Document:

exv10w1

 

Exhibit 10.1

LICENSE AGREEMENT

     This License Agreement, effective as of March 22, 2005 (the “Effective Date”), is by and
between Angiotech Pharmaceuticals, Inc., a corporation organized and existing under the
laws of the Province of British Columbia, Canada (“Angiotech Parent”), Angiodevice
International GmbH, a corporation organized and existing under the laws of Switzerland
(“Angiodevice”), Angiotech International AG, a corporation organized and existing under the
laws of Switzerland (“Angiotech International”), Angiotech BioCoatings Corp., a corporation
organized and existing under the laws of the State of New York, USA (“Angiotech BioCoatings”) and
CABG Medical, Inc., a corporation organized and existing under the laws of the State of
Minnesota, USA (“CABG”). Each of the parties hereto is referred to herein as “Party” and
collectively as the “Parties”.

WITNESSETH

     WHEREAS Angiodevice, Angiotech International and Angiotech BioCoatings are all subsidiaries of
Angiotech Parent (hereinafter collectively referred to as “Angiotech”) and are all Affiliates (as
that term is defined below) of each other;

     AND WHEREAS Angiotech owns, or has acquired licenses to, certain domestic and foreign patents
and patent applications and has developed know-how, relating to the use of paclitaxel as a
therapeutic agent in local medical applications;

     AND WHEREAS Angiotech has the right to grant licenses with respect to such patents, patent
applications, licenses and know-how for use in specified areas;

     AND WHEREAS CABG desires to receive a license for the use of certain of such patents, patent
applications, licenses and know-how, and Angiotech is willing to grant such a license to CABG;

     NOW THEREFORE, in consideration of the mutual promises and agreements set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Angiotech and CABG hereby agree as follows:

1. Definitions.

     Capitalized terms used in this Agreement and not otherwise defined herein shall have the
meaning as set forth below:

     “Affiliate” means any entity that, directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under common control with a Party to this
Agreement. For purposes of this definition, control means the direct or indirect ownership of at
least fifty percent (50%) (or such lesser percentage which is the maximum allowed to be owned by a
foreign corporation in a particular jurisdiction), of (a) the outstanding voting securities of such
entity, or (b) the decision making authority of such entity.

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     “Agreement” means this License Agreement, together with all exhibits annexed hereto,
as the same shall be modified and in effect from time to time.

     “CABG License” has the meaning ascribed to it in Section 2.1.

     “CABG Technology” means CABG’s Holly GraftTM System which is designed to bypass
blockages in coronary arteries by a single graft attached at one anastomosis/aperture to the aorta,
and any other proprietary information or technology developed or acquired by CABG that relates to
the bypass of blockages in coronary arteries.

     “Change of Control” means the acquisition by any person, or by any person acting
jointly or in concert with an offeror (“Joint Actor”), whether directly or indirectly, of voting
securities of CABG which, when added to all other voting securities of CABG held at same time by
such person, or by such person and a Joint Actor, totals for the first time not less than fifty
percent (50%) of the outstanding voting securities of CABG.

     “Clinical Data” means the results and analysis of data arising from the testing of a
drug, device or a combination thereof in vitro, in vivo in non-human subjects and in human
subjects, including safety and toxicity testing, or other pre-clinical testing, patient screening,
patient enrollment, patient status, any communications with regulatory authorities, actions taken
or modification in study design/conduct and summary of data collected on CRFs (Case Report Forms)
either paper or electronic.

     “Competitive Product” means in a given jurisdiction, (i) a drug or biologic approved
for marketing or in Phase III clinical development, (ii) a 510(k) device approved for marketing, or
(iii) a PMA device approved for marketing or in pivotal study clinical development, other than an
Eligible Product, that acts (or is being developed to act) for one or more target label indications
substantially similar to one or more approved or target label indications for an Eligible Product.

     “Confidential Information” means all information and data provided by the parties to
each other hereunder in written or other tangible medium and marked as confidential or, if
disclosed orally or displayed, identified as confidential at the time of disclosure and confirmed
in summary written form as confidential within thirty (30) days after disclosure, except any
portion thereof which:

          (a) is known to the receiving Party, as evidenced by the receiving Party’s written records,
before receipt thereof under this Agreement or any other agreement between the parties hereto
providing for confidentiality;

          (b) is disclosed to the receiving Party by a third person who is under no obligation of
confidentiality to the disclosing Party hereunder with respect to such information and who
otherwise has a right to make such disclosure;

          (c) is or becomes generally known in the trade through no fault of the receiving Party;

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          (d) is independently developed by the receiving Party, as evidenced by the receiving Party’s
written records, without access to such information; or

          (e) is required to be disclosed by applicable statute, rule or regulation of any court or
regulatory authority with competent jurisdiction; provided that the Party whose information is to
be disclosed shall be notified as soon as possible and the Party that is being required to disclose
such information shall, if requested by the Party whose information is to be disclosed, use
reasonable good faith efforts, at the expense of the requesting Party, to assist in seeking a
protective order (or equivalent) with respect to such disclosure or otherwise take reasonable steps
to avoid making such disclosure.

     “Calendar Quarter” means a calendar quarter or any part thereof.

     “Contract Year” means each successive period of four consecutive Calendar Quarters,
with the first such Contract Year beginning on the first day of the first full Calendar Quarter
that begins after the Effective Date.

     “Diligence Date(s)” means one or more of the date(s) set out in Section 4.1 as the
context requires.

     “Dollars” or “$” means the lawful currency of the United States of America.

     “Eligible Product” means any synthetic and/or biologic coronary artery bypass graft
products or systems that release or elute paclitaxel and that incorporate both Licensed Technology
and CABG Technology. For further clarification, “Eligible Product” does not include vascular
grafts, vascular wraps, products used in bypass procedures involving vessels harvested from the
patient, or products that fall within the scope of Angiotech’s 1997 license agreement with Boston
Scientific Corporation and Cook Inc., a copy of which is attached hereto as Exhibit D.

     “FDA” means the United States Food and Drug Administration or any successor agency.

     “First Commercial Sale” means the date of the first sale made pursuant to Regulatory
Approval, unless such Regulatory Approval is not required in such country, of an Eligible Product
in a country in CABG’s normal course of business.

     “IDE” means an Investigational Device Exemption under 21 C.F.R. Part 812, or such
other form of application or filing as may be required as a legal prerequisite to the commencement
of human clinical testing of an Eligible Product in the United States.

     “IND” means an Investigational New Drug Application under 21 C.F.R. Part 312, or such
other form of application or filing as may be required as a legal prerequisite to the commencement
of human clinical testing of an Eligible Product in the United States.

     “Improvements” means all improvements, variations, updates, modifications, and
enhancements made to the Licensed Patent Rights and/or Technical Information during the term of the
Agreement.

     “Investment Agreement” has the meaning ascribed to it in Section 3.3.

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     “License Fee” has the meaning ascribed to it in Section 3.1.

     “Licensed Field of Use” means coronary artery bypass graft field.

     “License Milestone Fee” has the meaning ascribed to it in Section 3.2.

     “Licensed Patent Rights” means all of the existing patents and patent applications set
out in Exhibit A, and all patent applications hereafter filed by Angiotech or its
Affiliates, or that Angiotech or its Affiliates have rights to, that are related to the existing
patents and patent applications set out in Exhibit A by way of any continuations,
continuations-in-part, divisions, provisionals or any substitute applications, any patent issued
with respect to any such patent applications, any reissue, re-examination, renewal or extension
(including any supplemental patent certificate) of any such patent, and any confirmation patent or
registration patent or patent of addition based on any such patent, and all foreign counterparts of
any of the foregoing, in each case to the extent they relate directly to the claims in the parent
application(s). “Licensed Patent Rights” includes “Core Patent Rights and “Focused Patent Rights”,
as those terms are defined in Article 7.

     “Licensed Technology” means Licensed Patent Rights, Technical Information in existence
as of the Effective Date, and any Improvements that CABG elects to have included in Licensed
Technology pursuant to Section 2.4.

     “Net Sales” means, with respect to any Eligible Product, gross sales from the sale,
rent, lease or otherwise making available of such Eligible Product to end-user third parties by or
on behalf of CABG and its Affiliates and permitted sublicensees, less the following, to the
extent the same are credited or deducted from the invoiced amount:

          (a) discounts, refunds, replacements, credits, rebates, allowances, adjustments, rejections,
recalls and returns (in the amount of the credit provided to the customer), all as usual and
customary in the business;

          (b) freight, postage, insurance, and other transportation charges;

          (c) sales and use taxes, customs duties, and any other governmental tax or charge (except
income taxes) imposed on or at the time of the production, importation, use, or sale of Eligible
Products (if separately invoiced), including any value added taxes (VAT), as adjusted for
reasonable and customary rebates and refunds; and

          (d) transfers at or below cost by or on behalf of CABG of Eligible Products in connection with
compassionate use, emergency use, bona fide research, treatment, Investigational New Drug
Applications (INDs) or the like, authorized by the FDA or corresponding foreign agencies.

     “NIH” means the National Institutes of Health (U.S.), also known as the “PHS”.

     “NIH Agreement” means the license agreement dated as of November 19, 1997, between
Angiotech and the NIH, as amended from time to time.

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     “Patent Coverage” means, for a particular Eligible Product in a given country, there
is a Valid Claim that, but for the license granted to CABG under this Agreement, would be infringed
by the manufacture, use or sale of such Eligible Product in such country or, where such Eligible
Product is used or sold but not manufactured, in such country, by the manufacture of such Eligible
Product in the country of manufacture.

     “Royalty” has the meaning ascribed to it in Section 3.4.

     “Regulatory Approval” means any approvals, licenses, registrations or authorizations
of any federal, state, provincial or local regulatory agency, department, bureau or other
governmental entity necessary for the manufacture and sale of a product in a regulatory
jurisdiction.

     “Senior Staff at Angiotech” means individuals employed by Angiotech Parent who are at
the level of Senior Vice President or above.

     “Technical Information” means all know-how, information, materials, formulations,
trade secrets, data and other proprietary information in the possession of, developed by, or
acquired by Angiotech or its Affiliates that are necessary or useful to practice the Licensed
Patent Rights, but excluding the Licensed Patent Rights and Confidential Information of third
parties that cannot be shared; provided however that any know-how, information, materials,
formulations, trade secrets, data and other proprietary information disclosed by Angiotech to CABG
shall continue to be Confidential Information of Angiotech.

     “Third Party License” means any license between Angiotech and a third party, including
but not limited to NIH and UBC, as such license may be amended from time to time, that includes in
its terms a grant of rights to Angiotech to use, and to sublicense the use of, technology that
forms part of the Licensed Technology.

     “Term” means that this Agreement shall, subject to the early termination provisions
specifically provided for herein, have a term from the Effective Date until the expiration of all
of the United States or foreign patents included in the Licensed Technology, including any United
States or foreign patents which become part of the Licensed Technology after the date of this
Agreement as provided for herein.

     “Territory” means worldwide.

     “Triggering Event” has the meaning ascribed to it in Section 3.2.

     “UBC” means The University of British Columbia and its sublicensees and assigns.

     “UBC Agreement” means the license agreement executed as of November 7, 1997 between
Angiotech and UBC, as amended from time to time.

     “Valid Claim” shall mean a claim in an issued patent or unexpired patent or patent
application within the Licensed Patent Rights that, (a) has not been finally cancelled, withdrawn,
abandoned or rejected by any administrative agency or other body of competent jurisdiction not
subject to further appeal, (b) has not been revoked, held invalid, or declared unpatentable or
unenforceable in a decision of a court or other body of competent jurisdiction that is

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unappealable or unappealed within the time allowed for appeal, and (c) has not been rendered
unenforceable through disclaimer or otherwise.

