<PAGE>
                                                                    EXHIBIT 10.2

                             PACLITAXEL COATED STENT
                             DISTRIBUTION AGREEMENT


     This PACLITAXEL COATED STENT DISTRIBUTION AGREEMENT ("Agreement") is made
and entered into effective this 16th day of August, 2001 ("Effective Date"), by
and between Advanced Cardiovascular Systems, Inc., a California corporation
having a principal place of business at 3200 Lakeside Drive, Santa Clara,
California 95054-2807 ("ACS"), and Cook Incorporated, an Indiana corporation
having a principal place of business at 925 South Curry Pike, Bloomington,
Indiana 47402 (Cook).

                                    RECITALS

     A. Cook is a manufacturer and seller of high quality medical products which
have been sold and used successfully throughout the world;

     B. Cook has been developing and conducting clinical tests on products that
include paclitaxel coated stents;

     C. ACS desires to act as a distributor for Cook and to purchase from Cook
certain of Cook's coronary paclitaxel coated stent products for distribution and
resale by ACS throughout the world; and

     D. Cook desires to designate ACS as its distributor and to sell certain of
its coronary paclitaxel coated stent products to ACS, all in accordance with the
terms and conditions set forth in this Agreement.

     In consideration of the foregoing, and of the covenants and conditions set
forth in this Agreement, the parties agree as follows:

1.   DEFINITIONS

     Solely for purposes of this Agreement, the following terms shall have the
meanings set forth below:

     1.1 "Affiliate" shall mean any individual, trust, business trust,
corporation, firm, partnership, joint venture, association or other entity
which, as of a particular date,


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directly or indirectly owns, is owned by or is under common ownership of a party
or third party, as the case may be. "Owns" (including, with correlative
meanings, the terms "owned by" and "under common ownership with") for purposes
of determining Affiliates of ACS or Cook or a third party, as the case may be,
shall mean ownership, directly or indirectly, of more than (i) [***] percent
[***](%) in the case of determining Affiliates of ACS or Cook or (ii) [***]
percent [***](%) in the case of determining Affiliates of a third party, of the
equity or other ownership interest having the power to vote on or direct the
affairs of such individual, trust, business trust, corporation, firm,
partnership, joint venture, association or other entity.

     1.2 "Applicable Regulatory Approval" shall mean the pre-market approval (or
supplemental approval) or clearance received from an Applicable Regulatory
Authority to market a Product in a particular jurisdiction, including the
approval to market expanded or enhanced indications. For example, in the United
States, Applicable Regulatory Approval includes a PMA.

     1.3 "Applicable Regulatory Authority" shall mean the agency or regulatory
authority having authority over the approval and sale of Products in an
applicable jurisdiction. For example, in the United States, the FDA is an
Applicable Regulatory Authority.

     1.4 "ASP" shall mean the Market Average Selling Price for all Drug Coated
Stents in an Applicable Region of the world. ASP shall be determined separately
for the following regions (an "Applicable Region") of the world: (i) United
States, (ii) Japan and (iii) the rest of the world.

     1.5 "Clinical Protocol(s)" shall mean the clinical protocol methodology for
obtaining any Applicable Regulatory Approval for commercialization of any
Product from the Applicable Regulatory Authorities.



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* Material has been omitted pursuant to a request for confidential treatment and
such material has been filed separately with the Securities and Exchange
Commission. Asterisks within brackets denote omissions.


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<PAGE>


     1.6 "Clinical Trial(s)" shall mean the implementation of the Clinical
Protocols.

     1.7 "Commercial Sale Year" shall mean successive periods of twelve (12)
consecutive calendar months beginning with the first day of the calendar month
in which the first sale by Cook to ACS of Product that is anticipated to be
distributed by ACS in a transaction that will be a First End User Sale of a
Product by ACS occurs, and on each anniversary of such date.

     1.8 "Complaint" shall mean any written, electronic or oral communication
that alleges deficiencies related to the identity, quality, durability,
reliability, safety, effectiveness or performance of a Product after it is
released for distribution.

     1.9 "Confidential Information" shall mean information that the disclosing
party deems proprietary or gives the disclosing party an advantage over its
competitors, including, but not limited to, techniques, designs, drawings,
processes, inventions, developments, equipment, prototypes, sales and customer
information, and business and financial information, relating to the business,
products, practices, or techniques of the disclosing party, whether in oral,
written, graphic or electronic form. As used herein, "Confidential Information"
shall not include any information or data which (i) is in or becomes part of the
public domain by any means other than the receiving party's breach of its
obligations hereunder; (ii) was known to the receiving party at the time of
disclosure by the disclosing party; other than from the disclosing party under
an obligation of confidentiality; (iii) is, at any time, disclosed to the
receiving party by any third party having the right to disclose the same; or
(iv) is independently developed by an employee or agent/consultant of the
receiving party without reference to Confidential Information disclosed by the
disclosing party pursuant to this Agreement. The parties also agree that a
public disclosure of portions of a party's Confidential Information in or from
more than one source shall not necessarily constitute a public disclosure of the
remaining portions of the Confidential Information.

     1.10 "Coronary" shall mean cardiac vasculature.



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<PAGE>


     1.11 "Distributor" shall mean a person or an entity whose sole purpose is
to distribute a product or products for other entities and who does not, either
directly or through an Affiliate, manufacture or conduct product development of
vascular intervention products. Notwithstanding the foregoing, for purposes of
this Agreement, ACS and Medico's-Hirata each shall be deemed a Distributor of
Cook.

     1.12 "Drug" shall mean a drug as defined in 21 U.S.C.ss. 321(g)(1) and
shall include biological products as defined in 42 U.S.C.ss.262.

     1.13 "Drug Coated Stents" shall mean all Coronary stent products, including
their delivery system, sold in End User Sales in an Applicable Region with a
Drug coating that is designed and intended to deliver and release a therapeutic
dose of such Drug or other pharmaceutical agent. Coated stent products that
contain a coating that is not designed or intended to deliver a dose of a Drug,
including without limitation antimicrobial, heparin, phospholipid, carbon,
titanium, PTFE or other similar coatings, are specifically excluded. For
products whose design or intent is unclear, the information included in such
product's instructions for use or other product labeling approved by an
Applicable Regulatory Authority will determine its status.

     1.14 "Effective Date" shall be the date indicated at the beginning of this
Agreement.

     1.15 "End User Sale" shall mean any transaction that transfers to an
end-user purchaser, for value, physical possession and title to a product.
Transfer of possession and title to an Affiliate or Distributor shall not
constitute an End User Sale unless the Affiliate or Distributor is the actual
end user of the product.

     1.16 "FDA" shall mean the United States Food and Drug Administration.

     1.17 "First End User Sale" shall mean the first End User Sale by ACS or an
Affiliate of ACS of a Product in the ordinary course of business to an end-user
third party for commercial purposes, specifically excluding any reimbursement by
third parties for Product used in clinical trials supporting Product approval.



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<PAGE>


     1.18 "First Product" shall mean the initial Product to be purchased and
distributed by ACS pursuant to this Agreement as identified on Exhibit A
attached hereto and by reference made a part hereof.

     1.19 "IDE" shall mean an investigational device exemption received from the
FDA pursuant to applicable law, including 21 U.S.C.ss.360j(g).

     1.20 "License Agreement" shall have the meaning given in Section 8.7 .

     1.21 "Market Average Selling Price" shall mean the average selling price of
all Drug Coated Stents in an Applicable Region sold in End User Sales,
determined according to Section 6.2.

     1.22 "MI" shall have the same meaning as the definition set forth in Alpert
and Thygesen, et al. Myocardial Infarction Redefined, JACC Vol. 36, No. 3, 2000,
Sept. 2000:959-69.

     1.23 "MDR" shall mean reports filed with the FDA pursuant to 21 CFR Part
803 with respect to a Product.

     1.24 "NIH Amendment" shall mean the proposed amendment to the NIH Agreement
(as defined in the License Agreement), in substantially the form previously
disclosed to ACS.

     1.25 "PMA" shall mean the premarket approval (or supplemental approval)
received from the FDA to market a Product in the United States pursuant to
applicable regulations, including 21 CFR ss. 814, or as allowed pursuant to
Section 510(k) of the Federal Food, Drug, and Cosmetic Act, as may be
applicable.

     1.26 "Product(s)" shall mean only the Cook Coronary paclitaxel coated stent
systems to be purchased and distributed by ACS pursuant to this Agreement.
Products include only the First Product and Subsequent Products. Products shall
meet the specifications determined in accordance with Section 4.1. Products
shall be limited to Coronary applications.



