exv10w5



 






Exhibit 10.5




LICENSE AGREEMENT




     THIS AGREEMENT is entered into as of July 18th and effective as of July 1, 2005 (the
“Effective Date”) by and between Micrus Endovascular Corporation (“Micrus US”), a Delaware
corporation whose principal office is at 610 Palomar Avenue, Sunnyvale, California 94085, and
Micrus Endovascular SA (“Licensee”), a corporation organized under the laws of Switzerland whose
principal office is at En Chamard, 1442 Montagny-Pres-Yverdon, Switzerland (each a “Party” and
collectively, the “Parties”).



RECITALS




     WHEREAS, Micrus US and Licensee each undertakes a business in the medical device industry, and
each seeks to continue developing its business and improving its operations;



     WHEREAS, Micrus US desires to grant to Licensee, and Licensee desires to acquire from Micrus
US, subject to the terms and conditions of this Agreement, a license to make or have made, sell and
support Licensed Products (as defined below), and to otherwise develop and use the Licensed
Technology (as defined below); and



     WHEREAS, Micrus US and Licensee have entered into an Agreement for Sharing Development Costs
dated concurrently herewith (the “Cost Sharing Agreement”), whereby the Parties agree to share the
costs and benefits of further developing the Licensed Technology after the Effective Date of this
Agreement;



     NOW, THEREFORE, in consideration of the premises and of the mutual promises hereinafter set
forth, the Parties hereto agree as follows:




	1.	 	DEFINITIONS





     For purposes of this Agreement, the following definitions shall apply to the terms set forth
below wherever they appear:




	1.1	 	“Affiliate” of a Party means any entity controlled by, controlling or under common control
with such Party, where “control” means ownership, either direct or indirect, of more than
fifty percent (50%) of the equity interest entitled to vote for the election of directors or
equivalent governing body.





***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.




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	1.2	 	“Brand Rights” means (a) all trade names, trademarks, service marks, logos, Internet domain
names or similar property that Micrus US uses, has developed or has registered anywhere in the
world, and any derivations of such marks that are developed, used or registered prior to or as
of the Effective Date hereof; and (b) all customer lists, market surveys, customer and
transaction data, and other market or customer related intangible property or goodwill that
Micrus US has created, collected or acquired, or that either Party creates, collects or
acquires prior to or as of the Effective Date hereof.
	 
	1.3	 	“Copyrights” means all copyright, unregistered design rights, and interests therein,
including, without limitation, all rights of authorship, use, publication, reproduction,
performance, transformation, moral rights and ownership of copyrightable works, designs (other
than registered designs and any other copyright interest accruing under any copyright law or
convention throughout the world including the right to register or renew any copyright
interest.
	 
	1.4	 	“Fiscal Year End” means March 31, the last day of Micrus US’s fiscal year.
	 
	1.5	 	“Global Brand Protocols” means procedures for use of the Brand Rights as initially
promulgated by Micrus US and as modified from time to time pursuant to the Cost Sharing
Agreement.
	 
	1.6	 	“Licensed Products” means products made by or for Licensee or its Sublicensees that in whole
or in part incorporate, use or are made using the Licensed Technology.
	 
	1.7	 	“Licensed Technology” means the following rights hereinafter described existing as of the
Effective Date: (a) all Patent Rights, Technical Information, Brand Rights, and Copyrights (as
such terms are defined in this Agreement), including without limitation, all right, title and
interest in the foregoing, and all devices, patents, copyrights, hardware, software, trade
secrets, proprietary techniques, business models, processes, methods, applications, technical
information, documentation and other similar items that were conceived, discovered, owned,
licensed, or acquired by Micrus US or any of its Affiliates or agents prior to or as of the
Effective Date; and (b) any other intangible property rights as defined in Treasury Regulation
Section 1.482-4(b). For purposes of this Agreement, Licensed Technology shall not include any
“Developed Intangibles” as that term is defined in the Cost Sharing Agreement.
	 
