exv10w12



 







Exhibit 10.12




CORPORATE FORMATION AGREEMENT




     This Corporate Formation Agreement (this “Agreement”) is made and entered into as of December
26, 2003 (the “Effective Date”) by and between Asthmatx, Inc. (“Asthmatx”), a California
corporation, and Broncus Technologies, Inc., a California corporation (“Broncus”).



RECITALS




     A. Broncus has caused Asthmatx to be incorporated and now wishes to contribute to Asthmatx
cash and certain assets, agreements and obligations of Broncus relating to Broncus’ Alair Asthma
Treatment System business (the “Alair Business”) in exchange for the Asthmatx Shares (as defined
herein) and other consideration described herein.



     B. It is contemplated that, prior to December 31, 2003, Broncus will distribute the Asthmatx
Shares (as defined herein) on a pro rata basis as a dividend to its shareholders (such distribution
and dividend being referred to herein as the “Spin-off”). Asthmatx has been provided with a copy
of an Information Statement prepared by Broncus which describes the Spin-off.



     C. Broncus has previously issued certain warrants to purchase shares of its Common Stock that
are now outstanding and listed in Exhibit A attached hereto (the “Broncus Warrants”), and,
after the occurrence of the Spin-off, Broncus will be required by the terms of the Broncus Warrants
to provide that the Warrant holders will receive shares of Asthmatx’s Common Stock upon exercise of
their Broncus Warrants. In consideration of the agreements of Broncus contained herein, Asthmatx
is willing to agree to issue shares of its Common Stock as provided herein upon the exercise of
Broncus Warrants in order to enable Broncus to satisfy its obligations under the Broncus Warrants.



     D. In consideration of Broncus’ agreements herein, Asthmatx is also willing to agree to grant
options to purchase shares of its Common Stock to holders of Broncus stock options and to employees
of Broncus who will become employees of Asthmatx as provided herein.



     E. The parties also desire to provide, in connection with the formation of Asthmatx, that they
will enter into certain agreements between themselves as provided herein.



AGREEMENT




     NOW, THEREFORE, in consideration of the premises and mutual agreements and covenants
hereinafter set forth, Asthmatx and Broncus hereby agree as follows:



     1. Contribution and Transfer of Assets; Issuance of Asthmatx Shares.



          1.1 Contribution and Transfer of Assets. Broncus hereby contributes, assigns,
transfers, conveys and delivers to Asthmatx, as of the Effective Date, all of Broncus’ right, title
and interest in, to or under all of the assets and properties identified in the following
subparagraphs of this Section 1.1 (collectively, the “Assigned Assets”):




 









 








               (a) cash in the amount equal to forty percent (40%) of the cash held by Broncus on the
Effective Date (which amount Broncus and Asthmatx agree and acknowledge will take into account
Broncus’ payment of those accounts payable paid on or before the Effective Date and which amount
Broncus and Asthamtx estimate will be approximately $2,150,000);



               (b) the tangible personal property assets of Broncus that are identified on Schedule
1.1(b) attached hereto;



               (c) the contracts and agreements that are identified on Schedule 1.1(c) attached
hereto (the “Assigned Contracts”);



               (d) the patents and patent applications specifically listed on Schedule 1.1(d)
attached hereto, all worldwide rights to the inventions described therein, and all rights to
enforce such patents (and any patents that may be issued on any such patent applications) and all
causes of action and rights of recovery for past infringement of such patents, patent applications
and inventions described therein (collectively, the “Assigned Patent Rights”);



               (e) the trademarks and trademark registrations that are identified on Schedule 1.1(e)
attached hereto, and all applications therefor, trade names and rights in trade dress and packaging
associated therewith (collectively, the “Assigned Trademark Rights”);



               (f) the intangible assets, technologies, properties and rights of Broncus that are associated
exclusively with the Alair Asthma Treatment System (including the Alair Controller Software, the
Alair Product Specification, training materials related to the Alair Program, publications
regarding the Alair procedure and all trade dress/design features for the Alair System), including
all patent rights associated therewith, copyrights, copyright registrations and applications
therefor, trade secrets, know-how and other intellectual property rights recognized by the law of
any applicable jurisdiction (collectively, “Intellectual Property Rights”) therein and thereto, all
rights to enforce such Intellectual Property Rights, and all causes of action and rights of
recovery for past infringement of such Intellectual Property Rights; and



               (g) the books and records of Broncus which relate to the assets described in clauses (a)
through (f) above and do not relate to the Excluded Assets (provided that Broncus shall be
entitled to retain a copy of such books and records).


