Document:

Registration Rights Agreement

 Exhibit 4.2 
  

REGISTRATION RIGHTS AGREEMENT 
  
 BETWEEN 
  
 ADVANCED MEDICAL OPTICS, INC., 
  
 AS ISSUER, 
  
 AND 
  
 MORGAN STANLEY & CO. INCORPORATED, 
  
 J.P. MORGAN SECURITIES INC. 
  
 AND 
  
 UBS SECURITIES LLC, 
  
 AS INITIAL PURCHASERS, 
  
 DATED AS OF JULY 18, 2005 

 REGISTRATION RIGHTS AGREEMENT dated as of July 18, 2005 (this “Agreement”), between
Advanced Medical Optics, Inc., a Delaware corporation (the “Company”), and the several initial purchasers named in SCHEDULE I hereto (the “Initial Purchasers”). In order to induce the Initial Purchasers to
enter into the Purchase Agreement dated July 13, 2005 (the “Purchase Agreement”), among the Company and the Initial Purchasers, the Company has agreed to provide the registration rights set forth in this Agreement. 
  
 The Company agrees with the Initial Purchasers, (i) for their benefit as
Initial Purchasers and (ii) for the benefit of the beneficial owners (including the Initial Purchasers) from time to time of the Notes (as defined herein) and the beneficial owners from time to time of the Underlying Common Stock (as defined herein)
issued upon conversion of the Notes (each of the foregoing a “Holder” and together the “Holders”), as follows: 
  
 SECTION 1. Definitions. Capitalized terms used herein without definition shall have their respective meanings set forth in the Purchase Agreement.
As used in this Agreement, the following terms shall have the following meanings: 
  
 “Additional Interest Amount” has the meaning set forth in Section 2(e) hereof. 
  
 “Affiliate” means with respect to any specified person, an “affiliate,” as defined in Rule 144 (as defined below), of
such person. 
  
 “Amendment Effectiveness Deadline
Date” has the meaning set forth in Section 2(d) hereof. 
  
 “Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in The City of New York are authorized or obligated by law or executive order to close. 

 
 “Commission” means the Securities and Exchange
Commission. 
  
 “Common Stock” means the shares
of common stock, $0.01 par value per share, of the Company, together with the rights evidenced by such common stock to the extent provided in the Rights Agreement dated as of June 24, 2002, between the Company and Mellon Investor Services LLC, as
amended, and any other shares of common stock as may constitute “Common Stock” for purposes of the Indenture (as defined below), including the Underlying Common Stock. 
  
 “Conversion Price” has the meaning assigned such term in the Indenture. 
  
 “Damages Accrual Period” has the meaning set forth in
Section 2(e) hereof. 
  
 “Damages Payment Date”
means each January 1 and July 1. 
  
 “Deferral
Notice” has the meaning set forth in Section 3(h) hereof. 
  
 “Deferral Period” has the meaning set forth in Section 3(h) hereof. 
  
 “Effectiveness Deadline Date” has the meaning set forth in Section 2(a) hereof. 

 “Effectiveness Period” means the period commencing on the date hereof and ending on the
earlier of the date that all Registrable Securities have ceased to be Registrable Securities or have ceased to be outstanding. 
  
 “Election and Questionnaire” means a written election delivered to the Company containing substantially the information called for by the
Selling Securityholder Election and Questionnaire attached as Annex A to the Offering Memorandum of the Company dated July 13, 2005, relating to the Notes, as such written election may be amended upon the advice of nationally-recognized counsel
experienced in such matters, to the extent reasonably necessary to ensure compliance with applicable law. 
  
 “Election Holder” means, on any date, any Holder that has delivered a Election and Questionnaire to the Company on or prior to such date.

  
 “Event” has the meaning set forth in Section
2(e) hereof. 
  
 “Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. 
  
 “Filing Deadline Date” has the meaning set forth in Section 2(a) hereof. 
  
 “Fundamental Change” has the meaning set forth in the Indenture. 
  
 “Holder” has the meaning set forth in the second paragraph
of this Agreement. 
  
 “Indenture” means the
Indenture, dated as of the date hereof, between the Company and U.S. Bank National Association, as trustee, pursuant to which the Notes shall be issued. 
  
 “Initial Purchasers” has the meaning set forth in the preamble hereof. 
  
 “Initial Shelf Registration Statement” has the meaning set forth in Section 2(a) hereof. 
  
 “Issue Date” means July 18, 2005. 
  
 “Material Event” has the meaning set forth in Section 3(h)
hereof. 
  
 “Note Register” has the meaning set
forth in the Indenture. 
  
 “Note Registrar” has
the meaning set forth in the Indenture. 
  
 “Notes” means the 1.375% Convertible Senior Subordinated Notes due 2025 of the Company issued and sold pursuant to the Purchase Agreement. 
  
 “Purchase Agreement” has the meaning set forth in the preamble hereof. 
  
 “Prospectus” means the prospectus included in any
Registration Statement (as defined below) (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective Registration Statement in reliance upon Rule 430A 
  

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 promulgated under the Securities Act), as amended or supplemented by any amendment or prospectus supplement, including
post-effective amendments, and all materials incorporated by reference or explicitly deemed to be incorporated by reference in such Prospectus. 
  
 “Record Date” means each June 15 and December 15. 
  
 “Record Holder” means, with respect to any Damages Payment Date relating to any Notes as to which any
Additional Interest Amount has accrued, the registered Holder of such Note on the December 15 immediately preceding a Damages Payment Date occurring on a January 1, and on the June 15 immediately preceding a Damages Payment Date occurring on a July
1. 
  
 “Registrable Securities” means the Notes
until such Notes have been converted into or exchanged for the Underlying Common Stock and, at all times subsequent to any such conversion or exchange, the Underlying Common Stock and any securities into or for which such Underlying Common Stock has
been converted or exchanged, and any security issued with respect thereto upon any stock dividend, split or similar event until, in the case of any such security, the earliest of: 
  
 (a) the date on which such security has been registered under the Securities Act and disposed of pursuant to
an effective registration statement; 
  
 (b) the
date on which such security is distributed to the public pursuant to Rule 144 under the Securities Act or may be sold or transferred by a person who is not an Affiliate of the Company pursuant to Rule 144(k) under the Securities Act (or any other
similar provision then in force) without any volume or manner of sale restrictions thereunder; and 
  
 (c) the date on which such securities cease to be outstanding (whether as a result of repurchase and cancellation, conversion or
otherwise). 
  
 “Registration Statement” means
any registration statement of the Company that covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such Registration Statement, including post-effective
amendments, all exhibits and all materials incorporated by reference or explicitly deemed to be incorporated by reference in such Registration Statement. 
  
 “Restricted Securities” means “restricted securities” as defined in Rule 144. 
  
 “Rule 144” means Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission. 
  
 “Rule 144A” means Rule 144A under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission. 
  
 “Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated by the Commission thereunder. 
  

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 “Shelf Registration Statement” has the meaning set forth in Section 2(a) hereof.

  
 “Special Counsel” means Latham & Watkins
LLP or one such other successor counsel as shall be specified by the Holders of a majority of the Registrable Securities and reasonably acceptable to the Company, but which may, with the written consent of the Initial Purchasers (which shall not be
unreasonably withheld), be another nationally recognized law firm experienced in securities law matters designated by the Company, the reasonable fees and expenses in connection with Blue Sky qualifications of the Registrable Securities of which
will be paid by the Company pursuant to Section 5 hereof. For purposes of determining the Holders of a majority of the Registrable Securities in this definition, Holders of Notes shall be deemed to be the Holders of the number of shares of
Underlying Common Stock into which such Notes are or would be convertible as of the date the consent is requested. 
  
 “Subsequent Shelf Registration Statement” has the meaning set forth in Section 2(b) hereof. 
  
 “TIA” means the Trust Indenture Act of 1939, as amended.

  
 “Trustee” means U.S. Bank National
Association, the trustee under the Indenture. 
  
 “Underlying Common Stock” means the Common Stock into which the Notes are convertible or issued upon any such conversion. 
  
 SECTION 2. Shelf Registration. (a) The Company shall use its reasonable best efforts to prepare and file or cause to be prepared and filed with the
Commission, by the date (the “Filing Deadline Date”) ninety (90) calendar days after the Issue Date, a Registration Statement for an offering to be made on a delayed or continuous basis pursuant to Rule 415 of the Securities Act (a
“Shelf Registration Statement”) registering the resale from time to time by Holders thereof of all of the Registrable Securities (the “Initial Shelf Registration Statement”). The Initial Shelf Registration Statement
shall be on Form S-3 or another appropriate form permitting registration of such Registrable Securities for resale by such Holders in accordance with the methods of distribution elected by the Holders and set forth in the Initial Shelf Registration
Statement. The Company shall use its reasonable best efforts to cause the Initial Shelf Registration Statement to be declared effective under the Securities Act by the date that is one hundred eighty (180) calendar days after the Issue Date (the
“Effectiveness Deadline Date”), and to keep the Initial Shelf Registration Statement (or any Subsequent Shelf Registration Statement) continuously effective under the Securities Act until the expiration of the Effectiveness Period.
At the time the Initial Shelf Registration Statement is declared effective, each Holder that became a Election Holder on or prior to the date ten (10) Business Days prior to such time of effectiveness shall be named as a selling securityholder in
the Initial Shelf Registration Statement and the related Prospectus in such a manner as to permit such Holder to deliver such Prospectus to purchasers of Registrable Securities in accordance with applicable law. No Holder that is not a Election
Holder shall be entitled to be named as a selling securityholder in or have the Registrable Securities held by it covered in a Shelf Registration Statement. The Company shall use its reasonable best efforts to ensure that none of the Company’s
securityholders (other than the Holders of Registrable Securities) shall have the right to include any of the Company’s securities in the Shelf Registration Statement. 
  

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 (b) If the Initial Shelf Registration Statement or any Subsequent Shelf Registration Statement ceases to
be effective for any reason at any time during the Effectiveness Period (other than because all Registrable Securities registered thereunder shall have been resold pursuant thereto or shall have otherwise ceased to be Registrable Securities), the
Company shall use its reasonable best efforts to obtain the prompt withdrawal of any order suspending the effectiveness thereof, and in any event shall within thirty (30) days of such cessation of effectiveness amend the Shelf Registration Statement
in a manner reasonably expected to obtain the withdrawal of the order suspending the effectiveness thereof, or file an additional Shelf Registration Statement covering all of the securities that as of the date of such filing are Registrable
Securities (a “Subsequent Shelf Registration Statement”). If a Subsequent Shelf Registration Statement is filed, the Company shall use its reasonable best efforts to cause the Subsequent Shelf Registration Statement to become
effective as promptly as is practicable after such filing and to keep such Registration Statement (or subsequent Shelf Registration Statement) continuously effective until the end of the Effectiveness Period. 
  
 (c) The Company shall supplement and amend the Shelf Registration Statement
if required by the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration Statement, if required by the Securities Act or as necessary to name a Election Holder as a selling
securityholder pursuant to Section 2(d) below. 
  
 (d) Each Holder
agrees that if such Holder wishes to sell Registrable Securities pursuant to a Shelf Registration Statement and related Prospectus, it will do so only in accordance with this Section 2(d) and Section 3(h) of this Agreement. Following the date that
the Initial Shelf Registration Statement is declared effective, each Holder that is not a Election Holder wishing to sell Registrable Securities pursuant to a Shelf Registration Statement and related Prospectus agrees to deliver an Election and
Questionnaire to the Company at least fifteen (15) Business Days prior to any intended distribution of Registrable Securities under the Shelf Registration Statement. From and after the date the Initial Shelf Registration Statement is declared
effective, the Company shall, as promptly as practicable after the date an Election and Questionnaire is delivered to the Company in accordance with the provisions of Section 8(c), and in any event upon the later of (1) fifteen (15) Business Days
after such date or (2) fifteen (15) Business Days after the expiration of any Deferral Period in effect when the Election and Questionnaire is delivered or put into effect within fifteen (15) Business Days of such delivery date: 
  
 (i) if required by applicable law, file with the Commission
a post-effective amendment to the Shelf Registration Statement or prepare and, if required by applicable law, file a supplement to the related Prospectus or a supplement or amendment to any document incorporated therein by reference or file any
other required document so that the Holder delivering such Election and Questionnaire is named as a selling securityholder in the Shelf Registration Statement and the related Prospectus in such a manner as to permit such Holder to deliver such
Prospectus to purchasers of the Registrable Securities in accordance with applicable law and, if the Company shall file a post-effective amendment to the Shelf Registration Statement, use its reasonable best efforts to cause such post-effective
amendment to be declared effective under the Securities Act as promptly as is practicable, but in any event by the date (the “Amendment Effectiveness Deadline Date”) that is forty-five (45) days after the date such post-effective
amendment is required by this clause to be filed by the Company in accordance with this clause (i); 
  

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 (ii) provide such Holder copies of any documents filed pursuant to Section 2(d)(i); and

  
 (iii) notify such Holder as promptly as
practicable after the effectiveness under the Securities Act of any post-effective amendment filed pursuant to Section 2(d)(i); 
  
 provided, that if such Election and Questionnaire is delivered during a Deferral Period, the Company shall so inform the Holder delivering such Election and
Questionnaire and shall take the actions set forth in clauses (i), (ii) and (iii) above upon expiration of the Deferral Period in accordance with Section 3(h). Notwithstanding anything contained herein to the contrary, (i) the Company shall be under
no obligation to name any Holder that is not a Election Holder as a selling securityholder in any Registration Statement or related Prospectus and (ii) the Amendment Effectiveness Deadline Date shall be extended by up to fifteen (15) Business Days
from the expiration of a Deferral Period if such Deferral Period shall be in effect on the Amendment Effectiveness Deadline Date. 
  
 (e) The parties hereto agree that the Holders of Notes that are Registrable Securities will suffer damages, and that it would not be feasible to ascertain
the extent of such damages with precision, if, other than as permitted hereunder, 
  
 (i) the Initial Shelf Registration Statement has not been filed on or prior to the Filing Deadline Date, 
  
 (ii) the Initial Shelf Registration Statement has not been
declared effective under the Securities Act on or prior to the Effectiveness Deadline Date, or 
  
 (iii) the aggregate duration of Deferral Periods in any period exceeds the number of days permitted in respect of such period pursuant to
Section 3(h) hereof. 
  
 Each event described in any of the foregoing clauses (i)
through (iii) is individually referred to herein as an “Event.” For purposes of this Agreement, each Event set forth above shall begin and end on the dates set forth in the table set forth below: 
  

					
	 Type of Event by
Clause

	    	 Beginning Date

	    	 Ending Date

	(i)	    	Filing Deadline Date	    	the date the Initial Shelf Registration Statement is filed
			
	(ii)	    	Effectiveness Deadline Date	    	the date the Initial Shelf Registration Statement becomes effective under the Securities Act
			
	(iii)	    	the date on which the aggregate duration of Deferral Periods in any period exceeds the number of days permitted by Section 3(h)	    	termination of the Deferral Period that caused the limit on the aggregate duration of Deferral Periods to be exceeded

  
 For purposes of this Agreement, Events
shall begin on the dates set forth in the table above and shall continue until the ending dates set forth in the table above. 
  