	1.8	 	“Patent Rights” means (a) any and all issued patents, reissue or reexamination patents,
patents of importation, revivals of patents, revalidation patents, utility models,
certificates of invention, registrations of patents, or extensions thereof, regardless of
country or formal name; and (b) all U.S. and foreign utility and design Patents, and published
or unpublished regular patent and provisional applications, including without limitation any
and all applications of addition, divisionals, continuations, continuations-in-part (“CIPs”),
continuing prosecution applications (“CPAs”), reexaminations, substitutions, extensions,




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	 	 	renewals, utility models, certificates of invention or reissues thereof or therefor,
invention disclosures and records of invention, and any license to practice any of the
foregoing.
	 
	1.9	 	“Quarterly Close Date” means June 30, September 30 and December 31, or equivalent dates
corresponding to the last day of the fiscal quarters of Micrus US’s fiscal year, and also
includes the Fiscal Year End.
	 
	1.10	 	“Sublicensee” means any party to whom Licensee sublicenses or transfers any portion of its
rights under this Agreement to use the Licensed Technology within one or more countries. As
the context requires, the term “Licensee” shall also include one or more of Licensee’s
Sublicensees.
	 
	1.11	 	“Technical Information” means any and all ideas, inventions, disclosures, design rights,
unpublished research and development information, manufacturing and operating information,
know-how, trade secrets and technical data, software, process characterization data, and all
documentation relating thereto in any form including drawings, source code, plans, bills of
material or sources of information.
	 
	1.12	 	“Total Gross Revenues” means the total amount of revenues received from third parties on
orders for Licensed Products that are accepted by Licensee plus all sublicensing royalties
received by Licensee with respect to Licensed Products, less the total amount thereon of
credits, cash or trade discounts actually given, freight charges paid by Licensee, fees paid
by Licensee for installation of the Licensed Products, and excluding import duties and
Federal, State and Local taxes, based on such sales, however designated, paid by Licensee.
	 
	1.13	 	“Year” means each period between Fiscal Year Ends, except the first Year shall begin on the
Effective Date and end on March 31, 2006, and the final Year shall end on the date of
termination of this Agreement.
	 
	2.	 	LICENSE GRANTS
	 
	2.1	 	Licenses. Subject to the terms and conditions of this Agreement, Micrus US hereby
grants Licensee non-exclusive, perpetual (subject to Article 7 below), worldwide (subject to
Section 2.2 below) licenses to:






	 	a.	 	use, develop, distribute, reproduce, publish, display, perform, modify and
transform the Licensed Technology;
	 
	 	b.	 	make, have made, use, distribute, dispose of, offer to dispose of, sell, offer
for sale, service, have serviced, repair, have repaired, modify, have sold, import and
have imported Licensed Products; and




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	 	c.	 	use, promote and otherwise exploit the Brand Rights in compliance with the
Global Brand Protocols.






	2.2	 	Retention of Rights. Notwithstanding the non-exclusive licenses granted to Licensee
under section 2.1 above, Micrus US retains the following exclusive rights:






	 	a.	 	all rights to use the Patent Rights and Technical Information in connection
with manufacturing Licensed Products within the United States (including production of
parts and components and final assembly and test of Licensed Products within the United
States from parts and components procured anywhere);






	 	b.	 	all rights to use the Licensed Technology in connection with selling Licensed
Products or providing services to customers with respect to Licensed Products, which
are installed in the United States.






	2.3	 	Sublicenses. Licensee shall not have the right to sublicense or transfer its rights
hereunder in whole or in part to any person or persons, unless agreed in writing by Micrus US
in its sole and absolute discretion. Such sublicense or transfer must be pursuant to a written
agreement signed by both Licensee and Sublicensee which has terms and restrictions at least as
protective of Licensed Technology as this Agreement.
	 
