Exhibit 10.28
CONFIDENTIAL
DISTRIBUTION AGREEMENT
This Distribution Agreement (“Agreement”) is made as of this 31st day of July,
2007, by and between: MICRUS ENDOVASCULAR Corporation, a corporation organized
under the laws of Delaware, having its principal place of business at 821 Fox
Lane, San Jose, California (“Micrus”) and BEIJING TIANXINFU MEDICAL APPLIANCE
Co. LTD. company organized under the laws of the People’s Republic of China with
business license number 1102211352495, and having a principal place of business
at 3 Floor of the Main Building N. 15, Zuojiazhuang, Chaoyang District, Beijing
China (“Distributor”).
          WHEREAS, Micrus has developed and/or commercialized Products (as
hereinafter defined) to be used in the Field (as hereinafter defined), and may
develop other products for use in the Field; and
          WHEREAS, Distributor has substantial experience in marketing medical
products and desires to distribute the Product, as hereinafter defined, in the
territory of the country of The People’s Republic of China; and
          WHEREAS, Micrus is willing to use Distributor as its exclusive
distributor of the Product for use in the Field, in the territory of The
People’s Republic of China, subject to the terms and conditions of this
Agreement.
ARTICLE 1 — DEFINITIONS
          As used in this Agreement, the following terms, whether used in the
singular or plural, shall have the meanings indicated:
          1.1 “Effective Date” shall mean the date of this Agreement first
written above.
          1.2 “Field” shall mean the field of interventional neuroradiology, or
such field(s) as to which the parties may agree in writing.
          1.3 “Marketing Authorizations” shall mean all authorizations,
licenses, approvals, and registrations to import, market and distribute the
Products in the Territory pursuant to the terms of this Agreement, as may be
required by an appropriate governmental agency in the Territory.
          1.4 “Product(s)” shall mean (a) Micrus’ current implantable,
three-dimensional microcoil products, together with a resistive heat-activated
delivery device, developed, manufactured, or made available to Distributor by
Micrus, and (b) any other Micrus product which is listed on Exhibit A hereto
(either at the Effective Date or thereafter by mutual agreement of the parties);
both of the foregoing (a) and (b) solely as used in the Field and as delivered
to Distributor from time to time by Micrus under this Agreement.
          1.5 “Territory” shall mean the geographic territory(ies) of The
People’s Republic of China.
ARTICLE 2 — APPOINTMENT OF DISTRIBUTOR
          2.1 Appointment of Distributor. Subject to the terms and conditions of
this Agreement (including, without limitation, Article 6), Micrus hereby
appoints Distributor as Micrus’ exclusive distributor of the Products within the
Territory. Distributor agrees that it shall not sell, advertise, distribute or
otherwise transfer or assist in the transfer of any product that competes with
the Product. Distributor may distribute the Product only as packaged by Micrus.
It is understood, however, that if Distributor believes that any such packaging
would not be in conformity with requirements of relevant Chinese authorities,
Distributor will immediately bring this to Micrus’ attention. Distributor shall
not sell, advertise, distribute, or otherwise transfer or assist in the transfer
of the Product outside the Territory or to persons or entities located outside
the Territory. Micrus reserves the right to grant similar distribution rights in
the Product to third parties for distribution and sale outside of the Territory;
provided, however, such third parties shall be similarly required to agree not
to sell, advertise, distribute, or otherwise transfer or assist in the transfer
of the Product in the Territory or to
***Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
Micrus Endovascular

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persons or entities located in the Territory during the term of this Agreement.
Distributor has no authority to appoint an associate distributor or
sub-distributor of the Product without the prior written authorization of
Micrus. If such authorization is given, each such distributor or sub-distributor
shall be bound in writing to restrictions at least as strict as those
restrictions imposed on Distributor under this Agreement.
          2.2 Relationship of Parties. The relationship of Micrus and
Distributor established by this Agreement is that of independent contractors,
and nothing contained in this Agreement shall be construed to: (i) give either
party the power to direct or control the day-to-day activities of the other; or
(ii) allow Distributor to create or assume any obligation on behalf of Micrus
for any purpose whatsoever. All financial obligations associated with
Distributor business are the sole responsibility of Distributor. All sales and
other agreements between Distributor and its customers are Distributor’s
exclusive responsibility and shall impose no duty or obligation upon Micrus and
shall not have the effect of lessening any of Distributor’s obligations under
this Agreement.
          2.3 Marketing Authorizations.
               2.3.1 Micrus Obligations. Micrus shall deliver to Distributor all
scientific, clinical, toxicological, and manufacturing data in the possession of
Micrus, to the extent necessary for Distributor to obtain all required Marketing
Authorizations within the Territory, provided Distributor maintains all such
data as confidential pursuant to Article 7.
               2.3.2 Distributor Obligations. At its own expense, Distributor
shall use its best efforts to obtain and maintain all necessary Marketing
Authorizations within the Territory. Specifically, Distributor agrees that it
will undertake to manage, at Distributor’s expense, all animal trials and human
clinical trials required to obtain the Marketing Authorizations. These approvals
will be obtained in the name of Micrus, with Distributor as agent of Micrus for
the purpose of such Marketing Authorizations. Upon termination of this
Agreement, Distributor agrees to transfer all of its rights, title and interest,
if any, in and to such approvals to Micrus, or any third party as may be
designated in writing by Micrus. Distributor shall provide Micrus with written
monthly progress reports of its efforts to obtain Marketing Authorizations.
Distributor agrees not to sell or distribute the Product in any geographic
region within the Territory until such time as all Marketing Authorizations in
such geographic region have duly been obtained, and to act at all times in a
manner consistent with such Marketing Authorizations.
               2.3.3 Distributor Qualifications. Distributor warrants that it
has, and complies with all requirements of, all necessary licenses, approvals
and/or qualifications as required under applicable Chinese laws, regulations and
rules to enter into this Agreement and to distribute the Products in the
Territory, including without limitation all legal qualifications and licenses as
required by the China State Food & Drug Administration (“SFDA”) and the state
or/and local Administration for Industry & Commerce (“AIC”), as well as other
relevant Chinese authorities for medical device registration, importation, sales
and after sale service. Any discontinuance of such licenses, approvals, or
qualifications, or of Distributor’s compliance with such requirements, shall be
deemed a material breach of this Agreement.
          2.4 Trademarks
               2.4.1 License. Micrus hereby grants to Distributor the
non-transferable, non-assignable, non-sublicensable right and license to use the
trademarks, service marks, and trade names that Micrus may adopt from time to
time in connection with Products sold hereunder (the “Trademarks”) solely on or
in connection with Distributor’s promotion, sale and distribution of the Product
within the Territory as authorized under this Agreement for the term of this
Agreement. Distributor shall have the right to indicate to the public that it is
an authorized distributor of the Product. Distributor shall not alter or remove
any Trademark applied to the Product. Nothing herein shall grant to Distributor
any right, title or interest in the Trademarks. All use of the Trademarks, and
goodwill associated therewith, shall inure to the benefit of Micrus. At no time
during or after the term of this Agreement shall Distributor challenge or assist
others to challenge the Trademarks or the registration thereof or attempt to
register any trademarks, marks or trade names confusingly similar to those of
Micrus.
Micrus Endovascular
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               2.4.2 Approval of Representations. Distributor shall respect the
Trademarks and follow the instructions of Micrus as to all usage of the
Trademarks, including, without, limitation, complying with Micrus’ quality
control requirements and submitting samples of Distributor’s use of the
Trademarks to Micrus for approval. If any of the Trademarks are to be used in
conjunction with any other mark on or in relation to the Product, then the
Trademark shall be presented equally legibly, equally prominently, and of the
same or greater size than the other mark(s) but nevertheless separated from the
other trademark so that each appears to be a mark in its own right, distinct
from the other mark(s).
          2.5 Provision of Data. Distributor agrees to provide Micrus promptly
with all clinical and technical information and data with respect to the Product
which it develops during the term of this Agreement. Distributor further agrees
to communicate promptly to Micrus any and all modifications, design changes or
improvements to the Products suggested by any of Distributor’s customers,
distributors, employees or agents. Distributor further agrees that Micrus shall
have, and is hereby assigned, any and all right, title and interest in and to
any such suggested modifications, design changes or improvements to the Products
without the payment of any additional consideration therefor either to
Distributor or its customers, distributors, employees or agents. Distributor
will also promptly notify Micrus of any infringement of any of the Trademarks,
patent or other proprietary rights relating to the Products of which Distributor
becomes aware.
          2.6 Protection Of Legends. Distributor shall not remove, overprint or
deface any notice of confidentiality, patent numbers, patent pending notice,
copyright, trademark, logo, legend or other notices of ownership or
confidentiality from any originals or copies of any materials, goods or products
it obtains from Micrus.
          2.7 Reverse Engineering. Distributor shall not, by itself or through
its agents or a third party, reverse-engineer, de-compile, or disassemble any
device or technology disclosed to it under this Agreement.
ARTICLE 3 — PURCHASE OF PRODUCT
          3.1 Terms and Conditions. All purchases of Product by Distributor from
Micrus during the term of this Agreement shall be subject to the terms and
conditions of this Agreement.
          3.2 Prices.
               3.2.1 Subject to this Section 3.2, Micrus will sell Product to
Distributor at the preferential prices shown in Exhibit A (“Purchase Price”)
until [***] after the Effective Date or until such time the pricing is revised
in accordance with this Agreement, whichever is earlier. The parties agree to
discuss, in good faith, increases and revisions to the prices, within at least
[***] from the Effective Date of this Agreement, based on market data then
available to Micrus and as relevant. [***]. Distributor shall have sole
discretion to establish the resale price of the Product to third parties subject
only to any regulatory or governmental limitations.
               3.2.2 The Purchase Price shall be revised [***] in writing
through consultation between Micrus and Distributor on [***], and at such other
times as the parties may agree in writing. Such revisions shall apply to all
orders for the affected Product received after the effective date of revision.
Price increases shall not affect unfulfilled purchase orders accepted by Micrus
in writing prior to the effective date of the price increase.
               3.2.3 All prices are F.O.B. shipping point.
          3.3 Taxes. The Purchase Price will be net of any Distributor federal,
state or local taxes that may be applicable to the Product. When Micrus has the
legal obligation to collect such taxes, the appropriate amount shall be added to
Distributor’s invoice and paid by Distributor, unless Distributor provides
Micrus with a valid tax exemption certificate authorized by the appropriate
taxing authority.
*** Confidential Treatment Requested
Micrus Endovascular
July 30, 2007