Notwithstanding the foregoing, the Assigned Assets shall not in any event include any of
the assets, properties and rights owned or held by Broncus that are not expressly identified in the
preceding subparagraphs of this Section 1.1 (collectively, the “Excluded Assets”), such as, by way
of illustration and not limitation, assets, properties, agreements, contracts, technologies and
Intellectual Property Rights associated with Broncus’ Exhale emphysema treatment system and not
expressly defined as Assigned Assets herein.




          1.2 Issuance of Asthmatx Shares and Grant of Asthmatx Options. In partial
consideration for Broncus’ contribution and transfer to Asthmatx of the Assigned Assets and the
commitments of Broncus contained in this Agreement, and such other good and valuable


- 2 -









 







consideration, the receipt and sufficiency of which are hereby acknowledged, Asthmatx hereby
agrees with Broncus as follows:




               (a) Issuance of Asthmatx Shares. Asthmatx hereby agrees with Broncus to, and hereby
does, issue and sell to Broncus, and Broncus hereby acquires from Asthmatx, an aggregate total of
(i) 3,883,541 shares of Asthmatx’s Common Stock, (ii) 2,612,500 shares of Asthmatx’s Series A-1
Preferred Stock, (iii) 2,090,000 shares of Asthmatx’s Series A-2 Preferred Stock, (iv) 1,045,000
shares of Asthmatx’s Series A-3 Preferred Stock, (v) 4,280,000 shares of Asthmatx’s Series B
Preferred Stock, (vi) 9,619,528 shares of Asthmatx’s Series C Preferred Stock, and (vii) 9,271,159
shares of Asthmatx’s Series D Preferred Stock (all such shares of Asthmatx Common Stock and
Asthmatx Preferred Stock being collectively referred to herein as the “Asthmatx Shares”).



               (b) Issuance of Common Shares Upon Exercise of Broncus Warrants. In addition to the
issuance to Broncus of the Asthmatx Shares pursuant to Section 1.1(a) above, Asthmatx hereby agrees
with Broncus that, within a reasonable time after each exercise of a Broncus Warrant that occurs
after the date of the Spin-off (a “Broncus Warrant Exercise”), Asthmatx shall issue to the holder
of such Broncus Warrant who has exercised such Broncus Warrant one (1) share of Asthmatx Common
Stock, as presently constituted (the “Issue Number”) for each share of Broncus Common Stock that is
issued to and received by the holder of such Broncus Warrant as a result of such Broncus Warrant
Exercise (with the Issue Number to be equitably and proportionally adjusted to account for and
reflect any stock splits, stock dividends, reverse stock splits or the like occurring after the
date of the Spin-off and affecting the number of outstanding shares of the Common Stock of either
Asthmatx or Broncus); provided, however, that Asthmatx shall not be obligated to
issue its Common Stock under this Section 1.2(b) with respect to a Broncus Warrant Exercise unless
and until Broncus has provided Asthmatx with written notice of such Broncus Warrant Exercise, which
notice shall include (i) the name and address of the holder of the Broncus Warrant exercised in
connection with such Broncus Warrant Exercise; (ii) the name and address of the person(s) in whose
name the shares of Asthmatx’s Common Stock issuable hereunder in respect of such Broncus Warrant
Exercise are to be registered; and (iii) a statement of the number of Broncus shares purchased in
connection with such Broncus Warrant Exercise, and Broncus’ computation of the number of shares of
Asthmatx’s Common Stock then issuable in respect of such Broncus Warrant Exercise in accordance
with this Section 1.2(b).



