Document:

exv10w2

 

Exhibit 10.2

Volcano Corporation

6,800,000 Shares of Common Stock

Underwriting Agreement

June 14, 2006

J.P. Morgan Securities Inc.

Piper Jaffray & Co.

Bear, Stearns & Co., Inc.

Cowen and Company, LLC
  As
Representatives of the
  several
Underwriters listed
  in
Schedule 1 hereto

c/o J.P. Morgan Securities Inc.

277 Park Avenue

New York, New York 10172

and

c/o Piper Jaffray & Co.

800 Nicollet Mall

Minneapolis, Minnesota 55402

Ladies and Gentlemen:

     Volcano Corporation, a Delaware corporation (the “Company”), proposes to issue and sell to the
several Underwriters listed in Schedule 1 hereto (the “Underwriters”), for whom you are acting as
representatives (the “Representatives”), an aggregate of 6,800,000 shares of common stock, par value
$0.001 per share, of the Company (the “Underwritten Shares”) and, at the option of the Underwriters,
up to an additional 1,020,000 shares of common stock, par value $0.001 per share, of the Company (the
“Option Shares”). The Underwritten Shares and the Option Shares are herein referred to as the
“Shares”. The shares of common stock, par value $0.001 per
share, of the Company to be outstanding
after giving effect to the sale of the Shares are herein referred to as the “Stock”. The Stock,
including the Shares, will have attached thereto rights (the “Rights”) to purchase Series A Junior
Participating Preferred Stock. The Rights are to be issued pursuant to a Rights Agreement (the
“Rights Agreement”) to be dated as of June 20, 2006 between the Company and American Stock Transfer &
Trust Company.

     The Company hereby confirms its agreement with the several Underwriters concerning the
purchase and sale of the Shares, as follows:

 

 
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     1. Registration Statement. The Company has prepared and filed with the Securities and
Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended, and the rules
and regulations of the Commission thereunder (collectively, the “Securities Act”), a registration
statement (File No. 333-132678) including a prospectus, relating to the Shares and Rights. Such
registration statement, as amended at the time it becomes effective, including the information, if
any, deemed pursuant to Rule 430A, 430B or 430C under the Securities Act to be part of the
registration statement at the time of its effectiveness (“Rule 430 Information”), is referred to
herein as the “Registration Statement”; and as used herein, the term “Preliminary Prospectus” means
each prospectus included in such registration statement (and any amendments thereto) before it
becomes effective, any prospectus filed with the Commission pursuant to Rule 424(a) under the
Securities Act and the prospectus included in the Registration Statement at the time of its
effectiveness that omits Rule 430 Information, and the term “Prospectus” means the prospectus in
the form first used (or made available upon request of purchasers pursuant to Rule 173 under the
Securities Act) in connection with confirmation of sales of the Shares. If the Company has filed
an abbreviated registration statement pursuant to Rule 462(b) under the Securities Act (the “Rule
462 Registration Statement”), then any reference herein to the term “Registration Statement” shall
be deemed to include such Rule 462 Registration Statement. Capitalized terms used but not defined
herein shall have the meanings given to such terms in the Registration Statement and the
Prospectus.

     At or prior to the time when sales of the Shares were first made (the “Time of Sale”), the
Company had prepared the following information (collectively with the pricing information set forth
on Annex B hereto, the “Time of Sale Information”): a Preliminary Prospectus dated June 1,
2006, and each “free-writing prospectus” (as defined pursuant to Rule 405 under the Securities Act)
listed on Annex B hereto.

     2. Purchase of the Shares by the Underwriters. (a) The Company agrees to issue and
sell the Shares to the several Underwriters as provided in this Agreement, and each Underwriter, on
the basis of the representations, warranties and agreements set forth herein and subject to the
conditions set forth herein, agrees, severally and not jointly, to purchase from the Company the
respective number of Underwritten Shares set forth opposite such Underwriter’s name in Schedule 1
hereto at a price per share (the “Purchase Price”) of $7.44.

     In addition, the Company agrees to issue and sell the Option Shares to the several
Underwriters as provided in this Agreement, and the Underwriters, on the basis of the
representations, warranties and agreements set forth herein and subject to the conditions set forth
herein, shall have the option to purchase, severally and not jointly, from the Company the Option
Shares at the Purchase Price.

     If any Option Shares are to be purchased, the number of Option Shares to be purchased by each
Underwriter shall be the number of Option Shares which bears the same ratio to the aggregate number
of Option Shares being purchased as the number of Underwritten Shares set forth opposite the name
of such Underwriter in Schedule 1 hereto (or such number increased as set forth in Section 10
hereof) bears to the aggregate number of Underwritten Shares being

 

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purchased from the Company by the several Underwriters, subject, however, to such adjustments to
eliminate any fractional Shares as the Representatives in their sole discretion shall make.

     The Underwriters may exercise the option to purchase the Option Shares at any time in whole,
or from time to time in part, on or before the thirtieth day following the date of this Agreement,
by written notice from the Representatives to the Company. Such notice shall set forth the
aggregate number of Option Shares as to which the option is being exercised and the date and time
when the Option Shares are to be delivered and paid for which may be the same date and time as the
Closing Date (as hereinafter defined) but shall not be earlier than the Closing Date nor later than
the tenth full business day (as hereinafter defined) after the date of such notice (unless such
time and date are postponed in accordance with the provisions of Section 10 hereof). Any such
notice shall be given at least two Business Days prior to the date and time of delivery specified
therein.

     (b) The Company understands that the Underwriters intend to make a public offering of the
Shares as soon after the effectiveness of this Agreement as in the judgment of the Representatives
is advisable, and initially to offer the Shares on the terms set forth in the Prospectus. The
Company acknowledges and agrees that the Underwriters may offer and sell Shares to or through any
affiliate of an Underwriter and that any such affiliate may offer and sell Shares purchased by it
to or through any Underwriter.

     (c) Payment for the Shares shall be made by wire transfer in immediately available funds to
the account specified by the Company to the Representatives in the case of the Underwritten Shares,
at the offices of Morrison & Foerster LLP, 12531 High Bluff Drive, San Diego, California 92130 at
10:00 A.M. New York City time on June 20, 2006, or at such other time or place on the same or such
other date, not later than the fifth business day thereafter, as the Representatives and the
Company may agree upon in writing or, in the case of the Option Shares, on the date and at the time
and place specified by the Representatives in the written notice of the Underwriters’ election to
purchase such Option Shares. The time and date of such payment for the Underwritten Shares is
referred to herein as the “Closing Date” and the time and date for such payment for the Option
Shares, if other than the Closing Date, is herein referred to as the “Additional Closing Date”.

     Payment for the Shares to be purchased on the Closing Date or the Additional Closing Date, as
the case may be, shall be made against delivery to the Representatives for the respective accounts
of the several Underwriters of the Shares to be purchased on such date in definitive form
registered in such names and in such denominations as the Representatives shall request in writing
not later than two full business days prior to the Closing Date or the Additional Closing Date, as
the case may be, with any transfer taxes payable in connection with the sale of the Shares duly
paid by the Company. The certificates for the Shares will be made available for inspection and
packaging by the Representatives at the office of J.P. Morgan Securities Inc. (“JPMorgan”) set
forth above not later than 1:00 P.M., New York City time, on the business day prior to the Closing
Date or the Additional Closing Date, as the case may be.

 

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     (d) The Company acknowledges and agrees that the Underwriters are acting solely in the
capacity of an arm’s length contractual counterparty to the Company with respect to the offering of
Shares contemplated hereby (including in connection with determining the terms of the offering) and
not as a financial advisor or a fiduciary to, or an agent of, the Company or any other person.
Additionally, neither the Representatives nor any other Underwriter is advising the Company or any
other person as to any legal, tax, investment, accounting or regulatory matters in any
jurisdiction. The Company shall consult with its own advisors concerning such matters and shall be
responsible for making its own independent investigation and appraisal of the transactions
contemplated hereby, and the Underwriters shall have no responsibility or liability to the Company
with respect thereto. Any review by the Underwriters of the Company, the transactions contemplated
hereby or other matters relating to such transactions will be performed solely for the benefit of
the Underwriters and shall not be on behalf of the Company.

     3. Representations and Warranties of the Company. The Company represents and warrants
to each Underwriter that:

     (a) Preliminary Prospectus. No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary Prospectus, at the time of
filing thereof, complied in all material respects with the Securities Act and did not contain any
untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided that the Company makes no representation and
warranty with respect to any statements or omissions made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in writing by such Underwriter
through the Representatives expressly for use in any Preliminary Prospectus.

     (b) Time of Sale Information. The Time of Sale Information, at the Time of Sale did not, and
at the Closing Date and as of the Additional Closing Date, as the case may be, will not, contain
any untrue statement of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were made, not
misleading; provided that the Company makes no representation and warranty with respect to
any statements or omissions made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by such Underwriter through the Representatives
expressly for use in such Time of Sale Information. No statement of material fact included in the
Prospectus has been omitted from the Time of Sale Information and no statement of material fact
included in the Time of Sale Information that is required to be included in the Prospectus has been
omitted therefrom.

     (c) Issuer Free Writing Prospectus. Other than the Preliminary Prospectus and the Prospectus,
the Company (including its agents and representatives, other than the Underwriters in their
capacity as such) has not made, used, prepared, authorized, approved or referred to and will not
prepare, make, use, authorize, approve or refer to any “written communication” (as defined in Rule
405 under the Securities Act) that constitutes an offer to sell or solicitation of an offer to buy
the Shares (each such communication by the Company or its agents and representatives

 

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(other than a communication referred to in clause (i) below) an “Issuer Free Writing Prospectus”)
other than (i) any document not constituting a prospectus pursuant to Section 2(a)(10)(a) of the
Securities Act or Rule 134 under the Securities Act or (ii) the documents listed on Annex B hereto
and other written communications approved in writing in advance by the Representatives. Each such
Issuer Free Writing Prospectus complied in all material respects with the Securities Act, has been
filed in accordance with the Securities Act (to the extent required thereby) and, when taken
together with the Preliminary Prospectus accompanying, or delivered prior to delivery of, such
Issuer Free Writing Prospectus, did not, and at the Closing Date and as of the Additional Closing
Date, as the case may be, will not, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that the Company makes
no representation and warranty with respect to any statements or omissions made in each such Issuer
Free Writing Prospectus in reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by such Underwriter through the Representatives
expressly for use in any Issuer Free Writing Prospectus.

     (d) Registration Statement and Prospectus. The Registration Statement has been declared
effective by the Commission. No order suspending the effectiveness of the Registration Statement
has been issued by the Commission and no proceeding for that purpose or pursuant to Section 8A of
the Securities Act against the Company or related to the offering has been initiated or, to the
knowledge of the Company, threatened by the Commission; as of the applicable effective date of the
Registration Statement and any amendment thereto, the Registration Statement complied and will
comply in all material respects with the Securities Act, and did not and will not contain any
untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein not misleading; and as of the date of the
Prospectus and any amendment or supplement thereto and as of the Closing Date and as of the
Additional Closing Date, as the case may be, the Prospectus will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under which they were made,
not misleading; provided that the Company makes no representation and warranty with respect
to any statements or omissions made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by such Underwriter through the Representatives
expressly for use in the Registration Statement and the Prospectus and any amendment or supplement
thereto.

     (e) Financial Statements. Except as permitted by that certain letter from the Commission to
the Company, dated as of October 13, 2005, the financial statements and the related notes thereto
of the Company and its consolidated subsidiaries included in the Registration Statement, the Time
of Sale Information and the Prospectus comply in all material respects with the applicable
requirements of the Securities Act and the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission thereunder (collectively, the “Exchange Act”), as
applicable, and present fairly the financial position of the Company and its subsidiaries as of the
dates indicated and the results of their operations and the changes in their cash flows for the
periods specified; such financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis

 

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throughout the periods covered thereby, and the supporting schedules included in the Registration
Statement present fairly the information required to be stated therein; and the other financial
information included in the Registration Statement, the Time of Sale Information and the Prospectus
has been derived from the accounting records of the Company and its subsidiaries and presents
fairly the information shown thereby; and the pro forma financial information and
the related notes thereto included in the Registration Statement, the Time of Sale Information and
the Prospectus have been prepared in accordance with the applicable requirements of the Securities
Act and the Exchange Act, as applicable, and the assumptions underlying such pro
forma financial information are reasonable and are set forth in the Registration Statement,
the Time of Sale Information and the Prospectus.

     (f) No Material Adverse Change. Since the date of the most recent financial statements of the
Company included in the Registration Statement, the Time of Sale Information and the Prospectus,
except as disclosed therein or contemplated thereby, (i) there has not been any change in the
capital stock or long-term debt of the Company or any of its subsidiaries, or any dividend or
distribution of any kind declared, set aside for payment, paid or made by the Company on any class
of capital stock, or any material adverse change, or any development involving a prospective
material adverse change, in or affecting the business, properties, management, financial position,
stockholders’ equity, results of operations or prospects of the Company and its subsidiaries taken
as a whole; (ii) neither the Company nor any of its subsidiaries has entered into any transaction
or agreement that is material to the Company and its subsidiaries taken as a whole or incurred any
liability or obligation, direct or contingent, that is material to the Company and its subsidiaries
taken as a whole; and (iii) neither the Company nor any of its subsidiaries has sustained any
material loss or interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor disturbance or dispute or any action, order
or decree of any court or arbitrator or governmental or regulatory authority, except in each case
as otherwise disclosed in the Registration Statement, the Time of Sale Information and the
Prospectus.

     (g) Organization and Good Standing. The Company and each of its subsidiaries have been duly
organized and are validly existing and in good standing under the laws of their respective
jurisdictions of organization, are duly qualified to do business and are in good standing in each
jurisdiction in which their respective ownership or lease of property or the conduct of their
respective businesses requires such qualification, and have all power and authority necessary to
own or hold their respective properties and to conduct the businesses in which they are engaged,
except where the failure to be so qualified or have such power or authority would not, individually
or in the aggregate, have a material adverse effect on the business, properties, management,
financial position, stockholders’ equity, results of operations or prospects of the Company and its
subsidiaries taken as a whole (a “Material Adverse Effect”). The Company does not own or control,
directly or indirectly, any corporation, association or other entity other than the subsidiaries
listed in Exhibit 21 to the Registration Statement. The subsidiaries listed in Schedule 2 to this
Agreement are the only significant subsidiaries of the Company.

     (h) Capitalization. The Company has an authorized capitalization as set forth in the
Registration Statement, the Time of Sale Information and the Prospectus under the heading

 

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“Capitalization”; all the outstanding shares of capital stock of the Company have been duly and
validly authorized and issued and are fully paid and non-assessable and are not subject to any
pre-emptive or similar rights; except as described in or expressly contemplated by the Registration
Statement, the Time of Sale Information and the Prospectus, there are no outstanding rights
(including, without limitation, pre-emptive rights), warrants or options to acquire, or instruments
convertible into or exchangeable for, any shares of capital stock or other equity interest in the
Company or any of its subsidiaries, or any contract, commitment, agreement, understanding or
arrangement of any kind relating to the issuance of any capital stock of the Company or any such
subsidiary, any such convertible or exchangeable securities or any such rights, warrants or
options; the capital stock of the Company conforms in all material respects to the description
thereof contained in the Registration Statement, the Time of Sale Information and the Prospectus;
and all the outstanding shares of capital stock or other equity interests of each subsidiary of the
Company have been duly and validly authorized and issued, are fully paid and non-assessable and are
owned directly or indirectly by the Company, free and clear of any lien, charge, encumbrance,
security interest, restriction on voting or transfer or any other claim of any third party.

     (i) Due Authorization. The Company has full right, power and authority to execute and deliver
this Agreement and to perform its obligations hereunder; and all action required to be taken for
the due and proper authorization, execution and delivery by it of this Agreement and the
consummation by it of the transactions contemplated hereby has been duly and validly taken.

     (j) Underwriting Agreement. This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and legally binding agreement of the Company enforceable
against the Company in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally or by
equitable principles relating to enforceability. This Agreement conforms in all material respects
to the description thereof contained in the Registration Statement, the Time of Sale Information
and the Prospectus.

     (k) The Shares. The Shares to be issued and sold by the Company hereunder have been duly
authorized by the Company and, when issued and delivered and paid for as provided herein, will be
duly and validly issued and will be fully paid and nonassessable and will conform to the
descriptions thereof in the Time of Sale Information and the Prospectus; and the issuance of the
Shares is not subject to any preemptive or similar rights; the Rights Agreement has been duly
authorized, executed and delivered by the Company and constitutes a valid and legally binding
agreement of the Company enforceable against the Company in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting
creditors’ rights generally or by equitable principles relating to enforceability; and the Rights
have been duly authorized by the Company and, when issued upon issuance of the Shares, will be
validly issued, and the Series A Junior Participating Preferred Stock has been duly authorized by
the Company and validly reserved for issuance and, upon the exercise of the Rights in accordance
with the terms of the Rights Agreement, will be validly issued, fully paid and non-assessable.

     (l) No Violation or Default. Neither the Company nor any of its subsidiaries is (i) in
violation of its charter or by-laws or similar organizational documents; (ii) in default, and no
event

 

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has occurred that, with notice or lapse of time or both, would constitute such a default, in the
due performance or observance of any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or
to which any of the property or assets of the Company or any of its subsidiaries is subject; or
(iii) in violation of any law or statute or any judgment, order, rule or regulation of any court or
arbitrator or governmental or regulatory authority, except, in the case of clauses (ii) and (iii)
above, for any such default or violation that would not, individually or in the aggregate, have a
Material Adverse Effect.

     (m) No Conflicts. The execution, delivery and performance by the Company of this Agreement,
the issuance and sale of the Shares and the consummation of the transactions contemplated by this
Agreement will not (i) conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of its subsidiaries
pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by which the Company or
any of its subsidiaries is bound or to which any of the property or assets of the Company or any of
its subsidiaries is subject, (ii) result in any violation of the provisions of the charter or
by-laws or similar organizational documents of the Company or any of its subsidiaries or (iii)
result in the violation of any law or statute or any judgment, order, rule or regulation of any
court or arbitrator or governmental or regulatory authority, except, in the case of clauses (i) and
(iii) above, for any such conflict, breach or violation that would not, individually or in the
aggregate, have a Material Adverse Effect.

