Document:

Distribution Agreement

 Exhibit 10.5
 DISTRIBUTION AGREEMENT
 by
and between
 BOSTON SCIENTIFIC CORPORATION
 and
 CORAUTUS
GENETICS INC.
 Dated as of July 30, 2003

         
TABLE OF CONTENTS

	 	 	 
	 	 	Page
	 	 	 
	 	ARTICLE I	 
	 	DEFINITIONS	 
	 	 	 
	SECTION 1.01.	
General	1 
	SECTION 1.02.	
Additional Definitions	4 
	 	 	 
	 	 	 
	 	ARTICLE II	 
	 	GRANT OF RIGHTS	 
	 	 	 
	SECTION 2.01.	
Appointment of BSC as Exclusive Distributor	5 
	SECTION 2.02.	
License to the Company	5 
	SECTION 2.03.	
Additional Licenses	5 
	 	 	 
	 	 	 
	 	ARTICLE III	 
	 	DISTRIBUTION, MANUFACTURE AND SUPPLY	 
	 	 	 
	SECTION 3.01.	
Marketing	6 
	SECTION 3.02.	
Training Advice and Assistance	7 
	SECTION 3.03.	
Supply Forecasts	7 
	SECTION 3.04.	
Orders	7 
	SECTION 3.05.	
Final Product Specifications; Packaging and Labeling	7 
	SECTION 3.06.	
Obligation to Supply	8 
	SECTION 3.07.	
Product Pricing and Purchases	8 
	SECTION 3.08.	
Royalties to BSC	8 
	SECTION 3.09.	
Payment Currency	9 
	SECTION 3.10.	
Samples	9 
	SECTION 3.11.	
The Company’s Audit Rights	10 
	SECTION 3.12.	
BSC’s Audit Rights	10 
	SECTION 3.13.	
Shipping and Inventory	10 
	SECTION 3.14.	
Acceptance	10 
	SECTION 3.15.	
Compliance with Laws	11 
	SECTION 3.16.	
Manufacturing Requirements and Regulatory Audits	11 
	SECTION 3.17.	
Recalls	12 
	SECTION 3.18.	
Non-Exclusive Distribution Agreement	13 
	 	 	 
	 	 	 
	 	ARTICLE IV	 
	 	REGULATORY	 
	 	 	 
	SECTION 4.01.	
Registration of Products in the Territory	13 
	SECTION 4.02. 	
Reporting Obligations	13 
	SECTION 4.03. 	
Technical Support Regarding Adverse Events	14 

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	 	ARTICLE V	 
	 	REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION	 
	 	 	 
	SECTION 5.01.	
Mutual Representations	14 
	SECTION 5.02.	
Company Warranties and Agreements	15 
	SECTION 5.03.	
BSC Warranties	16 
	SECTION 5.04.	
DISCLAIMER	16 
	SECTION 5.05.	
Company Indemnity	16 
	SECTION 5.06.	
BSC Indemnity	16 
	SECTION 5.07.	
Indemnification Procedure	17 
	SECTION 5.08.	
Limitation of Liability	17 
	SECTION 5.09.	
Insurance	18 
	SECTION 5.10.	
No Improper Representations or Warranties.	18 
	 	 	 
	 	 	 
	 	ARTICLE VI	 
	 	TERM AND TERMINATION	 
	 	 	 
	SECTION 6.01.	
Expiration	18 
	SECTION 6.02.	
Mutual Consent	18 
	SECTION 6.03.	
Termination for Cause	18 
	SECTION 6.04.	
Survival	18 
	 	 	 
	 	 	 
	 	ARTICLE VII	 
	 	CONFIDENTIALITY	 
	 	 	 
	SECTION 7.01.	
Confidentiality	19 
	SECTION 7.02.	
Release from Restrictions	19 
	SECTION 7.03.	
Public Announcements and Publications	19 
	 	 	 
	 	 	 
	 	ARTICLE VIII	 
	 	MISCELLANEOUS	 
	 	 	 
	SECTION 8.01.	
Notices	20 
	SECTION 8.02.	
Headings	21 
	SECTION 8.03.	
Severability	21 
	SECTION 8.04.	
Entire Agreement	21 
	SECTION 8.05.	
Assignment	21 
	SECTION 8.06.	
No Third Party Beneficiaries	21 
	SECTION 8.07.	
Change of Control	21 
	SECTION 8.08.	
Amendment	22 
	SECTION 8.09.	
Governing Law and Venue	22 
	SECTION 8.10.	
Dispute Resolution	22 
	SECTION 8.11.	
Counterparts	22 
	SECTION 8.12.	
No Waiver	23 
	SECTION 8.13.	
Independent Contractor	23 
	SECTION 8.14.	
Registration and Filing of this Agreement	23 

 ii

			
	 	 	 
	 	EXHIBITS	 
	 	 	 
	Exhibit A	
Sales Prices	 
	 	 	 
	Exhibit B	
BSC Competitors	 
	 	 	 
	Exhibit C	
Current Version of Purchase Order	 

 iii

  DISTRIBUTION AGREEMENT
                               This DISTRIBUTION AGREEMENT (this
“Agreement”) is made and entered into this 30th day of July, 2003 (the “Effective Date”) by and between BOSTON SCIENTIFIC CORPORATION (“BSC”), a Delaware corporation, and CORAUTUS GENETICS INC. (the
“Company”), a Delaware corporation (each a “Party,” and collectively, the “Parties”).
 W I T N E S S E T H:
                               WHEREAS, the Parties are parties to the
Investment Agreement, the Development Agreement (the “Development Agreement”), the Sublicense Agreement, the Loan Agreement (the “Loan Agreement”) and the Investor Rights Agreement, each of even date herewith
(collectively with this Agreement, the “Transaction Documents”); and
                               WHEREAS, pursuant to the transactions
contemplated by the Transaction Documents, the Parties wish to enter into an exclusive distributorship with respect to Final Products.
                               NOW, THEREFORE, in consideration of the
premises and the mutual representations, agreements and covenants set forth herein and in the other Transaction Documents, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree
as follows:
 ARTICLE I 
 DEFINITIONS
                                    SECTION
1.01.   
General.   As used herein, the following terms shall have the following meanings:

		
	 	                          “Act” means the United States Food, Drug and
Cosmetic Act and similar Laws in foreign jurisdictions, all as may be amended from time to time, to the extent applicable.

 

		
	 	                           “AE”
means, with respect to use of any Product or Injection Catheter, any adverse event (within the meaning of applicable FDA regulations, and including, without limitation, any unfavorable and unintended sign (including, without limitation, an abnormal
laboratory finding), exacerbation of a pre-existing condition, intercurrent illness, drug interaction, significant worsening of a disease under investigation or treatment, significant failure of expected pharmacological or biological action, or
symptom or disease temporally associated with the use of such Product or Injection Catheter, whether or not considered to be related to such Product or Injection Catheter), which event is associated with the use of such Product or Injection Catheter
(i) in clinical investigation, or (ii) by a patient once such Product or Injection Catheter has been approved, whether or not such event is considered to be drug-related. AE(s) shall include such events (i) occurring in the course of the use of such
Product or Injection Catheter in professional practice; (ii) occurring from drug overdose whether accidental or intentional; 

 
 1

	 	 
	 	 (iii) occurring from drug abuse; (iv) occurring from drug withdrawal; and (v) any significant and consistent failure of expected pharmacological action. Notwithstanding the foregoing, AEs shall include any
experience required to be reported to a relevant authority in any such country.
 

		
	 	                         “Affiliate” means, with respect to any specified
Person, any Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such specified Person.

 

		
	 	                          “Approvals” means authorizations granted to the
Company from a Regulatory Authority, including BLA approvals, to distribute, for either investigational or commercial purposes, a medical drug or product.

 

		
	 	                          “BLA” means a Biologics License Application
filed with the FDA in respect of a Product in order to manufacture, market, sell or use the Product in the United States.

 

		
	 	                         “BSC Competitor” means any of the Persons listed on
Exhibit B as such Exhibit may be updated from time to time by BSC by written notice to the Company containing a copy of such update; provided, however, (i) such updates may not occur more than twice per calendar year; and (ii) no more
than ten (10) Persons may be listed on Exhibit B at any one time.

 

		
	 	                          “BSC Indemnitee” means BSC, its Affiliates,
University of Michigan, HHMI, and each of their respective directors, officers, employees, regents, trustees, fellows and agents.

 

		
	 	                         “BSC Patents” means ***

		
	 	                          “Business Day” means any day that is not a
Saturday, a Sunday or any other day on which banks are required or authorized by Law to be closed in The City of New York.

 

		
	 	                          “Company Indemnitee” means the Company, its
Affiliates, and each of their respective directors, officers, employees and agents.

 

		
	 	                         “Competitor Transaction” means any transfer,
assignment or sale, directly or indirectly, of the business relating to the use of the Products (whether by stock sale, asset sale, merger or otherwise) and whether by sale of the Company in whole or in part to any BSC Competitor.

 

		
	 	                          “Confidential Information” means all nonpublic
proprietary information and materials (whether or not patentable) disclosed by one Party (the “Disclosing Party”) to the other Party (the “Receiving Party”), irrespective of the manner in which the Disclosing Party
disclosed such information and regardless of whether such information is labeled as confidential, in furtherance of this Agreement, including, but not limited to, trade secrets under applicable Law, substances, formulations, techniques, methodology,
equipment, data, reports, correspondence, know-how, manufacturing documentation and sources of supply, as well as the terms of this Agreement.

 __________
 “***” indicates redacted confidential information pursuant to a confidential treatment request filed with the SEC.
 
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	 	                         “FDA” means the United States Food and Drug
Administration.

 

		
	 	                          “Final Product” means, with respect to any
Product and country, the version of the relevant Product that receives Approval by a Regulatory Authority for marketing, distribution or sale in the relevant country.

 

		
	 	                         “Indemnified Party” means a Person seeking
indemnification from a Party pursuant to and in accordance with the terms and conditions of this Agreement.

 

		
	 	                          “Indemnifying Party” means the Party from whom
an Indemnified Party seeks indemnification pursuant to and in accordance with the terms and conditions of this Agreement.

 

		
	 	                          “Injection Catheter” means the injection
catheter known as the StilettoTM manufactured by BSC, including improvements, modifications and replacements thereto.

 

		
	 	                          “Intellectual Property” means all intellectual
property rights, including without limitation (i) United States and foreign patents and patent applications, divisions, continuations, continuations-in-part, reissues, renewals, reexaminations, requests for continued examination, supplemental
registrations or extensions thereof, (ii) trademarks, whether registered or unregistered and applications for registration thereof, (iii) copyrights, whether registered or unregistered and applications for registration thereof, and
(iv) trade secrets, know-how, technology, proprietary information and data, including, without limitation, formulae, procedures, plans, methods, processes, specifications, models, protocols, techniques and experimentation, and design, testing
and manufacturing data, and products, compositions, and procedures.

 

		
	 	                          “Law” means the Act and any other United States
or non-United States federal, national, supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code, order, requirement or rule of law, to the extent applicable.

 

		
	 	                          “Losses” means any losses, liabilities, claims
asserted, awards, interest, judgments, penalties, expenses (including, without limitation, reasonable attorneys’ fees and expenses), costs or damages.

 

		
	 	                          “Person” means an individual, partnership, joint
venture, corporation, limited liability company, trust, unincorporated organization or other entity (including, without limitation, any “group” within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934).

 

		
	 	                           “Product” means a plasmid DNA, drug, biologic
or other composition comprising VEGF-2 used for treatment of diseases of the heart or peripheral vascular system; provided, however, “Product” does not include any delivery device (including without limitation the Injection
Catheter, a hypodermic needle or stent) or the combination of any such plasmid DNA, drug, biologic or other composition with any such delivery device.

 

		
	 	                           “Product Specifications” for a Product, means
those specifications and performance requirements for such Product as mutually agreed by the Parties in

 
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  accordance with Section 2.05 of the Development Agreement, including, without limitation, clinical, manufacturing and marketing specifications.

		
	 	                              “Regulatory
Authority” means the FDA and any other national, supra-national, regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity.
 

 

		
	 	                             “Territory” means all
the countries of the world.

 

		
	 	                              “VEGF-2” means
the Human Genome Sciences angiogenic agent licensed to and being further developed and modified by the Company, sometimes referred to as Vascular Endothelial Growth Factor 2 plasmid DNA, and any modifications or improvements thereto.