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          3.4 Order and Acceptance. All orders for Product submitted by
Distributor shall be initiated by written purchase orders sent to Micrus via a
fax, e-mail, or a method set forth in Section 11.5 and requesting a delivery
date during the term of this Agreement. To facilitate Micrus’ production
scheduling, Distributor shall submit purchase orders to Micrus at least ninety
(90) days prior to the first day of the requested month of delivery. No order
shall be binding upon Micrus until accepted by Micrus in writing, and Micrus
shall have no liability to Distributor with respect to purchase orders that are
not so accepted. Micrus shall either: (i) notify Distributor, in writing (via
any of the means referenced above), of the acceptance or rejection of an order
(or any portion thereof) and of the assigned delivery date for accepted orders
with ten (10) days of receipt of the purchase order; or (ii) send Product
pursuant to such accepted order. No partial fulfillment of an order shall
constitute a commitment to fulfill the entire order, absent the written
acceptance of such entire order. Micrus shall use its commercially reasonable
efforts to deliver Product at the time specified in its written acceptance of
Distributor’s purchase orders. Micrus reserves the right at any time to
discontinue the manufacture, supply or sale of any Product, to make changes in
materials or design, or to add improvements to any Product, without incurring
any liability whatsoever.
          3.5 Terms of Purchase Orders. Distributor’s purchase orders submitted
to Micrus from time to time with respect to Product to be purchased hereunder
shall be governed by the terms of this Agreement, and nothing contained in any
such purchase order shall in any way modify such terms of purchase or add any
additional terms or conditions.
          3.6 Payment. Micrus shall submit an invoice to Distributor upon each
shipment of Product ordered by Distributor. The invoice shall set forth the
Purchase Price for the Product in a given shipment plus any freight, taxes or
other applicable costs initially paid by Micrus but to be borne by Distributor.
Payment shall be made by Distributor in US Dollars by wire transfer, check or
other instrument approved in writing by Micrus. Payment terms shall be the full
invoiced amount to be paid by Distributor to Micrus within ninety (90) days of
the date of the invoice; which payment terms shall be reviewed after the first
year of this Agreement for payment terms applicable to subsequent years of the
then-current term of the Agreement; provided, however, that any revision to the
payment terms must be made by a mutually agreed to writing executed by both
parties. Any invoiced amount not received within ninety (90) days of the date of
invoice shall be subject to a service charge of one percent (1%) per month, or
if lower, the maximum interest rate allowed by law. Distributor shall pay all of
Micrus’ costs and expenses (including reasonable attorney’s fees) to enforce and
preserve Micrus’ rights under this Subsection 3.6. All exchange, interest,
banking collection and other charges shall be at Distributor’s expense.
Distributor agrees to open and maintain an irrevocable standby letter of credit
for the benefit of Micrus in the amount of [***], drawn on a California bank
approved by Micrus and in form and substance acceptable to Micrus, prior to
issuing any purchase orders hereunder (and Micrus shall not be required to ship
Product hereunder until such letter of credit has issued, or if after making
such shipment Distributor’s balance payable to Micrus would exceed the amount of
the letter of credit). Notwithstanding the foregoing, Distributor may, in lieu
of providing a letter of credit, prepay any Product orders made pursuant to this
Agreement by wire transfer of the full amount of the order price to an account
designated by Micrus.
          3.7 Foreign Currency Exchange. Distributor shall be solely responsible
for obtaining approval from the China State Administration of Foreign Exchange
(“SAFE”) and any other relevant government authorities for currency conversion
of Chinese RMB into U.S. dollars for payment to Micrus, and Distributor warrants
that it shall do so. This Agreement may be terminated by Micrus pursuant to
Section 10.2 if Distributor fails to make payment when due, even if the currency
is blocked by the Chinese authorities.
          3.8 Monthly Reports. Within ten (10) days after the end of each
calendar month, Distributor shall provide Micrus with a written sales breakdown,
including without limitation, the amount and type of Product, and names of end
users of the Product sold in each country of the Territory during the period, as
well as a nonbinding forecast (by country) for the subsequent three-month
period.
*** Confidential Treatment Requested
Micrus Endovascular
July 30, 2007

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ARTICLE 4 — SUPPLY OF PRODUCT
          4.1 Terms of Distributor Requirements. Subject to the terms and
conditions of this Agreement (including, without limitation, Section 3.4),
Micrus agrees to sell and Distributor agrees to purchase from Micrus
Distributor’s entire requirements of products of the type provided by Micrus
under this Agreement, solely for distribution and/or sale in the Territory.
Micrus shall use commercially reasonable efforts to manufacture the Product and,
subject to Section 3.4, supply them to Distributor in quantities sufficient to
satisfy Distributor’s needs in accordance with the provisions of this Article 4,
provided Distributor submits to Micrus purchase estimates pursuant to
Section 4.2.
          4.2 Purchase Estimates. Distributor shall submit to Micrus, beginning
ninety (90) days before the first anticipated order of Product and within the
first ten (10) days after the beginning of each calendar quarter thereafter, a
non-binding good faith estimate of the amount of Product to be required and
purchased by Distributor for both the next three months and the next
twelve-month periods.
          4.3 Inspection and Dispute Resolution Relating to Satisfaction of
Product Specifications. The following provisions relate to inspection and
resolution of disputes:
               4.3.1 Rejection of Product. Distributor shall inspect all Product
promptly upon receipt thereof and may reject any Product pursuant to this
Section 4.3.1 that fails to meet the specifications set forth in Micrus’ current
product specifications for the Product. Any Product not properly rejected within
thirty (30) days of receipt of that Product at Distributor’s facility after
customs clearance for import (the “Rejection Period”) shall be deemed accepted.
To reject a Product, Distributor shall within the Rejection Period, (i) notify
Micrus in writing of its rejection and the reason for the rejection, and
(ii) return, at its expense, the rejected Product to Micrus (the “Returned
Product”) in the same condition in which it was delivered to Distributor. All
claims made by Distributor after its inspection of the Product shall be handled
on a case-by-case basis during which time Micrus shall have the right to first
inspect any Product involved before being required to take any action with
respect thereto. Micrus shall make its investigation within thirty (30) days of
receipt of notice of a claim from Distributor. Micrus shall, at its expense,
replace Product it determines to be defective and ship such replacement Product
freight prepaid. In no event shall Micrus be liable under this Agreement for any
failure of any Product to meet the specifications due to modification or
improper use, storage or shipment of the Product by Distributor or anyone
receiving the Product from or on behalf of Distributor.
               4.3.2 Resolution of Disputes Relating to Product Specifications.
If the parties hereto fail to agree as to whether a delivered quantity of
Product meets its agreed specifications, then the parties shall cooperate to
have the Product in dispute analyzed by a jointly selected qualified independent
testing laboratory.
               4.3.3 Return of Product After Rejection Period. After the
Rejection Period, Micrus’ limited warranty as stated in Section 8.1 hereof shall
be applied. If Micrus tests and inspects the Returned Product and determines
that such Returned Product (i) has been physically damaged, (ii) has been
modified or improperly used, stored or shipped by Distributor or anyone
receiving the Product from or on behalf of Distributor, or (iii) performs
according to Micrus’ written specifications, no credit will be given to
Distributor. If upon such test and inspections such Returned Product (a) has not
been physically damaged, (b) has not been modified or improperly used, stored or
shipped by Distributor or anyone receiving the Product from or on behalf of
Distributor, and (c) does not perform to Micrus’ written specification, these
Returned Products will be replaced at no cost to Distributor. In all cases of
physical damage or modification to, or improper use, storage or shipment of,
Returned Product, no credit will be given to Distributor.
          4.4 Title. Title and risk of loss pass to Distributor when Product
leaves Micrus’ facility. Distributor shall be solely responsible for the payment
of all freight and insurance and other costs, expenses, fees, duties, imports,
and charges of whatever kind or nature arising from the shipment, delivery, and
importation of Product into the Territory. Distributor shall solely be
responsible for taking all actions necessary to obtain clearance to import
Product into the Territory and Distributor warrants that it will comply in all
respects with any restrictions set forth in the import and/or export license for
every Product purchased hereunder.
          4.5 Reporting. Distributor agrees to report to Micrus any information
from any source, including, without limitation, employees, distributors, agents,
customers, user facilities, individuals, or medical or scientific literature,
whether published or unpublished, that reasonably suggests that there is a
problem with the Product or a probability that the Product or a similar product
has caused or contributed to a death, serious illness or serious injury,
including but not limited to, severe or permanent disability, stroke, or
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brain damage as promptly as possible but within five (5) days of receipt of
information of such event. Distributor agrees not to disclose any such
information referred to herein to any third party without the prior written
consent of Micrus.
               4.5.1 Serious illness means an event that is life threatening,
results in permanent impairment of a body function or permanent damage to the
body structure, or necessitates immediate medical or surgical intervention to
preclude permanent impairment of a body function or permanent damage to a body
structure.
               4.5.2 Serious injury means an event that is life threatening,
results in permanent impairment of a body function or permanent damage to a body
structure, or necessitates medical or surgical intervention to preclude
permanent impairment of a body function or permanent damage to a body structure.
          4.6 Monitoring. Each of the parties hereto shall monitor all relevant
journals and media communications for information on factors materially
affecting the use or efficacy of the Product and shall promptly inform the other
party of such information. The informing party may provide in writing its
evaluation of such information. Either party shall promptly inform the other if
it has actual knowledge of any measures which are necessary to eliminate or
minimize any risk associated with the use of the Product or a specific
production lot of the Product.
ARTICLE 5 — ADDITIONAL OBLIGATIONS OF DISTRIBUTOR
          5.1 Marketing Obligations. Distributor agrees to use its best efforts
to successfully promote and distribute the Product, at its own expense, in the
Territory using diligent and vigorous efforts to maximize sales and market
penetration at the earliest date. Such efforts shall include, but are not
limited to, preparing promotional materials, advertising the Product in trade
publications within the Territory, participating in appropriate trade shows
within the Territory, and directly soliciting orders from customers within the
Territory for the Product. Subject to Micrus’ approval and obligations under
Article 8 hereof, Distributor shall also be responsible for all quality control,
lot release for Distributor’s requirements, promotional activities, marketing
and selling efforts, distribution and technical services. All promotional
materials developed by Distributor shall be submitted to Micrus for approval
before such materials are distributed by Distributor. Micrus shall promptly
review such materials, and if no written response is provided by Micrus within
thirty (30) days after receipt of such material, then the material will be
deemed to have been approved by Micrus.
          5.2 Finances and Personnel. Distributor shall, at its sole cost,
expense, and risk: (i) employ on its own behalf an appropriate number of
specialized, trained, and qualified sales personnel whose main function shall be
the promotion and sale of the Product in the Territory; and (ii) maintain a
suitable organization for the promotion and sale of the Products in the
Territory pursuant to Distributor’s obligations hereunder. Notwithstanding the
foregoing, Micrus agrees to provide sales and marketing support to the extent
set forth in a letter agreement to be executed concurrently with this Agreement.
          5.3 Customer and Sales Reporting. Distributor shall, at its own
expense and consistent with the sales policies of Micrus:
               5.3.1 place the Product in Distributor’s catalogues as soon as
possible and feature the Product in any applicable trade show within the
Territory that it attends;
               5.3.2 provide adequate contact with existing and potential
customers within the Territory on a regular basis, consistent with good business
practice;
               5.3.3 assist Micrus in assessing customer requirements for the
Product, including modifications and improvements thereto, in terms of quality,
design, functional capability, and other features; and
               5.3.4 submit market research information, as reasonably requested
by Micrus regarding competition and changes in the market within the Territory.
          5.4 Marketing Plans. Distributor shall submit to Micrus for its
approval an initial Product launch plan for the Products in the Territory by
August 17th 2007, and then on or before October of each year, an annual
marketing and sales plan for the Products. Each of these plans shall include
specific marketing sales strategies, tactics and goals, market research
analysis, promotion budgets, and sales projections for all products to be
marketed in the Territory.
Micrus Endovascular
July 30, 2007