	3.	 	CONDITIONS
	 
	3.1	 	Ownership. Micrus US owns all right, title and interest in and to the Licensed
Technology. All rights in the Licensed Technology not expressly granted hereunder (or
accruing to Licensee under the Cost Sharing Agreement) are reserved to Micrus US.
	 
	3.2	 	Delivery. As expeditiously as possible, Micrus US shall deliver to Licensee such
documentation and other elements of the Licensed Technology, and such representations of the
Brand Rights, as necessary or appropriate for the Licensee’s operations.
	 
	3.3	 	Quality Control. The Licensed Products sold by Licensee shall meet the quality
control standards and specifications established from time-to-time by Micrus US, including any
requirements of applicable regulatory agencies worldwide for the manufacture and sale of
Licensed Products, as mutually agreed upon by the parties. Micrus US shall have the right, at
its expense, to audit Licensee’s quality control of Licensed Products from time-to-time on a
reasonable basis and on reasonable prior notice to Licensee.




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	4.	 	ROYALTIES AND OTHER OBLIGATIONS
	 
	4.1	 	Royalties. In consideration for the licenses and rights granted under Sections 2.1
and 2.3 of this Agreement, Licensee shall pay royalties to Micrus US as a percentage of the
Total Gross Revenues of Licensee and its Sublicensees from sales of Licensed Products or other
use of the Licensed Technology (“License Revenues”) in accordance to the royalty rate schedule
in Exhibit A and the terms of this Article 4.
	 
	4.2	 	Minimum Royalty. On or before each Fiscal Year End, Licensee shall estimate, in good
faith, the Total Gross Revenues expected for the following Year (“Estimated Revenues”), and
deliver to Micrus US a statement of Estimated Revenues. Concurrent with delivery of such
statement to Micrus US, Licensee shall pay Micrus US a non-refundable minimum royalty
(“Minimum Royalty”) based on such Estimated Revenues at the royalty rate for that Year,
specified in Exhibit A.
	 
	4.3	 	Annual Settlement. On or before the first Quarterly Close Date of each Year,
Licensee shall pay Micrus US the excess of the total royalty due on the actual amount of Total
Gross Revenues for the prior Year (“Actual Revenues”) and the Minimum Royalty paid with
respect to that Year’s Estimated Revenues. In the event Actual Revenues fall short of
Estimated Royalties for any Year, the difference shall be carried over and applied to
subsequent years.
	 
	4.4	 	Audits. Licensee shall keep and maintain complete and accurate written records of the
transactions underlying the royalties to be paid hereunder for at least four (4) years in
sufficient detail to permit ready verification of the computation of the royalties payable
hereunder, and shall allow Micrus US or its designee to inspect and make extracts or copies of
such records for the purpose of ascertaining the correctness of such payments. If any
examination and audit discloses any deficiency, Licensee shall pay the deficiency plus
interest thereon at the U.S. prime rate to Micrus US on or before the next Quarterly Close
Date.
	 
	4.5	 	Annual Review. The royalty rate schedule in Exhibit A is intended to be consistent
with the arm’s length standard and, for the duration of Licensee’s royalty obligation, shall
be subject to review at each Fiscal Year End to ensure that royalty rates continue to be
commensurate with the income attributable to the license. If such review determines that
arm’s length royalty rates differ from those on the existing schedule and that the difference
is not due to an extraordinary event, beyond the control of the Parties, that could not
reasonably have been anticipated, then the final royalty settlement for the prior Year under
Section 4.3 shall be adjusted to ensure that the total royalty for that Year is arm’s length
in accordance with Treasury Regulation Section 1.482-4(f)(2)(E) (provided, however, that in no
event shall Licensee be entitled to a refund of the minimum royalty under Section 4.2). The
royalty rate schedule in Exhibit A shall be amended appropriately.




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	4.6	 	Currency. Unless otherwise agreed by the Parties, all payments contemplated hereby
or made by the Parties in connection herewith shall be made in the lawful currency of the
United States of America. In making any calculation hereunder, any amounts in currencies
other than the U.S. dollar shall be translated into U.S. dollars at the prevailing bookkeeping
rate used by Micrus US during the period in which the revenue or expense is recognized under
U.S. generally accepted accounting principles.