 
                                  SECTION
1.02.   
Additional Definitions.   The following terms have the meanings set forth in the Sections set forth below:

				
	 Definition
 
 		 Location
 
 	
	Agreement	 	Preamble	 
	ASP	 	Exhibit A	 
	BSC	 	Preamble	 
	BSC Representative Group	 	3.01(b)	 
	Company	 	Preamble	 
	Company Representative Group	 	3.01(b)	 
	Deductions	 	Exhibit A	 
	Development Agreement	 	Recitals	 
	Effective Date	 	Preamble	 
	GMP	 	3.16(a)	 
	HHMI	 	2.02(c)	 
	Loan Agreement	 	Recitals	 
	Michigan License	 	2.02(b)	 
	Net Revenue	 	Exhibit A	 
	Notice of Disagreement	 	8.10(a)	 
	Parties	 	Preamble	 
	Party	 	Preamble	 
	Purchase Order	 	3.04	 
	Representatives	 	3.01(b)	 
	Royalties	 	3.08(a)	 
	Sales Price	 	Exhibit A	 
	Term	 	6.01	 
	Transaction Documents	 	Recitals	 
	University of Michigan	 	2.02(b)	 

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  ARTICLE II
GRANT OF RIGHTS
                               SECTION 2.01.   
Appointment of BSC as Exclusive Distributor.   The Company hereby grants BSC the sole and exclusive right to market, distribute and sell the Final Products within the Territory during the Term of this Agreement,
and BSC hereby accepts such appointment. The Company acknowledges and agrees that BSC may distribute the Final Products itself or through subdistributors that it uses in the ordinary course of its business to distribute other products, devices or
matters. The Company’s sole compensation for Final Products shall be the payment of the Sales Prices, which shall be calculated as set forth in Exhibit A to this Agreement.
                               SECTION 2.02.   
License to the Company.
                               (a)        
During such time that BSC has exclusive distribution rights to the Products under this Agreement, BSC grants to the Company a nonexclusive, nonsublicensable, nontransferable, royalty bearing license under BSC Patents, for the sole purpose of using,
making, having made and selling the Final Products, where such Final Products are sold to BSC for distribution by BSC, all in accordance with the terms and conditions of this Agreement. BSC acknowledges and agrees that it shall not be entitled to
any compensation for such license grant other than the payment of royalties as set forth in Section 3.08 of this Agreement. The Company acknowledges and agrees that unless otherwise agreed to by BSC in writing, any Final Products sold, transferred,
given or otherwise provided to Persons other than BSC by the Company (other than providing to Persons for research, testing and development) violates this license grant and the terms of this Agreement.
                               (b)        
The Parties acknowledge and agree that some of the BSC Patents are owned by the Regents of the University of Michigan (the “University of Michigan”) and that the license (or a portion thereof) for such BSC Patents granted pursuant
to Section 2.02(a) may be terminated by BSC upon the termination of the license agreement entered into by Genocor, Inc., BSC and the Regents of the University of Michigan on June 17, 1997 (the “Michigan License”).

                              (c)
        The Company agrees not to use the name of the University of Michigan or Howard Hughes Medical Institute (“HHMI”) in publicity or advertising with respect to the Products without the prior
written approval of the University of Michigan or HHMI.
                               (d)        
The Parties acknowledge and agree that the University of Michigan and HHMI make no warranty and shall not be held liable for any direct, indirect, special, incidental or consequential damage or lost profits or other economic loss or damage with
respect to the BSC Patents or any Products.
                               (e)        
To the extent allowed by the University of Michigan and any other third party owners of the BSC Patents, as applicable, BSC shall use commercially reasonable efforts to prosecute, maintain and defend the BSC Patents.
                     SECTION        2.03.  
 Additional Licenses.
 5

                      (a)         In the event that
the manufacture, use, sale, importation or exportation of the Final Products requires a license under a patent owned by a Person other than the Company or BSC, then the Company shall be responsible for all the costs and fees, including but not
limited to royalties, incurred in procuring and maintaining a license under such patent.
                    (b)         In the event that the manufacture, use, sale, importation
or exportation of the Injection Catheter requires a license under a patent owned by a Person other than the Company or BSC, then BSC shall be responsible for all the costs and fees, including but not limited to royalties, incurred in procuring and
maintaining a license under such patent.
                     (c)
        In the event that the use, sale, importation or exportation of the combination of the Final Product with the Injection Catheter requires a license under a patent owned by a Person other than the Company or
BSC, then the Parties shall equally share all costs and fees, including but not limited to royalties, incurred in procuring and maintaining a license under such patent.
                     (d)         The Parties acknowledge and agree that nothing set forth in
this Section 2.03 shall be construed as eliminating, waiving or otherwise limiting either Party’s obligations and responsibilities set forth in Article V.
 ARTICLE III
 DISTRIBUTION, MANUFACTURE AND SUPPLY
                     SECTION  3.01.

Marketing.
                     (a)        
BSC agrees to use commercially reasonable efforts to market and sell the Final Products. For purposes of the foregoing, “commercially reasonable efforts” means that for a period of three (3) years after the first Approval of a Final
Product in the United States, BSC shall expend *** dedicated specifically to marketing of Final Products, including, but not limited to, seminars, brochures, white papers, trade shows, post-market studies and physician education.
                     (b)         For the purposes of discussing marketing and pricing
issues, BSC and the Company shall each appoint one or more representatives (the “BSC Representative Group” and the “Company Representative Group,” respectively, and together, the
“Representatives”).
                     (c)        
The BSC Representative Group and the Company Representative Group agree to meet in person or via teleconference twice per year beginning after the first Approval of a Final Product, upon the reasonable request of the Company, to discuss BSC’s
marketing efforts, and BSC shall, in good faith, consider any comments provided by the Company Representative Group regarding BSC’s marketing efforts.
                     (d)         The Representatives shall meet and review marketing plans
with respect to Final Products in person or via teleconference at least once annually, beginning at the time of BLA submission. The Representatives shall also meet with each other in person or via teleconference to discuss pricing strategy prior to
the initial pricing of Products, and periodically thereafter. Notwithstanding anything in this Agreement to the contrary, BSC has sole final
 _________
 “***” indicates redacted confidential information pursuant to a confidential treatment request filed with the SEC. 
 6

  decision-making authority with respect to marketing and pricing of Final Products, provided, however, that (i) ***; and (ii) BSC shall not charge more for the Injection Catheter
when such Injection Catheter is to be used with the Final Product than the average price BSC charges for the Injection Catheter with respect to other uses in the treatment of diseases of the heart or peripheral vascular system.
                     SECTION  3.02.  
Training Advice and Assistance. The Company shall provide reasonable technical assistance, materials and training regarding the Products for BSC’s representatives, including but not limited to developing, training and
materials regarding the use, handling, storage and shipping of VEGF-2 and the Products. The Company shall also provide to BSC other services or other support information to assist BSC in marketing the Final Products, including but not limited to,
product handling manuals and other applicable information relating to the Final Products, including such information as is necessary or appropriate for BSC to formulate any other manuals, promotional materials and warning labels deemed necessary or
appropriate by BSC.
                     SECTION  3.03.  
Supply Forecasts. BSC shall provide the Company with a nine-month rolling forecast of orders for the Final Products, beginning on the first Business Day of the first calendar quarter following the calendar quarter in which
the BLA has been submitted to the FDA. The first two (2) months of each forecast shall be binding and shall constitute minimum orders of BSC to the Company; but only if the Company has obtained the Approvals required for distribution of the Final
Products that are the subject of such forecast. The remaining seven (7) months of each forecast shall be non-binding. Starting three (3) months prior to the planned launch of the Final Product, the BSC Representative Group shall provide the Company
Representative Group with monthly updates of the Product forecast.
                     SECTION  3.04.  
Orders. Together with each monthly Product forecast, beginning with the Product forecast submitted one (1) month prior to the planned launch of the Final Product, BSC shall deliver to the Company, in writing, a binding
purchase order (a “Purchase Order”) for Final Products. Purchase Orders shall be on BSC’s regular purchase order forms, in substance materially similar to (but not necessarily the form of) the current version of BSC’s
regular purchase order attached hereto as Exhibit C, except that any term or condition appearing on the face of such forms that are inconsistent with this Agreement and any term or condition appearing on the back of such forms shall be null and
void. This Purchase Order shall be for an amount of Final Products in accordance with the terms set forth in Section 3.03 with respect to the first binding month of the forecast. The face of each Purchase Order shall specify the quantities of
Final Products ordered by BSC, the applicable legal label text and packaging, and the requested time of shipment, and any other necessary shipping details. BSC may order, and the Company will use commercially reasonable efforts to supply, up to
thirty percent (30%) more than the volume of the Final Products indicated in the most recent Product forecast.
                     SECTION  3.05.  
Final Product Specifications; Packaging and Labeling. All Final Products delivered by the Company hereunder shall be in full compliance with Product Specifications, as approved by BSC pursuant to Section 2.05 of the
Development Agreement, and shall be sterilized and ready for end-user sale, including all packaging, labeling, and instructions-for-use, as approved by BSC and in accordance with the terms on the face of the Purchase Orders submitted by BSC. All
Final Products shall be labeled (including bar
 _________
 “***” indicates redacted confidential
information pursuant to a confidential treatment request filed with the SEC. 
 7

  coding/UPN numbers and patent notices) in accordance with the procedures specified from time to time by BSC. The Company may not make any changes to the Product Specifications, as
approved by BSC pursuant to Section 2.05 of the Development Agreement, or the packaging, labeling or instructions-for-use, as approved by BSC pursuant to this Section 3.05, without the prior written consent of BSC, such consent not to be
unreasonably withheld; provided, however, in the event any modifications to the Product Specifications are required by the FDA or other relevant Regulatory Authorities, such modifications to the Product Specifications may be made by
the Company without the consent of BSC, provided, further, that a copy of such modifications are provided to BSC as soon as reasonably practicable.
                     SECTION  3.06.  
Obligation to Supply.
                     (a)
        The Company shall use commercially reasonable efforts to make, have made, manufacture and sell the Final Products to BSC in accordance with this Agreement and the related Purchase Orders. The Company shall
use commercially reasonable efforts to make the Final Products available for shipment on the date specified for shipment in the Purchase Order (which shipment date shall not be earlier than 15 (fifteen) days after the date the Purchase Order is
received by the Company and not later than 25 (twenty-five) days after the date the Purchase Order is received by the Company) or, if no such date is specified, within 25 (twenty-five) days of the date BSC’s Purchase Order is received by the
Company.
                     (b)         If the Company fails to supply
at least eighty-five percent (85%) of BSC’s monthly Purchase Orders with respect to any Final Products for three (3) consecutive months, then the Company and BSC shall in good faith discuss having the Company enter into a subcontract agreement
with a third party manufacturer so that the Company may fulfill its obligations for the manufacture and supply of the Final Products.
                     (c)         If the Company fails to supply at least ninety percent
(90%) of the Products specified in Purchase Orders for two months in any consecutive four-month period, the Sales Price shall be reduced by ten percent (10%) for all orders placed by BSC under the Purchase Orders submitted during that two-month
period and such Sales Price shall remain reduced until Company supplies ninety percent (90%) of BSC’s monthly Purchase Orders for two (2) consecutive months. A corresponding credit shall apply to BSC’s next payment due under Company’s
invoice prepared in accordance with Section 3.07.
                     SECTION  3.07.  
Product Pricing and Purchases. The Company shall invoice BSC for Final Products delivered in accordance with this Agreement and the Purchase Orders therefor at Sales Prices. Sales Prices shall be calculated as set forth in
Exhibit A. BSC shall pay the Sales Prices due and owing under the Company’s invoices no later than the later of (x) thirty-five (35) days after the date of the Company’ invoice, provided that the invoice date is no earlier than the
date shipment is made, and (y) thirty (30) days after receipt by BSC of the Final Products. In the event of a dispute between the invoice amount and the amount paid by BSC, the Parties shall work together in good faith to resolve the dispute as soon
as practicable.
                     SECTION  3.08.  
Royalties to BSC.
 8

                      (a)         In consideration
of the license granted by BSC under Section 2.02, the Company shall pay to BSC a royalty of *** of the Sales Price (“Royalties”). BSC shall invoice the Company for Royalties on a quarterly basis, and the Company shall pay the amount
due and owing under the invoices within thirty (30) days after the date of BSC’s invoice. Except as provided in determining the Sales Price as described in Exhibit A, royalties shall be paid to BSC without deduction for sales, use, excise,
personal property or other similar taxes or duties imposed by Law and all such taxes or duties shall be assumed by and paid by the Company. In the event of a dispute between the invoice amount and the amount paid by the Company, the Parties shall
work together in good faith to resolve the dispute as soon as practicable.
                     (b)
        In the event the Michigan License or BSC’s license under any Licensed Patent (as defined in the Michigan License) is terminated during such time that BSC has exclusive distributorship rights to the
Final Products:

	 	          (i)          the Company may, upon thirty (30) days prior written notice to BSC, terminate the license granted to
the Company under Section 2.02 and the Company’s royalty obligations under Section 3.08(a); provided, however, (x) Royalties accrued prior to such termination shall remain due and payable to BSC and (y) the corresponding license
granted by BSC to the Company under Section 2.09 of the Development Agreement shall also be terminated. In the event of a termination of the license pursuant to this paragraph (i), BSC and the Company shall sign a written amendment to this Agreement
and the Development Agreement which reflects the foregoing terminations; or

 

	 	          (ii)          the Company may retain the license granted to the Company under Section 2.02; provided,
however, if the Company is required to pay royalties to the University of Michigan or its licensee(s) other than BSC under any Licensed Patent (as defined in the Michigan License), including U.S. Patent Nos. 5,661,133 or 6,316,419 (or any
reissues, divisions, continuations, continuations-in-part, extensions, reexaminations thereof, or foreign equivalents thereof), and the Company pays such royalties to the University of Michigan or its licensee(s) other than BSC, then the Royalties
due to BSC pursuant to this Section 3.08 shall be reduced by the amount of royalty paid by the Company to the University of Michigan or its licensee(s) other than BSC, but in no event shall such reduction result in a reduction of the Royalties paid
to BSC to an amount less than *** of the Sales Price.