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          5.5 Compliance with Laws. Distributor shall market and distribute the
Product in the Territory in compliance with all applicable laws and regulations
and good commercial practice and for uses and applications approved by Micrus in
writing for the Product. Distributor shall comply with all laws, rules and
regulations as applicable to the marketing, distribution and sale of the Product
in the Territory or any part of it. Distributor further agrees to comply with
the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”) and all
applicable export laws, restrictions and regulations of any U.S. or foreign
agency or authority and not to export or re-export or allow the export or
re-export of the Product or any related technology or information in violation
of any such laws, restrictions or regulations. A copy of the FCPA is attached to
this Agreement as Exhibit C.
          Distributor hereby declares that it has read and understood the
provisions of the FCPA and, on that basis, it further represents and covenants
that neither it nor any of its employees or agents have taken or will take any
action to cause Distributor to be in violation of the FCPA. Distributor further
declares that it understands that employees of non-profit, public or state-owned
medical care facilities who have discretionary spending, requisition or
disbursement authority, or who supervise employees with such authority, are
likely to fall within the FCPA’s definition of “foreign official,” and should be
considered “foreign officials” for purposes of compliance with the FCPA and this
Article of the Agreement.
          Specifically, Distributor hereby certifies that it has not paid, nor
offered or agreed to pay, nor has caused to be paid, or offered or agreed to be
paid, directly or indirectly, in respect of this Agreement, any fees,
commissions or political contributions to any “foreign official” anywhere for
the purpose of influencing such official’s act or decision to provide business
to Distributor or to Micrus. Distributor further certifies that it will not,
directly or indirectly, in connection with this Agreement and the business
resulting therefrom, offer, pay, promise to pay, or authorize the giving of
money or anything of value to any public or governmental employee or official,
to any political party or official thereof or to any candidate for political
office, while knowing or being aware of a high probability that all or a portion
of such money or thing of value will be offered, given or promised, directly or
indirectly, to any “foreign official,” to any political party or official
thereof, or to any candidate to political office, for the purpose of:
(a) influencing any act or decision of such official, political party, party
official, or candidate in his or its official capacity, including a decision to
fail to perform his or its official functions; or (b) inducing such official,
political party, party official or candidate to use his or its influence with
the government or instrumentality thereof to affect or influence any act or
decision of such government or instrumentality, in order to assist Micrus or
Distributor in obtaining or retaining business for or with, or directing
business to any third party. Distributor further certifies that it will not,
directly or indirectly, in connection with this Agreement and the business
resulting therefrom, offer, pay, promise to pay, or authorize the giving of
money or anything of value to any person, while knowing or being aware of a high
probability that all or a portion of such money or thing of value will be
offered, given, or promised, directly or indirectly, to any “foreign official,”
to any foreign political party or official thereof, or to any candidate for
foreign political office, for the purpose of: (a) influencing any act or
decision of such official, political party, party official, or candidate in his
or its official capacity, including a decision to fail to perform his or its
official functions; or (b) inducing such official, political party, party
official or candidate to use his or its influence with the government or
instrumentality thereof to affect or influence any act or decision of such
government or instrumentality, in order to assist Micrus or Distributor in
obtaining or retaining business for or with, or directing business to any third
party.
          Distributor agrees that it shall make its books and records available
to Micrus for inspection upon Micrus’ request so that Micrus can ensure that
Distributor has devised and maintained a system of internal accounting controls
sufficient to provide reasonable assurances, upon request from Micrus, that
(a) Distributor’s accounts accurately and fairly reflect, in reasonable detail,
Distributor’s transactions and dispositions of cash; (b) all transactions are
executed with general or specific authorization from distributor’s financial
controller (Ms. Chen Shi Hong); (c) transactions are recorded as necessary to
maintain accountability for assets; (d) access to assets is permitted only in
accordance with general or specific authorization of Distributor’s financial
controller; and (e) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences
          Distributor also agrees that it will require that all of its officers,
employees and contractors (if any are specifically approved by Micrus in writing
pursuant to Section 2.1 of this Agreement), who do or will assist, directly or
indirectly, Distributor in the promotion and sale of the Products pursuant to
this Agreement, complete initial training to ensure that they understand and
agree to comply with the provisions of the FCPA and this Section 5.5.
Distributor will further require that all officers, employees and distributors
will complete further training to ensure compliance with the FCPA and this
Section 5.5 no less frequently than on an annual basis. Distributor will, on
request, provide Micrus with signed certifications from all officers, employees
and contractors, confirming that each such officer, employee and contractor has
completed the required training. Further, Distributor will provide
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Micrus, at least ten (10) business days in advance of such training, with copies
of the training materials to be delivered to Distributor’s officers, employees
and contractors for Micrus’ review and approval. Distributor also agrees to
record, by audio- and/or video- means, each training session delivered to its
officers, employees and contractors, to maintain such recordings for a period of
not less than three (3) years, and to provide such recordings to Micrus upon
request.
          Distributor further agrees that if subsequent developments cause the
certifications and information reported herein to be no longer accurate or
complete, Distributor will immediately so advise Micrus. Distributor further
agrees that its violation of any part of this Section 5.5, including any refusal
to make its books and records available for Micrus’s inspection, will be a
material breach of this Agreement and cause for immediate termination, without
further liability or obligation on the part of Micrus notwithstanding anything
to the contrary provided in this Agreement.
          Distributor shall obtain and bear all expenses relating to any
necessary licenses and/or exemptions with respect to the export from the United
States of the Products to any location in compliance with all applicable laws
and regulations.
          5.6 Traceability. Distributor agrees to maintain access to records
allowing Micrus the ability to determine all customers who were shipped specific
product lots. Product Identification and traceability requirements are defined
in ISO 9001 : 1994 (E) requirement 4.8 as: “the supplier shall maintain
documented procedures for identifying the product from production, delivery and
installation.” Traceability in ISO 8402 Vocabulary is defined as: “ability to
trace the distribution and location of the product after delivery.”
ARTICLE 6 — FAILURE TO MEET MINIMUM REQUIREMENTS
     In the event that in any given year, the total Product orders and payments
by Distributor under Section 3.6 do not, in the aggregate, equal or exceed: the
minimum quarterly or annual purchase requirements in the amounts set forth in
Exhibit B hereto (“Minimum Purchase Requirements”), then Micrus may, at its sole
discretion, either: (a) convert the grant of the distribution rights pursuant to
Section 2.1 hereof to a non-exclusive basis; or (b) terminate this Agreement
upon thirty (30) days prior written notice to Distributor. If Micrus elects to
convert the grant of distribution rights to a non-exclusive basis, such election
shall be made by delivery of written notice by Micrus to Distributor and shall
take effect on the date set forth in the notice, and Micrus will in that event
retain the right thereafter to terminate this Agreement if at any time
Distributor again fails to equal or exceed the Minimum Purchase Requirements.
ARTICLE 7 — CONFIDENTIAL INFORMATION
     The parties hereto agree that each shall keep completely confidential and
shall not publish or otherwise divulge or use for its own benefit or for the
benefit of any third party any information of a proprietary nature furnished to
it (the “Receiving Party”) by the other party (the “Disclosing Party”) for a
period of five (5) years after the termination of this Agreement without the
prior written approval of the Disclosing Party in each instance, except to the
extent that it is necessary to divulge such information for the obtaining of
governmental approval for the marketing of the Product and the Receiving Party
discloses only the minimum of information necessary in connection therewith and
takes reasonable steps to maintain the confidentiality of such information.
Nothing in this Article 7 shall prevent disclosure or use of information: (i)
already known to the Receiving Party prior to its receipt of such information
from the Disclosing Party; (ii) which was known to the public at the time of
disclosure, or subsequently becomes so known through no act or omission of the
Receiving Party; (iii) which is properly acquired by the Receiving Party from a
third party having the right to convey such information; or (iv) that is
required to be disclosed by law or regulation or in connection with any
financing, acquisition, merger or sale, provided the Receiving Party provides
the Disclosing Party with advance notice of such disclosure and takes reasonable
steps to protect the confidentiality of such information. Information of a
proprietary nature shall include, but not be limited to, information concerning
a party’s products, proposed products, marketing plans, methods of manufacture,
customers or any other information or materials in whatever form not generally
known to the public. Subject to the foregoing, this specific terms of this
Agreement (including all financial terms) shall be kept confidential, however,
the parties may refer generally to this Agreement and the parties’ relationship
arising therefrom.
ARTICLE 8 — WARRANTY; LIMITATION OF LIABILITY
          8.1 Warranty. Micrus represents and warrants to Distributor that all
Product manufactured and delivered to Distributor pursuant to this Agreement
shall meet Micrus’ specifications for such Product at the time of delivery by
Micrus to Distributor for the
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shelf life of the Product as specified on the Product labeling; provided,
however, that such Product: (i) has been shipped in accordance with Micrus’
shipping instructions and stored in accordance with the instructions on the
labeling and the packaging for such Product; (ii) is used in the application for
which it was intended; and (iii) has not been modified without Micrus’ prior
written consent. Distributor shall handle and be solely responsible for all
warranty returns from its direct and indirect customers. MICRUS’ SOLE AND
EXCLUSIVE LIABILITY UNDER THE WARRANTY SET FORTH IN THIS SECTION 8.1 SHALL BE
LIMITED TO A REPLACEMENT TO DISTRIBUTOR OF THE DEFECTIVE UNIT OF THE PRODUCT
WITH A PRODUCT UNIT SUBSTANTIALLY EQUIVALENT TO THE UNIT ORIGINALLY SHIPPED BY
MICRUS TO DISTRIBUTOR, OR IF THAT IS IMPRACTICABLE, THE REFUND BY MICRUS TO
DISTRIBUTOR OF ALL AMOUNTS PAID TO MICRUS FOR SUCH DEFECTIVE UNIT.
          8.2 No Other Warranty. EXCEPT FOR THE EXPRESS WARRANTY SET FORTH IN
SECTION 8.1 HEREIN, THE PRODUCT IS PROVIDED “AS IS,” AND MICRUS GRANTS NO OTHER
WARRANTIES, EXPRESS OR IMPLIED, BY STATUTE OR OTHERWISE, REGARDING ANY PRODUCT,
ITS FITNESS FOR ANY PARTICULAR PURPOSE, ITS QUALITY, ITS MERCHANTABILITY, OR
OTHERWISE.
          8.3 Limitation of Liability: NOTWITHSTANDING ANYTHING ELSE IN THIS
AGREEMENT OR OTHERWISE, IN NO EVENT SHALL MICRUS BE LIABLE TO DISTRIBUTOR OR ANY
OTHER PERSON OR ENTITY WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT
UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE
THEORY FOR (A) THE COST OF PROCUREMENT OF SUBSTITUTE GOODS, (B) ANY SPECIAL,
CONSEQUENTIAL, PUNITIVE. INDIRECT OR INCIDENTAL DAMAGES OR (C) LOST PROFITS OR
LOST BUSINESS; EVEN IF THE REMEDIES PROVIDED FOR IN THIS AGREEMENT FAIL OF THEIR
ESSENTIAL PURPOSE AND EVEN IF EITHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES; PROVIDED, HOWEVER, THAT NOTHING HEREIN SHALL RELIEVE MICRUS
FROM ANY PRODUCT LIABILITY CLAIM, AS SET FORTH IN ARTICLE 9 HERETO.
          8.4 Ownership. Distributor acknowledges and agrees that as between
Distributor and Micrus, Micrus owns all right, title and interest in and to all
clinical, technical, product, sales, marketing, and customer information and
data with respect to the Product (including, without limitation, any and all
modifications, design changes or improvements relating thereto), and all
industrial and intellectual property rights of any kind in relation to the
Product (including, without limitation, any and all modifications, design
changes or improvements relating thereto) or any of the foregoing, including,
without limitation, the right to patents, registered or other designs,
trademarks, trade names, inventions, copyright, know-how and any other
confidential information. Nothing contained in this Agreement shall be effective
to give Distributor any rights of ownership in or to any of the foregoing. To
the extent Distributor owns any rights, title or interest in or to the
foregoing, Distributor hereby assigns all of such rights to Micrus. The
provision of Product technical information to Distributor under this Agreement
is for the sole purpose of obtaining approval from the regulatory authorities in
the Territory for the Product and is subject to the confidentiality obligations
set forth in Article 7. The use by Distributor of any of these property rights
is authorized only for the purposes herein set forth, and upon termination of
this Agreement for any reason such authorization shall cease.
          8.5 Sale Conveys No Right to Manufacture or Copy. The Product is
offered for sale and is sold by Micrus subject in every case to the condition
that such sale does not convey any license, expressly or by implication, to
manufacture, duplicate or otherwise copy or reproduce the Product or any portion