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 Commencing on (and including) any date that an Event has begun and ending on (but excluding) the next
date on which there are no Events that have occurred and are continuing (a “Damages Accrual Period”), the Company shall pay, as Additional Interest and not as a penalty, to Record Holders of Notes that are Registrable Securities an
amount accruing, for each day in the Damages Accrual Period, in respect of any Note, at a rate per annum equal to (A) 0.25% of the aggregate principal amount of such Note to and including the 90th calendar day of the Damages Accrual Period and (B)
0.50% of the aggregate principal amount of such Note from and after the 91st calendar day of the Damages Accrual Period (the “Additional Interest Amount”). Notwithstanding the foregoing, no Additional Interest Amount shall accrue as
to any Note that is a Registrable Security from and after the earlier of (x) the date such Note is no longer a Registrable Security and (y) expiration of the Effectiveness Period. The rate of accrual of the Additional Interest Amount with respect to
any period shall not exceed the rate provided for in this paragraph notwithstanding the occurrence of multiple concurrent Events. Following the cure of all Events relating to any particular Note, the accrual of Additional Interest with respect to
such Note shall cease. 
  
 The Additional Interest Amount shall
accrue from the first day of the applicable Damages Accrual Period, and shall be payable on each Damages Payment Date during the Damage Accrual Period (and on the Damages Payment Date next succeeding the end of the Damages Accrual Period if the
Damage Accrual Period does not end on a Damages Payment Date) to the Record Holders of Notes that are Registrable Securities entitled thereto; provided, that any Additional Interest Amount accrued with respect to any Note or portion thereof
redeemed by the Company on a redemption date, or repurchased by the Company on a repurchase date in connection with a Fundamental Change, in either case that is after a Damages Payment Date and before the next Record Date, shall, in any such event,
be paid on the applicable redemption date or repurchase date, as the case may be, instead to the Holder who submitted such Note or portion thereof for redemption on the applicable redemption date or repurchase on the applicable repurchase date;
provided, further, that any Additional Interest Amount accrued with respect to any Note or portion thereof converted into Underlying Common Stock in connection with a Fundamental Change shall be paid on the conversion date instead to the
Holder that submitted such Note or portion thereof for conversion. The Trustee shall be entitled, on behalf of registered holders of Notes, to seek any available remedy for the enforcement of this Agreement, including for the payment of such
Additional Interest Amount. Notwithstanding the foregoing, the parties agree that the sole damages payable for a violation of the terms of this Agreement with respect to which 

  

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Additional Interest are expressly provided shall be such Additional Interest. Nothing shall preclude any Holder from pursuing or obtaining specific
performance or other equitable relief with respect to this Agreement. 
  
 All of the Company’s obligations set forth in this Section 2(e) to pay any Additional Interest Amount that is outstanding with respect to any Note that is a Registrable Security at the time such Note ceases to be a Registrable Security
shall survive until such time as all such obligations with respect to such Note have been satisfied in full (notwithstanding termination of this Agreement pursuant to Section 8(k) hereof). 
  
 The parties hereto agree that the Additional Interest provided for in this
Section 2(e) constitute a reasonable estimate of the damages that may be incurred by Holders of Notes that are Registrable Securities by reason of the failure of the Shelf Registration Statement to be filed or declared effective or available for
effecting resales of Notes that are Registrable Securities in accordance with the provisions hereof. 
  
 SECTION 3. Registration Procedures. In connection with the registration obligations of the Company under Section 2 hereof, during the Effectiveness
Period the Company shall: 
  
 (a) Before filing any Registration
Statement or Prospectus or any amendments or supplements thereto with the Commission (other than any supplements that do nothing more substantive than name one or more Election Holders as selling securityholders), furnish to the Initial Purchasers
and the Special Counsel of such offering, if any, copies of all documents proposed to be filed at least three (3) Business Days prior to the filing of such Registration Statement or amendment thereto or Prospectus or supplement thereto. 

 
 (b) Subject to Section 3(h) hereof, prepare and file with the Commission
such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement continuously effective for the applicable period specified in Section 2(a) hereof; cause the related Prospectus to
be supplemented by any required prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act; and use its reasonable best efforts to comply with the provisions of
the Securities Act applicable to it with respect to the disposition of all securities covered by such Registration Statement during the Effectiveness Period in accordance with the intended methods of disposition by the sellers thereof set forth in
such Registration Statement as so amended or such Prospectus as so supplemented. 
  
 (c) As promptly as practicable give notice to the Election Holders, (i) when any Prospectus or Registration Statement has been filed with the Commission and, with respect to a Registration Statement, when the same has
been declared effective; provided, however, that the Company shall not be required by this clause (i) to notify any Election Holder of the filing of a supplement to any Prospectus that does nothing more substantive than name one or
more other Election Holders as selling securityholders, (ii) of any request, following the effectiveness of the Initial Shelf Registration Statement under the Securities Act, by the Commission or any other federal or state governmental authority for
amendments or supplements to any Registration Statement or related Prospectus or for additional information related thereto, (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending
the effectiveness of any Registration Statement or the initiation or threatening of any 
  

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 proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of
the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, (v) of the occurrence of, but not the nature of or details
concerning, a Material Event (provided, that no notice by the Company shall be required pursuant to this clause (v) in the event that the Company either promptly files a supplement to update the Prospectus or a Current Report on Form 8-K or
other appropriate Exchange Act report that is incorporated by reference into the Registration Statement, which, in any case, contains the requisite information with respect to such Material Event that results in such Registration Statement no longer
containing any untrue statement of a material fact or omitting to state a material fact necessary to make the statement contained therein not misleading) and (vi) of the determination by the Company that a post-effective amendment to a Registration
Statement will be filed with the Commission, which notice may, at the discretion of the Company (or as required pursuant to Section 3(h)), state that it constitutes a Deferral Notice, in which event the provisions of Section 3(h) shall apply.

  
 (d) Use its reasonable best efforts to obtain the withdrawal
of any order suspending the effectiveness of a Registration Statement or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction in which they have been
qualified for sale, in either case as promptly as practicable, and provide prompt notice to each Election Holder and the Initial Purchasers of the withdrawal of any such order. 
  
 (e) As promptly as practicable furnish to each Election Holder, the Special Counsel and the Initial Purchasers, upon request
and without charge, at least one (1) conformed copy of the Registration Statement and any amendment thereto, including exhibits filed with any Registration Statement or amendment, but without documents incorporated or deemed to be incorporated
therein by reference if such documents are available on the Electronic Data Gathering, Analysis, and Retrieval system of the Commission. 
  
 (f) During the Effectiveness Period, deliver to each Election Holder, in connection with any sale of Registrable Securities pursuant to a Registration
Statement, without charge, as many copies of the Prospectus or Prospectuses relating to such Registrable Securities (including each preliminary Prospectus) and any amendment or supplement thereto as such Election Holder may reasonably request; and
the Company hereby consents (except during such periods that a Deferral Notice is outstanding and has not been revoked) to the use of such Prospectus or each amendment or supplement thereto, by each Election Holder in connection with any offering
and sale of the Registrable Securities covered by such Prospectus or any amendment or supplement thereto in the manner set forth therein. 
  
 (g) Prior to any public offering of the Registrable Securities pursuant to a Registration Statement, use its reasonable best efforts to register or
qualify or cooperate with the Election Holders and the Special Counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities
or Blue Sky laws of such jurisdictions within the United States as any Election Holder reasonably requests in writing (which request may be included in the Election and Questionnaire); prior to any public offering of the Registrable Securities
pursuant to the Shelf Registration Statement, use its reasonable best efforts to keep each such registration or 

  

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qualification (or exemption therefrom) effective during the Effectiveness Period in connection with such Election Holder’s offer and sale of Registrable
Securities pursuant to such registration or qualification (or exemption therefrom) and do any and all other acts or things reasonably necessary or advisable to enable the disposition in such jurisdictions of such Registrable Securities in the manner
set forth in the relevant Registration Statement and the related Prospectus; provided, that the Company will not be required to (i) qualify as a foreign corporation or as a dealer in securities in any jurisdiction where it would not otherwise
be required to qualify but for this Agreement or (ii) take any action that would subject it to general service of process in suits or to taxation in any such jurisdiction where it is not then so subject. 
  
 (h) Upon (w) the issuance by the Commission of a stop order suspending the
effectiveness of the Shelf Registration Statement or the initiation of proceedings with respect to the Shelf Registration Statement under Section 8(d) or 8(e) of the Securities Act, (x) the occurrence of any event or the existence of any fact (a
“Material Event”) as a result of which any Registration Statement shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not
misleading, or any Prospectus shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading, (y) the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose or (z) the occurrence or existence of any pending corporate development that, in the reasonable discretion of the Company, makes it appropriate to suspend the availability of the Shelf Registration
Statement and the related Prospectus: 
  
 (i) in
the case of clause (x) above, subject to the next sentence, as promptly as practicable prepare and file, if necessary pursuant to applicable law, a post-effective amendment to such Registration Statement or a supplement to the related Prospectus or
any document incorporated therein by reference or file any other required document that would be incorporated by reference into such Registration Statement and Prospectus so that such Registration Statement does not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and such Prospectus does not contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, as thereafter delivered to the purchasers of the Registrable Securities being sold
thereunder, and, in the case of a post-effective amendment to a Registration Statement, subject to the next sentence, use its reasonable best efforts to cause it to be declared effective as promptly as is practicable, and 
  
 (ii) give notice to the Election Holders that the
availability of the Shelf Registration Statement is suspended (a “Deferral Notice”) and, upon receipt of any Deferral Notice, each Election Holder agrees not to sell any Registrable Securities pursuant to the Registration Statement
until such Election Holder’s receipt of copies of the supplemented or amended Prospectus provided for in clause (i) above, or until it is advised in writing by the Company that the Prospectus may be used, and has received 

  

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copies of any additional or supplemental filings that are incorporated or deemed incorporated by reference in such Prospectus, and such Holder will either
(X) destroy any Prospectuses, other than permanent file copies, then in such Holder’s possession that have been replaced by the Company with more recently dated prospectuses or (Y) deliver to the Company (at the Company’s expense) all
copies in such Holder’s possession, other than permanent file copies then in such Holder’s possession, of the Prospectus covering such Registrable Securities, current at the time of receipt of such notice. 
  
 The Company will use its reasonable best efforts to ensure that the use of
the Prospectus may be resumed (x) in the case of clause (w) and (y) above, as promptly as is practicable, (y) in the case of clause (B) above, as soon as, in the sole judgment of the Company, public disclosure of such Material Event would not be
prejudicial to or contrary to the interests of the Company or, if necessary to avoid unreasonable burden or expense, as soon as practicable thereafter and (z) in the case of clause (D) above, as soon as in the reasonable discretion of the Company,
such suspension is no longer appropriate. Any period during which the availability of the Shelf Registration Statement and any Prospectus is suspended (the “Deferral Period”) shall, without incurring any obligation to pay Additional
Interest pursuant to Section 2(e), not exceed 45 calendar days in any 90 calendar-day period (or 60 calendar days in any 90 calendar-day period in the event of a Material Event pursuant to which the Company has delivered a second notice as permitted
below) or 120 days in any 360 calendar-day period; provided, that in the case of a Material Event relating to an acquisition or a probable acquisition, financing, recapitalization, business combination or other similar transaction, the
Company may, without incurring any obligation to pay Additional Interest pursuant to Section 2(e), deliver to Election Holders a second notice to the effect set forth above, which shall have the effect of extending the Deferral Period by up to an
additional 15 calendar days, or such shorter period of time as is specified in such second notice. 
  
 (i) If requested in writing in connection with a disposition of Registrable Securities in an aggregate amount of at least $5 million pursuant to a
Registration Statement, make reasonably available for inspection during normal business hours by a representative for the Election Holders of such Registrable Securities, any broker-dealers, attorneys and accountants retained by such Election
Holders, and any attorneys or other agents retained by a broker-dealer engaged by such Election Holders, all relevant financial and other records and pertinent corporate documents and properties of the Company and its subsidiaries, and cause the
appropriate officers, directors and employees of the Company and its subsidiaries to make reasonably available for inspection during normal business hours on reasonable notice all relevant information reasonably requested by such representative for
the Election Holders, or any such broker-dealers, attorneys or accountants in connection with such disposition, in each case as is customary and reasonably necessary for similar “due diligence” examinations; provided, that such
persons shall first agree in writing with the Company that any non-public information shall be kept confidential by such persons and shall be used solely for the purposes of exercising rights under this Agreement, unless (w) disclosure of such
information is required by court or administrative order or is necessary to respond to inquiries of regulatory authorities, (x) disclosure of such information is required by law (including any disclosure requirements pursuant to federal securities
laws in connection with the filing of any Registration Statement or the use of any prospectus referred to in this Agreement), (y) such information becomes generally available to the public other than as a result of a disclosure or failure to
safeguard by any such person or (z) such information becomes 

  

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available to any such person from a source other than the Company and such source is not bound by a confidentiality agreement, and provided, further,
that the foregoing inspection and information gathering shall, to the greatest extent possible, be coordinated on behalf of all the Election Holders and the other parties entitled thereto by Special Counsel. Any person legally compelled to disclose
any such confidential information made available for inspection shall provide the Company with prompt prior written notice of such requirement so that the Company may seek a protective order or other appropriate remedy. 
  
 (j) Comply in all material respects with all applicable rules and regulations
of the Commission and make generally available to its securityholders earning statements (which need not be audited) satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule promulgated under the
Securities Act) for a 12-month period commencing on the first day of the first fiscal quarter of the Company commencing after the effective date of a Registration Statement. 
  
 (k) Cooperate with each Election Holder to facilitate the timely preparation and delivery of certificates representing
Registrable Securities sold or to be sold pursuant to a Registration Statement, which certificates shall not bear any restrictive legends, and cause such Registrable Securities to be in such denominations as are permitted by the Indenture and
registered in such names as such Election Holder may request in writing at least two (2) Business Days prior to any sale of such Registrable Securities. 
  
 (l) Provide a CUSIP number from Standard & Poor’s CUSIP Bureau for all Registrable Securities covered by each Registration Statement not later
than the effective date of such Registration Statement and provide the Trustee and the transfer agent for the Common Stock with printed certificates for the Registrable Securities that are in a form eligible for deposit with The Depository Trust
Company. 
  
 (m) Reasonably cooperate and assist in any filings
required to be made with the National Association of Securities Dealers, Inc. 
  
 (n) Upon the filing of the Initial Shelf Registration Statement, announce the same, by release to Reuters Economic Services and Bloomberg Business News and by delivery of written notice by first class mail to the
Holders at their addresses set forth in the Note Register of the Note Registrar. 
  
 (o) Upon the effectiveness of the Initial Shelf Registration Statement, announce the same, by release to Reuters Economic Services and Bloomberg Business News. 
  
 SECTION 4. Holder’s Obligations. Each Holder agrees, by
acquisition of the Registrable Securities, that no Holder shall be entitled to sell any of such Registrable Securities pursuant to a Registration Statement or to receive a Prospectus relating thereto, unless such Holder has furnished the Company
with a Election and Questionnaire as required pursuant to Section 2(d) hereof (including the information required to be included in such Election and Questionnaire) and the information set forth in the next sentence. Each Election Holder agrees to
furnish promptly to the Company all information required to be disclosed in order to make the information previously furnished to the Company by such Election Holder not misleading and any other information regarding such Election Holder and the
distribution of such Registrable 

  

 12 

 
Securities as the Company may from time to time reasonably request. Any sale of any Registrable Securities by any Holder shall constitute a representation
and warranty by such Holder that the information relating to such Holder and its plan of distribution is as set forth in the Prospectus delivered by such Holder in connection with such disposition, that such Prospectus does not as of the time of
such sale contain any untrue statement of a material fact relating to or provided by such Holder or its plan of distribution and that such Prospectus does not as of the time of such sale omit to state any material fact relating to or provided by
such Holder or its plan of distribution necessary to make the statements in such Prospectus, in the light of the circumstances under which they were made, not misleading. 
  