     (n) No Consents Required. No consent, approval, authorization, order, registration or
qualification of or with any court or arbitrator or governmental or regulatory authority is
required for the execution, delivery and performance by the Company of this Agreement, the issuance
and sale of the Shares and the consummation of the transactions contemplated by this Agreement,
except for the registration of the Shares under the Securities Act and such consents, approvals,
authorizations, orders and registrations or qualifications as may be required under applicable
state securities laws in connection with the purchase and distribution of the Shares by the
Underwriters.

     (o) Legal Proceedings. Except as described in the Registration Statement, the Time of Sale
Information and the Prospectus, there are no legal, governmental or regulatory investigations,
actions, suits or proceedings pending to which the Company or any of its subsidiaries is or may be
a party or to which any property of the Company or any of its subsidiaries is or may be the subject
that, individually or in the aggregate, if determined adversely to the Company or any of its
subsidiaries, could reasonably be expected to have a Material Adverse Effect or materially and
adversely affect the ability of the Company to perform its obligations under this Agreement; no
such investigations, actions, suits or proceedings are threatened or, to the best knowledge of the
Company, contemplated by any governmental or regulatory authority or threatened by others; and (i)
there are no current or pending legal, governmental or regulatory actions, suits or proceedings
that are required under the Securities

 

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Act to be described in the Registration Statement that are not so described in the Registration
Statement, the Time of Sale Information and the Prospectus and (ii) there are no statutes,
regulations or contracts or other documents that are required under the Securities Act to be filed
as exhibits to the Registration Statement or described in the Registration Statement or the
Prospectus that are not so filed as exhibits to the Registration Statement or described in the
Registration Statement, the Time of Sale Information and the Prospectus.

     (p) Independent Registered Public Accounting Firm. Ernst & Young LLP, who have audited the
Company’s consolidated financial statements and schedule as of December 31, 2005 and 2004 and for
each of the three years in the period ended December 31, 2005, are an independent registered public
accounting firm with respect to the Company and its subsidiaries within the applicable rules and
regulations adopted by the Commission and the Public Company Accounting Oversight Board (United
States) and as required by the Securities Act. The Company has no reason to believe that such
accountants, in the performance of their work for the Company, are in violation of the auditor
independence requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated in connection therewith (collectively, the “Sarbanes-Oxley Act”).

     (q) Title to Real and Personal Property. The Company and its subsidiaries have good and
marketable title in fee simple to, or have valid rights to lease or otherwise use, all items of
real and personal property that are material to the respective businesses of the Company and its
subsidiaries, in each case free and clear of all liens, encumbrances, claims and defects and
imperfections of title except those that (i) do not materially interfere with the use made and
proposed to be made of such property by the Company and its subsidiaries or (ii) could not
reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

     (r) Title to Intellectual Property. The Company and its subsidiaries own or possess adequate
rights to use all material patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service mark registrations, copyrights, licenses and know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures) necessary for the conduct of their respective businesses (“Intellectual
Property”); and the conduct of their respective businesses will not conflict in any material
respect with any such rights of others, the Company and its subsidiaries have not received any
notice of any claim of infringement or conflict with any such rights of others, and the Company is
unaware of any facts that would form a reasonable basis for any such claim. To the Company’s
knowledge, there is no infringement, misappropriation or violation by third parties of any of the
Intellectual Property, except as such infringement, misappropriation or violation would not have a
Material Adverse Effect. The Intellectual Property owned by the Company and, to the knowledge of
the Company, the Intellectual Property licensed to the Company, have not been adjudged invalid or
unenforceable, in whole or in part, and there is no pending or threatened action, suit, proceeding
or claim by others challenging the validity or scope of any such Intellectual Property, and the
Company is unaware of any facts which would form a reasonable basis for any such claim. To the
Company’s knowledge, no employee of the Company is in or has ever been in violation of any
employment contract, patent disclosure agreement, invention assignment agreement, non-competition
agreement, non-solicitation agreement, nondisclosure agreement or any restrictive

 

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covenant to or with a former employer where the basis of such violation relates to such employee’s
employment with the Company or actions undertaken by the employee while employed with the Company.

     (s) No Undisclosed Relationships. No relationship, direct or indirect, exists between or
among the Company or any of its subsidiaries, on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any of its subsidiaries, on the other, that
is required by the Securities Act to be described in the Registration Statement and the Prospectus
and that is not so described in such documents and in the Time of Sale Information.

     (t) Investment Company Act. The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described in the Registration
Statement, the Time of Sale Information and the Prospectus, will not be required to register as an
“investment company” or an entity “controlled” by an “investment company” within the meaning of the
Investment Company Act of 1940, as amended, and the rules and regulations of the Commission
thereunder (collectively, “Investment Company Act”).

     (u) Public Utility Holding Company Act. Neither the Company nor any of its subsidiaries is a
“holding company” or a “subsidiary company” of a holding company or an “affiliate” thereof within
the meaning of the Public Utility Holding Company Act of 1935, as amended.

     (v) Taxes. The Company and its subsidiaries have paid all federal, state, local and foreign
taxes and filed all tax returns required to be paid or filed through the date hereof; and except as
otherwise disclosed in the Registration Statement, the Time of Sale Information and the Prospectus,
there is no tax deficiency that has been, or could reasonably be expected to be, asserted against
the Company or any of its subsidiaries or any of their respective properties or assets.

     (w) Licenses and Permits. The Company and its subsidiaries possess all licenses,
certificates, permits and other authorizations issued by, and have made all declarations and
filings with, the appropriate federal, state, local or foreign governmental or regulatory
authorities that are necessary for the ownership or lease of their respective properties or the
conduct of their respective businesses as described in the Registration Statement, the Time of Sale
Information and the Prospectus, except where the failure to possess or make the same would not,
individually or in the aggregate, have a Material Adverse Effect; and except as described in the
Registration Statement, the Time of Sale Information and the Prospectus, neither the Company nor
any of its subsidiaries has received notice of any revocation or modification of any such license,
certificate, permit or authorization or has any reason to believe that any such license,
certificate, permit or authorization will not be renewed in the ordinary course.

     (x) No Labor Disputes. No labor disturbance by or dispute with employees of the Company or
any of its subsidiaries exists or, to the best knowledge of the Company, is contemplated or
threatened and the Company is not aware of any existing or imminent labor

 

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disturbance by, or dispute with, the employees of any of its or its subsidiaries’ principal
suppliers, contractors or customers, except as would not have a Material Adverse Effect.

     (y) Compliance With Environmental Laws. (i) The Company and its subsidiaries (x) are in
compliance with any and all applicable federal, state, local and foreign laws, rules, regulations,
requirements, decisions and orders relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or contaminants (collectively,
“Environmental Laws”); (y) have received and are in compliance with all permits, licenses,
certificates or other authorizations or approvals required of them under applicable Environmental
Laws to conduct their respective businesses; and (z) have not received notice of any actual or
potential liability for the investigation or remediation of any disposal or release of hazardous or
toxic substances or wastes, pollutants or contaminants, and (ii) there are no costs or liabilities
associated with Environmental Laws of or relating to the Company or its subsidiaries, except in the
case of each of (i)(x) and (i)(y) above, for any such failure to comply, or failure to receive
required permits, licenses or approvals, or cost or liability, as would not, individually or in the
aggregate, have a Material Adverse Effect.

     (z) Compliance With ERISA. Each employee benefit plan, within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that is maintained,
administered or contributed to by the Company or any of its affiliates for employees or former
employees of the Company and its affiliates has been maintained in material compliance with its
terms and the requirements of any applicable statutes, orders, rules and regulations, including but
not limited to ERISA and the Internal Revenue Code of 1986, as amended (the “Code”); no prohibited
transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, has occurred
with respect to any such plan excluding transactions effected pursuant to a statutory or
administrative exemption; and for each such plan that is subject to the funding rules of Section
412 of the Code or Section 302 of ERISA, no “accumulated funding deficiency” as defined in Section
412 of the Code has been incurred, whether or not waived, and the fair market value of the assets
of each such plan (excluding for these purposes accrued but unpaid contributions) exceeds the
present value of all benefits accrued under such plan determined using reasonable actuarial
assumptions.

     (aa) Disclosure Controls. The Company and its subsidiaries maintain an effective system of
“disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Exchange Act) that is
designed to ensure that information required to be disclosed by the Company in reports that it
files or submits under the Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the Commission’s rules and forms, including controls and procedures
designed to ensure that such information is accumulated and communicated to the Company’s
management as appropriate to allow timely decisions regarding required disclosure. The Company and
its subsidiaries have carried out evaluations of the effectiveness of their disclosure controls and
procedures as required by Rule 13a-15 of the Exchange Act.

     (bb) Accounting Controls. The Company and its subsidiaries maintain systems of “internal
control over financial reporting” (as defined in Rule 13a-15(f) of the Exchange Act) that

 

12

comply with the requirements of the Exchange Act and have been designed by, or under the
supervision of, their respective principal executive and principal financial officers, or persons
performing similar functions, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles, including, but not limited to internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to assets is permitted
only in accordance with management’s general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. Except as disclosed in the
Registration Statement, the Time of Sale Information and the Prospectus, there are no material
weaknesses in the Company’s internal controls.

     (cc) Insurance. The Company and its subsidiaries have insurance covering their respective
properties, operations, personnel and businesses, including business interruption insurance, which
insurance is in amounts and insures against such losses and risks as are adequate to protect the
Company and its subsidiaries and their respective businesses; and neither the Company nor any of
its subsidiaries has (i) received notice from any insurer or agent of such insurer that capital
improvements or other expenditures are required or necessary to be made in order to continue such
insurance or (ii) any reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage at reasonable cost from
similar insurers as may be necessary to continue its business.

     (dd) No Unlawful Payments. Neither the Company nor any of its subsidiaries nor, to the best
knowledge of the Company, any director, officer, agent, employee or other person associated with or
acting on behalf of the Company or any of its subsidiaries has (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating to political
activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; (iii) violated or is in violation of any provision of
the Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.

     (ee) Compliance with Money Laundering Laws. The operations of the Company and its
subsidiaries are and have been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued, administered or
enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit
or proceeding by or before any court or governmental agency, authority or body or any arbitrator
involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is
pending or, to the best knowledge of the Company, threatened.

 

13

     (ff) Compliance with OFAC. None of the Company, any of its subsidiaries or, to the knowledge
of the Company, any director, officer, agent, employee or Affiliate of the Company or any of its
subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Department of the Treasury (“OFAC”); and the Company will not directly
or indirectly knowingly use the proceeds of the offering of the Shares hereunder, or lend,
contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or
other person or entity, for the purpose of financing the activities of any person currently subject
to any U.S. sanctions administered by OFAC.

     (gg) No Restrictions on Subsidiaries. No subsidiary of the Company is currently prohibited,
directly or indirectly, under any agreement or other instrument to which it is a party or is
subject, from paying any dividends to the Company, from making any other distribution on such
subsidiary’s capital stock, from repaying to the Company any loans or advances to such subsidiary
from the Company or from transferring any of such subsidiary’s properties or assets to the Company
or any other subsidiary of the Company.

     (hh) No Broker’s Fees. Neither the Company nor any of its subsidiaries is a party to any
contract, agreement or understanding with any person (other than this Agreement) that would give
rise to a valid claim against the Company or any of its subsidiaries or any Underwriter for a
brokerage commission, finder’s fee or like payment in connection with the offering and sale of the
Shares.

     (ii) No Registration Rights. No person has the right to require the Company or any of its
subsidiaries to register any securities for sale under the Securities Act by reason of the filing
of the Registration Statement with the Commission or the issuance and sale of the Shares.

     (jj) No Stabilization. The Company has not taken, directly or indirectly, any action designed
to or that could reasonably be expected to cause or result in any stabilization or manipulation of
the price of the Shares.

     (kk) Business With Cuba. The Company has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 92-198, Laws of Florida) relating to doing business with the Government
of Cuba or with any person or affiliate located in Cuba.

     (ll) Forward-Looking Statements. No forward-looking statement (within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act) contained in the Registration
Statement, the Time of Sale Information and the Prospectus has been made or reaffirmed without a
reasonable basis or has been disclosed other than in good faith.

     (mm) Statistical and Market Data. Nothing has come to the attention of the Company that has
caused the Company to believe that the statistical and market-related data included in the
Registration Statement, the Time of Sale Information and the Prospectus is not based on or derived
from sources that are reliable and accurate in all material respects.

 

14

     (nn) Sarbanes-Oxley Act. There is and has been no failure on the part of the Company or any
of the Company’s directors or officers, in their capacities as such, to comply with any provision
of the Sarbanes-Oxley Act, including Section 402 related to loans and Sections 302 and 906 related
to certifications.

     (oo) Status under the Securities Act. The Company is not an ineligible issuer as defined
under the Securities Act, in each case at the times specified in the Securities Act in connection
with the offering of the Shares.

     (pp) Exchange Listing. The Shares have been approved for listing on the National Association
of Securities Dealers Automated Quotations National Market (the “Nasdaq National Market”), subject
to official notice of issuance.

     (qq) Occupational Health and Safety. The Company (i) is in compliance, in all material
respects, with any and all applicable foreign, federal, state and local laws, rules, regulations,
treaties, statutes and codes promulgated by any and all governmental authorities (including
pursuant to the Occupational Health and Safety Act) relating to the protection of human health and
safety in the workplace (“Occupational Laws”); (ii) has received all material permits, licenses or
other approvals required of it under applicable Occupational Laws to conduct its business as
currently conducted; and (iii) is in compliance, in all material respects, with all terms and
conditions of such permit, license or approval, and the Company does not have knowledge of any
facts, circumstances or developments relating to its operations or cost accounting practices that
could reasonably be expected to form the basis for or give rise to such actions, suits,
investigations or proceedings. No action, proceeding, revocation proceeding, writ, injunction or
claim is pending or threatened against the Company relating to Occupational Laws.

     (rr) NASD. The Company’s board of directors has validly appointed an audit committee whose
composition satisfies the requirements of the Rules of the National Association of Securities
Dealers, Inc. (the “NASD Rules”). The Company’s board of directors and/or the audit committee has
adopted a charter that satisfies the requirements of the NASD Rules.

     (ss) Compliance with Laws. The Company has materially complied with, is not in material
violation of, and has not received any written notices of violation with respect to, any foreign,
federal, state or local statute, law or regulation, including without limitation all statutes,
rules, or regulations applicable to the ownership, testing, development, manufacture, packaging,
processing, use, distribution, marketing, labeling, promotion, sale, offer for sale, reimbursement,
storage, import, export or disposal of any product manufactured or distributed by the Company
(“Applicable Laws”), or any license, certificate, approval, clearance, authorization, permit,
supplement or amendment required by any Applicable Laws (“Authorizations”). The Company possesses
all material Authorizations and such material Authorizations are in full force and effect. The
Company is, and its products are, in compliance in all material respects with all Authorizations
and Applicable Laws, including, but not limited to, all laws, statutes, rules, regulations, or
orders administered, issued or enforced by the Federal Food and Drug Administration (the “FDA”) or
any other federal or foreign governmental authority having authority over the Company or any of its
products (“Governmental Authority”). Except as

 

15

described in the Registration Statement, the Time of Sale Information and the Prospectus, the
Company has not received from the FDA or any other Governmental Authority any notice of adverse
findings, regulatory letters, notices of violations, Warning Letters, criminal proceeding notices
under Section 305 of the Federal Food, Drug, and Cosmetic Act, or other similar communication from
the FDA or other Governmental Authority alleging or asserting material noncompliance with
Applicable Laws or any Authorizations, and there have been no seizures conducted or threatened by
the FDA or other Governmental Authority, and no recalls, market withdrawals, field notifications,
notifications of misbranding or adulteration, safety alerts or similar actions relating to the
safety or efficacy of the Company’s products conducted, requested or threatened by the FDA or other
Governmental Authority relating to the products sold by the Company. Except as described in the
Registration Statement, the Time of Sale Information and the Prospectus, the Company has not,
either voluntarily or involuntarily, initiated, conducted, or issued or caused to be initiated,
conducted or issued, any recall, market withdrawal, safety alert, “dear doctor” letter, or other
similar notice or action relating to the alleged lack of safety or efficacy of any of the Company’s
products or any alleged product defect or violation, and the Company has no knowledge that any
Governmental Authority has initiated, conducted or intends to initiate any such notice or action.
The Company has not received notice of any claim, action, suit, proceeding, hearing, enforcement,
investigation, arbitration or other similar action from any Governmental Authority alleging that
any product operation or activity is in material violation of any Applicable Laws or Authorizations
and has no knowledge that any such Governmental Authority is considering any such claim,
litigation, arbitration, action, suit, investigation or proceeding. Each regulatory submission for
the Company’s products has been filed, cleared and maintained in compliance in all material
respects with all Applicable Laws and Authorizations, including without limitation applicable
federal statutes, rules, regulations or orders administered or promulgated by the FDA or other
Governmental Authority, and all laboratory and clinical studies, and tests that support clearance
of its products have been conducted in all material respects in compliance with accepted
professional scientific standards and all Applicable Laws and Authorizations in all material
respects. No filing or submission to the FDA or any other Governmental Authority, intended to be
the basis for any Authorization, contains any material omission or material false information, and
the Company has not received any notices or correspondence from any Governmental Authority
(including, but not limited to, the FDA) requiring suspension of any studies, tests, or clinical
trials conducted by or on behalf of the Company. Except as described in the Registration Statement,
the Time of Sale Information and the Prospectus, there currently are not any clinical trials being
conducted by or on behalf of the Company where the underlying data will or is intended to be
submitted to the FDA, nor are there any applications for premarket approval or clearance pending
with the FDA. The Company is not aware of any facts which are reasonably likely to cause (A) the
withdrawal, or recall of any products sold or intended to be sold by the Company, or (B) a change
in the marketing classification or labeling of any such products, except as would not reasonably be
expected to result in a Material Adverse Effect, (C) a termination or suspension of marketing
clearance of any such products, or (D) a suspension or revocation of any of the Company’s
Authorizations. The Company has not received notice (whether complete or pending) of any proceeding
seeking recall, suspension or seizure of any products sold or intended to be sold by the Company.