     “Warrant Agreement” means the Warrant Agreement entered into by Angiodevice and CABG
on March 22, 2005, a copy of which is attached hereto as Exhibit B.

2. License Grant.

     2.1 Grant. Subject to terms and conditions of this Agreement, including but not
limited to the reservation of rights set forth below in Section 2.3, Angiotech hereby grants to
CABG an exclusive right and license to use the Licensed Technology to make, have made, use, offer
to sell, sell and import Eligible Products solely in the Licensed Field of Use in the Territory
(the “CABG License”). The Parties agree that, for the avoidance of doubt, the granting of the CABG
License in this Section 2.1, (a) does not give CABG any rights to make, have made, use, offer for
sale, sell or import any component parts of the Eligible Products for use in any third party
devices, and (b) Subject to Section 2.3, Angiotech has no rights to grant any further right or
license in the Licensed Technology to any third party to make, have made, use, offer for sale, sell
or import any Eligible Products in the Licensed Field of Use in the Territory, and does not itself
have the right to make, have made, use, offer for sale, sell or import any Eligible Products in the
Licensed Field of Use in the Territory. As soon as is reasonably practical after the execution
of this Agreement, Angiotech shall disclose to CABG all Technical Information and shall make their
employees available to CABG to answer any questions CABG may have regarding such Technical
Information.

     2.2 Sublicensing. CABG shall not have any rights to sublicense its rights to the
Licensed Technology obtained pursuant to Section 2.1, except to (a) its Affiliates with written
notice to be provided to Angiotech at least thirty (30) days in advance of any such sublicense or,
(b) as otherwise consented to by Angiotech, with such consent to be granted or withheld at the sole
discretion of Angiotech. No granting of any sublicense by CABG shall relieve CABG from, or
diminish any obligation of CABG, under this Agreement and CABG shall be responsible for the
performance by its permitted sublicensees under such sublicense. Any sublicense granted by CABG
under this Agreement shall be subject to the terms and conditions of this Agreement and any
applicable Third Party License.

     2.3 Reservation of Rights. Angiotech reserves the following rights, among others, to
the Licensed Technology; (a) any use or purpose outside the Licensed Field of Use, (b) research
purposes in all fields and applications, including in the Licensed Field of Use, (c) to the extent
reserved or specified under any Third Party Licenses, including but not limited to the reservation
by UBC of rights to use the Licensed Technology for research, or (d) to the United States
Government by applicable legislation and regulations.

     2.4 Angiotech Improvements. Angiotech hereby grants to CABG a right to elect to
include in the Licensed Technology any Improvements made by or for Angiotech after the Effective
Date, to the extent that such Improvements relate to the Eligible Product(s). Angiotech shall
notify CABG in writing of such Improvements, providing a description of the Improvements and any
financial and other obligations under any applicable Third Party License, and CABG may, by giving
written notice to Angiotech within thirty (30) days following receipt

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of Angiotech’s written notice describing such Improvements, elect to include such Improvements
as Licensed Technology under this Agreement; provided that:

          (a) CABG will be obligated to reimburse Angiotech for all of the costs and expenses of
Angiotech under any Third Party License (if applicable, to be apportioned by Angiotech acting
reasonably, among CABG, Angiotech and other sublicensees of such technology from Angiotech, notice
of such apportionment to be given to CABG together with the basis upon which the apportionment
determination was made) and CABG will be obligated to pay royalties on sales as required by any
Third Party License in addition to the Royalties payable under this Agreement; and

          (b) CABG will be subject to all performance, minimum sales and other obligations set forth in
the Third Party License (as apportioned by Angiotech, if applicable) relating to such Improvements.

In the event that CABG does not elect to include such Improvements as Licensed Technology within
such thirty (30) day period, then CABG shall have no rights to such Improvements thereafter. If
CABG does not elect to include such Improvement as Licensed Technology, Angiotech agrees it shall
not grant any right or license to any third party to use the Improvement to make, have made, use,
offer to sell, sell and import Eligible Products in the Licensed Field of Use in the Territory.

     2.5 Improvements Made by CABG. Any Improvements made by CABG to Licensed Patent
Rights and Licensed Technology other than to Licensed Patent Rights or Technical Information
licensed to Angiotech Parent under the UBC Agreement, shall be owned by CABG. CABG hereby grants
to Angiotech a non-exclusive, perpetual, non-royalty bearing, worldwide right and license,
excluding the Licensed Field of Use, to make, use, offer to sell, sell and import, with the right
to sublicense all such rights, to any Improvements made by or for CABG. Any Improvements made by
CABG to the Licensed Patent Rights or Technical Information licensed to Angiotech Parent under the
UBC Agreement shall be owned by Angiotech and shall automatically be included in Licensed
Technology. CABG hereby agrees that it shall promptly provide Angiotech with notice of any
Improvements that could be covered under this Section 2.5 and that it will take all steps necessary
to transfer ownership to Angiotech of Improvements relating to the UBC rights as described above.

     2.6 Stand-Still and Potential Expansion of Eligible Products Definition.

          (a) Angiotech hereby agrees that it will not develop, or enter into any agreement with a third
party that would have the effect of permitting such third party to develop, a system or products to
be used in conventional coronary artery bypass procedures involving vessels harvested from the
patient, using all or any part of the Licensed Technology, for a period of twelve (12) months after
the Effective Date. If, during that twelve (12) month period, CABG successfully completes, or has
made material progress towards the completion of, feasibility studies on products for use in
conventional coronary artery bypass procedures involving vessels

          harvested from the patient
and the Parties have agreed on development milestone timelines for such product, Angiotech agrees
that it will amend the definition of Eligible Products to read as follows:

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“Eligible Product” means any synthetic and/or biologic (including but
not limited to vessels harvested from the patient) coronary artery bypass graft
products or systems that release or elute paclitaxel and that incorporate both
Licensed Technology and CABG Technology. For further clarification, “Eligible
Product” does not include vascular grafts, vascular wraps or products that fall
within the scope of Angiotech’s 1997 license agreement with Boston Scientific
Corporation and Cook Inc., a copy of which is attached hereto as Exhibit D.

          (b) During the twelve (12) month period set out in (a) above, the Parties agree to negotiate
in good faith to define what “successful completion of feasibility studies or material progress
towards the completion of feasibility studies” will involve and to agree on development milestone
timelines (similar to those provided for herein) for the product and, in the event that the Parties
agree to a definition and to milestones, the Parties shall amend this Agreement to incorporate any
such language and to give effect to the other provisions of this Section 2.6. In the event that
(a) the parties have agreed on what “successful completion of feasibility studies or material
progress towards the completion of feasibility studies” will involve and on development milestone
timelines for such product, and CABG fails to “successfully complete feasibility studies, or to
make material progress towards the completion of feasibility studies”, or (b) the Parties fail,
after good faith negotiations, to agree on what “successful completion of feasibility studies or
material progress towards the completion of feasibility studies” will involve and/or on development
milestone timelines for such product, all within the twelve (12) month time period, then Angiotech
will be free to develop, or enter into any agreement with a third party that would have the effect
of permitting such third party to develop, a system or products to be used in conventional coronary
artery bypass procedures involving vessels harvested from the patient, using all or any part of the
Licensed Technology.

3. CABG License Fees & Royalties.

     3.1 License Maintenance Fees. In consideration for the license granted under Section
2.1 of this Agreement, CABG shall issue to Angiotech Angiodevice penny warrants for CABG voting
common shares with a value equivalent to five million Dollars ($5,000,000) (“License Fee”) under
the terms and conditions of the Warrant Agreement attached hereto as Exhibit B (the
“Warrant Agreement”). The CABG voting common shares will be valued as provided for in the Warrant
Agreement.

     3.2 CABG License Milestone Fees. As additional consideration for the license granted
under Section 2.1 of this Agreement, CABG shall pay the following license milestone fees (each, a
“License Milestone Fee”) to Angiotech Angiodevice within thirty (30) days of the occurrence of the
applicable event triggering payment of the License Milestone Fee (each, a “Triggering Event”):

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          (a) Receipt by CABG of a CE Mark for an Eligible Product, *** Dollars ($***) shall be payable
by CABG to Angiotech,

          (b) Receipt by CABG of approval of a Premarket Approval Application (“PMA”) from the FDA to
sell an Eligible Product in the United States, *** Dollars ($***) shall be payable by CABG to
Angiotech.

     3.3 Election to Pay in Common Stock. CABG shall have the option under Section 3.2(a)
and (b) of electing to pay Angiotech in equivalent value of CABG common shares, under terms that
are at least as favorable to Angiotech as provided for in the Investment Agreement entered into by
Angiotech Parent and CABG on March 22, 2005 (“Investment Agreement”), rather than in cash. In the
event that CABG wishes to elect to pay Angiotech in equivalent value of CABG voting common shares,
written notice of such election shall be provided to Angiotech within ten (10) business days after
the occurrence of the applicable Triggering Event. In the event that CABG makes an election as
provided for in this Section 3.3, the voting common shares of CABG will be valued by taking an
average of the closing price of the CABG common shares over the ten (10) trading days immediately
subsequent to the date of the applicable Triggering Event. In the event that Angiotech has not
received such notice of CABG’s election as provided for hereunder within ten (10) business days
after the occurrence of the applicable Triggering Event, CABG shall pay Angiotech in cash as
provided for in Section 3.2 (a) and/or (b) as applicable. CABG shall not be entitled to elect to
pay Angiotech in CABG voting common shares if such payment would take Angiotech’s total ownership
of CABG’s outstanding voting common shares above 20% without the express written approval of
Angiotech’s Board of Directors.

     3.4 Royalty.

          (a) Royalty Where Patent Coverage Exists. As further additional consideration for the
license granted under Section 2.1, within sixty (60) days after the end of each Calendar Quarter
during the Term, CABG shall pay to Angiotech Angiodevice a Royalty of *** percent (***%) of all Net
Sales in jurisdictions where Patent Coverage exists. In the event that CABG undergoes a Change of
Control during the Term, CABG shall be required to pay a Royalty of *** percent (***%) of all Net
Sales in jurisdictions where Patent Coverage exists.

          (b) Royalty Where No Patent Coverage Exists. As further additional consideration for
the license granted under Section 2.1, within sixty (60) days after the end of each Calendar
Quarter during the Term, CABG shall pay to Angiotech Angiodevice a Royalty of *** percent (***%) of
all Net Sales in jurisdictions where no Patent Coverage exists in consideration for the license
granted to CABG pursuant to Section 2.1 to the Technical Information within the Licensed
Technology.

          (c) First Commercial Sale. A Royalty shall become due and payable to Angiotech
Angiodevice by CABG in a country within sixty (60) days after the end of the

*** Confidential Treatment
Required
 

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     Calendar Quarter within which the First Commercial Sale of an Eligible Product takes place in
that country.

     3.5 Non-Arm’s Length Sales. On sales made in other than an arm’s length transaction,
the value of the Net Sales attributed under this Section 3 to such a transaction shall be that
which would have been received in an arm’s length transaction. Sales between and among CABG and
its Affiliates that are intended for resale shall not be included in Net Sales until those Eligible
Products are sold to a third party by the Affiliate.