 
                     SECTION  3.09.  
Payment Currency. Unless otherwise specified in this Agreement, all references to money payments, currency, monetary values and dollars or U.S. dollars mean United States dollars, and all payments hereunder shall be made
in United States dollars.
                     SECTION  3.10.  
Samples. With respect to each Final Product, the Parties shall discuss in good faith the need for samples of the Final Product for marketing purposes, and if the Parties believe samples are needed for marketing purposes,
then the Parties shall share the costs involved in procuring such samples.
 _________
 “***” indicates
redacted confidential information pursuant to a confidential treatment request filed with the SEC. 
 9

                              SECTION 3.11. 

The Company’s Audit Rights. During the Term of this Agreement, BSC shall maintain complete and accurate records and books of account sufficient to substantiate the calculation of ASP, including records of the
quantities of Final Products sold, for a period of four (4) years after the sale of the corresponding Final Products. BSC shall permit a certified public accountant, reasonably acceptable to BSC and appointed by the Company, at the Company’s
expense, to examine BSC’s books, ledgers and records relating to the calculation of ASP for the Final Products during regular business hours, on one week’s prior notice, for the purpose of verifying, and only to the extent necessary to
verify, ASP but in no event more than once per calendar year. The accountant shall maintain all information received during such examination in confidence and shall report to the Company only with respect to the accuracy of the ASP calculations. The
Company shall bear the full cost and expense of such audit, unless a discrepancy in excess of five percent (5%) in favor of the Company is discovered, in which event BSC shall bear the full cost and expense of such audit.
                             SECTION 3.12.   
BSC’s Audit Rights. During the Term of this Agreement, the Company shall maintain complete and accurate records and books of account relating to (i) all fixed and variable costs (including both expenses and
depreciation and amortization of capital expenditures) attributable to the manufacture of Products and (ii) sale of the Final Products to BSC. The Company shall maintain such records for a period of four (4) years after the sale of the corresponding
Final Products. The Company shall permit a certified public accountant, reasonably acceptable to the Company and appointed by BSC, at BSC’s expense, to examine the Company’s books, ledgers and records relating to all such costs, during
regular business hours, on one week’s prior notice, for the purpose of verifying, and only to the extent necessary to verify, such costs, but in no event more than once per calendar year. The accountant shall maintain all information received
during such examination in confidence and shall report to BSC only with respect to the accuracy of the Company’s accounting of such costs. BSC shall bear the full cost and expense of such audit, unless a discrepancy in excess of five percent
(5%) in favor of BSC is discovered, in which event the Company shall bear the full cost and expense of such audit.
                             SECTION 3.13.  
Shipping and Inventory. The Company shall make available Final Products ordered by BSC hereunder at the Company’s point of manufacturing or warehouse for delivery in accordance with the Purchase Orders therefor. BSC
shall choose the carrier for delivery of the Final Products. Prior to the filing of the first BLA, the Representatives shall work together to develop (a) a shipping plan regarding the shipping of Products, including an allocation of shipping
costs that each Party is to bear, and (b) an inventory plan regarding the level of Final Product inventory that BSC and the Company shall be required to maintain. Risk of loss or damage shall pass to BSC upon delivery of the Final Products at
the Company’s point of manufacturing or warehouse to the carrier chosen by BSC for delivery.
                            SECTION 3.14.  
Acceptance.
                            (a)
        Each shipment of Final Products from the Company to BSC shall contain such quality control certificates reasonably requested by BSC certifying that the Final Products are in conformity with the Product
Specifications. Notwithstanding any prior inspection or payments, all Final Products will be subject to final inspection and acceptance at BSC’s designated destination point within thirty (30) days after delivery. BSC shall notify the

 10

  Company within thirty (30) days after delivery of any apparent defective material or workmanship or non-conformity of any Final Product to the Product Specifications or Purchase Order.
If BSC fails to so notify the Company within such thirty (30)-day period, BSC will be deemed to have accepted the Final Product; provided, however, the warranties set forth in Article V shall survive such acceptance.

                           (b)         Without
prejudice to any other right or remedy of BSC, in case any item is defective in material or workmanship, or otherwise fails to conform to the Product Specifications or a Purchase Order at the time of delivery by or on behalf of the Company to
BSC’s designated destination point, BSC will have the right to reject it. Any item that has been rejected must be replaced, or made conforming, by and at the expense of the Company (including but not limited to shipping costs) promptly after
notice. BSC will not be required to pay for any rejected item. Unless otherwise agreed to by the Parties, BSC will return all rejected Final Products to the Company at the Company’s expense.
                             SECTION 3.15.  
Compliance with Laws. The Company shall comply with all applicable Laws pertaining to the testing, manufacture, labeling or packaging of the Final Products, and in any other manner pertaining to performance by the Company
of its obligations under this Agreement, including the maintenance of ongoing quality assurance and testing procedures to comply with applicable regulatory requirements. BSC and the Company shall comply with all applicable Laws pertaining to the
transportation, import, export, distribution, sales and marketing of the Final Products, and the Company shall cooperate with and provide BSC reasonable assistance with such compliance.
                             SECTION 3.16.  
Manufacturing Requirements and Regulatory Audits.
                            (a)         All Final
Products shall be manufactured in accordance with (a) relevant Laws, (b) the Product Specifications, (c) applicable regulations relating to Good Manufacturing Practices (“GMP”) and similar requirements required by the
Act, (d) batch records and (e) all other pertinent rules and regulations of ISO, the FDA and any Regulatory Authorities in other applicable jurisdictions. Upon the reasonable request of BSC, the Company shall provide BSC with written
evidence of compliance with the criteria set forth in the preceding sentence.
                            (b)         Subject to
reasonable security restrictions and reasonable confidentiality restrictions imposed by any third party manufacturer consistent with the treatment of Confidential Information pursuant to Article VII herein, BSC shall have the right to have quality
employees of BSC present at the plant or plants at which the Final Products are manufactured during normal business hours to conduct an initial and periodic inspections of such facilities and manufacturing procedures for compliance with GMP and QSR,
the Product Specifications and BSC’s quality assurance requirements and to inspect the Company’s inventory of Final Products, work-in-process, raw materials to be used for the Final Products, production records, design history file,
quality manuals, regulatory dossiers and such other matters as may be pertinent to proper quality assurance of the Final Products to be delivered hereunder. BSC agrees to give the Company a minimum of four (4) Business Days’ prior notice of any
such inspection. The Company shall use commercially reasonable efforts to take such action as is required to correct any deficiencies identified by BSC relating to the production of any Final Product. The Company agrees to assist BSC in arranging
visits and inspection of the plants at which the Final
 11

  Products are manufactured. The Company acknowledges and agrees that it is not currently a party to and shall not enter into any manufacturing agreement relating to the manufacture of
any Final Product that does not grant to BSC rights to inspect the plant or plants at which such products are manufactured on the terms set forth in this section.
                            (c)         The Company shall
permit and shall require its manufacturers to permit authorized representatives of any Regulatory Authority to inspect plant and production facilities related to or used in connection with the manufacture of the Final Products sold to BSC under this
Agreement and will promptly notify BSC when the Company receives notice of any such inspection. The Company shall advise BSC of the findings of any regulatory inspection and will take the necessary steps to promptly correct any compliance
deficiencies found by the Regulatory Authority relating to the manufacture of Final Products sold to BSC pursuant to this Agreement. The Company further agrees to use best efforts to provide BSC such documents or conduct such analyses as BSC may
reasonably request in connection with any regulatory submission or audit concerning such products.
                            (d)         BSC may, on an as
needed basis and pursuant to industry standards, require the Company to perform reasonable complaint evaluations in order to investigate root cause and corrective actions associated with any complaints concerning quality assurance of Final Products
delivered hereunder. The Company is to maintain records of such investigations as required by GMP. The Company shall have a reasonable number of days, as agreed to by BSC and the Company, from the time it receives the complaint to perform a complete
investigation and provide to BSC a written report identifying the root cause analysis, the corrective action, and the preventive action to the extent applicable. The Company shall also provide BSC with a follow-up written report on the effectiveness
of the corrective actions, if any, within an agreed-upon time period. The Company shall also maintain a cross-reference system from the Company’s complaint system to BSC’s complaint handling system, and BSC shall provide the Company
reasonable assistance in establishing such a cross-reference system.
                            SECTION 3.17.  
Recalls.
                            (a)
        If, in the good faith judgment of the Company or BSC, any product defect or any government action requires a recall of, or the issuance of an advisory letter regarding any Final Product, either Party may
undertake such recall or issue such advisory letter after consultation with the other Party. Each Party shall notify the other Party in a timely manner prior to making any recall or issuing any advisory letter. The Parties shall endeavor to reach an
agreement prior to making any recall or issuing any advisory letter regarding the manner, text and timing of any publicity to be given to such matters in time to comply with any applicable legal or regulatory requirements, but such agreement will
not be a precondition to any action that either Party deems necessary to protect users of the Final Products or to comply with any applicable governmental orders or mandates. The Parties agree to provide reasonable assistance to one another in the
event of any recall or issuance of any advisory letter. In the event of any recall of Final Products, BSC shall have the right to manage such recall of Final Products.
                            (b)         In the event of
the issuance of an advisory letter, the costs of issuing such advisory letter shall be borne by the Party responsible for the defect causing the need to issue the advisory letter.
 12

                             (c)
        In the event of a recall of any Final Product, the Company shall correct any deficiency relating to its manufacturing, packaging, testing, storing, handling or labeling of such Final Product. If the reason
for the recall is due to a defect that is the fault of the Company, (i) the Company shall, at BSC’s option, either, at its cost replace each unit of the Product recalled (including units held in inventory by BSC or its customers) with a
corrected Product within a reasonable period of time, or refund the purchase price therefor, and (ii) the Company shall reimburse BSC for all reasonable costs and expenses (including shipping, quality control testing, notification and restocking
costs) incurred by BSC as a result of such recall. If the reason for the recall is due to a defect that is the fault of BSC, BSC shall reimburse the Company for all reasonable costs and expenses (including shipping, quality control testing,
notification and restocking costs) incurred by the Company as a result of such recall.
                            SECTION 3.18.  
Non-Exclusive Distribution Agreement. If (x) BSC, in its sole discretion, determines that BSC’s sales of the Final Products do not warrant BSC’s continued marketing effort as the exclusive distributor of the
Final Products or (y) BSC’s gross revenues for the sales of any product that involves gene therapy for the treatment of cardiovascular or vascular disease during any twelve (12) month period exceeds BSC’s gross revenues for Final Products
sold by BSC during such period in any territory in which BSC is distributing the Final Product, BSC shall notify the Company and they will make good faith attempts to negotiate a non-exclusive distribution arrangement and license to the BSC Patents
on mutually agreeable terms which will permit the Company to sell Final Products directly and/or through distributors approved by BSC. For the avoidance of doubt, the Parties acknowledge and agree that sales by BSC of catheters or any other delivery
device on a stand-alone basis shall not be relevant for purposes of calculating BSC’s gross revenues pursuant to this Section 3.18 regardless of how the catheters or delivery devices are ultimately used.
 ARTICLE IV 
 REGULATORY
                            SECTION 4.01.  
Registration of Products in the Territory. The Company shall diligently and reasonably promptly apply for registration and regulatory approvals deemed necessary by the Company and BSC to promote and sell the Final Products
in the United States and in each other jurisdiction in which the Parties agree to seek Approvals. At the request of the Company, BSC shall, at its expense, provide such reasonable assistance and information with respect to the Injection Catheter as
is necessary for the Company to seek and obtain such registrations and regulatory approvals. All costs incurred as a result of applications for registrations and regulatory approvals hereunder shall be paid by the Company, including those reasonable
costs incurred by BSC as a result of any assistance provided to the Company as required hereby (but excluding any costs relating to the Injection Catheter as set forth above), which costs will be detailed in a written statement sent by the BSC
Representative Group to the Company Representative Group and reimbursed by the Company to BSC promptly thereunder.
                            SECTION 4.02.  
Reporting Obligations.
                            (a)         Adverse Events
and Product Complaints. Each Party shall (i) adhere to all requirements of applicable Laws which relate to the reporting and investigation of AEs anywhere 
 13