               (c) Grant of Asthmatx Stock Options to Broncus Optionees. Effective at a time prior
to the time the Spin-off takes effect and during which Asthmatx is a subsidiary of Broncus,
Asthmatx shall grant to each Broncus Optionee (as defined below), with respect to each outstanding
option to purchase Broncus Common Stock held by such Broncus Optionee (a “Broncus Option”), an
option to purchase shares of Asthmatx Common Stock (an “Asthmatx Option”) on the following basis
and terms, except as otherwise noted below:



                    (i) the number of shares of Asthmatx Common Stock subject to each Asthmatx Option granted to a
Broncus Optionee under this Section 1.2(c) with respect to a Broncus Option will (except as
may be otherwise specified in Schedule 1.2(c) attached hereto) be equal to the number of
shares of Broncus Common Stock with respect to which such Broncus Option was vested and exercisable
on the date such Asthmatx Option is granted (or, if exercise



- 3 -









 







of such Broncus Option was not subject to a vesting condition, the number of shares of Broncus
Common Stock subject to such Broncus Option that, on such date of grant, is not subject to
repurchase by Broncus at its original issue price upon termination of the Broncus Optionee’s
services);



                    (ii) the exercise price per share of such Asthmatx Option shall be a price per share of
Asthmatx Common Stock that is forty percent (40%) of the exercise price per share at which shares
of Broncus Common Stock are purchasable under such Broncus Option (computed before the effect of
any modification or adjustment of such Broncus Option made in connection with the Spin-off);



                    (iii) such Asthmatx Option shall continue to be exercisable by such Broncus Optionee for so
long as such Broncus Optionee continues to be employed by, or provide services to, Broncus or a
parent or subsidiary of Broncus (as those terms are defined in Broncus’ option plans) but in no
event beyond the scheduled expiration date of the Broncus Option with respect to which such
Asthmatx Option is granted; and



                    (iv) other terms not described in the foregoing clauses (i) through (iii) that are
substantially the same as the terms of the Broncus Option with respect to which such Asthmatx
Option is granted;


provided, however, that solely for purposes of determining the number of shares of
Asthmatx Common Stock subject to an Asthmatx Option granted to a Broncus Optionee with respect to a
Broncus Option that has not vested on the date of the Spin-off due to probationary “cliff” vesting
provisions (“Cliff Vesting”), such Broncus Option will be deemed to have been vested as of the date
of the Spin-off as to that portion of the Broncus Option subject to Cliff Vesting that is
proportional to the number of months elapsed between the beginning of the Cliff Vesting period and
the date of the Spin-off, but such Asthmatx Option will not actually become vested or exercisable
until the Broncus Optionee has provided the number of months of service to Broncus required to
satisfy the original Cliff Vesting provision under such Broncus Option. For purposes of this
Section 1.2, the term “Broncus Optionee” means an individual (other than an individual who entirely
terminates his or her employment with Broncus in order to become a full-time employee of Asthmatx)
who on the date of the Spin-off holds at least one outstanding option to purchase shares of Broncus
Common Stock.




               (d) Grant of Asthmatx Stock Options to Transferring Optionee. On or before the time
the Spin-off takes effect, Asthmatx shall grant to each Broncus employee who has become an employee
of Asthmatx on or before the date the Spin-off takes effect (each a “Transferring Optionee”), with
respect to each Broncus Option held by such Transferring Optionee (a “Broncus Option”), an Asthmatx
Option on the following basis and terms, except as otherwise noted below:



                    (i) the number of shares of Asthmatx Common Stock subject to each Asthmatx Option granted to a
Transferring Optionee under this Section 1.2(d) with respect to a Broncus Option held by such
Transferring Optionee will (except as may be otherwise specified in Schedule 1.2(d)
attached hereto) be equal to the total number of shares of Broncus Common Stock subject to such
Broncus Option, whether or not vested (computed before the



- 4 -









 







effect of any modification or adjustment of such Broncus Option made in connection with the
Spin-off);



                    (ii) the exercise price per share of each such Asthmatx Option shall be a price per share of
Asthmatx Common Stock that is forty percent (40%) of the exercise price per share at which shares
of Broncus Common Stock are purchasable under such Broncus Option (computed before the effect of
any modification or adjustment of such Broncus Option made in connection with the Spin-off);