     3.6 Sales of Eligible Products in Combination. In the event that CABG or any
Affiliate sells an Eligible Product together with any other distinct product for a single price,
such as in a kit, (collectively, the “Combination Product”) the Net Sales of the Eligible Product
for the purposes of determining Royalties payable hereunder, shall be calculated by multiplying the
total Net Sales of the Combination Product by the fraction A/B, where A is the price of the
Eligible Product and B is the price of the Combination Product. The price of the Eligible Product
and the Combination Product shall be CABG’s standard, published resale price for each product. If
CABG does not have standard published resale prices for such products, the values shall be
determined by the mutual written agreement between the Parties, acting reasonably, or, failing
agreement, within thirty (30) days from written notice by one Party to the other, as determined by
the dispute resolution steps described in Article 9.

     3.7 Reporting of CABG Royalties. CABG shall deliver to Angiotech Angiodevice,
together with each Royalty payment due under Section 3.4 a written Royalty report setting forth for
the applicable Calendar Quarter, at least the following information:

          (a) The date of the First Commercial Sale of an Eligible Product in each country in the
Territory;

          (b) The number of Eligible Products sold, rented, leased or otherwise made available to third
parties by or on behalf of CABG and its Affiliates, reported on a country-by-country basis
(including a separate item for sales where there is Patent Coverage and where there is not);

          (c) Total gross sales amounts received for such Eligible Products by jurisdiction, including
separate items for the value of any goods or services received in exchange for Eligible Products,
any additional amounts to be added to Net Sales pursuant to Section 3.5;

          (d) Deductions applicable to determine Net Sales for such period by jurisdiction;

          (e) The amount of Royalties due or, if no Royalties are due, a statement that no Royalties are
due; and

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          (f) Such other information as may reasonably be requested by Angiotech for purposes of
determining the amount of Royalties owing by CABG hereunder and for Angiotech to fulfill its
obligations under the Third Party Licenses.

Each Royalty report shall be certified as correct by the CFO of CABG and shall include a reasonably
detailed listing of all deductions made to determine Net Sales and to calculate the Royalties
payable hereunder.

     3.8 Payment of Maintenance License Fees, Milestone License Fees and Royalties. All
Royalties due under this Article 3 are to be paid in Dollars. For conversion of foreign currency
to Dollars, the conversion rate shall be the New York foreign exchange rate quoted in The Wall
Street Journal on the day that the payment is due. All payments shall be made by wire transfer to
Angiotech’s account in accordance with the following instructions (unless amended by written
notice):

	 	   	Correspondent bank:
	 
	 	   	Angiotech Angiodevice

UBS AG

Postfach, CH-8098 Zurich

Konto-Nr.      230-375751.60Z

IBAN             CH82 0023 0230 3757 5160 Z

BIC                UBSWCHZH80A

Any loss of exchange, value, taxes, or other expenses incurred in the transfer or conversion to
Dollars shall be paid entirely by CABG. The Royalty report required by Section 3.7 shall accompany
each such payment.

     3.9 Late Payments. Interest will be assessed by Angiotech Angiodevice on any overdue
payments at a rate of one percent (1%) per month, compounded monthly beginning on the due date of
the applicable payment (an effective annual rate of 12.68 % per annum), or at such lower maximum
rate permitted by law. The payment of such interest will not prevent Angiotech from exercising any
other rights it may have as a consequence of the lateness of any payment.

     3.10 Governmental Filings. Except for taxes based on Angiotech’s income, CABG will be
solely responsible for determining if any tax on Net Sales and Royalty payments is owed to any
governmental authority and shall pay any such tax and be responsible for all filings with
appropriate governmental authorities related thereto.

     3.11 Audit Rights. CABG shall keep accurate records of all of its operations, and
shall cause its Affiliates to keep accurate records of all of their respective operations, within
the scope of this Agreement, for five (5) years following each reporting period (as described in
Section 3.7), and Angiotech, at its expense, shall have the right to have a certified public
accountant inspect such records, solely for the purpose of verifying the calculation and payment of
the

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Royalties due hereunder, at the offices of CABG and its Affiliates, as applicable, no later
than one (1) year after the end of the Calendar Quarter to which they pertain upon two (2) weeks
prior written notice by Angiotech. The certified public accountant shall agree in writing with
CABG to be bound by reasonable confidentiality provisions with respect to such information prior to
receiving access to such information. In the event the examination shows an underpayment for any
Contract Year, CABG shall pay to Angiotech the amounts underpaid, together with interest pursuant
to Section 3.9. In the event the examination shows an overpayment for any Contract Year, CABG
shall offset the amount overpaid, together with interest calculated at the rates set forth in
Section 3.9, on the next Royalty payment made to Angiotech hereunder. Where the amount of any
underpayment is more than three percent (3%) for any Contract Year, CABG shall also reimburse
Angiotech for the actual out-of-pocket costs incurred by Angiotech to conduct such examination.

4. CABG Diligence Obligations.

     4.1 Diligence Obligations. CABG is required to meet the following obligations
relating to the development and sale of Eligible Products during the Term of this Agreement:

          (a) In the United States;

     (i) A safety trial in humans must be initiated for an Eligible Product by
January 1, 2007; and

     (ii) A submission for a product approval for an Eligible Product must be
submitted to the FDA in the U.S. by January 1, 2009.

          (b) In Europe;

     (i) The first clinical trial in humans must be initiated for an Eligible
Product by January 1, 2006;

     (ii) An application for a CE Mark for an Eligible Product must be submitted by
January 1, 2008; and

     (iii) The first commercial sale of an Eligible Product must be made by January
1, 2009.

          (c) The dates provided for in Sections 4.1(a) and (b) above shall each be referred to as a
“Diligence Date”.

     4.2 Failure to Meet Diligence Timelines. In the event that CABG has not fulfilled the
required obligation by the applicable Diligence Date, then Angiotech shall be entitled, at its
discretion, to treat any such failure as a material breach in accordance with Section 8.1(a) of
this

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Agreement; provided, however, that the cure period shall be ninety (90) days rather than forty five
(45) days.

     4.3 Progress Reports. CABG will provide written annual reports on development
progress for Eligible Products or efforts to commercialize Eligible Products, as applicable, to be
received by Angiotech within thirty (30) days after the end of each calendar year. These progress
reports shall include, but not be limited to, progress on research and development (including
detailed information and data, including any and all Clinical Data generated), plans for future
clinical studies, status of current clinical studies, status of applications for regulatory
approvals, manufacturing, marketing and sales efforts during the preceding calendar year, as well
as plans for the present calendar year, including the schedule of all upcoming clinical development
meetings. CABG agrees to provide any additional information reasonably required by Angiotech to
evaluate CABG’s performance towards meeting the Diligence Dates under this Agreement and to allow
Angiotech to fulfill its obligations under Third Party Licenses. Any Clinical Data provided to
Angiotech by CABG as provided for hereunder may be used by Angiotech as required, including for
submission to regulatory authorities.

     4.4 Meetings. Angiotech shall be given the right to be present and to observe, at its
discretion, all significant meetings concerning CABG’s clinical development of Eligible Products
and to have access to all Clinical Data generated by CABG. In order to facilitate Angiotech’s
right to be present at such meetings, CABG shall provide Angiotech with a schedule of all clinical
development meetings scheduled for the then-current calendar year along with the annual progress
report required by Section 4.3. CABG shall be required to provide Angiotech with written notice of
changes to that meeting schedule at least ten (10) days prior to a scheduling change. In addition,
in the event that Angiotech wishes to meet with CABG to discuss clinical development, future
development plans, progress reports and/or to ensure that CABG is using commercially reasonable
efforts to bring one or more Eligible Products to market, or to market an Eligible Product that has
been approved for commercial sale, Angiotech shall provide notice to CABG requesting a meeting and,
(a) setting out the specific reasons for the meeting, (b) providing at least three (3) possible
dates for the meeting (none of which will be less than thirty (30) days after receipt by CABG of
the meeting notice), (c) states which Angiotech personnel will be present for the meeting, and (d)
states whether the meeting will be in person at a specified location or by teleconference. In the
event that the Parties cannot mutually agree to a time and/or location for the meeting within ten
(10) days after receipt of the meeting notice by CABG, CABG shall be required to accept one of the
meeting times and locations proposed by Angiotech in the notice. In the event that CABG fails to
attend a meeting properly proposed by Angiotech hereunder or fails to accept one of the meeting
times and locations proposed by Angiotech in the notice within a reasonable time, Angiotech shall
be entitled, at its discretion, to treat any such failure as a material breach in accordance with
Section 8.1(a) of this Agreement. In the event that Angiotech fails to attend a meeting properly
set up hereunder, such failure to attend shall not be considered as a breach or a material breach
of this Agreement by CABG or by Angiotech. For clarification, it is agreed that Angiotech’s role
in such meetings will be as an observer not as an active participant.

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     4.5 Reporting under Third Party Licenses. CABG shall use commercially reasonable
efforts to assist Angiotech in fulfilling its reporting obligations under any Third Party Licenses,
including but not limited to notifying Angiotech of the date of First Commercial Sale in each
country within thirty (30) days of such occurrence. CABG hereby consents to the delivery by
Angiotech to each licensor under a Third Party License of a copy of this Agreement and any
amendments or authorized sublicenses, together with any reports and information provided under this
Agreement. Angiotech agrees to, (a) only provide such information to such licensors as is required
under the applicable Third Party License, and (b) to arrange for the licensor under each Third
Party License to execute a non-disclosure agreement directly with CABG prior to disclosure of any
such information to such licensor.

5. Other Obligations of CABG and Angiotech.

     5.1 Regulatory Approvals. CABG shall be responsible for obtaining all Regulatory
Approvals for its Eligible Products in all geographical areas which it, in its sole discretion,
deems necessary or advisable, including funding all pre-clinical and clinical studies deemed by
CABG to be necessary or advisable for obtaining Regulatory Approvals. Angiotech agrees to provide
reasonable assistance upon request by CABG in the pursuit of Regulatory Approvals for Eligible
Products, and CABG shall reimburse Angiotech for its reasonable expenses of providing such
assistance. CABG agrees that it shall provide Angiotech with copies of all correspondence,
including but not limited to submissions, to all Regulatory Authorities.

     5.2 Patent Applications and Foreign Filing. Angiotech shall be entitled to file,
prosecute and maintain in force any and all patents and patent applications included in the
Licensed Patent Rights. The filing, prosecution and maintenance of patents and patent applications
pursuant to this Section 5.2 shall be done through patent counsel selected by Angiotech. To the
extent Angiotech has the right to do so, Angiotech will keep CABG reasonably informed and consult
with CABG on all significant patent matters relating to the Focused Patent Rights within the
Licensed Field of Use, provided that Angiotech shall have the final say on all matters relating to
the Focused Patent Rights either within or outside the Licensed Field of Use.

     5.3 Press Releases. The parties agree that the public announcement of the execution
of this Agreement shall be in the form of a press release to be agreed upon by the parties.
Thereafter, Angiotech and CABG shall be free to use the information set forth in such press release
in future public announcements. With respect to other public statements that reference the other
Party hereto, including submissions to the Securities and Exchange Commission, Canadian Securities
Administrators or stock exchange or market system on which its securities are listed, such
statements shall be submitted to the referenced Party for review and approval, which approval shall
not be unreasonably withheld or delayed.

     5.4 Publications. CABG agrees that it shall not publish or present the results of
studies carried out that relate to the Licensed Technology without the opportunity for prior review
and approval by Angiotech, which approval shall not be unreasonably withheld or delayed. CABG
shall provide to Angiotech the opportunity to review any proposed abstracts,

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manuscripts or presentations (including information to be presented orally) covering
information arising from the use of the Licensed Technology under this Agreement, and not
previously disclosed, at least thirty (30) days prior to the intended submission for publication.
CABG agrees, upon written request from Angiotech, not to submit such abstract or manuscript for
publication or to make such presentation until, (a) CABG has removed any Angiotech Confidential
Information as reasonably requested by Angiotech, or (b) Angiotech is given a reasonable period of
time to secure patent protection for any material in such publication or presentation which it
believes is patentable.