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<PAGE>


     1.27 "SDS Distribution Agreement" shall mean that certain Stent Delivery
System Distribution Agreement between ACS and Cook dated as of the date of this
Agreement.

     1.28 "Subsequent Product" shall mean a Product to be purchased and
distributed by ACS (other than the First Product).

     1.29 "TVF" (Target Vessel Failure) shall be the composite of death, Q-wave
MI, non-Q-wave MI, target site revascularization (TSR) or target vessel
revascularization (TVR) by coronary artery bypass surgery (CABG) or percutaneous
coronary intervention (PCI), or as otherwise defined in the Clinical Protocol.

2.   PRODUCT DISTRIBUTION

     2.1 Distribution Rights of ACS. Subject to the terms and conditions set
forth in this Agreement, Cook grants to ACS the exclusive right to purchase
Products from Cook for distribution and resale throughout the world after
Applicable Regulatory Approvals have been obtained in an applicable
jurisdiction, and Cook appoints ACS as its exclusive representative to promote,
resell, market and distribute Products throughout the world. ACS accepts the
appointment and agrees to represent Cook according to the terms and conditions
set forth in this Agreement.

     2.2 Responsibilities. Cook shall make Products available for purchase by
ACS in accordance with the terms of this Agreement. ACS shall comply with all
applicable requirements established by the Applicable Regulatory Authorities
related to ACS's sale of Products. Cook shall comply with all applicable
requirements established by the Applicable Regulatory Authorities related to
Cook's manufacture of Products.

     2.3 Exclusivity. The distribution arrangement contemplated by this
Agreement is exclusive as it relates to the Products and Cook shall not retain
the right to sell Products to anyone anywhere in the world, either directly,
through Distributors or through any other commercially available method, other
than to ACS. Notwithstanding the foregoing, Cook's right to sell any other
products, including paclitaxel coated stent products that are not Products as
defined herein, is not limited by the exclusive nature of this distribution



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<PAGE>


arrangement, except that Cook agrees that it shall not distribute, market,
promote or otherwise sell other paclitaxel coated stent products through or with
any other third party other than through Cook's worldwide direct sales
organization or Distributors.

3.   PRODUCT SUPPLY

     3.1 Product Supply. Subject to the terms and conditions set forth in this
Agreement, Cook shall, upon order from ACS, make or have made and sell solely to
ACS Products for resale by ACS as Cook's distributor. All Products shall be
sterilized, shipped and packaged by Cook under ACS's PMA.

     3.2 Forecasts and Purchase Orders. At least ninety (90) days before the
anticipated date of the first shipment of the First Product by Cook to ACS, ACS
will provide Cook with a good faith, non-binding forecast of its anticipated
purchases of all applicable Products, by designated part number covering the
twelve (12) month period beginning on the first full month beginning at least
ninety (90) days after the date such forecast is provided. ACS shall provide
Cook, on or before the last day of each month thereafter, similar twelve (12)
month forecasts on a rolling basis. For the first three months in each such
forecast ("Firm Forecast"), ACS shall be obligated to purchase an aggregate
quantity of units that is not less than [***]% of the aggregate quantity of
Products set forth in the Firm Forecast for each month, but the mix will be
subject to reasonable change by ACS when ACS provides Cook with a final purchase
order. In the event any subsequent overlapping Firm Forecast for any month
deviates from an initial Firm Forecast for such month, the initial Firm Forecast
number shall control. Subject to the foregoing, and at least thirty (30) days
before the requested delivery date, ACS shall give Cook a written purchase order
that is firm as to both quantity and mix of units. Cook shall have no obligation
to supply a specific part number or size of a Product unless the quantity
ordered for such part number or size in a particular order is at least [***].
For any month, ACS may submit orders in excess of [***]% of the amount of the
Firm Forecast for such month, but Cook shall not be obligated to supply the
excess amount except on a reasonable efforts basis. Reasonable efforts shall
include providing


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* Material has been omitted pursuant to a request for confidential treatment and
such material has been filed separately with the Securities and Exchange
Commission. Asterisks within brackets denote omissions.

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<PAGE>

additional shifts. The parties will meet periodically, but in
any event at least once during each calendar year, to discuss ACS's anticipated
demand beyond the latest forecasted 12-month period. In addition, the parties
will discuss additional forecasts as appropriate to facilitate the initial
supply of Products and the additional lead time that may be necessary for
Products ordered for initial launch.

     3.3 Form of Purchase Order. All purchases and sales of the Products will be
governed solely by the terms of this Agreement. Any purchase order issued by
ACS, or acknowledgment issued by Cook, shall have no force or effect except as
to the quantity specified and the delivery dates to the extent consistent with
this Agreement. Purchase orders shall be sent to the person or persons
designated from time to time by Cook via electronic mail, electronic data
interchange, facsimile or recognized overnight delivery service, or as otherwise
agreed by the parties. Cook will acknowledge its acceptance of each ACS purchase
order promptly in writing, but in any event no later than 3 days after receipt,
and in such acknowledgment will confirm the relevant order information. The
parties will establish other procedures from time to time which will designate
the form and manner of the purchase orders from ACS and acknowledgement from
Cook. Cook may reject a purchase order only if it is not made in accordance with
the terms of this Agreement. Notwithstanding anything contained in this
Agreement to the contrary, in no event shall Cook have any liability for delays
or inability to deliver Product when either of the foregoing is caused by the
acts or omissions of ACS or its Affiliates.

     3.4 Delivery. Cook will ship all quantities of Products to ACS by the dates
specified in each purchase order, provided that such dates are no less than
thirty (30) days after Cook's delivery of the relevant purchase order. Delivery
shall be deemed to take place upon delivery of the Products by Cook as set forth
in Section 6.3 below. Cook will notify ACS promptly if Cook anticipates any
potential delay in filling any of ACS's orders. ACS may cancel any order, in
whole or in part, which is delayed beyond the delivery date by more than 15 days
even if the cause of the delay is beyond the control of Cook.


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<PAGE>


     3.5 Management Committee. During the first three months of the term of this
Agreement, Cook and ACS shall establish a joint management committee which shall
consist of three (3) representatives of each party, where at least one
representative of each party shall be at least a Vice President level employee
of such party responsible for implementing this Agreement, or an authorized
designate of such employee. Each party shall be free to change its
representatives upon written notice to the other party. During the term of this
Agreement, the Management Committee shall meet regularly, but no less than twice
per year, unless otherwise agreed by ACS and Cook. Additional meetings may be
called to address specific issues requiring immediate action by either party on
ten (10) days' notice to the other party and unless otherwise agreed all
meetings shall alternate between the respective offices of the parties. Each
party shall pay its own traveling and lodging expenses to attend the meetings.

     3.6 Inventory Management. Each party will be responsible for managing its
inventory of Products and for handling, storing and disposing thereof in a
manner consistent with all applicable regulations.

     3.7 Secondary Source. Within six (6) months after the Effective Date, Cook
shall designate a second manufacturing facility within Cook or an Affiliate
which shall have the ability to manufacture Products for delivery to ACS under
this Agreement. Promptly after the designation of this second facility, Cook
and/or such Affiliate, as the case may be, shall commence and diligently pursue
all regulatory approvals necessary for the operation of such facility and the
manufacturing of Products.

     3.8 Manufacturing Allocation. Cook shall maintain manufacturing capacity,
including supplies of the materials comprising the Products, sufficient to fill
the orders properly placed by ACS under this Agreement. In the event of a
shortage in manufacturing capacity, Cook will allocate its available supply of
such materials pro rata to Products ordered by ACS based on the ratio of ACS's
market share of Products to Cook's market share of Drug Coated Stents (excluding
sales of Products)

     3.9 Minimum Purchases. During each of the first three (3) Commercial Sale
Years, ACS agrees that it will purchase from Cook a minimum dollar value of
Product



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based on the transfer price to ACS determined as set forth below. The minimum
purchases will be established based on the scenario resulting from the outcome
of the clinical results of the development of the First Product as follows:


                                      [***]


The minimum purchase commitment determined above shall be reduced by the amount
of any Products ordered by ACS in accordance with Section 3.2 to the extent Cook
fails to deliver the Products in a timely manner as required by this Agreement.
Subject to Cook's






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* Material has been omitted pursuant to a request for confidential treatment and
such material has been filed separately with the Securities and Exchange
Commission. Asterisks within brackets denote omissions.


