic Legal Counsel before entering into it. All Medtronic
employees and agents must comply with these Standards, the Medtronic Code of
Conduct and applicable law, including, for example, the antitrust, securities,
FDA and export control laws. Standards 1-8 do not apply to relationships with
individual patients or to relationships with entities that are not in the
business of providing health care services or affiliated with such entities.
Standards are Country-Specific. These Standards apply to interactions with
Customers who work in the U.S. Other country-specific Standards can be found at
the Compliance site on the Medtronic Intranet. The Standards of the country
where the Customer works apply to that Customer. Customer Interactions with
Customers (whether U.S. or O.U.S.-based) who work or perform services outside of
the U.S. require notice to the area Medtronic Legal Counsel (or responsible area
corporate paralegal), followed by approval of an area Medtronic Vice President.
If the Customer Interaction is the primary responsibility of management outside
of the U.S., but is with a U.S. physician or for services performed by an
individual or organization within the U.S., notice to the U.S. business legal
department followed by approval of a U.S. Medtronic Vice President is required.
“Customer” means any person or entity in a position to purchase, lease,
recommend, use, or arrange for the purchase or lease of or prescribe Medtronic
products. Gifts, payments or other benefits given to persons employed by a
Customer or to a close family member of a Customer are attributed to the
Customer. Likewise, gifts, payments or other benefits that are given in the name
of a Customer or to an organization
 1
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

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affiliated with a Customer are attributed to the Customer. An organization is
“affiliated” with a Customer if it is controlled by or under common control with
the Customer, or if the Customer is on the Board of the organization, receives
material compensation from, or has an investment interest in the organization.
“Medtronic Vice President,” “Medtronic Corporate Vice President” and “Medtronic
Legal Counsel.” References throughout the Standards to a “Medtronic Vice
President” mean any Vice President of Medtronic, Inc. A list of the “Medtronic
Corporate Vice Presidents” is on the Medtronic Compliance website. References to
“Medtronic Legal Counsel” are to the Medtronic-employed lawyers providing
services to the businesses and geographies.
Compliance with Standards is required. All Medtronic employees and agents
involved in Customer Interactions are expected to know and comply with these
Standards and with any interpretive guidance given to them by Medtronic (e.g.,
by a Medtronic Manager (“Manager”) or Medtronic Legal Counsel). Managers are
responsible for ensuring compliance. Violations of the Standards could expose
the employee and Medtronic to civil and criminal liability. Adherence to the
Standards is a condition of employment for every employee and violations will be
dealt with promptly and may result in disciplinary measures up to and including
the termination of employment.
Each business must develop and implement appropriate procedures for disciplining
employees who violate the Standards and for responding to violations by agents.
These discipline policies are subject to review and approval by the Medtronic
General Counsel. Each business must also ensure that all personnel involved in
Customer Interactions receive mandatory training on the Standards at a level
appropriate to their position.
If an employee is in doubt about the meaning or application of a Standard, the
employee should contact a Manager or Medtronic Legal Counsel. If an employee is
concerned that others may be engaging in, or requiring that the employee engage
in, conduct that is inconsistent with these Standards, the employee should
discuss the concern with a Manager or Medtronic Legal Counsel or contact the
Compliance Line at 800-488-3125.
If the Company is restricted from doing something, so are its agents and
employees. If these Standards restrict Medtronic’s interactions with a Customer,
Medtronic employees and agents are likewise restricted, even if no request for
reimbursement is made of the Company. Agents of Medtronic that interact with
Customers on Medtronic’s behalf must be contractually required to adhere to
these Standards.
Payments to Customers may only be made by the Company. Only the Company can make
payments to, or on behalf of, or reimburse a Customer and only by Company
 2
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

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check or wire transfer. Any payment for travel expenses incurred by a Customer
(e.g., lodging, meals, or transportation) must be paid directly to the vendor
(e.g., the hotel or airline) whenever practical. When reimbursement is made to
the Customer, original receipts or other supporting documentation is required.
When a Customer is expected to pay out-of-pocket for reimbursable travel
expenses, the Customer should be provided with modest per-diem spending
guidelines in advance. Neither the Company nor any Medtronic employee or agent
may ever provide cash or a personal check to a Customer.
Exceptions or amendments. In circumstances where conduct prohibited by these
Standards does not implicate underlying legal or ethical concerns, it may be
appropriate to grant infrequent, fact-specific exceptions. Exceptions must
comply with all legal and regulatory requirements and require the specific
written approval of both a Medtronic Corporate Vice President and Medtronic
Legal Counsel. Amendments to the Standards require the approval of the Medtronic
General Counsel.
Limits on meals and hospitality. Meals or other hospitality permitted under
these Standards must be modest in value and subordinate in time and focus to the
purpose of the interaction. Except as provided under Standard 6 (Consulting),
Medtronic-funded hospitality is limited to modest meals and receptions.
Medtronic may not pay for, contribute to, or hold parties for Customers for the
purpose of celebrating a non-business event, such as a holiday. Medtronic may
not pay for meals, receptions, other hospitality, or travel or lodging for a
spouse or other guest of a Customer.
Limits on travel. Travel provided for Customers outside of the 48 contiguous
states (the “Continental U.S.”), other than travel to the Continental U.S.
originating outside of the Continental U.S. or travel within a state located
outside of the Continental U.S., must be approved by a Medtronic Corporate Vice
President. Such travel may be allowed only if the location is necessary to
accomplish the purpose of the trip (e.g., to bring Customers to a specialized
lab when similar facilities are not available in the Continental U.S.), or if
most of the anticipated attendees do not live in the Continental U.S. but do
live convenient to the proposed location. Except as provided under Standard 6
(Consulting), Medtronic-provided travel is limited to coach class travel.
Limits on lodging. The locations of any Medtronic-sponsored business meeting,
Training and Education session, or consulting meeting must be modest and
selected based upon program requirements and convenience of attendees. Any
lodging provided to a Customer must be provided at an “Approved Medtronic
Customer Meeting Facility” or at a hotel with a rate no higher than an Approved
Medtronic Customer Meeting Facility for that locale. A list of the Approved
Medtronic Customer Meeting Facilities will be maintained by the Medtronic
Corporate Event Planners in conjunction with the Medtronic Corporate Legal
Department and is available on the Medtronic Compliance website.
 3
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