	4.7	 	Netting of Amounts Payable. A netting of any amount payable under this Agreement as
against existing accounts payable and accounts receivable, whether arising under this or any
other agreement, shall be acceptable payment, effective as of the date of the netting on the
books of the Parties.
	 
	5.	 	LIMITATION OF LIABILITY.




IN NO EVENT WILL MICRUS US, OR ITS DIRECTORS, OFFICERS, EMPLOYEES OR AFFILIATES, HAVE ANY LIABILITY
FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES, HOWEVER CAUSED AND ON ANY THEORY OF
LIABILITY, WHETHER FOR BREACH OF CONTRACT, TORT OR OTHERWISE, ARISING OUT OF OR RELATED TO THIS
AGREEMENT, INCLUDING BUT NOT LIMITED TO, LOSS OF ANTICIPATED PROFITS, OR LOSS OF USE, EVEN IF
MICRUS US HAS BEEN ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN FACT SHALL KNOW OF THE
POSSIBILITY OF SUCH DAMAGES.





	6.	 	CONFIDENTIAL INFORMATION
	 
	6.1	 	Obligations. The Parties acknowledge that, from time to time, one Party (the
“Disclosing Party”) may disclose to the other Party (the “Receiving Party”) information which
is marked as “proprietary” or “confidential” or which would, under the circumstances, be
understood by a reasonable person to be proprietary and nonpublic (“Confidential
Information”). The Receiving Party shall retain such Confidential Information in confidence
and shall not disclose it to any third party without the Disclosing Party’s written consent.
Each Party shall use at least the same procedures and degree of care which it uses to protect
its own Confidential Information of like importance, and in no event less than reasonable
care.
	 
	6.2	 	Exceptions. Notwithstanding the foregoing, Confidential Information will not include
information to the extent that such information:






	 	a.	 	was already known by the Receiving Party without an obligation of
confidentiality at the time of disclosure hereunder;




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	 	b.	 	was generally available to the public at the time of its disclosure to the
Receiving Party hereunder;
	 
	 	c.	 	became generally available to the public after its disclosure other than
through an act or omission of the Receiving Party in breach of this Agreement;
	 
	 	a.	 	was subsequently lawfully and independently disclosed to the Receiving Party by
a person other than the Disclosing Party;
	 
	 	b.	 	was independently developed by the Receiving Party; or
	 
	 	d.	 	is disclosed pursuant to the order or requirement of a court, administrative
agency, or other governmental body, provided, however, that the Receiving Party shall
provide prompt notice thereof to enable the Disclosing Party to seek a protective order
or otherwise prevent such disclosure.






	6.3	 	Contractors. Licensee may appoint one or more third party contractors (each a “Contractor”)
to assist Licensee in Licensee’s operations; provided, however, that any such Contractor’s
access to and use of the Licensed Technology: (a) will only be permitted pursuant to a signed
written agreement between Licensee and such Contractor that contains terms at least as
restrictive as those set forth in this Article 6, (b) protects Micrus US’s proprietary rights
in the Licensed Technology to the degree set forth in this Agreement, and (c) grants the
Contractor no rights in the Licensed Technology or any modification, or enhancement thereof.
	 
	7.	 	TERMINATION
	 
	7.1	 	Term of the Agreement. The initial term of this Agreement shall be for one (1) year
from the Effective Date. Following the initial term, this Agreement shall continue in force
until such time that either Party gives written notice to the other to terminate the
Agreement. Such notice shall be no less then sixty (60) days prior to the proposed
termination date.
	 