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<PAGE>


rights under Section 8.3, after the end of the third Commercial Sale Year, ACS
shall have no obligation to purchase Product.

4.   PRODUCT SPECIFICATIONS

     4.1 Specifications. All Products shall be manufactured in accordance with
Cook's technical specifications determined as set forth below. The First Product
supplied hereunder shall be as described in Exhibit A. For each Subsequent
Product , Cook and ACS shall promptly agree on a project plan for completion of
clinical testing and obtaining Applicable Regulatory Approval of the Subsequent
Product. Cook and ACS shall use reasonable efforts to carry out the project
plans in accordance with their respective terms. Final specifications for each
Product shall be established by Cook in accordance with the project plan
established pursuant to this Section, which shall be subject to ACS's approval.

     4.2 Changes to Specifications and Manufacturing Procedures. In the event
that Cook proposes to make any changes in the Product specifications or
manufacturing procedures, including processes, parameters, materials, design and
labeling, which may require any notification to, or filing with, any Applicable
Regulatory Authority or could reasonably be expected to result in any change in
Product performance characteristics, Cook shall, before implementing such
change, first notify ACS and will not make the changes unless Cook receives
written approval from ACS. ACS and Cook will jointly establish a decision tree
analysis procedure for determining when a change could result in a required
notification to, or filing with, an Applicable Regulatory Authority or any
change in Product performance characteristics.

     4.3 Defective Product. ACS shall have the right to inspect Products at any
time after receipt, but prior to shelf-life expiration, and will promptly notify
Cook if any Product is non-conforming because it fails to meet applicable
specifications as the result of the acts or omissions of Cook. Cook will replace
non-conforming Product within thirty (30) days of determination of
non-conformity and notice thereof to Cook. No Product will be accepted by Cook
for return other than Product which is found to be non-conforming pursuant to
this Section or recalled pursuant to Section 5.6. No Product



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shall be returned where the reason for the return is due to mishandling by the
shipping agent or the acts or omissions of ACS or its Affiliates. If any
customers reject any of the Products sold by ACS or return any Products to ACS
as a result of an alleged non-conformity or failure of performance, ACS will
notify Cook, in reasonable detail, promptly, but no later than three (3)
business days after ACS's receipt of such complaint, describing the particulars
of the rejection or return. The parties will discuss in good faith the
resolution of any such customer problem and will cooperate and coordinate all
follow-up and communication with customers which the parties deem appropriate.
If there is a dispute as to whether or not a Product is conforming or the cause
of non-conformity, the Product shall be submitted to a mutually agreeable third
party consultant for determination of conformity or non-conformity and the cause
thereof, whose determination shall be binding on the parties.

     4.4 Patent Marking. ACS and Cook shall use reasonable efforts to mark all
Products (or where impractical, the Product packaging) with appropriate patent
numbers, as required in accordance with 35 U.S.C. ss. 287, insofar as United
States sales are concerned, and the requirements of the individual foreign
countries, insofar as foreign sales are concerned.

5.   REGULATORY COMPLIANCE

     5.1 Registration and Listing. If required under 21 C.F.R. Part 807, Cook
will update its FDA registration and listing forms to indicate that Cook is the
manufacturer of the Products.

     5.2 Regulatory Approvals. Cook shall not have any obligation to supply any
Product to ACS unless the Product falls within an existing Applicable Regulatory
Approval (or anticipated approval in the case of the initial supply of a Product
pending approval).

     5.3 Product Labeling. To the extent required by applicable law, the Product
will be clearly labeled as a Cook product so as to reflect Cook as the
manufacturer, source and origin of the Product. Without limiting the generality
of the first sentence of this Section 5.3, each Product outer package shall
include the statement: "manufactured by Cook."



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The placement and size of the marks or type identifying Cook will be
substantially less prominent than the markings and type identifying ACS. ACS
will provide all logos, other artwork and company information of ACS required by
Cook to produce labeling, product inserts and packaging for the Products. Upon
receipt thereof, and with ACS's cooperation, Cook will produce such labeling,
product inserts and packaging. Except as requested by ACS and agreed to as set
forth in the Product specification established pursuant to Section 4.1, there
shall be no printed matter on or in the Product, other than as specifically
required by applicable law or regulations. Cook will not make any changes to
such labeling, product inserts or packaging except as mutually agreed by the
parties. The parties will notify each other in writing promptly of any
compliance issues of which the notifying party becomes aware which relate to
labels, package inserts or packaging. ACS and Cook shall not use any trademarks
of the other party without the prior consent of the other party.

     5.4 Quality Control Inspection. If so requested in writing by ACS, Cook
will review with ACS the quality control inspection processes and standards of
Cook in order to reasonably assure ACS of satisfaction of the requirements of
this Agreement. However, on-site inspections of Cook's facilities, quality
control records and documents may be made only by an independent quality control
auditor as provided below. ACS shall have the right at reasonable times and upon
reasonable prior notice to have quality control audits made of Cook's
facilities, quality control records and documents by an independent expert who
is selected by ACS and is reasonably satisfactory to Cook. The independent
expert shall execute a reasonable confidentiality agreement with Cook and shall
report back to both parties with the results of the audit. On-site inspections
of such facilities, quality control records and documents shall be no more
frequent than once per calendar year and prior to the initial launch of a
Product, but in no event more frequently than quarterly. An on-site inspection
can be made on a more frequent basis upon a showing of good cause as a result of
quality issues of which ACS has recently become aware. Notwithstanding the
foregoing, if there is a significant product problem due to a quality assurance
issue, ACS will be allowed to have the independent auditor participate with Cook
in Cook's review of its facilities, quality control records and documents and
the independent auditor will be allowed to report back to ACS, including
providing



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<PAGE>

copies of applicable data and records. Notwithstanding anything else in this
Section 5.4, ACS shall not be entitled to receive any proprietary competitively
sensitive information of Cook and all information disclosed in connection with
such audits or reviews shall be deemed Confidential Information of Cook.

     5.5 Reporting and Product Complaints. Cook will be responsible for
investigating Complaints under 21 C.F.R. ss.820.198 and filing any required
MDRs, with the FDA in compliance with 21 C.F.R. Part 803. In addition, Cook will
file any required reports of Product Corrections and Removals pursuant to 21
C.F.R. Part 806. Notwithstanding the foregoing, Cook will inform ACS of its
findings during such investigations and will provide ACS with copies of draft
filings prior to any such filings. In addition, if Cook or ACS receives from a
third party any oral or written Complaint regarding any Product, it will
promptly notify the other party of such Complaint, in reasonable detail, but no
later than three (3) business days after its receipt of such Complaint, and will
provide all information necessary to enable the other party to comply with
applicable FDA or other regulatory requirements, and any other applicable legal
requirements, in a timely fashion. From time to time, Cook and ACS will
establish procedures to be followed in order to comply with applicable legal
requirements. The parties will cooperate and coordinate with each other to
conduct all follow-up and communications with customers which the parties deem
appropriate. Cook and ACS will provide each other with reasonable access to
their respective Complaint files and information regarding Complaints.

     5.6 Product Recalls. Cook will be responsible for conducting any necessary
product recalls, consistent with 21 C.F.R. Part 7. ACS will assist Cook in
conducting recalls. If ACS reasonably believes that it is appropriate to
undertake a recall of any Products, ACS will promptly notify Cook and Cook will
promptly and in good faith discuss such proposed recall, which notification and
discussion will be made prior to initiating a recall to the extent practical. If
ACS has not notified Cook of a proposed recall, and Cook determines that a
recall may be advisable, Cook will immediately notify ACS, and the parties will
promptly and in good faith discuss such proposed recall. However, it is
understood that if Cook refuses to initiate a recall after ACS proposes a
recall, ACS shall have the right to conduct a recall pursuant to 21 CFR Part 7.
The party



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<PAGE>

whose act or omission gave rise to the recall shall, at its own expense, use its
best efforts to promptly correct the problem(s) that caused the recall. ACS will
maintain complete and accurate records, for such periods as may be required by
applicable law, of all Products sold by it. The parties will discuss and
cooperate with each other in good faith as to the initiation and conduct of any
recall, including communications with any purchasers or end users, and with
applicable regulatory authorities, in order to minimize the risk to any party of
a failure to follow legal requirements for such recall. The party whose act or
omission gave rise to the recall shall be responsible for and shall reimburse
all the reasonable costs and expenses of the recall, including cost of goods,
notification, shipping and handling.