     5.5 Successors of Angiotech. Angiotech covenants and agrees that it will require any
successor of Angiotech to assume all of its obligations to CABG under the terms and conditions of
this Agreement, including, without limitation, any successor which results from: (a) a sale of
Angiotech to another person or entity, whether through the sale of its stock, through a sale of all
or substantially all of its assets, or through a merger, or (b) a sale of that portion of its
business which includes the Licensed Technology, or (c) a reorganization or change of its
ownership.

6. Representations and Covenants.

     6.1 Representations and Warranties. Angiotech and CABG each represent and warrant to
the other that:

          (a) Organization & Power. It is a corporation duly organized and validly existing
under the laws of its place of incorporation and has all requisite corporate power and authority to
enter into this Agreement;

          (b) Authorization. It is duly authorized by all requisite action to execute, deliver
and perform this Agreement and to consummate the transactions contemplated hereby, and that the
same do not conflict or cause a default with respect to its obligations under any other agreement;

          (c) Execution & Delivery. It has duly executed and delivered this Agreement, and

          (d) Laws, Rules & Regulations. It shall and shall cause its Affiliates to, comply
with all laws, rules and regulations applicable to the performance of its obligations hereunder,
including, to the extent applicable to such Party, the discovery, development, manufacture,
distribution, import, export and sale of the Eligible Product(s).

     6.2 Angiotech Representations and Warranties. Angiotech represents and warrants to
CABG that as of the Effective Date, except as set forth on Exhibit A hereto:

          (a) Angiotech owns or controls the commercial rights included in the CABG License, including
without limitation the Licensed Patent Rights, free of any liens or encumbrances, other than Third
Party Licenses;

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          (b) To the knowledge of the Senior Staff of Angiotech, Angiotech has not received any notice
from any person or entity claiming to have any right, title or interest in or to the Licensed
Patent Rights, other than as specifically set out below in this Section 6.2(d) and, to Angiotech’s
knowledge, there is no reason to expect that any such notice is forthcoming;

On February 18, 2005, a claim was filed by Conor Medsystems, Inc. in a court in the
United Kingdom alleging that one of Angiotech’s stent patents is invalid and seeking
to have the patent revoked. The outcome of this legal proceeding is uncertain at
this time;

          (c) Angiotech has not entered into, and is not aware of, any outstanding options, licenses or
agreements relating to the Licensed Technology for use in Eligible Products other than any Third
Party Licenses that may be within the Licensed Technology;

          (d) The Licensed Patent Rights listed on Exhibit A hereto represent all patents and
patent applications owned by or licensed to Angiotech necessary for the use of paclitaxel for the
Eligible Products in the Licensed Field of Use;

          (e) To the knowledge of the Senior Staff at Angiotech, other than the Third Party Licenses
identified on Exhibit A, there are no third parties to whom license fees must be paid to
utilize the Licensed Technology in a manner contemplated by the CABG License granted in Section
2.1;

          (f) Each of the Third Party Licenses is a valid and enforceable license, except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium
or other laws of general application affecting the enforcement of creditors’ rights and (ii)
general principles of equity that restrict the availability of equitable remedies. Neither
Angiotech nor, to the knowledge of the Senior Staff of Angiotech after due inquiry, the other party
to any such Third Party Licenses, is in material breach or violation of such Third Party License;
and,

          (g) For purpose of clarity and notwithstanding (a) to (f) in this Section 6.2, Angiotech
provides no representations or warranties with respect to the totality of, or to any component of,
the CABG Technology that is included within the Eligible Product.

     ANGIOTECH DOES NOT WARRANT THE VALIDITY OF THE LICENSED PATENTS AND MAKES NO
REPRESENTATIONS WHATSOEVER WITH REGARD TO THE SCOPE OF THE LICENSED TECHNOLOGY OR THAT THE LICENSED
TECHNOLOGY MAY BE EXPLOITED BY CABG AND ITS AFFILIATES WITHOUT INFRINGING THE PATENT RIGHTS OF
OTHERS. ANGIOTECH EXPRESSLY DISCLAIMS ANY AND ALL IMPLIED OR EXPRESS WARRANTIES AND MAKES NO
EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF THE
LICENSED TECHNOLOGY. IN NO EVENT SHALL A PARTY BE LIABLE TO THE OTHER FOR INDIRECT, PUNITIVE,
SPECIAL, CONSEQUENTIAL OR

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EXEMPLARY DAMAGES OF ANY KIND, INCLUDING LOSS OF PROFITS AND LOSS OR INTERRUPTION OF BUSINESS,
PROVIDED HOWEVER THAT THE FOREGOING PROVISION SHALL NOT BE CONSTRUED TO LIMIT A PARTY’S
INDEMNIFICATION OBLIGATIONS UNDER THIS AGREEMENT FOR THIRD PARTY CLAIMS WHICH MAY INCLUDE INDIRECT,
SPECIAL, CONSEQUENTIAL, PUNITIVE, EXEMPLARY AND OTHER TYPES OF DAMAGES.

     6.3 Covenants Regarding Third Party Licenses. Angiotech covenants and agrees to
take all commercially reasonable actions necessary to perform its obligations under the Third Party
Licenses and to remain in compliance with any conditions of such Third Party Licenses. Angiotech
agrees to notify CABG in the event of a material breach of any of the Third Party Licenses.
Angiotech agrees to commence to cure such material within a reasonable time period, and to
diligently pursue such cure.

     6.4 Compliance with NIH and UBC Agreements. CABG hereby agrees to comply with the
covenants and conditions of the NIH Agreement and UBC Agreement set out in Exhibit C
hereto, as if it were a party to each such agreement with respect to such provisions. To the
extent the NIH Agreement or UBC Agreement is amended to include additional terms and conditions
applicable to sublicensees, CABG agrees to comply with such covenants and conditions as are
relevant to the CABG License, including without limitation performance milestones and benchmarks;
provided that any such amendment to such agreements will not impair the rights of CABG under this
Agreement and provided further that any such amendment that imposes additional obligations on CABG,
or may reduce the benefits to CABG of the NIH Agreement or the UBC Agreement, will not be entered
into without the prior consent of CABG, which consent will not be untimely or unreasonably
withheld.

7. Infringement, Indemnity and Insurance.

     7.1 Definitions. The following definitions shall be used only for the purposes of
this Article 7:

          (a) “Action” means any legal action or proceeding, or the filing of any counterclaim.
Depending on the context, “Action” may refer to a Core Action, a Focused Action or a Declined
Action.

          (b) “Core Action” shall mean an Action against any alleged infringement of the Core Patent
Rights identified pursuant to Section 7.2, whether inside or outside the Licensed Field of Use.

          (c) “Core Patent Rights” shall mean those Licensed Patent Rights listed in Exhibit A
hereto under the heading “Core Patent Rights”.

          (d) “Declined Action” is defined in Section 7.4(c)(ii).

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          (e) “Eligible Product Market” means, for a specific country, the total sales of an Eligible
Product and of all other products that are being sold in such jurisdiction for use in approved
and/or target label indications that are substantially similar to one or more approved and/or
target label indications of that Eligible Product in that jurisdiction.

          (f) “Focused Action” shall mean an Action against any alleged infringement of the Focused
Patent Rights identified pursuant to Section 7.2, whether inside or outside the Licensed Field of
Use; provided however that any Action that involves both the Core Patent Rights and the Focused
Patent Rights shall be deemed a Core Action.

          (g) “Focused Patent Rights” shall mean those Licensed Patent Rights listed in Exhibit
A hereto under the heading “Focused Patent Rights”.

          (h) “Infringing Product” means a third party product that may infringe the Licensed Patent
Rights and that has Regulatory Approval for use in humans in the Licensed Field of Use.

     7.2 Notification. With respect to any Licensed Patent Rights, each Party shall notify
the other Party in writing of any alleged or threatened infringement of such Licensed Patent Rights
of which it becomes aware, and shall provide to the other Party available evidence thereof. The
Parties shall consult with respect to potential strategies for terminating such alleged or
threatened infringement without litigation.

     7.3 Defense and Enforcement of Core Patent Rights.

          (a) Defense of Declaratory Judgment Action. Angiotech shall be solely responsible for
defending any assertion of invalidity or unenforceability of Core Patent Rights worldwide.

          (c) Non-Litigation Actions by Angiotech. Angiotech shall have the right, in its sole
discretion, to take actions to terminate alleged infringement identified pursuant to Section 7.2
without litigation (including the sole right to grant a license to the alleged infringer outside of
the Licensed Field of Use) with respect to Core Patent Rights.

          (d) Core Patent Rights. Angiotech shall have the sole right, but not the obligation,
to commence and control any Core Action, at its own expense. If Angiotech, in its sole discretion,
elects to not take any Action against any alleged infringement of the Core Patent Rights, CABG
shall have no right to do so and CABG shall have no recourse against Angiotech for any damages
suffered by CABG as a result of such decision.

          (c) Recoveries. Any damages or other recovery related to the Core Patent Rights,
including compensatory and other non-compensatory damages or recovery actually received from a
third party shall be allocated first to reimburse the costs and expenses, including
reasonable attorney’s fees and expert witness fees, incurred by Angiotech. Such reimbursement

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shall be made first from any compensatory damages, including attorney’s fees and costs recovered.
If any balance remains of the damages or other recovery made from the third party after such
reimbursement, any remaining compensatory damages that are attributable to lost sales of Eligible
Products, if any, shall be considered Net Sales and the amount of the Royalties owing thereon
calculated pursuant to Section 3.4 shall be payable to Angiotech. Any remaining balance of damages
or other recovery that are attributable to lost sales of Eligible Products, if any, shall be
payable to CABG.

     7.4 Defense and Enforcement of Focused Patent Rights.

          (a) Defense of Declaratory Judgment Action. In the event of an assertion of
invalidity or unenforceability of Focused Patent Rights, the Parties shall mutually agree how to
defend such assertion (including allocation of the Parties’ responsibilities for the costs of such
defense).

          (b) Non-Litigation Actions by Angiotech. Angiotech shall have the sole right, in its
sole discretion, to take actions to terminate alleged infringement identified pursuant to Section
7.2 without litigation (including the sole right to grant a license to the alleged infringer
outside of the Licensed Field of Use) with respect to Focused Patent Rights; provided, however,
where such alleged infringement involves the Focused Patent Rights within the Licensed Field of
Use, Angiotech shall reasonably consider the interests of CABG and shall not settle or make any
agreement that would have a material adverse effect on CABG’s rights under this Agreement, without
the prior written consent of CABG, which shall not be unreasonably delayed or denied.

          (c) Focused Action within the Licensed Field of Use.

               (i) Angiotech shall have the sole right, but not the obligation, to commence and control any
Focused Action. In the event that Angiotech elects, in its sole discretion, to undertake such a
Focused Action, CABG agrees to reasonably cooperate with Angiotech, including providing access to
all necessary documents, executing all papers and performing such other acts as may be reasonably
required for such Focused Action, including but not limited to consenting to be joined as a Party
plaintiff in such Focused Action. Angiotech shall control such Focused Action, and Angiotech may
enter into settlements, stipulated judgments or other arrangements respecting such infringement,
provided, however, Angiotech shall reasonably consider the interests of CABG and shall not settle
or make any agreement that would have a material adverse effect on CABG’s rights under this
Agreement, without the prior written consent of CABG. Angiotech shall keep CABG reasonably
apprised of the progress of any such Focused Action. CABG may, at its option and sole expense, be
represented by counsel of its choice, but all other costs associated with any such Focused Action
shall be at the sole expense of Angiotech.