                    (iii) each Asthmatx Option granted to such Continuing Broncus Optionee (A) shall be vested on
the date it is granted to the same extent that the Broncus Option with respect to which it was
granted was vested on such date, and (B) shall vest and become exercisable on the same terms and
vesting schedule as the Broncus Option with respect to which it was granted, except that, for
purposes of vesting, all applicable references to Broncus in such Broncus Option shall be
references to Asthmatx in such Asthmatx Option;



                    (iv) each such Asthmatx Option shall continue to be exercisable by such Transferring Optionee
for so long as such Transferring Optionee continues to be employed by, or provide services to,
Asthmatx or a Parent or Subsidiary of Asthmatx (as those terms are defined in Asthmatx’s option
plan) but in no event beyond the scheduled expiration date of the Broncus Option with respect to
which such Asthmatx Option is granted; and



                    (v) other terms not described in the foregoing clauses (i) through (iv) that are substantially
the same as the terms of the Broncus Option with respect to which such Asthmatx Option is granted.



     2. Assumption of Obligations and Liabilities .



          2.1 Certain Defined Terms. As used herein, the following terms shall have the following
meanings:




               (a) “Alair” means the Alair Asthma Treatment System which was originally developed by Broncus
and which has been contributed and assigned by Broncus to Asthmatx pursuant to this Agreement.



               (b) “Alair Business” shall have the meaning given to that term in Recital A of this Agreement
and includes, without limitation, the business of developing, testing, marketing, selling and
otherwise commercially exploiting Alair and any associated services.



               (c) “Exhale” means Broncus’ Exhale Airway Bypass System, which is used to treat emphysema in
humans and which is owned and retained by Broncus.



               (d) “Exhale Business” means Broncus’ business of developing, testing, marketing, selling and
otherwise commercially exploiting Exhale and any associated services.



               (e) “Liabilities” means, collectively, any and all liabilities, losses, claims, debts, duties,
obligations (including but not limited to contractual obligations), expenses,



- 5 -









 







claims, deficiencies or guaranties of any type, whether accrued, absolute, contingent,
matured, unmatured or otherwise.



               (f) “Loss” means, collectively, all Liabilities, loss, damages, expense, cost, fines, fees,
penalties, obligations or injuries, including without limitation those resulting from any and all
claims, actions, suits, demands, assessments, investigations, judgments, awards, arbitrations or
other proceedings, together with reasonable costs and expenses including the reasonable attorneys’
fees and other legal costs and expenses relating thereto.



          2.2 Assumption of Liabilities by Asthmatx. Except to the extent that Asthmatx is
expressly entitled to be indemnified for any of such Liabilities by Broncus pursuant to the
provisions of the Indemnification Agreement (as that term is defined in Section 2.3 below),
Asthmatx hereby assumes and agrees to faithfully and timely pay, perform, fulfill and satisfy in
full all of the following Liabilities (collectively, the “Assumed Liabilities”):




               (a) any and all Liabilities, to the extent that such Liabilities relate to, arise out of or
result from the conduct or operation of the Alair Business by any person or entity (including but
not limited to Broncus, Asthmatx and/or by any other party or parties) at any time, whether before,
on or after the Effective Date; and



               (b) any Liability to the extent it relates to, arises out of, or results from, any of the
Assigned Assets (including without limitation any of the Assigned Contracts) whether such Liability
arises before, on or after the Effective Date.



          2.3 Indemnification Agreement. The parties mutually agree, as soon as reasonably
practicable, to enter into a separate written agreement between themselves (such agreement being
referred to herein as the “Indemnification Agreement”). The Indemnification Agreement will
provide for and address the following matters: (a) the terms and conditions upon which Asthmatx
will undertake to use good faith efforts to obtain certain liability insurance relating to the
Alair Business; (b) the terms and conditions upon which Asthmatx will indemnify Broncus for Loss
related to the Alair Business (including the Assumed Liabilities); (c) the terms and conditions
upon which Broncus will indemnify Asthmatx for Loss related to the Exhale Business; and (d) the
terms and conditions upon which the parties will have access to and may obtain coverage under,
certain insurance policies held by Broncus providing coverage for certain third-party claims
arising from the treatment of individuals with Alair prior to the Effective Date (which may include
provisions pursuant to which Broncus may, from the proceeds of such insurance policies, provide
certain limited indemnification to Asthmatx with respect to such third-party claims).