     5.7 Maintenance of Records. As a distributor of the Products, ACS will
maintain records of MDRs, and will make the records available to the FDA upon
request. In addition, if requested, ACS will assist Cook in meeting its MDR
reporting obligations.

     5.8 Procedures. ACS and Cook will jointly establish procedures to be
followed for Complaint investigations, MDR filings, reports of corrections and
removals, Product recalls and such other matters as ACS and Cook deem
appropriate.

     5.9 Milestone Payments. Upon the first IDE approval by the FDA of the First
Product and delivery by Cook to ACS of the Products necessary to complete the
Clinical Trial for the first IDE, ACS shall pay to Cook $[***]. Upon the
approval by the FDA of the PMA for the First Product, ACS shall pay Cook $[***].
The foregoing amounts shall be paid only for the First Product and will be paid
only once and shall not apply to any minimum purchase amounts set forth in
Section 3.9.

6.   PAYMENT

     6.1 Purchase Price.

               (a) ACS shall pay to Cook for each Product a purchase price equal
to [***]% of the ASP determined as set in Section 6.2. The purchase price shall
be



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

* Material has been omitted pursuant to a request for confidential treatment and
such material has been filed separately with the Securities and Exchange
Commission. Asterisks within brackets denote omissions.


                                       15
<PAGE>

determined on a region-by-region basis based on ACS's good faith expectation of
where the Product will be sold which shall be set forth in ACS's purchase order.
Different purchase prices will be determined for the following three (3)
regions: (i) United States, (ii) Japan and (iii) the rest of the world. Within
forty-five (45) days of the completion of each calendar quarter, ACS will
determine the quantity, if any, of Products that were ultimately sold in a
different region than what was indicated in the purchase order, and provide a
written accounting of such determination to Cook. If necessary, such accounting
will include an adjustment in the aggregate purchase price paid by ACS in the
preceding quarter, either in the form of additional payment to Cook by ACS or a
credit against future purchases of ACS's overpayment by Cook to ACS. ASP will be
determined and adjusted on a quarterly basis as set forth in Section 6.2.

               (b) Upon the written request of Cook, at Cook's expense and not
more than once in or in respect of any calendar year, Cook's regular independent
public accountant shall verify the accuracy of the accounting furnished by ACS
in respect of any calendar year ending not more than twenty-four (24) months
prior to the date of such notice. Upon the expiration of twenty-four (24) months
following the end of any calendar year, the accounting and calculation of
amounts payable with respect to such fiscal year shall be binding and conclusive
upon Cook and ACS, and ACS and its Affiliates and Cook shall be released from
any liability or accountability with respect to payments for such year. The
report prepared by such independent public accountant, a copy of which shall be
sent or otherwise provided to ACS by such independent public accountant at the
same time it is sent or otherwise provided to Cook, shall contain the
conclusions of such independent public accountant regarding the audit and will
specify that the amounts paid to Cook pursuant thereto were correct or, if
incorrect, the amount of any underpayment or overpayment. If such independent
public accountant's report shows any underpayment, ACS shall remit to Cook
within thirty (30) days after ACS's receipt of such report, (i) the amount of
such underpayment and (ii) if such underpayment exceeds ten percent (10%) of the
total amount owed for the calendar year then being audited, the reasonable and
necessary fees and expenses of such independent public accountant performing the
audit, subject to reasonable substantiation thereof. If such


                                       16
<PAGE>

independent public accountant's report shows an overpayment, such amount shall
be credited against future purchases.

               (c) In the event that any Product sold hereunder is replaced with
a different or new Product, the replaced Product will not be accepted as a
return and no refund will be given to ACS based on any such return. Cook will
cooperate reasonably with ACS to adjust packaging and make other changes
necessary to sell the replaced Product in countries other than the country for
which the replaced Product was originally intended, subject to Applicable
Regulatory Approvals in such country and subject to agreement between Cook and
ACS as to reimbursement of Cook's out-of-pocket costs. Promptly after shipping
the replaced Product to the new market, ACS will give Cook written notice of the
amount of Product replaced and the markets or countries from which and to which
the replaced Product was moved.

     6.2 Determination of ASP. ASP will be determined on a quarterly basis by
reference to [***]. [***]. [***]. [***]. For purposes of determining the
applicable ASP to be utilized for the purchase price of particular Products
during a quarter, the ASP determined for the most recent previous quarter will
be utilized.

     6.3 Freight and Shipping. All Products shall be shipped to ACS or its
designee DDU (Incoterms 2000) airport of destination. Products will be packaged
in accordance with standard commercial practices for the medical devices
industry generally in effect at the time of shipment and any special packing
reasonably deemed necessary by ACS or Cook, in good faith, to maintain and
safeguard the Products. All shipping costs will be borne by ACS. Title to and
risk of loss of the Product will pass to ACS or its designee upon delivery to
the airport of destination.

     6.4 Payment Terms. Invoices for Products sold pursuant to this Agreement
will be paid by ACS to Cook in United States dollars, net ninety (90) days after
the later of the date of invoice or date of shipment by Cook of the Products to
ACS , and will be paid by ACS by wire transfer to a bank account in the United
States as Cook will from time to



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

* Material has been omitted pursuant to a request for confidential treatment and
such material has been filed separately with the Securities and Exchange
Commission. Asterisks within brackets denote omissions.


                                       17
<PAGE>


time specify in writing to ACS. Interest shall be due for late payments at a
rate that is the lesser of eight percent (8%) per annum or the maximum amount
permitted by law.

     6.5 Third-Party Royalties. Cook shall be responsible for payment of
royalties owed and due upon sale of Product to ACS on account of Cook licenses
that pertain to the Product. If requested by Cook, ACS shall provide ASP data to
Cook solely for the purpose of determining the amount of such royalties.

7.   CONFIDENTIALITY AND PUBLICITY

     7.1 Confidentiality. Each party and its Affiliates will maintain in
confidence the Confidential Information of the other party or its Affiliates
disclosed to it under this Agreement, and shall not make use thereof in whole or
in part except for the express purposes authorized in this Agreement. Except as
provided in this Agreement, each of the parties shall not communicate any
portion of the Confidential Information of the other party or its Affiliates to
any other person, firm, corporation, government agency or entity without first
obtaining prior written permission from the other party, except that a party may
disclose such information to its Affiliates and to its attorneys, accountants
and other advisers and representatives on a "need to know" basis and after
taking reasonable steps to protect the continuing confidentiality of the
Confidential Information. A party may provide a copy of this Agreement to
potential acquirors or merger candidates on a "need to know" basis and after
taking reasonable steps to protect the continuing confidentiality of the
Confidential Information. The obligations under this Section 7.1 shall survive
the termination or expiration of this Agreement.

     7.2 Press Release. Within two (2) business days after the Effective Date,
ACS and Cook shall agree on the form of a joint press release to be released in
accordance with the schedule discussed between the parties. The parties may make
additional public statements or releases provided that such statements and
releases are consistent with the agreed upon joint press release. Except as
required by law or the applicable regulations of a nationally recognized stock
exchange or as contained in said press release, neither ACS nor Cook nor their
Affiliates shall release any information to any third party with respect to the
existence or terms of this Agreement, other than as specifically may be
permitted in


                                       18
<PAGE>


any other agreement between the parties or their Affiliates, without the prior
written consent of the other party. This prohibition includes, but is not
limited to education and scientific conferences, promotional materials,
governmental filings, and discussions with lenders, investment bankers, public
officials, customers and the media. To the extent that a release of information
is required by law, the parties shall cooperate to insure that the content is
accurate and in accordance with the reasonable business standards of each of
them.

     7.3 Additional Release of Information. If ACS or Cook determines that a
release of otherwise prohibited information is required by law, including a
court or governmental agency, it shall notify the other party in writing ten
(10) days (or such lesser period as is feasible under the circumstances) before
the time of the proposed release. The notice shall include the exact text of the
proposed release and the time and manner of the release. If requested, the party
seeking to release information shall furnish to the other an opinion of counsel
that the release of all the information is required by law. At the other party's
request and before the release, the party desiring to release the information
shall consult with the other party on the necessity for the disclosure and the
text of the proposed release. Absent approval in advance from the other party,
in no event shall a release include information regarding the existence or terms
of this Agreement that is not required by law.

8.   TERM AND TERMINATION

     8.1 Effective Date. This Agreement shall become effective as of the
Effective Date and shall continue until terminated as provided in this
Agreement.