thereof. Distributor shall take appropriate steps with its customers and
distributors, if any, as Micrus may request, to inform them of and assure
compliance with the restrictions contained in this Section 8.5.
ARTICLE 9 — INDEMNIFICATION
          9.1 Indemnification by Micrus. Micrus agrees to and hereby does
indemnify and hold Distributor harmless from and against all claims, damages,
losses, costs and expenses, including reasonable attorneys’ fees, which
Distributor may incur by reason of any Product sold or furnished by Micrus which
result in injury, illness, or death of any person, to the extent that such
claims arise out of or result from either the negligence or willful misconduct
of Micrus in: (i) product design; or (ii) manufacturing; or (iii) breach of any
representations or warranties by Micrus hereunder, except if such claims arise
from the negligence or willful misconduct of Distributor, any modification of
the Product other than by Micrus or any breach by Distributor of any of its
obligations, representations or warranties under this Agreement. Micrus shall
have sole control of any such action or settlement negotiations, and Micrus
agrees to pay, subject to the limitations hereinafter set forth, any final
judgment entered against Distributor or its customer on
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such issue in any such suit or proceedings indemnified hereunder by Micrus.
Distributor agrees to notify Micrus promptly in writing of such claim, suit or
proceeding and gives Micrus authority to proceed as contemplated herein, and, at
Micrus’ expense, give Micrus proper and full information and assistance to
settle and/or defend any such claim, suit or proceeding. If the Product, or any
part thereof, is the subject of any claim, suit or proceeding for infringement
of any third party patents or trademark in the United States or in the
Territory, or if the sale or use of the Product, or any part thereof, is, as a
result thereof, enjoined, then Micrus shall, at its option and expense:
(a) procure for Distributor and its customers the right under such patent, or
trademark to sell or use, as appropriate, the Product or such part thereof; or
(b) replace the Product, or part thereof, with other suitable Product or parts;
or (c) suitably modify the Product, or part thereof, or (d) if the use of the
Product, or part thereof, is prevented by injunction, remove the Product or part
thereof, and refund the aggregate payments paid therefore by Distributor, less a
reasonable sum for the use and damage; provided that such claim, suit or
proceeding is not based on a modification of the Product by Distributor or
anyone other than Micrus, or a combination of the Product with any product other
than those provided by Micrus for use with the Product.
          9.2 Indemnification by Distributor. Distributor hereby agrees to and
hereby does indemnify and hold Micrus harmless from and against all claims,
damages, losses, costs and expenses, including reasonable attorneys’ fees, which
Micrus may incur to the extent that such claims arise out or result from;
(i) the unlawful sale or other distribution of Product by Distributor, including
any improper sales by Distributor to customers who are located outside the
Territory; (ii) the negligent or willful misconduct of Distributor in the
distribution, labeling or packaging of the Product; (iii) Distributor’s
recommended use of Product in violation of this Agreement; (iv) modification of
the Product by Distributor, (v) combination of the Product with any product
other than those provided by Micrus for use with the Product, or (vi) breach of
any representation, warranty, or obligation by Distributor hereunder, except for
such claims which arise out of or result from the gross negligence, or willful
misconduct of Micrus. Distributor shall have sole control of any such action or
settlement negotiations, and Distributor agrees to pay, subject to the
limitations hereinafter set forth, any final judgment entered against Micrus or
its customer on such issue in any such suit or proceedings defended by
Distributor. Micrus agrees to notify Distributor promptly in writing of such
claim, suit or proceeding and gives Distributor authority to proceed as
contemplated herein, and, at Distributor’s expense, give Distributor proper and
full information and assistance to settle and/or defend any such claim, suit or
proceeding.
          9.3 Contribution. In the event the negligence of Distributor and
Micrus contribute to any loss, cost, damages, claim or expense relating to
Product supplied and/or distributed or sold hereunder, then Distributor and
Micrus shall be responsible for that portion of the loss, cost, damages, claim
or expense to which its negligence contributed.
ARTICLE 10 — TERM AND TERMINATION
          10.1 Term. This Agreement shall commence on the Effective Date and
shall continue in force for a fixed term until March 31, 2012.
          10.2 Failure to Make Payment. Micrus may terminate this Agreement at
any time upon Distributor’s failure to make payments due to Micrus pursuant to
this Agreement and the continuation of such failure for more than thirty
(30) days after delivery of written notice to Distributor of such failure.
          10.3 Failure to Commercialize or Obtain Marketing Authorizations.
Micrus may terminate this Agreement at any time upon Distributor’s failure to
use diligent efforts to move ahead with its obligations to market, sell and
distribute Product under Section 5.1 or meet the Minimum Purchase Requirement
and upon the continuation of such failure for more than ninety (90) days after
delivery of written notice to Distributor of such failure, except where such
failure of Distributor is a result of the failure of Micrus to meet its
obligations as defined in this Agreement or due to circumstances beyond the
reasonable control of Distributor pursuant to Section 11.7 hereof.
          10.4 Patent. Copyright. Trademark or FCPA Violations. Micrus may
terminate this Agreement at any time without notice upon Distributor’s violation
of Article 7 or of Sections 5.5, 8.4, or 8.5 hereof.
          10.5 Material Breach. Except as set forth in Section 10.2 hereof or
elsewhere in this Agreement, either party may terminate this Agreement upon
ninety (90) days prior written notice in the event of the other party’s breach
of any other material provision of this Agreement, if such default or breach is
not remedied within ninety (90) days from the date of such notice, except
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where such default or breach is due to circumstances beyond the reasonable
control of the other party pursuant to Section 11.7 hereof, or as otherwise
specified in this Article 10.
          10.6 Bankruptcy. If, during the term of this Agreement, either party
makes an assignment, of this Agreement or generally, for the benefit of
creditors, or becomes insolvent or seeks protection under any bankruptcy,
receivership, trust deed, creditor’s arrangement or composition, or if any
comparable proceeding is instituted against the other party and is not dismissed
within ninety (90) days of such institution, then the other party may terminate
this Agreement immediately upon delivery of written notice thereof.
          10.7 Control Event. In the event that Distributor sells all or
substantially all of its business or assets to which this Agreement relates to a
non-affiliate, or has more than fifty percent (50%) of its equity securities
purchased by a single purchaser who is a non-affiliate in one transaction (a
“Control Event”) (whether by sale, acquisition, merger, operation of law or
otherwise), then Micrus may terminate this Agreement with thirty (30) days prior
written notice at any time after the occurrence of the Control Event. In the
event that Micrus sells all or substantially all of its business or assets to
which this Agreement relates to a non-affiliate, or has more than fifty percent
(50%) of its equity securities purchased by a purchaser who is a non-affiliate
in one transaction, then Micrus may terminate this Agreement at any time,
provided Micrus pays Distributor a termination fee of fifteen (15%) of the
Minimum Purchase Requirement for the then current term. For purposes of this
section, a non-affiliate is not a parent, subsidiary or a subsidiary of a common
parent or a successor.
          10.8 Waiver. Any failure to terminate shall not be construed as a
waiver by the aggrieved party of its right to terminate for future defaults or
breaches.
          10.9 Effects of Termination.
               10.9.1 Return of Property. Upon termination of this Agreement for
any reason, each party shall upon the request of the other party return all
books, records, documents, data, samples, parts, materials, and proprietary
information which it shall have received from the other party pursuant to this
Agreement and which it shall still have in its possession or control; provided,
however, that a single copy may be retained solely for legal archival purposes
by each party, subject to the confidentiality provisions of Article 7.
               10.9.2 Accrued Payments. Termination of this Agreement by either
party shall not prejudice the right of either party to recover any payments for
Products shipped under this Agreement, and shall not prejudice any cause of
action or claim of either party accruing under this Agreement.
               10.9.3 Marketing and Distribution Rights. Upon termination of
this Agreement, Distributor’s rights to market, distribute, sell and otherwise
transfer the Product, and all other rights under this Agreement, shall
immediately cease. The parties shall undertake to negotiate in good faith a
mutually acceptable agreement to satisfy any contractual obligations of
Distributor to supply the Product to third parties, and Micrus shall supply all
necessary inventory under such agreements. Except as needed to satisfy any
contractual obligations existing as of the effective date of termination and as
approved by Micrus in writing, Distributor shall return all inventory in its
possession or control to Micrus in the same condition in which it was provided
by Micrus within sixty (60) days after termination.
               10.9.4 Marketing Authorizations. Upon termination of this
Agreement, Distributor shall promptly assign or otherwise transfer to Micrus or
its designees all of Distributor’s rights, title and interest in and to the
Marketing Authorizations and/or pending applications for the Product; provided,
however, if such termination does not result from a breach of this Agreement by
Distributor, Micrus shall reimburse Distributor for its costs incurred in
obtaining such Marketing Authorizations.
               10.9.5 Trademark. Upon termination of this Agreement, the license
to use the Trademarks granted in Section 2.4 shall also terminate and all right,
title and interest in such Trademarks shall belong to Micrus. Upon termination
of this Agreement, Distributor shall return or destroy all materials containing
Micrus’ trademark, service mark, trade name and/or logo, including but not
limited to promotion materials, brochures, labels, packaging and/or samples.
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               10.9.6 Pending Orders. Upon termination of this Agreement, Micrus
shall have the right, at its option, to continue or terminate any order pending
as of the effective date of termination.
               10.9.7 No Liability for Termination. Neither party will incur any
liability whatsoever for any damages, loss or expenses of any kind suffered or
incurred by the other party (or for any compensation to the other party) arising
from or incident to any termination of this Agreement pursuant to such party’s
right of termination under this Agreement, whether or not such party is aware of
any such damages, loss or expenses.
          10.10 Termination Not Sole Remedy. Termination is not the sole remedy
under this Agreement and, whether or not termination is effected, all other
remedies will remain available.
ARTICLE 11 — GENERAL PROVISIONS
          11.1 Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of California and the
United States of America, without regard to the United Nations Convention on
Contracts for the International Sale of Goods. Except as set forth in
Section 11.2, the sole jurisdiction and venue for actions relating to the
subject matter of this Agreement shall be the California state and U.S. federal
courts having jurisdiction in Santa Clara County, California, and the parties
hereby consent to the jurisdiction of such courts.
          11.2 Arbitration. Except for actions seeking injunctive relief, all
disputes, controversies, or differences which may arise between the parties
hereto, out of, in relation to, or in connection with this Agreement or the
breach thereof, shall be finally settled by binding arbitration in San
Francisco, California, U.S.A., in accordance with the Commercial Arbitration
rules of the American Arbitration Association then in effect by one
(1) arbitrator appointed in accordance with such Rules, by which each party
hereto agrees to be bound. The arbitration shall be conducted in the English
language. The parties further agree to exclude any right of application or
appeal to any courts and that the arbitration award shall be final and binding
on the parties, provided judgment upon an award rendered shall be entered in any
court having jurisdiction, or application shall be made to such court for
judicial acceptance of the award and an order of enforcement, as the case may
be.
          11.3 Entire Agreement. This Agreement represents the entire Agreement
and understanding of the parties hereto with respect to the marketing and
distribution of the Product and the subject matter of this Agreement, and
supersedes all previous agreements and understandings related thereto, and may
only be amended or modified in writing signed by an authorized representative of
the parties hereto.
          11.4 Assignment. Distributor may not assign, transfer or otherwise
dispose of any of its rights or obligations pursuant to this Agreement without
the prior written consent of Micrus. Such consent shall not be unreasonably
withheld. Micrus may assign this Agreement to any affiliate or acquirer of
Micrus. In the absence of such an assignment, any performance by a Micrus
affiliate of an obligation of Micrus hereunder shall, as between the parties, be
deemed to have been rendered by Micrus, and any notice to Distributor given by a
Micrus affiliate hereunder shall be deemed as between the parties to have been
given by Micrus. This Agreement shall be binding on, inure to the benefit of,
and be enforceable by the parties, their respective heirs, successors and valid
assigns.
          11.5 Notice. All notices under this Agreement shall be in writing and
shall be deemed given on the date of delivery if sent by certified or registered
mail, commercial courier (return receipt or confirmation of delivery required
and costs prepaid), or by personal delivery to the party to receive such notices
or other communications called for in this Agreement at the following addresses
(or at such other address for a party as shall be specified by such party by
like notice):