 

16

     (tt) Suppliers. No supplier of merchandise to the Company has ceased shipments of merchandise
to the Company, which cessation would result in a Material Adverse Effect.

     (uu) Studies, Tests and Trials. To the Company’s knowledge, the descriptions of and
information regarding the studies, tests and trials, and the data and results derived therefrom,
contained in the Registration Statement, the Time of Sale Information and the Prospectus are
accurate and complete in all material respects and the Company, after due inquiry, is not aware of
any other studies, tests, trials, presentations, publications or other information relating to the
Company’s products that are not described in the Registration Statement, the Time of Sale
Information and the Prospectus and that could reasonably call into question the validity,
completeness, or accuracy of any study, test, trial, results or data described in the Registration
Statement, the Time of Sale Information and the Prospectus when viewed in the context in which such
studies, tests, trials results, or data are described therein.

     4. Further Agreements of the Company. The Company covenants and agrees with each
Underwriter that:

     (a) Required Filings. The Company will file the final Prospectus with the Commission within
the time periods specified by Rule 424(b) and Rule 430A, 430B or 430C under the Securities Act,
will file any Issuer Free Writing Prospectus to the extent required by Rule 433 under the
Securities Act; and the Company will furnish copies of the Prospectus and each Issuer Free Writing
Prospectus (to the extent not previously delivered) to the Underwriters in New York City prior to
10:00 A.M., New York City time, on the business day next succeeding the date of this Agreement in
such quantities as the Representatives may reasonably request.

     (b) Delivery of Copies. The Company will deliver, without charge, (i) to the Representatives,
five signed copies of the Registration Statement as originally filed and each amendment thereto, in
each case including all exhibits and consents filed therewith; and (ii) to each Underwriter (A) a
conformed copy of the Registration Statement as originally filed and each amendment thereto
(without exhibits) and (B) during the Prospectus Delivery Period (as defined below), as many copies
of the Prospectus (including all amendments and supplements thereto) and each Issuer Free Writing
Prospectus as the Representatives may reasonably request. As used herein, the term “Prospectus
Delivery Period” means such period of time after the first date of the public offering of the
Shares as in the opinion of counsel for the Underwriters a prospectus relating to the Shares is
required by law to be delivered (or required to be delivered but for Rule 172 under the Securities
Act) in connection with sales of the Shares by any Underwriter or dealer.

     (c) Amendments or Supplements, Issuer Free Writing Prospectuses. Before preparing, using,
authorizing, approving, referring to or filing any Issuer Free Writing Prospectus, and before
filing any amendment or supplement to the Registration Statement or the Prospectus, the Company
will furnish to the Representatives and counsel for the Underwriters a copy of the proposed Issuer
Free Writing Prospectus, amendment or supplement for review and will not prepare, use, authorize,
approve, refer to or file any such Issuer Free Writing Prospectus

 

17

or file any such proposed amendment or supplement to which the Representatives reasonably objects.

     (d) Notice to the Representatives. The Company will advise the Representatives promptly, and
confirm such advice in writing, (i) when the Registration Statement has become effective; (ii) when
any amendment to the Registration Statement has been filed or becomes effective; (iii) when any
supplement to the Prospectus or any Issuer Free Writing Prospectus or any amendment to the
Prospectus has been filed; (iv) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or the receipt of any
comments from the Commission relating to the Registration Statement or any other request by the
Commission for any additional information; (v) of the issuance by the Commission of any order
suspending the effectiveness of the Registration Statement or preventing or suspending the use of
any Preliminary Prospectus or the Prospectus or the initiation or threatening of any proceeding for
that purpose or pursuant to Section 8A of the Securities Act; (vi) of the occurrence of any event
within the Prospectus Delivery Period as a result of which the Prospectus, the Time of Sale
Information or any Issuer Free Writing Prospectus as then amended or supplemented would include any
untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the circumstances existing
when the Prospectus, the Time of Sale Information or any such Issuer Free Writing Prospectus is
delivered to a purchaser, not misleading; and (vii) of the receipt by the Company of any notice
with respect to any suspension of the qualification of the Shares for offer and sale in any
jurisdiction or the initiation or threatening of any proceeding for such purpose; and the Company
will use its best efforts to prevent the issuance of any such order suspending the effectiveness of
the Registration Statement, preventing or suspending the use of any Preliminary Prospectus or the
Prospectus or suspending any such qualification of the Shares and, if any such order is issued,
will obtain as soon as possible the withdrawal thereof.

     (e) Ongoing Compliance. (1) If during the Prospectus Delivery Period (i) any event shall
occur or condition shall exist as a result of which the Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in the light of the
circumstances existing when the Prospectus is delivered to a purchaser, not misleading or (ii) it
is necessary to amend or supplement the Prospectus to comply with law, the Company will immediately
notify the Underwriters thereof and forthwith prepare and, subject to paragraph (c) above, file
with the Commission and furnish to the Underwriters and to such dealers as the Representatives may
designate, such amendments or supplements to the Prospectus as may be necessary so that the
statements in the Prospectus as so amended or supplemented will not, in the light of the
circumstances existing when the Prospectus is delivered to a purchaser, be misleading or so that
the Prospectus will comply with law and (2) if at any time prior to the Closing Date (i) any event
shall occur or condition shall exist as a result of which the Time of Sale Information as then
amended or supplemented would include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of the circumstances,
not misleading or (ii) it is necessary to amend or supplement the Time of Sale Information to
comply with law, the Company will immediately notify the Underwriters thereof and forthwith prepare
and, subject to paragraph (c) above, file with the Commission (to the

 

18

extent required) and furnish to the Underwriters and to such dealers as the Representatives may
designate, such amendments or supplements to the Time of Sale Information as may be necessary so
that the statements in the Time of Sale Information as so amended or supplemented will not, in the
light of the circumstances, be misleading or so that the Time of Sale Information will comply with
law.

     (f) Blue Sky Compliance. The Company will qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Representatives shall reasonably request
and will continue such qualifications in effect so long as required for distribution of the Shares;
provided that the Company shall not be required to (i) qualify as a foreign corporation or
other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be
required to so qualify, (ii) file any general consent to service of process in any such
jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it is not otherwise so
subject.

     (g) Earning Statement. The Company will make generally available to its security holders and
the Representatives as soon as practicable an earning statement that satisfies the provisions of
Section 11(a) of the Securities Act and Rule 158 of the Commission promulgated thereunder covering
a period of at least twelve months beginning with the first fiscal quarter of the Company occurring
after the “effective date” (as defined in Rule 158) of the Registration Statement.

     (h) Clear Market. For a period of 180 days after the date of the initial public offering of
the Shares, the Company will not (i) offer, pledge, announce the intention to sell, sell, contract
to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase or otherwise transfer or dispose of, directly or
indirectly, any shares of Stock or any securities convertible into or exercisable or exchangeable
for Stock or (ii) enter into any swap or other agreement that transfers, in whole or in part, any
of the economic consequences of ownership of the Stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Stock or such other securities, in cash or
otherwise, without the prior written consent of JPMorgan and Piper Jaffray & Co. (“Piper Jaffray”),
other than the Shares to be sold hereunder and any shares of Stock of the Company issued upon the
exercise of options granted under existing employee stock option plans. Notwithstanding the
foregoing, if (1) during the last 17 days of the 180-day restricted period, the Company issues an
earnings release or material news or a material event relating to the Company occurs; or (2) prior
to the expiration of the 180-day restricted period, the Company announces that it will release
earnings results during the 16-day period beginning on the last day of the 180-day period, the
restrictions imposed by this Agreement shall continue to apply until the expiration of the 18-day
period beginning on the issuance of the earnings release or the occurrence of the material news or
material event.

     (i) Use of Proceeds. The Company will apply the net proceeds from the sale of the Shares as
described in the Registration Statement, the Time of Sale Information and the Prospectus under the
heading “Use of Proceeds”.

 

19

     (j) No Stabilization. The Company will not take, directly or indirectly, any action designed
to or that could reasonably be expected to cause or result in any stabilization or manipulation of
the price of the Shares.

     (k) Reports. So long as the Shares are outstanding, the Company will furnish to the
Representatives, as soon as they are available, copies of all reports or other communications
(financial or other) furnished to holders of the Shares, and copies of any reports and financial
statements furnished to or filed with the Commission or any national securities exchange or
automatic quotation system.

     (l) Record Retention. The Company will, pursuant to reasonable procedures developed in good
faith, retain copies of each Issuer Free Writing Prospectus that is not filed with the Commission
in accordance with Rule 433 under the Securities Act.

     (m) Filings. The Company will file with the Commission such reports as may be required by
Rule 463 under the Securities Act.

     (n) Sarbanes
- Oxley Act. The Company and its subsidiaries will maintain such controls and
other procedures, including without limitation those required by Sections 302 and 906 of the
Sarbanes-Oxley Act and the applicable regulations thereunder, that are designed to ensure that
information required to be disclosed by the Company in the reports that it files or submits under
the Exchange Act is recorded, processed, summarized and reported within the time periods specified
in the Commission’s rules and forms, including without limitation, controls and procedures designed
to ensure that information required to be disclosed by the Company in the reports that it files or
submits under the Exchange Act is accumulated and communicated to the Company’s management,
including its principal executive officer and its principal financial officer, or persons
performing similar functions, as appropriate to allow timely decisions regarding required
disclosure, to ensure that material information relating to the Company, including its
subsidiaries, is made known to them by others within those entities. The Company and its
subsidiaries will comply with all effective applicable provisions of the Sarbanes-Oxley Act.

     5. Certain Agreements of the Underwriters. Each Underwriter hereby represents and
agrees that:

     (a) It has not and will not use, authorize use of, refer to, or participate in the planning
for use of, any “free writing prospectus”, as defined in Rule 405 under the Securities Act (which
term includes use of any written information furnished to the Commission by the Company and not
incorporated by reference into the Registration Statement and any press release issued by the
Company) other than (i) a free writing prospectus that, solely as a result of use by such
underwriter, would not trigger an obligation to file such free writing prospectus with the
Commission pursuant to Rule 433 (other than a free writing prospectus permitted under clause (c)),
(ii) any Issuer Free Writing Prospectus listed on Annex B or prepared pursuant to Section 3(c) or
Section 4(c) above, or (iii) any free writing prospectus prepared by such underwriter and

 

20

approved by the Company in advance in writing (each such free writing prospectus referred to
in clauses (i) or (iii), an “Underwriter Free Writing Prospectus”).

     (b) It has not and will not distribute any Underwriter Free Writing Prospectus referred to in
clause (a)(i) in a manner reasonably designed to lead to its broad unrestricted dissemination.

     (c) It has not and will not, without the prior written consent of the Company, use any free
writing prospectus that contains the final terms of the Shares unless such terms have previously
been included in a free writing prospectus filed with the Commission; provided that Underwriters
may use a term sheet substantially in the form of Annex C hereto without the consent of the
Company; provided further that any Underwriter using such term sheet shall notify the Company, and
provide a copy of such term sheet to the Company, prior to, or substantially concurrently with, the
first use of such term sheet.

     (d) It will, pursuant to reasonable procedures developed in good faith, retain copies of each
free writing prospectus used or referred to by it, in accordance with Rule 433 under the Securities
Act.

     (e) It is not subject to any pending proceeding under Section 8A of the Securities Act with
respect to the offering (and will promptly notify the Company if any such proceeding against it is
initiated during the Prospectus Delivery Period).

     6. Conditions of Underwriters’ Obligations. The obligation of each Underwriter to
purchase the Underwritten Shares on the Closing Date or the Option Shares on the Additional Closing
Date, as the case may be, as provided herein is subject to the performance by the Company of its
covenants and other obligations hereunder and to the following additional conditions:

     (a) Registration Compliance; No Stop Order. No order suspending the effectiveness of the
Registration Statement shall be in effect, and no proceeding for such purpose or pursuant to
Section 8A under the Securities Act shall be pending before or threatened by the Commission; the
Prospectus and each Issuer Free Writing Prospectus shall have been timely filed with the Commission
under the Securities Act (in the case of an Issuer Free Writing Prospectus, to the extent required
by Rule 433 under the Securities Act) and in accordance with Section 4(a) hereof; and all requests
by the Commission for additional information shall have been complied with to the reasonable
satisfaction of the Representatives.

     (b) Representations and Warranties. The representations and warranties of the Company
contained herein shall be true and correct on the date hereof and on and as of the Closing Date or
the Additional Closing Date, as the case may be; and the statements of the Company and its officers
made in any certificates delivered pursuant to this Agreement shall be true and correct on and as
of the Closing Date or the Additional Closing Date, as the case may be.

 

21

     (c) No Downgrade. Subsequent to the execution and delivery of this Agreement, (i) no
downgrading shall have occurred in the rating accorded any securities or preferred stock of or
guaranteed by the Company or any of its subsidiaries by any “nationally recognized statistical
rating organization”, as such term is defined by the Commission for purposes of Rule 436(g)(2)
under the Securities Act and (ii) no such organization shall have publicly announced that it has
under surveillance or review, or has changed its outlook with respect to, its rating of any
securities or preferred stock of or guaranteed by the Company or any of its subsidiaries (other
than an announcement with positive implications of a possible upgrading).

     (d) No Material Adverse Change. No event or condition of a type described in Section 3(f)
hereof shall have occurred or shall exist, which event or condition is not described in the Time of
Sale Information (excluding any amendment or supplement thereto) and the Prospectus (excluding any
amendment or supplement thereto) and the effect of which in the judgment of the Representatives
makes it impracticable or inadvisable to proceed with the offering, sale or delivery of the Shares
on the Closing Date or the Additional Closing Date, as the case may be, on the terms and in the
manner contemplated by this Agreement, the Time of Sale Information and the Prospectus.

     (e) Officer’s Certificate. The Representatives shall have received on and as of the Closing
Date or the Additional Closing Date, as the case may be, a certificate of the chief financial
officer or chief accounting officer of the Company and one additional senior executive officer of
the Company who is satisfactory to the Representatives (i) confirming that such officers have
carefully reviewed the Registration Statement, the Time of Sale Information and the Prospectus and,
to the best knowledge of such officers, the representations set forth in Sections 3(b) and 3(d)
hereof are true and correct, (ii) confirming that the other representations and warranties of the
Company in this Agreement are true and correct and that the Company has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or
prior to such Closing Date and (iii) to the effect set forth in paragraphs (a), (c) and (d) above.

     (f) Comfort Letters. On the date of this Agreement and on the Closing Date or the Additional
Closing Date, as the case may be, Ernst & Young LLP shall have furnished to the Representatives, at
the request of the Company, letters, dated the respective dates of delivery thereof and addressed
to the Underwriters, in form and substance reasonably satisfactory to the Representatives,
containing statements and information of the type customarily included in accountants’ “comfort
letters” to underwriters with respect to the financial statements and certain financial information
contained in the Registration Statement, the Time of Sale Information and the Prospectus; provided,
that the letter delivered on the Closing Date or the Additional Closing Date, as the case may be
shall use a “cut-off” date no more than three business days prior to such Closing Date or such
Additional Closing Date, as the case may be.

     (g) Opinion of Counsel for the Company. Reed Smith LLP, counsel for the Company, shall have
furnished to the Representatives, at the request of the Company, their written opinion, dated the
Closing Date or the Additional Closing Date, as the case may be, and

 

22

addressed to the Underwriters, in form and substance reasonably satisfactory to the
Representatives, to the effect set forth in Annex A hereto.

     (h) Opinion of Regulatory Counsel for the Company. Reed Smith LLP, regulatory counsel for the
Company, shall have furnished to the Representatives, at the request of the Company, their written
opinion, dated the Closing Date or the Additional Closing Date, as the case may be, and addressed
to the Underwriters, with respect to such matters as the Representatives may reasonably request.

     (i) Opinion of O’Melveny & Myers LLP. O’Melveny & Myers LLP, intellectual property counsel
for the Company, shall have furnished to the Representatives, at the request of the Company, their
written opinion, dated the Closing Date or the Additional Closing Date, as the case may be, and
addressed to the Underwriters, with respect to such matters as the Representatives may reasonably
request.

     (j) Opinion of Leydig, Voit & Mayer, Ltd. Leydig, Voit & Mayer, Ltd., intellectual property
counsel for the Company, shall have furnished to the Representatives, at the request of the
Company, their written opinion, dated the Closing Date or the Additional Closing Date, as the case
may be, and addressed to the Underwriters, with respect to such matters as the Representatives may
reasonably request.

     (k) Opinion of Canter IP Law, Inc. Canter IP Law, Inc., intellectual property counsel for the
Company, shall have furnished to the Representatives, at the request of the Company, its written
opinion, dated the Closing Date or the Additional Closing Date, as the case may be, and addressed
to the Underwriters, with respect to such matters as the Representatives may reasonably request.

     (l) Opinion of Counsel for the Underwriters. The Representatives shall have received on and
as of the Closing Date or the Additional Closing Date, as the case may be, an opinion of Morrison &
Foerster LLP, counsel for the Underwriters, with respect to such matters as the Representatives may
reasonably request, and such counsel shall have received such documents and information as they may
reasonably request to enable them to pass upon such matters.

     (m) No Legal Impediment to Issuance. No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any federal, state or foreign
governmental or regulatory authority that would, as of the Closing Date or the Additional Closing
Date, as the case may be, prevent the issuance or sale of the Shares; and no injunction or order of
any federal, state or foreign court shall have been issued that would, as of the Closing Date or
the Additional Closing Date, as the case may be, prevent the issuance or sale of the Shares.