     8.2 Term. This Agreement shall continue, subject to termination as provided
in this Agreement, until the end of the third Commercial Sale Year. Thereafter,
this Agreement shall automatically continue until terminated as provided in this
Agreement or upon the mutual consent of the parties.

     8.3 Termination for Lack of Performance. If, at any time following the
completion of the third Commercial Sale Year, ACS's aggregate annual order of
all



                                       19
<PAGE>

Products from Cook in a Commercial Sale Year falls below $[***] million, this
Agreement may be terminated by Cook upon ninety (90) days prior written notice
to ACS, and such termination shall be the sole remedy for failure to order
Products after the completion of the third Commercial Sale Year.

     8.4 Termination for Default. Following compliance with the provisions set
forth below, either party may terminate this Agreement by giving at least thirty
(30) days' written notice to the other party if the other party materially
breaches this Agreement. This Agreement shall automatically terminate at the end
of such notice period unless such material breach is cured. Failure to terminate
this Agreement for any breach shall not constitute a waiver by the aggrieved
party of its right to terminate for such breach at a later time if such breach
remains uncured and for any other breach. If a party believes the other party
has not complied in any material respect with this Agreement, it shall give the
other party written notice, specifying the acts or omissions constituting such
non-compliance. A Party's non-compliance with any provision of this Agreement
shall not be considered to be a breach of this Agreement provided that the
non-complying party cures the non-compliance within the thirty (30) day notice
period first set forth above.

     8.5 Termination by ACS. ACS may terminate this Agreement at any time
following the completion of the third Commercial Sale Year upon ninety (90) days
prior written notice to Cook. In addition, ACS may terminate this Agreement at
any time upon ninety (90) days prior written notice to Cook if the clinical
results of the development of the First Product falls within Scenario C as set
forth in Section 3.9; provided such notice shall be given to Cook within thirty
(30) days after ACS receives notice of the foregoing event.

     8.6 Effect of Third Party License. To the extent a third party licensor
establishes by a final ruling in a court of competent jurisdiction (or as a
result of arbitration, if applicable) which ruling has become non-appealable
that the sale of Products by Cook to ACS or ACS's purchase or distribution of
Products is a breach of or not licensed under a




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

* Material has been omitted pursuant to a request for confidential treatment and
such material has been filed separately with the Securities and Exchange
Commission. Asterisks within brackets denote omissions.


                                       20
<PAGE>


currently existing license between Cook and that third party, any resulting
failure to supply the affected Products to ACS or ACS's inability to purchase or
distribute Products shall not constitute a breach of this Agreement, but shall
result in the automatic termination of this Agreement; provided, however, that
Cook shall diligently oppose any action brought by such third party. Cook shall
permit ACS, at ACS's expense, to provide input into the defense of such action.

     8.7 Breach of License Agreement. ACS acknowledges and agrees that certain
rights of Cook to utilize paclitaxel coatings are derived from a license
agreement between Cook and Angiotech Pharmaceuticals, Inc. ("Angiotech") dated
July 9, 1997 (the "License Agreement"). In the event Cook receives notice that
Cook is in default or breach under any of the terms of the License Agreement,
Cook promptly shall investigate such allegations and shall use its best efforts
to resolve such claim of default or breach, which efforts shall include without
limitation (a) immediately setting a meeting with Angiotech or any other
interested parties in an attempt to determine the basis for such claim of
alleged default or breach and resolution thereof, (b) in the event resolution
does not occur on an informal basis, seeking immediate relief under the
provisions of the License Agreement to arbitrate the alleged default or breach
to seek final resolution thereof, and (c) to the extent permitted under the
License Agreement, immediately seek any other remedy available to Cook to
resolve the alleged default or breach. [***]. Cook agrees to keep ACS informed
of all of the foregoing proceedings, provided, however, that all decisions made
therein shall be made by Cook in its sole and absolute discretion.

     8.8 Cumulative Failure to Supply. If, for any period of three (3)
consecutive months, ACS fails to supply at least [***]% of the Products (as
defined in the SDS Distribution Agreement) ordered by Cook pursuant to the SDS
Distribution Agreement, Cook shall have the option to terminate this Agreement
upon thirty (30) days notice to ACS.




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

* Material has been omitted pursuant to a request for confidential treatment and
such material has been filed separately with the Securities and Exchange
Commission. Asterisks within brackets denote omissions.

                                       21
<PAGE>

     8.9 Termination By Mutual Agreement. At any time during the term of this
Agreement, the parties may mutually agree in writing to terminate this
Agreement.

     8.10 Termination Relating to Clinical Trial. ACS shall have the option to
terminate this Agreement upon notice to Cook in the event that (a) the data
safety monitoring board for a Clinical Trial recommends halting the Clinical
Trial for patient safety issues only, (b) an ethics committee for a Clinical
Trial requests halting the Clinical Trial, or (c) a Clinical Trial's primary
hypotheses are not proven; provided such notice shall be given to Cook within
sixty (60) days after ACS receives notice of the foregoing events.

     8.11 Termination Relating to IDE. ACS shall have the option to terminate
this Agreement at any time upon notice to Cook in the event the United States
IDE approval for the First Product is not received from the FDA prior to
December 31, 2001, provided, however, that if the IDE approval is delayed
because of the failure of ACS to diligently pursue its approval, the date shall
be extended by the period of time ACS has not diligently pursued IDE approval.

     8.12 NIH Amendment. ACS shall have the option to terminate this Agreement
at any time if the NIH Amendment [***] is not executed on or before the date of
ACS's submission of its application for a PMA to market the First Product.

     8.13 Termination for Bankruptcy or Insolvency. Either party may terminate
this Agreement with immediate effect: (i) upon the institution by the other
party of proceedings to be adjudicated bankrupt, or the consent by the other
party to institution of bankruptcy proceedings against it or the filing by the
other party of a petition or answer or consent seeking reorganization or release
under the Federal Bankruptcy Code, or the consent by the other party to the
filing of any such petition or the appointment of a receiver, liquidator,
assignee, trustee, or other similar official of the other party for the benefit
of creditors or for substantially all of its property for the benefit of
creditors, in each of the foregoing cases only in the event that the respective
circumstances continue



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

* Material has been omitted pursuant to a request for confidential treatment and
such material has been filed separately with the Securities and Exchange
Commission. Asterisks within brackets denote omissions.


                                       22
<PAGE>

without dismissal or cure for a period of ninety (90) days; or (ii) if, within
ninety (90) days after the commencement of an action against the other party
seeking any bankruptcy, reorganization, liquidation, dissolution or similar
relief under any present or future law or regulation for the benefit of
creditors, such action shall not have been dismissed or all orders or
proceedings thereunder affecting the operations or the business of the other
party stayed, or if the stay of any such order or proceeding shall thereafter be
set aside; or if, (iii) within ninety (90) days after the appointment without
the consent or acquiescence of the other party of any trustee, receiver, or
liquidator or similar official of the other party for the benefit of creditors,
or for substantially all of its property for the benefit of creditors, such
appointment shall not have been vacated.

     8.14 Effect of Termination. All rights and obligations of the parties that
are intended to survive the termination or expiration of this Agreement,
including the obligations of confidentiality, to make payment of all amounts
previously due or payable under this Agreement and to comply with purchase
orders previously sent and acknowledged, shall survive such termination or
expiration, including without limitation Sections 1, 5.5, 5.6, 5.7, 6.5, 7, 9,
10, 11, 12 and 13. In addition, notwithstanding any termination or expiration of
this Agreement, other than a termination by Cook pursuant to Section 8.4 or 8.7,
ACS shall continue to be allowed to sell any Products previously purchased from
Cook.

9.   REPRESENTATIONS, WARRANTIES AND COVENANTS

     9.1 Corporate Power And Due Authorization. Each party represents and
warrants that it is duly organized and validly existing under the laws of the
state of its incorporation, has full corporate power and authority to enter into
this Agreement and to carry out the provisions of this Agreement, and is duly
authorized to execute and deliver this Agreement and to perform its obligations
hereunder.

     9.2 Binding Agreement. Each party represents and warrants that this
Agreement is a legal and valid obligation binding upon it and is enforceable in
accordance with its terms. The execution, delivery and performance of the
Agreement by such party does not conflict with any agreement, instrument or
understanding, oral or



                                       23
<PAGE>

written, to which it is a party or by which it may be bound nor violate any law
or regulation of any court, governmental body or administrative or other agency
having authority over it; provided, however, Cook does not make a representation
or warranty in this Section 9.2 with respect to the License Agreement.