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No lodging may be provided at a resort or Resort Location. “Resort Locations”
are areas, other than major metropolitan areas, known primarily as recreation or
vacation destinations (e.g., ski, golf, beach, spa, fishing, vineyard,
horseback-riding, hunting or fishing destinations, such as Aspen, Pebble Beach,
Naples, or Napa Valley). If a business unit with headquarters located in a
Resort Location sponsors a meeting for its Customers, and for the convenience of
its staff or Customers locates the meeting convenient to its headquarters, the
Resort Location restriction does not apply, unless the hotel is located on, or
immediately adjacent to, a resort property (e.g., beside a golf course or beach,
on the grounds of a vineyard or at the foot of a ski hill).
Oversight. The Medtronic Executive Committee will include compliance issues as
an agenda item at least quarterly. Each Business President, Geography President,
and Business General Manager is responsible for ensuring that: 1) compliance
issues are addressed at least quarterly at their staff meetings or by a
committee composed of high-level management and the chief financial and legal
officers for their business unit, at which a summary of the issues along with
their disposition is reviewed and a copy of the disposition is sent to the
Medtronic General Counsel; 2) that a comprehensive plan is in place to ensure
that these issues are addressed throughout their organizations, including
policies and procedures requiring appropriate documentation, monitoring, and
retrospective review of activities governed by these Standards; and 3) all
appropriate personnel receive appropriate training on the Standards.
Key management employees will be required to complete annual Certifications of
Compliance in which they confirm that they are not aware of unreported
violations of the Medtronic Code of Conduct or the Business Conduct Standards.
Accuracy in reporting reimbursement-related information. Any product-related
cost or charge information (other than direct billings) provided by Medtronic to
a government agency that may be used for the purpose of setting reimbursement
rates must be reviewed by Medtronic Legal Counsel before it is reported to the
agency.
 4
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

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(MEDTRONIC LOGO) [f17688f1768800.gif]
Medtronic U.S. Business Conduct Standards
 
Standard #2
Free or Reduced Charge Products: Discounts, Credits and Rebates, Samples, Demos,
Loaners and Warranties
 
Discounts furnished in the ordinary course of business are permitted, provided
that they comply with this Standard.
Scope of Standard. This Standard addresses “Discounts” (reductions from list
price of the amount charged for Medtronic products, including free items,
credits and rebates) as well as accessories, samples, demos, trial-period loans,
product with no independent value, and warranties.
Discounts not permitted:

  •   Rebates paid in cash rather than by check;     •   Signing and conversion
bonuses;     •   Discounts earned on products covered by a federal health care
program, but applied to products that are not covered by the program;     •  
Discounts available when a product is covered by private payors, but not
available when it is covered by a federal health care program; and     •  
Credits earned on trade-ins, in excess of the fair market value of the item that
is traded.

Legal review required. Prior review by Medtronic Legal Counsel is required for
Discount programs:

  •   That are based on Medtronic’s “share of an account” or involving
“exclusivity” or “sole vendor requirements”;     •   That result in the
reduction of the product price below cost;     •   That are conditioned on the
purchase of a package or bundle containing products that are not all the same;  
  •   That involve multiple items with variable discount rates;     •   That may
not be applied at the discretion of the Customer (i.e., that require the
discount be applied for a particular purpose, for example, to fund the
acquisition

 5
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

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      of another product, or to support a research or education program), except
credits restricted to the purchase of more of the same product;     •   That
involve Discounts paid prior to the purchase of the products on which they are
earned;     •   That are in a form other than a Discount taken at the time of
sale as a reduction in the invoice price, or a Discount paid later as a rebate
or a credit for the same type of item;     •   That extend for more than one
year; or     •   That involve products with “No independent value,” as described
below.

Prior review by Medtronic Legal Counsel is also required when:

  •   Paying unreimbursed medical expenses in connection with a warranty
obligation (such payment must be provided solely for the benefit of the patient
and can only be made to a Customer on a patient’s behalf);     •   Free product
is provided for analysis under a Consulting Agreement, or as part of a clinical
trial or research project, to ensure that the underlying arrangement is
consistent with Standard 6 (Consulting) and the value of the free product to the
Customer is considered in setting fair market value compensation;     •  
Entering into an agreement with a group purchasing or similar organization; or  
  •   Giving, loaning or consigning Medtronic products without charge except
when the product is provided:

  –   pursuant to a warranty;     –   while equivalent Medtronic product is
being repaired;     –   as a replacement as the result of regulatory action, to
eliminate the risk of failure, or for product that is accidentally damaged; or  
  –   consistent with the requirements set forth below under “Samples,” “Demos,”
“Accessories,” or “Indigent patients.”

Samples. A limited number (per evaluating physician) of free product samples may
be given to permit evaluation of products by Customers who are unfamiliar with
the product. No-charge loaners may also be provided in the same circumstances,
but only for a reasonable evaluation period.
Demos. Demonstration (functional or mock-up) products not for sale or use in
patients may be given free of charge, provided they are labeled “Not for Human
Use.”
“Accessories” are single-use or disposable items (e.g., lead introducers and
batteries) that facilitate the use or operation of Medtronic products purchased
by a Customer. Accessories may be provided free of charge only if they may be
given without charge under another provision of Standard 2, or they are of
nominal value (i.e., less than $100), are not eligible for separate
reimbursement under any federal health care program, are provided to any given
Customer only occasionally, and are equally available at no charge to all
Customers.
 6
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

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Indigent patients. Consistent with Standard 3 (Donations) and with any Medtronic
policies on Indigent patients, products may be given to Indigent patients when
the doctor or facility will not receive payment for the product or associated
procedures.
Products with no independent value. Medtronic may give or lend products without
charge that are ancillary to and facilitate the use or operation of Medtronic
products purchased by a Customer (e.g., product-specific tools). These products
must not have any value independent of the primary product and must not be of
personal use to the Customer. The recipient must acknowledge receipt, and, in
the case of a loan, ownership by Medtronic. Products do not qualify as having
“no independent value” if they are sometimes sold to Customers by Medtronic or
any other manufacturer.
Documentation. Product sold or given to a Customer with more than a nominal list
price, other than Demos, must be invoiced.