  in the Territory and keep the other Party informed of such matters, (ii) promptly inform the other Party of any material safety or health incidents related to any Final Product or
Injection Catheter, including the use, manufacture, labeling or packaging of any of the foregoing, and (iii) promptly inform the other Party upon becoming aware of any unusual or unexpected reactions or events, malfunctions, safety or efficacy of or
attributable to any Product or VEGF-2 or Injection Catheter and/or any Regulatory Authority action related thereto.
                            (b)         Exchange of
Drug Safety Information. The Parties shall immediately provide each other with copies of all drug or device safety requests from all governmental and other Regulatory Authorities. Proposed answers affecting a Product or Injection Catheter will
be exchanged between the Parties before submission, and the Parties shall cooperate with respect to such answers; provided, however, that the Company shall have the ultimate decision making authority with respect to answers relating to
the Products, and BSC shall have the ultimate decision making authority to answers relating to the Injection Catheters. Each Party shall provide the other Party with the decisions received from the applicable Regulatory Authorities reasonably
promptly after the Party receives notice of such decision.
                            (c)         Regulatory
Actions. Each Party shall advise the other Party of any regulatory action of which it is aware and which could reasonably be expected to affect a Final Product or Injection Catheter in any country.
                            (d)         Governmental
Inspection. Each Party shall advise the other Party of any governmental communication, inspection or report or Law relating to a Product or Injection Catheter of which it is aware and which might reasonably be expected to affect a Product or
Injection Catheter. Any response to a regulatory notice relating to the Products, Injection Catheters or such Law shall be prepared jointly by the Parties, with the lead role taken by the Party to whom such notice is addressed (or, if addressed to
both Parties, with the lead role taken by the Company unless the notice relates to the Injection Catheter in which case BSC shall take the lead role); provided, however, that each Party shall be entitled to take all such actions with
respect to such notice as are required of it by Law. Both Parties shall have the right to be present during any such inspection.
                            SECTION 4.03.  
Technical Support Regarding Adverse Events.
                            (a)         Retention of
Product Samples. The Company shall retain samples of each production lot of Products in accordance with applicable Law.
                            (b)        Quality
Assurance Investigations. Each Party shall take the actions in relation to AEs that is mutually agreed upon by the Parties.
 ARTICLE V
 REPRESENTATIONS, WARRANTIES AND
INDEMNIFICATION
                            SECTION 5.01.  
Mutual Representations. Each Party hereby represents and warrants to the other Party as follows:
 14

		
	 	          (a)           The execution, delivery and performance of this Agreement by such Party have been duly
authorized by all necessary action on the part of such Party.

 

		
	 	          (b)           This Agreement has been duly executed and delivered by such Party and, assuming due
authorization, execution and delivery by the other Party, constitutes a legal, valid and binding obligation of such Party, enforceable against such Party in accordance with its terms, subject to (i) the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights and remedies generally, and (ii) the effect of general equitable principles, regardless of whether asserted in a proceeding in equity or at
law.

 

		
	 	          (c)           Such Party’s execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby does not and will not (i) violate, conflict with or result in the breach of any provision of the certificate of incorporation or by-laws (or similar organizational documents) of such Party, (ii) conflict with
or violate any Law or governmental order applicable to such Party or its assets, properties or businesses, or (iii) conflict with, result in any breach of, constitute a default (or event which with the giving of notice or lapse of time, or both,
would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any encumbrance on any of its outstanding shares
of common stock or preferred stock or any of the assets or properties of such Party pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which it
is a party or by which any of such Party’s shares of common stock or preferred stock or any of the Party’s assets or properties is bound or affected.

 

		
	 	          (d)           It is not a party to any litigation relating to, or that could reasonably be expected to
affect, its ability to perform its obligations under this Agreement.

 
                      SECTION 5.02.  
Company Warranties and Agreements.
                     (a)          The Company represents and warrants that at
the time of delivery of Final Products by the Company to BSC’s designated destination point, all Final Products hereunder shall (i) conform to the appropriate Product Specifications, (ii) comply with any terms and conditions set forth on the
face of the applicable Purchase Order, provided that such terms and conditions are not inconsistent with the terms and conditions of this Agreement, (iii) be free and clear of all liens and encumbrances and (iv) not be adulterated
within the meaning of the Act or within the meaning of the Law of any applicable state or foreign jurisdiction, as the Act and such Laws are constituted and effective at the time of shipment.
                     (b)          The Company represents and warrants that,
to the actual knowledge of the Company, the manufacture, use, sale, offer for sale, import, export and distribution of Final Products under this Agreement does not infringe, misappropriate, dilute or otherwise violate the Intellectual Property of
any third party.
 15

                      (c)          The Company represents and warrants that it
is not party to, and covenants and agrees not to enter into, any agreement for the sale or distribution of the Final Products with any Person other than BSC.
                     (d)          The Company represents and warrants that it
is the sole and exclusive owner or licensee of all right, title and interest in and to the Final Products to be delivered hereunder, free and clear of any liens or encumbrances, other than the obligation to pay royalties.
                     SECTION 5.03.  
BSC Warranties.
                     (a)          BSC represents and warrants that it has the
right to grant the license set forth in Section 2.02(a) of this Agreement.
                     (b)          BSC represents and warrants that the BSC
Patents have not been adjudged invalid or unenforceable and, to the actual knowledge of BSC, are not subject to any outstanding consent, settlement, decree, order, injunction, judgment or ruling that would impair the validity or enforceability of
the BSC Patents.
                     (c)          BSC
represents and warrants that, to the actual knowledge of BSC, the development, manufacture and use of the Injection Catheter does not infringe, misappropriate, dilute or otherwise violate the Intellectual Property of any third party.

                    SECTION 5.04.  
DISCLAIMER.  EXCEPT AS EXPLICITLY PROVIDED IN THIS ARTICLE, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS, IMPLIED, OR STATUTORY, AND THE PARTIES EXPRESSLY DISCLAIM ALL OTHER WARRANTIES,
INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
                     SECTION 5.05.  
Company Indemnity.  The Company shall indemnify, defend and hold harmless each BSC Indemnitee from any and all Losses actually suffered or incurred by BSC arising out of or resulting from: (a) the breach of any
representation or warranty, covenant or agreement by the Company contained in this Agreement, provided, for purposes of determining whether there is a breach of the representation and warranty set forth in Section 5.02(b), the knowledge
qualifier shall be disregarded; (b) any negligent act or omission or willful misconduct of the Company in connection with performance of its obligations under this Agreement; and (c) all product liability claims that arise from the manufacture or
use of the Final Products, except to the extent attributable to the Injection Catheter or the negligent act or omission or willful misconduct of BSC or its officers, agents or employees.
                     SECTION 5.06.  
BSC Indemnity.  BSC agrees to indemnify, defend and hold harmless each Company Indemnitee from any and all Losses actually suffered or incurred by the Company arising out of or resulting from: (a) the breach of any
representation or warranty, covenant or agreement by BSC contained in this Agreement, provided, for purposes of determining whether there is a breach of the representation and warranty set forth in Section 5.03(c), the knowledge qualifier
shall be disregarded; and (b) any negligent act or omission or willful misconduct of BSC in connection with performance of its obligations under this Agreement; and (c) all product liability claims that arise from the manufacture or use of the

 16

  Injection Catheters, except to the extent attributable to the Final Product or the negligent act or omission or willful misconduct of the Company or its officers, agents or
employees.
                     SECTION 5.07.  
Indemnification Procedure.
                     (a)          Any Indemnified Party seeking
indemnification under this Agreement shall give prompt written notice to the Indemnifying Party of any claim, assertion, event or proceeding by or in respect of a third party of which such Indemnified Party has knowledge concerning any Losses as to
which such Indemnified Party may request indemnification hereunder; provided, however, that the failure to provide or a delay in providing such notice shall not release the Indemnifying Party from any of its obligations under this
Agreement except to the extent that the Indemnifying Party is actually prejudiced by such failure or delay and shall not relieve the Indemnifying Party from any other obligation or liability that it may have to any Indemnified Party otherwise than
under this Agreement.
                     (b)          The Indemnifying Party shall have the right
to assume, through counsel of its own choosing, which counsel shall be reasonably satisfactory to the Indemnified Party, the defense or settlement of any claim or proceeding the subject of indemnification hereunder at its own expense, so long as the
Indemnifying Party first acknowledges in writing its obligation to indemnify the Indemnified Party hereunder against any and all Losses that may result from such claim or proceeding. If the Indemnifying Party elects to assume the defense of any such
claim or proceeding, the Indemnified Party may participate in such defense, but in such case the expenses of the Indemnified Party with respect to its assumption of such defense shall be borne and paid by the Indemnified Party. Notwithstanding the
foregoing, the Indemnified Party shall have the right to employ separate counsel at the Indemnifying Party’s expense and to control its own defense of any such claim or proceeding if a conflict or potential conflict exists between the
Indemnifying Party and the Indemnified Party that would make such separate representation advisable under applicable standards of professional conduct.
                     (c)          If the Indemnifying Party elects to assume
the defense of any claim or proceeding, no settlement in respect of any third-party claim may be effected by the Indemnifying Party without the Indemnified Party’s prior written consent, which consent shall not be unreasonably withheld or
delayed. If the Indemnifying Party fails to undertake any such defense, the Indemnified Party shall have the right to undertake the defense or settlement thereof at the Indemnifying Party’s expense. Notwithstanding anything herein to the
contrary, regardless of whether the Indemnifying Party has assumed the defense of any claim or proceeding pursuant to this Section 5.07, the Indemnified Party shall not settle any claim or proceeding without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or delayed; provided, however, that the Parties agree that it shall be reasonable for the Indemnifying Party to withhold its consent if any such settlement involves
any admission of liability or wrongdoing by the Indemnified Party or the Indemnifying Party.
                     SECTION 5.08.  
Limitation of Liability.  IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT, EXCEPT TO THE EXTENT SUCH DAMAGES: (A) ARE
INCLUDED IN AN AWARD AGAINST EITHER PARTY RESULTING FROM A THIRD PARTY CLAIM FOR WHICH SUCH PARTY IS 
 17

  INDEMNIFIED HEREUNDER; OR (B) ARE RELATED TO OR ARISE FROM WILLFUL OR INTENTIONAL MISCONDUCT.
                     SECTION 5.09.  
Insurance.  Effective sixty (60) days after the Effective Date and so long as the Company has any obligations under Article V of this Agreement, the Company shall maintain comprehensive general liability insurance,
including products liability, with a minimum liability coverage limit of ten million dollars ($10,000,000) per occurrence and naming BSC, University of Michigan and HHMI (including their regents, trustees, fellows, officers and employees) as
additional insureds. The Company shall provide BSC with a copy of a certificate of insurance evidencing compliance with this provision. Such certificate of insurance shall also provide BSC with thirty (30) days’ prior written notice of
cancellation, modification or termination.
                     SECTION 5.10.  
No Improper Representations or Warranties.  Neither Party shall make any statements, representations or warranties or accept any liabilities or responsibilities that are inconsistent with any disclaimer or
limitation included in this Article V.
 ARTICLE VI 
TERM AND TERMINATION
                     SECTION 6.01.  
Expiration.  This Agreement shall remain in full force and effect unless terminated in accordance with this Article VI (the “Term”).
                     SECTION 6.02.  
Mutual Consent.  The Parties can terminate this Agreement by the mutual written consent of both Parties.
                     SECTION 6.03.  
Termination for Cause.
                     (a)          This Agreement may be terminated by either
Party, if the other Party shall be in material breach of any provision contained in this Agreement and any such breach shall not have been remedied within forty-five (45) Business Days after receipt of written notice from the terminating Party
specifying (i) such breach and (ii) intention to terminate if such breach is not cured within forty-five (45) Business Days.
                     (b)          This Agreement may be terminated by the
Company in the event that BSC materially breaches the Loan Agreement and such breach shall not have been remedied within forty-five (45) Business Days after receipt of written notice from the Company specifying (i) such breach and (ii) intention to
terminate this Agreement if such breach is not cured within forty-five (45) Business Days.
                     SECTION 6.04.  
Survival.  In addition to any clause which by its express term survives termination or expiration, the respective rights and obligations of the Parties under the provisions of Articles V (Representations,
Warranties and Indemnification), VI (Term and Termination), VII (Confidentiality), and Article VIII (Miscellaneous) shall also survive any termination or expiration of this Agreement.
 18