               (ii) If, within one hundred twenty (120) days after discovering or being notified by CABG in
writing of an alleged infringement that would be the basis of a potential Focused Action that
involves the Focused Patent Rights within the Licensed Field of Use,
Angiotech declines to commence a Focused Action, then CABG shall have the right, but not the

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obligation to commence an Action with respect to such alleged infringement that involves the
Focused Patent Rights within the Licensed Field of Use (“Declined Action”) if either of the
following two conditions are met:

                    (x) The alleged infringement of the Focused Patent Right is occurring in the United States,
the European Union or Japan, or

                    (y) In the country where the alleged infringement is occurring, CABG has at least *** dollars
($***) annual Net Sales and the Infringing Product has captured ten percent (***%) of the Eligible
Product Market.

In the event that the above two conditions are met and CABG elects, in its sole discretion, to
commence such Declined Action, Angiotech agrees to reasonably cooperate with CABG, including
providing access to all necessary documents, executing all papers and performing such other acts as
may be reasonably required for such Declined Action, such as consenting to be joined as a party
plaintiff in such Declined Action, at CABG’s sole expense. CABG shall keep Angiotech reasonably
apprised of the progress of any such Declined Action. Angiotech may, at its option and sole
expense, be represented by counsel of its choice, but all other costs associated with any such
Focused Action shall be at the sole expense of CABG.

     (d) Recoveries. In any Focused Action or Declined Action pursuant to this Section
7.4, any damages or other recovery, including compensatory and other non-compensatory damages or
recovery actually received from a third party, shall be allocated first to reimburse the costs and
expenses, including reasonable attorney’s fees and expert witness fees, of the Party commencing
such Focused or Declined Action and then to reimburse the other Party, if any, for such costs and
expenses. Such reimbursement shall be made first from any compensatory damages, including
attorney’s fees and costs recovered. If any balance remains of the damages or other recovery made
from the third party after such reimbursement, any remaining compensatory damages that are
attributable to lost sales of Eligible Products shall be considered Net Sales and the amount of the
Royalties owing thereon calculated pursuant to Section 3.4 shall be payable to Angiotech. Any
remaining balance of damages or other recovery that are attributable to lost sales of Eligible
Products, if any, shall be payable to CABG. Any remaining balance of damages or other recovery
shall be apportioned as follows:

          (i) when the Focused or Declined Action only concerns the Focused Patent Rights within the
Licensed Field of Use, the remaining balance of damages or other recovery that are attributable to
lost sales of Eligible Products shall be payable to CABG. Any remaining balance of damages or
recovery that are not attributable to lost sales of Eligible Products shall be payable to the Party
commencing such Focused or Declined Action; or

          (ii) when the action concerns the Focused Patent Rights within the Licensed Field of Use and
within the field of use licensed by Angiotech or its Affiliates to other licensees or sublicensees,
the remaining balance of damages or other recovery that is attributable to lost sales of products
will be apportioned by Angiotech acting reasonably, between CABG and
such other licensees and sublicensees on the basis of the lost product sales of such parties.
Any

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remaining balance of damages or other recovery that is not attributable to lost sales of
products, shall be apportioned by Angiotech acting reasonably, between CABG, Angiotech and such
other licensees and sublicensees. Notice of such apportionment shall be given by Angiotech to CABG
together with the basis upon which the apportionment determination was made, subject to the right
of CABG to review the determination and submit the determination for dispute resolution pursuant to
Article 9.

     7.5 Reduction Relating to Claims. In the event that CABG incurs or accrues any
expenses directly connected with a filed claim or objection of any third party that any of the
Licensed Technology infringes a patent or other right of such third party relating to the Licensed
Technology, whether or not CABG is a party to such litigation, CABG shall be entitled, from the
date of such claim or objection until the claim or objection is resolved favorably to Angiotech or
CABG, as the case may be, to reduce the amount of any Royalty payments which may otherwise be due
in accordance with Section 3.4 of this Agreement by an amount equal to up to fifty percent (50%) of
any such payment, until such time as CABG has been compensated for any such expenses. Any such
expenses claimed by CABG are subject the right of audit by Angiotech as described in Section 3.11.

     7.6 Reduction Relating to Infringers. In the event that alleged infringement of the
Licensed Patent Rights exists within the Licensed Field of Use in any jurisdiction in the
Territory, and Angiotech, through its election or failure to elect to exercise its sole rights to
address alleged infringement pursuant to Section 7.3(d), the Parties agree to meet and negotiate in
good faith to determine (a) whether damages have been incurred by CABG as a result of such alleged
infringement and, (b) if any damages have been incurred as the result of such alleged infringement,
compensation payable by Angiotech to CABG for such damages.

     7.7 Indemnification.

          (a) CABG Indemnity. CABG and each of its Affiliates shall indemnify and hold
Angiotech, its Affiliates, and their respective current and former officers, inventors, directors,
employees, students, governing board members, trustees, faculty, medical and professional staff,
consultants, contractors and agents, and their respective successors, heirs and assigns,
(“Angiotech Indemnitees”) harmless from and against any and all liability, damage, loss, cost
(including reasonable attorneys’ fees and expenses of litigation) and expense incurred (a “Loss”),
resulting from or imposed upon the Angiotech Indemnitees or any of them by any third party in
connection with any claims, suits, actions, demands or judgments, including claims for bodily
injury or property damage, (i) relating to the development, manufacture, use, distribution or sale
of any Eligible Product by CABG or its Affiliates, or their respective employees, consultants,
contractors and agents, (ii) due to a breach of this Agreement by CABG, or (iii) due to the
negligence or willful misconduct of CABG, its Affiliates or their respective employees,
consultants, contractors and agents; provided, however, that the foregoing indemnity shall not
apply to any Loss to the extent that such Loss was caused by negligent or willful misconduct, or a
breach of this Agreement, by Angiotech or its Affiliates.

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          (b) Angiotech Indemnity. Angiotech shall indemnify and hold CABG and its Affiliates,
and their respective officers, directors, employees, consultants, contractors and agents, and their
respective successors, heirs and assigns, (“CABG Indemnitees”) harmless from and against any and
all Losses, resulting from or imposed upon the CABG Indemnitees or any of them by any third party
in connection with any claims, suits, actions, demands or judgments, including any claim of bodily
injury or property damage, (i) relating to the development, manufacture, use, distribution or sale
of any product (other than Eligible Products) by Angiotech or its licensees or sublicensees (other
than CABG and its Affiliates), (ii) due to a breach of this Agreement, or (iii) due to the
negligence or willful misconduct of Angiotech, its Affiliates or their respective employees,
consultants, contractors and agents; provided, however, that the foregoing indemnity shall not
apply to any Loss to the extent that such Loss was caused by negligent or willful misconduct, or a
breach of this Agreement, by CABG or its Affiliates.

          (c) Claims Procedures. A Party entitled to be indemnified by the other Party (an
“Indemnified Party”) pursuant to Section 7.7 (a) or (b) hereof shall give written notice to the
other Party (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge
of any threatened or asserted claim as to which indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such claim or any litigation resulting there from,
provided:

               (i) that counsel for the Indemnifying Party, who shall conduct the defense of such claim or
any litigation resulting there from, shall be approved by the Indemnified Party (which approval
shall not be unreasonably withheld or delayed), and the Indemnified Party may participate in such
defense at such Indemnified Party’s expense (unless (i) the employment of counsel by such
Indemnified Party has been authorized by the Indemnifying Party; or (ii) the Indemnified Party
shall have reasonably concluded that there may be a conflict of interest between the Indemnifying
Party and the Indemnified Party in the defense of such action, in each of which cases the
Indemnifying Party shall pay the reasonable fees and expenses of one law firm serving as counsel
for the Indemnified Party, which law firm shall be subject to approval, not to be unreasonably
withheld or delayed, by the Indemnifying Party);

               (ii) the failure of any Indemnified Party to give notice as provided herein shall not relieve
the Indemnifying Party of its obligations under this Agreement to the extent that such failure to
give notice did not result in prejudice to the Indemnifying Party or the Indemnifying Party’s
insurer;

          (c) the Indemnifying Party, in the defense of any such claim or litigation, shall not, except
with the approval of the Indemnified Party (which approval shall not be unreasonably withheld or
delayed), consent to entry of any judgment or enter into any settlement which, (i) would result in
injunctive or other relief being imposed against the Indemnified Party; or (ii) does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of
a release from all liability in respect to such claim or litigation; and

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          (d) the Indemnified Party shall furnish such information regarding itself or the claim in
question as the Indemnifying Party may reasonably request in writing, and shall be reasonably
required in connection with the defense of such claim or litigation resulting there from.

     7.8 Insurance. (a) CABG shall, at all times during the term of this Agreement and
until five (5) years after expiration of the last batch of Eligible Products sold or manufactured
hereunder by CABG or its Affiliates, obtain and maintain at its own cost and expense, comprehensive
commercial liability insurance, including, but not limited to, product liability and contractual
liability insurance, and errors and omissions coverage, with respect to its activities hereunder
from a reputable and financially secure insurance carrier. Such insurance shall be in such amounts
and subject to such deductibles as the Parties may agree based upon standards prevailing in the
industry at the time, but under no circumstances shall be less than, (a) prior to regulatory
approval, the statutorily required minimum insurance level provided for in the jurisdiction in
which the clinical trial or other research is being completed, and (b) after the First Commercial
Product in a country, the minimum that is customary in that country for similar products being sold
in similar markets. Upon the written request of Angiotech, CABG shall provide to Angiotech copies
of its Certificates of Insurance. Each policy will be endorsed to provide that the insurers will
give Angiotech, or its designee, not less than thirty (30) days prior written notice of any
cancellation or material change in coverage. If CABG fails to place or maintain insurance as
required under this Agreement, Angiotech or its designee may place and maintain such policy and all
premium and other costs incurred by Angiotech or its designee shall be paid by CABG.

          (b) Subrogation. All of the liability policies set out in (a) shall be primary and
non-contributory, shall include as additional named insured Angiotech (subject to wording in such
policies restricting coverage to those claims for which the CABG may be responsible hereunder) and
contain a waiver of subrogation in favor of Angiotech or Angiotech’s designee and in favor of the
UBC, its Board of Governors, faculty, officers, employees, students and agents.

8. Termination.

     8.1 Early Termination by Angiotech. Notwithstanding the foregoing, and subject to the
limitations set forth below, Angiotech shall be entitled in the following circumstances to
terminate this Agreement:

          (a) Material Breach. In the event that CABG materially breaches this Agreement,
Angiotech shall have the right, at its sole election, to terminate this Agreement upon forty five
(45) days, or thirty (30) days in the case of breach for non-payment, prior written notice to CABG;
provided, however, that if CABG shall cure the breach or default within the forty five (45) or the
thirty (30) day period, as applicable, all such licenses and agreements shall continue in full
force and effect. If, however, CABG is disputing the payment that Angiotech claims not to have
been paid timely, Angiotech shall not have the right to terminate this

- 23 -

 

Agreement unless and until this matter is resolved in Angiotech’s favour through the dispute
resolution provisions of Article 9 herein.

          (b) Insolvency, Bankruptcy. In the event that CABG files a petition in bankruptcy or
if an involuntary petition shall be filed against it and such petition shall not be dismissed
within sixty (60) days, or if it shall become insolvent or admit its inability to pay its debts
when due, or if a receiver or guardian shall be appointed for it, then all licenses granted to such
Party under this Agreement shall immediately terminate.