     (n) Good Standing. The Representatives shall have received on and as of the Closing Date or
the Additional Closing Date, as the case may be, satisfactory evidence of the good standing of the
Company and its subsidiaries in their respective jurisdictions of organization and their good
standing as foreign entities in such other jurisdictions as the Representatives may

 

23

reasonably request, in each case in writing or any standard form of telecommunication from the
appropriate Governmental Authorities of such jurisdictions.

     (o) Exchange Listing. The Shares to be delivered on the Closing Date or Additional Closing
Date, as the case may be, shall have been approved for listing on the Nasdaq National Market,
subject to official notice of issuance.

     (p) Lock-up Agreements. The “lock-up” agreements, each substantially in the form of Exhibit A
hereto, between you and certain shareholders, officers and directors of the Company relating to
sales and certain other dispositions of shares of Stock or certain other securities, delivered to
you on or before the date hereof, shall be full force and effect on the Closing Date or Additional
Closing Date, as the case may be.

     (q) Additional Documents. On or prior to the Closing Date or the Additional Closing Date, as
the case may be, the Company shall have furnished to the Representatives such further certificates
and documents as the Representatives may reasonably request.

     All opinions, letters, certificates and evidence mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the Underwriters.

     7. Indemnification and Contribution.

     (a) Indemnification of the Underwriters. The Company agrees to indemnify and hold harmless
each Underwriter, its affiliates, directors and officers and each person, if any, who controls such
Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, damages and liabilities (including, without
limitation, legal fees and other expenses incurred in connection with any suit, action or
proceeding or any claim asserted, as such fees and expenses are incurred), joint or several, that
arise out of, or are based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary in order to make the statements
therein, not misleading, (ii) or any untrue statement or alleged untrue statement of a material
fact contained in the Prospectus (or any amendment or supplement thereto), any Issuer Free Writing
Prospectus or any Time of Sale Information (including any Time of Sale Information that has
subsequently been amended), or caused by any omission or alleged omission to state therein a
material fact necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, in each case except insofar as such losses, claims,
damages or liabilities arise out of, or are based upon, any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with any information relating
to any Underwriter furnished to the Company in writing by such Underwriter through the
Representatives expressly for use therein, it being understood and agreed that the only such
information furnished by any Underwriter consists of the information described as such in
subsection (b) below.

 

24

     (b) Indemnification of the Company. Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth in
paragraph (a) above, but only with respect to any losses, claims, damages or liabilities that arise
out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with any information relating to such Underwriter furnished
to the Company in writing by such Underwriter through the Representatives expressly for use in the
Registration Statement, the Prospectus (or any amendment or supplement thereto), any Issuer Free
Writing Prospectus or any Time of Sale Information, it being understood and agreed upon that the
only such information furnished by any Underwriter consists of the following information in the
Prospectus furnished on behalf of each Underwriter: the concession and reallowance figures
appearing in the third paragraph under the caption “Underwriting”.

     (c) Notice and Procedures. If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against any person in
respect of which indemnification may be sought pursuant to either paragraph (a) or (b) above, such
person (the “Indemnified Person”) shall promptly notify the person against whom such
indemnification may be sought (the “Indemnifying Person”) in writing; provided that the
failure to notify the Indemnifying Person shall not relieve it from any liability that it may have
under this Section 7 except to the extent that it has been materially prejudiced (through the
forfeiture of substantive rights or defenses) by such failure; and provided,
further, that the failure to notify the Indemnifying Person shall not relieve it from any
liability that it may have to an Indemnified Person otherwise than under this Section 7. If any
such proceeding shall be brought or asserted against an Indemnified Person and it shall have
notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably
satisfactory to the Indemnified Person (who shall not, without the consent of the Indemnified
Person, be counsel to the Indemnifying Person) to represent the Indemnified Person in such
proceeding and shall pay the fees and expenses of such counsel related to such proceeding, as
incurred. In any such proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified
Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to
the contrary or (ii) the Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person. It is understood and agreed that the
Indemnifying Person shall not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to
any local counsel) for all Indemnified Persons, and that all such fees and expenses shall be paid
or reimbursed as they are incurred. Any such separate firm for any Underwriter, its affiliates,
directors and officers and any control persons of such Underwriter shall be designated in writing
by JPMorgan and Piper Jaffray and any such separate firm for the Company, its directors, its
officers who signed the Registration Statement and any control persons of the Company shall be
designated in writing by the Company. The Indemnifying Person shall not be liable for any
settlement of any proceeding effected without its written consent, but if settled with such consent
or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify each
Indemnified Person

 

25

from and against any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an Indemnified Person shall have requested that an
Indemnifying Person reimburse the Indemnified Person for fees and expenses of counsel as
contemplated by this paragraph, the Indemnifying Person shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is entered into more than 30
days after receipt by the Indemnifying Person of such request and (ii) the Indemnifying Person
shall not have reimbursed the Indemnified Person in accordance with such request prior to the date
of such settlement. No Indemnifying Person shall, without the written consent of the Indemnified
Person, effect any settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnification could have been sought
hereunder by such Indemnified Person, unless such settlement (x) includes an unconditional release
of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified
Person, from all liability on claims that are the subject matter of such proceeding and (y) does
not include any statement as to or any admission of fault, culpability or a failure to act by or on
behalf of any Indemnified Person.

     (d) Contribution. If the indemnification provided for in paragraphs (a) and (b) above is
unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of
indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the Company, on the one
hand, and the Underwriters, on the other, from the offering of the Shares or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) but also the relative fault of the
Company, on the one hand, and the Underwriters, on the other, in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the Company, on the one hand,
and the Underwriters, on the other, shall be deemed to be in the same respective proportions as the
net proceeds (before deducting expenses) received by the Company from the sale of the Shares and
the total underwriting discounts and commissions received by the Underwriters in connection
therewith, in each case as set forth in the table on the cover of the Prospectus, bear to the
aggregate offering price of the Shares. The relative fault of the Company, on the one hand, and
the Underwriters, on the other, shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or by the Underwriters and the
parties’ relative intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

     (e) Limitation on Liability. The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such purpose) or
by any other method of allocation that does not take account of the equitable considerations
referred to in paragraph (d) above. The amount paid or payable by an Indemnified Person as a
result of the losses, claims, damages and liabilities referred to in paragraph (d) above shall be
deemed to

 

26

include, subject to the limitations set forth above, any legal or other expenses incurred by such
Indemnified Person in connection with any such action or claim. Notwithstanding the provisions of
this Section 7, in no event shall an Underwriter be required to contribute any amount in excess of
the amount by which the total underwriting discounts and commissions received by such Underwriter
with respect to the offering of the Shares exceeds the amount of any damages that such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters’ obligations to contribute pursuant
to this Section 7 are several in proportion to their respective purchase obligations hereunder and
not joint.

     (f) Non-Exclusive Remedies. The remedies provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any Indemnified Person
at law or in equity.

     8. Effectiveness of Agreement. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto.

     9. Termination. This Agreement may be terminated in the absolute discretion of
JPMorgan and Piper Jaffray, by notice to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date or, in the case of the Option Shares, prior to the
Additional Closing Date (i) trading generally shall have been suspended or materially limited on or
by any of the New York Stock Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board Options Exchange, the Chicago Mercantile Exchange or
the Chicago Board of Trade; (ii) trading of any securities issued or guaranteed by the Company
shall have been suspended on any exchange or in any over-the-counter market; (iii) a general
moratorium on commercial banking activities shall have been declared by federal or New York State
authorities; (iv) there shall have occurred any outbreak or escalation of hostilities or any change
in financial markets or any calamity or crisis, either within or outside the United States, that,
in the judgment of JPMorgan and Piper Jaffray, is material and adverse and makes it impracticable
or inadvisable to proceed with the offering, sale or delivery of the Shares on the Closing Date or
the Additional Closing Date, as the case may be, on the terms and in the manner contemplated by
this Agreement, the Time of Sale Information and the Prospectus; or (v) the representation in
Section 3(b) is incorrect in any respect.

     10. Defaulting Underwriter. (a) If, on the Closing Date or the Additional Closing
Date, as the case may be, any Underwriter defaults on its obligation to purchase the Shares that it
has agreed to purchase hereunder on such date, the non-defaulting Underwriters may in their
discretion arrange for the purchase of such Shares by other persons satisfactory to the Company on
the terms contained in this Agreement. If, within 36 hours after any such default by any
Underwriter, the non-defaulting Underwriters do not arrange for the purchase of such Shares, then
the Company shall be entitled to a further period of 36 hours within which to procure other persons
satisfactory to the non-defaulting Underwriters to purchase such Shares on such terms. If other
persons become obligated or agree to purchase the Shares of a defaulting Underwriter, either the

 

27

non-defaulting Underwriters or the Company may postpone the Closing Date or the Additional Closing
Date, as the case may be, for up to five full business days in order to effect any changes that in
the opinion of counsel for the Company or counsel for the Underwriters may be necessary in the
Registration Statement and the Prospectus or in any other document or arrangement, and the Company
agrees to promptly prepare any amendment or supplement to the Registration Statement and the
Prospectus that effects any such changes. As used in this Agreement, the term “Underwriter”
includes, for all purposes of this Agreement unless the context otherwise requires, any person not
listed in Schedule 1 hereto that, pursuant to this Section 10, purchases Shares that a defaulting
Underwriter agreed but failed to purchase.

     (b) If, after giving effect to any arrangements for the purchase of the Shares of a defaulting
Underwriter or Underwriters by the non-defaulting Underwriters and the Company as provided in
paragraph (a) above, the aggregate number of Shares that remain unpurchased on the Closing Date or
the Additional Closing Date, as the case may be does not exceed one-eleventh of the aggregate
number of Shares to be purchased on such date, then the Company shall have the right to require
each non-defaulting Underwriter to purchase the number of Shares that such Underwriter agreed to
purchase hereunder on such date plus such Underwriter’s pro rata share (based on the number of
Shares that such Underwriter agreed to purchase on such date) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made.

     (c) If, after giving effect to any arrangements for the purchase of the Shares of a defaulting
Underwriter or Underwriters by the non-defaulting Underwriters and the Company as provided in
paragraph (a) above, the aggregate number of Shares that remain unpurchased on the Closing Date or
the Additional Closing Date, as the case may be, exceeds one-eleventh of the aggregate amount of
Shares to be purchased on such date, or if the Company shall not exercise the right described in
paragraph (b) above, then this Agreement or, with respect to any Additional Closing Date, the
obligation of the Underwriters to purchase Shares on the Additional Closing Date, as the case may
be, shall terminate without liability on the part of the non-defaulting Underwriters. Any
termination of this Agreement pursuant to this Section 10 shall be without liability on the part of
the Company, except that the Company will continue to be liable for the payment of expenses as set
forth in Section 11 hereof and except that the provisions of Section 7 hereof shall not terminate
and shall remain in effect.

     (d) Nothing contained herein shall relieve a defaulting Underwriter of any liability it may
have to the Company or any non-defaulting Underwriter for damages caused by its default.

     11. Payment of Expenses. (a) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company will pay or cause to be paid
all costs and expenses incident to the performance of its obligations hereunder, including without
limitation, (i) the costs incident to the authorization, issuance, sale, preparation and delivery
of the Shares and any taxes payable in that connection; (ii) the costs incident to the preparation,
printing and filing under the Securities Act of the Registration Statement, the Preliminary
Prospectus, any Issuer Free Writing Prospectus, any Time of Sale Information and the Prospectus
(including all exhibits, amendments and supplements thereto) and the distribution

 

28

thereof; (iii) the costs of reproducing and distributing this Agreement; (iv) the fees and expenses
of the Company’s counsel and independent accountants; (v) the fees and expenses incurred in
connection with the registration or qualification and determination of eligibility for investment
of the Shares under the laws of such jurisdictions as the Representatives may designate and the
preparation, printing and distribution of a Blue Sky Memorandum (including the related fees and
expenses of counsel for the Underwriters); (vi) the cost of preparing stock certificates; (vii) the
costs and charges of any transfer agent and any registrar; (viii) all expenses and application fees
incurred in connection with any filing with, and clearance of the offering by, the National
Association of Securities Dealers, Inc.; (ix) all expenses incurred by the Company in connection
with any “road show” presentation to potential investors; (x) all expenses and application fees
related to the listing of the Shares on the Nasdaq National Market; and (xi) all other costs and
expenses incident to the performance of its obligations hereunder that are not otherwise
specifically provided for herein.

     (b) If (i) this Agreement is terminated pursuant to clauses (ii) or (v) of Section 9, (ii) the
Company for any reason fails to tender the Shares for delivery to the Underwriters, or (iii) the
Underwriters decline to purchase the Shares for any reason permitted under this Agreement (other
than following a termination pursuant to clauses (i), (iii) or (iv) of Section 9), the Company
agrees to reimburse the Underwriters for all out-of-pocket costs and expenses (including the fees
and expenses of their counsel) reasonably incurred by the Underwriters in connection with this
Agreement and the offering contemplated hereby.

     12. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective successors and the officers
and directors and any controlling persons referred to in Section 7 hereof. Nothing in this
Agreement is intended or shall be construed to give any other person any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision contained herein. No
purchaser of Shares from any Underwriter shall be deemed to be a successor merely by reason of such
purchase.

     13. Survival. The respective indemnities, rights of contribution, representations,
warranties and agreements of the Company and the Underwriters contained in this Agreement or made
by or on behalf of the Company or the Underwriters pursuant to this Agreement or any certificate
delivered pursuant hereto shall survive the delivery of and payment for the Shares and shall remain
in full force and effect, regardless of any termination of this Agreement or any investigation made
by or on behalf of the Company or the Underwriters.

     14. Certain Defined Terms. For purposes of this Agreement, (a) except where otherwise
expressly provided, the term “affiliate” has the meaning set forth in Rule 405 under the Securities
Act; (b) the term “business day” means any day other than a day on which banks are permitted or
required to be closed in New York City; (c) the term “subsidiary” has the meaning set forth in Rule
405 under the Securities Act; and (d) the term “significant subsidiary” has the meaning set forth
in Rule 1-02 of Regulation S-X under the Exchange Act.

 

29

     15. Miscellaneous. (a) Authority of JPMorgan and Piper Jaffray. Any action by the
Underwriters hereunder may be taken by JPMorgan and Piper Jaffray on behalf of the Underwriters,
and any such action taken by JPMorgan and Piper Jaffray shall be binding upon the Underwriters.

     (b) Notices. All notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted and confirmed by any standard form of
telecommunication. Notices to the Underwriters shall be given to the Representatives c/o J.P.
Morgan Securities Inc., 277 Park Avenue, New York, New York 10172 (fax: (212) 622-8358); Attention:
Equity Syndicate Desk, and c/o Piper Jaffray & Co., 800 Nicollet Mall, Minneapolis, Minnesota 55402
(fax: (612) 303-6220; Attention: Equity Capital Markets. Notices to the Company shall be given to it at
Volcano Corporation, 2870 Kilgore Road, Rancho Cordova, California 95670 (fax: (916) 638-8812);
Attention: Chief Executive Officer.

     (c) Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.

     (d) Counterparts. This Agreement may be signed in counterparts (which may include
counterparts delivered by any standard form of telecommunication), each of which shall be an
original and all of which together shall constitute one and the same instrument.

     (e) Amendments or Waivers. No amendment or waiver of any provision of this Agreement, nor any
consent or approval to any departure therefrom, shall in any event be effective unless the same
shall be in writing and signed by the parties hereto.

     (f) Headings. The headings herein are included for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this Agreement.

 

30

     If the foregoing is in accordance with your understanding, please indicate your acceptance of
this Agreement by signing in the space provided below.

	 	 	 	 	 
	 	Very truly yours,

VOLCANO CORPORATION

 	 
	 	By  	/s/ R. Scott Huennekens	 
	 	 	Name: R. Scott Huennekens	 
	 	 	Title: President and Chief Executive Officer	 
	 

Accepted: June 14, 2006

J.P. MORGAN SECURITIES INC.

For itself and on behalf of the

several Underwriters listed

in Schedule 1 hereto.
 

	 	 	 	 	 
	By
	 	/s/ Matthew McGrath	 	 
	 

	 	 

Matthew McGrath
Vice President
	 	 

 

PIPER JAFFRAY & CO.

For itself and on behalf of the

several Underwriters listed

in Schedule 1 hereto.
 

	 	 	 	 	 
	By
	 	/s/ Rakesh Mehta	 	 
	 

	 	 

Rakesh Mehta
Vice President
	 	 

 

31

Schedule 1

	 	 	 	 	 
	Underwriter	 	Number of Shares	 
	 
	 	 	 	 
	J.P. Morgan Securities Inc.
	 	 	2,380,000
	 
	Piper Jaffray & Co.
	 	 	2,380,000
	 
	Bear, Stearns & Co., Inc.
	 	 	1,360,000
	 
	Cowen and Company, LLC
	 	 	   680,000
	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	Total
	 	 	6,800,000
	 

 

32

Annex A

Form of Opinion of Counsel for the Company

     (a) The Registration Statement was declared effective under the Securities Act as of the date
specified in such opinion; each of the Preliminary Prospectus and the Prospectus was filed with the
Commission pursuant to the subparagraph of Rule 424(b) under the Securities Act specified in such
opinion on the date specified therein; and no order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that purpose or pursuant to Section
8A of the Securities Act against the Company or in connection with the offering is pending or, to
the best knowledge of such counsel, threatened by the Commission.

     (b) The Registration Statement, the Preliminary Prospectus, each Issuer Free Writing
Prospectus included in the Time of Sale Information and the Prospectus (other than the financial
statements and related schedules therein, as to which such counsel need express no opinion) comply
as to form in all material respects with the requirements of the Securities Act.

     (c) The Company has been duly organized and is validly existing and in good standing under the
laws of its jurisdiction of organization, is duly qualified to do business and is in good standing
in each jurisdiction in which its ownership or lease of property or the conduct of its business
requires such qualification, and has all power and authority necessary to own or hold its
properties and to conduct the business in which it is engaged, except where the failure to be so
qualified or have such power or authority would not, individually or in the aggregate, have a
Material Adverse Effect.