  ARTICLE VII
 CONFIDENTIALITY
                 SECTION 7.01. 
Confidentiality. During the Term of this Agreement and for the period of three (3) years thereafter, the Receiving Party shall maintain Confidential Information in confidence and shall not disclose, divulge or otherwise
communicate such Confidential Information to others, or use it for any purpose, except pursuant to, and in order to carry out, the terms and objectives of this Agreement. The Receiving Party hereby shall exercise every reasonable precaution to
prevent and restrain the unauthorized disclosure of such Confidential Information by any of its directors, officers, employees, consultants, subcontractors, or agents. Upon termination of this Agreement, each Party shall return to the other Party,
upon demand, all Confidential Information in its possession or, upon demand, destroy such Confidential Information and provide a certificate to the other Party of such destruction signed by an officer of the destroying Party.
                 SECTION 7.02. 
Release from Restrictions. The provisions of Section 7.01 shall not apply to any information disclosed hereunder that:

		
	 	          (a)         is lawfully disclosed to the Receiving Party by an independent, unaffiliated third party rightfully in
possession of the information and under no confidentiality or fiduciary obligation not to make disclosure;

 

		
	 	          (b)         becomes published or generally known to the public through no fault or omission on the part of the Receiving
Party;

 

		
	 	          (c)         is developed independently by the Receiving Party without access to the Confidential Information of the
Disclosing Party;

 

		
	 	          (d)         is legally required to be disclosed to a Regulatory Authority in the United States or in another jurisdiction
in which the Parties have agreed to seek Approvals; provided, however, the Receiving Party shall continue to treat such information as confidential pursuant to Section 7.01 unless and until such information becomes published or
generally known to the public through no fault or omission on the part of the Receiving Party; or

 

		
	 	          (e)         a Party is legally compelled to disclose; provided, however, that the Receiving Party shall
provide prompt written notice of such requirement to the Disclosing Party so that the Disclosing Party may seek a protective order or other remedy or waive compliance with Section 7.01; and provided further that in the event that such
protective order or other remedy is not obtained or the Disclosing Party waives compliance with Section 7.01, the Receiving Party shall be permitted to furnish only that portion of such Confidential Information that is legally required to be
provided and the Receiving Party shall exercise its reasonable best efforts to obtain assurances that confidential treatment shall be accorded such information.

 
                  SECTION 7.03. 
Public Announcements and Publications. Except as required by Law or by the requirements of any securities exchange on which the securities of a Party hereto are listed, no Party shall make, or cause to be made, any press
release or public announcement in
 19

  respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media in respect of this Agreement or the transactions contemplated hereby
without the prior written consent of the other Party, and the Parties shall cooperate as to the timing and contents of any such press release or public announcement.
 ARTICLE VIII

MISCELLANEOUS
                  SECTION 8.01. 
Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person,
by an internationally recognized overnight courier service, by telecopy or registered or certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall
be specified in a notice given in accordance with this Section 8.01):

		
	 	          (a)        if to the Company:

 

		
	 	                      Corautus Genetics Inc.

		
	 	                      430 Tenth Street, NW

		
	 	                      Suite S-204

		
	 	                      Atlanta, GA 30318

		
	 	                      Telecopy: (404) 526-6218

		
	 	                      Attention: Richard E. Otto, Chief Executive Officer

 

		
	 	                       with a copy to:

 

		
	 	                       McKenna Long & Aldridge LLP

		
	 	                       303 Peachtree Street, Suite 5300

		
	 	                       Atlanta, GA 30308

		
	 	                       Telecopy: (404) 527-4198

		
	 	                       Attention: Robert E. Tritt

 

		
	 	          (b)         if to BSC:

 

		
	 	                       Boston Scientific Corporation

		
	 	                       One Boston Scientific Place

		
	 	                       Natick, MA 01760-1537

		
	 	                       Telecopy: (508) 650 8956

		
	 	                       Attention: Lawrence C. Best, Senior Vice President and

		
	 	                             Chief Financial Officer

 
 20

		
	 	                       with a copy to:

 

		
	 	                       Boston Scientific Corporation

		
	 	                       One Boston Scientific Place

		
	 	                       Natick, MA 01760-1537

		
	 	                       Telecopy: (508) 650 8956

		
	 	                       Attention: General Counsel

                 SECTION 8.02. 
Headings. The descriptive headings contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of the Agreement.
                  SECTION 8.03. 
Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in
full force and effect for so long as the economic or legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the transactions
contemplated by this Agreement are consummated as originally contemplated to the greatest extent possible.
                  SECTION 8.04. 
Entire Agreement. The Transaction Documents constitute the entire agreement of the Parties with respect to the subject matter thereof and supersede all prior agreements and undertakings, both written and oral, among the
Parties with respect to the subject matter thereof.
                  SECTION 8.05. 
Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns. Neither Party may assign this Agreement without the prior written
consent of the other Party; provided, however, that BSC may assign to an Affiliate its rights and obligations under this Agreement without the approval of the Company; provided further that no such assignment by BSC to an
Affiliate shall relieve BSC of any obligation or liability hereunder, whether then existing or thereafter incurred by BSC or its assignee. No assignment by either Party permitted hereunder shall relieve the applicable Party of its then-existing
obligations under this Agreement.
                  SECTION 8.06. 
No Third Party Beneficiaries. This Agreement shall be binding upon and inure solely to the benefit of the Parties and their permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any
other Person any legal or equitable right, benefit or remedy of any nature whatsoever.
                  SECTION 8.07. 
Change of Control. In the event of a change of control of the Company or BSC, this Agreement and all rights and obligations of each Party hereunder shall survive unaffected, provided, however, if there is a
Competitor Transaction, the Sales Price to be paid by BSC to the Company for the Final Products shall be reduced to be *** of the ASP calculated in accordance with Exhibit A.
 _________
 “***” indicates redacted confidential information pursuant to a confidential treatment request filed with the SEC. 
 21

                   SECTION 8.08. 
Amendment. Except with respect to Exhibit B, this Agreement may not be amended or modified except by an instrument in writing signed by authorized representatives of the Company and BSC. In the event the University of
Michigan or any third party owner of a BSC Patent requests that BSC amend the terms of this Agreement in order to comply with the Michigan License or the terms of the patent license agreements entered into by BSC and such third party owners, BSC and
the Company shall discuss in good faith the amending of this Agreement to incorporate the requested amendment.
                  SECTION 8.09. 
Governing Law and Venue. This Agreement shall be governed by, and construed in accordance with, the Laws of the State of New York. The Parties unconditionally and irrevocably agree and consent to the exclusive
jurisdiction of the courts located in the state of New York and waive any objection with respect thereto, for the purpose of any action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, and
further agree not to commence any such action, suit or proceeding except in any such court.
                 SECTION 8.10. 
Dispute Resolution. Except to the limited extent necessary to (i) avoid expiration of a claim, (ii) comply with deadlines under applicable Law, or (iii) obtain interim relief, including injunctive relief, to
preserve the status quo or prevent irreparable harm, neither Party shall file an action or institute legal proceedings with respect to any dispute, controversy, or claim arising out of this Agreement or the validity, interpretation, breach or
termination thereof, including claims seeking redress or asserting rights under any Law, until:

		
	 	          (a)         the aggrieved Party has given the other Party written notice (“Notice of Disagreement”), in
accordance with Section 8.01 of this Agreement, of its grievance setting forth the basis for such dispute and the remedy desired;

 

		
	 	          (b)         the other Party has failed to provide a prompt and effective remedy (in the view of the aggrieved
Party);

 

		
	 	          (c)         the aggrieved Party has requested in writing senior executives for both Parties to promptly meet and discuss
the matter detailed in the Notice of Disagreement in order to consider informal and amicable means of resolution; and

 

		
	 	          (d)         (i) the senior executives for both Parties have met at least three times and have not been able to resolve
the dispute to the mutual satisfaction of the Parties or (ii) more than sixty (60) Business Days have passed since the date of the Notice of Disagreement.

 
                 SECTION 8.11. 
Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different Parties in separate counterparts, each of which when executed shall be
deemed to be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile shall be effective as delivery of a manually executed
counterpart of this Agreement.
 22

                      SECTION  8.12.  
No Waiver. The failure of either Party to enforce at any time for any period the provisions of or any rights deriving from this Agreement shall not be construed to be a waiver of such provisions or rights or the right of
such Party thereafter to enforce such provisions.
                     SECTION  8.13.  
Independent Contractor. In performing under this Agreement, each Party shall be acting as an independent contractor and shall not be considered or deemed to be an agent, employee, joint venturer, or partner of the other
Party. Each Party shall at all times maintain complete control over its personnel and operations. Neither Party shall have, or shall represent that it has any power, right or authority to bind the other Party to any obligation or liability, or to
assume or create any obligation or liability on behalf of the other Party.
                     SECTION
 8.14.  
Registration and Filing of this Agreement. Notwithstanding Article VII, to the extent, if any, that a Party concludes in good faith that it is required to file or register this Agreement or a notification thereof with any
governmental authority, including, without limitation, the U.S. Securities and Exchange Commission, the Competition Directorate of the Commission of the European Communities, the U.S. Department of Justice or the U.S. Federal Trade Commission, in
accordance with Law, such Party shall inform the other Party thereof, and both Parties shall cooperate each at its own expense in such filing or notification and shall execute all documents reasonably required in connection therewith. In such filing
or registration, the Parties shall request confidential treatment of sensitive provisions of the Agreement, to the extent permitted by Law. The Parties shall promptly inform each other as to the activities or inquiries of any such governmental
authority relating to this Agreement and shall cooperate to respond to any request for further information therefrom on a timely basis.
 23

                      IN WITNESS WHEREOF, BSC and the Company have caused this
Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

					
	BOSTON SCIENTIFIC CORPORATION	 	CORAUTUS GENETICS INC.
	 	 	 	 	 
	By:	/s/ LAWRENCE C. BEST	 	By:	/s/ RICHARD E. OTTO
	 	 
 	 	 	 
 
	 	Lawrence C. Best	 	 	Richard E. Otto
	 	Senior Vice President and Chief Financial Officer	 	 	Chief Executive Officer

 24

  
Exhibit A
          “Sales Price” shall mean the price to be paid by BSC to the Company for a Final Product and shall
be ***, calculated by reference to the following terms and conditions:
                     •        “Net Revenue” means ***.
                     •        “Deductions” means ***.
                     •        ***.
                     •        ***.
 _________

“***” indicates redacted confidential information pursuant to a confidential treatment request filed with the SEC. 

  
Exhibit B
 *** 
 _________
 “***” indicates redacted confidential
information pursuant to a confidential treatment request filed with the SEC. 
   

  
Exhibit C
 [GRAPHIC APPEARS HERE]
 2

  [GRAPHIC APPEARS HERE]Employment Agreement

 Exhibit 10.6
 EMPLOYMENT AGREEMENT
                     THIS EMPLOYMENT AGREEMENT (the “Agreement”), effective as of February 5, 2003 (the
“Effective Date”), between RICHARD E. OTTO (the “Executive”) and CORAUTUS GENETICS INC., a Delaware corporation (the “Company”);
 W I T
N E S S E T H:
                     WHEREAS,
 the Company desires to employ Executive, and Executive desires to accept such employment with the Company; and
                     WHEREAS,  the Company and Executive desire to place their agreement regarding the terms and
conditions of said employment in a written instrument;
                     NOW, THEREFORE,  in
consideration of the premises and the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Executive hereby agree as
follows:
 ARTICLE 1
 DUTIES AND AUTHORITY
                           