     3. Further Assurances. The parties agree to execute such further documents
and instruments and to take such further actions as may be reasonably necessary to carry out the
purposes and intent of this Agreement. Broncus further agrees, promptly upon request of Asthmatx,
or any of its successors or assigns, to, at Asthmatx’s expense, to execute, deliver and/or assist
in the filing of (i) recordable patent assignments for each patent or patent application included
in the Assigned Patent Rights, (ii) recordable trademark assignments for each trademark, trademark
application or similar right included in the Assigned Trademark Rights, and (iii) any power of
attorney, assignment, application for copyright, patent or other



- 6 -









 







intellectual property right protection, or any other papers which may be necessary or
desirable to fully secure to Asthmatx, its successors and assigns, all right, title and interest in
and to each of the Assigned Assets. In addition, Broncus agrees never to assert any claims, rights
or moral rights in or to any of the Assigned Assets, except such rights, if any, as Broncus may
hold under a separate written agreement executed by Broncus and Asthmatx.



     4. Representations and Warranties of Broncus. Broncus represents and
warrants to Asthmatx that, as of the Effective Date:



          4.1 Corporate Organization. Broncus is a corporation duly organized, validly existing
and in good standing under the laws of the State of California, and has the corporate power and
authority to enter into and perform its obligations under this Agreement.



          4.2 Authority. The execution, delivery and performance of this Agreement, and the
performance by Broncus of the transactions contemplated hereby, have been duly and validly approved
and authorized by all necessary action of Broncus’ Board of Directors. This Agreement is the valid
and binding obligation of Broncus, enforceable in accordance with its terms, except as to the
effect, if any, of (i) applicable bankruptcy, insolvency, reorganization or other laws of general
application relating to or affecting the enforcement of creditors’ rights generally and (ii) rules
of law governing specific performance, injunctive relief and other equitable remedies.



          4.3 No Conflict. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will conflict with or violate any provision
of the Articles of Incorporation or Bylaws of Broncus.



          4.4 Securities Law Matters. Broncus is not acquiring the Asthmatx Shares with a view
to, or for sale in connection with, any unlawful distribution of the Asthmatx Shares within the
meaning of the Securities Act of 1933, as amended (the “Securities Act”). Broncus has a
preexisting business relationship with Asthmatx and/or certain of its officers and/or directors of
a nature and duration sufficient to make Broncus aware of the character, business acumen and
general business and financial circumstances of Asthmatx and/or such officers and directors. By
reason of Broncus’ business and financial experience, Broncus is capable of evaluating the merits
and risks of this investment, has the ability to protect Broncus’ own interests in this transaction
and is financially capable of bearing a total loss of this investment.



          4.5 Assigned Assets. To Broncus’ knowledge, (a) Broncus owns, and can grant exclusive
right, title and interest in and to, each of the Assigned Assets, (b) none of the Assigned Assets
are presently subject to any dispute, claim, prior license or other agreement, assignment or rights
of any third party, or any other rights that might interfere with Asthmatx’s use, or exercise of
ownership of, any Assigned Assets, nor is Broncus aware of any claims by any third party to any
rights of any kind in or to any of the Assigned Assets, and (c) none of the Assigned Assets are
subject to any lien, pledge, mortgage, security interest or other encumbrance of any sort (other
than such Liabilities as are assumed by Asthmatx pursuant to Section 2 of this Agreement and other
than any lien that would have no material affect on Asthmatx’s ability to use or transfer an
Assigned Asset).