  •   Disclosure. Discount terms must be set at the time of sale and reflected
in a written agreement. When the amount of the Discount is known at the time of
sale, the net price of each discounted item must be fully disclosed in writing
to the Customer on the invoice. Otherwise, the invoice must make clear reference
to another document provided to the Customer that explains the Discount terms,
including its allocation among the invoiced products. Each invoice for
discounted product must include the notation that the price is net of any
Discount. Where the actual Discount is not known at the time of sale (e.g., in
the case of a volume rebate), the invoice should include a statement that the
purchase price may be subject to a Discount, and, when the Discount becomes
known, a written statement should be issued to the Customer noting the Discount
and relating the Discount back to the original invoice(s). Additional
disclosures may be required in connection with Discount programs designated
above as requiring legal review.     •   Medicare reporting notification. The
invoice must state that the Customer may be obligated to report the Discount to
Medicare, Medicaid or other federal health care programs.     •  
Sample-specific requirements. Invoices for sample product must indicate that the
product is provided at “no charge” and contain language similar to the words
“Customer should not seek reimbursement for this product.”     •  
Warranty-specific requirements. The invoice must accurately report the price
reduction of the item (including any free item) that was obtained as part of the
warranty and inform the Customer of its reporting obligations under federal law.
In circumstances where eligibility for a price reduction under a warranty may be
determined after the time of sale (at which time a warranty credit is issued),
the invoice must accurately report the potential that additional price
reductions may apply and inform the Customer of its reporting obligations. When
the value of the warranty credit becomes known, Medtronic must provide the
Customer with documentation of the warranty credit.

 7

**** Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

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  •   Leases. Any product leased or lent to a Customer, with or without charge,
with more than a nominal list price must be the subject of a written lease
agreement accurately stating all material terms of the lease (in the case of
relatively low-value items, such as programmers, a letter from Medtronic setting
forth the material terms and conditions upon which the item is lent is
sufficient).

Finance Department responsibilities. Business Shared Services and the Finance
Department for the applicable Medtronic business must ensure that invoicing and
documentation of any Discounts or other arrangements described in this Standard
are in accordance with these requirements and Medtronic financial policies.
 8
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

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(MEDTRONIC LOGO) [f17688f1768800.gif]
Medtronic U.S. Business Conduct Standards
 
Standard #3
Donations to Customers or Organizations Closely Affiliated With Customers
 
Donations to Customers or organizations affiliated with Customers are permitted
only if the donation is intended to benefit society and promote better health
care, demonstrate good corporate citizenship, or serve a genuine educational
function, and, except in rare instances, only where the recipient is a
tax-exempt charity.
“Donations” are contributions made by Medtronic to support a charitable purpose,
and may be made only to a tax-exempt charity, or, in rare instances, to
individuals engaged in a genuine charitable mission (“Charities”). Donations may
not be linked, implicitly or explicitly, to an agreement to use, order,
recommend or refer for Medtronic products or used to reward prior purchases.
Donations may not result in a personal benefit to a Customer, as opposed to
supporting a charitable purpose. Product donations for use outside of the U.S.
must not violate any export control law.
Payments by Medtronic in return for items or services, and research grants or
other payments made to entities that are not Charities, should be evaluated
under Standard 6 (Consulting) or Standard 8 (Medical Conferences). Donations
made to a charity to sponsor or support attendance at conferences must also meet
the requirements of Standard 8.
Support of education. Donations that meet the requirements of Standard 3 may be
made for educational purposes, including:

  •   Supporting an endowed chair at an academic institution;     •  
Subsidizing the education of fellows participating in fellowship programs with
an academic affiliation;     •   Subsidizing medical congresses and conferences;
and     •   Educating the public on health care topics.

Support of research. Donations that meet the requirements of Standard 3 may be
made to support specific scientific research projects. These might include, for
example, donations to support basic scientific research. Support for research
connected to Medtronic therapies normally should be addressed under Standard 6
(Consulting).
 9
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

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Other permissible purposes. Donations that meet all of the requirements of
Standard 3 may be made for other genuine philanthropic and charitable purposes
that demonstrate good corporate citizenship and represent a benefit to society;
for example, support of activities directed at providing services or products to
Indigent patients (see Standard 2 [Discounts]).
Fundraising events. Support of fundraising events is only permitted where at
least a portion of the donation qualifies for a charitable tax deduction.
Sponsorship of either Customer participation in (e.g., the entrance fee to a
charitable golf tournament), or Customer attendance at (e.g., tickets for a
charitable gala), fundraising events is prohibited, except where the
participants or attendees are selected by the donee or where the event involves
only a meal or reception and qualifies as a business courtesy under Standard 5
(Business Courtesies).
“Infrastructure” support. Monetary donations may not be made to a Customer to
support construction or renovation of Customer facilities, or to equip Customer
facilities. However, Medtronic may purchase tickets to, or sponsor, a qualifying
fundraising event (see above) even if the proceeds are designated for such
purposes, and Medtronic may make donations of Medtronic equipment to support a
charitable purpose. If the transfer of equipment is not to a charity and for a
charitable purpose, the limitations in Standard 2 (Discounts) apply.
Support for lobbying. Donations that meet all other requirements of Standard 3
are permitted even when the recipient will apply some or all of the donation for
lobbying activities. However, prior review by the Washington Government Affairs
Office is required to ensure that these initiatives are consistent with
Medtronic’s legislative goals and are likely to be effective.
Mechanics of payment. Donations may be made only through wire transfer to the
recipient’s official bank accounts or through Medtronic check made payable to
the official name of the Charity. Reimbursement for monetary donations made
through the use of expense reports is expressly prohibited.
Transmittal letter. A transmittal letter from Medtronic clearly explaining the
purpose of the donation must be sent prior to or with the donation. The
transmittal letter must be approved by Medtronic Legal Counsel or, if the
payment is less than $2,500, be in a form that has been approved by Medtronic
Legal Counsel and used without material modification.
Approval process. Each business unit must establish a process for receiving,
reviewing and acting on all charitable donation proposals according to
pre-established criteria consistent with Standard 3. Personnel that are part of
the sales organization
 10
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