      If to MICRUS:    
MICRUS ENDOVASCULAR CORPORATION
   
821 Fox Lane
   
San Jose, California 95131
   
Attention: Chief Financial Officer

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      If to DISTRIBUTOR:    
BEIJING TIANXINFU MEDICAL APPLIANCE CO. LTD.
   
3 Floor of the Main Building N. 15,
   
Zuojiazhuang, Chaoyang District
   
Beijing China, 100028
   
Attention: Chief Executive Officer

          11.6 Limitation on Liability. Except for breaches of Article 7, in no
event shall either party be liable to the other for incidental or consequential
damages, even if such party shall have been advised of the possibility of the
same. This limitation will not reduce either party’s obligations with respect to
damages that may be suffered by third parties and as to which an indemnification
obligation applies under Article 9.
          11.7 Force Majeure. Except for the obligation to make payments under
this Agreement, each of the parties hereto shall be excused from the performance
of its obligations hereunder in the event such performance is prevented by force
majeure, and such excuse shall continue for thirty (30) days after the
termination of such force majeure. For the purposes of this Agreement, force
majeure is defined to include causes beyond the control of the parties hereto,
including without limitation, acts of God, acts, resolutions or laws of any
government, war, war-like conditions, civil commotion, destruction of production
facilities or materials by fire, earthquake or storm, labor disturbances,
epidemic and failure of public utilities or common carriers.
          11.8 Publicity. Neither party shall make any press release or other
similar public disclosure or announcement concerning this Agreement, without the
prior written consent of the non-disclosing party, which consent shall not be
unreasonably withheld, except as otherwise required by law. Consent will be
deemed granted if no response is received from the non-Disclosing Party within
fifteen (15) days of its confirmed written request for approval from the
Disclosing Party. Notwithstanding the foregoing, in the event such disclosure or
public announcement is required to be made on a more immediate basis in order to
comply with applicable laws, then approval will be deemed granted if no response
is received from the non-disclosing party within the timeframes required by law;
provided, however, that the Disclosing Party provides the non-disclosing party
with notice of the legally required timeframe for approval of the disclosure at
the time of providing a copy of the proposed disclosure or announcement.
          11.9 Survival of Rights. All rights to payments and the provisions of
Articles 1 (Definitions), 7 (Confidential Information), 8 (Warranty; Limitation
of Liability), 9 (Indemnification), and 11 (General Provisions), as well as
Sections 2.2 (Relationship of Parties), 4.5 (Reporting), 10.8 (No Waiver), 10.9
(Effects of Termination) and 10.10 (Termination Not Sole Remedy) shall survive
the expiration or termination of this Agreement.
          11.10 Legal Expenses. The prevailing party in any legal action brought
by one party against the other and arising out of this Agreement shall be
entitled, in addition to any other rights and remedies it may have, to
reimbursement for its expenses, including arbitration costs and reasonable
attorney’s fees.
          11.11 Governmental Relations. In carrying out its responsibilities
under this Agreement, Distributor has not and will not pay, offer or promise to
pay, or authorize the payment directly or indirectly of any monies or anything
of value to any government official or employee, or any political party or
candidates for political office for the purpose of influencing any act or
decision of such official or of the government. In the event of a breach of the
representations and warranties in the preceding sentence, this Agreement may
automatically be cancelled by Micrus upon receipt by Distributor of written
notice of cancellation, and any claims for payment by Distributor shall be
surrendered. In no event shall Micrus be obligated under this Agreement to take
any action or omit to take any action that Micrus believes, in good faith, would
cause it to be in violation of any U.S. laws, including without limitation the
Foreign Corrupt Practices Act Distributor shall comply with all laws, rules and
regulations applicable to its performance of its obligations under this
Agreement, including all U.S. export control laws.
          11.12 Headings. Headings and captions are for convenience only and are
not to be used in the interpretation of this Agreement.
          11.13 Severability. If any provision of this Agreement is held to be
illegal or unenforceable, that provision shall be limited or eliminated to the
minimum extent necessary so that this Agreement shall otherwise remain in full
force and effect.
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          11.14 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instruments. This Agreement may be executed by
facsimile with original signatures promptly following by a method set forth in
Section 11.5.
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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.

                  MICRUS ENDOVASCULAR CORPORATION    
 
           
 
  BY:        
 
     
 
NAME:    
 
      TITLE:    
 
                BEIJING TIANXINFU MEDICAL APPLIANCE CO.
LTD.      
 
  BY:        
 
     
 
NAME:    
 
      TITLE:    

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EXHIBIT A
PURCHASE PRICE
As specified in Section 3.2.1 of the Distribution Agreement, the initial unit
pricing of the product sold to Distributor is given in the following schedule.
Each unit with be packaged sterile in an individual container and shipped to
Distributor in a multi-pack shipping box. All prices below are in United States
Dollars and exclude freight out of Micrus’ warehouse, which will be charged
separately.

      Product   Initial Purchase Price / Unit (in US$)  
Detachment Control Box
  [***]
Micrusphere® Cerecyte®
  [***]
Helipaq® Cerecyte
  [***]
Ultipaq® Cerecyte
  [***]
Micrusphere (bare platinum)
  [***]
Helipaq (bare platinum)
  [***]
Ultipaq
  [***]
Pharos™ Intracranial Stent
  [***]
Courier™ Microcatheter
  [***]
Watusi™ Guidwire
  [***]
Presidio™
  [***]
Connecting Cables
  [***]

*** Confidential Treatment Requested
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EXHIBIT B
MINIMUM PURCHASE REQUIREMENTS
The following schedule sets forth Distributor’s Minimum Purchase Requirements as
specified in Section 5.6 of the Distribution Agreement. These minimums are
stated in US Dollars and represent the cost of Products paid for by Distributor
to Micrus during each year of the Agreement (measured by anniversary dates of
the Effective Date).

                      TERRITORY   Year 1*   Year 2   Year 3   Year 4   Year 5
People’s Republic of China
  [***]**   [***]   [***]   [***]   [***]

*Year 1 shall start on the Effective Date and end March 31, 2008. Subsequent
years commence April 1 and end March 31.
**[***]

     
[***]
  Adjusted Year 1 Minimum Purchase Requirement
[***]
  [***]
[***]
  [***]
[***]
  [***]
[***]
  [***]

*** Confidential Treatment Requested
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EXHIBIT C
Anti-Bribery and Books & Records Provisions of
The Foreign Corrupt Practices Act
Current through Pub. L. 105-366 (November 10, 1998)
UNITED STATES CODE
TITLE 15. COMMERCE AND TRADE
CHAPTER 2B—SECURITIES EXCHANGES
§ 78m. Periodical and other reports
(a) Reports by issuer of security; contents
Every issuer of a security registered pursuant to section 78l of this title
shall file with the Commission, in accordance with such rules and regulations as
the Commission may prescribe as necessary or appropriate for the proper
protection of investors and to insure fair dealing in the security—
(1) such information and documents (and such copies thereof) as the Commission
shall require to keep reasonably current the information and documents required
to be included in or filed with an application or registration statement filed
pursuant to section 78l of this title, except that the Commission may not
require the filing of any material contract wholly executed before July 1, 1962.
(2) such annual reports (and such copies thereof), certified if required by the
rules and regulations of the Commission by independent public accountants, and
such quarterly reports (and such copies thereof), as the Commission may
prescribe.
Every issuer of a security registered on a national securities exchange shall
also file a duplicate original of such information, documents, and reports with
the exchange.
(b) Form of report; books, records, and internal accounting; directives
* * *
(2) Every issuer which has a class of securities registered pursuant to section
78l of this title and every issuer which is required to file reports pursuant to
section 78o(d) of this title shall—
(A) make and keep books, records, and accounts, which, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of
the issuer; and
(B) devise and maintain a system of internal accounting controls sufficient to
provide reasonable assurances that—
(i) transactions are executed in accordance with management’s general or
specific authorization;
(ii) transactions are recorded as necessary (I) to permit preparation of
financial statements in conformity with generally accepted accounting principles
or any other criteria applicable to such statements, and (II) to maintain
accountability for assets;
(iii) access to assets is permitted only in accordance with management’s general
or specific authorization; and
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(iv) the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.

(3)   (A) With respect to matters concerning the national security of the United
States, no duty or liability under paragraph (2) of this subsection shall be
imposed upon any person acting in cooperation with the head of any Federal
department or agency responsible for such matters if such act in cooperation
with such head of a department or agency was done upon the specific, written
directive of the head of such department or agency pursuant to Presidential
authority to issue such directives. Each directive issued under this paragraph
shall set forth the specific facts and circumstances with respect to which the
provisions of this paragraph are to be invoked. Each such directive shall,
unless renewed in writing, expire one year after the date of issuance.

        (B) Each head of a Federal department or agency of the United States who
issues such a directive pursuant to this paragraph shall maintain a complete
file of all such directives and shall, on October 1 of each year, transmit a
summary of matters covered by such directives in force at any time during the
previous year to the Permanent Select Committee on Intelligence of the House of
Representatives and the Select Committee on Intelligence of the Senate.