 SECTION 5. Registration Expenses. The Company shall bear all fees and expenses incurred in connection with the
performance by the Company of its obligations under Section 2 and 3 of this Agreement whether or not any Registration Statement is declared effective. Such fees and expenses shall include, without limitation, (a) all registration and filing fees
(including, without limitation, fees and expenses (x) with respect to filings required to be made with the National Association of Securities Dealers, Inc. and (y) of compliance with federal and state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of the Special Counsel in connection with Blue Sky qualifications of the Registrable Securities under the laws of such jurisdictions as Election Holders of a majority of the Registrable Securities being
sold pursuant to a Registration Statement may designate), (b) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities in a form eligible for deposit with The Depository Trust Company), (c)
duplication expenses relating to copies of any Registration Statement or Prospectus delivered to any Holders hereunder, (d) fees and disbursements of counsel for the Company in connection with the Shelf Registration Statement, (e) reasonable fees
and disbursements of the Trustee and its counsel and of the Note Registrar and Transfer Agent for the Common Stock and (f) any Securities Act liability insurance obtained by the Company in its sole discretion. In addition, the Company shall pay the
internal expenses of the Company (including, without limitation, all salaries and expenses of officers and employees performing legal or accounting duties), the expense of any annual audit, the fees and expenses incurred in connection with the
listing by the Company of the Registrable Securities on any securities exchange on which similar securities of the Company are then listed, if any listing is made, and the fees and expenses of any person, including special experts, retained by the
Company. Notwithstanding the provisions of this Section 5, each Holder of Registrable Securities shall pay its selling expenses, including any underwriting discount and commissions, and its registration expenses to the extent required by applicable
law. 
  
 SECTION 6. Indemnification and Contribution.

  
 (a) Indemnification by the Company. The Company agrees
to indemnify and hold harmless each Election Holder, each person, if any, who controls any Election Holder within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, and each Affiliate of any Election Holder
within the meaning of Rule 405 under the Securities Act that is a broker-dealer from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) caused by any (i) untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or any amendment thereof, caused by any omission or alleged omission to
state therein a material fact required to be stated 

  

 13 

 
therein or necessary to make the statements therein not misleading or (ii) untrue statement or alleged untrue statement of a material fact contained in any
preliminary Prospectus or the Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto), caused by any omission or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein in light of the circumstances under which they were made not misleading, except in each of (i) and (ii) above insofar as such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon information relating to any Holder furnished to the Company in writing by such Holder expressly for use therein; provided, that the indemnification contained in this
paragraph shall not inure to the benefit of any Holder (or to the benefit of any person controlling such Holder) on account of any such losses, claims, damages or liabilities caused by any untrue statement or alleged untrue statement or omission or
alleged omission made in any preliminary Prospectus, provided in each case the Company has performed its obligations under Section 3(f) hereof if either (A) (x) such Holder failed to send or deliver a copy of the Prospectus with or prior to the
delivery of written confirmation of the sale by such Holder to the person asserting the claim from which such losses, claims, damages or liabilities arise and (y) the Prospectus would have corrected such untrue statement or alleged untrue statement
or such omission or alleged omission, or (B) (x) such untrue statement or alleged untrue statement, omission or alleged omission is corrected in an amendment or supplement to the Prospectus and (y) having previously been furnished by or on behalf of
the Company with copies of the Prospectus as so amended or supplemented, such Holder thereafter fails to deliver such Prospectus as so amended or supplemented, with or prior to the delivery of written confirmation of the sale of a Registrable
Security to the person asserting the claim from which such losses, claims, damages or liabilities arise. 
  
 (b) Indemnification by Holders. Each Holder, severally and not jointly, agrees to indemnify and hold harmless the Company and its directors,
officers and each person, if any, who controls the Company (within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act) or any other Holder, to the same extent as the foregoing indemnity from the Company to such
Holder, but only with reference to information relating to such Holder furnished to the Company in writing by such Holder expressly for use in the Registration Statement or Prospectus or amendment or supplement thereto. In no event shall the
liability of any Holder hereunder be greater in amount than the dollar amount of the proceeds received by such Holder upon the sale of the Registrable Securities pursuant to the Registration Statement giving rise to such indemnification obligation.

  
 (c) Conduct of Indemnification Proceedings. In case any
proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to Section 6(a) or 6(b) hereof, such person (the ”indemnified party”) shall promptly
notify the person against whom such indemnity may be sought (the “indemnifying party”) in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified
party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the reasonable fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention
of such 

  

 14 

 
counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party
in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel at its standard non-premium rates) for all such indemnified
parties and that all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by, in the case of parties indemnified pursuant to Section 6(a), the Holders of a majority (with Holders of Notes deemed
to be the Holders, for purposes of determining such majority, of the number of shares of Underlying Common Stock into which such Notes are or would be convertible as of the date on which such designation is made) of the Registrable Securities
covered by the Registration Statement held by Holders that are indemnified parties pursuant to Section 6(a) and, in the case of parties indemnified pursuant to Section 6(b), the Company. The indemnifying party shall not be liable for any settlement
of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment that is indemnifiable pursuant to Section 6(a) or 6(b), as the case may be. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 60 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such
settlement being entered into and (iii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement; provided, that an indemnifying party shall not be liable for
any such settlement effected without its consent if such indemnifying party, prior to the date of such settlement, (1) reimburses such indemnified party in accordance with such request for the amount of such fees and expenses of counsel as the
indemnifying party believes in good faith to be reasonable, and (2) provides written notice to the indemnified party that the indemnifying party disputes in good faith the reasonableness of the unpaid balance of such fees and expenses. No
indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. 
  
 (d) Contribution. To the extent that the indemnification provided for
in Section 6(a) or 6(b) is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party under Section 6(a) or 6(b), as applicable, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the indemnified party or parties on the other hand or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i) 

  

 15 

 
above but also the relative fault of the indemnifying party or parties on the one hand and of the indemnified party or parties on the other hand in
connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company shall be deemed to be equal to the total
net proceeds from the offering and sale of the Notes to the Initial Purchasers made pursuant to the Purchase Agreement (before deducting expenses) of the Registrable Securities to which such losses, claims, damages or liabilities relate. The
relative benefits received by any Holder shall be deemed to be equal to the value of receiving Registrable Securities that are registered under the Securities Act. The relative fault of the Holders on the one hand and the Company on the other hand
shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Holders or by the Company,
and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Holders’ respective obligations to contribute pursuant to this Section 6(d) are several in proportion
to the respective number of Registrable Securities they have sold pursuant to a Registration Statement, and not joint. 
  
 The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding this Section 6, no indemnifying party that is a selling Holder shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable
Securities sold by it and distributed to the public were offered to the public exceeds the amount of any damages that such indemnifying party has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 
  
 (e) The remedies provided for in this Section 6 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to an indemnified party at law or in equity, hereunder, under the Purchase Agreement or otherwise. 
  
 (f) The indemnity and contribution provisions contained in this Section 6 shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Holder, any person controlling any Holder or any Affiliate of any Holder or by or on behalf of the Company, their officers or directors or
any person controlling the Company and (iii) the sale of any Registrable Securities by any Holder. 
  
 SECTION 7. Information Requirements. The Company covenants that, if at any time before the end of the Effectiveness Period the Company is not
subject to the reporting requirements of the Exchange Act, it will cooperate with any Holder and take such further reasonable action as any Holder may reasonably request in writing (including, without limitation, making such reasonable
representations as any such Holder may reasonably request), all to the 

  

 16 

 
extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of
the exemptions provided by Rule 144 and Rule 144A under the Securities Act and customarily taken in connection with sales pursuant to such exemption. Upon the written request of any Holder, the Company shall deliver to such Holder a written
statement as to whether it has complied with such filing requirements, unless such a statement has been included in the Company’s most recent report filed pursuant to Section 13 or Section 15(d) of Exchange Act. Notwithstanding the foregoing,
nothing in this Section 7 shall be deemed to require the Company to register any of its securities (other than the Common Stock) under any section of the Exchange Act. 
  
 SECTION 8. Miscellaneous. 
  

(a) No Conflicting Agreements. The Company is not, as of the date hereof, a party to, nor shall it, on or after the date of this Agreement,
enter into, any agreement with respect to its securities that conflicts with the rights granted to the Holders in this Agreement. The Company represents and warrants that the rights granted to the Holders hereunder do not in any way conflict with
the rights granted to the holders of the Company’s securities under any other agreements. 
  
 (b) Amendments and Waivers. Except as provided in the next paragraph, the provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of Holders of a majority of the then outstanding Underlying Common Stock constituting Registrable Securities (with Holders of
Notes deemed to be the Holders, for purposes of this Section, of the number of outstanding shares of Underlying Common Stock into which such Notes are or would be convertible as of the date on which such consent is requested). Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders whose securities are being sold pursuant to a Registration Statement and that does not affect the rights
of other Holders may be given by Holders of a majority of the Registrable Securities being sold by such Holders pursuant to such Registration Statement; provided that the provisions of this sentence may not be amended, modified or
supplemented except in accordance with the provisions of the immediately preceding sentence. Notwithstanding the foregoing two sentences, this Agreement may be amended by written agreement signed by the Company and the Initial Purchasers, without
the consent of the Holders of Registrable Securities, to cure any ambiguity or to correct or supplement any provision contained herein that may be defective or inconsistent with any other provision contained herein, or to make such other provisions
in regard to matters or questions arising under this Agreement that shall not adversely affect the interests of the Holders of Registrable Securities. Each Holder of Registrable Securities outstanding at the time of any such amendment, modification,
supplement, waiver or consent or thereafter shall be bound by any such amendment, modification, supplement, waiver or consent effected pursuant to this Section 8(b), whether or not any notice, writing or marking indicating such amendment,
modification, supplement, waiver or consent appears on the Registrable Securities or is delivered to such Holder. 
  
 To the extent that any Notes remain outstanding, upon a merger or consolidation or sale, conveyance, transfer or lease of all or substantially all of the
properties and assets of the 

  

 17 

 
Company in which the person (if other than the Company) formed by such consolidation or into which the Company is merged or the person who acquires by sale,
conveyance, transfer or lease all or substantially all of the properties and assets of the Company assumes the Company’s obligations under the Indenture and the Notes, the Company shall procure the assumption of its obligations under this
Agreement by such person, and this Agreement may be amended, modified or supplemented without the consent of any Holders to provide for such assumption of the Company’s obligations hereunder. Without the consent of each Holder of Notes, no
amendment or modification may change the provisions relating to the payment of Additional Interest. 
  
 (c) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, by telecopier, by
courier guaranteeing overnight delivery or by first-class mail, return receipt requested, and shall be deemed given (i) when made, if made by hand delivery, (ii) upon confirmation, if made by telecopier, (iii) one (1) Business Day after being
deposited with such courier, if made by overnight courier or (iv) on the date indicated on the notice of receipt, if made by first-class mail, to the parties as follows: 
  
 (i) if to a Holder, at the most current address given by such Holder to the Company in a Election and
Questionnaire or any amendment thereto; 
  

	 	(ii)	if to the Company, to: 

  
 Advanced Medical Optics, Inc. 
 1700 E. St.
Andrew Place 
 Santa Ana, California 92705 
 Attention: Aimee S. Weisner, Esq. 
 Telecopy No.: (714) 247-8679 
  
 and 
  
 Skadden, Arps, Slate, Meagher & Flom LLP 
 300 South Grand Avenue 
 Suite 3400 
 Los Angeles, California 90071 
 Attention: Jennifer A. Bensch, Esq. 
 Telecopy No.: (213) 687-5600 
  

	 	(iii)	if to the Initial Purchasers, to: 

  
 Morgan Stanley & Co. Incorporated 
 1585
Broadway, New York, New York 10036 
 Attention: Janet Livingston 
 Telecopy No.: (212) 762-8639 
  
 or to such other address as such person may have furnished to the other persons identified in this Section 8(c) in writing in accordance herewith.

  

 18 

 (d) Approval of Holders. Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by the Company or its Affiliates (other than the Initial Purchasers or subsequent Holders if such subsequent Holders are deemed to be such Affiliates solely by reason of their
holdings of such Registrable Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. 
  
 (e) Successors and Assigns. Any person who purchases any Registrable Securities from the Initial Purchasers shall be
deemed, for purposes of this Agreement, to be an assignee of the Initial Purchasers. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties and shall inure to the benefit of and be binding
upon each Holder of any Registrable Securities, provided that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Registrable Securities in violation of the terms of the Indenture. If any transferee of
any Holder shall acquire Registrable Securities, in any manner, whether by operation of law or otherwise, such Registrable Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Securities,
such person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement and such person shall be entitled to receive the benefits hereof. 
  
 (f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be original and all of which taken together shall constitute one and the same agreement. 
  
 (g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof. 
  
 (h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 
  
 (i) Severability. If any term, provision, covenant or restriction of this Agreement is held to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, and the parties hereto shall use their
best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction, it being intended that all of the rights and privileges of the parties
shall be enforceable to the fullest extent permitted by law. 
  
 (j) Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and, is intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and the registration rights granted by the Company with respect to the Registrable Securities. Except as provided in the Purchase Agreement, there are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein, with respect to the registration rights granted by the Company with respect to the Registrable Securities. This Agreement supersedes all prior agreements and undertakings among the parties with respect to
such registration rights. No party hereto shall have any rights, duties or obligations other than those specifically set forth in this Agreement. In no event will such methods of distribution take the form of an underwritten offering of the
Registrable Securities without the prior agreement of the Company. 
  

 19 

 (k) Termination. This Agreement and the obligations of the parties hereunder shall terminate upon
the end of the Effectiveness Period, except for any liabilities or obligations under Section 4, 5, 6 or 8 hereof and the obligations to make payments of and provide for the Additional Interest Amount under Section 2(e) hereof to the extent such
amount accrues prior to the end of the Effectiveness Period, each of which shall remain in effect in accordance with its terms. 
  
 [Intentionally Left Blank] 
  

 20 

 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. 
  

			
	ADVANCED MEDICAL OPTICS, INC.
		
	By:	 	 /s/ Richard A. Meier

	Name:	 	Richard A. Meier
	Title:	 	 Executive Vice President of
 Operations and
Finance,
 Chief Financial Officer

  
 [Intentionally
Left Blank] 

			
	Confirmed and accepted as of the date first above written:
	
	 MORGAN STANLEY & CO. INCORPORATED
 J.P. MORGAN SECURITIES INC.
 UBS SECURITIES LLC

		
	By:	 	 Morgan Stanley & Co. Incorporated, acting severally on behalf of each Initial Purchaser named in SCHEDULE I
hereto

		
	By:	 	 /s/ Rizvan Dhalla

	Name:	 	Rizvan Dhalla
	Title:	 	Executive Director

  
 [Intentionally
Left Blank] 

 SCHEDULE I 
  

				
	 Initial Purchaser

	  	 Firm Securities to
 be Purchased

	 Morgan Stanley & Co. Incorporated
	  	$	60,000,000
	 J.P. Morgan Securities Inc.
	  	 	45,000,000
	 UBS Securities LLC
	  	 	45,000,000
		
	 Total
	  	$	150,000,000Development and License Agreement, dated as of July 15, 2005

 Exhibit 10.10 
  
  
 DEVELOPMENT AND LICENSE AGREEMENT

  
 THIS DEVELOPMENT AND LICENSE AGREEMENT (the “Agreement”) is
made as of July 15, 2005, by and between Atricure, Inc., a Delaware corporation (“Atricure”), and UST Inc., a Washington corporation (“UST”). 
  