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may not be involved in this process except to respond to Customers’ questions
about where to submit an application for a donation. Budgets for donations may
not reside in the sales organization.
All donations that exceed $1,000 or the equivalent fair market value must have
prior approval of a Medtronic Vice President. Donations that exceed $15,000 or
the equivalent fair market value must be approved by a Corporate Vice President.
Required documentation. The disposition of each request for a donation must be
documented. Also, all donations (whether of monetary or non-monetary items such
as products or equipment) must be supported by documentation demonstrating that:
1) the recipient is a Charity (this will normally require evidence of the
entity’s tax-exempt status); 2) the donation will be used for an appropriate
purpose (described above); 3) the amount of the donation is appropriate for the
proposed purpose (e.g., not in excess of the anticipated costs of a proposed
project or event); and 4) the donation has been received by the Charity (i.e., a
receipt or acknowledgment from the recipient, or, if specified in the
transmittal letter stating the purpose of the donation, a canceled check).
Research grant requests must be accompanied by an explanation of the purpose of
the research, a detailed research protocol or other appropriate documentation,
and a detailed budget or description of how the requested funds will be applied.
Educational grant requests must be accompanied by a detailed explanation of the
particular educational program involved, including date, place, and program
description, and a detailed budget or description of how the requested funds
will be applied.
 11
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

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(MEDTRONIC LOGO) [f17688f1768800.gif]
Medtronic U.S. Business Conduct Standards
 
Standard #4
Gifts
 
The giving or accepting of gifts is generally prohibited. An exception is made
for: 1) occasional modest gifts, but only if the gift benefits patients or
serves a genuine educational function; and 2) minimal-value, branded promotional
items related to the Customer’s work or benefiting patients.
Value, frequency and purpose of gifts. Gifts must benefit patients or serve a
genuine educational function. Except for medical textbooks and anatomical
models, the fair market value of any gift may not exceed $100. Gifts from any
business unit, having a per-Customer aggregate value in excess of $300 per year,
are prohibited. In no event may gifts be given in the form of cash, cash
equivalents, or gift certificates, other than gift certificates for a
specifically identified item. Gifts that do not benefit patients or serve a
genuine educational function, such as food, flowers, wine, or other
refreshments, are prohibited. Gifts to public employees (e.g., public
university, public hospital or VA physicians, administrators or other employees)
are generally prohibited by the rules of those institutions, and Medtronic must
not give any gifts that violate these rules. It is the responsibility of the
involved employee and the employee’s Manager to determine the appropriateness of
the type and amount of gift given in each circumstance. Samples and other
transactions described under Standard 2 (Discounts) should be considered under
that Standard rather than under this Standard. Gifts given in exchange or
appreciation for services should be treated as compensation and must conform to
Standard 6 (Consulting). Gifts may not be given as a “thank you” for the
purchase of product.
Minimal-value, branded, promotional items. It is also occasionally permissible
to give minimal-value, branded, promotional items related to the Customer’s work
or for the benefit of patients. Examples include pens and notepads. Items such
as golf balls and tee shirts are not related to the Customer’s work or patient
benefit, and are prohibited.
Documentation. The description and purpose of gifts should be documented and
approved on an expense report or comparable authorization process. Expenses for
gifts must be clearly identified as such and coded as directed by Finance.
 12
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

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(MEDTRONIC LOGO) [f17688f1768800.gif]
Medtronic U.S. Business Conduct Standards
 
Standard #5
Business Courtesies
 
Business Courtesies provided to a Customer in the context of a business meeting
are limited to meals, receptions, transportation and lodging, and must be modest
in amount and related to a legitimate business purpose.
Permissible business purpose. A “Business Meeting” is a meeting held for one of
the following business purposes: 1) explaining the features, use or other
important aspects of Medtronic products; 2) understanding the product-related
service, or other concerns, needs or demands of a Customer; 3) explaining the
services and terms available from Medtronic; or 4) negotiating contracts and
sales terms.
Permissible Business Courtesies. The term “Business Courtesies” includes any
meals, receptions, transportation, lodging or entertainment provided to a
Customer by Medtronic. This Standard limits the Business Courtesies that
Medtronic may provide in connection with a Business Meeting to occasional modest
meals and receptions incurred during the Business Meeting and travel and lodging
as provided below. No other Business Courtesies may be extended in connection
with a Business Meeting. A Medtronic employee must be present during any meal or
reception and the setting must be consistent with the business purpose. Unless
the courtesy may be extended under another Standard (see below), if there is no
permissible business purpose for the meeting (i.e., the meeting is not a
Business Meeting) or if there is no Medtronic employee in attendance, the
courtesy is a prohibited gift under Standard 4 (Gifts).
Courtesies in other contexts. For guidance relating to courtesies (i.e., any
meal, reception, transportation, lodging or entertainment) extended to Customers
in connection with Consultant Meetings, see Standard 6; Medtronic-sponsored
Training and Education, see Standard 7; or third-party medical conferences, see
Standard 8.
Payment for travel, lodging and meals. If a Customer is asked to travel to an
out-of-town Business Meeting for Medtronic’s convenience, in addition to the
meals and receptions described above, Medtronic may cover modest travel (ground
transportation and airfare), lodging and meals associated with the trip as
provided in Standard 1 (General Provisions). These trips are appropriate only if
they are to Medtronic’s offices
 13
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

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

 

or to other function-appropriate locations selected by Medtronic because of
practical concerns, or because of cost savings to Medtronic. Examples of
appropriate reasons for trips are plant tours and product demonstrations (where
the product is not reasonably portable) when there is a real and substantial
business need for such a tour or demonstration.
Documentation of Business Courtesies. The description and business purpose of
all Business Meetings, along with the nature and amount of any Business
Courtesies, the full names of those in attendance, including the employment,
agency or staff affiliation of any individual Customer, must be documented and
approved on an expense report or other appropriate authorization process.
Value and frequency of Business Courtesies. Each business unit must develop,
with the approval of the Business President and Medtronic Legal Counsel,
general, per-individual Customer, per-day spending limits for meals and
receptions that are modest in amount. Each business unit must also determine
appropriate limits on frequency or aggregate spending. For administrative
convenience, nominal expenses (less than $25), and expenses incurred in
connection with activities governed by other Standards may be excluded from
these limits.
 14
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

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(MEDTRONIC LOGO) [f17688f1768800.gif]
Medtronic U.S. Business Conduct Standards
 