          (c) Challenge of Licensed Patent Rights. During the Term, should CABG or any of its
Affiliates, successors or assigns challenge the validity of any Licensed Patent Rights, or support,
directly or indirectly, any such challenge to any Licensed Patent Rights, Angiotech shall be
entitled to terminate this Agreement upon thirty (30) days prior written notice to CABG.

          (d) Termination of Third Party Sublicense. In the event of a termination of a Third
Party License, (i) the CABG License, insofar as it relates to the Third Party License only, shall
terminate, subject to any right under the Third Party License Agreement to convert the Third Party
License to a direct license between the third party licensor and CABG, or (ii) CABG shall be
permitted, within sixty (60) days of receiving notice of termination of such Third Party License,
to terminate this Agreement upon thirty (30) days prior written notice to Angiotech.

          (e) CABG Merger or Acquisition. Angiotech may, upon thirty (30) days written notice
to CABG, terminate this Agreement throughout the Territory or on a country by country basis (to be
determined at Angiotech’s sole discretion) if, (a) CABG is acquired or merges with a third party,
and (b) the acquiring or merged-with third party or its Affiliate has developed or marketed a
Competitive Product prior to the acquisition of or merger with CABG, and (c) such acquisition or
merger’s resulting or surviving entity fails to either develop, make, use, sell, offer to sell,
market, distribute, or import Eligible Products during the entire six (6) month period following
the acquisition or merger. If the acquiring or merged-with entity, or any of its Affiliates, has
developed or marketed a Competitive Product prior to the acquisition or merger, CABG shall notify
Angiotech of its acquisition by or merger with such third party no later than twenty (20) days
after the expiration of the six (6) month period following the acquisition or merger, and shall
furnish information to Angiotech reasonably necessary for Angiotech to determine whether Eligible
Products have been developed, made, used, sold, offered for sale, marketed, distributed, or
imported by the surviving entity or CABG during the six (6) month period following the acquisition
or merger. Notwithstanding the foregoing, Angiotech shall not have the right to terminate this
Agreement under this Section 8.1(e) in the event that, (i) CABG states in the notice of acquisition
or merger required herein that the resulting or surviving entity or its Affiliate(s), as
applicable, has made a binding commitment to discontinue the development or marketing of the
Competitive Product, as the case may be, or to divest itself of such Competitive Product, and (ii)
the resulting or surviving entity, or its Affiliate(s), in fact discontinues development or
marketing, as the case may be, or divests itself of such Competitive Product within eleven (11)
months after the consummation of the acquisition or merger. Angiotech’s rights hereunder to give
notice terminating this Agreement pursuant to this Section 8.1(e) shall lapse: (i) nine (9) months
after the date of consummation of

- 24 -

 

the acquisition or merger, or (ii) three (3) months after Angiotech’s receipt of the
aforementioned notice and requested information from CABG, whichever occurs later.

     8.2 Early Termination by CABG. Notwithstanding the foregoing, and subject to the
limitations set forth below, CABG shall be entitled in the following circumstances to terminate
this Agreement:

          (a) Material Breach. In the event that Angiotech materially breaches this Agreement,
CABG shall have the right, at its sole election, to terminate this Agreement upon forty five (45)
days, or thirty (30) days in the case of breach for non-payment, prior written notice to Angiotech;
provided, however, that if Angiotech shall cure the breach or default within the forty five (45) or
the thirty (30) day period, as applicable, all such licenses and agreements shall continue in full
force and effect.

          (b) Insolvency, Bankruptcy. In the event that Angiotech files a petition in
bankruptcy or if an involuntary petition shall be filed against it and such petition shall not be
dismissed within sixty (60) days, or if it shall become insolvent or admit its inability to pay its
debts when due, or if a receiver or guardian shall be appointed for it, then all licenses granted
to such Party under this Agreement shall immediately terminate.

     8.3 Accrued Obligations. Upon termination of this Agreement for any reason, each of
Angiotech and CABG shall remain liable for those obligations that accrued with respect to such
license prior to the effective date of the termination. CABG may, for a period of one (1) year
after the effective date of the termination of the CABG License, complete and sell any or all
Eligible Products that it can demonstrate were in the process of manufacture or in inventory on the
effective date of the termination; provided, however, that CABG shall remain
obligated to pay any applicable Royalties thereon as provided in this Agreement. Within thirty
(30) days after receipt of notice of termination, CABG shall provide Angiotech with an accounting
of Eligible Products then on hand and in process and its best estimate of when sales of such
Eligible Products in its inventory will conclude.

9. Dispute Resolution.

     9.1 Negotiation of Parties. In the event of any dispute, claim or controversy arising
out of or relating to the interpretation of any provision of this Agreement, to the performance of
either Party under this Agreement or to any other matter under this Agreement, including any action
in tort, contract or otherwise, at equity or at law, and any claims of fraud in the inducement (a
“Dispute”), either Party may at any time provide the other Party written notice specifying the
terms of such Dispute in reasonable detail. As soon as practicable after receipt of such notice,
the Chief Executive Officers of both Angiotech and CABG shall meet at a mutually agreed upon time
and location for the purpose of resolving such Dispute. They shall engage in good faith
discussions and/or negotiations for a period of up to thirty (30) days to resolve the Dispute or
negotiate an interpretation or revision of the applicable portion of this Agreement which is
mutually agreeable to both parties, without the necessity of formal procedures relating thereto.
During the course of such discussion and/or negotiation, the parties shall reasonably

- 25 -

 

cooperate and provide information that is not materially confidential in order so that each of
the parties may be fully informed with respect to the issues in Dispute.

     9.2 Arbitration.

          (a) Submission. If the Dispute is not resolved within the thirty (30) day period
referenced in Section 9.1, either party may deliver written notice to the other party demanding
submission of such Dispute to binding arbitration conducted pursuant to the provisions of this
Agreement and the then-current commercial arbitration rules of the American Arbitration Association
(“AAA”), except to the extent such AAA rules are inconsistent with the provisions of this
Agreement. Even though the arbitrator(s) shall apply the AAA rules, the arbitration shall not be
conducted by the AAA.

          (b) Appointment of Arbitrator(s). The case shall be submitted to a single arbitrator
who shall be a retired state or federal judge or an attorney who has practiced in the area of
business litigation or in the substantive area of law related to this Agreement, for at least ten
(10) years. Each party shall submit a list of three (3) arbitrators to the other party within ten
(10) days after the initiating party has delivered a written notice to the other party demanding
arbitration of the Dispute. From the combined list, the parties shall mutually agree on the
arbitrator. Should the parties be unable to agree on the choice of an arbitrator within thirty
(30) days after delivery of the written notice demanding arbitration, the arbitration shall be
conducted by a panel of three (3) arbitrators. Each party shall choose one arbitrator within ten
(10) days after the expiration of the above thirty (30) day period and the two selected shall
choose a third arbitrator within five (5) days after their appointment. If the issues of the
Dispute involve scientific, technical or commercial matters, any arbitrator chosen hereunder shall
have educational training and/or industry experience sufficient to demonstrate a reasonable level
of relevant scientific, medical and industry knowledge.

          (c) Location/Costs. The site of the arbitration shall be in the metropolitan area of
Seattle, Washington, USA. The exact location within such metropolitan area shall be designated by
the arbitrator(s). The non-prevailing party shall pay all expenses of the arbitration proceeding,
including the expenses and fees of the parties’ witnesses and legal counsel and of the
arbitrator(s), unless otherwise provided in the arbitration award.

          (d) Discovery/Interim Relief. The arbitrator(s) shall allow the parties to conduct
limited discovery. Either party may apply to any court having jurisdiction hereof seeking
injunctive relief so as to maintain the status quo until such time as the arbitration award is
rendered or the Dispute is otherwise resolved.

          (e) Final Award. The arbitrational award shall be final and binding upon the parties
and may be entered and enforced at any court having jurisdiction. Each party hereby submits to
personal jurisdiction of the Federal Courts located in the City of Seattle, State of Washington,
USA and consents to the entry of the arbitration award in such courts and in the appropriate courts
located in any other jurisdiction of a party’s residence.

- 26 -

 

     9.3 Third Party Licenses. Sections 9.1 and 9.2 shall not prevent Angiotech from
seeking any remedies in law or equity it may have to protect its rights under Third Party Licenses.

10. General Provisions.

     10.1 Remedies. The parties acknowledge and agree that, in the event of a breach or a
threatened breach by either Party of this Agreement for which it will have no adequate remedy at
law, the other Party may suffer irreparable damage and, accordingly, shall be entitled to
injunctive and other equitable remedies to prevent or restrain such breach or threatened breach,
without the necessity of posting any bond or surety, in addition to any other remedy they might
have at law or at equity.

     10.2 Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Washington, USA in force therein without regard to its conflict of
law rules. Subject to Article 9, each party hereby irrevocably consents to the exclusive
jurisdiction and venue of the Federal Courts located in the City of Seattle, State of Washington,
USA in connection with any action or proceeding brought by either party against the other party
arising out of or relating to this Agreement.

     10.3 Confidentiality. It is contemplated that in the course of the performance of
this Agreement each Party may, from time to time, disclose Confidential Information to the other.
Each Party agrees that for the Term and for a period of five (5) years thereafter, the receiving
Party shall keep confidential and shall not publish or otherwise disclose, and will not use any
Confidential Information except for the limited purposes set forth in this Agreement;
provided, however, that no provision of this Agreement shall be construed to
preclude such disclosure of Confidential Information as may be necessary or appropriate (a) to
obtain from any governmental agency any necessary approval (subject to Section 5.6), (b) to obtain
patents that are included in the Licensed Technology or (c) to fulfill Angiotech’s obligations
under Third Party Licenses (subject to the provisions of Section 4.6 herein); provided, further,
however, that the Party whose information is to be disclosed shall be notified as soon as possible
and the Party that is being required to disclose such information shall, if requested by the Party
whose information is to be disclosed, use reasonable good faith efforts, at the expense of the
requesting Party, to assist in seeking a protective order (or equivalent) with respect to such
disclosure or otherwise avoid making such disclosure. The receiving Party will take all
precautions as are reasonably necessary to prevent unauthorized access to, reproduction,
duplication, disclosure or use of the other Party’s Confidential Information and shall only
disclose the Confidential Information of the other Party to those of its officers, directors and
employees, or to officers, directors and employees of its Affiliates, on a “need to know basis”
provided each such officer, director or employees agrees in favor of the disclosing Party to be
bound by the same obligations of secrecy and confidentiality that the receiving Party is bound to
under this Agreement and provides further that the receiving Party shall be directly responsible to
the disclosing Party for any losses or damages suffered as a result of the breach of such
obligations by the receiving Party’s directors, officers or employees.

- 27 -

 

     10.4 Amendment and Waiver. No provision of or right under this Agreement shall be
deemed to have been waived by any act or acquiescence on the part of any Party, its agents or
employees, but only by an instrument in writing signed by an authorized officer of such Party. No
waiver by either Party of any breach of this Agreement by any other Party shall be effective as to
any other breach, whether of the same or any other term or condition and whether occurring before
or after the date of such waiver.

     10.5 Intellectual Property

          (a) Trademarks. During the Term of this Agreement, CABG shall have the right to
market and advertise Eligible Products under their respective names, trademarks, trade names,
labels, or other designations, provided however, that all packaging of Eligible Products shall be
marked with the trademark “ANGIOTECHKNOWLEDGYTM” (in a form to be provided by Angiotech provided
such form complies with applicable law, including, without limitation, FDA regulations). All
respective names, trademarks, trade names, labels, or other designations used shall are, and the
same shall remain, the property of their respective owners.