 PREAMBLE 
  
 WHEREAS, UST owns and otherwise possesses know-how and intellectual property necessary or useful for the manufacture and commercialization of systems for the delivery of
high intensity focused ultrasound (“HIFU”) to the human body; 
  
 WHEREAS, Atricure and UST desire for UST to design, engineer, develop and produce, and provide to Atricure, a complete engineering prototype of, a HIFU system designed to form transmural cardiac lesions, scars or partial necrosis on the
epicardial surface of a beating human heart; 
  
 WHEREAS, Atricure desires to
license from UST, and UST desires to license to Atricure, all intellectual property necessary to manufacture and sell such systems on a commercial scale; 
  
 NOW, THEREFORE, for good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the Parties hereto agree as follows: 
  
 ARTICLE 1 
  
 DEFINITIONS 
  
 The capitalized terms in this Agreement shall, except to the extent defined in the text of this Agreement, have the meanings ascribed to them in Schedule 1 of this
Agreement. 
  
 ARTICLE 2 
  
 DEVELOPMENT OF HIFU SYSTEM 
  
 2.1. Technology Transfer and Development Services. 
  
 (a) Performance. UST hereby agrees to research,
design, develop, engineer, test and implement the HIFU System, and to produce for Atricure a completely engineered prototype of the HIFU System, all in accordance with the technology transfer and development plan (the “Development Plan”)
attached hereto as Schedule 2 (collectively, the “Development Services”). As provided in the Development Plan, the Development Services also include the delivery to Atricure of various deliverables which meet specified descriptions or
specifications, including but not limited to the above-mentioned prototype (collectively, the “Deliverables”). Upon their delivery to Atricure, sole ownership of the Deliverables will be deemed transferred to Atricure. UST shall exercise
its commercially reasonable best efforts to perform the various aspects of the Development Services within the time frames set forth in the Development Plan. The Parties acknowledge that the Development Plan contemplates that the Development
Services will be completed within fourteen (14) months after the Effective Date (the date falling fourteen (14) months after the Effective Date being the “Target Completion Date”). The Development Plan shall be subject to modification only
with the written consent of both Parties. 
  
 (b)
Program Extension. If, for whatsoever reason, UST shall not have completed the Development Services on or prior to the Target Completion Date, UST shall be obligated nevertheless to continue to perform the Development Services unless and
until, if at all, Atricure shall give to UST a notice to terminate such performance; provided, however, that in no event shall UST be obligated to continue performing Development Services beyond the date falling twenty (20) months after the
Effective Date. 
  

 1 

 2.2. Development Consideration; Performance Incentives. 
  
 (a) Development Consideration. As consideration for
the performance of the Development Services, Atricure shall pay to UST consideration (the “Development Consideration”) as follows: 
  
 (i) Three hundred seventy five thousand dollars ($375,000), payable by wire transfer to the Account within five (5) days after the
Effective Date; 
  
 (ii) Nine hundred sixty-six
thousand dollars ($966,000), payable by wire transfer to the Account in fourteen (14) monthly installments, as follows: 
  
 (A) Sixty-nine thousand dollars ($69,000) on that date falling thirty (30) days after the Effective Date (the “Thirtieth Day”);

  
 (B) Sixty-nine thousand dollars ($69,000) on
or before the tenth (10th) Business Day of each of the next thirteen (13) calendar months (beginning with the first calendar month commencing after the Thirtieth Day); 
  
 (iii) In the event and to the extent that, pursuant to Section 2.1(b), UST continues to render Development
Services subsequent to the Target Completion Date, Atricure shall pay to UST, in consideration for such services, the sum of all direct costs reasonably incurred by UST in connection with the rendition of such services (i.e., excluding any
allocation of overhead or other indirect costs, but including, e.g., an appropriate allocation of salaries of professional personnel dedicated thereto (other than management) and related out-of-pocket expenses). In connection therewith, UST shall,
after the end of each calendar month, deliver to Atricure a statement showing the direct cost reimbursement due for such month and, in reasonable detail, the back-up information in connection therewith, including identification of the individuals
who shall have performed Development Services during such month, the man-hours contributed by each, the applicable salary rates or consulting fees paid and any relevant out-of-pocket expenses incurred. 
  
 (b) Remaining Period. In the event that UST shall
have achieved all four (4) Milestones prior to the Target Completion Date, UST shall, during the period beginning on the day after such achievement shall have occurred and ending on the Target Completion Date (the “Remaining Period”),
render such consultation and advice, relating to the HIFU System and the development thereof, as may be requested from time to time by Atricure provided Atricure shall continue to make the payments to UST pursuant to Section 2.2(a)(ii)(B). UST
agrees that such consultation and advice (which may take various forms, including participation in experimental activities and the preparation and delivery of written analyses and recommendations) shall be rendered by those UST personnel who were
engaged in the performance of the Development Services and that (to the extent requested by Atricure) the level of time and effort devoted to such consultation and advice shall be substantially equivalent to that which UST devoted to the rendition
of the Development Services. 
  
 ARTICLE 3 
  
 LICENSE OF INTELLECTUAL PROPERTY 
  
 3.1. Grant of Licenses. Subject to the payment of the Royalty and the
fulfillment of the other terms and conditions of this Agreement, UST hereby grants to Atricure, and Atricure hereby accepts: 
  
 (a) Exclusive License. An exclusive (including as to UST), perpetual, worldwide license in, to and under the UST IP, with the right
to grant sublicenses thereunder, to make, have made, import, export, use, offer to sell, sell, and/or otherwise dispose of HIFU Systems for use in the Atricure Field and to utilize the UST IP in connection with the marketing, advertising, and
promotion of HIFU Systems for use in the Atricure Field. 
  
 (b) Exclusive Sublicense. An exclusive (including as to UST), perpetual, worldwide sublicense in, to and under the Sonic/Keilman IP, to make, have made, import, export, use, offer to sell, sell, and/or
otherwise dispose of HIFU Systems for use in the Atricure Field and to utilize the Sonic/Keilman IP in connection with marketing, advertising, and promotion of HIFU Systems for use in the Atricure Field. 
  

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 (c) Licensed IP. Subject to Section 3.7, the Sonic/Keilman IP and the UST IP shall
be referred to, collectively, as the “Licensed IP”. 
  
 3.2. Right to Exercise. Notwithstanding Sections 3.1(a), and 3.1(b) Atricure shall not have the right to exercise the rights granted to it under such sections unless and until all its payment obligations to UST under Section 2.2(a)
shall have been discharged. 
  
 3.3. Information Download.
Without limiting anything contained in the Development Plan, UST shall provide Atricure with all information, relating to the Licensed IP, as may be known or possessed by UST and reasonably necessary or appropriate for Atricure to exploit the
License, including any materials related to the obtaining of Market Clearance for, and the production and commercialization of, the HIFU System. 
  
 3.4. Preservation of Rights. 
  
 (a) No Inconsistent Grants. UST covenants that it has not granted, and will not grant, any rights to any Third Party that are
inconsistent with the rights granted to Atricure under this Agreement.  
  
 (b) Assignment. UST further covenants that it will not, except in the case of Qualified Transfer, assign or otherwise dispose of
any ownership interest which it has or may obtain in, to or under any Licensed IP. 
  
 (c) Non-Compete. 
  
 (i) Each of (A) UST, (B) CKL, LLC, a Washington limited liability company, and (C) the Shareholders (as defined below) covenants and
agrees that he, she or it, as the case may be, shall not, during the period beginning on the Effective Date and ending on the Cessation Date (as defined below), directly or indirectly compete with Atricure (or any Sublicensee) in the Atricure Field
anywhere in the world. 
  
 (ii) For purposes of
this Agreement, the “Cessation Date” shall mean the earliest to occur of (A) the date on which the Royalty Term shall end, (B) the date on which this Agreement shall terminate, and (C) the date falling six (6) years after the Effective
Date (but only if cumulative Net Sales shall have failed to reach one million dollars ($1,000,000) by such date. 
  
 (iii) For purposes hereof, the term “Shareholders” shall mean and include the following persons: Yu-Chi Chu, Lawrence A. Crum,
Perry Kaminski and Eugene Larson. 
  
 3.5. Expiration of
the Royalty Term. Upon the expiration of the Royalty Term, the License shall automatically become perpetual, irrevocable and fully paid-up. 
  
 3.6 UW Licenses. 
  
 (a) Reference is made to that certain Non-Exclusive License Agreement as amended, dated December 30, 2002, by and between UST and UW (the
“First UW License Agreement”). UST agrees that, in the event that, in connection with the development and/or commercialization of the HIFU System, Atricure desires to obtain a sublicense in, to and under any Intellectual Property which (a)
is possessed by UST under the First UW License Agreement and (b) relates to, or is useful in connection with, the Atricure Field (the “First UW IP”), then, upon receipt of notice from Atricure, UST shall exercise its best efforts to
negotiate and consummate an amendment to this Agreement which shall include a sublicense of the First UW IP with Atricure on terms and conditions substantially identical to those contained in a draft agreement entitled “Development and License
Agreement Redline July 14 2005” transmitted to Eugene Larson, Joseph Whitford, Dave Denowitz, Dave Drachman and Stephen Drake by Mark Byrne on July 14, 2005 at 6:24 PM by e-mail. During the period beginning on the Effective Date and ending on
the earlier of (a) the date on which this agreement shall terminate or (b) the date on which Atricure shall exercise its option pursuant to Section 4.7(f), UST shall not enter into a sublicense to the First UW IP with any third party. 
  
 (b) Reference is made to that certain Exclusive License
Agreement as amended, dated May 7, 2003, by and between UST and UW (the “Second UW License Agreement”). UST agrees that, 

  

 3 

 
in the event that, in connection with the development and/or commercialization of the HIFU System, Atricure desires to obtain a sublicense in, to and under
any Intellectual Property which (a) is possessed by UST under the Second UW License Agreement and (b) relates to, or is useful in connection with, the Atricure Field (the “Second UW IP”), then, upon receipt of notice from Atricure, UST
shall exercise its best efforts to negotiate and consummate such a sublicense of the Second UW IP with Atricure on commercially reasonable terms and conditions. 
  

3.7 Modification of Licensed IP. Atricure has the right, at its sole discretion, to remove the Sonic/Keilman IP from the Licensed IP. Atricure
will exercise its right in writing pursuant to Section 13.6. Such exercise will become effective on the date of notice. 
  
 3.8 Patent Marking. Atricure shall mark any HIFU Systems or Combination Products, or packaging pertaining thereto, made and sold by Atricure in the
United States with an appropriate patent marking identifying the pendency of any U.S. Patent Application and/or any issued U.S. or foreign Patent forming any part of the Sonic/Keilman IP. All such products shipped or sold in other countries shall be
marked in such a manner as to provide notice to potential infringers, pursuant to the Patent law and practice of the country of manufacture or sale, as appropriate. 
  
 ARTICLE 4 
  
 ROYALTIES 
  
 4.1. Royalties. In consideration for the License granted to Atricure under Article 3, Atricure shall pay to UST royalties and maintenance payments
in accordance with this Article 4: 
  
 4.2. Royalty
Percentage. Atricure shall, subject to Section 4.4, pay to UST a royalty (the “Royalty”) equal to: 
  
 (a) Four percent (4%) of Net Sales during the Royalty Term. 
  
 (b) Subsequent to the expiration of the Royalty Term, no Royalty or other such payments shall be due to UST
or any other Person in connection with the sale of HIFU Systems or Combination Products. 
  
 4.3. Royalty Payments. Except as provided in this Agreement, all Royalty payments due hereunder shall be paid quarterly within thirty (30) days after the end of each calendar quarter. Each such payment shall be
accompanied by a statement of the amount of Net Sales during such quarter and the amount of Royalties, if any, due thereon (each such statement being a “Royalty Statement”). 
  
 4.4. Royalty Cap. Notwithstanding any other provision hereof, in no event shall Atricure be obligated to pay to UST
under this Agreement more than an aggregate of fifteen million dollars ($15,000,000) in Royalties. 
  
 4.5. Currency and Exchange Rates. All Royalty payments required under this Article 4 shall be made in United States dollars. Royalty payments on
sales, or payments received, in currencies other than United States dollars shall be calculated using the appropriate foreign exchange rate for such currency as published in The Wall Street Journal (Western edition) on the last Business Day of each
calendar quarter in which the sales occurred. 
  
 4.6.
Audits. UST shall have the right to appoint an independent certified public accountant, reasonably acceptable to Atricure, to inspect the records of Atricure that are relevant to the determination of Net Sales. Atricure shall make its records
available for inspection by such independent certified public accountant during regular business hours at such place or places where such records are customarily kept, upon reasonable notice from UST, solely to verify the accuracy of the Royalty
Statements and the correctness of the Royalty payments. UST agrees to hold, and to ensure that UST’s appointed accountant will hold, all such information learned in the course of any audit or inspection in confidence in accordance with the
terms of Article 10. The results of each inspection shall be binding on the Parties, absent fraud or manifest error. UST shall pay for such audits and inspections, except that in the event that any such audit covering at least four (4) calendar
quarters reveals that, during the period covered by the audit, Atricure paid to UST less than ninety percent (90%) of the aggregate amount of Royalties that were due to UST with respect to such period, 

  

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Atricure shall be obligated to reimburse UST for the reasonable out-of-pocket costs incurred by UST with respect to such audit. 
  
 4.7. License and Standstill Maintenance Payments. Atricure shall pay
to UST license and standtsill maintenance payments (the “Maintenance Fees”) equal to: 
  
 (a) Between the Effective Date and April 1, 2006 one hundred percent (100%) of the amounts shown in Sections 4.7(a)(i) and 4.7(a)(ii), and
thereafter a percentage equal to one divided by one plus the number of sublicenses granted by UST to the UW IP, of the amounts shown in Sections 4.7(a)(i) and 4.7(a)(ii) (with the Parties making appropriate financial adjustments between themselves
from time to time to reflect increases, or decreases, in the number of outstanding sublicenses and the dates on which the sublicenses become effective). (For example since Atricure is the first sublicensee of the UW IP, the percentage is fifty
percent (50%). If UST grants a second sublicense to the UW IP the percentage changes to thirty three percent (33%) and so on. 
  
 (i) The current annual license maintenance fees (in effect as of the Effective Date) due to UW arising under Section 6.2 of the First UW
License Agreement, plus 
  
 (ii) The current
minimum annual royalties (in effect as of the Effective Date) due by UST to UW arising under Section 6.5 of the First UW License Agreement, plus 
  
 (b) The current payments (in effect as of the Effective Date) due by UST to Sonic/Keilman under Section 5.1 of the Sonic/Keilman License
Agreement. 
  
 (c) AtriCure shall pay only the
Maintenance Fees that have accrued beginning July 1, 2005, and shall only pay Maintenance Fees during the unexpired term of the patents included in the Sonic/Keilman IP and patents included in the UW IP as the case may be. 
  