Standard #6
Consulting, Research, and Advisory Arrangements
 
Medtronic may compensate Customers for consulting, research and other services
rendered, and reasonable costs incurred, where the services have value to
Medtronic and are paid at no more than fair market value. Such arrangements must
be in writing in a form approved by Medtronic Legal Counsel and comply with
local Business Conduct Standards.
Purpose and payment. Agreements with Customers may be entered into only for
services for which there is a legitimate Medtronic need. Clinical trials,
including post-market or outcomes studies, must be based on a demonstrable need
for data (e.g., for product approval, reimbursement, or supplemental efficacy
claims). Payments to support studies sponsored by Customer-consultants
(“Consultants”) are permissible if the outcome of the proposed study is likely
to be of use to Medtronic (see Standard 3 for charitable donations to support
research). Consultants contracting with Medtronic must be well qualified, in
terms of available facilities and education or experience. Compensation may not
exceed the fair market value of services provided, and may not be extended to
the Consultant as a reward for prior business or as an inducement for future
business. Compensation must be structured on a measurable basis, such as payment
based on a daily, hourly or per-project rate, deliverables or milestones.
Approval process. Each business must establish mechanisms that require oversight
and approval by personnel qualified to arrange and evaluate the proposed
arrangement according to criteria consistent with Standard 6. Personnel in the
sales organization may be involved in this process only to the extent necessary
to supply information about contractor qualifications or interest. Budgets for
Standard 6 arrangements may not reside in the sales organization. Members of the
sales organization may not deliver payment to Consultants.
Form of agreements. Agreements with Customers for the provision of services
(e.g., training, educating, consulting, research, clinical study, focus group,
and physician advisory board) must: 1) be entered into prior to the start of the
services and, without exception, prior to payment; 2) be in writing and signed
by the parties; 3) be approved by Medtronic Legal Counsel, or, where the
aggregate annual payment under the
 15
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

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agreement is less than $2,500, be in a form which has been approved by Medtronic
Legal Counsel and used without modification; and 4) specify the services to be
provided, the term of the agreement, the method of payment, and any obligation
to reimburse for travel, lodging, and other related expenses. Each agreement
must specify a mechanism to verify that the required services are performed
(e.g., periodic progress reports or a final written study report). Each business
unit must develop an effective mechanism for substantiating that contracted
services were provided (e.g., Manager review or internal spot assessments), or
that there is a documented, legitimate reason that the services were not
provided. A businessperson outside of the sales organization must ensure that
the agreement is carried out in accordance with its terms. Consulting agreements
should comply with the personal services safe harbor to the extent practicable.
Agreements providing for services on an as-needed basis with payment prior to
receipt of services are prohibited.
Required documentation. Files on all Consulting agreements must be maintained by
the business unit and must include the written agreement, rate of compensation,
the basis for selecting the Consultant (including the Consultant’s particular
qualifications) and setting the compensation, and need for the services. Each
Consultant must represent and acknowledge in writing that they have properly
notified, and have received all necessary permissions from, all required parties
(e.g., hospital, employer, and regulators) if those parties are not signatories
to the agreement.
Limits on use of Customer-Consultants. Consultants who are health care
professionals may not be paid to recommend the sale, lease or use of Medtronic
products. They may be paid to speak, write and provide Training and Education on
Medtronic products and related disease states. They may also provide technical
expertise on behalf of Medtronic. For example, they may be involved in advocacy
efforts with payors for reimbursement of Medtronic products. In any case, they
are required to disclose their affiliation with Medtronic prior to providing
services.
Medtronic may also jointly put on events with health care professionals
(“co-marketing events”) at which the professional promotes his or her own
practice (possibly along with discussion of disease states and therapies) at the
same time that Medtronic promotes its therapies. For such co-marketing events,
Medtronic’s support should never exceed its fair portion of the event costs.
Since the health care professional’s contribution to the event is normally the
time that he or she spends preparing and speaking, Medtronic should not pay the
health care professional an honorarium or fee for his or her time, except in the
case of an exception, see Standard 1 (General Provisions).
Regardless of the value of the contract, whenever a Consultant who is a health
care professional is contracted to speak to potential Customers or referral
sources about a Medtronic product, the agreement must be approved by Medtronic
Legal Counsel to ensure that it requires appropriate disclosure of any conflict
of interest and appropriate limitations on the scope of contracted activities.
 16
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

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Approval process. A U.S. Medtronic Vice President must sign all Consultant
agreements initiated within the U.S. For agreements with O.U.S. individuals or
institutions, see Standard 1 (General Provisions). Delegation of this
responsibility can only be made with the approval of the Medtronic General
Counsel.
Consultant meetings. All Consultant services must be performed pursuant to
written consulting agreements. Consequently, Consultants invited to meetings to
perform consulting services must have written consulting agreements in effect
describing the services to be provided at the meeting. Medtronic personnel with
a bona fide interest in, and in a position to use, the advice given by the
Consultants must be in attendance at each Consultant meeting. Securing
consulting services must be the purpose of the meeting. Meals and hospitality
should not compete with, or take precedence over, the purpose of the meeting.
Copies of the agenda and minutes of any Consultant meeting must be maintained in
each of the attending Consultants’ files (mentioned above) and the agenda for
group meetings must be reviewed by Medtronic Legal Counsel prior to issuing
invitations.

  •   Meals and hospitality. Medtronic may provide Consultants with modest
meals, receptions, lodging, ground transportation and other hospitality in
connection with a Consultant meeting. Hospitality beyond meals, receptions,
travel and lodging, may be offered only on days during which at least five hours
of bona fide Consultant meetings are scheduled. Each business unit must develop,
with the approval of the Business President and Medtronic Legal Counsel, general
per-Consultant, per-day spending limits on meals and hospitality extended in
this context.     •   Travel and lodging. The locations of meetings with
Consultants must meet the criteria set out in Standard 1 (General Provisions).
Medtronic may pay for reasonable travel costs for Consultants in connection with
a Consultant meeting, which may exceed coach class if necessary to secure a
Consultant’s services. Medtronic may not pay for the travel or other expenses
(including the cost of meals, receptions and other hospitality) of guests of
Consultants, or of any other person who is not a bona fide contributor to the
meeting.