     (d) The Company has an authorized capitalization as set forth in the Registration Statement,
the Time of Sale Information and the Prospectus under the heading “Capitalization”; all the
outstanding shares of capital stock of the Company have been duly and validly authorized and issued
and are fully paid and non-assessable; the capital stock of the Company conforms in all material
respects to the description thereof contained in the Registration Statement, the Time of Sale
Information and the Prospectus under the heading “Description of Capital Stock.” Except as
disclosed in the Registration Statement, the Time of Sale Information and the Prospectus, there are
no preemptive rights or other rights to subscribe for or purchase, or any restriction upon the
voting or transfer of, any shares of common stock pursuant to the Company’s Amended and Restated
Certificate of Incorporation, by-laws, or any agreement or other instrument known to such counsel
to which the Company is a party or by which the Company is bound. Except as disclosed in the
Registration Statement, the Time of Sale Information and the Prospectus, to such counsel’s
knowledge, neither the filing of the Registration Statement nor the offering or sale of the Shares
as contemplated by the Underwriting Agreement gives rise to any rights for or relating to the
registration of any shares of common stock or other securities of the Company.

     (e) The Company has full right, power and authority to execute and deliver the Underwriting
Agreement and to perform its obligations thereunder.

 

33

     (f) The Underwriting Agreement has been duly authorized, executed and delivered by the Company
and constitutes a valid and legally binding agreement of the Company enforceable against the
Company in accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors’ rights generally or by equitable
principles relating to enforceability.

     (g) The Shares have been duly authorized, and when delivered to and paid for by the
Underwriters in accordance with the terms of the Underwriting Agreement, will be validly issued,
fully paid and non-assessable and the issuance of the Shares is not subject to any preemptive or
similar rights.

     (h) To the best of such counsel’s knowledge, the Company is not (i) in violation of its
Amended and Restated Certificate of Incorporation or by-laws; (ii) in default, and no event has
occurred that, with notice or lapse of time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition contained in any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which it is a party or by which
it is bound or to which any of its property or assets is subject which is filed as an exhibit to
the Registration Statement; or (iii) in violation of any law or statute or any judgment, order,
rule or regulation of any court or arbitrator or governmental or regulatory authority, except in
the case of clauses (ii) and (iii) for any such default or violation that would not, individually
or in the aggregate, have a Material Adverse Effect. To the best of such counsel’s knowledge, no
subsidiary of the Company is in default, and no event has occurred that, with notice or lapse of
time or both, would constitute such a default, in the due performance or observance of any term,
covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which it is a party or by which it is bound or to which any of its
property or assets is subject which is filed as an exhibit to the Registration Statement, except
for any such default or violation that would not, individually or in the aggregate, have a Material
Adverse Effect.

     (i) The execution, delivery and performance by the Company of the Underwriting Agreement, the
issuance and sale of the Shares being delivered on the Closing Date or the Additional Closing Date,
as the case may be, and compliance by the Company with the terms of, and the consummation of the
transactions contemplated by, the Underwriting Agreement will not (i) conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a default under, or result
in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or to which any of the property
or assets of the Company or any of its subsidiaries is subject and which is filed as an exhibit to
the Registration Statement, (ii) result in any violation of the provisions of the Amended and
Restated Certificate of Incorporation or by-laws or similar organizational documents of the Company
or any of its subsidiaries or (iii) result in the violation of any law or statute or any judgment,
order or regulation of any court or arbitrator or governmental or regulatory authority except, in
the case of clauses (i) and (iii) above, for such conflict, breach or violation that would not,
individually or in the aggregate, have a Material Adverse Effect.

 

34

     (j) No consent, approval, authorization, order, registration or qualification of or with any
court or arbitrator or governmental or regulatory authority is required for the execution, delivery
and performance by the Company of the Underwriting Agreement, the issuance and sale of the Shares
being delivered on the Closing Date or the Additional Closing Date, as the case may be, and
compliance by the Company with the terms thereof and the consummation of the transactions
contemplated by the Underwriting Agreement, except for the registration of the Shares under the
Securities Act, compliance with the rules of the Nasdaq National Market and such consents,
approvals, authorizations, orders and registrations or qualifications as may be required under
applicable state securities laws in connection with the purchase and distribution of the Shares by
the Underwriters.

     (k) The statements in the Registration Statement, the Time of Sale Information and the
Prospectus under the headings “Risk Factors — Anti-takeover provisions in our amended and restated
certificate of incorporation and bylaws and Delaware law could discourage a takeover,” “Description
of Capital Stock,” “Shares Eligible for Future Sale,” “Management — Employment Agreements and
Change in Control Arrangements,” “Business — Sales, Marketing and Distribution — Japan —
Interventional Cardiology,” “Business — Sales, Marketing and Distribution — Supply and
Distribution Agreement with GE,” “Business — Intellectual Property — Third Party Licenses,”
“Management — Voting Agreement,” “Management — Employee Benefit Plans,” “Management — 401(k)
Plan,” “Management — Managing Director Agreement,” “Management — Limitations on Liability and
Indemnification,” “Related Party Transactions — Transactions with Ferrer Freeman & Company, LLC,”
“Related Party Transactions — Transactions with Medtronic, Inc.,” “Related Party Transactions —
Sales of Preferred Stock,” in the twelfth paragraph under the heading “Management’s Discussion and
Analysis of Financial Condition and Results of Operations — Overview,” in first through ninth
paragraphs under the heading “Underwriting” and in Part II of the Registration Statement in items
14 and 15, to the extent that such statements constitute summaries of the terms of stock, statutes,
contracts and other documents, matters of law or regulation or legal conclusions, fairly summarize
the matters described therein, and are accurate, in all material respects; and, to the best
knowledge of such counsel, (A) there are no current or pending legal, governmental or regulatory
actions, suits or proceedings that are required under the Securities Act to be described in the
Registration Statement and that are not so described in the Registration Statement, the Time of
Sale Information and the Prospectus and (B) there are no statutes, regulations or contracts and
other documents that are required under the Securities Act to be filed as exhibits to the
Registration Statement or described in the Registration Statement and that have not been so filed
as exhibits to the Registration Statement or described in the Registration Statement, the Time of
Sale Information and the Prospectus.

     (m) The Company is not and, after giving effect to the offering and sale of the Shares and the
application of the proceeds thereof as described in the Registration Statement, the Time of Sale
Information and the Prospectus, will not be required to register as an “investment company” or an
entity “controlled” by an “investment company” within the meaning of the Investment Company Act.

 

35

     (n) To the best knowledge of such counsel, neither the Company nor any of its subsidiaries is
a “holding company” or a “subsidiary company” of a holding company or an “affiliate” thereof within
the meaning of the Public Utility Holding Company Act of 1935, as amended.

     (o) The Shares have been designated for inclusion in the Nasdaq National Market.

     (p) Each of the Company’s subsidiaries has been duly organized and is validly existing and in
good standing under the laws of its jurisdiction of organization, is duly qualified to do business
and is in good standing in each jurisdiction in which its ownership or lease of property or the
conduct of its business requires such qualification, and has all power and authority necessary to
own or hold its properties and to conduct the business in which it is engaged, except where the
failure to be so qualified or have such power or authority would not, individually or in the
aggregate, have a Material Adverse Effect. To the best of such counsel’s knowledge, none of such
subsidiaries is (i) in violation of its respective organizational documents; (ii) in default, and
no event has occurred that, with notice or lapse of time or both, would constitute such a default,
in the due performance or observance of any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to which it is a party or
by which it is bound or to which any of its property or assets is subject which is filed as an
exhibit to the Registration Statement; or (iii) in violation of any law or statute or any judgment,
order, rule or regulation of any court or arbitrator or governmental or regulatory authority,
except in the case of clauses (ii) and (iii) for any such default or violation that would not,
individually or in the aggregate, have a Material Adverse Effect.

     (q) The Rights Agreement has been duly authorized, executed and delivered by the Company and
constitutes a valid and legally binding agreement of the Company enforceable against the Company in
accordance with its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors’ rights generally or by equitable principles
relating to enforceability; the Rights have been duly authorized by the Company, and, when issued
upon issuance of the Shares, will be validly issued, and the Series A Junior Participating
Preferred Stock has been duly authorized by the Company and validly reserved for issuance upon the
exercise of the Rights and, when issued upon such exercise in accordance with the terms of the
Rights Agreement, will be validly issued, fully paid and non-assessable.

     Such counsel shall also state that they have participated in conferences with representatives
of the Company and with representatives of its independent accountants and counsel at which
conferences the contents of the Registration Statement, the Time of Sale Information and the
Prospectus and any amendment and supplement thereto and related matters were discussed and,
although such counsel assume no responsibility for the accuracy, completeness or fairness of the
Registration Statement, the Time of Sale Information, the Prospectus and any amendment or
supplement thereto (except as expressly provided above), nothing has come to the attention of such
counsel to cause such counsel to believe that the Registration Statement, at the time of its
effective date (including the information, if any, deemed pursuant to Rule 430A, 430B or 430C to be
part of

 

36

the Registration Statement at the time of effectiveness), contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, that the Time of Sale Information, at the Time of Sale
(which such counsel may assume to be the date of the Underwriting Agreement) contained any untrue
statement of a material fact or omitted to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading or that the
Prospectus or any amendment or supplement thereto as of its date and the Closing Date contains any
untrue statement of a material fact or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were made, not misleading
(other than the financial statements and other financial information contained therein, as to
which such counsel need express no belief).

     In rendering such opinion, such counsel may rely as to matters of fact on certificates of
responsible officers of the Company and public officials that are furnished to the Underwriters.

     The opinion of Reed Smith LLP described above shall be rendered to the Underwriters at the
request of the Company and shall so state therein.

 

37

Annex B

a. Time of Sale Information

Free Writing Prospectus dated June 14, 2006

 

38

Annex C

Not Applicable

 

 

39

Exhibit A

FORM OF LOCK-UP AGREEMENT

                          , 2006

J.P. MORGAN SECURITIES INC.

PIPER JAFFRAY & CO.

BEAR, STEARNS & CO., INC.

COWEN & CO., LLC

As Representatives of the

several Underwriters listed in

Schedule I to the Underwriting

Agreement referred to below

c/o J.P. Morgan Securities Inc.

277 Park Avenue

New York, NY 10172

     Re:
Volcano Corporation - Public Offering

Ladies and Gentlemen:

     The undersigned understands that you, as Representatives of the several Underwriters, propose
to enter into an Underwriting Agreement (the “Underwriting Agreement”) with Volcano Corporation, a
Delaware corporation (the “Company”), providing for the public offering (the “Public Offering”) by
the several Underwriters named in Schedule I to the Underwriting Agreement (the “Underwriters”), of
common stock of the Company (the “Securities”). Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Underwriting Agreement.

     In consideration of the Underwriters’ agreement to purchase and make the Public Offering of
the Securities, and for other good and valuable consideration receipt of which is hereby
acknowledged, the undersigned hereby agrees that, without the prior written consent of J.P. Morgan
Securities Inc. and Piper Jaffray & Co. (which consent may be withheld in their sole discretion),
the undersigned will not, during the period ending 180 days after the date of the prospectus
relating to the Public Offering (the “Prospectus”), (1) offer, pledge, announce the intention to
sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose
of, directly or indirectly, any shares of Common Stock, $0.001 per share par value, of the Company
(the “Common Stock”) or any securities convertible into or exercisable or exchangeable for Common
Stock (including without limitation, Common Stock which may be deemed to be beneficially owned by
the undersigned in accordance with the rules and regulations of the Securities and Exchange
Commission and securities which may be issued upon exercise of

 

40

a stock option or warrant) or (2) enter into any swap or other agreement that transfers, in whole
or in part, any of the economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of Common Stock or
such other securities, in cash or otherwise. In addition, the undersigned agrees that, without the
prior written consent of J.P. Morgan Securities Inc. and Piper Jaffray & Co., it will not, during
the period ending 180 days after the date of the Prospectus, make any demand for or exercise any
right with respect to, the registration of any shares of Common Stock or any security convertible
into or exercisable or exchangeable for Common Stock. Notwithstanding the foregoing, if (1) during
the last 17 days of the 180-day restricted period, the Company issues an earnings release or
material news or a material event relating to the Company occurs; or (2) prior to the expiration of
the 180-day restricted period, the Company announces that it will release earnings results during
the 16-day period beginning on the last day of the 180-day period, the restrictions imposed by this
Letter Agreement shall continue to apply until the expiration of the 18-day period beginning on the
issuance of the earnings release or the occurrence of the material news or material event.

     In furtherance of the foregoing, the Company, and any duly appointed transfer agent for the
registration or transfer of the securities described herein, are hereby authorized to decline to
make any transfer of securities if such transfer would constitute a violation or breach of this
Letter Agreement. In addition, the undersigned hereby waives any rights the undersigned may have to
require registration of Common Stock in connection with the filing of a registration statement
relating to the Public Offering.

     The undersigned hereby represents and warrants that the undersigned has full power and
authority to enter into this Letter Agreement. All authority herein conferred or agreed to be
conferred and any obligations of the undersigned shall be binding upon the successors, assigns,
heirs or personal representatives of the undersigned.

     The undersigned understands that, if the Underwriting Agreement does not become effective, or
if the Underwriting Agreement (other than the provisions thereof which survive termination) shall
terminate or be terminated prior to payment for and delivery of the Common Stock to be sold
thereunder, the undersigned shall be released from all obligations under this Letter Agreement.
The undersigned understands that the Underwriters are entering into the Underwriting Agreement and
proceeding with the Public Offering in reliance upon this Letter Agreement.

     This Letter Agreement shall be governed by and construed in accordance with the laws of the
State of New York, without regard to the conflict of laws principles thereof.

	 	 	 	 	 
	 	Very truly yours,

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

Significant Subsidiaries

Volcano Japan Co., Ltd.
Volcano Europe, S.A./N.V.exv10w3

 

Exhibit 10.3

[NOTE: CERTAIN PORTIONS OF THIS DOCUMENT HAVE BEEN MARKED TO INDICATE THAT CONFIDENTIAL
INFORMATION HAS BEEN OMITTED. CONFIDENTIALITY HAS BEEN REQUESTED FOR THIS CONFIDENTIAL INFORMATION.
THE CONFIDENTIAL PORTIONS HAVE BEEN PROVIDED SEPARATELY TO THE SECURITIES AND EXCHANGE COMMISSION]

Manufacturing Services Agreement

Between

Volcano Corporation

And

Endicott Interconnect Technologies, Inc.

Page 1 of 29

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	1.0
	 	SCOPE OF AGREEMENT	 	 	3	 
	 
	 	 	 	 	 	 
	2.0
	 	DEFINITIONS	 	 	4	 
	 
	 	 	 	 	 	 
	3.0
	 	DESIGN, DEVELOPMENT AND PROTOTYPES	 	 	9	 
	 
	 	 	 	 	 	 
	4.0
	 	OWNERSHIP	 	 	9	 
	 
	 	 	 	 	 	 
	5.0
	 	PRODUCT PURCHASES	 	 	10	 
	 
	 	 	 	 	 	 
	6.0
	 	DELIVERY AND ACCEPTANCE	 	 	12	 
	 
	 	 	 	 	 	 
	7.0
	 	PRICES AND PAYMENT TERMS	 	 	12	 
	 
	 	 	 	 	 	 
	8.0
	 	COMPONENT PROCUREMENT	 	 	12	 
	 
	 	 	 	 	 	 
	9.0
	 	WARRANTIES	 	 	13	 
	 
	 	 	 	 	 	 
	10.0
	 	INVENTORY MANAGEMENT	 	 	13	 
	 
	 	 	 	 	 	 
	11.0
	 	PERFORMANCE EXPECTATIONS AND QUALITY STANDARDS	 	 	14	 
	 
	 	 	 	 	 	 
	12.0
	 	CHANGE NOTIFICATION	 	 	14	 
	 
	 	 	 	 	 	 
	13.0
	 	INTELLECTUAL PROPERTY	 	 	15	 
	 
	 	 	 	 	 	 
	14.0
	 	CONFIDENTIAL INFORMATION	 	 	16	 
	 
	 	 	 	 	 	 
	15.0
	 	FORCE MAJEURE EVENTS	 	 	16	 
	 
	 	 	 	 	 	 
	16.0
	 	EVENTS OF DEFAULT	 	 	16	 
	 
	 	 	 	 	 	 
	17.0
	 	TERMINATION	 	 	17	 
	 
	 	 	 	 	 	 
	18.0
	 	LIMITATION OF LIABILITY	 	 	18	 
	 
	 	 	 	 	 	 
	19.0
	 	LIABILITY CAP	 	 	19	 
	 
	 	 	 	 	 	 
	20.0
	 	MISCELLANEOUS	 	 	19	 
	 
	 	 	 	 	 	 
	ATTACHMENT A	 	 	22	 
	 
	 	 	 	 	 	 
	     VOLCANO Product Pricing	 	 	22	 
	 
	 	 	 	 	 	 
	ATTACHMENT B	 	 	23	 
	 
	 	 	 	 	 	 
	     Administration and Notices	 	 	23	 
	 
	 	 	 	 	 	 
	STATEMENT OF WORK (SOW)	 	 	24	 

Page 2 of 29

 

MANUFACTURING SERVICES AGREEMENT

THIS MANUFACTURING SERVICES AGREEMENT (the “Agreement”) is entered into and is effective as of the
date of execution by both parties, (the “Effective Date”) by and between Volcano Corporation
(“VOLCANO”), a Delaware corporation with a principal place of business at 2870 Kilgore Road, Rancho
Cordova, CA and Endicott Interconnect Technologies Incorporated (“EI”), a New York company with a
principal place of business at 1701 North Street, Endicott, NY, singularly or collectively referred
to as a Party or the Parties.

The Parties hereby agree as follows:

	1.0	 	Scope of Agreement

	 	1.1	 	EI General Obligations. This Agreement specifies the terms and
conditions under which EI agrees to manufacture and sell Products described in this
Agreement, based on the requirements provided by VOLCANO. Without limiting any specific
obligation specified in this Agreement, EI will:

	 	1.1.1	 	Maintain one or more manufacturing processes and production
lines, purchase or procure Tools, and source Components and materials as needed
to fulfill EI’s obligations to manufacture the Products in accordance with the
Specifications set forth in SOW and the other Product Requirements provided by
VOLCANO.
	 