(4) No criminal liability shall be imposed for failing to comply with the
requirements of paragraph (2) of this subsection except as provided in paragraph
(5) of this subsection.
(5) No person shall knowingly circumvent or knowingly fail to implement a system
of internal accounting controls or knowingly falsify any book, record, or
account described in paragraph (2).
(6) Where an issuer which has a class of securities registered pursuant to
section 78l of this title or an issuer which is required to file reports
pursuant to section 78o(d) of this title holds 50 per centum or less of the
voting power with respect to a domestic or foreign firm, the provisions of
paragraph (2) require only that the issuer proceed in good faith to use its
influence, to the extent reasonable under the issuer’s circumstances, to cause
such domestic or foreign firm to devise and maintain a system of internal
accounting controls consistent with paragraph (2). Such circumstances include
the relative degree of the issuer’s ownership of the domestic or foreign firm
and the laws and practices governing the business operations of the country in
which such firm is located. An issuer which demonstrates good faith efforts to
use such influence shall be conclusively presumed to have complied with the
requirements of paragraph (2).
(7) For the purpose of paragraph (2) of this subsection, the terms “reasonable
assurances” and “reasonable detail” mean such level of detail and degree of
assurance as would satisfy prudent officials in the conduct of their own
affairs.
* * *
<§ 78dd-1 [Section 30A of the Securities & Exchange Act of 1934].
Prohibited foreign trade practices by issuers
(a) Prohibition
It shall be unlawful for any issuer which has a class of securities registered
pursuant to section 78l of this title or which is required to file reports under
section 78o(d) of this title, or for any officer, director, employee, or agent
of such issuer or any stockholder thereof acting on behalf of such issuer, to
make use of the mails or any means or instrumentality of interstate commerce
corruptly in furtherance of an offer, payment, promise to pay, or authorization
of the payment of any money, or offer, gift, promise to give, or authorization
of the giving of anything of value to—
(1) any foreign official for purposes of—
(A) (i) influencing any act or decision of such foreign official in his official
capacity, (ii) inducing such foreign official to do or omit to do any act in
violation of the lawful duty of such official, or (iii) securing any improper
advantage; or
(B) inducing such foreign official to use his influence with a foreign
government or instrumentality thereof to affect or influence any act or decision
of such government or instrumentality,
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in order to assist such issuer in obtaining or retaining business for or with,
or directing business to, any person;
(2) any foreign political party or official thereof or any candidate for foreign
political office for purposes of—
(A) (i) influencing any act or decision of such party, official, or candidate in
its or his official capacity, (ii) inducing such party, official, or candidate
to do or omit to do an act in violation of the lawful duty of such party,
official, or candidate, or (iii) securing any improper advantage; or
(B) inducing such party, official, or candidate to use its or his influence with
a foreign government or instrumentality thereof to affect or influence any act
or decision of such government or instrumentality.
in order to assist such issuer in obtaining or retaining business for or with,
or directing business to, any person; or
(3) any person, while knowing that all or a portion of such money or thing of
value will be offered, given, or promised, directly or indirectly, to any
foreign official, to any foreign political party or official thereof, or to any
candidate for foreign political office, for purposes of—
(A) (i) influencing any act or decision of such foreign official, political
party, party official, or candidate in his or its official capacity,
(ii) inducing such foreign official, political party, party official, or
candidate to do or omit to do any act in violation of the lawful duty of such
foreign official, political party, party official, or candidate, or
(iii) securing any improper advantage; or
(B) inducing such foreign official, political party, party official, or
candidate to use his or its influence with a foreign government or
instrumentality thereof to affect or influence any act or decision of such
government or instrumentality,
in order to assist such issuer in obtaining or retaining business for or with,
or directing business to, any person.
(b) Exception for routine governmental action
Subsections (a) and (g) of this section shall not apply to any facilitating or
expediting payment to a foreign official, political party, or party official the
purpose of which is to expedite or to secure the performance of a routine
governmental action by a foreign official, political party, or party official.
(c) Affirmative defenses
It shall be an affirmative defense to actions under subsection (a) or (g) of
this section that—
(1) the payment, gift, offer, or promise of anything of value that was made, was
lawful under the written laws and regulations of the foreign official’s,
political party’s, party official’s, or candidate’s country; or
(2) the payment, gift, offer, or promise of anything of value that was made, was
a reasonable and bona fide expenditure, such as travel and lodging expenses,
incurred by or on behalf of a foreign official, party, party official, or
candidate and was directly related to—
(A) the promotion, demonstration, or explanation of products or services; or
(B) the execution or performance of a contract with a foreign government or
agency thereof.
(d) Guidelines by Attorney General
Not later than one year after August 23, 1988, the Attorney General, after
consultation with the Commission, the Secretary of Commerce, the United States
Trade Representative, the Secretary of State, and the Secretary of the Treasury,
and after obtaining the views of all interested persons through public notice
and comment procedures, shall determine to what extent compliance with this
section would be enhanced and the business community would be assisted by
further clarification of the preceding provisions of this section and may, based
on such determination and to the extent necessary and appropriate, issue—
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(1) guidelines describing specific types of conduct, associated with common
types of export sales arrangements and business contracts, which for purposes of
the Department of Justice’s present enforcement policy, the Attorney General
determines would be in conformance with the preceding provisions of this
section; and
(2) general precautionary procedures which issuers may use on a voluntary basis
to conform their conduct to the Department of Justice’s present enforcement
policy regarding the preceding provisions of this section.
The Attorney General shall issue the guidelines and procedures referred to in
the preceding sentence in accordance with the provisions of subchapter II of
chapter 5 of Title 5 and those guidelines and procedures shall be subject to the
provisions of chapter 7 of that title.
(e) Opinions of Attorney General
(1) The Attorney General, after consultation with appropriate departments and
agencies of the United States and after obtaining the views of all interested
persons through public notice and comment procedures, shall establish a
procedure to provide responses to specific inquiries by issuers concerning
conformance of their conduct with the Department of Justice’s present
enforcement policy regarding the preceding provisions of this section. The
Attorney General shall, within 30 days after receiving such a request, issue an
opinion in response to that request. The opinion shall state whether or not
certain specified prospective conduct would, for purposes of the Department of
Justice’s present enforcement policy, violate the preceding provisions of this
section. Additional requests for opinions may be filed with the Attorney General
regarding other specified prospective conduct that is beyond the scope of
conduct specified in previous requests. In any action brought under the
applicable provisions of this section, there shall be a rebuttable presumption
that conduct, which is specified in a request by an issuer and for which the
Attorney General has issued an opinion that such conduct is in conformity with
the Department of Justice’s present enforcement policy, is in compliance with
the preceding provisions of this section. Such a presumption may be rebutted by
a preponderance of the evidence. In considering the presumption for purposes of
this paragraph, a court shall weight all relevant factors, including but not
limited to whether the information submitted to the Attorney General was
accurate and complete and whether it was within the scope of the conduct
specified in any request received by the Attorney General. The Attorney General
shall establish the procedure required by this paragraph in accordance with the
provisions of subchapter II of chapter 5 of Title 5 and that procedure shall be
subject to the provisions of chapter 7 of that title.
(2) Any document or other material which is provided to, received by, or
prepared in the Department of Justice or any other department or agency of the
United States in connection with a request by an issuer under the procedure
established under paragraph
(1), shall be exempt from disclosure under section 552 of Title 5 and shall not,
except with the consent of the issuer, be made publicly available, regardless of
whether the Attorney General responds to such a request or the issuer withdraws
such request before receiving a response.
(3) Any issuer who has made a request to the Attorney General under paragraph
(1) may withdraw such request prior to the time the Attorney General issues an
opinion in response to such request. Any request so withdrawn shall have no
force or effect.
(4) The Attorney General shall, to the maximum extent practicable, provide
timely guidance concerning the Department of Justice’s present enforcement
policy with respect to the preceding provisions of this section to potential
exporters and small businesses that are unable to obtain specialized counsel on
issues pertaining to such provisions. Such guidance shall be limited to
responses to requests under paragraph (1) concerning conformity of specified
prospective conduct with the Department of Justice’s present enforcement policy
regarding the preceding provisions of this section and general explanations of
compliance responsibilities and of potential liabilities under the preceding
provisions of this section.
(f) Definitions
For purposes of this section:

(1)   A) The term “foreign official” means any officer or employee of a foreign
government or any department, agency, or instrumentality thereof, or of a public
international organization, or any person acting in an official capacity for or
on behalf of any such government or department, agency, or instrumentality, or
for or on behalf of any such public international organization.   (B)   For
purposes of subparagraph (A), the term “public international organization”
means—

  (i)   an organization that is designated by Executive Order pursuant to
section 1 of the International Organizations Immunities Act (22 U.S.C. § 288);
or

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  (ii)   any other international organization that is designated by the
President by Executive order for the purposes of this section, effective as of
the date of publication of such order in the Federal Register.

(2)   (A) A person’s state of mind is “knowing” with respect to conduct, a
circumstance, or a result if—

(i) such person is aware that such person is engaging in such conduct, that such
circumstance exists, or that such result is substantially certain to occur; or
(ii) such person has a firm belief that such circumstance exists or that such
result is substantially certain to occur.
(B) When knowledge of the existence of a particular circumstance is required for
an offense, such knowledge is established if a person is aware of a high
probability of the existence of such circumstance, unless the person actually
believes that such circumstance does not exist.

(3)   (A) The term “routine governmental action” means only an action which is
ordinarily and commonly performed by a foreign official in—