Payment. The appropriate Business President, Area President or Business General
Manager shall ensure that there is an approved written, executed agreement, and
that there is evidence of performance of the agreement prior to payment for
services. Payments must be made by check or wire transfer to the official name
and address or account of the party contracting with Medtronic.
 17
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

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(MEDTRONIC LOGO) [f17688f1768800.gif]
Medtronic U.S. Business Conduct Standards
 
Standard #7
Training and Education Concerning Medtronic Products
 
Medtronic has a responsibility to make available instruction, education, and
training on the safe and effective use of its products to health care providers.
If Medtronic provides reimbursement of travel, living, or meal expenses to
participants in connection with training and education, the amount must be
reasonable and in compliance with local Business Conduct Standards.
Training and Education meetings. Medtronic may provide Training and Education to
Customers to explain the safe and effective use of Medtronic products (“Training
and Education”) to persons who could benefit from it. Training and Education
will normally be provided by Medtronic rather than a third party, and includes:
1) training on how to use or implant a Medtronic product; 2) training on
indications or therapies appropriate for use of a Medtronic product, including
education regarding product-related disease states and the appropriate use of
the product in the continuum of care; and 3) training on the quality,
properties, and/or design characteristics of a Medtronic product, to the extent
that such training provides health care professionals information on how to use
that product safely and effectively.
Training and Education must be the purpose for the program. Meals and receptions
should not compete with, or take precedence over, the educational program.
Except on a travel day, Training and Education should not be less than five
hours for each program day. All Training and Education must be adequately
documented, including the agenda and a report on the costs, participants, and
faculty.
Oversight responsibilities. Each business unit is responsible for setting up and
maintaining a review and approval process for the Training and Education
programs it sponsors. The review process must include the course content, agenda
(covering all events from arrival to departure) and faculty.
Location of meetings. The locations for Medtronic-sponsored Training and
Education must be consistent with Standard 1 (General Provisions) and must be
limited to the Continental U.S., except when all of the attendees live in a U.S.
state or territory outside of the Continental U.S. Programs requiring “hands-on”
training in surgical procedures
 18
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

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should be held at Bakken Educational Centers, surgical training facilities,
medical institutions or other facilities appropriate for such purposes.
Medtronic manufacturing or Medtronic R&D facilities satisfying all of the
criteria outlined in this paragraph may be appropriate locations.
Travel, lodging, meals and hospitality. Medtronic may pay for reasonable travel
and lodging costs incurred by attendees, consistent with Standard 1 (General
Provisions). Medtronic may provide attendees with modest meals and receptions in
connection with a Training and Education program. Medtronic may not pay for the
travel or other expenses for guests of attendees, or for any other person who
does not have a bona fide professional interest in the information being shared
at the meeting. Each business unit must develop, with the approval of the
Business President and Medtronic Legal Counsel, general per-Customer, per-day
spending limits on meals and receptions extended in this context.
Reimbursement support programs. Medtronic may support accurate and responsible
billing for products and related procedures to Medicare and other payors and
cost-effective use of Medtronic products, by providing Customers with: 1)
information about the economically efficient use of Medtronic products (e.g.,
explaining where the product can most efficiently be used in the continuum of
care and how the product can be offered in a cost-effective manner); 2)
coverage, coding and billing information regarding Medtronic products or related
services or procedures; and 3) technical or other support intended to aid in the
appropriate and efficient use or installation of Medtronic products.
Medtronic may not provide general practice management advice of material value
to Customers without charging fair market value. For example, except in exchange
for fair market value, it is not permissible to provide personnel or services to
a Customer in situations that relieve the Customer of hiring such personnel or
purchasing such services. It is also not appropriate to provide customized
advice that is not product-focused.
 19
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

 

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(MEDTRONIC LOGO) [f17688f1768800.gif]
Medtronic U.S. Customer Relationship Standards.
 
Standard #8
Medical Conferences, Congresses and Professional Meetings Sponsored by
Organizations Other than Medtronic
 
Medtronic has an interest in building awareness and understanding of its
products and related disease states through support for third-party scientific
forums. For these purposes, Medtronic may underwrite the cost of such
third-party conferences or meetings and may subsidize the attendance of health
care professionals-in-training. Such payments must comply with local Business
Conduct Standards.
Qualifying conferences. Medtronic may support the following categories of events
(collectively “Conferences”) consistent with Standard 8:

  •   Nationally or regionally recognized meetings. Medtronic may support
nationally or regionally recognized, bona fide, independent, educational,
scientific or policy-making conferences, congresses and professional meetings
that have a relationship to Medtronic businesses or products.     •   Grand
Rounds. A subsidy may be made to the institution sponsoring “Grand Rounds,” as
that term is normally understood, if: 1) the subsidy is made pursuant to a
written agreement that specifies the topics to be addressed; 2) the topics are
related to the therapies, uses or indications for a Medtronic product; and 3)
the subsidy does not exceed the normal and customary expenses associated with
the conduct of the Grand Rounds.     •   Scientifically valuable roundtables or
discussion groups. A subsidy may be made to support high-caliber, scientifically
valuable roundtables, panels or discussion groups directed at advancing the
state of medical knowledge about Medtronic therapies or meaningfully addressing
disease states or technology of interest to Medtronic.

Permissible subsidies. Subsidies may be provided to the Conference sponsor to
reduce overall Conference costs, support modest meals or receptions, or allow
attendance by medical students, residents, fellows, or other health care
professionals-
 20
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.

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

 

in-training (see selection requirements under “Scholarships” below). While
Medtronic funds may be applied to pay costs and expenses associated with faculty
selected and retained by the Conference sponsor, no payments may be made by
Medtronic directly to faculty, and the selection of faculty must be at the sole
discretion of the sponsor. Payment or subsidy of transportation or other
expenses related to spouses or other guests of attendees is not permitted.
Required documentation. Medtronic may only support a Conference where the
sponsor has submitted an agenda demonstrating that the Conference or a portion
thereof is dedicated to education on Medtronic products or related disease
states. There must also be an appropriate fee charged of attendees for any CME
or CEU credits granted.
If a meeting is sponsored by a Customer, Medtronic must also confirm and
document that the meeting will be held at a modest location, that hospitality
will also be modest, and that the net meeting costs will be equal or greater
than the sum of all subsidies (from Medtronic or another party). If a focus of
the meeting is promotional rather than scientific, it must also comply with the
requirements of Standard 6 (Consulting) for co-marketing events. If Medtronic
sponsors the meeting, Standard 7 (Training and Education on Medtronic Products)
applies.
Scholarships to health care professionals-in-training. Subsidies for attendance
at Conferences by medical students, residents, fellows, or other health care
professionals-in-training may be provided to bona fide training institutions as
well as the Conference sponsor. In both cases, the selection of subsidized
attendees shall be at the discretion of the institution or sponsor.
Medtronic-provided meals and receptions. Medtronic may host modest meals and
receptions as part of a Conference. Such events should not compete with or take
precedence over the educational portion of the Conference. Off-agenda
interactions between Medtronic and a select group of attendees should be treated
under Standard 5 (Business Courtesies) if they are business meetings or Standard
7 if they involve Training and Education on Medtronic products.
 21
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