	 	1.1.2	 	Manufacture, verify, pack, ship and sell all Products in
accordance with the terms of this Agreement.
	 
	 	1.1.3	 	Meet the Supplier Performance Expectations described in
Section 11 below, and develop and maintain quality control standards
consistent with those standards described in that Section.
	 
	 	1.1.4	 	VOLCANO will obtain all necessary approvals and certifications
to enable EI to manufacture the Products under this Agreement and make all
necessary safety standard changes as appropriate hereunder.
	 
	 	1.1.5	 	On VOLCANO’s request, provide all Technical Assistance, for a
fee to be agreed upon by both Parties pursuant to this Agreement.
	 
	 	1.1.6	 	EI will perform Component Manufacturing per VOLCANO’s direction.

	 	1.2	 	VOLCANO General Obligations. Without limiting any specific obligation
required under this Agreement, VOLCANO will provide to EI, Product Requirements
consisting of, but not necessarily limited to:

	 	a)	 	SOW
	 
	 	b)	 	Product numbers;
	 
	 	c)	 	BOM;
	 
	 	d)	 	AVL;

Page 3 of 29

 

	 	e)	 	Board placement data (Gerber files);
	 
	 	f)	 	Raw Flex information required to manufacture the Flex;
	 
	 	g)	 	Schematic drawings, if test required;
	 
	 	h)	 	Assembly drawings;
	 
	 	i)	 	Packaging requirements, workmanship and quality specifications;
	 
	 	j)	 	General Technical Specifications;
	 
	 	k)	 	Consigned Component List.
	 
	 	l)	 	Design file;
	 
	 	m)	 	General and technical Specification in attachments.

	 	1.2.1	 	VOLCANO is the Finished Device Manufacturer. VOLCANO is responsible
for all requirements of the finished device under FDA regulations.
	 
	 	1.2.2	 	VOLCANO is responsible for all testing including but not limited to
interconnect, functional, and final product validation.

	 	1.3	 	Term of Agreement. This Agreement will commence as of the Effective Date
and will continue for the initial Term of three (3) years unless otherwise indicated in
the terms of this Agreement. One (1) month prior to the end of the initial Term and each
subsequent Term, if any, the Parties shall conduct a review of the terms of this
Agreement and the business relationship between the Parties and, where mutually agreed,
may make any changes and renew the Agreement for a Term.

	2.0	 	Definitions
	 
	 	 	The following capitalized terms will have the meanings given for the purposes of this
Agreement:

	 	2.1	 	“Approved Vendor List” also referred to as “AVL”, refers to the
list of VOLCANO approved vendors who are qualified Component Suppliers authorized by
VOLCANO for use in the manufacture of Products. “Vendor” and “Manufacturer” shall mean
the same.
	 
	 	2.2	 	“Bill of Material” also referred to as “BOM”, means the list of
all Components, VOLCANO Part Numbers, quantity per assembly, and EI’s part number where
applicable, that is used to assemble each Product.
	 
	 	2.3	 	“Change Order” also referred to as a “CO”, is the written
notification provided to EI by VOLCANO to modify the delivery of a Product, as further
described in Section 12.2 VOLCANO Proposed Changes below.
	 
	 	2.4	 	“Component” means the piece parts, subassemblies, software, OEM
components and products, and all other materials incorporated by EI into Products built
for VOLCANO.

Page 4 of 29

 

	 	2.5	 	“Component Lead Time” means the number of workdays that sub-tier
suppliers plan to build a Component from start to finish.
	 
	 	2.6	 	“Component Supplier” means the qualified suppliers authorized by
VOLCANO for use in the manufacture of VOLCANO Products.
	 
	 	2.7	 	“CDA” means that certain 5-party Non-Disclosure Agreement Agreement,
dated July 28, 2005, by and between EI and VOLCANO.
	 
	 	2.8	 	“Consigned Components” refers to those Components provided to EI for
assembly into Products where VOLCANO retains all ownership interest and obligations in
those Consigned Components.
	 
	 	2.9	 	“Deliverables” refers to Products, Components, Developments,
Prototypes, Test Software, exclusive of EI Intellectual Property and other work
provided by EI to VOLCANO as applicable hereunder.
	 
	 	2.10	 	“Delivery Date” means the date specified in an Order for the delivery
of Products.
	 
	 	2.11	 	“Developments” means any new inventions, discoveries, technologies,
processes, or materials (whether or not patentable) developed in connection with EI’s
performance under this Agreement relating to a Product’s Requirements or design.
	 
	 	2.12	 	“Developed Technology” means all technical information, know-how,
ideas, concepts, processes, procedures, designs, schematics, works of authorship,
inventions and discoveries (patentable or unpatentable, copyrightable, registrable as a
mask work, protectable as a trade secret or otherwise protectable as an Intellectual
Property Right), conceived by personnel of one or both the parties hereto, following
commencement and in furtherance of the work performed by EI for VOLCANO pursuant to
this Contract.
	 
	 	2.13	 	“Eligible Buyer” means a party authorized and approved by VOLCANO to
purchase under the terms of this Agreement.
	 
	 	2.14	 	“Engineering Changes” means any material, electrical, mechanical or
chemical changes to the Products proposed by VOLCANO or EI that would affect, but not
be limited to, Product performance, reliability, safety, environmental compatibility,
serviceability, appearance, dimensions, tolerances, or composition.
	 
	 	2.15	 	“EOL” means end of life of the component. This component will no longer be
supplied by the manufacturer.
	 
	 	2.16	 	“ESD” means Electrostatic Discharge.

Page 5 of 29

 

	 	2.17	 	“Excess Components” means components on hand or on-order at EI that
exceed the quantity required to meet open “Orders”
	 
	 	2.18	 	“Forecast” means VOLCANO’s rolling estimate of its purchase
requirements over a twelve (12) month period as further described in Section
5.3 below, or such other period designated by the Parties.
	 
	 	2.19	 	“Flex” means a flexible printed circuit board.
	 
	 	2.20	 	“Finished Device Manufacturer” the provider of a finished, packaged,
and labeled device as defined by FDA 21 CFR 820.
	 
	 	2.21	 	“Intellectual Property” means technical information, computer programs,
algorithms, source code, object code, inventions (whether or not patentable),
discoveries, improvements, concepts or methods, works of authorship fixed in any medium
of expression, and any and all Intellectual Property Rights pertaining thereto.
	 
	 	2.22	 	“Intellectual Property Rights” means all copyrights, patents or patent
applications, mask registered designs or registered design applications, Marks
(registered or not), Mask Works, inventions, trade secrets, proprietary technical
information (including but not limited to specifications, designs, plans, computer
programs in source and object code, flowcharts, diagrams, drawings and other
information), and manufacturing processes, and other similar proprietary information.
	 
	 	2.23	 	“Manufacturing Changes” means any material design changes, or
outsourcing of the manufacturing of sub-processes.
	 
	 	2.24	 	“Manufacturing Lead Time” means the number of workdays that are planned
to build a Product from start to finish.
	 
	 	2.25	 	“Marks” means the trademarks, service marks, trademark and service mark
applications, trade dress, trade names, logos, insignia, symbols, designs or other
marks identifying a Party or its products.
	 
	 	2.26	 	“Mask Work” means the pattern used to transfer design and technical
information from the Product Requirements onto a Product or Component.
	 
	 	2.27	 	“Minimum Buys” means the minimum quantities of Components that certain
suppliers may require of EI to purchase as defined in SOW.
	 
	 	2.28	 	“NDA/CDA” means the NDA and the CDA.
	 
	 	2.29	 	“NDA” means that certain Mutual Nondisclosure Agreement, dated July 14
2005, by and between EI and VOLCANO.

Page 6 of 29

 

	 	2.30	 	“NRE” means non-recurring engineering expenses.
	 
	 	2.31	 	“Obsolete Components” means Components or Materials on-hand or on order
at EI made obsolete by Change Orders, or deletion from the AVL.
	 
	 	2.32	 	“Order” means a written or electronic purchase order (including any
attachments thereto) issued to EI by VOLCANO or an Eligible Buyer containing part
number, unit quantity, unit price, shipping destination and instructions, Delivery
Date, and other instructions or requirements pertinent to the Order.
	 
	 	2.33	 	“Package or Packaging” refers to the material used in the protection of
Products and Components while at EI’s facility and in transit.
	 
	 	2.34	 	“Pre-Existing Intellectual Property” means any Intellectual Property
conceived or developed prior to performance of this Agreement.
	 
	 	2.35	 	“Product Requirement” means any requirement, for the development or
manufacture of Products, provided by VOLCANO to EI, including this Agreement, SOW, and
Specifications, and part number drawing.
	 
	 	2.36	 	“Products” or “Product” means those assemblies, sub-assemblies,
systems, and other products manufactured by EI. Products may be added to this Agreement
or from time to time by agreement of the Parties. For the purpose of this agreement,
“Products” or “Product” shall also be known as “component” as defined by FDA 21 CFR
820.3 (c) as “any raw material, substance, piece, part, software, firmware, labeling,
or assembly which is intended to be included as part of the finished, packaged, and
labeled device.”
	 
	 	2.37	 	“Prototype” means the pre-production unit of a Product, packaged in a
production package, and manufactured in accordance with the Product Requirements with
partial or no test verification.
	 
	 	2.38	 	“Shipping Dock” means the shipping dock at EI’s manufacturing facility.

  
	 
	 	2.39	 	

“RMA” means a return material authorization as described in Section 6.4 below.
	 
	 	2.40	 	“SOW” means statement of work.
	 
	 	2.41	 	“Specifications” means the technical and quality requirements for the
Product as defined by VOLCANO and listed in SOW.
	 
	 	2.42	 	“Supplier Performance Expectations” means those quality standards and
metrics that EI must meet as further described in Section 11.1 Quality
Standards and SOW hereto.
	 
	 	2.43	 	“Technical Manufacturing Information” means the manufacturing
information, process and technology used by EI or third parties under its control to
design,

Page 7 of 29

 

	 	 	 	develop, test or manufacture the Products including, but not limited to: (i)
specifications, software, schematics, drawings, designs, or other materials pertinent
to the most current revision level of manufacturing of the Products; (ii) copies of all
inspection, manufacturing, test and quality control procedures and any other work
processes; (iii) jig, fixture and tooling designs; (iv) EI history files; and (v)
support documentation.
	 
	 	2.44	 	“Technology” means all technical information, know-how, ideas,
concepts, processes, procedures, designs, schematics, works of authorship, inventions
and discoveries (patentable or unpatentable, copyrightable, registrable as a mask work,
protectable as a trade secret or otherwise protectable as an Intellectual Property
Right), owned or licensed (with a right to sublicense) by a party hereto and all
Intellectual Property Rights pertaining thereto.
	 
	 	2.45	 	“Termination Inventory” means Components on order, Component inventory,
work-in-process, and finished Product inventory at the discontinuance or termination of
this Agreement or upon receipt of a Change Order from VOLCANO, or at the complete or
partial termination or cancellation of an Order or of a Product.
	 
	 	2.46	 	“Test Fixtures” means electrical test equipment tooling, including
software applications or programs, provided to EI from VOLCANO for the purpose of
testing completed printed circuit board assemblies or systems manufactured by EI, where
VOLCANO retains all ownership interest and obligations in such Test Fixtures.
	 
	 	2.47	 	“Test Software” means any programs or code to perform test verification
for Prototypes, Components or finished Products.
	 
	 	2.48	 	“Tools” means equipment, jigs and fixtures that may be used by EI in
the manufacture of Products.
	 
	 	2.49	 	“Purchase Order Lead Time” means the period of time, expressed in hours
or days, from when an Order or Release is received by EI to when the Product is
delivered to the VOLCANO.
	 
	 	2.50	 	“VOLCANO Agreement” means that certain Indemnification, Insurance, and
Limits of Liability Agreement, dated August 29, 2005, by and between VOLCANO and EI.
	 
	 	2.51	 	“VOLCANO Part Number” refers to the unique, VOLCANO or VOLCANO-assigned
reference number for a particular assembly or Component.
	 
	 	2.52	 	“VOLCANO Property” will mean all property that VOLCANO may provide to
EI for assembly into Products, such as Consigned Component inventories, as well as any
designs, documentation, Product Requirements, Tools, Test Fixtures, Test Software, and
other test equipment and other materials that VOLCANO may furnish to EI or
that VOLCANO may pay for in connection with this Agreement for EI’s use in performing
any of its obligations hereunder.

Page 8 of 29

 

	3.0	 	Design, Development and Prototypes

	 	3.1	 	Prototype Services. EI will design and develop Prototypes for each Product
and will perform the additional services set forth below or as otherwise agreed per this
agreement.
	 
	 	3.2	 	Return of Prototypes. Any Prototypes rejected may be returned at the option
of the VOLCANO Business Unit Manager using the return processes or otherwise agreed
between the VOLCANO Business Unit Manager and the EI Program Manager.
	 
	 	3.3	 	Additional Services. The Parties may agree to add additional services from
time to time. Prior to commencing any such services, EI will provide VOLCANO a written
proposal that will include a description of the services to be performed and the total
estimated fees. EI agrees to propose fee rates on both a time and material or fixed price
basis at VOLCANO’s request. The parties will enter into a SOW signed by both Parties to
initiate each service referencing this Agreement and becoming subject to its terms and
conditions. However, to the extent of any conflict between the terms of a SOW and these
terms, the terms of the SOW will control and take precedence, except for terms and
conditions relating to rights of Intellectual Property which shall be governed entirely
by this Agreement and not any SOW, including if said SOW is incorporated with this
Agreement or otherwise made part thereof.

	4.0	 	Ownership

	 	4.1	 	Pre-Existing Intellectual Property. Each Party will maintain all right,
title and interest in its Pre-Existing Intellectual Property, subject to any licenses
granted below.
	 
	 	4.2	 	Developed Intellectual Property. Except for Intellectual Property in
Product Requirements and Deliverables, which shall be owned by VOLCANO, ownership of
Intellectual Property conceived or developed under this Agreement will be owned by the
Party or Parties whose employees, agents or contractors conceive, author or otherwise
create such Intellectual Property. Any Intellectual Property that may be developed
jointly will be jointly owned, with no accounting requirement by one Party to the other.
	 
	 	4.3	 	VOLCANO Rights.

	 	4.3.1	 	VOLCANO will own all right, title and interest, including all
Intellectual Property Rights, in and to the Product Requirements and the
Deliverables.
	 
	 	4.3.2	 	Should VOLCANO elect to pay EI to develop Technical Manufacturing
Information for the purpose of manufacturing Products, which Technical
Manufacturing Information is unique to Products as defined herein, VOLCANO will
expressly state as such and EI will identify the cost VOLCANO will pay to
cover such development. Such cost will be in addition to the cost of
Deliverables. If EI agrees to develop such Technical Manufacturing Information
at this price, EI shall own such EI-developed Technical

Page 9 of 29

 

	 	 	 	Manufacturing
Information, and VOLCANO will receive a non-exclusive, royalty-free, worldwide,
transferable, perpetual license under said EI-developed Technical Manufacturing
Information to make, sell, offer for sale, use, reproduce, modify, adapt,
display, distribute, and make other versions of Products using said
EI-developed Technical Manufacturing Information. This grant shall include the
right of VOLCANO to sublicense to system integrators, re-seller and other
parties at VOLCANO’s sole discretion.

	 	4.4	 	EI Rights.

	 	4.4.1	 	EI will own all right, title and interest, including all
Intellectual Property Rights, in and to Intellectual Property related to EI’s
manufacturing process of the Products that EI develops solely on its own, without
assistance or input from VOLCANO, excluding jointly developed Intellectual
Property, including EI’s Technical Manufacturing Information for the Products,
subject to VOLCANO’s license of EI-developed Technical Manufacturing Information
under Section 4.3.2 above. VOLCANO agrees to maintain the confidentiality
of EI’s Technical Manufacturing Information under the terms specified in
Section 14 below and in accordance with the terms and conditions of the
NDA/CDA.
	 
	 	4.4.2	 	VOLCANO grants to EI, a non-exclusive, non-transferable, worldwide,
royalty-free license under VOLCANO’s Intellectual Property Rights to use the
Product Requirements to design, develop, test and manufacture the Deliverables for
the term of this Agreement. EI agrees to maintain the confidentiality of the
Product Requirements under the terms specified in Section 14 below and in
accordance with the terms and conditions of the NDA/CDA.

	 	4.5	 	Trademark Usage. Nothing in this Agreement implies the grant of any
license from one Party to the other to use any Marks. Notwithstanding the foregoing,
VOLCANO grants to EI the non-exclusive, limited right to reproduce any designated VOLCANO
Marks on VOLCANO Products.

	5.0	 	Product Purchases

	 	5.1	 	Non-Exclusive. VOLCANO or any Eligible Buyer shall only have a right to
manufacture Products internally or through third parties, purchase Products from other
sources or enter into a similar agreement with any third party, as specifically defined
under the terms and conditions of this Agreement and subject to the Intellectual Property
Rights and any other rights of EI.
	 
	 	5.2	 	Order Acknowledgment. Purchase of Products will be initiated by an
issuance of an Order by VOLCANO. EI will acknowledge the Order with a delivery date. If
an Order exceeds the Forecast or shortens the Purchase Order Lead Time, EI will use its
commercially reasonable efforts to fill such excess or accommodate such shorter Purchase
Order Lead Time. Any expedite fees associated with an order in excess of
Forecast will be agreed by both Parties in advance of any action or work to fulfill the
Order.

Page 10 of 29

 

	 	5.3	 	Forecasts. VOLCANO will provide a 12 month rolling forecast quarterly. The
Forecast is intended for visibility as a planning tool of future demand but is not
intended to be a binding order or commitment.
	 