     9.3 Cook Representations, Warranties, and Covenants. Cook represents,
warrants and covenants to ACS that:

          (i)    it shall, at the time of sale of any Products to ACS, possess
                 good and marketable title to such Products;

          (ii)   such Products (a) will have been manufactured or assembled by
                 Cook or its subcontractors in compliance with applicable
                 Quality System Regulations (as defined in applicable FDA
                 regulations at 21 CFR Part 820) and similar applicable
                 regulations worldwide, and in compliance with Cook's quality
                 control processes and standards, which processes and standards
                 will meet the minimum requirements of the Applicable Regulatory
                 Authorities for relevant medical devices and associated
                 products, (b) at the time of shipment conform to the
                 specifications established pursuant to Section 4.1; and (c)
                 when received by ACS, shall have a minimum expiration date so
                 that its remaining shelf life is at least 18 months; provided
                 Cook makes no representation or warranty under this Section 9.3
                 with respect to any portion of Product supplied by ACS or its
                 Affiliates;

          (iii)  the License Agreement, as between Angiotech and Cook, all
                 other Cook licenses pertaining to the Product and, to Cook's
                 actual knowledge without having made any independent
                 investigation, Angiotech's licenses from NeoRx and NIH, are
                 all in full force and effect with no outstanding disputes
                 between any of the parties thereto; and



                                       24
<PAGE>

          (iv)   Should Cook receive a notice of default on any of Cook's
                 third-party licenses required for sale of Product which could
                 result in termination of such license as a result of default by
                 Cook, Cook agrees that it shall promptly notify ACS and provide
                 ACS all material information available regarding such alleged
                 default.

     9.4 Disclaimer of Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS
     AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY TO THE OTHER
     PARTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY
     WARRANTY OF NONINFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR
     PURPOSE.

10.  INDEMNITY

     10.1 ACS Indemnity of Cook. ACS hereby indemnifies and agrees to defend and
hold Cook, its permitted successors, Affiliates, and permitted assigns harmless
from and against all claims, liabilities, demands, damages, losses and expenses
relating to claims of third parties only (collectively, "Losses") arising out of
or in connection with (a) any breach of any representation or warranty of ACS
set forth in this Agreement, (b) any breach of any agreement, covenant or
obligation of ACS set forth in this Agreement, and (c) the sale by ACS of the
Products including any Losses relating to personal injury resulting from the
sale or other disposition of any Product; provided, however, that in no event
shall ACS be obligated to indemnify, hold harmless and defend for Losses to the
extent caused by matters that are covered by Cook's indemnity set forth in
Section_10.2 below or Cook's negligence or willful misconduct. The foregoing
indemnity shall not apply to Infringement Liabilities (as defined in Section
11.2).

     10.2 Cook Indemnity of ACS. Cook hereby indemnifies and agrees to defend
and hold ACS, its permitted successors, Affiliates, and permitted assigns
harmless from and against all Losses arising out of or in connection with (a)
any breach of any representation or warranty of Cook set forth in this
Agreement, and (b) any breach of any agreement, covenant or obligation of Cook
set forth in this Agreement; provided, however, that in no event shall Cook be
obligated to indemnify, hold harmless and defend



                                       25
<PAGE>

for Losses to the extent caused by matters that are covered by ACS's indemnity
set forth in Section 10.1 above, ACS's negligence or willful misconduct.

     10.3 Limitations. Payments by the Indemnifying Party pursuant to Section
10.1 or 10.2 shall be limited to the amount of any Losses that remain after
deducting therefrom (i) any tax benefit (net of any related tax detriments)
actually realized by the Indemnified Party and (ii) any indemnity, contribution
or similar payment actually recovered by the Indemnified Party from any third
party with respect thereto (other than proceeds of insurance maintained by or
for the benefit of the Indemnified Party). The Indemnified Party shall use all
reasonable efforts to seek and recover any tax benefits and any indemnity,
contribution or similar payments available to the Indemnified Party with respect
to any Losses for which the Indemnified Party seeks indemnification pursuant to
Sections 10.1 or 10.2. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS
AGREEMENT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER OR TO THE OTHER'S
AFFILIATES FOR ANY INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF
THIS AGREEMENT OR ITS TERMINATION, WHETHER LIABILITY IS ASSERTED IN TORT OR
CONTRACT, AND IRRESPECTIVE OF WHETHER THE PARTIES HAVE BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES, ALL REMEDIES OF THE PARTIES SHALL BE LIMITED TO
ACTUAL DIRECT DAMAGES.

     10.4 Indemnification Procedures. A person to whom indemnification is
provided hereunder is referred to herein as the "Indemnified Party" and the
party providing indemnification is referred to as the "Indemnifying Party." If
an Indemnified Party intends to seek indemnification pursuant to this Section
10, such Indemnified Party shall promptly notify the Indemnifying Party in
writing of such claim. The Indemnified Party will provide the Indemnifying Party
with prompt written notice of any third party claim in respect of which
indemnification is sought. The failure to provide either such notice will not
affect any rights hereunder except to the extent the Indemnifying Party is
materially prejudiced thereby. Any such notice shall set forth in reasonable
detail the available facts, circumstances and basis of the claim. If such claim
involves a claim by a third party against the Indemnified Party, the
Indemnifying Party may, after



                                       26
<PAGE>

acknowledging in writing liability hereunder, assume, through counsel of its own
choosing (so long as reasonably acceptable to the Indemnified Party) and at its
own expense, the defense thereof, and the Indemnified Party shall cooperate with
it in connection therewith (including by furnishing such information as the
Indemnifying Party may reasonably request), provided, that the Indemnified Party
may participate in such defense through counsel chosen by it, at its own
expense. So long as the Indemnifying Party is contesting any such claim in good
faith, the Indemnified Party shall not pay or settle, or admit any liability
with respect to, any such claim which it continues to seek indemnification for
without the Indemnifying Party's consent. The Indemnifying Party will not
without the Indemnified Party's prior written consent settle or compromise any
claim or consent to entry of any judgment which does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to the
Indemnified Party of a release from all liability in respect of such claim. The
Indemnifying Party shall not, without the prior written consent of the
Indemnified Party (which consent shall not be unreasonably withheld), take any
measure or step in connection with any settlement or compromise that imposes a
material burden or encumbrance upon the operation or conduct of the Indemnified
Party's business. If the Indemnifying Party is not contesting such claim in good
faith, then the Indemnified Party may, upon at least ten (10) days' notice to
the Indemnifying Party (unless the Indemnifying Party shall assume such
settlement or defense within such ten (10) day period), conduct and control,
through counsel of its own choosing and at the expense of the Indemnifying
Party, the settlement or defense thereof, and the Indemnifying Party shall
cooperate with it in connection therewith. The failure of the Indemnified Party
to participate in, conduct or control such defense shall not relieve the
Indemnifying Party of any obligation it may have hereunder.

     10.5 Insurance. Each party will obtain and maintain in force, or, if
reasonably acceptable to the other party, self-insure for, at all times during
the term of this Agreement, commercial general liability insurance, including
product liability insurance in an amount not less than $20 million in the
aggregate with a maximum deductible per occurrence of not more than $5 million
and shall provide the other party with a certificate of such insurance upon
written request of such party. Each party will provide written



                                       27
<PAGE>

notification to the other party to this Agreement, not less than thirty (30)
days prior to modification, cancellation or expiration of such policy.

     10.6 Exclusivity. The provisions of this Section 10 shall be the exclusive
remedy for money damages for the breaches and other matters covered thereby, but
shall not preclude injunctive relief, specific performance or other equitable
remedies. The obligations under this Section 10 shall survive the termination or
expiration of this Agreement.