 (d) Subsequent to Atricure exercising, if at all, its right
under Section 3.7 to remove the Sonic/Keilman IP from the Licensed IP, the Maintenance Fees otherwise payable under 4.7(b) are no longer due to UST or any other Person. 
  
 (e) UST shall render an invoice to Atricure for such Maintenance Fees which shall be due and payable by
Atricure within thirty (30) days after the receipt thereof. 
  
 (f) Atricure has the right, at its sole discretion, to stop paying the Maintenance Fees provided for under Section 4.7(a). Atricure will exercise its right in writing pursuant to Section 12.6. Such exercise will
become effective on the date of notice. 
  
 (g)
Section 4.7 (a) shall become null and void on that date on which Atricure shall make its first Royalty payment under Article 4. 
  
 ARTICLE 5 
  
 OWNERSHIP, PROSECUTION AND MAINTENANCE OF INTELLECTUAL PROPERTY RIGHTS 
  
 5.1. Ownership. The Parties agree to the following ownership rights with regard to Intellectual Property: 
  
 (a) All Intellectual Property owned by a Party as of the
Effective Date (such Party’s “Pre-Existing IPR”) shall continue to be owned by such Party. 
  
 (b) All inventions and discoveries generated or conceived, during the Term, exclusively by employees or consultants to one Party in
connection with the performance of this Agreement shall be deemed to be owned solely by such Party (such inventions and discoveries being referred to as each Party’s “Solely-Created IPR”). The term “Atricure IPR” shall
refer, collectively, to Atricure’s Pre-Existing IPR and Solely-Created IPR, and the term “UST IPR” shall refer, collectively, to UST’s Pre-Existing IPR and Solely-Created IPR. 
  

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 (c) All inventions and discoveries generated or conceived, during the Term, jointly by
the Parties in connection with the performance of this Agreement shall be collectively referred to as “Jointly-Created IPR”. All Jointly-Created IPR which relates, exclusively or primarily, to the Atricure IPR shall be deemed to be owned
solely and exclusively by Atricure and all Jointly-Created IPR which relates, exclusively or primarily, to the UST IPR shall be deemed to be owned solely and exclusively by UST. 
  
 (d) To the extent not inconsistent with this Agreement, inventorship issues shall be determined in
accordance with U.S. patent laws. 
  
 5.2. Disclosure.
During the Term, each Party shall submit a reasonably detailed written report to the other Party within sixty (60) days after the end of each calendar quarter describing any inventions or discoveries which, to its knowledge, arose during the prior
quarter in connection with the performance of this Agreement (any such written report being an “IPR Notice”). 
  
 5.3. Patent Applications. 
  
 (a) Costs. Each Party shall, except as otherwise provided below, solely bear the costs of preparing, filing, prosecuting and
maintaining (or causing to be prepared, filed, prosecuted, and maintained) (collectively, “Prosecuting”) Patent Applications and Patents associated with its Solely-Created IPR and all Jointly-Created IPR owned by it. 
  
 (b) Acquisition Notices. Within one hundred twenty
(120) days after giving an IPR Notice to the other Party, the party giving such notice shall give to the other Party a subsequent notice indicating whether or not such party elects to Prosecute a United States Patent Application on any of its
Jointly-Created IPR or Solely-Created IPR disclosed therein. In the event that it shall be more likely than not that a reasonable United States patent attorney would deem such Solely-Created IPR or Jointly-Created IPR to be patentable in the United
States, and such Party shall (i) fail, within such time period, to give notice indicating its election to Prosecute such a Patent Application (a “Prosecution Notice”) or (ii) timely give such notice but thereafter fail, in a material
respect, to diligently Prosecute such Patent Application or any resulting Patent, the other Party shall have the right, exercisable by written notice (the “Acquisition Notice”), to acquire such Solely-Created IPR or Jointly-Created IPR. A
Party receiving an Acquisition Notice shall execute and deliver such documents, and do and perform all such other acts and things, as shall be reasonably necessary to cause title to the relevant Solely-Created IPR or Jointly-Created IPR (along with
any related Patents or Patent Applications) to be assigned and conveyed to the other Party or to enable the other Party to Prosecute any such related Patent or Patent Application. For purposes of this Section 5.3(b), a party shall not be deemed to
have failed, in a material respect, to diligently Prosecute a Patent Application or Patent unless the other Party shall have notified such party of such failure, and such Party shall have failed, within thirty (30) days, to substantially cure the
same or unless it shall have failed, prior to the date falling six (6) months after giving a Prosecution Notice, to commence, in a significant and meaningful way, such Prosecution. 
  
 5.4. Infringement Action by the Parties.  
  
 (a) Notice. Upon learning of any infringement of the Licensed IP, whether or not in connection with,
or relating to, the rights granted to Atricure under this Agreement, Atricure or UST, as the case may be, shall promptly provide notice to the other Party in writing of said infringement and shall supply the other Party with all material evidence
possessed by the notifying Party pertaining to said infringement. The date on which any such notice of infringement is given to the other Party shall be referred to as the “Infringement Notice Date.” 
  
 (b) Infringements Affecting Atricure Field. In the
event that such infringement primarily relates to or affects the Atricure Field: 
  
 (i) First Right. Atricure shall have the first right, but not the obligation, to file suit, at its own expense, against any such
infringing party. 
  
 (ii) Secondary
Right. In the event that Atricure (A) fails to commence, within ninety (90) days after the Infringement Notice Date, a lawsuit regarding such infringement or (B) commences a lawsuit during such period but thereafter fails to continue to
vigorously prosecute such lawsuit, UST shall have the right, but not the obligation, to prosecute such a lawsuit at its own expense. 
  

 6 

 (c) Other Infringement. In the event that such infringement does not primarily
relate to or affect the Atricure Field: 
  
 (i)
First Right. UST or its designee shall have the first right to file suit, at its own expense, against any such infringing party. 
  
 (ii) Secondary Right. In the event that UST (A) fails to commence, within ninety (90) days after the Infringement Notice Date, a
lawsuit regarding such infringement or (B) commences a lawsuit during such period but thereafter fails to continue to vigorously prosecute such lawsuit, Atricure shall have the right, but not the obligation, to prosecute such a lawsuit at its own
expense. 
  
 (d) Cooperation; Joinder.

  
 (i) Control. The Party undertaking the
abatement and enforcement actions under this Section 5.4 shall have the right to control such action. 
  
 (ii) Cooperation. Each Party shall cooperate, in all reasonable respects, with the other Party in any lawsuit brought by the other
Party in accordance with this Section 5.4. 
  
 (iii) Information. The controlling party shall, on a continuous basis, (A) keep the other Party apprised of all material aspects thereof and consult with the other Party concerning the conduct thereof; and (B) forward to the other
Party any and all material documents (including, but not limited to, pleadings, interrogatories, deposition transcripts and communications), relating to the lawsuit, as may be requested by the other Party (except to the extent that the same would
involve a waiver of the attorney-client privilege with respect to the material so requested). 
  
 (iv) Counsel. The other Party shall have the right, at its expense, to employ separate counsel and fully participate in (but not
control) the conduct of the lawsuit. 
  
 (v)
Compulsory Joinder. The controlling Party shall have the right to cause the other Party to join (i.e, become a party to) any lawsuit contemplated by this Section 5.4 provided that (A) the joinder of the other Party is mandatory in order for
the claims being asserted by the controlling Party to proceed under applicable Law and (B) the controlling party shall promptly reimburse the party so joined for all its reasonable and documented out-of-pocket costs incurred in connection with
participating as a party to such lawsuit. 
  
 (vi) Voluntary Joinder. The non-controlling Party shall, in addition, have the right to join any lawsuit contemplated by this Section 5.4 as a party thereto, and to participate accordingly. 
  
 (e) Settlement. The Party controlling any action
described in this Section 5.4 may not settle or consent to an adverse judgment without the express written consent of the non-controlling Party (such consent not to be unreasonably withheld). 
  
 (f) Damages. 
  
 (i) Definitions. For purposes of this Agreement:

  
 (A) “Infringement Costs” shall
mean any out-of-pocket expenses (including attorneys’ fees) incurred by the controlling Party in connection with any action referred to in Section 5.4(b) or 5.4(c); 
  
 (B) “Infringement Damages” shall mean any amounts representing compensation for lost sales,
royalties or profits, or any other damages, incurred by a Party as a result of infringement of its rights relating to the Licensed IP. 
  

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 (ii) Allocation. Unless otherwise mutually agreed by the Parties, and subject to
the respective indemnity obligations of the Parties set forth in Article 11, all monies recovered upon the final judgment or settlement of any action described in Section 5.4(b) or 5.4(c) shall be allocated: 
  
 (A) first, to reimburse the controlling Party for its
Infringement Costs relating to the action; 
  
 (B) second, to the parties to the action (i.e., Atricure and/or UST, as the case may be), on a pro rata basis (if there shall have been more than one party to the action) to the extent of (and with such proration based upon) any
Infringement Damages incurred by them as a result of the infringement (provided, however, that if a party shall have been joined in the action pursuant to Section 5.5(d)(v), it shall be credited under this Section 5.4(f)(ii)(B) only for any
Infringement Damages in excess of any out-of-pocket costs reimbursed to such Party by the other Party under Section 5.4(d)(v)); and 
  
 (C) third, to the controlling Party 
  
 5.5. Infringement Actions by Third Parties. 
  
 (a) Notice. Each Party shall notify the other Party promptly in writing of any Claim of infringement of any Intellectual Property
which is threatened, made or brought against either Party, or any of its Sublicensees, by any Third Party by reason of either Party’s performance of its obligations under this Agreement or the manufacture, use or sale of devices using HIFU
technology (any such Claim being an “IP Claim” and any such notice being an “IP Claim Notice”). 
  
 (b) Atricure Right to Defend. In the event that a Third Party commences an IP Claim against Atricure or any of its Sublicensees,
Atricure shall have the right to conduct and control, through counsel of its choosing, the defense and/or settlement (collectively, the “Defense”) of such IP Claim, and in any such case UST shall cooperate in all reasonable respects in
connection therewith. 
  
 (c) UST Counsel.
UST shall nevertheless have the right to employ counsel separate from counsel employed by Atricure in any such action and to fully participate in (but not control) the Defense thereof, but the fees and expenses of such counsel employed by UST, and
of such participation, shall be at the expense of UST. 
  
 (d) Settlements. In connection with any IP Claim, Atricure will not enter into any settlement thereof, or consent to the entry of any judgment thereon, without the prior written consent of UST, which shall not be unreasonably
withheld. 
  
 (e) Allocation of Economic
Burden. The Parties shall share equally the amount of (i) any and all costs, fees and expenses (including reasonable attorneys’ fees and expenses) incurred by Atricure in connection with Atricure’s Defense of an IP Claim, and (ii) any
and all sums paid or payable by Atricure in connection with any judgment or settlement arising out of an IP Claim. 
  
 5.6. Third Party Licenses. 
  
 (a) Third Party Licenses. If in the written opinion of outside patent counsel to Atricure, Atricure (or any Sublicensee) cannot
engage in the development, manufacture, use or sale, as appropriate, of the HIFU Systems in the Atricure Field without infringing one or more Patents that have issued to a Third Party or (ii) in connection with any settlement of an IP Claim
described in Section 5.5, a license is proposed to be obtained from the Third Party plaintiff(s), then Atricure shall have the first right, but not the obligation, to negotiate and enter into (in its own name) a/the license from the relevant Third
Party (any such license being a “Third Party License”). 
  
 (b) UST Notice. Atricure shall promptly notify UST of the execution and delivery of any Third Party License. 
  
 (c) Allocation of Economic Burden. 
  
 (i) Fees. For purposes hereof, all milestone, license, sublicense, royalty and other such costs and fees paid by Atricure in
connection with the exercise of its rights under any Third Party License shall be collectively referred to as “Third Party License Fees.” 
  
 (ii) Invoices. Subject to the last sentence of this Section 5.6(c)(ii), the Parties shall equally share the amount of any and all
Third Party License Fees. Within thirty (30) days after 

  

 8 

 
the end of any calendar quarter during which Atricure shall have incurred any Third Party License Fees, it shall render to UST an invoice for UST’s
portion thereof. Each such invoice shall be accompanied or preceded by reasonably-detailed back-up documentation relating to the amounts so invoiced, including all relevant back-up invoices from Third Parties. Each such invoice which shall be
consistent with the terms of this Agreement shall be due and payable within forty-five (45) days after the receipt thereof by UST. Notwithstanding any of the foregoing, in no event shall any invoice submitted by Atricure under this Section
5.6(c)(ii) with respect to any calendar quarter be for an amount greater than one percent (1%) of Net Sales during such calendar quarter. 
  
 ARTICLE 6 
  
 REPRESENTATIONS AND WARRANTIES OF UST 
  
 UST hereby makes the representation and warranties below: 
  
 6.1. General. 
  
 (a) Organization. UST is a corporation duly organized, validly existing and in good standing under the laws of the State of Washington. UST has the corporate power and authority to execute and deliver this Agreement, to consummate
the transactions contemplated under this Agreement, to perform its other obligations under this Agreement and to grant the licenses and other rights to Atricure under this Agreement. 
  
 (b) Valid and Binding Agreement. All acts and approvals required to be taken by or on the part of UST
(corporate or otherwise) necessary to enter into this Agreement, consummate the transactions contemplated by this Agreement, perform its obligations under this Agreement and to grant the licenses and other rights under this Agreement have been duly
and properly taken by UST. This Agreement has been duly and validly executed and delivered by UST, and is the legal, valid and binding obligation of UST, enforceable against UST in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors’ rights generally and to general principles of equity. 
  
 (c) No Violation, Etc. The execution and delivery of this Agreement by UST, the consummation by it of the transactions contemplated
by this Agreement, the grant by it of the licenses and other rights under this Agreement (and Atricure’s exercise thereof) and the performance by it of its obligations under this Agreement does not, and will not at all relevant times, (i)
violate or conflict with any provision of the articles of organization of UST, (ii) violate, or conflict with, or result in a breach of any provision of, or constitute a default (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any agreement, lease, instrument, obligation, understanding or arrangement to which UST is a party or by which any of UST’s properties or assets is subject, or (iii) result in a
violation by UST of any Law to which UST or any of its properties or assets are subject. 
  
 (d) Consents and Approvals; Transfer. No permit, consent, approval or authorization of, or declaration, filing or registration
with, any Governmental Entity or other Third Party is or will be necessary to be made or obtained by UST in connection with (i) the execution and delivery by UST of this Agreement, (ii) the consummation by it of the transactions contemplated under
this Agreement, (iii) the grant of the License or other rights to Atricure under this Agreement or (iv) the performance by UST of its obligations under this Agreement. 
  
 (e) Litigation. There is no litigation, proceeding, investigation, arbitration or claim pending, or,
to UST’s knowledge, threatened against UST, and there is, to UST’s knowledge, no reasonable basis for any such action, which affects in whole or in part UST’s ability to grant the License or other rights hereunder or to consummate the
transactions contemplated by this Agreement or the performance of UST’s obligations hereunder. 
  
 6.2. UST IP. 
  
 (a) Owner. UST is the sole and exclusive owner of all right, title and interest in and to each item of Intellectual Property
included in the UST IP, free and clear of all Liens. 
  