	 	5.4	 	Materials/Inventory Management. The intent is for EI and VOLCANO to
jointly define and optimize opportunities to reduce both the risk and the liability of
procuring components to forecasted requirements. Unless otherwise agreed to the
following materials/inventory management processes will apply:

	 	5.4.1	 	Material Procurement. EI is authorized to purchase
Components pursuant to Orders for Products. VOLCANO shall submit Orders on a
quarterly basis. EI will follow prudent procurement practices to ensure supply
while minimizing total inventory exposure. VOLCANO may provide input to EI
regarding prudent supply chain practices, and EI will in good faith take such
input into account. “Prudent Procurement Practices” are hereby
defined to include, but are not limited to, the following:

	 	5.4.1.1	 	following EI’s ABC classifications;
	 
	 	5.4.1.2	 	utilizing minimum order quantities as defined by Component
Suppliers and economic order quantities as approved by VOLCANO;
	 
	 	5.4.1.3	 	ordering and buying Components as appropriate to meet
Manufacturing Lead Times, taking into account Component Lead Times
and EI’s internal manufacturing lead times; prior to procurement, EI
shall provide VOLCANO a list of those components that have
procurement lead times greater than 3 months.; VOLCANO shall review
and provide written authorization for procurement of such components
	 
	 	5.4.1.4	 	exercising return and cancellation privileges as allowed by
agreements with Component Suppliers.

	 	5.4.2	 	Materials Liability. VOLCANO will pay EI for
Component and/or Product inventory excess of open Orders for: (i) purchased
Components bought within the Component Lead-Times to meet Orders, (ii) Minimum
Buys , (iii) any buffer Component inventory approved in writing by VOLCANO,
(iv) negotiate EOL buy of Components with VOLCANO. If EI agrees to purchase
Components then VOLCANO will be liable for these Components.
	 
	 	5.4.3	 	Excess & Obsolete Materials. EI will also provide
VOLCANO excess and obsolete reports at the end of every month. Excess reports
shall include materials approved by VOLCANO that extend beyond Order
requirements
and for minimum order quantities.

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	6.0	 	Delivery and Acceptance

	 	6.1	 	Delivery. The Parties agree to use the logistics processes defined in the
purchase order. All Product shipments will be FOB Shipping dock at EI’s manufacturing
facility.
	 
	 	6.2	 	Title and Risk of Loss. Title to and risk of loss or damage to the Product
will pass to VOLCANO upon EI’s tender of the Product to the VOLCANO carrier.
	 
	 	6.3	 	Acceptance. Acceptance of the Product shall occur no later than twenty
(20) business days after receipt of Product and shall be based solely on whether the
Product passes a mutually agreeable Acceptance Test Procedure or Inspection designed to
demonstrate compliance with the Product Requirements and Technical Manufacturing
Information. Product shall be deemed accepted if not rejected within this twenty (20)
business day period.
	 
	 	6.4	 	Rejected Products. Prior to returning any rejected Product, VOLCANO will
obtain a RMA number from EI, and will return such Product in accordance with EI’s
instructions. VOLCANO will specify the reason for such rejection in all requested RMAs.
In the event a Product is rejected, EI will at EI’s option, repair the Product if it is
repairable, provide a replacement if stock is available, or refund the purchase price.

	7.0	 	Prices and Payment Terms

	 	7.1	 	VOLCANO Product Pricing. Specific Product prices, Volumes, currency and
any exchange rate sharing will be agreed upon by EI and VOLCANO and set forth in
Attachment A to this Agreement.
	 
	 	7.2	 	Adjusted Pricing. The Parties agree to implement the following pricing
methodology to implement new pricing or price adjustments, whether for a new product or
existing Products. To introduce new pricing, EI will issue a quotation to VOLCANO
listing the Product, pricing, and delivery schedule of the Product. EI will identify the
cost driver for all price increases. Material price increases from suppliers will be
passed through to VOLCANO in EI’s Adjusted Price.
	 
	 	7.7	 	Payment Terms. VOLCANO and EI agree to payment terms of net forty five
(45) days from the date of invoice. Payment will be made in US dollars.

	8.0	 	Component Procurement

	 	8.1	 	Approved Vendor Lists. EI agrees to buy all Components from suppliers on
the AVL or distributors or distributed coming from those manufactures. In the event that
EI is unable to procure a Component(s) as a result of the AVL restrictions set forth
herein, VOLCANO and EI agree to negotiate changes to the AVL.
	 
	 	8.2	 	Consigned Components. VOLCANO reserves the right to supply through
consignment, at its discretion and upon EI’s consent, any Components to EI related to the
production of Product. VOLCANO will retain all rights, title, interest, and obligation
(including but not limited to, warranty related issues) in the Components

Page 12 of 29

 

	 	 	 	furnished to EI
as consigned inventory. VOLCANO will retain ownership of all such Consigned Components
including during the time such Components are used by EI in the manufacturing of
VOLCANO’s Products. EI will manufacture the Product using its normal manufacturing
practices. EI will care for VOLCANO consigned materials in the same manner as it own
materials. Each party shall bear the financial loss of its materials that are yielded,
consumed, or damaged during the manufacturing process at EI. EI will provide VOLCANO with
inventory reports on a monthly basis or as requested for all consigned materials.
	 
	 	8.3	 	EI’s production yield, scrap or lost of Consigned Components used by EI production
is at VOLCANO’s risk. EI shall provide monthly status on yields, scrap, and consigned
material loss.

	9.0	 	Warranties

	 	9.1	 	EI warrants all Products delivered hereunder to be free from defects of EI
materials and workmanship excluding Components for a period of one (1) year from the date
of shipment. EI will pass on to VOLCANO all Component Suppliers’ warranties to the extent
that they are transferable. EI agrees to ensure that all Components used in the Product
are manufactured by suppliers on VOLCANO’s AVL. VOLCANO acknowledges that the design
based functionally of Products is contingent on VOLCANO’s designs and, therefore, such
warranty does not apply to the design based functionality of Products fabricated under
this Agreement.
	 
	 	9.2	 	EXCEPT AS PROVIDED IN THIS AGREEMENT, ALL EXPRESS OR IMPLIED CONDITIONS,
REPRESENTATIONS AND WARRANTIES INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF DESIGN,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT, ARE DISCLAIMED BY
EACH PARTY, EXCEPT TO THE EXTENT THAT SUCH DISCLAIMERS ARE HELD TO BE LEGALLY INVALID.
	 
	 	9.3	 	No course of dealing, course of performance, usage of trade, or description of
Product, Prototype or service shall be deemed to establish an expressed or implied
warranty.
	 
	 	9.4	 	If VOLCANO claims that any Products and any incidental services are nonconforming,
VOLCANO shall (i) promptly notify EI, in writing, of the basis of such nonconformity;
(ii) follow EI’s instructions for the return of the Products; and (iii) return such
Products to EI’s designated facility with the RMA identified. EI will, at its option,
repair or replace the defective Products, or issue a credit or rebate for the purchase
price.
	 
	 	9.5	 	EI’s sole liability and VOLCANO sole remedy for breach of warranty shall be limited
as stated in Section 9 Warranties.

	10.0	 	Inventory Management

	 	10.1	 	Obsolete Component Inventory. Obsolete Components will be communicated to
VOLCANO as soon as possible after purchase order demand is removed. For Obsolete

Page 13 of 29

 

	 	 	 	Components inventory, provided that EI has demonstrated Prudent Procurement Practices in
purchasing such Components, VOLCANO has the option of: (i) purchasing the Obsolete
Components from EI, at EI’s current quoted price and having the Obsolete Components
returned to VOLCANO, or a location indicated by VOLCANO; (ii) authorizing EI to sell
Obsolete Components internally or externally and VOLCANO, upon review and agreement, pays
the difference between EI’s current quoted price and selling price; or (iii) scrapping
and disposing of the Obsolete Components at EI’s current quoted price. VOLCANO will
advise EI in writing within thirty (30) calendar days which option VOLCANO has selected to
disposition the Obsolete Components. EI shall provide VOLCANO obsolete reports monthly.
	 
	 	10.2	 	Excess Component Inventory. EI shall provide VOLCANO excess reports
monthly. Excess reports shall include materials approved by VOLCANO that extend beyond
quarterly requirements and for minimum order quantities.
	 
	 	10.3	 	Component Discontinuances. If EI receives notice from a Component supplier
that a Component will be discontinued, EI will notify VOLCANO in writing within five (5)
business days and will use commercially reasonable efforts to identify a form, fit and
function replacement and in a reasonable period of time, notify VOLCANO by submitting in
writing a list of alternatives. The VOLCANO Global Account Manager or, as appropriate, the
Business Unit Managers and EI will develop an appropriate action plan, including all
sample requirements, product qualifications, updates to the AVL, and schedule changes
necessary to reaching a mutually agreeable resolution of the discontinuance. EI will use
commercially reasonable efforts to ensure all such suppliers are obligated to provide a
minimum of ninety (90) days notification of any potential discontinuance to EI.
	 
	 	10.4	 	Component Life-time Buys. In the event that VOLCANO cannot identify a form,
fit and function replacement, or does not approve a replacement identified by EI, VOLCANO
may purchase the LTB inventory and consign or Buy/Sell such LTB inventory to EI for use in
manufacturing Products. At its discretion, VOLCANO may also request EI purchase the LTB
inventory. EI has the right to refuse this request or require a PO from VOLCANO to cover
these LTB components.

	11.0	 	Performance Expectations and Quality Standards

	 	11.1	 	Quality Standards. EI agrees to meet the quality standards and performance
metrics defined in the Products Specification. In addition to these standards and
metrics, Products shall pass the test plan specified for the Product.
	 
	 	11.2	 	Quarterly Business Reviews. EI and VOLCANO shall conduct quarterly business
reviews. Following such review, EI shall provide a written report that details quarterly
yields, scrap, costs, inventory status, and cost reduction efforts and other such data as
may be discussed and agreed to in writing by EI and VOLCANO.

	12.0	 	Change Notification

	 	12.1	 	EI Proposed Changes. No Engineering or Manufacturing Changes to form, fit or

Page 14 of 29

 

	 	 	 	function may be made to, or incorporated into, Products without the prior written approval
of the VOLCANO. EI will provide VOLCANO written notice of any proposed Engineering or
Manufacturing Changes to form, fit, or function and provide evaluation samples and other
appropriate information as may be specified by the VOLCANO. Such information may include
possible effects on price, performance, reliability, manufacturing capacity, lead and
delivery times, or appearance, and any Obsolete or other Components changes. VOLCANO must
provide written approval of the Impact Proposal prior to any implementation of the
Engineering or Manufacturing Change.
	 
	 	12.2	 	VOLCANO Proposed Changes. EI acknowledges that VOLCANO may need to change the
Product or processes during the Term for contractual, engineering or Product related
reasons. These changes will be communicated through a Change Order (CO) request. EI is
only to take action when given change instructions in writing from VOLCANO. After receipt
of the CO, EI will provide to VOLCANO, any delivery impact, an implementation date,
potential scrap or material exposure and the impact on the price of the Product due to CO
changes. If acceptable, VOLCANO will notify the EI and provide specific instructions to EI
on CO implementations.
	 
	 	12.3	 	Financial Responsibility from Proposed Changes. If VOLCANO accepts EI’s Impact
Proposal, VOLCANO will assume liability for any material made obsolete due to a CO
implementation per the terms and conditions described in Section 10.2 Component
Discontinuances of this Agreement. In addition, VOLCANO will be responsible for increased
labor or material charges and any reasonable rework or expedite charges for labor,
materials and test resulting from a CO.

	13.0	 	Intellectual Property

	 	13.1	 	Intellectual Property Indemnification. Each party agrees to indemnify, defend
and hold harmless the other party from all liability, causes of action, demands, losses,
damages, costs and expenses (including attorneys’ fees) arising out of any third party
claims that the Deliverables manufactured by EI or the processes performed by EI in the
performance of this Contract infringe a patent, copyright, trade secret, or other
intellectual property right, foreign or domestic, of said third party, to the extent that
said third party claims are based on Deliverables and processes incorporating designs,
specifications or other documentation of said indemnifying party and the other party’s
compliance therewith. Notwithstanding the above, VOLCANO agrees to indemnify, defend and
hold harmless EI from all liability, causes of action, demands, losses, damages, cost and
expenses (including attorney’s fees) arising out of any third party claims that VOLCANO
Property or Product Requirements infringe a patent, copyright, trade secret, or other
Intellectual Property Right, foreign or domestic, of said third party.
	 
	 	13.2	 	Background Technology. Except as otherwise expressly set forth in this
Agreement, (a) each party is and will be the sole and exclusive owner of all right, title,
and interest
in and to its own background Technology and neither party acquires any interests under
this Contract to the other’s background Technology and (b) nothing in this Contract

Page 15 of 29

 

	 	 	 	shall be construed to limit or restrict any right of either party to register,
encumber, transfer, license, access, reference, use, or practice any of its own
background Technology in any way for any purpose or use, including without limitation,
the use in connection with the development, manufacture, distribution, marketing,
promotion, and/or sale of any products. Background Technology of a particular party
shall mean all Technology owned or licensed by said party prior to commencement of this
Contract and shall not include Derivative Work Developed Technology and Pre-Existing
Intellectual Property.

	14.0	 	Confidential Information

	 	14.1	 	Proprietary Information. During the Term, a Party (the “Recipient”) may
receive or have access to certain information of the other Party (the “Discloser”) that
is marked or otherwise expressly designated as “Confidential,” including information or
data concerning the Discloser’s Intellectual Property, products or product plans,
business operations, strategies, customers and related information. The Parties will be
bound by the terms of the NDA and/or the CDA and any information designated as
Confidential under this Section 14.1 shall also be considered “Proprietary Information”
as such term is defined in the NDA/CDA. To the extent any term of this Agreement
conflicts with any term in the NDA/CDA, the terms of this Agreement will control and take
precedence. Proprietary Information, as defined in the NDA/CDA, may only be used by
those employees or temporary employees of the Recipient who have a need to know such
information for purposes related to this Agreement. The AVL, Bill of Material,
Forecasts, Orders, Product Requirements and other information identified in this
Agreement as VOLCANO confidential must be held in confidence by EI under the terms of the
NDA/CDA. Notwithstanding the foregoing, EI may provide VOLCANO’s Proprietary Information
to EI’s subcontractors or suppliers, provided that EI binds such third parties to
substantially similar confidentiality obligations.

	15.0	 	Force Majeure Events

	 	15.1	 	Force Majeure. Neither party shall be liable hereunder by reason of any
failure or delay in the performance of its obligations hereunder on account of acts of
God or other cause which is beyond the reasonable control of such party and could not
have been avoided by the exercise of reasonable prudence. In the event of the occurrence
of any force majeure event, the affected party shall notify the other party immediately
in writing of the invocation of this Section 16.1 Notice of Breach, and each party’s
obligations hereunder to the other shall be suspended for the duration of such force
majeure event; provided, however, that the affected party shall be obligated to use its
commercially reasonable efforts to restore performance hereunder as soon as reasonably
practicable, and provided, further, that if such event continues for more than thirty
(30) days in the aggregate in any six (6) month period, the non-affected party shall have
the right to terminate this Agreement at any time upon written Notice to the other party.

	16.0	 	Events of Default

	 	16.1	 	Notice of Breach. If either Party is in “Material” Breach of any provision
of this Agreement, the non-breaching Party may, by notice to the breaching Party, except
as

Page 16 of 29

 

	 	 	 	otherwise prohibited by the United States bankruptcy laws, terminate the whole or any
part of this Agreement or any Order, unless the breaching Party cures the Breach within
thirty (30) calendar days after receipt of notice.
	 
	 	16.2	 	Causes of Breach. For purposes of this Agreement, the term “Breach”
includes any:

	 	a)	 	proceeding, whether voluntary or involuntary, in bankruptcy or
insolvency by or against a Party;
	 
	 	b)	 	appointment, with or without a Party’s consent, of a receiver or an
assignee of a Party for the benefit of creditors;
	 
	 	c)	 	other failure by a Party to comply with any material provision of
this Agreement with additional failure to provide the non-breaching Party, upon
request, with reasonable assurances of future performance.

	17.0	 	Termination

	 	17.1	 	Termination For Convenience. Either party may terminate this Agreement
hereunder for any reason at its convenience upon one hundred eighty (180) calendar days
prior written notice to the other party.
	 
	 	17.2	 	Effect of Expiration or Termination. Upon expiration or termination of
this Agreement, the Parties agree to the following terms regarding the relevant VOLCANO
Property and Termination Inventory:

	 	a)	 	All Orders issued prior to the effective date of the termination or
expiration will be fulfilled pursuant to and subject to the terms of this
Agreement, even if the Delivery Dates of Products under such Orders are after the
effective date of expiration or termination; and
	 
	 	b)	 	All licenses granted by VOLCANO to EI to any VOLCANO Property or
Intellectual Property or by EI to VOLCANO to any EI Intellectual Property will
automatically terminate upon earlier termination or expiration of this Agreement
if such termination is for convenience.

	 	17.3	 	Survival. The rights and obligations under the following Sections of this
Agreement will survive any expiration or earlier termination of this Agreement in
accordance with their terms: Section 2 (“Definitions”); 4 (“Ownership”); 7 (“Prices
and Payment Terms”); 9 (“Warranties”); 13 (“Intellectual Property Defense”); 14
(“Confidential Information”); 17 (“Termination”); 18 (“Limitation of Liability”); and 20
(“Miscellaneous”).
	 
	 	17.4	 	VOLCANO Obligations upon Complete or Partial Termination. In the event of
a complete or partial termination of this Agreement by either Party, VOLCANO will
reimburse EI for any mutually agreed non-amortized EI costs associated with Product
not originally funded through Non-Recurring Engineering (NRE) charges. In addition, in
the event of a complete or partial termination of this Agreement (i) by EI for cause as
provided in Section 16.1 above (ii) by VOLCANO, for convenience as provided in
Section 17.1 above, or for cause as provided in Sections 16.1 above; or
(iii) by either

Page 17 of 29

 

	 	 	 	party in the event of a force majeure event as described in Section
15.1 above, the Parties agree to take the following actions:

	 	17.4.1	 	EI will identify any Components in inventory, and VOLCANO will have the right of
first refusal to purchase such Components;
	 
	 	17.4.2	 	EI will use commercially reasonable efforts to cancel its purchase commitments
or return for credit or find other use for all Components intended for use in the
Product (including all Components rendered excess/obsolete by Engineering Changes
or Manufacturing Changes, or COs);
	 
	 	17.4.3	 	EI will cancel all cancelable, pending orders to Component Suppliers from the
date of notification by VOLCANO of the complete or partial termination of this
Agreement.
	 