(i) obtaining permits, licenses, or other official documents to qualify a person
to do business in a foreign country;
(ii) processing governmental papers, such as visas and work orders;
(iii) providing police protection, mail pick-up and delivery, or scheduling
inspections associated with contract performance or inspections related to
transit of goods across country;
(iv) providing phone service, power and water supply, loading and unloading
cargo, or protecting perishable products or commodities from deterioration; or
(v) actions of a similar nature.
(B) The term “routine governmental action” does not include any decision by a
foreign official whether, or on what terms, to award new business to or to
continue business with a particular party, or any action taken by a foreign
official involved in the decision-making process to encourage a decision to
award new business to or continue business with a particular party.
(g) Alternative Jurisdiction
(1) It shall also be unlawful for any issuer organized under the laws of the
United States, or a State, territory, possession, or commonwealth of the United
States or a political subdivision thereof and which has a class of securities
registered pursuant to section 12 of this title or which is required to file
reports under section 15(d) of this title, or for any United States person that
is an officer, director, employee, or agent of such issuer or a stockholder
thereof acting on behalf of such issuer, to corruptly do any act outside the
United States in furtherance of an offer, payment, promise to pay, or
authorization of the payment of any money, or offer, gift, promise to give, or
authorization of the giving of anything of value to any of the persons or
entities set forth in paragraphs (1), (2), and (3) of this subsection (a) of
this section for the purposes set forth therein, irrespective of whether such
issuer or such officer, director, employee, agent, or stockholder makes use of
the mails or any means or instrumentality of interstate commerce in furtherance
of such offer, gift, payment, promise, or authorization.
(2) As used in this subsection, the term “United States person” means a national
of the United States (as defined in section 101 of the Immigration and
Nationality Act (8 U.S.C. § 1101)) or any corporation, partnership, association,
joint-stock company, business trust, unincorporated organization, or sole
proprietorship organized under the laws of the United States or any State,
territory, possession, or commonwealth of the United States, or any political
subdivision thereof.
§ 78dd-2. Prohibited foreign trade practices by domestic concerns
(a) Prohibition
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It shall be unlawful for any domestic concern, other than an issuer which is
subject to section 78dd-1 of this title, or for any officer, director, employee,
or agent of such domestic concern or any stockholder thereof acting on behalf of
such domestic concern, to make use of the mails or any means or instrumentality
of interstate commerce corruptly in furtherance of an offer, payment, promise to
pay, or authorization of the payment of any money, or offer, gift, promise to
give, or authorization of the giving of anything of value to—
(1) any foreign official for purposes of—
(A) (i) influencing any act or decision of such foreign official in his official
capacity, (ii) inducing such foreign official to do or omit to do any act in
violation of the lawful duty of such official, or (iii) securing any improper
advantage; or
(B) inducing such foreign official to use his influence with a foreign
government or instrumentality thereof to affect or influence any act or decision
of such government or instrumentality,
in order to assist such domestic concern in obtaining or retaining business for
or with, or directing business to, any person;
(2) any foreign political party or official thereof or any candidate for foreign
political office for purposes of—
(A) (i) influencing any act or decision of such party, official, or candidate in
its or his official capacity, (ii) inducing such party, official, or candidate
to do or omit to do an act in violation of the lawful duty of such party,
official, or candidate, or (iii) securing any improper advantage; or
(B) inducing such party, official, or candidate to use its or his influence with
a foreign government or instrumentality thereof to affect or influence any act
or decision of such government or instrumentality,
in order to assist such domestic concern in obtaining or retaining business for
or with, or directing business to, any person;
(3) any person, while knowing that all or a portion of such money or thing of
value will be offered, given, or promised, directly or indirectly, to any
foreign official, to any foreign political party or official thereof, or to any
candidate for foreign political office, for purposes of—
(A) (i) influencing any act or decision of such foreign official, political
party, party official, or candidate in his or its official capacity,
(ii) inducing such foreign official, political party, party official, or
candidate to do or omit to do any act in violation of the lawful duty of such
foreign official, political party, party official, or candidate, or
(iii) securing any improper advantage; or
(B) inducing such foreign official, political party, party official, or
candidate to use his or its influence with a foreign government or
instrumentality thereof to affect or influence any act or decision of such
government or instrumentality,
in order to assist such domestic concern in obtaining or retaining business for
or with, or directing business to, any person.
(b) Exception for routine governmental action
Subsections (a) and (i) of this section shall not apply to any facilitating or
expediting payment to a foreign official, political party, or party official the
purpose of which is to expedite or to secure the performance of a routine
governmental action by a foreign official, political party, or party official.
(c) Affirmative defenses
It shall be an affirmative defense to actions under subsection (a) or (i) of
this section that—
(1) the payment, gift, offer, or promise of anything of value that was made, was
lawful under the written laws and regulations of the foreign official’s,
political party’s, party official’s, or candidate’s country; or
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(2) the payment, gift, offer, or promise of anything of value that was made, was
a reasonable and bona fide expenditure, such as travel and lodging expenses,
incurred by or on behalf of a foreign official, party, party official, or
candidate and was directly related to—
(A) the promotion, demonstration, or explanation of products or services; or
(B) the execution or performance of a contract with a foreign government or
agency thereof.
(d) Injunctive relief
(1) When it appears to the Attorney General that any domestic concern to which
this section applies, or officer, director, employee, agent, or stockholder
thereof, is engaged, or about to engage, in any act or practice constituting a
violation of subsection (a) or (i) of this section, the Attorney General may, in
his discretion, bring a civil action in an appropriate district court of the
United States to enjoin such act or practice, and upon a proper showing, a
permanent injunction or a temporary restraining order shall be granted without
bond.
(2) For the purpose of any civil investigation which, in the opinion of the
Attorney General, is necessary and proper to enforce this section, the Attorney
General or his designee are empowered to administer oaths and affirmations,
subpoena witnesses, take evidence, and require the production of any books,
papers, or other documents which the Attorney General deems relevant or material
to such investigation. The attendance of witnesses and the production of
documentary evidence may be required from any place in the United States, or any
territory, possession, or commonwealth of the United States, at any designated
place of hearing.
(3) In case of contumacy by, or refusal to obey a subpoena issued to, any
person, the Attorney General may invoke the aid of any court of the United
States within the jurisdiction of which such investigation or proceeding is
carried on, or where such person resides or carries on business, in requiring
the attendance and testimony of witnesses and the production of books, papers,
or other documents. Any such court may issue an order requiring such person to
appear before the Attorney General or his designee, there to produce records, if
so ordered, or to give testimony touching the matter under investigation. Any
failure to obey such order of the court may be punished by such court as a
contempt thereof.
All process in any such case may be served in the judicial district in which
such person resides or may be found. The Attorney General may make such rules
relating to civil investigations as may be necessary or appropriate to implement
the provisions of this subsection.
(e) Guidelines by Attorney General
Not later than 6 months after August 23, 1988, the Attorney General, after
consultation with the Securities and Exchange Commission, the Secretary of
Commerce, the United States Trade Representative, the Secretary of State, and
the Secretary of the Treasury, and after obtaining the views of all interested
persons through public notice and comment procedures, shall determine to what
extent compliance with this section would be enhanced and the business community
would be assisted by further clarification of the preceding provisions of this
section and may, based on such determination and to the extent necessary and
appropriate, issue—
(1) guidelines describing specific types of conduct, associated with common
types of export sales arrangements and business contracts, which for purposes of
the Department of Justice’s present enforcement policy, the Attorney General
determines would be in conformance with the preceding provisions of this
section; and
(2) general precautionary procedures which domestic concerns may use on a
voluntary basis to conform their conduct to the Department of Justice’s present
enforcement policy regarding the preceding provisions of this section.
The Attorney General shall issue the guidelines and procedures referred to in
the preceding sentence in accordance with the provisions of subchapter II of
chapter 5 of Title 5 and those guidelines and procedures shall be subject to the
provisions of chapter 7 of that title.
(f) Opinions of Attorney General
     (1) The Attorney General, after consultation with appropriate departments
and agencies of the United States and after obtaining the views of all
interested persons through public notice and comment procedures, shall establish
a procedure to provide responses to specific inquiries by domestic concerns
concerning conformance of their conduct with the Department of Justice’s present
enforcement policy regarding the preceding provisions of this section. The
Attorney General shall, within 30 days after receiving such
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a request, issue an opinion in response to that request. The opinion shall state
whether or not certain specified prospective conduct would, for purposes of the
Department of Justice’s present enforcement policy, violate the preceding
provisions of this section. Additional requests for opinions may be filed with
the Attorney General regarding other specified prospective conduct that is
beyond the scope of conduct specified in previous requests. In any action
brought under the applicable provisions of this section, there shall be a
rebuttable presumption that conduct, which is specified in a request by a
domestic concern and for which the Attorney General has issued an opinion that
such conduct is in conformity with the Department of Justice’s present
enforcement policy, is in compliance with the preceding provisions of this
section. Such a presumption may be rebutted by a preponderance of the evidence.
In considering the presumption for purposes of this paragraph, a court shall
weigh all relevant factors, including but not limited to whether the information
submitted to the Attorney General was accurate and complete and whether it was
within the scope of the conduct specified in any request received by the
Attorney General. The Attorney General shall establish the procedure required by
this paragraph in accordance with the provisions of subchapter II of chapter 5
of Title 5 and that procedure shall be subject to the provisions of chapter 7 of
that title.
(2) Any document or other material which is provided to, received by, or
prepared in the Department of Justice or any other department or agency of the
United States in connection with a request by a domestic concern under the
procedure established under paragraph (1), shall be exempt from disclosure under
section 552 of Title 5 and shall not, except with the consent of the domestic
concern, by made publicly available, regardless of whether the Attorney General
response to such a request or the domestic concern withdraws such request before
receiving a response.
(3) Any domestic concern who has made a request to the Attorney General under
paragraph (1) may withdraw such request prior to the time the Attorney General
issues an opinion in response to such request. Any request so withdrawn shall
have no force or effect.
(4) The Attorney General shall, to the maximum extent practicable, provide
timely guidance concerning the Department of Justice’s present enforcement
policy with respect to the preceding provisions of this section to potential
exporters and small businesses that are unable to obtain specialized counsel on
issues pertaining to such provisions. Such guidance shall be limited to
responses to requests under paragraph (1) concerning conformity of specified
prospective conduct with the Department of Justice’s present enforcement policy
regarding the preceding provisions of this section and general explanations of
compliance responsibilities and of potential liabilities under the preceding
provisions of this section.
(g) Penalties

(1)   (A) Any domestic concern that is not a natural person and that violates
subsection (a) or (i) of this section shall be fined not more than $2,000,000.

(B) Any domestic concern that is not a natural person and that violates
subsection (a) or (i) of this section shall be subject to a civil penalty of not
more than $10,000 imposed in an action brought by the Attorney General.

(2)   (A) Any natural person that is an officer, director, employee, or agent of
a domestic concern, or stockholder acting on behalf of such domestic concern,
who willfully violates subsection (a) or (i) of this section shall be fined not
more than $100,000 or imprisoned not more than 5 years, or both.

(B) Any natural person that is an officer, director, employee, or agent of a
domestic concern, or stockholder acting on behalf of such domestic concern, who
violates subsection (a) or (i) of this section shall be subject to a civil
penalty of not more than $10,000 imposed in an action brought by the Attorney
General.

(3)   Whenever a fine is imposed under paragraph (2) upon any officer, director,
employee, agent, or stockholder of a domestic concern, such fine may not be
paid, directly or indirectly, by such domestic concern.

(h) Definitions
For purposes of this section:

(1)   The term “domestic concern” means—

     (A) any individual who is a citizen, national, or resident of the United
States; and
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(B) any corporation, partnership, association, joint-stock company, business
trust, unincorporated organization, or sole proprietorship which has its
principal place of business in the United States, or which is organized under
the laws of a State of the United States or a territory, possession, or
commonwealth of the United States.

(2)   (A) The term “foreign official” means any officer or employee of a foreign
government or any department, agency, or instrumentality thereof, or of a public
international organization, or any person acting in an official capacity for or
on behalf of any such government or department, agency, or instrumentality, or
for or on behalf of any such public international organization.

(B) For purposes of subparagraph (A), the term “public international
organization” means —
(i) an organization that has been designated by Executive order pursuant to
Section 1 of the International Organizations Immunities Act (22 U.S.C. § 288);
or
(ii)any other international organization that is designated by the President by
Executive order for the purposes of this section, effective as of the date of
publication of such order in the Federal Register.

(3)   (A) A person’s state of mind is “knowing” with respect to conduct, a
circumstance, or a result if—

(i) such person is aware that such person is engaging in such conduct, that such
circumstance exists, or that such result is substantially certain to occur; or
(ii) such person has a firm belief that such circumstance exists or that such
result is substantially certain to occur.
(B) When knowledge of the existence of a particular circumstance is required for
an offense, such knowledge is established if a person is aware of a high
probability of the existence of such circumstance, unless the person actually
believes that such circumstance does not exist.

(4)   (A) The term “routine governmental action“means only an action which is
ordinarily and commonly performed by a foreign official in—

(i) obtaining permits, licenses, or other official documents to qualify a person
to do business in a foreign country;
(ii) processing governmental papers, such as visas and work orders;
(iii) providing police protection, mail pick-up and delivery, or scheduling
inspections associated with contract performance or inspections related to
transit of goods across country;
(iv) providing phone service, power and water supply, loading and unloading
cargo, or protecting perishable products or commodities from deterioration; or
(v) actions of a similar nature.
(B) The term “routine governmental action” does not include any decision by a
foreign official whether, or on what terms, to award new business to or to
continue business with a particular party, or any action taken by a foreign
official involved in the decision-making process to encourage a decision to
award new business to or continue business with a particular party.
(5) The term “interstate commerce“means trade, commerce, transportation, or
communication among the several States, or between any foreign country and any
State or between any State and any place or ship outside thereof, and such term
includes the intrastate use of—
(A) a telephone or other interstate means of communication, or
(B) any other interstate instrumentality.
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(i) Alternative Jurisdiction

(1)   It shall also be unlawful for any United States person to corruptly do any
act outside the United States in furtherance of an offer, payment, promise to
pay, or authorization of the payment of any money, or offer, gift, promise to
give, or authorization of the giving of anything of value to any of the persons
or entities set forth in paragraphs (1), (2), and (3) of subsection (a), for the
purposes set forth therein, irrespective of whether such United States person
makes use of the mails or any means or instrumentality of interstate commerce in
furtherance of such offer, gift, payment, promise, or authorization.   (2)   As
used in this subsection, a “United States person“means a national of the United
States (as defined in section 101 of the Immigration and Nationality Act (8
U.S.C. § 1101)) or any corporation, partnership, association, joint-stock
company, business trust, unincorporated organization, or sole proprietorship
organized under the laws of the United States or any State, territory,
possession, or commonwealth of the United States, or any political subdivision
thereof.