 9 

 (b) Infringement. To the knowledge of UST, the exercise by Atricure of its rights
under this Agreement with respect to the UST IP shall not constitute an infringement of the Intellectual Property rights of any Person. 
  
 (c) Claims. No Person has asserted a Claim, or to UST’s knowledge threatened to assert a Claim, against UST alleging that the
exploitation by UST of any of the UST IP would constitute an infringement of any Intellectual Property rights of any Person, and UST is unaware of any basis for any such Claim. 
  
 (d) Challenges. To the knowledge of UST, (i) there are no outstanding challenges, by any Person, to
the validity of the UST IP and (ii) there are no pending interference, opposition or similar proceedings, or any threats to commence any such proceedings, before any Governmental Entity in regard to any Patents included in the UST IP. 
  
 (e) Third Party Infringement. To the knowledge of
UST, no Person is engaging in any activities which constitute, or which UST believes may constitute, infringement of UST’s rights in the UST IP. 
  
 (f) Full Force and Effect. Each of the Patents included in the UST IP is currently in full force and effect, and all filing and
maintenance fees with respect thereto which have become due and payable have been paid in full. 
  
 (g) Exclusive Right. UST has the exclusive right to grant to Atricure the license of the UST IP granted under this Agreement.

  
 (h) Personnel. All present and former
UST personnel, including employees, agents, consultants and contractors, who have had access to, or have contributed to or participated in the conception and development of, the UST IP have either (i) executed written agreements with UST that have
accorded UST full, effective, exclusive and original ownership of such UST IP or (ii) executed appropriate instruments of assignment in favor of UST, as assignee, that have conveyed to UST full, effective and exclusive ownership of such UST IP. UST
warrants that it shall ensure that the preceding representation remains true and correct throughout the Term of this Agreement. 
  
 6.3. Sonic/Keilman IP. 
  
 (a) Infringement. To the knowledge of UST, the exercise by Atricure of its rights under this Agreement with respect to the
Sonic/Keilman IP shall not constitute an infringement of the Intellectual Property rights of any Person. 
  
 (b) Claims. No Person has asserted a Claim, or to UST’s knowledge threatened to assert a Claim, against UST alleging that the
exploitation by UST of any of the Sonic/Keilman IP would constitute an infringement of any Intellectual Property rights of any Person, and UST is unaware of any basis for any such Claim. 
  
 (c) Challenges. To the knowledge of UST, (i) there are no outstanding challenges, by any Person, to
the validity of the Patents included in the Sonic/Keilman IP and (ii) there are no pending interference, opposition or similar proceedings, or any threats to commence any such proceedings, before any Governmental Entity in regard to any of such
Patents. 
  
 (d) Third Party Infringement.
To the knowledge of UST, no Person is engaging in any activities which constitute, or which UST believes may constitute, infringement of UST’s rights in the Sonic/Keilman IP. 
  
 (e) Full Force and Effect. To the knowledge of UST, each of the Patents included in the Sonic/Keilman
IP is in full force and effect, and all filing and maintenance fees with respect thereto which have become due and payable have been paid in full. 
  
 (f) Exclusive Right. UST has the exclusive right to grant to Atricure the sublicense of the Sonic/Keilman IP granted under this
Agreement. 
  

 10 

 6.4. Sonic/Keilman License Agreement. 
  
 (a) True Copy. UST has delivered to Atricure a true
and correct copy of the Sonic/Keilman License Agreement, including all amendments thereto. 
  
 (b) No Default. Each of UST and, to UST’s knowledge, Sonic/Keilman has performed all material obligations required thereunder
to be performed by it to date, and is not in default or breach under the UW License Agreement; 
  
 (c) Duly Authorized. The Sonic/Keilman License Agreement has been duly authorized, executed and delivered by UST and constitutes
the legal, valid and binding obligation of UST, enforceable against UST in accordance with its terms, except as such enforceability may be affected by laws affecting creditors’ rights generally and general equitable principles. 
  
 (d) Sonic/Keilman Authorization. UST has no knowledge
that the Sonic/Keilman License Agreement has not been duly authorized, executed or delivered by Sonic/Keilman, or does not constitute the legal, valid and binding obligation of Sonic/Keilman, enforceable against Sonic/Keilman in accordance with its
terms, except as such enforceability may be affected by laws affecting creditors’ rights generally and general equitable principles. 
  
 (e) No Conflict. The execution, delivery and performance of this Agreement by UST does not (with or without the giving of notice,
the passage of time or both) cause a termination under, or give rise to a right on the part of Sonic Concepts Inc. or George W. Keilman to terminate or modify, the Sonic/Keilman License Agreement. 
  
 6.5. Disclaimer of Warranties. EXCEPT AS PROVIDED IN THIS ARTICLE 6,
UST DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS, IMPLIED, OR STATUTORY, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE AND ANY IMPLIED WARRANTY ARISING FROM COURSE OF DEALING OR USAGE OF
TRADE. EXCEPT AS PROVIDED IN THIS ARTICLE 6, THERE IS NO WARRANTY AGAINST INTERFERENCE WITH ATRICURE’S ENJOYMENT OF THE LICENSED IP OR HIFU SYSTEM OR AGAINST INFRINGEMENT. 
  
 ARTICLE 7 
  
 REPRESENTATIONS AND WARRANTIES OF ATRICURE 
  
 Atricure hereby makes the representation and warranties below: 
  
 7.1. Organization. Atricure is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.
Atricure has the corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. 
  
 7.2. Valid and Binding Agreements. All acts and approvals required to be taken by or on the part of the Atricure (corporate or otherwise) necessary
to consummate the transactions contemplated by this Agreement have been duly and properly taken by Atricure. This Agreement has been duly and validly executed and delivered by Atricure, and is the legal, valid and binding obligation of Atricure
enforceable against Atricure in accordance with their respective terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity. 
  
 7.3. No Violation, Etc. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby nor compliance by Atricure with any of the provisions hereof (a) violates or conflicts with any provision of the articles of organization or operating agreement of Atricure, (b)
violates, or conflicts with, or results in a breach of any provision of, or constitutes a default (or gives rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any agreement, lease,
instrument, obligation, understanding or arrangement to which Atricure is a party or any of Atricure’ properties or assets is subject, or (c) violates any applicable Law. 
  

 11 

 7.4. Consents and Approvals. No permit, consent, approval or authorization of, or declaration,
filing or registration with, any Governmental Entity or Third Party is or will be necessary to be made or obtained by Atricure in connection with the execution and delivery by Atricure of this Agreement or the consummation by it of the transactions
contemplated under this Agreement. 
  
 ARTICLE 8 

 
 TERM OF THE AGREEMENT 
  
 This Agreement shall become effective on the Effective Date and shall continue in effect
unless and until terminated pursuant to Article 9. 
  
 ARTICLE 9

  
 TERMINATION 
  
 9.1. By Either Party For Breach. In the event that (a) Party shall
materially breach the Agreement, (b) the other Party shall give a notice to such Party which describes such breach in reasonable detail and demands that such breach be cured (the “Cure Notice”) and (c) the breaching Party shall fail to
cure such breach within forty-five (45) days after the date on which the Cure Notice shall have been given, then the non-breaching Party shall have the right to terminate this Agreement immediately upon notice to the breaching Party.

  
 9.2. By Atricure Prior to Target Completion Date.

  
 (a) Notice. Notwithstanding any other
provision of this Agreement, Atricure shall have the right, exercisable by the giving of notice to UST at any time prior to the Target Completion Date, to terminate this Agreement in its entirety (such notice being the “Optional Termination
Notice” and the date on which such notice shall, if at all, be given being the “Optional Termination Notice Date”). For the removal of doubt, from and after the Optional Termination Notice Date, this Agreement shall be deemed
terminated, and Atricure shall not be obligated to make any further payments to UST hereunder, of whatsoever kind or nature (other than the payment referred to in Section 9.2(b) and debts which shall already have accrued). 
  
 (b) Promissory Note. Contemporaneously with the
execution and delivery hereof, Atricure has executed and delivered to UST a demand promissory note, in the form attached hereto as Schedule 4, in the amount of one hundred thousand dollars ($100,000). As provided in such promissory note, UST shall
be entitled to demand payment under such promissory note at any time on or after the Optional Termination Notice Date. 
  
 (c) Deemed Optional Termination. In the event that Atricure fails to make any monthly installment called for under Section
2.2(a)(ii) on or before the date on which it is required hereunder to be paid, UST shall have the right to give a notice to Atricure requesting that such payment be made (the date of the giving of any such notice being the “Installment Request
Date”). In the event that Atricure fails, within fifteen (15) days after the Installment Request Date, to pay to UST the relevant installment (the “Unpaid Installment”), Atricure shall be deemed for all purposes of this Agreement to
have given an Optional Termination Notice to UST on such 15th day, and, accordingly, (i) such 15th day shall be deemed to be the Optional Termination Notice Date and (ii) the provisions of Section 9.2(a) shall apply in all respects. For the removal
of doubt, on and after the Optional Termination Notice Date, Atricure shall no longer be obligated to pay the Unpaid Installment, and Atricure shall not be liable to UST for any damages for failure to pay the Unpaid Installment (other than the
payment referred to in Section 9.2(b) and debts which shall have already accrued.). 
  
 9.3. By Atricure Subsequent to Target Completion Date. Notwithstanding any other provision of this Agreement, Atricure shall have the right, exercisable by the giving of notice to UST at any time subsequent to
the Target Completion Date, to terminate this Agreement in its entirety (such notice being the “Subsequent Termination Notice” and the date on which such notice shall, if at all, be given being the “Subsequent Termination Notice
Date”). For the removal of doubt, from and after the Subsequent Termination Notice Date, this Agreement shall be deemed terminated, and Atricure shall not be obligated to make any further payments to UST hereunder, of whatsoever kind or nature,
other than debts which shall already have accrued. 
  

 12 

 9.4. Failure to Pursue Commercialization. This Agreement shall be subject to termination in
accordance with the following: 
  
 (a)
510(k). In the event that Market Clearance of the HIFU System in the U.S. shall require the filing and prosecution of a 510(k) with the FDA, UST shall have the right to terminate this Agreement in the event that the First Commercial Sale of
the HIFU System shall not have occurred on or prior to the date falling three (3) years after the date on which UST shall have completed, in accordance with this Agreement, the performance of the Development Services (such date being the “Third
Anniversary”). In the event that UST shall have the right so to terminate this Agreement, such right shall be exercisable only by the giving of notice to Atricure to such effect, and such notice shall not be valid unless given on or before the
date falling thirty (30) days after the Third Anniversary. 
  
 (b) PMA. In the event that Market Approval of the HIFU System in the U.S. shall require the filing and prosecution of a PMA with the FDA, UST shall have the right to terminate this Agreement in the event that
Atricure shall not have filed a related IDE with the FDA on or before the Third Anniversary. In the event that UST shall have the right so to terminate this Agreement, such right shall be exercisable only by the giving of notice to Atricure to such
effect, and such notice shall not be valid unless given on or before the date falling thirty (30) days after the Third Anniversary. 
  
 ARTICLE 10 
  
 CONFIDENTIALITY 
  
 10.1. General. During the course of performing their obligations under this Agreement, it is anticipated that UST and Atricure may each learn confidential and proprietary information, whether oral, written or
electronically encoded (“Confidential Information”) which is the property of the other. The Party supplying such Confidential Information (“Disclosing Party”) shall mark all written materials deemed to contain Confidential
Information, and shall provide a written summary of any orally or visually presented Confidential Information, which shall also be marked “Confidential Information” within thirty (30) days of disclosure or presentation of such information
to the other Party. 
  
 10.2. Disclosure and Use. A Party
which receives Confidential Information (“Receiving Party”) covenants and agrees that neither it nor any of its Affiliates, subsidiaries, divisions, directors, officers, employees, agents, independent contractors or other organizations or
persons over which it has control (collectively, its “Representatives”) will: (a) directly or indirectly use any Confidential Information for any purpose which is not permitted hereunder, or (b) disseminate or disclose any of the
Confidential Information to any person or persons who do not need to have knowledge of the Confidential Information in the course of their employment with Receiving Party (and then only to the extent that such employment relates to exercising the
Receiving Party’s rights, or fulfilling the Receiving Party’s obligations, under this Agreement), without the express prior written consent of the Disclosing Party. 
  
 10.3. Certain Exceptions. The Parties’ obligations under this Agreement shall not apply to any Confidential
Information which: 
  
 (a) is or becomes publicly
known without the wrongful act or breach of this Agreement by the Receiving Party (each party acknowledging that any actions of its Representatives which are inconsistent with the terms of this Article 10 will be deemed to be a breach by such
Party); 
  
 (b) is independently developed by the
Receiving Party without the benefit or use of the disclosed Confidential Information; 
  
 (c) is already known to the Receiving Party at the time of disclosure (so long as the Receiving Party rightfully received such
Confidential Information from a Third Party who was not under any obligation of confidentiality to the Disclosing Party); 
  
 (d) is, subsequent to disclosure by the Disclosing Party, rightfully received by the Receiving Party from a Third Party who is not under
any obligation of confidentiality to the Disclosing Party. 
  
 10.4. Legal Compulsion. If disclosure of Confidential Information is required by court order or governmental requirements, regulations, or investigations, the Party being required to disclose the other 

  

 13 

 
Party’s Confidential Information shall (a) prior to such disclosure, notify the other Party in a timely fashion to allow that Party to take the
necessary steps to seek a protective order or other appropriate remedy, including redaction, or to take any other necessary actions to maintain the confidentiality of this Confidential Information, (b) whenever possible, request confidential
treatment of the Confidential Information and (c) disclose only so much of the Confidential Information which it is legally compelled to disclose. If disclosure, to a Governmental Entity, of Confidential Information of UST by Atricure is required
for securing a regulatory approval necessary for Atricure to exercise its rights under this Agreement, Atricure may, to the extent necessary (and subject to compliance with the foregoing provisions of this Section 10.4, to the extent reasonably
feasible), disclose such Confidential Information for the sole purpose of securing such regulatory approval, or to otherwise comply with Law; provided that Atricure shall take all reasonable steps to limit disclosure of the Confidential Information
(except as otherwise provided above in Section 10.3) and to otherwise maintain the confidentiality of the Confidential Information in accordance with this Article 10. 
  
 ARTICLE 11 
  
 INDEMNIFICATION 
  
 11.1. Indemnification by UST. UST will indemnify and hold harmless Atricure and its Affiliates, and their respective directors, officers, employees
and agents (collectively, the “Atricure Indemnified Parties”), against any losses, damages, costs and expenses, including reasonable attorneys fees and expenses (regardless whether incurred in connection with a Claim involving UST or a
Third Party), arising out of any breach of any of UST’s representations, warranties, agreements or covenants under this Agreement. 
  
 11.2. Indemnification by Atricure. Atricure will indemnify and hold harmless UST and its Affiliates, and their respective directors, officers,
employees and agents (collectively, the “UST Indemnified Parties”), against any losses, damages, costs and expenses, including reasonable attorneys fees and expenses (regardless whether incurred in connection with a Claim involving
Atricure or a Third Party), arising out of any breach of any of Atricure’ representations, warranties, agreements or covenants under this Agreement. 
  
 11.3. Survival. All representations and warranties made by the Parties herein shall survive the execution and delivery hereof. 
  
 11.4. Sole Remedy. The Parties agree that, except for any equitable
relief obtainable under the provisions of Article 10 or Section 3.4(c), the indemnification provisions of this Article 11 constitute the sole remedy for any and all breaches of the representations, warranties, covenants and agreements contained in
this Agreement. 
  