11.  CONTRIBUTION TO INFRINGEMENT LIABILITIES

     11.1 Infringement Claims. In the event that a party receives notice of a
third party claim alleging that the manufacture, use or sale of a Product
infringes the patents of a third party (or a breach of the License Agreement),
the party receiving notice shall promptly notify the other party in writing of
such claim (an "Infringement Claim"). Any notice of an Infringement Claim shall
set forth in reasonable detail the available facts, circumstances and basis of
the claim. ACS shall be the lead party (the "Lead Party") with respect to
Infringement Claims relating to Products under this Agreement; provided,
however, to the extent the Infringement Claim relates to the paclitaxel coating
on the stents comprising Products or to the method of applying such coating,
Cook shall be the Lead Party with respect to such portion of the Infringement
Claim. The party which is not the Lead Party with respect to an Infringement
Claim is sometimes referred to herein as the "Second Party". The Lead Party
shall assume, through counsel of its own choosing (so long as reasonably
acceptable to the Second Party) and at its own expense, the defense against the
Infringement Claim, and the Second Party shall cooperate with it in connection
therewith (including by furnishing such information as the Lead Party may
reasonably request), provided, that the Second Party may participate in such
defense through counsel chosen by it, at its own expense. If the Lead Party is
not contesting the Infringement Claim in good faith, then the Second Party may,
upon at least ten (10) days' notice to the Lead Party (unless the Lead Party
shall assume such settlement or defense within such ten (10) day period),
conduct and control, through counsel of its own choosing and at the expense of
the Lead Party, the settlement or defense thereof, and the



                                       28
<PAGE>

Lead Party shall cooperate with it in connection therewith. Despite the Pro Rata
Basis sharing of Infringement Liabilities set forth in Section 11.2 below, a
party ("First Party") shall have no obligation to contribute to amounts paid in
settlement of an Infringement Claim if such settlement is effected by the other
party without the express prior written consent of the First Party, which
consent shall not be unreasonably conditioned, withheld or delayed. Except as
provided in Section 8.7, neither party may settle or otherwise consent to an
adverse judgment relating to an Infringement Claim that diminishes the rights or
interest of the other party without the express prior written consent of the
other party, which consent shall not be unreasonably conditioned, withheld or
delayed. Except as otherwise provided herein, each party will be responsible for
its own costs and expenses of participating in the defense against the
Infringement Claim. Infringement Liabilities (as defined below) shall not
include these costs and expenses of participation.


     11.2 Pro Rata Sharing of Infringement Liabilities. ACS and Cook hereby
agree among themselves to pay, share and/or contribute to any and all damage
awards, judgments or settlements for actual compensatory damages to a third
party relating to the Infringement Claim (collectively, "Infringement
Liabilities") but not including any award, judgment or settlement for damages
constituting increased damages under 35 U.S.C. Section 284 or attorneys fees
under 35 U.S.C. Section 285. ACS and Cook will pay the Infringement Liabilities
in accordance with the following percentages: ACS will pay [***]% and Cook will
pay [***]% (the "Pro Rata Basis") if and to the extent the Infringement
Liabilities result from any agreement or settlement approved by the parties or
from any final arbitration award or final judgment of a court which may be
obtained against ACS and/or Guidant based on any Infringement Liability. The
parties agree to share Infringement Liabilities on the Pro Rata Basis even
though they are receiving differing benefits under the transactions contemplated
by this Agreement.



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

* Material has been omitted pursuant to a request for confidential treatment and
such material has been filed separately with the Securities and Exchange
Commission. Asterisks within brackets denote omissions.

                                       29
<PAGE>

     11.3 Recovery of Excess Payments. If for any reason ACS or Cook, as the
case may be, shall pay or otherwise bear any setoff or out of pocket recovery
for an Infringement Liability in excess of its share thereof determined on a Pro
Rata Basis, the other party hereto shall promptly pay amounts to the party who
suffered such excess so that each party ultimately bears a share of the
Infringement Liability on a Pro Rata Basis as provided in this Agreement. If any
party has advanced funds to pay an Infringement Liability in excess of its share
on a Pro Rata Basis, such party shall also be entitled to collect interest on
the excess funds advanced until repaid, at the "prime rate" as published by The
Wall Street Journal (or successor) and in effect from time to time, from the
other party obligated hereunder to contribute such excess from the date which is
thirty (30) days after the delivery of notice to the other party setting forth
the amount demanded and the basis for the demand.

12.  NOTICE

     Any notice, report or written statement to a party permitted or required
under this Agreement shall be in writing and shall be sent by facsimile, first
class mail, Federal Express or other recognized overnight delivery service, or
hand delivered at the respective addresses set forth below, or to such other
addresses as the respective parties may from time to time designate:

             ADVANCED CARDIOVASCULAR SYSTEMS, INC.
             3200 Lakeside Drive
             Santa Clara, California 95054-2807
             Attention:  General Counsel
             Fax:  (408) 845-3987

             COOK INCORPORATED
             925 South Curry Pike
             Bloomington, Indiana 47402-0489
             Attention:  Peter Yonkman
             Fax:  (812) 339-5369

     Notice shall be deemed to have been given at the expiration of one (1)
business day from the date of notice given by facsimile, seven (7) business days
from the date the notice is deposited with the postal service or two (2)
business days from the date the






                                       30
<PAGE>

notice is sent by recognized overnight delivery service unless actual receipt of
the notice at an earlier date is established. Hand-delivered notices shall be
effective upon delivery.

13.  MISCELLANEOUS

     13.1 Entire Agreement. This Agreement shall constitute the entire agreement
between the parties with respect to the distribution and supply of Products, and
shall supersede all previous negotiations, commitments and writings relating
thereto (other than the Confidentiality Agreement dated June 2, 2000 between
ACS's parent company, Guidant Corporation, and Cook). This Agreement shall not
be modified or altered in any manner except by an instrument in writing executed
by the parties hereto.

     13.2 Severability. If any provision of this Agreement is found to be
prohibited by law and invalid, or for any reason such provision is held
unenforceable, in whole or in part, that provision shall be considered severable
and its invalidity or unenforceability shall not effect the remainder of this
Agreement, which shall continue in full force and effect.

     13.3 Assignment. Neither this Agreement nor any of the rights or
obligations arising under this Agreement may be assigned or transferred by
either party, in whole or in part, without the prior written consent of the
other party, and any attempted assignment or transfer without such written
consent shall be of no force or effect. Notwithstanding the foregoing, this
Agreement, including the rights and obligations arising under this Agreement,
can be assigned without consent to an Affiliate of Cook or ACS, provided that
Cook or ACS, as the case may be, remains liable under this Agreement, or to an
entity that acquires all or substantially all of the business of that party and
its Affiliates. Subject to the foregoing, this Agreement shall be binding upon
and inure to the benefit of the permitted successors, assigns and transferees of
the parties.

     13.4 Relationship Between the Parties. It is understood that Cook is the
manufacturer of the Products and is not a contract manufacturer for ACS, and
that ACS will not participate in the manufacture of the Product. In addition,
the parties hereto are independent contractors and engaged in the conduct of
their own respective endeavors and ACS is acting as a distributor of the
Products. Neither Cook nor ACS is to be



                                       31
<PAGE>


considered the agent or employee of the other for any purpose, and neither party
has the right or authority to enter into any contract or assume any obligation
for the other or give any warranty or make any representation on behalf of the
other party except where and to the extent specifically authorized in writing to
do so.

     13.5 Applicable Law. This Agreement shall be deemed to be executed and to
be performed in the State of Indiana and shall be construed in accordance with
the laws of the State of Indiana as to all matters, including, but not limited
to, matters of validity, construction, effect, or performance, but excluding any
Indiana choice of law rules which may direct the application of the law of any
other jurisdiction.

     13.6 Captions. Captions are inserted only as a matter of convenience and
for reference, and in no way define, limit, or describe the scope of this
Agreement or the intent of any provision herein.

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

     13.8 No Strict Construction. This Agreement has been prepared with the
participation of both parties, and shall not be strictly construed against
either party.

     13.9 Consultation With Counsel and Reliance. Cook and ACS each acknowledge
that it has consulted with, or has had the opportunity to consult with, counsel
of its choice, and that in executing this Agreement it has not relied upon any
statements, representations or agreements of any other person other than those
contained herein.

     13.10 Compliance With Law. No party will be required to perform and may
omit to perform any act in connection with this Agreement, including the sale
and marketing of the Products, which would be in violation of (a) any applicable
laws of the United States of America, including any FDA regulations or
regulations of the Department of Commerce relating to the export from the United
States of products or



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<PAGE>

technology, or the United States Foreign Corrupt Practices Act; or (b) any
applicable laws or regulations of any other relevant jurisdiction, including
state and local law.

     13.11 Absence of Waiver. The failure of any party to enforce at any time
any provision of this Agreement shall in no way be construed as a waiver of such
provision, nor in any way to affect the validity of this Agreement or any part
thereof, or the right of any party to later enforce each and every such
provision. No waiver of any breach of this Agreement shall be held to be a
waiver of any other or subsequent breach.

     13.12 Non-Solicitation. During the term of this Agreement, neither party
nor its Affiliates shall solicit for employment any person who is directly
involved in the performance of this Agreement and who is an employee of the
other party or its Affiliates.