	7.2	 	Immediate Termination Upon Notice for Change in Control or Substantial Encumbrance.
In the event that the direct or indirect ownership of Licensee undergoes a change in control
so that Licensee and Micrus US cease to be Affiliates, or in the event that a substantial
portion of Licensee’s assets or the conduct of Licensee’s business shall be substantially
encumbered by extraordinary governmental action or by operation of law, including bankruptcy
or similar proceedings, Micrus US may, at its option, terminate this Agreement effective
immediately upon written notice given to Licensee. For purposes of this paragraph, notice
shall be effective when sent.




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	7.3	 	Termination After Failure to Cure for Failure of Performance. If any Party shall
fail to perform any of its covenants contained in this Agreement or in the Contract
Manufacturing Services Agreement, Agreement for Sharing Development Costs or Supportive
Services Agreement between the Parties with the same effective date, and shall fail to cure
such default within sixty (60) days after receipt of a notice from the other Party, the Party
giving notice shall have the right to terminate this Agreement immediately by giving written
notice to the other Party.
	 
	7.4	 	Effect of Termination. Upon any termination of this Agreement, Licensee and all of
its Sublicensees shall immediately cease to exercise all rights and licenses to the Licensed
Technology or the Brand Rights granted under this Agreement. Within sixty (60) days of the
date of termination, Licensee shall, at the option of Micrus US, return or destroy any
materials, or copies of materials delivered to Licensee pursuant to Section 3.2 or Section
6.1. Licensee shall furnish Micrus US with a certificate signed by an executive officer of
Licensee verifying that the same has been done.
	 
	7.5	 	Final Payment. Upon any termination, treating the date of termination as the final
“Fiscal Year End,” Licensee shall pay any royalties due to Micrus US pursuant to Section 4.3
within sixty (60) days of termination. In the event Licensee or its Sublicensees fail to
promptly discontinue use of Licensed Technology or the Brand Rights as required by Section
7.4, royalties shall continue to accrue in accordance with Section 4 until use is actually
discontinued. The continuation of royalties under this Section 7.5 shall not prejudice or
preclude the availability of any other remedies available to Micrus US for Licensee’s breach
of this Agreement.
	 
	7.6	 	Treatment of Minimum Royalty. Upon any termination other than a termination under
Section 7.3 on account of Micrus US’s failure to cure a default, Licensee shall forfeit the
Minimum Royalty paid pursuant to Section 4.2 of this Agreement and shall not be entitled to
reimbursement of any portion thereof. In the event of a termination under Section 7.3 on
account of Micrus US’s failure to cure a default, Licensee shall be entitled to reimbursement
of a ratable share of the Minimum Royalty if and to the extent that Actual Revenues for the
shortened Year fall short of the Estimated Revenues used to determine the amount of the
Minimum Royalty.
	 
	7.7	 	Survival. The terms and conditions of the following provisions shall survive
termination or expiration of this Agreement: Articles 1, 5, 6 and 8, and Sections 3.1, 4.4,
7.4, 7.5 and 7.7. In addition, the termination or expiration of this Agreement shall not
relieve either Party of any liability under this Agreement that accrued prior to such
termination or expiration.




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	8.	 	MISCELLANEOUS
	 
	8.1	 	Governing Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of California, United States of America, without giving effect to
conflict of laws principles. The Parties hereby expressly consent to the personal jurisdiction
and venue of the courts of California.
	 
	8.2	 	Waiver. Any waiver of the provisions of this Agreement or of a Party’s rights or
remedies under this Agreement must be in writing to be effective. Failure, neglect, or delay
by a Party to enforce the provisions of this Agreement or its rights or remedies at any time
will not be construed and will not be deemed to be a waiver of such party’s rights under this
Agreement and will not in any way affect the validity of the whole or any part of this
Agreement or prejudice such Party’s right to take subsequent action.
	 
	8.3	 	Amendments. This Agreement may not be altered or amended except by a written
agreement signed by both Parties.
	 
	8.4	 	Successors and Assignees. This Agreement shall be binding upon and inure to the
benefit of any entity that is the successor to substantially all of the assets and businesses
of either Party. Neither Party may otherwise assign this Agreement without the other Party’s
written authorization.
	 