                     1.1         Employment.   The Company
hereby agrees to employ Executive during the Employment Period (as defined in Article 2) as its Chief Executive Officer, and Executive hereby accepts such employment by Company, upon the terms and conditions set forth in this Agreement. Executive
may also hold such additional corporate offices to which he may be elected from time to time by the Board of Directors of the Company (the “Board”).
                     1.2         Duties of Executive as
Employee.   Executive shall perform the duties customary for the position of Chief Executive Officer of the Company, and such other duties as Company (acting through its Board) may from time to time assign to him. During the
Employment Period, Executive shall perform the duties properly assigned to him hereunder, shall devote substantially all of his business time (in no event less than 40 hours per week), attention and effort to the affairs of the Company and shall use
his best efforts to promote the interests of the Company. Executive shall not, without the prior written consent of the Board engage in any other business activities, whether or not such business activity is pursued for profit, gain or other
pecuniary advantage; provided, however, that (i) Executive may invest his assets in a form or manner consistent with Section 5.3 herein and as will not require any services on his part in the operation of the affairs of the enterprises in which the
investments are made and (ii) Executive may serve

  on civic or charitable boards or committees if such service does not individually or in the aggregate significantly interfere with the performance of his duties under this Agreement.
Executive shall conduct himself at all times in a business-like and professional manner as appropriate for his position and shall represent the Company in all respects in compliance with good business and ethical practices. In addition, the
Executive shall be subject to and abide by the policies and procedures of the Company applicable to personnel of the Company, as may be adopted from time to time.
                     1.3         Board Membership.  Executive is
currently a member of the Board. In connection with each annual meeting of shareholders (or action by written consent in lieu thereof) of the Company during the Employment Period, the Board will nominate Executive for re-election as a member of the
Board, and subject to election by the shareholders of the Company, Executive also agrees to serve as a member of the Board during the Employment Period and to resign from such position at the end of the Employment Period, unless requested to remain
by the Board.
 ARTICLE 2
 TERM
                     Unless terminated earlier as provided in Article 4, this Agreement shall extend for a period of two (2)
years from the Effective Date. For purposes of this Agreement, the term of employment (the “Employment Period”) shall commence on the Effective Date and end on the date as of which this Agreement is terminated under this Article 2 or
Article 4, whichever is earlier. The term of this Agreement (as specified in this Article 2) may be extended by mutual written consent of the parties.
 ARTICLE 3
 COMPENSATION
                     3.1
        Salary.  Subject to any adjustments pursuant to Section 3.8, the Company hereby agrees to pay Executive a salary of $200,000 per annum (pro rated for partial years) during the
Employment Period, payable monthly in arrears pursuant to the normal payroll practices of the Company. Upon the receipt by the Company following the Effective Date of cash in the amount of $5,000,000 (whether in the form of equity, debt or
otherwise) to support the Company’s Phase IIb clinical trial, general and administrative expenses or other purposes, Executive’s salary under this Section 3.1 shall automatically be raised to $300,000 per annum (pro rated for partial
years) retroactive to the Effective Date, and the unpaid amounts of salary due in connection with this retroactive increase shall be paid within thirty (30) days after the closing date for such funding. All such payments shall be subject to
applicable withholdings as provided in Section 6.6. Notwithstanding anything in this Section 3.1 to the contrary, in the event that the parties mutually agree that payment of the specified salary amounts shall be deferred to a stated time or event,
deferral of payment in accordance with such an agreement shall not be a breach of this Agreement.
 2

                      3.2         Annual
Bonus.  Within a reasonable period of time after each anniversary date of this Agreement, the Company further agrees to pay Executive an additional cash bonus (the “Annual Bonus”) in such amount (which may be zero) as may be
determined by the Board. Any such payment shall be subject to applicable withholdings as provided in Section 6.6.
                     3.3         Stock Option Incentives.   Subject
to the provisions of Article 4, in accordance with and subject to the terms of the Corautus Genetics Inc. Stock Option Plan (the “Option Plan”) and the related option agreement (the “Option Agreement”) and to the approval of each
option grant by the Board, the Company agrees to grant to the Executive nonqualified stock options (as defined in the Option Plan) to purchase 500,000 shares of the Company’s common stock according to the following terms and conditions (any
additional terms and conditions of such option grants to be as specified in the Option Plan and the Option Agreement):
                                 (a)
        The date of grant shall be the date of execution of this Agreement;
                                 (b)
        The option price shall be $1.30 per share;
                                 (c)
        Subject to Section 3.3(d), options for 10,417 shares (1/48th of the total grant, rounded up to the next whole share) (pro rated for partial months) shall become exercisable on the last day of
each calendar month following the grant date (a “Vesting Date”) until the total grant has become exercisable or further vesting is terminated by the terms of this Agreement or the Option Plan or Agreement, provided however that (i) on the
first such Vesting Date, the number of options that would have become exercisable on or prior to such date if the date of grant had been the Effective Date shall become exercisable and (ii) if, on any Vesting Date, the number of non-exercisable
options remaining is less than 10,417 shares, the number of shares which shall become exercisable shall be all remaining non-vested shares;
                                 (d)
        Notwithstanding the vesting schedule described in Section 3.3(c) above, vesting of the option grant shall be accelerated as follows upon the meeting of the stated milestones: (i) options for 25,000 shares
shall become exercisable upon execution of a Board-approved agreement between the Company and a major pharmaceutical or medical device company for the purpose of collaboration on the Company’s Phase IIb clinical trial; (ii) options for 100,000
shares shall become exercisable upon the commencement of treatment of the first patient in a Phase IIb clinical trial, the protocol for which has been approved by the U. S. Food & Drug Administration; (iii) options for 50,000 shares shall become
exercisable upon the receipt by Company of cash in the aggregate amount of $5,000,000 (whether in the form of equity, debt or otherwise) to support the Company’s clinical trials, general and administrative expenses or other purposes; (iv)
options for 50,000 shares shall become exercisable upon the receipt by Company of cash in the aggregate amount of $5,000,000 (in addition to the amount received under (iii);  i.e., a total of $10,000,000) (whether in the form of equity, debt
or otherwise) to support the Company’s clinical trials, general and administrative expenses or other purposes; (v) options for 25,000 shares shall become exercisable upon receipt by Company of cash in the aggregate amount of $2,500,000 (in
addition to the amounts received under (iii) and (iv);  i.e., a total of $12,500,000) whether in the form of equity, debt, or otherwise) to support the Company’s clinical trials, general and administrative expenses or other purposes; and
(vi) all unvested options shall vest upon a Change in Control (for purposes of this Section 3.3(d), only cash 
 3

  received after the Effective Date and during the term of this Agreement shall be counted) (by way of example, if on the second anniversary of the Effective Date, all of the milestones
in (c)(i)-(v) have been met and this Agreement is otherwise in effect, all options will have fully vested);
                                 (e)
        The options shall have a 10-year term and shall be subject to the terms and provisions of the Option Plan; and
                                 (f)
        Subject to the provisions of the Option Plan regarding Changes in Control, and the overall 10-year term of the options, the options, when vested, shall be exercisable for the periods stated below following
Executive’s termination of his Service Provider (as defined in the Option Plan) relationship with the Company:

		
	 	      (i)        If such termination is by the Company for Cause or a voluntary termination by Executive without Transition, ninety (90)
days;

 

		
	 	      (ii)        If such termination is a voluntary termination by Executive with Transition, seven (7) years; and

 

		
	 	      (iii)        If such termination occurs for any other reason, the remaining term of the options.

 
 For purposes of Section 3.3(d), all dollar amounts shall be calculated as gross amounts without reduction for any fees or other costs incurred to procure the cash payments to which reference is made in that section. For
purposes of Section 3.3(f), the term “Transition” shall be defined as in Section 4.1(f).
                     3.4         Employee Benefits.   At all times during
the Employment Period, Executive shall be entitled to participate in any retirement or group insurance, hospitalization, medical, dental, health and accident, disability or similar plan or program of the Company now existing or established hereafter
to the extent that he is eligible under the general provisions thereof and on the same basis as similarly situated employees, including, without limitation, the Company Profit Sharing 401(k) Plan and the Company Supplemental Retirement Income Plan.
However, notwithstanding anything in this Section 3.4 to the contrary, Executive acknowledges and agrees that Company may, in its sole discretion and from time to time, establish, modify or eliminate any such plans or programs in accordance with
applicable law.
                     3.5         Special Employee
Benefits Provisions.   In addition to Executive’s rights under Section 3.4 of this Agreement, the Company agrees to provide Executive with the following special employee benefits during the Employment Period:
                                 (a)
       The Company will provide to Executive at no cost to him supplemental accidental death and disability (“AD&D”) insurance in a face amount which, when combined with the face amount of group
AD&D insurance provided to Executive under the Company’s base AD&D insurance program for employees will total $1,000,000.
                                 (b)
        Subject to the limitation of Section 3.5(d), in the event that the Executive
 4

   waives coverage under the Company’s medical plan for employees for himself and his dependents, the Company shall reimburse Executive during the Employment Period for his premium
cost of maintaining alternative personal medical insurance for himself and any of his dependents that would have been eligible dependents under the Company medical plan, provided however that such reimbursement shall be paid within 30 days following
a written request from Executive including reasonable substantiation of such expense.
                                 (c)
        Subject to the limitation of Section 3.5(d), with each reimbursement payment to Executive contemplated under Section 3.5(b), the Company shall also pay a cash bonus sufficient to pay all federal, state and
local income taxes with respect to such reimbursement and related bonus payments, such bonus payments to be withheld by the Company and paid as required by law to the applicable taxation authorities on Executive’s behalf.
                                 (d)
        The aggregate payments to or on behalf of the Executive pursuant to Sections 3.5(b) and (c) with respect to a given period shall be limited to the cost the Company would otherwise incur to extend its
present medical plan to cover Executive and his eligible dependents in the State of Georgia for such period (determined on a pro rata basis).
                     3.6         Vacation.  During the Employment Period,
Executive shall be entitled to a period of paid vacation time equal to not less than twenty (20) business days for each 12-month period beginning on the Effective Date, which shall accrue in accordance with the practices and policies of the Company.
The days selected for Executive’s vacation shall be mutually and reasonably agreeable to Company and Executive.
                     3.7         Reimbursement of Expenses.   The Company
shall reimburse Executive for all reasonable expenses that Executive incurs in connection with the duties of his employment by the Company, in accordance with the Company’s normal policies regarding business expense reimbursement, as in effect
from time to time. Any reimbursements under this paragraph shall be made upon Executive’s presentation to the Company, from time to time, of an account of such expenses in such form and in such detail as the Company may request. Executive shall
not be permitted to approve his own expenses.
                     3.8
        No Other Compensation; Review.  Executive shall not be entitled to any compensation for services from the Company as an employee, Director or otherwise during the Employment Period other
than the compensation specified in this Agreement. The Board may elect to review the Executive’s performance and salary from time to time, and may increase, but not decrease, the Executive’s salary as provided herein. Any such increase in
salary shall be deemed to constitute an amendment of this Agreement solely with respect to the salary provided in Section 3.1.
 ARTICLE 4
 TERMINATION OF EMPLOYMENT
 5

           4.1     Termination.  The Executive understands and agrees that employment
with the Company is at-will, which means that either the Executive or the Company may terminate this agreement at any time, subject to the provisions of this Agreement. This Agreement will terminate prior to the end of the Employment Period
specified in Article 2 upon the occurrence of the first of the following:
                    (a)
        The Board may terminate this Agreement for Cause (as defined below) at any time after providing the Executive with written notice, and in such event, the Executive shall forfeit as of the date of such
termination specified in such notice any right to any compensation, bonuses, stock options or other benefits under this Agreement accruing, vesting or becoming exercisable after the date of termination. Notwithstanding anything in this Section
4.1(a) to the contrary, the effect of the termination of the Executive’s employment on the Executive’s subsequent entitlement to benefits under any bonus arrangement, stock option agreement and plan or employee benefit plan shall be
determined in accordance with the governing documents with respect to such arrangements, agreements or plans, respectively.
                     (b)         This Agreement shall also terminate upon (i) the death of
the Executive or (ii) the effective date of a written determination by the Board that the Executive is not able, due to injury or illness, to continue to meet his obligations under this Agreement for all or a substantial portion of the
then-remaining Employment Period.
                     (c)         The
Company may terminate this Agreement at any time for any reason at its discretion upon written notice to Executive.
                     (d)         Executive may terminate this Agreement for Good Reason (as
defined below) at any time after providing the Company with written notice and a reasonable opportunity to cure.
                     (e)         Executive may terminate this Agreement at any time for any
reason without Transition (as defined in Section 4.1(f)).
                      (f)
        Executive may terminate this Agreement at any time for any reason with Transition. For purposes of this Agreement, “Transition” by the Executive shall mean giving reasonable written notice to the
Company of a desire to terminate the Agreement and working with and assisting the Board over a reasonable period of time (but not beyond the Employment Period) to identify, hire and train a successor for Executive’s position with the objective
of achieving a smooth transition with minimal disruption to the Company. Such Transition may include remaining employed by the Company for a period of time to be agreed upon after the replacement is hired to effectuate the transition and thereafter
for a reasonable period (but not beyond the Employment Period) being available to consult with the replacement on a part-time basis as reasonably required.
          4.2       Payment Upon Termination.  Upon termination of this Agreement, Executive shall be entitled
to the following:
 6