	 	17.4.4	 	VOLCANO will reimburse EI for all validated actual costs, charges and fees
incurred to return any portion of the Termination Inventory to Component
Suppliers. All costs will be justified by appropriate documentation; and
	 
	 	17.4.5	 	VOLCANO will reimburse EI for Termination Inventory remaining after EI has taken
those steps required above. Any such reimbursement will be: (i) at EI’s quoted
price for Components to VOLCANO; (ii) the purchase price in effect at the date of
cancellation for finished Products.

	 	17.5	 	VOLCANO’s Rights Upon Termination. In the event of termination by VOLCANO,
EI will provide VOLCANO the following:

	 	a)	 	All VOLCANO Property (unless sold to EI pursuant to the terms of this
Agreement or otherwise agreed to in writing)
	 
	 	b)	 	Developments, excluding those made by EI.

	18.0	 	Limitation of Liability
	 
	 	 	NEITHER PARTY WILL BE LIABLE FOR ANY INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES TO THE
OTHER (INCLUDING LOSS OF PROFITS) ARISING OUT OF ANY PERFORMANCE OF THIS AGREEMENT OR IN
FURTHERANCE OF THE PROVISIONS OR OBJECTIVES OF THIS AGREEMENT, REGARDLESS OF WHETHER SUCH
DAMAGES ARE BASED ON TORT, WARRANTY, CONTRACT OR ANY OTHER LEGAL THEORY, EVEN IF ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES. NOTWITHSTANDING THE ABOVE, EACH PARTY WILL BE RESPONSIBLE FOR
ANY DAMAGES LOSSES, ETC. INCLUDED IN AN AWARD OR SETTLEMENT OF A THIRD PARTY INTELLECTUAL
PROPERTY CLAIM IN ACCORDANCE WITH SECTION 13 ABOVE, OR ANY DAMAGES ARISING FROM DEATH
OR BODILY INJURY. IN ADDITION, EACH PARTY WILL BE RESPONSIBLE FOR ALL DAMAGES, OF ANY KIND,
SUFFERED AS A RESULT OF
ANY UNAUTHORIZED DISCLOSURE OF THE OTHER PARTY’S TRADE SECRETS WHERE SUCH DISCLOSURE RESULTS
IN ACTUAL DAMAGES.

Page 18 of 29

 

	19.0	 	Liability Cap
	 
	 	 	IN NO EVENT WILL EI’S TOTAL LIABILITY UNDER THIS AGREEMENT EXCEED $100,000.00 PER CALENDAR
YEAR. NOTWITHSTANDING THE ABOVE, EACH PARTY WILL BE RESPONSIBLE FOR ANY DAMAGES, LOSSES, ETC.
INCLUDED IN AN AWARD OR SETTLEMENT OF A THIRD PARTY INTELLECTUAL PROPERTY CLAIM IN ACCORDANCE
WITH SECTION 13 HERIN ABOVE, OR ANY DAMAGES ARISING FROM DEATH OR BODILY INJURY,
PROVIDED THAT SUCH DAMAGES ARISE OUT OF THE RESPONSIBLE PARTY’S INTENTIONAL MISCONDUCT OR
GROSS NEGLIGENCE. IN ADDITION, EACH PARTY WILL BE RESPONSIBLE FOR ALL DAMAGES, OF ANY KIND,
SUFFERED AS A RESULT OF ANY UNAUTHORIZED DISCLOSURE OF THE OTHER PARTY’S TRADE SECRETS WHERE
SUCH DISCLOSURE RESULTS IN ACTUAL DAMAGES, PROVIDED THAT SUCH DAMAGES ARISE OUT OF THE
RESPONSIBLE PARTY’S INTENTIONAL MISCONDUCT OR GROSS NEGLIGENCE SUBJECT TO THE ABOVE LIABILITY
CAP OF $100,000.00 PER CALENDAR YEAR.
	 
	20.0	 	Miscellaneous

	 	20.1	 	Notices. See Attachment B.
	 
	 	20.2	 	Reference to Days. All references in this Agreement to “business days (M-F
excluding holidays)” will, unless otherwise specified herein, mean calendar days.
	 
	 	20.3	 	Independent Contractors. Each Party represents and warrants to the other
that its relationship with the other under this Agreement will be as an independent
contractor and neither Party is a partner, employee or agent of or with the other.
	 
	 	20.4	 	Severability. If any provision of this Agreement is determined by a court
of competent jurisdiction to be invalid or unenforceable in any respect, such
determination will not impair or affect the validity, legality or enforceability of the
remaining provisions hereof, and each provision is hereby declared to be separate,
severable and distinct. To the extent that any such provision is found to be invalid,
illegal or unenforceable, the Parties hereto will negotiate in good faith to substitute
for such provision, to the extent possible, a new provision that most nearly effects the
Parties’ original intent in entering into this Agreement or to provide equitable
adjustment in the event no such provision can be added. The other provisions of this
Agreement will remain in full force and effect.
	 
	 	20.5	 	VOLCANO Agreement.  The VOLCANO Agreement (Indemnification, Insurance, and
Limits of Liability) signed by VOLCANO on 26 August, 2005 and EI on 29 August 2005 is
hereby incorporated herein and made a part hereof. Purchase orders under the Insurance
section in the VOLCANO Agreement executed on 26 August, 2005 shall include this
Manufacturing Services Agreement
	 
	 	20.6	 	Hierarchy of Documents/Order of Precedence. Unless otherwise specifically
agreed to by the Parties, in the event of any conflict between the provisions of this
Agreement and SOWs negotiated either prior to or subsequent to this Agreement, the order
of

Page 19 of 29

 

	 	 	 	precedence is as follows:

	 	(i)	 	the VOLCANO Agreement;
	 
	 	(ii)	 	this Agreement;
	 
	 	(iii)	 	the NDA/CDA;
	 
	 	(iv)	 	a SOW;
	 
	 	(v)	 	any Addendum; and
	 
	 	(vi)	 	the front of each Order that is acknowledged by EI. Unless otherwise
specifically agreed, the Parties acknowledge that any terms and conditions of any
such quotation, Order, acknowledgment or invoice will be deemed deleted and of no
effect whatsoever.

	 	20.7	 	Entire Agreement. This Agreement constitutes the entire agreement between
the Parties with respect to the subject matter hereof and supersedes all prior agreements
(excluding the VOLCANO Agreement and the NDA/CDA), understandings, negotiations and
discussions, whether written or oral; for purposes of construction, this Agreement will
be deemed to have been drafted by both Parties. No modifications, amendments, or waiver
of any term, condition, or provision of this Agreement will be binding on either Party
unless in writing and signed by an authorized representative of each Party.
	 
	 	20.8	 	Governing Law. This Agreement will be governed in all respects by the laws
of the State of New York without reference to the conflict of laws provisions.
	 
	 	20.9	 	Assignment. Neither this Agreement nor any right, license, privilege or
obligation provided herein may be assigned, transferred or shared by either Party without
the other Party’s prior written consent, and any attempted assignment or transfer is
void.
	 
	 	20.10	 	No Publication. Neither Party may publicize or disclose to any third
party, without the written consent of the other Party, the terms of this Agreement.
Without limiting the generality of the foregoing sentence, no press releases may be made
without the prior written mutual consent of each Party.
	 
	 	20.11	 	Headings. The section headings in this Agreement are for convenience of
reference only. The headings will not limit or extend the meaning of any provision of
this Agreement, and will not be relevant in interpreting any provision of this Agreement.
The plural will be deemed to include the singular, and the singular will be deemed to
include the plural.
	 
	 	20.12	 	Dispute Resolution. Prior to any Party pursuing legal remedies hereunder,
the Parties
agree to negotiate in good faith to resolve any disputes arising during the performance
of the Agreement. If such negotiations and meetings do not resolve the dispute within
five (5) business days after notice of the dispute, then a Senior Vice President from

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	 	 	 	each Party will meet face to face within thirty (30) business days or as mutually
agreed between them to attempt to resolve such dispute. If the dispute is not resolved
to the satisfaction of these executives, then either VOLCANO or EI may terminate this
Agreement in whole or in part and pursue all available legal remedies.

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

	 	 	 	 	 	 	 	 	 
	VOLCANO CORPORATION	 	ENDICOTT INTERCONNECT 

TECHNOLOGIES, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	Date:

	 	 	 	Date:	 	 	 	 
	By:

	 	 

	 	By:
	 	 

	 	 
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	John Dahldorf
	 	Name:
	 	Wade Phalen	 	 
	Title:

	 	CFO
	 	Title:
	 	VP and GM of Complex Assembly	 	 

Page 21 of 29

 

Attachment A

VOLCANO Product Pricing

1) The Development NRE cost for the build of VOLCANO’s Flex carrier in EI facility in Endicott, NY
is $40,000. The deliverable for this item is five (5) frames of Flex product. Delivery date is 13
weeks from receipt of PO.

2) If VOLCANO and EI enter into a two (2) year production contract for the turnkey Flex and
assembly, EI will refund/rebate the Flex development NRE.

3) The pricing for the turnkey Flex and assembly will be [CONFIDENTIAL]* for the
first [CONFIDENTIAL]* pieces on a frame at [CONFIDENTIAL]* pieces
per week minimum. EI will be responsible to capitalize the specialized placement and dispensing
equipment required for the build. The placement equipment is currently under development at
Universal Instruments and VOLCANO has directed EI to purchase, lease or acquire such equipment.
VOLCANO has directed EI to purchase, lease, or acquire from Asymtek, the dispensing equipment to
manufacture this product.

4) The pricing for the turnkey Flex and assembly will be [CONFIDENTIAL]* for
follow-on orders in 2007 and 2008, at a minimum of [CONFIDENTIAL]* per week, for a
total of [CONFIDENTIAL]* pieces.

5) VOLCANO will purchase from EI, product at the price and minimum quantities per week as defined
in sections 3 and 4 above. The price and minimum quantities are for good parts delivered by EI to
Volcano. Good parts are those that meet the requirements as defined in the SOW, its referenced
prints and specifications, and pass an outgoing electrical test at EI. This electrical test will be
performed using equipment and test programs provided by VOLCANO. EI will manufacture the Product
using its normal manufacturing practices. EI will care for VOLCANO consigned materials in the same
manner as it own materials. Each party shall bear the financial loss of its materials that are
yielded, consumed, or damaged during the manufacturing process at EI.

6) Assemblies that are found to be nonconforming to the requirements as defined in the SOW, its
referenced prints and specifications, and that do not pass an outgoing electrical test at EI or
fail incoming verification at VOLCANO, shall be deemed nonconforming product. Nonconforming product
that can not be repaired or accepted under agreement by both parties shall be deemed as scrap or
yielded product. Each party shall bear the financial loss of its portion of the materials and value
add in the total value of nonconforming assemblies. Neither party shall hold the other liable for
losses of its material or value add content.

 

			
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Attachment B

Administration and Notices

	1.	 	Notices:

	 	1.1	 	Any notice or other communication required or permitted to be given hereunder will
be in writing. Notices may be delivered in person, by an email with return verification
from the receiving party, reputable courier with delivery confirmation, transmitted by
fax with confirmation, or sent by certified mail return receipt requested.
	 
	 	 	 	Either Party may change its designated contact and address for purposes of notice by
giving notice to the other Party in accordance with these provisions.

Coordinators

Technical Coordinators:

[CONFIDENTIAL]*

Contract Coordinators:

[CONFIDENTIAL]*

The Coordinators for the respective companies will determine designated points of contact for
specific issues where not specified in this Agreement.

 

			
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STATEMENT OF WORK (SOW)

FOR THE DELIVERY OF FLEX AND ASSEMBLY

OF

VOLCANO p/n [CONFIDENTIAL]*

 

			
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	1.0	 	SCOPE

	 	1.1	 	Introduction

	 	 	The work identified in this Statement of Work (SOW) is to be performed for VOLCANO by EI. This
document identifies the product description, scope of work to be performed and quality
considerations to be observed during the processing of this product. All exceptions and/or
deviations to any requirements defined herein shall have prior approval from VOLCANO. This SOW
may be amended by mutual agreement of both parties.

	 	1.2	 	Summary of Tasks
	 
	 	 	 	EI shall be responsible for performing the following tasks:
	 
	 	•	 	Develop the Flex substrate to the specifications defined on the applicable prints and
specifications
	 
	 	•	 	Manufacture the Flex
	 
	 	•	 	Assemble the (Consigned Components) [CONFIDENTIAL]* and
[CONFIDENTIAL]* to the Flex
	 
	 	2.0	 	APPLICABLE DOCUMENTS

	 	 	Unless stated otherwise, the most recent version of these documents shall apply. VOLCANO is
responsible to notify EI of updates to VOLCANO documents. The documents listed form a part of
this Statement of Work.

	 	2.1	 	VOLCANO Documents:
	 
	 	 	 	[CONFIDENTIAL]*
	 
	 	2.2	 	Industry/Other Documents:

	 	 	 	ISO 9001:2000
	 
	 	 	 	IPC-A-610 Rev D – Acceptability of electronic assemblies
	 
	 	 	 	ANSI/ESD S20.20-1999 – Protection of electrical and electronic parts, assemblies, and

 

			
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	 	 	 	equipment (Excluding Electrically Initiated Explosive Devices)

	3.0	 	PRODUCTS AND SERVICES

EI shall procure all materials, develop the process to fabricate and manufacture the Flex circuit.
Five frames of Flex circuits shall be delivered to VOLCANO as prototypes for initial testing. Upon
VOLCANO’s acceptance of the prototype units, EI shall manufacture substrates for three (3)
consecutive weeks (~25 frames per week) to be used for qualification of the EI Flex substrate. Upon
successful qualification of the Flex circuit, EI shall manufacture, as a turnkey product the Flex
and assembly of the surface mount components. The assembly shall be comprised of the solder and
underfill of the [CONFIDENTIAL]* and [CONFIDENTIAL]*. The
[CONFIDENTIAL]* and [CONFIDENTIAL]* components will be consigned
by VOLCANO. All Product will be delivered to VOLCANO in a multi-up format, with multiple pieces on
a frame. EI will perform an electrical test of product using Volcano furnished test and test
equipment.

	4.0	 	PURCHASE ORDER

VOLCANO shall place a PO with EI for the amount of $40,000 for the cost of tooling and a portion of
the development cost of the Flex circuit manufacturing process.

	5.0	 	QUALITY REQUIREMENTS

Manufacturing Readiness Review – To be scheduled within 30 days of delivery of the 5 qualification
frames of Flex circuits

Quality and Inspection System per ISO 9001:2000

	6.0	 	PACKAGING/SHIPPING REQUIREMENTS

Static protection is required of the assembled Flex and the components.

Product is to be packaged to ensure proper protection during shipment and handling.

	7.0	 	ADMINISTRATIVE/PROGRAM MANAGEMENT REQUIREMENTS

	 	•	 	Weekly status by COB every Thursday
	 
	 	•	 	Any changes or contractual correspondence shall be coordinated through the Coordinators
identified below.

	8.0	 	PROGRAM SCHEDULE

	 	•	 	The delivery of 5 frames of Flex circuits to VOLCANO shall occur in 13 weeks from
receipt of PO.

 

			
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	 	•	 	VOLCANO will perform testing, analysis and approve/disapprove the delivered
qualification parts in 3 weeks or less from receipt.
	 
	 	•	 	Upon approval of qualification, but no sooner than 6 weeks from delivery of the
1st 5 frames, EI shall produce and deliver Flex circuits of
[CONFIDENTIAL]* pieces on a frame per week for 3 weeks to validate
manufacturing capacity. This may include a ramp to get to [CONFIDENTIAL]*
per week.
	 
	 	•	 	Manufacturing of Flex circuits shall continue at the rate of
[CONFIDENTIAL]* units per week minimum through December 2008.

	9.0	 	DELIVERABLES  — VOLCANO To EI

	 	•	 	Documents as noted above.
	 
	 	•	 	Artwork Gerber Files.
	 
	 	•	 	Consigned Components.
	 
	 	•	 	[CONFIDENTIAL]* Wafer Prober and Test programs

	10.0	 	DELIVERABLE — EI to VOLCANO

	 	•	 	The Flex shall be delivered in a multi-up frame.
	 
	 	•	 	Flex images mounted on frames.
	 
	 	•	 	Flex assemblies mounted on frames.

	11.0	 	CHANGES

VOLCANO may, at any time, from time to time, by written notice to EI, request changes to the part
numbers, specifications, or work scope, including engineering changes. EI shall submit a written
report to VOLCANO setting forth the probable effect, if any, of the requested change in regard to
the work and the effect of any change on prices, payment and delivery. EI shall not proceed with
any such change until authorized in writing by VOLCANO.

	12.0	 	ENGINEERING CHANGE ORDER (ECO) PROCESSING.

EI will process ECO’s submitted by VOLCANO based on the following criteria.

Minimum documentation requirements from VOLCANO:

 

			
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	1)	 	An ECO cover sheet stating purpose of the EC, the Product affected classification as
“emergency” or “standard”;
	 
	2)	 	The description of the change i.e., functional or nonfunctional;
	 
	3)	 	Marked up drawings, BOMs, AVL, Logic Schematics, specifications, or other document
based on the previous approved control copy sent to EI;
	 
	4)	 	Disposition if all levels of Products and Components affected (on order, stock and
work-in- process).

Page 28 of 29

 

Coordinators

Technical Coordinators:

[CONFIDENTIAL]*

Contract Coordinators:

[CONFIDENTIAL]*

 

			
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