 11.5. Exclusion and Disclaimer of Certain
Damages. EXCEPT AS PROHIBITED BY LAW, AND EXCEPT WITH RESPECT TO THE BREACH, BY EITHER PARTY, OF ITS OBLIGATIONS OF CONFIDENTIALITY UNDER ARTICLE 10, IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY (OR TO ANY OTHER PARTIES ENTITLED TO
INDEMNITY UNDER SECTION 11.1 OR 11.2) FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES (INCLUDING WITHOUT LIMITATION DAMAGES FOR “LOST PROFITS” OR “LOST REVENUE”), REGARDLESS OF THE THEORY OF LIABILITY (INCLUDING
WITHOUT LIMITATION PRODUCT LIABILITY OR NEGLIGENCE), OR FOR ANY PUNITIVE DAMAGES, IN CONNECTION WITH OR ARISING UNDER THIS AGREEMENT, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED, HOWEVER, THAT THIS EXCLUSION AND LIMITATION SHALL NOT
APPLY TO REASONABLE ATTORNEYS FEES AND EXPENSES, WHICH SHALL BE RECOVERABLE IN ACCORDANCE WITH THE TERMS OF SECTIONS 11.1 AND 11.2. THIS EXCLUSION AND LIMITATION SHALL APPLY EVEN IF ANY REMEDY FAILS OF ITS ESSENTIAL PURPOSE. 
  
 11.6. Limitation of Liability. Notwithstanding anything in this
Agreement to the contrary, Atricure agrees that the total, cumulative liability of UST under this Agreement, whether in contract (including any provision of this Agreement), tort or otherwise, shall be limited to and shall not exceed fifty percent
(50%) of the Royalty paid by Atricure to UST under Section 4.2(a) of this Agreement. UST’s limitation of liability under this Section 11.6 is cumulative, with all UST’s payments to Atricure being aggregated to determine satisfaction of the
limit. Similarly, Atricure’s right to receive payment (e.g., of damages or other sums) shall also be cumulative inasmuch as Atricure shall be given “credit” hereunder for all Royalties, regardless when paid. For example, in the event
that UST incurs a liability to Atricure which, 

  

 14 

 
by virtue of the 50% limitation, it is not obligated to pay at that time, it will thereafter become obligated to pay such liability in the event and
to the extent that it receives further Royalty payments from Atricure in the future. The existence of claims or suits will not enlarge or extend the limit. Atricure releases UST from all obligations, liability, claims or demands in excess of the
limitation. This exclusion and limitation will apply even if any remedy fails of its essential purpose. The Parties acknowledge that the other parts of this Agreement rely upon the inclusion of this Section 11.6. 
  
 ARTICLE 12 
  
 GENERAL MATTERS 
  
 12.1. Publicity. Unless expressly approved in advance and in writing
by the other Party or as otherwise required by applicable Law, neither Party shall make any reference to the other Party or to the subject matter of this Agreement in any publicity, advertising or other public statements or documents. 
  
 12.2. Relationship of Parties. The relationship of the Parties will be
that of independent contractors. Neither Party will have the right to bind, represent or act for the other Party. The Parties will have no agency, partnership, joint venture or fiduciary duties to each other. 
  
 12.3. Expenses. Except as otherwise expressly provided herein, each
Party to this Agreement shall pay its own expenses in connection with the negotiation of this Agreement, the performance of its obligations hereunder, and the consummation of the transactions contemplated herein. 
  
 12.4. Amendment; Modification. No amendment, modification or
supplement of any provision of this Agreement shall be valid or effective unless made in writing and signed by each Party. 
  
 12.5. Entire Agreement; No Waiver. This Agreement contains the entire agreement between the Parties relating to the subject matter hereof and all
prior understandings between the Parties relating thereto are superseded by this Agreement. Waiver by either Party of any default by the other will not be deemed a waiver by such Party of any default by the other that may thereafter occur.

  
 12.6. Notices. All notices given under this Agreement
shall be in writing and may be delivered (a) by hand, (b) by United States mail, certified or registered, return receipt requested, (c) by overnight courier service, or (d) by facsimile transmission. Notices shall be deemed to have been given and
received on the date of actual receipt (or, if delivery is refused, on the first date of tender). All notices shall be sent to the addresses and facsimile numbers set forth below (or to such address or facsimile number as the receiving Party may
specify from time to time in accordance with this Section 12.6): 
  

			
	If to Atricure:	  	If to UST:
		
	Atricure, Inc.	  	UST, Inc.
	6033 Schumacher Park Drive	  	528 18th Avenue
	West Chester, Ohio 45069	  	Seattle, Washington 98122
	Attention: David J. Drachman	  	Attention: President
	Facsimile: (513) 644-1358	  	Facsimile: (206) 758-7805
		
	With a copy to:	  	With a copy to:
		
	Lowell S. Lifschultz	  	Joseph P. Whitford, Esq
	Epstein Becker & Green, P.C.	  	Davis Wright Tremaine LLP
	250 Park Avenue, 12th Floor	  	 2600 Century Square
 1501 Fourth
Avenue

	New York, New York 10177	  	Seattle, WA 98101-1688.
	Facsimile: (212) 878-8725	  	Facsimile No.: (206) 903-3894

  

 15 

 12.7. Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure
to the benefit of the Parties hereto and their respective successors and permitted assigns. Neither this Agreement, nor any rights or obligations hereunder, may be assigned or delegated by either Party without the prior written consent of the other
Party; provided, however, that either Party may assign and/or delegate any of its rights or obligations hereunder to any Person which shall, by sale of assets, merger or otherwise, have acquired all of its assets (not including cash, cash
equivalents or real property) which relate, in any material respect, to this Agreement (any transaction described above being a “Qualified Transfer”). Any purported assignment of rights or obligations which is inconsistent with the terms
of this Section 12.7 shall be void ab initio. No delegation of duties shall release the delegating party from its obligations hereunder. 
  
 12.8. Governing Law; Severability. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York,
without giving effect to the conflict-of-law rules thereof. The Parties hereby submit to the jurisdiction of the State and Federal Courts located within the City of Chicago, Illinois, and agree that any litigation between the Parties arising out of
this Agreement shall be commenced and adjudicated only in such courts. If any portion of this Agreement is found by a court of competent jurisdiction to be illegal, invalid or unenforceable, such portion shall be deleted and all other terms and
conditions of this Agreement shall remain in full force and effect and shall be interpreted to achieve, to the greatest extent possible, the objectives of this Agreement taken as a whole, including the illegal, invalid or unenforceable
provision. 
  
 12.9. Counterparts. This Agreement
may be executed in any number of counterparts, each of which shall be considered an original and all of which shall constitute one and the same instrument. Any such counterpart may be delivered by means of a facsimile transmission. 
  
 12.10. No Third Party Beneficiaries. Except as provided in Article 11,
nothing in this Agreement is intended to create any rights in or on behalf of any other Person and no other Person will be construed to be a third party beneficiary of this Agreement or otherwise have any legal or equitable rights as a result of
this Agreement. 
  
 12.11. Further Assistance. Each Party
hereto shall use all commercially reasonable efforts to implement the provisions of this Agreement, and for such purpose each Party, at the request of the other Party, and without further consideration, at or after the Effective Date shall, unless
otherwise specifically provided in this Agreement, execute and deliver or cause to be executed and delivered, to the other Party such deeds, assignments, bills of sale, consents and other instruments as the other Party may reasonably request to
implement or reflect the provisions of this Agreement. Upon request by Atricure, UST shall provide Atricure with such reasonable assistance and information as may be necessary or appropriate for Atricure to obtain regulatory approvals necessary for
the commercial manufacture, use or sale of the HIFU Systems. 
  
 12.12. Survival of Obligations. Notwithstanding any other provision of this Agreement, the obligations of the Parties under Sections 5.3, 5.4, 5.5, 5.6, Article 10, Article 11 and Article 12, as well as the obligation to pay any
Royalty which shall have accrued, shall survive the expiration or other termination of this Agreement. 
  
 12.13. Equitable Relief. Each Party hereby acknowledges and agrees that a breach by it of the provisions of Article 10 or Section 3.4(c) shall
cause irreparable harm to the other Party. In the event of a breach, or a threatened breach by a Party of the terms of Article 10 or Section 3.4(c), the other Party shall be entitled to seek equitable relief restraining, or enjoining, the Party
threatening to breach, or breaching, such provision. 
  
 [signature page immediately following] 
  

 16 

 IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above written. 
  

			
	 ATRICURE, INC.

		
	By:	 	/s/    David Drachman
		
	 Name:
	 	David Drachman
		
	 Title:
	 	President
	
	 UST, INC.

		
	By:	 	/s/    Eugene A. Larson
		
	 Name:
	 	Eugene A. Larson
		
	 Title:
	 	President

  
 The undersigned have executed
this Agreement 
 for the sole purpose of becoming bound by the 
 provisions of Section 3.4(c) and Section 12.13 
 (to the extent relevant to Section 3.4(c)): 
  

	
	
	/s/    Yu-Chi Chu
	 Yu-Chi Chu

	
	/s/    Lawrence C. Crum
	 Lawrence C. Crum

	
	/s/    Perry Kaminski
	 Perry Kaminski

	
	/s/    Eugene Larson
	 Eugene Larson

  

			
	CKL, LLC
		
	By:	 	Eugene Larson
		
	 Title:
	 	Partner
		
	By:	 	/s/    Lawrence C. Crum
		
	 Title:
	 	Partner
		
	By:	 	/s/    Perry Kaminski
		
	 Title:
	 	Partner

  

 17 

  
 SCHEDULE 1 

 
 DEFINED TERMS 
  
 “Account” shall mean such bank or similar account as UST shall designate to
Atricure from time to time by notice given in accordance with this Agreement. 
  
 “Affiliate” means, with respect to a Party, any Person that Controls, is Controlled by or under common Control with such Party. 
  
 “Agreement” shall have the meaning ascribed to it in the Preamble. 
  
 “Atricure Field” shall include the following: (a) cardiac cauterization by the application of ultrasound to cardiac tissue to create a lesion, scar or partial
necrosis in order to ablate, block or delay electrical conduction in such tissue; (b) making connecting lesions between anatomical structures including connecting lesions to the mitral valve; and (c) reducing the size of cardiac structures;
provided, however, that the Atricure Field shall be deemed not to include: (i) the treatment of cardiac disease from the esophagus, (ii) any treatment or diagnosis accomplished by placing the treatment device (i.e., transducer) on the surface of the
body, or (iii) the treatment of cardiac valve leaflets, or their supporting structures, with HIFU. 
  
 “Atricure Indemnified Parties” shall have the meaning ascribed to it in Section 11.1. 
  
 “Business Day” shall mean any day other than (a) a Saturday or Sunday or (b) any day on which the Federal Reserve Bank in New York City shall be closed for
business. 
  
 “Claims” means claims, causes of action and lawsuits of
every nature and description. 
  
 “Combination Product” shall mean any
subject matter (including but not limited to products and processes), sold as a unit and at a single price, which contains a HIFU System as a component thereof and one or more other components not constituting HIFU System(s). 
  
 “Confidential Information” has the meaning set forth in Section 10.1. 

 
 “Control” means the ability to direct, or cause the direction of, the general
management and policies of an entity, whether by vote, contract or otherwise. 
  
 “Copyrights” means all (a) U.S. and foreign copyrights and all other similar or related rights, whether statutory or arising under common law, (b) all copyright applications and registrations, and certificates of copyright
pertaining thereto, including but not limited to, copyright registrations and applications, and (c) any extensions and renewals of any of the foregoing. 
  
 “Defense” shall have the meaning ascribed thereto in Section 5.2. 
  
 “Development Plan” shall have the meaning ascribed thereto in Section 2.1(a). 
  
 “Development Consideration” shall have the meaning ascribed thereto in Section 2.2. 
  
 “Development Services” shall have the meaning ascribed to it in Section 2.1(a).

  
 “Disclosing Party” shall have the meaning ascribed to it in Section
10.1. 
  
 “Effective Date” shall mean the date of this Agreement as set
forth in the Preamble; provided, however, that if the date on which this Agreement is fully executed and delivered shall occur after the date falling seven (7) days after (but not including) the date set forth in the Preamble, the term
“Effective Date” shall mean the actual date on which this Agreement shall have been fully executed and delivered. 
  
 “FDA” shall mean the U.S. Food and Drug Administration, and any successor agency. 
  
 “First Commercial Sale” shall mean the first sale of a HIFU System by Atricure to a Third Party for use in connection with the
treatment of the general public. 
  

 18 

 “510(k)” shall mean a 510(k) Notification for Clearance, filed with the FDA. 
  
 “GAAP” means United States Generally Accepted Accounting Practices, consistently
applied. 
  
 “Governmental Entity” shall mean any federal, national,
foreign, state, municipal, local or territorial (a) government or governmental department, commission, board, bureau, agency, regulatory authority or instrumentality or (b) court or similar judicial authority. 
  
 “HIFU System” means a complete “turn-key” HIFU system, meeting the
Specifications, designed to form transmural cardiac lesions on the epicardial surface of a beating human heart as a means of providing a minimally invasive surgical ablation of atrial fibrillation. 
  
 “IDE” shall mean an investigational device exemption filed with the FDA in
connection with a related PMA. 
  
 “Infringement Costs” shall have the
meaning ascribed to it in Section 5.4. 
  
 “Infringement Damages” shall
have the meaning ascribed to it in Section 5.4. 
  
 “Infringement Notice
Date” has the meaning ascribed to it in Section 5.4. 
  
 “Intellectual
Property” means, collectively, Technology and Trade Secrets, Patents and Copyrights. 
  
 “IP Claim” shall have the meaning ascribed thereto in Section 5.5. 
  
 “Jointly-Created IPR” shall have the meaning ascribed thereto in Section 5.1 
  
 “Laws” means all laws, rules and regulations of any Governmental Entity. 
  
 “License” shall mean, collectively, subject to Section 3.7, the licenses granted to Atricure under Sections 3.1(a) and 3.1(b).

  
 “Licensed IP” shall have the meaning ascribed thereto in Section
3.1(c). 
  
 “Licensed Patents” shall mean, collectively, all Patents
included in the Licensed IP. 
  
 “Lien” means any mortgages, security
interests, liens, encumbrances and charges of any kind or nature. 
  
 “Market
Approval” shall mean, with respect to the HIFU System (in the event that a PMA is required), such final approval(s) and clearance(s) from such Governmental Entities as may be required by applicable Laws to permit the general sale and
commercialization of the HIFU System. 
  
 “Market Clearance” shall mean,
with respect to the HIFU System (in the event that a 510 (k) is required), such final approval(s) and clearance(s) from such Governmental Entities as may be required by applicable Laws to permit the general sale and commercialization of the HIFU
System. 
  
 “Milestones” shall mean the milestones set forth in the
Development Plan. 
  