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SCHEDULE 3.15
ANNUAL AND QUARTERLY QUOTA

              Individual Clips   Year-1*   Year-2**   Year-3***
Annual Quota
  ****   ****   ****
Minimum Annual Quota
  ****   ****   ****
 
           

                      Year One Individual Clips   Year-1*     Q1#   Q2   Q3   Q4
  Total
Quarter Split
  ****   ****   ****   ****   ****
Quota
  ****   ****   ****   ****   ****
Minimum Quota
  ****   ****   ****   ****   ****
 
                   

                      Year Two Individual Clips   Year-2**     Q1   Q2   Q3   Q4
  Total
Quarter Split
  ****   ****   ****   ****   ****
Quota
  ****   ****   ****   ****   ****
Minimum Quota
  ****   ****   ****   ****   ****
 
                   

*Year 1: Mar 1, 2006 to April 30, 2007
**Year 2: May 1, 2007 to April 30, 2008
***Year 3: May 1, 2008 to April 30, 2009
#Q1 of Calendar Year 2006 shall be defined as the period beginning March 1, 2006
and ending July 31, 2006.
Page 23
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

 

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

 

SCHEDULE 5.4
MEDTRONIC RETURNED INVENTORY POLICY
Returned Products
1. Authorization must be obtained from Medtronic Customer Service before the
return of any product.
2. A Returned Goods Authorization (RGA) number will be given to you and must be
clearly identified on the carton of any returned product.

  a.   Information required for an RGA number includes the product catalog
number and quantity of product to be returned, the reason for the return, the
customer P.O. number, the Medtronic invoice number, and the date of invoice.

  b.   RGA number will be valid for 30 days from date of issuance. If product is
not returned within 30 days, RGA will be canceled.

  c.   Product must be returned to Medtronic in proper storage cartons.

3. Freight on all returned products must be prepaid.
4. Credit schedule for returned product:

  a.   Product shipped in error by Medtronic will receive full credit, including
freight.

  b.   Product received by the customer in a damaged condition may be returned
for full credit or replacement, upon approval of a Medtronic Representative,
within (5) working days from the date of receipt by the customer.

  c.   All other product returned within 90 days of invoice date in saleable
condition will be subject to a 20% reprocessing fee. Except end-user complaints,
which are a result of product not meeting specifications.

  d.   Products not eligible for return will not receive credit, this includes:

  •   Product returned without an RGA number     •   Product returned more than
90 days after invoice date     •   Product that has deteriorated due to improper
storage, handling, abuse or other causes beyond the control of Medtronic     •  
Product opened or used by the customer     •   Product that has been sterilized
by the customer     •   Special order or custom product

•   Product past expiration date

Page 24
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

 

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

 

SCHEDULE 6.1
U-CLIP ™ PRODUCTS AND PRICING
U-CLIP™ Anastomotic Device
All U-CLIP™ 2-pack configurations are shipped as 24 packs per carton, all 8-pack
configurations are shipped as 18 packs per carton.

  Product Order           U-CLIP™   Carton   Distributor     Number   Product
Description   Count   List Price   Discount   Transfer Price  
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***
****
    * ***     * ***     * ***     * ***     * ***

 Page 25
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

 

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****
    * ***     * ***     * ***     * ***     * ***  
UCLIP™ Anastomotic Miscellaneous Products
 
****
    * ***     * ***     * ***     * ***     * ***  

 Page 26
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

 

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SCHEDULE 7.3
USER WARRANTY
Page 27
****Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

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

 

(MEDTRONIC LOGO) [f17688f1768803.gif]
(U-CLIP DEVICE PICTURE) [f17688f1768804.gif]

1.   Needle 2.   Flexible Member 3.   Transition (Light Blue) 4.   Slide Release
Sleeve (Metallic) 5.   Clip 6.   Stopper 7.   Silver Ball

(PICTURE) [f17688f1768805.gif]
Explanation of symbols on package labeling

     
(SYMBOL) [f17688f1768806.gif]
  Sterilized Using Irradiation
 
   
(SYMBOL) [f17688f1768807.gif]
  Do Not Reuse
 
   
(SYMBOL) [f17688f1768808.gif]
  Use By
 
   
(SYMBOL) [f17688f1768809.gif]
  Lot Number
 
   
(SYMBOL) [f17688f1768810.gif]
  Attention, See Instructions for use
 
   
(SYMBOL) [f17688f1768811.gif]
  Manufacturer
 
   
(SYMBOL) [f17688f1768812.gif]
  Quantity
 
   
(SYMBOL) [f17688f1768813.gif]
  For US Audiences Only
 
   
(SYMBOL) [f17688f1768814.gif]
  Nonpyrogenic

 
Important: These instructions provide guidance to the experienced surgeon using
the U-CLIPÔ Device, sizes B140, B160, and B180. This is not a reference to
surgical clipping and suturing technique. Please read the following information
carefully. Failure to properly follow the instructions may result in serious
patient injury.
Indications: The U-CLIPÔ Device is intended for endoscopic and nonendoscopic
soft tissue and prosthetic material approximation and/or attachment and the
creation of anastomoses in blood vessels, grafts, and other tubular structures.
Device Description: See Figure 1. Each clip is individually applied to the
anastomotic, attachment, or approximation site.
Instructions for Use for the U-CLIPÔ Device
(Use of magnification is recommended.)