- 7 -









 





     5. ACKNOWLEDGMENT AND AGREEMENT BY BRONCUS AND ASTHMTAX REGARDING SPIN-OFF.
Broncus and Asthmatx acknowledge and agree that (i) the Asthmatx Shares are not being registered
with the Securities and Exchange Commission under the Securities Act or being qualified under the
California Corporate Securities Law of 1968, as amended, or other applicable state securities laws,
but instead are being issued under exemptions from the registration and qualification requirements
of such securities laws which impose certain restrictions on the subsequent sale, transfer or other
disposition the Asthmatx Shares by Broncus and Broncus’ shareholders, and (ii) the stock
certificates representing the Asthmatx Shares will bear restrictive legends as set forth in Section
6.1 to enable Asthmatx to enforce the aforementioned transfer restrictions and such transfer
restrictions will be noted in Asthmatx’s stock transfer books. Broncus and Asthmatx further
acknowledge and agree that the aforementioned transfer restrictions will apply to the Asthmatx
Shares (and will continue to apply to the Asthmatx Shares in the hands of Broncus’ shareholders who
receive them in the Spin-off).



     6. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.



          6.1 Legends. Broncus understands and agrees that Asthmatx will place the legends set
forth below or similar legends on any stock certificate(s) evidencing the Asthmatx Shares, together
with any other legends that may be required by state or federal securities laws, Asthmatx’s
Articles of Incorporation or Bylaws, any other applicable agreement between Broncus, Asthmatx
and/or any third parties:





THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY
NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD
BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT
FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT
THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS.




THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A 180 DAY MARKET STANDOFF
RESTRICTION AS SET FORTH IN A CERTAIN AGREEMENT BETWEEN THE ISSUER AND THE
ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE
PRINCIPAL OFFICE OF THE ISSUER. AS A RESULT OF SUCH AGREEMENT, THESE SHARES MAY NOT
BE TRADED PRIOR TO 180 DAYS AFTER THE EFFECTIVE DATE OF A PUBLIC OFFERING OF THE
COMMON STOCK OF THE ISSUER HEREOF. SUCH RESTRICTION IS BINDING ON TRANSFEREES OF
THESE SHARES.



          6.2 Stop-Transfer Instructions. Broncus agrees that, to ensure compliance with
the restrictions imposed by this Agreement, Asthmatx may issue appropriate “stop-transfer”
instructions to its transfer agent, if any, and if Asthmatx transfers its own securities, it may
make appropriate notations to the same effect in its own records.




- 8 -









 








          6.3 Refusal to Transfer. Asthmatx will not be required (a) to transfer on its books
any Asthmatx Shares that have been sold or otherwise transferred in violation of any of the
provisions of this Agreement or (b) to treat as owner of such Asthmatx Shares, or to accord the
right to vote or pay dividends, to any purchaser or other transferee to whom such Asthmatx Shares
have been so transferred; provided, however, that Broncus and Asthmatx acknowledge
and agree that the transfer, distribution and dividend of the Asthmatx Shares to Broncus’
shareholders in connection with the Spin-off shall not constitute a transfer in violation of any of
the provisions of this Agreement and this Section 6.3 shall not apply to any such transfer.




          6.4 Market Stand Off Agreement. Broncus agrees, in connection with any registration
of Asthmatx’s securities under the Securities Act that, upon the request of Asthmatx or the
underwriters managing any registered public offering of Asthmatx’s securities, Broncus will not
sell or otherwise dispose of any Asthmatx Shares without the prior written consent of Asthmatx or
such underwriters, as the case may be, for such period of time (not to exceed one hundred eighty
(180) days) after the effective date of such registration requested by such managing underwriters
and subject to all restrictions as Asthmatx or the managing underwriters may specify for
employee-shareholders generally. Broncus further agrees to enter into any agreement reasonably
required by the underwriters to implement the foregoing.




     7. CERTAIN AGREEMENTS.



          7.1 License and Manufacturing Agreements. To assist Asthmatx in commencing business
as a separate entity following the Spin-off and to afford each other certain assurances regarding
each party’s ability to use and practice certain intellectual property rights, the parties agree
that, concurrently with the Spin-off, they shall: (a) enter into a License Agreement having the
principal terms summarized in the Term Sheet attached as Exhibit B hereto, under which each
party would grant the other a license to use certain of its intellectual property rights within a
defined field of use (the “Cross-License Agreement”); and (b) a Manufacturing Service Agreement in
substantially the form attached hereto as Exhibit C (the “Manufacturing Agreement”),
pursuant to which Broncus would agree to manufacture certain devices for Asthmatx in exchange for
cash charges. The definitive forms of the Cross-License Agreement and the Manufacturing Agreement
executed by the parties shall be the sole and exclusive agreement and understanding of the parties
with regard to the subject matter of such agreements.