     13.13 Consent and Approval. Whenever consent or approval is required from
either party under this Agreement, such consent or approval shall not be
unreasonably withheld, delayed or conditioned.

     13.14 Arbitration. ACS and Cook shall use reasonable efforts to amicably
resolve any dispute. However, if ACS and Cook are not able to resolve their
dispute, any controversy or claim arising out of or relating to this Agreement
shall be submitted to binding arbitration in accordance with the following
procedures, except as the parties shall otherwise agree. The controversy or
claim shall be settled by arbitration in Indianapolis, Indiana in accordance
with the rules then pertaining of the CPR Institute for Disputes Resolution, or
successor ("CPR"), except where those rules conflict with these provisions, in
which case these provisions shall control. Any arbitration shall be subject to
the following:

               (a) Any award pursuant to such arbitration shall be accompanied
by the written opinion of a majority of the arbitrators giving their reasons
therefor and rendered within thirty (30) days of the date of closing of the
arbitration hearing.



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<PAGE>


               (b) The panel shall consist of three arbitrators chosen from the
CPR Panels of Distinguished Neutrals (or, by agreement, from another provider of
arbitrators) each of whom is a lawyer with at least fifteen (15) years
experience with a law firm or corporate law department or was a judge of a court
of general jurisdiction. In the event the aggregate damages sought by the
claimant are stated to be less than $5 million, and the aggregate damages sought
by the counterclaimant are stated to be less than $5 million, and neither side
seeks equitable relief, then a single arbitrator shall be chosen, having the
same qualifications and experience specified above. Each arbitrator shall be
neutral, independent, disinterested, impartial and shall abide by The Code of
Ethics for Arbitrators in Commercial Disputes approved by the American
Arbitration Association. There shall be no ex parte communications with an
arbitrator either before or during the arbitration, relating to the dispute or
the issues involved in the dispute or the arbitrator's views on any such issues.

               (c) The parties agree to cooperate to attempt to select the
arbitrator(s) by agreement within twenty (20) days of initiation of the
arbitration, including jointly interviewing the final candidates.

               (d) In the event the parties cannot agree upon selection of the
arbitrator(s), the CPR will select arbitrator(s) as follows: CPR shall provide
the parties with a list of no less than twenty-five (25) proposed arbitrators
(fifteen (15) if a single arbitrator is to be selected) having the credentials
referenced above. Within twenty-five (25) days of receiving such lists, the
parties shall rank at least 65% of the proposed arbitrators on the initial CPR
list, after exercising cause challenges. The parties may then interview the five
candidates (three if a single arbitrator is to be selected) with the highest
combined rankings for no more than one hour each and, following the interviews,
may exercise one peremptory challenge each. The panel will consist of the
remaining three candidates (or one, if one arbitrator is to be selected) with
the highest combined rankings. In the event these procedures fail to result in
selection of the required number of arbitrators, CPR shall select the
appropriate number of arbitrators from among the members of the various CPR
Panels of Distinguished Neutrals, allowing each side challenges for cause and
three peremptory challenges each.


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<PAGE>


               (e) The award rendered by the arbitrators shall, solely with
respect to the particular dispute, difference or alleged breach of this
Agreement which was submitted to arbitration, be conclusive and binding upon the
parties hereto and judgment on the award may be entered in any court of proper
jurisdiction; provided, however, that nothing herein shall give the arbitrators
any authority to amend, alter or delete any term, condition or provision of this
Agreement. The law applicable to the enforcement of any award shall be Title 9
of the United States Code, the Federal Arbitration Act.

               (f) Each party shall pay its own attorney fees, costs and
expenses of arbitration and the fees, costs and expenses of the arbitrators
shall be equally shared; except that if any matter or dispute raised by a party
or any defense or objection thereto is determined by the arbitrators to have
been unreasonable, the arbitrators may assess, as part of the award, all or any
part of the arbitration expenses (including reasonable attorneys' fees) of the
other party or parties and of the arbitrators against the party raising such
unreasonable matter or dispute or defense or objection thereto.

               (g) The arbitrators shall fix the time and place in Indianapolis
for the arbitration hearing, which shall be held within forty-five (45) days
after appointment of the arbitrators. Notice of such hearing shall be given by
the arbitrators to the parties at least twenty (20) days in advance, unless the
parties by mutual agreement waive such notice.

               (h) The parties shall submit all documents and proof upon which
they intend to rely within thirty (30) days after the appointment of the
arbitrators. All parties shall be afforded a reasonable opportunity to examine
such documents and proof prior to any hearing.

               (i) The panel will establish what procedures and format will be
followed at the hearing. Live testimony will be permitted. Direct examination
will be followed by cross-examination. A court reporter will record the
proceedings. The arbitration hearing shall take place on consecutive business
days until complete. Each party shall be given a limited and equal amount of
time to present its case. Unless the



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<PAGE>

parties otherwise agree, no hearing shall exceed ten (10) trial days. The
arbitration hearing shall be conducted in accordance with the Federal Rules of
Evidence, except as modified herein or by agreement of the parties.

               (j) Any party may be represented by counsel. A party intending to
be so represented shall be notify the other party or parties and the arbitrators
of the name and address of counsel at least three days prior to the date set for
the hearing at which counsel is first to appear. When an arbitration is
initiated by counsel, or where any attorney replies for another party, such
notice is deemed to have been given by such party.

               (k) The parties may modify any period of time by mutual
agreement. The arbitrators for good cause may extend any period of time
established by this Agreement, except the time for making the award. The panel
shall notify the parties of any such extension of time and its reason therefor.

               (l) The scope of discovery allowed with respect to arbitration
proceeding shall be the same as that allowed under the Federal Rules of Civil
Procedure except as provided herein. The arbitrators shall provide for discovery
according to the time limits set out in paragraph (g), giving recognition to the
understanding of the parties that they contemplate reasonable discovery,
including document demands and depositions, but that such discovery will be
limited so that the schedule set forth in paragraph (g) may be met. No more than
twenty (20) requests for documents may be served. Interrogatories or Requests
for Admissions will not be permitted. Notwithstanding the above, it is the
intent of the parties that document discovery will be limited to only those
documents reasonably necessary to the adjudication of the arbitrable issues.
This provision is intended to replace Rule 4 "Early Disclosure of Information"
of the CPR Rules, which will have no force and effect. Depositions or parties
and non-parties will be limited to a total of forty (40) hours per party per
case. Both parties will be permitted to use any discovery obtained in court or
other proceedings. The Chairperson of the arbitration panel will resolve any
discovery disputes between the parties.



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<PAGE>


     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers, effective as of the day and year first above
written.


                                  ADVANCED CARDIOVASCULAR
                                  SYSTEMS, INC.


                                  By:_____________________________________
                                       John M. Capek, Ph.D.
                                       President



                                  COOK INCORPORATED

                                  By:_____________________________________
                                       John A. DeFord, Ph.D.
                                       President and Chief Executive Officer


                                  By:_____________________________________
                                       Phyllis C. McCullough
                                       Chairman




                                       37
<PAGE>
                                   EXHIBIT A
                                 FIRST PRODUCT
                              Product Description

The coronary stent system shall consist of a balloon-expandable 316L stainless
steel stent mounted on the balloon of a delivery system coated with paclitaxel
at a concentration level of three (3) embedded five (5) turn adaptable links
and six (6) expanding elements in a series of "U", "Y" and "W" shaped elements
in a 3-3-3 link pattern micrograms per square millimeter. Each ring of
the stent will consist of three (3) embedded five (5) turn adaptable links
and six (6) expanding elements in a series of "U", "Y" and "W" shaped elements
in a 3-3-3 link pattern.

The stent system shall consist of one pattern with two different designs. The
smaller stent is a lower profile system for the expansion range of 2.5, 2.75,
and 3.0 (3.5 post-dilated) mm diameter. The larger stent has slightly larger
radii on the "U" an "Y" elements to allow expansion to 3.5 and 4.0 (4.5
post-dilated) mm in diameter.

The stent design shall incorporate variable thickness struts (0.0036 to 0.0049
inch).

 The stent system shall be provided with a hydrophilic-coated catheter shaft on
both rapid exchange and over-the-wire formats that are 5 Fr compatible having
the following crossing profiles:

Expanded Diameter (mm)     Crossing Profile (inch)
        2.75                        0.041
        3.0                         0.041
        3.5                         0.044
        4.0                         0.046

















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