1.   Grasp needle and lift clip from package. 2.   If using laparoscopically,
gently grasp the middle of the flexible member and push through the port (10 mm
or larger). Check for visual damage or pre-release of the clip prior to use. If
the clip appears damaged, remove, discard, and use another clip. 3.   Pierce the
tissue in the desired location with the needle (Figure 2). The clip can be used
in a single or double bite fashion. 4.   Pull the needle until the tissue to be
approximated rests completely inside the clip. The tissue should fill
approximately 3/4 of the space between clip arms (Figure 3). 5.   Orient the
clip so that the entire release sleeve (metallic tube), both ends of the clip,
and the silver ball are visible. Position the clip so that tissue is fully
contained between the clip arms and both clip arms are visible (Figure 4). 6.  
To deploy the clip, gently hold the release sleeve (metallic tube) at the
junction of the sleeve and transition zone (light blue) with graspers. With a
second grasper, gently hold the visible end of the clip. Pull on the release
sleeve while putting counter tension on the clip (Figure 5). The clip will
release from the needle assembly and automatically close, holding the tissue
and/or prosthetic material in place (Figure 6). 7.   When extracting the needle
assembly during a laparoscopic procedure, grasp the flexible member away from
the needle and pull back through the port (10 mm or larger). 8.   Discard needle
assembly appropriately. 9.   Repeat steps 1 through 8 to complete tissue
approximation (Figure 7). After completion of the tissue approximation, check
for undesirable tissue approximation or leaks and place additional clips as
necessary.

Note: If necessary to remove a clip, utilize standard surgical instruments by
grasping the larger, distal end of the clip and then pulling away from the
tissue.
CONTRAINDICATIONS

•   Do not use for tubal ligation.

WARNING

•   Failure to follow instructions may contribute to intraoperative and
postoperative failure of the anastomosis, attachment, or approximation,
resulting in serious patient injury.

PRECAUTIONS

•   Caution: Federal Law (USA) restricts this device to sale by or on the order
of a physician. •   The U-CLIPÔ Device is designed and intended for single use
only: DO NOT RESTERILIZE OR REUSE. •   Do not use if package is damaged or
opened, if product is accidentally contaminated before use, or if beyond
expiration date. •   Do not hold the metallic release sleeve while manipulating
the clip. •   When using needle drivers, do not apply excessive force directly
on the clip. •   If the clip appears damaged, do not use. Discard or return to
Medtronic. •   If using robotic needle drivers, do not “bottom out” needle
drivers on flexible member. •   If the clip is inadvertently straightened during
handling, discard and use a new clip. •   Use extra caution when working with
gauze to avoid entangling the clips. •   Care should be exercised when removing
clips, as tissue damage may occur.

ADVERSE EFFECTS
•    None known.

**** Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

 

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

 

THE FOLLOWING DISCLAIMER OF WARRANTY APPLIES TO UNITED STATES CUSTOMERS ONLY:
DISCLAIMER OF WARRANTY
ALTHOUGH THE U-CLIPÔ DEVICE, HEREAFTER REFERRED TO AS “PRODUCT” HAS BEEN
MANUFACTURED UNDER CAREFULLY CONTROLLED CONDITIONS, MEDTRONIC HAS NO CONTROL
OVER THE CONDITIONS UNDER WHICH THIS PRODUCT IS USED. MEDTRONIC, THEREFORE
DISCLAIMS ALL WARRANTIES, BOTH EXPRESS AND IMPLIED, WITH RESPECT TO THE PRODUCT,
INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE. MEDTRONIC SHALL NOT BE LIABLE TO ANY PERSON OR
ENTITY FOR ANY MEDICAL EXPENSES OR ANY DIRECT, INCIDENTAL OR CONSEQUENTIAL
DAMAGES CAUSED BY ANY USE, DEFECT, FAILURE OR MALFUNCTION OF THE PRODUCT,
WHETHER A CLAIM FOR SUCH DAMAGES IS BASED UPON WARRANTY, CONTRACT, TORT OR
OTHERWISE. NO PERSON HAS ANY AUTHORITY TO BIND MEDTRONIC TO ANY REPRESENTATION
OR WARRANTY WITH RESPECT TO THE PRODUCT.
The exclusions and limitations set out above are not intended to, and should not
be construed so as to, contravene mandatory provisions of applicable law. If any
part or term of this Disclaimer of Warranty is held to be illegal, unenforceable
or in conflict with applicable law, by a court of competent jurisdiction, the
validity of the remaining portions of this Disclaimer of Warranty shall not be
affected, and all rights and obligations shall be construed and enforced as if
this Disclaimer of Warranty did not contain the particular part or term held to
be invalid.
THE FOLLOWING DISCLAIMER OF WARRANTY APPLIES TO CUSTOMERS OUTSIDE THE UNITED
STATES:
DISCLAIMER OF WARRANTY
ALTHOUGH THE U-CLIPÔ DEVICE, HEREAFTER REFERRED TO AS “PRODUCT” HAS BEEN
CAREFULLY DESIGNED, MANUFACTURED AND TESTED PRIOR TO SALE, THE PRODUCT MAY FAIL
TO PERFORM ITS INTENDED FUNCTION SATISFACTORILY FOR A VARIETY OF REASONS. THE
WARNINGS CONTAINED IN THE PRODUCT LABELING PROVIDE MORE DETAILED INFORMATION AND
ARE CONSIDERED AN INTEGRAL PART OF THIS DISCLAIMER OF WARRANTY. MEDTRONIC,
THEREFORE, DISCLAIMS ALL WARRANTIES, BOTH EXPRESS AND IMPLIED, WITH RESPECT TO
THE PRODUCT. MEDTRONIC SHALL NOT BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL
DAMAGES CAUSED BY ANY USE, DEFECT OR FAILURE OF THE PRODUCT, WHETHER THE CLAIM
IS BASED ON WARRANTY, CONTRACT, TORT OR OTHERWISE.
The exclusions and limitations set out above are not intended to, and should not
be construed so as to, contravene mandatory provisions of applicable law. If any
part or term of this Disclaimer of Warranty is held by any court of competent
jurisdiction to be illegal, unenforceable or in conflict with applicable law,
the validity of the remaining portion of the Disclaimer of Warranty shall not be
affected, and all rights and obligations shall be construed and enforced as if
this Disclaimer of Warranty did not contain the particular part or term held to
be invalid.
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**** Certain confidential information contained in this document, marked with 4
asterisks, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.