     8. GENERAL PROVISIONS .



          8.1 Governing Law. This Agreement will be governed by and construed in accordance
with the laws of the State of California, without giving effect to that body of laws pertaining to
conflict of laws.




          8.2 Further Assurances. The parties agree to execute such further documents and
instruments and to take such further actions as may be reasonably necessary to carry out the
purposes and intent of this Agreement.




          8.3 Counterparts; Facsimile Signatures. This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered will be deemed an


- 9 -









 







original, and all of which together shall constitute one and the same agreement. This
Agreement may be executed and delivered by facsimile and upon such delivery the facsimile signature
will be deemed to have the same effect as if the original signature had been delivered to the other
party.




          8.4 Severability. If any provision of this Agreement is determined by any court or
arbitrator of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such
provision will be enforced to the maximum extent possible given the intent of the parties hereto.
If such clause or provision cannot be so enforced, then such provision shall be stricken from this
Agreement and the remainder of this Agreement shall be enforced as if such invalid, illegal or
unenforceable clause or provision had (to the extent not enforceable) never been contained in this
Agreement.




          8.5 Notices. Any and all notices required or permitted to be given to a party
pursuant to the provisions of this Agreement will be in writing and will be effective and deemed to
provide such party sufficient notice under this Agreement on the earliest of the following: (i) at
the time of personal delivery, if delivery is in person; (ii) one (1) business day after deposit
with an express overnight courier for United States deliveries, or two (2) business days after such
deposit for deliveries outside of the United States, with proof of delivery from the courier
requested; or (iii) three (3) business days after deposit in the United States mail by certified
mail (return receipt requested) for United States deliveries. All notices for delivery outside the
United States will be sent by express courier. All notices not delivered personally will be sent
with postage and/or other charges prepaid and properly addressed to the party to be notified at the
address set forth on the signature page to this Agreement (or at such other address as the party to
be notified may have designated to the other party by one of the indicated means of notice herein).




          8.6 Amendment and Waivers. This Agreement may not be altered or amended except by an
instrument in writing executed by Broncus and Asthmatx. No rights of a party under this Agreement
may be waived, except by an instrument in writing executed by such party. No waiver of any terms,
provision or condition of or failure to exercise or delay in exercising any rights or remedies
under this Agreement, in any one or more instances shall be deemed to be, or construed as, a
further or continuing waiver of any such term, provision, condition, right or remedy or as a waiver
of any other term, provision or condition of this Agreement.




          8.7 Entire Agreement. This Agreement and the documents referred to herein and
exhibits hereto constitute the entire agreement and understanding of the parties with respect to
the subject matter of this Agreement, and supersede all prior understandings and agreements,
whether oral or written, between or among the parties hereto with respect to the specific subject
matter hereof.




[Signature page follows]




- 10 -









 





     In Witness Whereof, the parties hereto have executed this Corporate Formation
Agreement as of the Effective Date set forth in the first paragraph hereof.



	 	 	 	 	 
	ASTHMATX, INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Glen French	 	 
	 

	 	 

Glen French, President
	 	 
	 
	 	 	 	 
	Address:

	 	1340 Space Park Way	 	 
	 

	 	Mountain View, CA 94043	 	 






 









 






     In Witness Whereof, the parties hereto have executed this Corporate Formation
Agreement as of the Effective Date set forth in the first paragraph hereof.



	 	 	 	 	 
	BRONCUS TECHNOLOGIES, INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Cary Cole	 	 
	 

	 	 

Cary Cole, President
	 	 
	 
	 	 	 	 
	Address:

	 	1400 North Shoreline Blvd, Suite A8	 	 
	 

	 	Mountain View, CA 94043