          (b) Patents. CABG agrees to mark the Eligible Products or their packaging sold in the
United States with all applicable U.S. patent numbers and similarly to indicate “Patent Pending”
status, to the extent and subject to applicable laws. All Eligible Products manufactured in,
shipped to, or sold in other countries shall be marked in such a manner as to protect and preserve
the Licensed Patent Rights in such countries.

     10.6 Independent Contractors. Each Party represents that it is acting on its own
behalf as an independent contractor and is not acting as an agent for or on behalf of any third
Party. This Agreement and the relations hereby established by and between Angiotech and CABG does
not constitute a partnership, joint venture, agency or contract of employment between them.

     10.7 Assignment. Subject to Section 8.1(e), this Agreement and CABG’s rights and
obligations hereunder may not be sold, assigned or transferred to any third party without the
consent of Angiotech, which consent shall not be unreasonably withheld or delayed; provided,
however, that such consent shall not be required for CABG to assign its right and obligations under
this Agreement to any successor which results from: (i) a sale of CABG to another person or entity,
whether through the sale of its stock, through a sale of all or substantially all of its assets, or
through a merger, or (ii) a sale of that portion of its business which includes the CABG
Technology, or (iii) a reorganization or Change of Control.

     10.8 Successors and Assigns. This Agreement shall bind and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.

     10.9 Notices. All communications hereunder shall be in writing and shall be deemed to
have been duly given upon receipt by the addressee at the addresses set forth below, or such other
address as either Party may specify by notice sent in accordance with this section:

- 28 -

 

	 	 	 
	If to CABG:

	 	CABG Medical, Inc.
	

	 	14505 - 21st Avenue North
	

	 	Suite 212
	

	 	Minneapolis, MN 55447-5602
	

	 	Attn: President
	 
	 	 
	If to Angiotech:

	 	Angiotech Pharmaceuticals, Inc.
	

	 	1618 Station Street
	

	 	Vancouver, BC, Canada V6A 1B6
	

	 	Attention:CBO
	 
	 	 
	With a copy to:

	 	General Counsel

     10.10 Severability. In the event any provision of this Agreement shall for any reason
be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other term or provision hereof. The parties agree that they
will negotiate in good faith or will permit a court or arbitrator to replace any provision hereof
so held invalid, illegal or unenforceable with a valid provision which is as similar as possible in
substance to the invalid, illegal or unenforceable provision.

     10.11 Captions. Captions of the Sections and subsections of this Agreement are for
reference purposes only and do not constitute terms or conditions of this Agreement and shall not
limit or affect the terms and conditions hereof,

     10.12 Word Meanings. Words such as herein, hereinafter, hereof and hereunder refer to
this Agreement as a whole and not merely to a Section or paragraph in which such words appear,
unless the context otherwise requires. The singular shall include the plural, and each masculine,
feminine and neuter reference shall include and refer also to the others, unless the context
otherwise requires.

     10.13 Entire Agreement. This Agreement, the Warrant Agreement and the Investment
Agreement contain the entire understanding of each of the Parties with respect to the transactions
and matters contemplated hereby, including without limitation any licensing of the Licensed
Technology, supersedes all prior agreements and understandings relating to the subject matter
hereof, and no representations, inducements, promises or agreements, whether oral or otherwise,
between the Parties not contained herein or incorporated herein by reference shall be of any force
or affect.

     10.14 Rules of Construction. The parties agree that they have participated equally in
the formation of this Agreement and that the language and terms of this Agreement shall not be
presumptively construed against any of them.

     10.15 Counterparts. This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same

- 29 -

 

instrument. In making proof of this Agreement, it shall not be necessary to produce or
account for more than one such counterpart.

     10.16 Survival. The following provisions shall survive the termination of this
Agreement, Article 1, 9, 10 and Sections 2.5, 3.11, 7.7 and 7.8, and any other provisions that by
their terms the Parties intend to survive termination.

     10.17 Compliance. The Parties shall comply fully with all applicable laws and
regulations in connection with their respective activities under this Agreement.

- 30 -

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered
by their respective duly authorized officers as of the Effective Date.

	 	 	 	 	 	 	 
	ANGIOTECH PHARMACEUTICALS, INC.	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	              /s/ K. Thomas Bailey	 	 	 	 
	

	 	 	 	 	 	 
	

	 	K. Thomas Bailey, Vice President,	 	 	 	 
	

	 	Business Development	 	 	 	 
	 
	 	 	 	 	 	 
	ANGIOTECH BIOCOATINGS CORP.	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	              /s/ David Hall	 	 	 	 
	

	 	 	 	 	 	 
	

	 	David Hall, Vice President and Treasurer	 	 	 	 
	 
	 	 	 	 	 	 
	ANGIOTECH INTERNATIONAL AG	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	              /s/ Hans Peter Weber
	 	By:
	 	              /s/ Jürg Dannecker
	

	 	 
	 	 	 	 
	

	 	Hans Peter Weber, Chairman of the Board
	 	 	 	Jürg Dannecker, Director
	 
	 	 	 	 	 	 
	ANGIODEVICE INTERNATIONAL GmbH	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	              /s/ Hans Peter Weber
	 	By:
	 	              /s/ Jürg Dannecker
	

	 	 
	 	 	 	 
	

	 	Hans Peter Weber, Managing Director
	 	 	 	Jürg Dannecker, Managing Director
	 
	 	 	 	 	 	 
	CABG MEDICAL, INC.	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	              /s/ John Babitt	 	 	 	 
	

	 	 	 	 	 	 
	Name:

	 	              John Babitt	 	 	 	 
	Title:

	 	              President	 	 	 	 

- 31 -exv10w2

 

Exhibit 10.2

CABG MEDICAL, INC.

INVESTMENT AGREEMENT

     This Investment Agreement (the “Agreement”) is made as of March 22, 2005 by and between CABG
Medical, Inc., a Minnesota corporation (the “Company”) with its principal office at 14505
21st Avenue North, Minneapolis, Minnesota 55447, and Angiotech Pharmaceuticals, Inc., a
corporation organized and existing under the laws of the Province of British Columbia (“Angiotech”)
with its principal office at 1618 Station Street, Vancouver, British Columbia, Canada V6A 1B6.

RECITALS

     WHEREAS, the Company desires to issue and sell to Angiotech, and Angiotech desires to purchase
on the terms and subject to the conditions set forth in this Agreement, certain shares of Company
common stock; and

AGREEMENT

     NOW, THEREFORE, in consideration of the respective representations, warranties, covenants and
agreements set forth herein, and for other valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:

Section 1

Purchase and Sale of Common Stock

     1.1 First Purchase and Sale of Common Stock. Subject to the terms and conditions of
this Agreement, at the First Closing (as defined in Section 2.1), the Company shall issue and sell,
and Angiotech shall purchase, for an aggregate purchase price equal to five million dollars (U.S.
$5,000,000) (the “First Purchase Price”), 1,104,972 shares of the Company’s common stock, no par
value (the “Common Stock”) at a per share purchase price equal to $4.5425 (determined by
multiplying the closing sale price of a share of Common Stock as reported on the Nasdaq Stock
Market as of the end of the regular trading session on the date hereof by 1.15%).

     1.2 Second Purchase and Sale of Common Stock. Subject to the terms and conditions of
this Agreement, including but not limited to Section 4.5, at the Second Closing (as defined in
Section 2.2), the Company shall issue and sell, and Angiotech shall purchase, for an aggregate
purchase price equal to the greater of (i) five million dollars (U.S. $5,000,000) and (ii) such
lesser amount as is necessary to comply with Section 4.5 hereof (the “Second Purchase Price”), that
number of shares of the Company’s Common Stock determined by dividing the Second Purchase Price by
the sum of (i) the closing sale price of a share of Common Stock as reported on the Nasdaq Stock
Market as of the end of the regular trading session on the date upon which the Company achieves the
Net Sales Milestone, multiplied by (ii) 1.15%.

 

 

     1.3 Notice of Net Sales Milestone. The Company covenants and agrees that it will
provide written notice to Angiotech of the achievement of the Net Sales Milestone within ten (10)
business days of the achievement of such milestone.

     1.4 Securities. The shares of Common Stock to be issued at each respective Closing
are herein collectively referred to as the “Securities.”

Section 2

Closing Date; Delivery

     2.1 First Closing Date. The completion of the first purchase and sale of Securities
will be held on the date hereof (the “First Closing”). The date of the First Closing is
hereinafter referred to as the “First Closing Date.”

     2.2 Second Closing Date. The completion of the second purchase and sale of Securities
will be held twenty (20) business days following the date upon which the Company shall have
achieved cumulative Net Sales (as defined in that certain License Agreement dated March 22, 2005,
between the Company and Angiotech (the “License Agreement”)) on Eligible Products (as defined in
the License Agreement) equal to $13 million (the “Net Sales Milestone”) (the “Second Closing”).
The date of the Second Closing is hereinafter referred to as the “Second Closing Date.”

     2.3 Delivery. At each or immediately following each Closing, the Company will deliver
to Angiotech the certificates evidencing the Securities. Such delivery shall be against payment of
the First or Second Purchase Price, as the case may be, for the Securities by wire transfer of
immediately available funds to the Company’s bank account (in accordance with instructions
furnished by the Company).

Section 3

Representations and Warranties of the Company

     The Company represents and warrants to Angiotech as follows:

     3.1 Organization and Standing. The Company is a corporation duly organized and
validly existing under the laws of the state Minnesota, and is, to the extent applicable, in good
standing under the laws of said state, and has the requisite corporate power and authority to own
its properties and to carry on its business as now being conducted. Other than as disclosed in the
SEC Documents (as defined herein), the Company has no subsidiaries or direct or indirect ownership
in any firm, corporation or business that either individually or in the aggregate is material to
the business of the Company. The Company is qualified to do business and is in good standing as a
foreign corporation in every jurisdiction in which its ownership of property or conduct of business
requires it to be so qualified and in which the failure to so qualify would not have a material
adverse effect on the assets, properties, financial condition or business of the Company.

2

 

     3.2 Corporate Power; Authorization. The Company has all requisite legal and corporate
power and authority and has taken all requisite corporate action to duly authorize, execute and
deliver this Agreement, to sell and issue the Securities, and to carry out and perform all of its
obligations under and contemplated by this Agreement. This Agreement has been duly executed and
delivered by an authorized officer of the Company and constitutes the legal, valid and binding
obligation of the Company, enforceable in accordance with its terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the
enforcement of creditors’ rights generally, and (b) as limited by equitable principles generally
(regardless of whether such enforceability is considered a proceeding in equity or at law).

     3.3 Issuance and Delivery. The Securities have been duly authorized and, when issued
and delivered in compliance with this Agreement, will be duly and validly issued and delivered and
will be outstanding, fully paid, nonassessable and free and clear of all pledges, liens,
encumbrances and restrictions other than any liens or encumbrances created by or imposed on the
holders thereof through no action of the Company; provided, however, that the Securities will be
subject to restrictions on transfer and state and federal securities laws and as provided herein.
No further approval or authority of the shareholders or the Board of Directors of the Company will
be required for the issuance and sale of the Securities to be sold by the Company as contemplated
herein.