                       (a)         Except as
otherwise specified in this Agreement, Executive shall receive any compensation, bonuses, stock options, accrued but unused vacation any other benefits under this Agreement which had accrued, vested, become exercisable or become due and payable as
of the date of termination; provided, however, that except as otherwise provided in this Agreement, (i) no bonus for a given period shall be deemed to have accrued or become due and payable unless and until the Executive has remained employed
through the last day of such period, (ii) notwithstanding the vesting of any stock options, the exercise of such options shall be governed by the applicable terms and conditions of the relevant option grant and the stock option plan pursuant to
which it was granted and (iii) notwithstanding anything in this Section 4.2(a) to the contrary, the effect of the termination of the Executive’s employment on the Executive’s subsequent entitlement to benefits under any bonus arrangement,
stock option agreement and plan or employee benefit plan shall be determined in accordance with the governing documents with respect to such arrangements, agreements or plans, respectively.
                      (b)         In the event that this Agreement terminates pursuant to
Sections 4.1(b), 4.1(c) and 4.1(d), Executive shall also receive, in addition to any other benefits to which Executive may be entitled under Section 4.2(a), a severance payment equal to one (1) year’s salary at his then current rate of salary
under Section 3.1.
                      (c)         In the event that
this Agreement terminates because of (A) expiration at the end of the Employment Period specified in Article 2, (B) termination for Cause under Section 4.1(a) or (C) termination by Executive under Section 4.1(e) or (f), the Executive shall not be
entitled to any severance payment from the Company.
                      (d)
        In the event that this Agreement terminates within one (1) year prior to, or two (2) years following, a Change in Control (as defined below) for any reason other than (A) expiration at the end of the
Employment Period specified in Article 2, (B) termination for Cause under Section 4.1(a), or (C) termination by Executive under Section 4.1(e) or (f), the Company shall give to Executive as a severance payment, in addition to any other benefits to
which Executive may be entitled under Section 4.2(a), but in lieu of any other benefits to which Executive may be entitled under Sections 4.2(b), a lump sum cash payment equal to one (1) year’s salary at his then current rate of salary under
Section 3.1.
          4.3      Definitions.
                      (a)         For purposes of this Agreement, “Cause” shall
mean:

		
	 	              (i)       the willful and continuous failure of Executive to substantially perform the Executive’s duties
(other than as a result of a written determination of injury or illness as provided in Section 4.1(b)), after the Company delivers to the Executive a written demand for substantial performance that specifically identifies the manner in which the
Company believes that the Executive has not substantially performed the Executive’s duties and the Executive has failed to cure the identified deficiencies within ten (10) business days of receipt of such notice;

 

7

		
	 	             (ii)       the Executive’s conviction of a felony of a crime of moral turpitude (including, without limitation,
any nolo contendere plea), or any adjudication of a perpetration by the Executive of a common law fraud;

		
	 	             (iii)       the Executive’s engagement in any activity that is in conflict of interest or competitive with the
Company or its affiliates (other than any isolated, insubstantial and inadvertent action not taken in bad faith and which is promptly remedied by the Executive upon notice by the Company);

 

		
	 	             (iv)       Executive’s engaging in any knowing act of fraud or dishonesty against the Company or any of its
affiliates or any material breach of federal or state securities laws or regulations;

 

		
	 	             (v)       the Executive’s harassment of any individual in the workplace based on age, gender or other protected
status or class or violation of any policy of the Company regarding harassment, but only following an investigation by an independent third party into the harassment claim which substantiates such claim.

 
                      (b)         For purposes of this Agreement, “Change in
Control” shall mean the occurrence of any one of the following events:

		
	 	               (i)       Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
(including “affiliates” and “associates” of such person, but excluding the Company, any employee benefit plan of the Company or any “subsidiary” of the Company) becomes the “beneficial owner” (as defined in
Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities; or

 

		
	 	               (ii)       The consummation of the sale, lease, transfer, exchange, mortgage, pledge or other disposition
by the Company of all or substantially all of the Company’s assets; or

 

		
	 	               (iii)       A change in the composition of the Board occurring within a two-year period, as a result of
which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” means directors who either (A) are Directors as of the Effective Date, or (B) are elected, or nominated for election, to the Board with
the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but will not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating
to the election of directors to the Company); or

 

		
	 	                (iv)       The consummation of a merger or consolidation of the Company with any other corporation
or any other transaction or series of related transactions 

 
 8

		
	 	between the Company and any other “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) or “persons”, which merger, consolidation or other transaction(s) results in the
voting securities of the Company outstanding immediately prior thereto not continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of
the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger, consolidation or other transaction(s).

 
 For purposes of this Section 4.3(b), the term “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the terms “affiliate,” “associate” and “subsidiary” shall
have the respective meanings ascribed to such terms in Rule 12b-2 under Section 12 of the Exchange Act. The term “person” includes any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization,
association, corporation, institution, or any other entity.
                      (c)
        For purposes of this Agreement, “Good Reason” shall mean the occurrence of any one of the following events unless Executive specifically agrees in writing that such event shall not constitute Good
Reason:

		
	 	                (i)       the reduction of the Executive’s base salary below the level set pursuant to this
Agreement as then in effect (a voluntary deferral by Executive of his cash compensation shall not be considered a reduction of Executive’s base salary for purposes of this Section 4.3(c)(i));

 

		
	 	                (ii)       any material adverse change in the status, responsibilities, or perquisites of
Executive;

 

		
	 	                (iii)       any failure to nominate (or re-nominate) Executive as a member of the Board or to
nominate (or re-nominate) and elect (or re-elect) Executive as Chief Executive Officer of the Company;

 

		
	 	                (iv)       causing or requiring Executive to report to anyone other than the Board;

 

		
	 	                (v)       assignment of duties materially inconsistent with Executive’s position and duties as
described in this Agreement;

 

		
	 	                (vi)       the failure of the Company to assign this Agreement to a successor to the Company or
failure of a successor to the Company to explicitly assume and agree to be bound by this Agreement; and

 

		
	 	                (vii)       any requirement by the Company that Executive relocate his permanent personal residence
(with or without Company reimbursement of moving expenses) to any location other than his primary residence on the Effective Date.

 
 9

           4.4     Other Benefits After Termination Date.   Except for the payments and benefits,
if any, provided under this Article 4, no other benefits, compensation or other remuneration of any type, whether taxable or nontaxable, shall be payable to the Executive after his termination of employment, except as required by law or by the
applicable terms and provisions of any employee benefit plan applicable to the Executive.
          4.5     General
Release.   Notwithstanding anything in this Article 4 to the contrary, the Executive agrees that in the event of any termination of this Agreement that results in the payment of severance pay pursuant to this Article 4, as a
condition to receipt of and as consideration for such payment: (i) in the event of termination of this Agreement by the Executive pursuant to Sections 4.1(d) or (e), the Executive shall have given at least sixty (60) days’ written notice to the
Company; and (ii) prior to the payment of any such severance pay, the Executive (or if due to death, the executor or administrator of his estate) shall sign a general release of any and all claims that the Executive, his heirs and assigns and/or his
estate may have against the Company and its related parties, in such form as the Company may require.
          4.6     Effect of
Noncompetition/Nonsolicitation Provisions.   Notwithstanding anything in this Article IV to the contrary, the payment of any amounts or benefits after termination of the Executive’s employment (other than amounts or benefits
payable pursuant to Section 4.2(a)) shall be subject to the provisions of Section 5.7.
 ARTICLE 5
 PROVISIONS RELATED TO
NONCOMPETITION AND NONSOLICITATION
          5.1     Reasonableness of Noncompetition/ Nonsolicitation Provisions.
  Executive understands and acknowledges that the Company is engaged in the development and marketing of gene therapy products in the field of angiogenesis (the “Business”), and that because of his position and the scope of his
duties as Executive for the Company he has (i) intimate knowledge of the business of the Company including, but not limited to, knowledge of Confidential Information (as defined below) and (ii) knowledge of and relationships with the investors,
customers and suppliers of the Company. Executive agrees and acknowledges that such knowledge, access, and relationships are such that if Executive were to compete with the Company, in engaging in the Business within the United States, at any time
during the Employment Period, the Company would suffer harm and would be severely and irreparably damaged. Executive agrees that the Noncompetition/ Nonsolicitation Provisions contained herein are reasonable and necessary to protect the
confidentiality of the trade secrets, and other Confidential Information concerning the Company acquired by Executive. The provisions of this Agreement shall be interpreted so as to protect those trade secrets and Confidential Information, and to
secure for the Company the exclusive benefits of the work performed on behalf of the Company by the Executive under this Agreement, and not to limit unreasonably his ability to engage in employment and consulting activities in non-competitive areas
which do not endanger the Company’s legitimate interests expressed in this Agreement. Accordingly, Executive acknowledges and agrees that the provisions contained in Sections 5.2, 5.3, 5.4, 5.5, 5.6, 5.7 and
 10

  5.8 (the “Noncompetition/Nonsolicitation Provisions”) are reasonable and valid in all respects. Executive acknowledges and agrees that the compensation provided to Executive
hereunder is provided, in part, as consideration for his agreement to the Noncompetition/Nonsolicitation Provisions.
         5.2      Confidentiality.  Executive agrees that he may not at any time during, or within two (2) years subsequent
to, the Employment Period, directly or indirectly, use or disclose any Confidential Information, except as such use or disclosure is required in connection with the Executive’s performance of his duties to the Company unless a formal written
contract is entered into by Executive and the Company providing the terms and conditions of use or as otherwise permitted by the confidentiality policy adopted by the Board, as in effect from time to time. The obligations of this Section 5.2 shall
terminate with respect to any particular portion of Confidential Information if: (a) it is in the public domain at the time the Company discloses it to Executive; or (b) it enters the public domain subsequent to the time of the Company’s
disclosure to Executive and without any fault or disclosure on the part of Executive; or (c) it was known to Executive prior to the disclosure by the Company, free of any obligation of confidence, as evidenced by Executive’s written records; or
(d) it is required to be disclosed by law, regulation, or order of a governmental agency or a court of competent jurisdiction, provided however that the Executive, to the extent practical, shall provide written notice to the Company prior to such
disclosure and shall take all reasonable steps to restrict and maintain confidentiality of any such disclosure. Upon termination of this Agreement, Executive must deliver to the Company all Confidential Material in his possession. As used in this
paragraph, the terms “Confidential Information” and “Confidential Material” have the following meanings:
                     (a)          “Confidential Information” is
defined as all information or material that constitutes a trade secret of the Company under the Uniform Trade Secrets Act as set forth on Exhibit A, whether or not marked as confidential and all confidential or proprietary materials or information
designated as such by the Company by the use of a proprietary legend, marking, stamp or other positive written notice at the time of disclosure by the Company. In addition, any information or materials (other than trade secret information or
materials or information or materials disclosed at a Company Board meeting) orally or visually disclosed to Executive without an appropriate letter, stamp or legend, but which is indicated verbally by the Company at the time of its initial
disclosure to be confidential, shall constitute Confidential Information.
                     (b)          “Confidential Material” means any
document, writing or other informational media of any kind, obtained by Executive as a consequence of or through his affiliation with the Company, containing any Confidential Information and includes, without limiting the generality of the
foregoing, customer lists, financial data, computer programs, business plans, investment sources, operating instructions or techniques, forms or manuals, and procedural instructions.
          5.3      Conflicting Employment and Business Opportunities During the Period of Employment.   Executive
agrees:
                     (a)          that he shall
not directly or indirectly engage in any employment, 
 11

  occupation, consulting, or other business activity which the Company shall determine in good faith to be in competition with the Company or to interfere with his duties as an employee
of the Company; and
                     (b)          that he shall not engage in any business
enterprise that would be in competition with the Company; and
                     (c)          that he shall promptly disclose to the
Company’s appropriate corporate officers or directors all business opportunities that are (i) presented to Executive in his capacity as an officer or employee of the Company, and (ii) of a similar nature to the type of business the Company
currently engaged in or has expressed an interest in engaging in the future; and
                     (d)          that he shall not usurp or take advantage
of any such business opportunity without first offering such opportunity to the Company.
          5.4     
Nonsolicitation of Employees.  During the Employment Period and continuing for one (1) year thereafter, the Executive shall not, without the prior written consent of the Company, directly or indirectly, as a sole
proprietor, member of a partnership, stockholder or investor, officer or director of a corporation, or as an employee, associate, executive, consultant or agent of any person, partnership, corporation or other business organization or entity other
than the Company, solicit or endeavor to entice away from the Company or its affiliates any employee of or consultant to the Company to leave the Company, provided however that this Section 5.4 shall not be applicable with respect to any such
discussions between Executive and Robert T. Atwood.
          5.5      Inventions.
                     (a)          Executive agrees to disclose promptly to
the proper officers of the Company, and the Board, in writing any patentable or unpatentable, copyrightable or uncopyrightable, idea, invention, work of authorship (including, but not limited to computer programs, software and documentation),
formula, device, improvement, method, process or discovery (each, an “Invention”) which relates to the Company’s business that Executive conceives, makes, develops, or works on, in whole or in part, solely or jointly with others
during the Employment Period. Executive understands that this Agreement is not intended to require assignment of any of Executive’s rights in an Invention that Executive develops entirely on Executive’s own time without using the
Company’s equipment, supplies, facilities or trade secret information except for those Inventions that either: (1) relate at the time of conception or reduction to practice of the Invention to the Company’s business, or actual or
demonstrably anticipated research or development of the Company; or (2) result from any work performed by Executive for the Company. Executive further understands that the Company has the right to review, in confidence, all Inventions conceived by
Executive, solely or jointly with others, during the Employment Period to determine questions of rights to Inventions falling within the scope of this Agreement.
                     (b)          It is expressly agreed that the Inventions
created by Executive hereunder 
 12