 “Net Sales” shall mean, with respect to any given
fiscal period, the sum of the following: 
  
 (a) with respect to
all sales of HIFU Systems, during such fiscal period, on a “stand-alone” basis (i.e., other than as a component of a Combination Product), the total amount invoiced to Third Parties therefor, during such fiscal period, by Atricure
less (to the extent relating to such period): (i) credits granted for returns, price adjustments, billing errors, recalls and other adjustments; (ii) discounts (including trade, quantity and cash discounts); (iii) rebates paid to third
parties (including Medicare, Medicaid and similar rebates); (iv) freight, shipping, insurance and handling charges; (v) sales, excise, use, value-added, turnover, consumption and similar taxes; (vi) customs and other import/export duties; and (vii)
a reserve for uncollectible amounts consistent with previous experience and GAAP (the items in subsections (i) through (vii) being, collectively, the “Standard Deductions”); plus 
  

 19 

 (b) with respect to all sales of Combination Products, during such fiscal period, a sum equal to (x) the
total amount invoiced to Third Parties therefor, during such fiscal period, by Atricure less (to the extent relating to such period) (y) the Standard Deductions, multiplied by: 
  
 (i) in the event that each component of the Combination Product is sold separately, the fraction
A÷(A+B), where “A” is equal to the average invoice price of the HIFU System, in such country, when sold separately and “B” is equal to the sum of the average invoice prices, in such country, of each of the other components
of the Combination Product when the same shall be sold separately; or 
  
 (ii) in the event that not all components of the Combination Product are sold separately, the fraction A÷B, where “A” is defined as in subsection (i) above and “B” is equal to the average
invoice price of the Combination Product in such country; plus 
  
 (c) the total revenues received by Atricure, during such fiscal period, in consideration for the sublicensing, to Third Parties, of the Licensed IP less (i) to the extent applicable and relating to such period, the Standard
Deductions and (ii) the sum of all out-of-pocket expenses (including, without limitation, attorneys’ fees and expenses) incurred by Atricure during such period in connection with or relating to the sublicensing of the Licensed IP to any Third
Party. 
  
 “Party” means Atricure or UST, as the case may be, and
“Parties” means collectively Atricure and UST. 
  
 “Patents”
means (a) all current and future U.S. and foreign patents and patent applications, and (b) all foreign counterpart, continuation, divisional, continuation-in-part, re-issue and substitution applications based on the foregoing, together with any
patents that may issue based thereon. 
  
 “Patent Application” means and
includes any application for, and any other filing made in connection with the obtaining, amendment or maintenance of, a Patent, as well as any amendment or supplement to any such application or filing. 
  
 “Person” means an individual, corporation, partnership, limited liability company,
firm, association, joint venture, estate, trust or other entity, including any Governmental Entity. 
  
 “PMA” shall mean a Pre-Market Approval Application filed with the FDA. 
  
 “Qualified Transfer” shall have the meaning ascribed to it in Section 12.7. 
  
 “Receiving Party” shall have the meaning ascribed to it in Section 10.2. 
  
 “Royalty” shall have the meaning ascribed thereto in Section 4.2. 
  
 “Royalty Statement” shall have the meaning as defined in Section 4.4. 

 
 “Royalty Term” means the period of time commencing on the date of the First
Commercial Sale and ending on the date falling fifteen (15) years after the date of the First Commercial Sale. 
  
 “Specifications” shall mean the specifications relating to the HIFU System, as contained in the Development Plan. 
  
 “Sonic/Keilman IP” shall mean any Intellectual Property which (a) is possessed by UST, at any time during the Term hereof, under the Sonic/Keilman License
Agreement and (b) relates to, or is useful in connection with, the Atricure Field, including, without limitation, the Patents and Patent Applications set forth in Section 3 of Schedule 3 hereto. 
  
 “Sonic/Keilman License Agreement” shall mean that certain Exclusive License
Agreement, dated July 15 2005, as amended, by and between UST, Sonic Concepts, Inc. 
  
 “Sublicensee” shall mean any Person to whom Atricure shall grant a sublicense of any rights under that portion of the License covered by Section 3.1(a). 
  
 “Target Completion Date” shall have the meaning ascribed thereto in the Preamble. 
  

 20 

 “Technology and Trade Secrets” means all inventions, discoveries, formulas, processes, know-how, methods,
designs, techniques, developments, technology, software, and related improvements, whether or not patentable or copyrightable, and any work that incorporates, is based upon, derived from, or otherwise uses any of the foregoing, including, without
limitation, any trade secret or other intellectual property rights in any of the foregoing. 
  
 “Termination” shall mean and include, with respect to any Patent, (a) the expiration of such Patent, (b) the entry of a final judgment of invalidity or unenforceability with respect to such Patent, by a
court of competent jurisdiction, where either (i) such judgment is unappealable or (ii) all rights of appeal with respect thereto shall have lapsed and (c) any other termination of such Patent for any reason whatsoever, including the failure to pay
any required maintenance or other fees with respect thereto. 
  
 “Third
Party” means any Person other than (a) a Party to this Agreement or (b) an Affiliate of a Party to this Agreement. 
  
 “UST Indemnified Parties” shall have the meaning ascribed to it in Section 11.2. 
  
 “UST IP” shall mean any Intellectual Property which is (a) owned by UST, at any time during the Term hereof and (b) relates to, or
is useful in connection with, the Atricure Field, including, without limitation, the Patents and Patent Applications set forth in Section 1 of Schedule 3 hereto and any Jointly-Created IPR owned by it. 
  
 “UW” shall mean the University of Washington. 
  

 21 

  
 SCHEDULE 2 

 
 DEVELOPMENT PLAN 
  
 SEE ATTACHED 
  

 22 

 Proposed HIFU Feasibility Milestones 
  

									
	 Milestone

	  	 Description

	  	 Deliverables

	  	 Roles

	  	 Estimated Time
 (from signing)

	1) Transducer & System Bench Test	  	Creates ablation pathways on explanted animal heart using non-miniaturized transducer	  	 Tissue Effect: Create line lesions (10-15mm long x 3±1mm wide x 4±1mm thick) in explanted myocardium. Lesion creation time <
60 seconds.
  
 Transducer: Using a single broadband frequency, CW
transducer with no scanning. Transducer is same size or smaller than current UST “hockey puck” transducer.
  
 System: Using existing UST HIFU generator with active transducer cooling.
	  	 Milestone is UST responsibility,
  
 AtriCure provides mechanical design and prototyping support, test plan review and approval
	  	3-4 months
					
	2) Acute Animal Test Criteria I	  	Creates ablation pathways on an open chest beating heart using a miniaturized transducer	  	 Tissue Effect: Create line lesions (10-15mm long x 3±1mm wide x 4±1mm thick) on the posterior of the left atrium of a beating
pig heart. Lesion creation time < 60 seconds Create one lesion between left and right pulmonary veins. Create a connecting lesion to the mitral valve.
  
 Transducer: Functional miniaturized instrument end effector for placement in the transverse sinus open chest which incorporates a single frequency CW transducer
with no scanning.
  
 System: Using existing UST HIFU generator with active
transducer cooling if needed. Define treatment parameters.
	  	 Milestone is UST responsibility,
  
 AtriCure provides instrument design, mechanical engineering and prototyping support, thermal modeling finite element analysis, test plan review and
approval
	  	6-7 months
					
	3) Acute Animal Test Criteria II	  	ablation pathways are repeatable across different transducers and animal when used on a beating heart open chest	  	 Tissue Effect: Create full thickness line lesions (10-15mm long x 3±1mm wide x 4±1mm thick) in explanted myocardium. Lesion
creation time < 60 seconds on the posterior of the left atrial of a beating pig heart. Using a full block DOE show no significant difference in tissue effect across two independent transducers used in two animals.
  
 Transducer: Functional instrument end effector for placement in transverse cardiac
sinus which incorporates a single frequency, CW transducer with no scanning. Transducer, when packaged with housing, focusing elements and coupling elements is less than 10mm thick x 20mm wide x 27mm long. Transducer body temperature will not
contribute to a thermal dose in surrounding tissue of more than t43 = 60 while making two successive
lesions
  
 System: Using prototype of new HIFU generator implementing
treatment parameters from MS-2, with active transducer cooling if needed.
	  	 Milestone is UST responsibility,
  
 AtriCure provides instrument design, mechanical engineering and prototyping support, thermal modeling finite element analysis, statistical analysis, test plan review and
approval
	  	10-12 months

  

 23 

									
	 Milestone

	  	 Description

	  	 Deliverables

	  	 Roles

	  	 Estimated Time
 (from signing)

	4) Chronic Animal Test Criteria I	  	Creates ablation pathways sustained to 30 days	  	 Tissue Effect: Create full thickness line lesions (10-15mm long x 3±1mm wide x 4±1mm thick) in explanted animal atria. Lesion
creation time < 60 seconds on the posterior of the left atrium of a beating pig heart. Using a full block DOE show no significant difference in tissue effect across two independent transducers used in two animals.
  
 Transducer: Functional handpiece and end effector for placement in transverse sinus
which incorporates a single frequency CW transducer with no scanning. Transducer, when packaged with housing, focusing elements and coupling elements is less than 10mm thick x 20mm wide x 27mm long. Transducer body temperature will not contribute to
a thermal dose in surrounding tissue of more than t43 = 60 while making two successive lesions
  
 System: Using prototype of new HIFU generator implementing treatment parameters from
MS-2, with active transducer cooling if needed.
	  	 Milestone is UST responsibility for intercostals probe, AtriCure for chronic animal study,
  
 AtriCure provides instrument design, mechanical engineering and prototyping support, thermal
modeling finite element analysis, statistical analysis, test plan review and approval
	  	13-14 months
					
	5) Clinical Pilot Evaluation Criteria Met	  	Creates ablation pathways acutely	  	 Tissue Effect: Create full thickness line lesions (10-15mm long x 3±1mm wide x 4±1mm thick) in human left atrial appendage
immediately prior to surgical resection. Lesion creation time < 60 seconds.
  
 Transducer: Clinical use handpiece and end effector for placement in transverse cardiac sinus which incorporates a single frequency CW transducer with no scanning. Transducer, when packaged with housing, focusing elements and
coupling elements is less than 10mm thick x 20mm wide x 27mm long. Transducer body temperature will not contribute to a thermal dose in surrounding tissue of more than t43 = 60 while making two successive lesions
  
 System: Clinical use version of new HIFU generator implementing treatment parameters from MS-2, with active transducer cooling if needed.
	  	 Milestone is AtriCure responsibility
  
 UST provides technology support to achieve objective
	  	20–24 months

  
 Confidential and
Proprietary information of AtriCure inc. 
  
 May
7, 2005 
  

 24 

  
 SCHEDULE 3 

 
 SECTION 1: CERTAIN UST IP 
  

											
	Family No.

	  	 Country

	  	Appln. No.

	  	File Date

	  	 Inventor(s)

	  	 Title

	1	  	U.S.	  	60/471669	  	05/19/2003	  	Larry L. Smith	  	Geometrically Shaped Coupling Hydrogel Standoffs for HIFU
	 	  	U.S.	  	10/847,232	  	05/17/2004	  	Larry L. Smith	  	Geometrically Shaped Coupling Hydrogel Standoffs for HIFU
	 	  	Europe	  	04252734.1	  	05/12/2004	  	Same	  	Same
						
	2	  	U.S.	  	60/604,784	  	08/26/2004	  	Joseph Leonetti Larry L. Smith	  	Geometrically Shaped Coupling Hydrogel Standoffs for HIFU (Acrylates)
						
	3	  	U.S.	  	60/517,555	  	11/05/2003	  	Anthony Lowman	  	Hydrogel Compositions and Manufacturing Process for Ultrasound Couplants
						
	 	  	U.S.	  	10/978,767	  	11/01/2004	  	 Anthony Lowman
 Larry Smith
	  	Same
						
	4	  	U.S.	  	60/524,200	  	11/21/2003	  	Eugene Larson Perry Kaminski Yu-Chi Chu	  	Bone Cancer Pain Management Utilizing Ultrasound
	 	  	U.S.	  	10/994,421	  	11/22/2004	  	Same	  	 
						
	5	  	U.S.	  	 	  	 	  	Perry Kaminski Eugene Larson	  	Hand-Held HIFU
						
	6	  	U.S.	  	 	  	 	  	Perry Kaminski Yu-Chi Chu	  	Automatic Thermal Dose Regulation
						
	7	  	U.S.	  	Disclosure	  	 	  	Perry Kaminski	  	Device for extracting heat from HIFU transducers
						
	8	  	U.S.	  	Disclosure	  	 	  	Perry Kaminski	  	Nonlinear Focusing Device for HIFU transducers

  

 25 

 SECTION 2: CERTAIN Sonic/Keilman IP 
  

					
	 Pat. App. No.
 Pat. Issue No.
 Pat. Issue Date

	  	Licensor

	    	 Title

	 08/961,972
 6,007,499
 12/28/99
	  	Sonic/Keilman	    	Methods and apparatus for medical procedures using HIFU
			
	 09/390/032
 6,432,067
 8/13/02
	  	Sonic/Keilman	    	Methods and apparatus for medical procedures using HIFU
			
	 09/390,506
 6,315,741
 11/13/01
	  	Sonic/Keilman	    	Methods and apparatus for medical procedures using HIFU
			
	98955182.5	  	Sonic/Keilman	    	Methods and apparatus for medical procedures using HIFU
			
	 10/171,149
 (20030018255)
	  	Sonic/Keilman	    	Methods and apparatus for medical procedures using HIFU

  

 26 

  
 SCHEDULE 4 

 
 FORM OF PROMISSORY NOTE 
  
 CONDITIONAL DEMAND PROMISSORY NOTE 
  

			
	$100,000	 	 July 15, 2005

  
 FOR VALUE RECEIVED, the undersigned,
ATRICURE INC., a Delaware corporation with offices at 6033 Schumacher Park Drive, West Chester, Ohio 45069 ( “AtriCure”), hereby promises to pay to UST INC. (“UST”), a Washington corporation with offices at 528 18th Avenue, Seattle, Washington 98122, on demand (in accordance with the terms below) the principal sum of ONE HUNDRED THOUSAND
DOLLARS ($100,000.00), at the address set forth above in lawful money of the United States of America. 
  
 The principal amount of this Note shall be payable in full on demand (given by written notice to AtriCure in accordance with the terms hereof) subject to the occurrence of, and at any time on or after, the
“Optional Termination Notice Date” (as defined in Article 9 of that certain Development and License Agreement, dated the date hereof, between AtriCure and UST). In the event, however, that the “Optional Termination Notice Date”
shall not have occurred on or prior to the “Target Completion Date” (as defined in the aforesaid Development and License Agreement), then this Note shall automatically become null and void. 
  
 All notices and other communications to the undersigned shall be in writing and shall be
deemed to have been received when delivered personally (which shall include, without limitation, via express overnight courier) or, if mailed, three (3) business days after having been mailed by registered or certified mail, return receipt
requested, postage prepaid, to the address of the undersigned indicated above. 
  
 This Note shall be binding upon the permitted assigns and successors of AtriCure and shall inure to the benefit of and be enforceable by UST, its successors and assigns. 
  
 No delay or omission on the part of UST in exercising any right hereunder shall operate as a waiver of such right or of any other right
under this Note. No waiver of any right shall be effective unless in writing and signed by UST, and no waiver on one (1) or more occasions shall be conclusive as a bar to or waiver of any right on any other occasion. 
  
 This Note shall be governed by and construed in accordance with the internal laws of the
State of New York. 
  
 IN WITNESS THEREOF, the undersigned has executed this Note
as of the 15 day of July, 2005. 
  

			
	 ATRICURE, INC.

		
	By:	 	 /s/ David J. Drachman

	 Name:
	 	 David J. Drachman

	 Title:
	 	 President and Chief Executive Officer

  

 27

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