	8.5	 	Severability. If any provision in this Agreement shall be found or be held to be
invalid or unenforceable, then the meaning of said provision shall be construed, to the extent
feasible, so as to render the provision enforceable, and if no feasible interpretation would
save such provision, it shall be severed from the remainder of this Agreement which shall
remain in full force and effect unless the severed provision is essential and material to the
rights or benefits received by any party. In such event, the Parties shall use best efforts
to negotiate, in good faith, a substitute, valid and enforceable provision or agreement which
most nearly affects the Parties’ intent in entering into this Agreement.
	 
	8.6	 	Entire Agreement. This Agreement (including the Exhibit and any addenda hereto signed
by both Parties) and the other documents referred to herein, contain the entire agreement of
the Parties with respect to the subject matter of this Agreement and supersedes all previous
communications, representations, understandings and agreements, either oral or written,
between the Parties with respect to the subject matter.
	 
	8.7	 	Relationship Between Parties. The Parties shall at all times and for all purposes be
deemed to be independent contractors and neither Party, nor either Party’s employees,
representatives, subcontractors or agents, shall have the right or power to bind the other
Party. This Agreement shall not itself create or be deemed to create a joint venture,
partnership or similar association between the Parties or either Party’s employees,
subcontractors or agents.




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	8.8	 	Counterparts. The Parties may execute this Agreement in multiple counterparts, each
of which constitutes an original as against the Party that signed it, and both of which
together constitute one agreement. The signatures of both Parties need not appear on the same
counterpart. The delivery of signed counterparts by facsimile or email transmission that
includes a copy of the sending Party’s signature is as effective as signing and delivering the
counterpart in person.
	 
	8.9	 	Notices. Any notices required or permitted hereunder shall be given in writing either
(a) through personal delivery by courier with tracking capabilities or otherwise, (b) by
telecopy or other electronic medium, or (c) by deposit in the mail. Any notice given using
means described in (a) or (c) of the preceding sentence shall be sent to the other Party at
the address set forth in the first paragraph of this Agreement or to such other address as the
Party has designated by notice given pursuant to this Agreement. All notices shall be deemed
given or made (x) on the date delivered if delivered personally, by courier or otherwise, (y)
on the date initially received, if delivered by telecopy or other electronic medium, or (z) on
the third business day after it is mailed.





(The remainder of this page has been intentionally left blank)




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By their signatures, the authorized representatives of the Parties acknowledge the Parties’
acceptance of this Agreement:




	 	 	 	 	 
	 	 	Micrus Endovascular Corporation
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	     /s/ John Kilcoyne
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	Printed Name: John Kilcoyne
	 
	 	 	 	 
	 	 	Title: President and Chief Executive Officer
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	Micrus Endovascular SA
	 
	 	 	 	 
	 

	 	By:
	 	     /s/ Beat Merz
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	Printed Name: Beat Merz
	 
	 	 	 	 
	 	 	Title: President and Administrator
	 
	 	 	 	 
	 

	 	By:
	 	     /s/ Francois Requin
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	Printed Name: Francois Requin
	 
	 	 	 	 
	 	 	Title: Administrator






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EXHIBIT A




ROYALTY RATE SCHEDULE




	 	 	 	 	 	 	 
	Beginning Date	 	Ending Date	 	Annual Royalty Rate
	[***]

	 	[***]
	 	 	 	[***]	 
	[***]

	 	[***]
	 	 	 	[***]	 
	[***]

	 	[***]
	 	 	 	[***]	 
	[***]

	 	[***]
	 	 	 	[***]	 
	[***]

	 	[***]
	 	 	 	[***]	 
	[***]

	 	[***]
	 	 		[***]	 





These royalty rates shall apply to the calculation of the Minimum Royalty as provided in Section
4.2 of the License Agreement unless the Parties adopt a different royalty rate schedule by amending
this Exhibit A.


***
Confidential Treatment Requested



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