  which either: (1) relate at the time of conception or reduction to practice of the Invention to the Company’s business, or actual or demonstrably anticipated research or
development of the Company; or (2) result from any work performed by Executive for the Company shall be considered specially ordered or commissioned “works made for hire,” as such term is defined under the United States Copyright Act of
1976, as amended (the “Act”), and that such works and the copyright interests therein and thereto shall belong solely and exclusively to the Company and shall be considered the property of the Company for purposes of this Agreement. To the
extent that such works do not constitute “works made for hire” under the Act, Executive, in consideration of $1.00 and other good and valuable consideration, the receipt and adequacy of which hereby are acknowledged, hereby irrevocably
assigns to the Company, its successors and assigns, without royalty or any other further consideration, (i) all rights, title and interests in and to the copyrights of the Inventions and all renewals and extensions of the copyrights that may be
secured under existing or future laws, and (ii) all other rights, title and interests he may have in the Inventions. Accordingly, the Company will have the right to register in the office of the Registrar of Copyrights of the United States, the
Inventions in the Company’s name as the owner and author of such Inventions. Executive shall, upon request by the Company and at the Company’s expense, promptly execute, acknowledge or deliver any documents or instruments deemed reasonably
necessary by the Company to document, enforce, protect or otherwise perfect the Company’s copyright and other interests in the Inventions.
                     (c)          Without limiting the generality or effect
of any other provision of this Agreement, Executive agrees to assign and hereby assigns to the Company without royalty or any other further consideration his entire right, title and interest in and to any Invention Executive is required to disclose
hereunder.
                     (d)          Executive
agrees to make and maintain adequate and current written records of all Inventions covered by this Agreement. These records shall be and remain the property of the Company.
                     (e)          Executive agrees to assist the Company in
obtaining, maintaining, and enforcing patents and other proprietary rights in connection with any Invention covered under this Agreement for which the Company has or obtains any right, title or interest. Executive further agrees that his obligations
under this subsection shall continue beyond the termination of the Employment Period, but if Executive is called upon to render such assistance after the termination of the Entitlement Period, Executive shall be entitled to a fair and reasonable
rate of compensation for such assistance. Executive shall, in addition, be entitled to reimbursement of any out-of-pocket expenses incurred at the request of the Company relating to such assistance.
                     (f)          Executive represents that there are no
other contracts to assign Inventions that are now in existence between any other person or entity and Executive. Executive further represents that he has no other employment or undertakings which might restrict or impair his performance of this
Agreement. Executive will not, in connection with his engagement as an officer and employee of the Company, use or disclose to the Company any confidential trade secret or other proprietary information of any previous employer or other person to
which Executive is not lawfully entitled.
 13

           5.7      Notification of New Employer.  Executive agrees that the
Company may notify any subsequent party which engages the services of Executive of Executive’s rights and obligations under this Agreement.
          5.8      Remedy for Breach.  Executive acknowledges and agrees that his breach of any of the
Noncompetition/Nonsolicitation Provisions contained in this Agreement would cause irreparable injury to the Company and that remedies at law of the Company for any actual or threatened breach by Executive of such Provisions would be inadequate.
Accordingly, Executive acknowledges and agrees that the Company shall be entitled to specific performance of the Provisions in such sections or injunctive relief against activities in violation of such sections, or both, by temporary or permanent
injunction or other appropriate judicial remedy, writ or order, without the necessity of proving actual damages. This provision with respect to injunctive relief shall not diminish the right of the Company to claim and recover damages against
Executive for any breach of this Agreement in addition to injunctive relief. In particular, but without limitation, any benefits to which the Executive may be entitled under this Agreement shall be forfeited as of the date Executive first breaches
his obligations under this Agreement, subject to the right to cure any such breach specified in this Agreement. Executive acknowledges and agrees that, he will be responsible for all legal expenses, including actual attorneys fees, which the Company
incurs in pursuing remedies, whether legal or equitable, for any actual or threatened breach of this Agreement by Executive, provided that Executive shall have this obligation only if the Company is the prevailing party in any such action. Executive
acknowledges and agrees that the Noncompetition/Nonsolicitation Provisions contained in this Agreement shall be construed as agreements independent of any other provision of this or any other contract between the parties hereto, and that the
existence of any claim or cause of action by Executive against the Company, whether predicated upon this or any other contract, shall not constitute a defense to the enforcement by the Company of said Provisions.
          5.9      Employee Agreements.  Executive agrees, as a condition of employment, to execute and deliver to
the Company such confidentiality, nondisclosure, conflict of interest or other agreements and disclosures as the Company may require of its employees generally under its current policies.
 14

  ARTICLE 6
MISCELLANEOUS
             6.1      Entire Agreement.   Except as otherwise specifically provided in this Agreement, all prior
negotiations and agreements by and among the Company (including, without limitation, with any member of the Board acting on behalf of the Company) and the Executive with respect to the subject matter of this Agreement are superseded by this
Agreement, and there are no other representations, warranties, understandings or agreements with respect to the subject matter of this Agreement. Except as may be otherwise specifically provided in this Agreement, no change, modification, addition
or termination of this or any part of this Agreement will be valid unless in writing and signed by or on behalf of the party to be charged therewith.
             6.2      Severability.    It is the intention of the parties hereto that the provisions of this Agreement
shall be enforced to the fullest extent permissible under the laws of each state and jurisdiction in which such enforcement is sought, but that the unenforceability (or the modification to conform with such laws) of any provision hereof shall not
render unenforceable or impair the remainder of this Agreement which shall be deemed amended to delete or modify, as necessary, the invalid or unenforceable provisions. The parties further agree to alter the balance of this Agreement in order to
render the same valid and enforceable. The terms of the restrictive covenant provisions of this Agreement shall be deemed modified to the extent necessary to be enforceable.
             6.3      No Waivers.   No failure or delay on the part of any party exercising any power or right under
this Agreement will operate as a waiver of that power or right, and no single or partial exercise of any right or power shall preclude any other of further exercise thereof, or the exercise of any other right or power under this
Agreement.
             6.4      Notices.    Any notice or consent required or permitted hereunder
shall be deemed to have been given when hand-delivered or mailed by registered mail, postage prepaid and return-receipt requested to the intended recipient at the following address:

		
	 	If to the Company:
	 	 
	 	Corautus Genetics, Inc.
	 	10030 Barnes Canyon Road
	 	San Diego, CA 92121
	 	 
	 	With a copy to:
	 	 
	 	McKenna Long & Aldridge LLP
	 	Attn: Robert Tritt, Esq.
	 	303 Peachtree Street
	 	Suite 5300
	 	Atlanta, GA 30308

 15

		
	 	If to Executive:
	 	 
	 	Richard E. Otto
	 	15 Fairway Drive
	 	St. Simons Island, Georgia 31522

 
 Each party may modify its written notice address under this Section 6.4 by written notice to the other
party, provided that, notwithstanding any contrary provision of this Section 6.4, such change of address notice shall not be effective until received by the party to whom it is directed.
             6.5      Successors and Assigns.   This Agreement shall inure to the benefit of the Company and its
successors and assigns, including any entity directly or indirectly controlling, controlled by, or under direct or indirect common control with the Company. This Agreement is personal to Executive and may not be assigned or transferred by
Executive.
             6.6      Withholding and Offsets.    Notwithstanding anything in this
Agreement to the contrary, all payments to Executive under this Agreement are subject to all withholding deductions mandated by applicable law (including, without limitation, withholding for income and social security taxes) and deductions (if any)
approved by Executive (including, without limitation, any deductions for the employee contribution for benefit programs as the Company, in its discretion, may from time to time establish), and may be further reduced by any amount owed by the
Executive to the Company at the time the payment is made in satisfaction of such obligation, to the extent permitted under applicable law.
             6.7      Governing Law/Survival.    This Agreement will be governed by the laws of the State of Georgia.
The provisions of Articles 4 and 5 and of Sections 6.4, 6.6, 6.7, 6.8 and 6.9, will survive the termination of this Agreement.
             6.8
     Arbitration.    Any claim or dispute arising under this Agreement shall be subject to arbitration, and prior to commencing any court action, the parties agree that they shall arbitrate all
controversies. The party seeking arbitration must initiate the arbitration process within one year after acquiring knowledge of the claim by written notice to the other party as provided in Section 6.4 including a statement of the claim. The
arbitration shall be conducted in the city in which the Company headquarters is located, in accordance with the Employment Dispute Rules of the American Arbitration Association and the Federal Arbitration Act, 9 U.S.C. §1, et. seq. The
arbitrator(s) shall be neutral and shall be authorized to award both liquidated and actual damages, in addition to injunctive relief, but no punitive damages. The Company shall pay the arbitrator’s expenses and fees and any other expenses that
would not have been incurred if the case were litigated in the judicial forum having jurisdiction over it. Each party shall pay its own attorney fees, witness fees and other expenses incurred by the party for his/her/its own benefit, provided,
however, that the arbitrator(s) may award attorneys’ fees and costs in such proportion as he/she/they may decide, without regard to any restriction on the amount of such award under applicable law. Such an award shall be in writing and explain
the basis therefor, and shall be binding and conclusive upon the parties hereto, subject to 9 U.S.C. §10. Each party shall have 
 16

  the right to have the award made the judgment of a court of competent jurisdiction.
             6.9      Use and Return of Documents and Property.   Executive acknowledges that in the course of his
employment with the Company, he will have the opportunity to inspect and use certain property, both tangible and intangible, of the Company and its affiliates. All such property shall remain the exclusive property of the Company and its affiliates,
and Executive has and shall have no right or interest in such property. Executive shall use Company property only during employment and only in the performance of his job and to further the Company’s interests, and he will not remove Company
property from the Company’s premises except to the extent necessary to perform his duties and to the extent approved by the Company, either expressly or generally under its policies. Promptly upon the Executive’s date of termination of
employment, Executive shall return to the Company all of the Company’s memoranda, notes, records, data, books, sketches, computer programs, audio-visual materials, correspondence, lists, every piece of information recorded in any form, and all
other tangible property.
             6.10     Employee’s Representations.    The Executive hereby
represents and warrants to the Company that he (a) is not now under any obligation of a contractual or quasi-contractual nature that is inconsistent or in conflict with this Agreement or that would prevent, limit or impair the performance by the
Executive of his obligations hereunder; and (b) has been advised that he should be represented by legal counsel in the preparation, negotiation, execution and delivery of this Agreement and understands fully the terms and provisions
hereof.
             6.11     Beneficiary.    If Executive dies prior to receiving all of the amounts
payable to him in accordance with the terms of this Agreement, such amounts shall be paid to the beneficiary designated in writing by the Executive in such form as required by the Company. In the absence of such designation, any such amount shall be
paid to Executive’s estate.
             6.12     Further Assurances.    Each of the parties
hereto agrees to take or cause to be taken, all actions necessary, proper or advisable to effect the transactions contemplated by this Agreement.
             6.13     Nonalienation.    Benefits payable under this Agreement shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution or levy of any kind, either voluntary or involuntary, prior to actually being received by Executive or a beneficiary, as applicable, and any
such attempt to dispose of any right to benefits payable hereunder shall be void.
             6.14     Captions.
   The names of the Articles and Sections of this Agreement are for convenience of reference only and do not constitute a part hereof.
             6.15     Counterparts.    This Agreement may be executed in several counterparts, each of which shall be
deemed to be an original but all of which together will constitute one and the same instrument.
 17

           IN WITNESS WHEREOF, Executive and the Company have executed and delivered this Agreement as of on the date set forth above,
but actually on the date set forth below.

		
	COMPANY:	CORAUTUS GENETICS, INC.

 

			
	 	By:	/s/   VICTOR SCHMITT
	 	 	

	 	Name:	Victor Schmitt
	 	 	

	 	Title:	Chairman of Compensation Committee
	 	 	

	 	Date:	May 14, 2003

 

		
	EXECUTIVE:	RICHARD E. OTTO
	 	 	 
	 	 	 
	 	/s/   RICHARD E. OTTO
	 	

	 	Date:   May 14, 2003

 18

  EXHIBIT A
 UNIFORM TRADE SECRETS ACT
 (Drafted by the National Conference of Commissioners
on Uniform State Laws, as amended 1985)
 Section 1. Definitions

		
	 	As used in this Act, unless the context requires otherwise:
 . . . 
(4)       “Trade secret” means information, including a formula, pattern, compilation, program
device, method, technique, or process, that: (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its
disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

 
 19

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