§ 78dd-3. Prohibited foreign trade practices by persons other than issuers or
domestic concerns
(a) Prohibition
It shall be unlawful for any person other than an issuer that is subject to
section 30A of the Securities Exchange Act of 1934 or a domestic concern, as
defined in section 104 of this Act), or for any officer, director, employee, or
agent of such person or any stockholder thereof acting on behalf of such person,
while in the territory of the United States, corruptly to make use of the mails
or any means or instrumentality of interstate commerce or to do any other act in
furtherance of an offer, payment, promise to pay, or authorization of the
payment of any money, or offer, gift, promise to give, or authorization of the
giving of anything of value to—
(1) any foreign official for purposes of—
(A) (i) influencing any act or decision of such foreign official in his official
capacity, (ii) inducing such foreign official to do or omit to do any act in
violation of the lawful duty of such official, or (iii) securing any improper
advantage; or
(B) inducing such foreign official to use his influence with a foreign
government or instrumentality thereof to affect or influence any act or decision
of such government or instrumentality,
in order to assist such person in obtaining or retaining business for or with,
or directing business to, any person;
(2) any foreign political party or official thereof or any candidate for foreign
political office for purposes of—
(A) (i) influencing any act or decision of such party, official, or candidate in
its or his official capacity, (ii) inducing such party, official, or candidate
to do or omit to do an act in violation of the lawful duty of such party,
official, or candidate, or (iii) securing any improper advantage; or
(B) inducing such party, official, or candidate to use its or his influence with
a foreign government or instrumentality thereof to affect or influence any act
or decision of such government or instrumentality.
in order to assist such person in obtaining or retaining business for or with,
or directing business to, any person; or
(3) any person, while knowing that all or a portion of such money or thing of
value will be offered, given, or promised, directly or indirectly, to any
foreign official, to any foreign political party or official thereof, or to any
candidate for foreign political office, for purposes of—
(A) (i) influencing any act or decision of such foreign official, political
party, party official, or candidate in his or its official capacity,
(ii) inducing such foreign official, political party, party official, or
candidate to do or omit to do any act in violation of the lawful duty of such
foreign official, political party, party official, or candidate, or
(iii) securing any improper advantage; or
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(B) inducing such foreign official, political party, party official, or
candidate to use his or its influence with a foreign government or
instrumentality thereof to affect or influence any act or decision of such
government or instrumentality,
in order to assist such person in obtaining or retaining business for or with,
or directing business to, any person.
(b) Exception for routine governmental action
Subsection (a) of this section shall not apply to any facilitating or expediting
payment to a foreign official, political party, or party official the purpose of
which is to expedite or to secure the performance of a routine governmental
action by a foreign official, political party, or party official.
(c) Affirmative defenses
It shall be an affirmative defense to actions under subsection (a) of this
section that—
(1) the payment, gift, offer, or promise of anything of value that was made, was
lawful under the written laws and regulations of the foreign official’s,
political party’s, party official’s, or candidate’s country; or
(2) the payment, gift, offer, or promise of anything of value that was made, was
a reasonable and bona fide expenditure, such as travel and lodging expenses,
incurred by or on behalf of a foreign official, party, party official, or
candidate and was directly related to—
(A) the promotion, demonstration, or explanation of products or services; or
(B) the execution or performance of a contract with a foreign government or
agency thereof.
(d) Injunctive relief
(1) When it appears to the Attorney General that any person to which this
section applies, or officer, director, employee, agent, or stockholder thereof,
is engaged, or about to engage, in any act or practice constituting a violation
of subsection (a) of this section, the Attorney General may, in his discretion,
bring a civil action in an appropriate district court of the United States to
enjoin such act or practice, and upon a proper showing, a permanent injunction
or a temporary restraining order shall be granted without bond.
(2) For the purpose of any civil investigation which, in the opinion of the
Attorney General, is necessary and proper to enforce this section, the Attorney
General or his designee are empowered to administer oaths and affirmations,
subpoena witnesses, take evidence, and require the production of any books,
papers, or other documents which the Attorney General deems relevant or material
to such investigation. The attendance of witnesses and the production of
documentary evidence may be required from any place in the United States, or any
territory, possession, or commonwealth of the United States, at any designated
place of hearing.
(3) In case of contumacy by, or refusal to obey a subpoena issued to, any
person, the Attorney General may invoke the aid of any court of the United
States within the jurisdiction of which such investigation or proceeding is
carried on, or where such person resides or carries on business, in requiring
the attendance and testimony of witnesses and the production of books, papers,
or other documents. Any such court may issue an order requiring such person to
appear before the Attorney General or his designee, there to produce records, if
so ordered, or to give testimony touching the matter under investigation. Any
failure to obey such order of the court may be punished by such court as a
contempt thereof.
(4) All process in any such case may be served in the judicial district in which
such person resides or may be found. The Attorney General may make such rules
relating to civil investigations as may be necessary or appropriate to implement
the provisions of this subsection.
(e) Penalties

(1)   (A) Any juridical person that violates subsection (a) of this section
shall be fined not more than $2,000,000.

(B) Any juridical person that violates subsection (a) of this section shall be
subject to a civil penalty of not more than $10,000 imposed in an action brought
by the Attorney General.
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(2)   (A) Any natural person who willfully violates subsection (a) of this
section shall be fined not more than $100,000 or imprisoned not more than
5 years, or both.

(B) Any natural person who violates subsection (a) of this section shall be
subject to a civil penalty of not more than $10,000 imposed in an action brought
by the Attorney General.

(3)   Whenever a fine is imposed under paragraph (2) upon any officer, director,
employee, agent, or stockholder of a person, such fine may not be paid, directly
or indirectly, by such person.

(f) Definitions
For purposes of this section:

(1)   The term “person,” when referring to an offender, means any natural person
other than a. national of the United States (as defined in 8 U.S.C. § 1101) or
any corporation, partnership, association, joint-stock company, business trust,
unincorporated organization, or sole proprietorship organized under the law of a
foreign nation or a political subdivision thereof   (2)   (A) The term “foreign
official” means any officer or employee of a foreign government or any
department, agency, or instrumentality thereof, or of a public international
organization, or any person acting in an official capacity for or on behalf of
any such government or department, agency, or instrumentality, or for or on
behalf of any such public international organization.       For purposes of
subparagraph (A), the term “public international organization” means —

  (i)   an organization that has been designated by Executive Order pursuant to
Section 1 of the International Organizations Immunities Act (22 U.S.C. § 288);
or     (ii)   any other international organization that is designated by the
President by Executive order for the purposes of this section, effective as of
the date of publication of such order in the Federal Register.

(3)   (A) A person’s state of mind is “knowing“with respect to conduct, a
circumstance, or a result if —

  (i)   such person is aware that such person is engaging in such conduct, that
such circumstance exists, or that such result is substantially certain to occur;
or     (ii)   such person has a firm belief that such circumstance exists or
that such result is substantially certain to occur.

(B) When knowledge of the existence of a particular circumstance is required for
an offense, such knowledge is established if a person is aware of a high
probability of the existence of such circumstance, unless the person actually
believes that such circumstance does not exist.

(4)   (A) The term “routine governmental action“means only an action which is
ordinarily and commonly performed by a foreign official in—

  (i)   obtaining permits, licenses, or other official documents to qualify a
person to do business in a foreign country;     (ii)   processing governmental
papers, such as visas and work orders;     (iii)   providing police protection,
mail pick-up and delivery, or scheduling inspections associated with contract
performance or inspections related to transit of goods across country;     (iv)
  providing phone service, power and water supply, loading and unloading cargo,
or protecting perishable products or commodities from deterioration; or     (v)
  actions of a similar nature.

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(B) The term “routine governmental action” does not include any decision by a
foreign official whether, or on what terms, to award new business to or to
continue business with a particular party, or any action taken by a foreign
official involved in the decision-making process to encourage a decision to
award new business to or continue business with a particular party.
(5) The term “interstate commerce” means trade, commerce, transportation, or
communication among the several States, or between any foreign country and any
State or between any State and any place or ship outside thereof, and such term
includes the intrastate use of —
(A) a telephone or other interstate means of communication, or
(B) any other interstate instrumentality.
§ 78ff. Penalties
(a) Willful violations; false and misleading statements
Any person who willfully violates any provision of this chapter (other than
section 78dd-1 of this title), or any rule or regulation thereunder the
violation of which is made unlawful or the observance of which is required under
the terms of this chapter, or any person who willfully and knowingly makes, or
causes to be made, any statement in any application, report, or document
required to be filed under this chapter or any rule or regulation thereunder or
any undertaking contained in a registration statement as provided in subsection
(d) of section 78o of this title, or by any self-regulatory organization in
connection with an application for membership or participation therein or to
become associated with a member thereof, which statement was false or misleading
with respect to any material fact, shall upon conviction be fined not more than
$5,000,000, or imprisoned not more than 20 years, or both, except that when such
person is a person other than a natural person, a fine not exceeding $25,000,000
may be imposed; but no person shall be subject to imprisonment under this
section for the violation of any rule or regulation if he proves that he had no
knowledge of such rule or regulation.
(b) Failure to file information, documents, or reports
Any issuer which fails to file information, documents, or reports required to be
filed under subsection (d) of section 78o of this title or any rule or
regulation thereunder shall forfeit to the United States the sum of $100 for
each and every day such failure to file shall continue. Such forfeiture, which
shall be in lieu of any criminal penalty for such failure to file which might be
deemed to arise under subsection (a) of this section, shall be payable into the
Treasury of the United States and shall be recoverable in a civil suit in the
name of the United States.
(c) Violations by issuers, officers, directors, stockholders, employees, or
agents of issuers

(1)   (A) Any issuer that violates subsection (a) or (g) of section 30A of this
title [15 U.S.C. § 78dd-1] shall be fined not more than $2,000,000. (B) Any
issuer that violates subsection (a) or (g) of section 30A of this title [15
U.S.C. § 78dd-1] shall be subject to a civil penalty of not more than $10,000
imposed in an action brought by the Commission.   (2)   (A) Any officer,
director, employee, or agent of an issuer, or stockholder acting on behalf of
such issuer, who willfully violates subsection (a) or (g) of section 30A of this
title [15 U.S.C. § 78dd-1] shall be fined not more than $100,000, or imprisoned
not more than 5 years, or both. (B) Any officer, director, employee, or agent of
an issuer, or stockholder acting on behalf of such issuer, who violates
subsection (a) or (g) of section 30A of this title [15 U.S.C. § 78dd-1] shall be
subject to a civil penalty of not more than $10,000 imposed in an action brought
by the Commission.

(3)   Whenever a fine is imposed under paragraph (2) upon any officer, director,
employee, agent, or stockholder of an issuer, such fine may not be paid,
directly or indirectly, by such issuer.

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