     3.4 SEC Documents; Financial Statements; Subsequent Events. The Company has filed in
a timely manner all documents that the Company was required to file with the Securities and
Exchange Commission (“SEC”) during the twelve (12) months preceding the date of this Agreement. As
of their respective filing dates, all documents filed by the Company with the SEC (the “SEC
Documents”) complied in all material respects with the requirements of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”) or the Securities Act of 1933, as amended (the “Securities
Act”), as applicable and all rules and regulations thereunder. None of the SEC Documents
contained, as of their respective dates, any untrue statement of material fact or omitted to state
a material fact required to be stated therein or necessary to make the statements made therein, in
light of the circumstances under which they were made, not misleading, and such SEC Documents, when
read as a whole, do not contain any untrue statements of a material fact and do not omit to state a
material fact necessary to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company included in the SEC
Documents (the “Financial Statements”) comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with respect thereto. The
Financial Statements have been prepared in accordance with United States generally accepted
accounting principles consistently applied, and fairly present the financial position of the
Company at the dates thereof and the results of the Company’s operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal adjustments).

     3.5 No Consents. No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state, or local governmental
authority or any other third party on the part of the Company is required in connection with the
execution and delivery of this Agreement that has not been accomplished and the consummation of the
transactions contemplated by this Agreement, except for any filings under applicable

3

 

federal and/or state laws, which filings and qualifications, if required, will be accomplished
in a timely manner consistent with such applicable law.

     3.6 Exempt Transactions. Subject to the accuracy of Angiotech’s representations and
warranties in Section 4 of this Agreement, the offer, sale and issuance of the Securities in
conformity with the terms of this Agreement constitute transactions exempt from the registration
requirements of Section 5 of the Securities Act and from the registration or qualification
requirements of the laws of any applicable state jurisdiction.

     3.7 Intellectual Property. The Company owns or possesses adequate rights to use all
patents, patent rights, inventions, trademarks, trade names, copyrights, licenses, governmental
authorizations, trade secrets and know-how that are used or necessary for the conduct of the
Company’s business as described in the SEC Documents; except as described in the SEC Documents, the
Company has not received any notice of, or has any knowledge of, any infringement of or conflict
with asserted rights of others with respect to any patent, patent right, invention, trademarks,
trade names, copyrights, licenses, governmental authorizations, trade secret or know-how that,
individually or in the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a material adverse effect on the assets, properties, financial condition or business of
the Company.

     3.8 Authorized Capital Stock. The authorized and outstanding capital stock of the
Company conforms, as of the dates for which such information is given, in all material respects to
the statements relating thereto contained in the SEC Documents. The issued and outstanding shares
of capital stock of the Company have been duly authorized, validly issued and are fully paid and
nonassessable; except as set forth or referred to in the SEC Documents, no warrants, options or
other rights to purchase, agreements or other obligation to issue, or agreements or other rights to
convert any obligation into, any shares of capital stock of the Company have been granted or
entered into by the Company. No holder of any security of the Company is entitled to any
preemptive or similar rights to purchase any securities of the Company.

     3.9 Litigation. There are no actions, suits, proceedings or investigations pending
or, to the best of the Company’s knowledge, threatened against the Company or any of its properties
before or by any court or arbitrator or any governmental body, agency or official in which there is
a reasonable likelihood (in the judgment of the Company) of an adverse decision that (a) would have
a material adverse effect on the Company’s properties or assets or the business of the Company as
presently conducted or proposed to be conducted, or (b) would impair the ability of the Company to
perform in any material respect its obligations under this Agreement. The Company is not in
default with respect to any judgment, order or decree of any court or governmental agency or
instrumentality that, individually or in the aggregate, would have a material adverse effect on the
assets, properties, financial condition or business of the Company.

     3.10 Compliance With Other Instruments. The business and operations of the Company
have been and are being conducted in accordance with all applicable laws, rules and regulations of
all governmental authorities, except for such violations of applicable laws, rules and regulations
that would not, individually or in the aggregate, have a material adverse effect on the assets,
properties, financial condition or business of the Company. Neither the execution and delivery of,
nor the performance or compliance with, this Agreement and the transactions

4

 

contemplated hereby, will, with or without the giving of notice or the passage of time, (i)
result in any breach of, or constitute a default under, or result in the imposition of any lien or
encumbrance upon any asset or property of the Company pursuant to any agreement or other instrument
to which the Company is a party or by which the Company or any of its properties, assets or rights
is bound or effected, except for such breach or default or the imposition of any such lien or
encumbrance that, either individually or in the aggregate, would not have a material adverse effect
on the assets, properties, financial condition or business of the Company, or (ii) violate the
Articles of Incorporation or Bylaws of the Company or any other organizational documents of the
Company or any law, rule, regulation, judgment, order or decree. The Company is not in violation
of its Articles of Incorporation or Bylaws nor in violation of or in default under, any lien,
indenture, mortgage, lease, agreement, instrument, commitment or arrangements, except for such
defaults that would not, individually or in the aggregate, have a material adverse effect on the
assets, properties, financial condition or business of the Company, or subject to any restriction
that would prohibit the Company from entering into or performing its obligations under the
Agreement.

     3.11 Brokers or Finders. No natural or legal person has or will have, as a result of
any act or omission of the Company, any right, interest or valid claim against Angiotech for any
commission, fee or other compensation as a finder or broker in connection with the transactions
contemplated by this Agreement.

     3.12 Contracts. The contracts so described in the SEC Documents or incorporated by
reference therein are in full force and effect on the date hereof, except for contracts the
termination or expiration of which would, individually or in the aggregate, not have a material
adverse effect on the business, properties or assets of the Company, and the Company is not, nor to
the Company’s knowledge, is any other party in breach of or default under any of such contracts.
The SEC Documents describe or incorporate by reference all material contracts to which the Company
is a party.

     3.13 Properties. The Company has good and marketable title to all the properties and
assets reflected as owned in the financial statements included in the SEC Documents, subject to no
lien, mortgage, pledge, charge or encumbrance of any kind except (i) those, if any, reflected in
such financial statements or SEC Documents, or (ii) those that are not material in amount and do
not adversely affect the use made and promised to be made of such property by the Company. The
Company holds its leased properties under valid and binding leases, with such exceptions as are not
materially significant in relation to the business of the Company. Except as disclosed in the SEC
Documents, the Company owns or leases all such properties as are necessary to their operations as
now conducted or as proposed to be conducted.

     3.14 Compliance. The Company has not been advised and has no reason to believe that
it is not conducting business in compliance with all applicable laws, rules and regulations of the
jurisdictions in which it is conducting business; except where failure to be so in compliance would
not materially adversely affect the condition (financial or otherwise), business, results of
operations or prospects of the Company.

     3.15 Taxes. The Company has filed all necessary federal, state and foreign income tax
returns and have paid or accrued all taxes shown as due thereon, and the Company has no

5

 

knowledge of any tax deficiency that has been or might be asserted or threatened against the
Company that could materially and adversely affect the business, operations or properties of the
Company.

     3.16 Insurance. The Company maintains insurance of the types and in the amounts
generally deemed adequate for its business, including, but not limited to, insurance covering all
real and personal property owned or leased by the Company against theft, damage, destruction, acts
of vandalism and all other risks customarily insured against, all of which insurance is in full
force and effect.

     3.17 Contributions. The Company has not, directly or indirectly, at any time during
the last five years (i) made any unlawful contribution to any candidate for public office, or
failed to disclose fully any contribution in violation of law, or (ii) made any payment to any
federal or state governmental officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or permitted by the laws of the United States or
any jurisdiction thereof.

     3.20 Use of Proceeds. The Company will use the proceeds received from Angiotech under
this Agreement for working capital purposes only.

Section 4

Representations, Warranties and Covenants of Angiotech

     Angiotech hereby represent and warrant to the Company as follows:

     4.1 Authorization. (i) Angiotech has all requisite legal and corporate or other power
and capacity and has taken all requisite corporate or other action to execute and deliver this
Agreement, to purchase the Securities and to carry out and perform all of its obligations under
this Agreement, and (ii) this Agreement constitutes the legal, valid and binding obligation of
Angiotech, enforceable in accordance with its terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, or similar laws relating to or affecting the enforcement of
creditors’ rights generally and (b) as limited by equitable principles generally (regardless of
whether such enforceability is considered a proceeding in equity or at law).

     4.2 Investment Experience. Angiotech is an “accredited investor” as defined in Rule
501(a) under the Securities Act. Angiotech is aware of the Company’s business affairs and
financial condition and has had access to and has acquired sufficient information about the Company
to reach an informed and knowledgeable decision to acquire the Securities. Angiotech has such
business and financial experience as is required to give it the capacity to protect its own
interests in connection with the purchase of the Securities.

     4.3 Investment Intent. Angiotech is acquiring the Securities for its own account as
principal, and not as a nominee or agent, for investment purposes only, and not with a present view
to, or for, resale, distribution or fractionalization thereof, in whole or in part, within the
meaning of the Securities Act. Angiotech understands that the offer and sale of the Securities
have not been registered under the Securities Act or registered or qualified under any state

6

 

securities law in reliance on specific exemptions therefrom which exemptions may depend upon,
among other things, the bona fide nature of its investment intent as expressed herein. Angiotech
will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Securities except
in compliance with the Securities Act, and the rules and regulations promulgated thereunder.

     4.4 Registration or Exemption Requirements. Angiotech further acknowledges and
understands that the Securities may not be resold or otherwise transferred except in a transaction
registered under the Securities Act or unless an exemption from such registration is available.
Angiotech understands that the certificate(s) evidencing the Securities will be imprinted with a
legend that prohibits the transfer of such securities unless (i) they are registered or such
registration is not required, and (ii) if the transfer is pursuant to an exemption from
registration other than Rule 144 under the Securities Act and, if the Company shall so request in
writing, an opinion of counsel reasonably satisfactory to the Company is obtained to the effect
that the transaction is so exempt.

     4.5 Shareholding Restriction. Angiotech represents that it will at no time own more
than 19.9 percent (19.9%) of the issued and outstanding stock of the Company as a result of the
consummation of the transactions contemplated by this Agreement, the License Agreement, or the
exercise of that certain warrant issued in favor of Angiodevice International GmbH dated of even
date herewith (the “Warrant”), with such ownership percentage calculated as of the time of each
potential issuance. Angiotech acknowledges that it may not be able to exercise certain rights
under this Agreement or the Warrant if during the term of the Agreement or the Warrant such
exercise would bring its ownership percentage of the Company’s capital stock to twenty percent
(20%) or greater of the then outstanding shares of the Company’s capital stock.

Section 5

Conditions to Angiotech Obligation to Close

     The obligation of Angiotech to purchase the Securities at each Closing is subject to the
fulfillment or waiver of the following conditions, any of which may be waived in whole or in part
by Angiotech.

     5.1 Representations and Warranties. The representations and warranties made by the
Company in Section 3 hereof shall be true and correct in all material respects when made, and shall
be true and correct in all material respects on the Second Closing Date with the same force and
effect as if they had been made on and as of said date.

     5.2 Covenants. All covenants, agreements and conditions contained in this Agreement
to be performed by the Company on or prior to each respective Closing Date shall have been
performed or complied with in all material respects.

     5.3 License Agreement. The Company shall have executed the License Agreement on or
prior to the First Closing Date.

7

 

Section 6

Conditions to Closing of Company

     The Company’s obligation to sell and issue the Securities at each Closing to Angiotech is
subject to the fulfillment or waiver of the following conditions, any of which may be waived in
whole or in part by the Company:

     6.1 Representations and Warranties. The representations and warranties made by such
Investor in Section 4 hereof shall be true and correct in all material respects when made, and
shall be true and correct in all material respects on the Second Closing Date with the same force
and effect as if they had been made on and as of such date.

     6.2 Covenants. All covenants, agreements and conditions contained in this Agreement
to be performed by Angiotech on or prior to each respective Closing Date shall have been performed
or complied with in all material respects.

     6.3 License Agreement. Angiotech shall have executed the License Agreement on or
prior to the First Closing Date.

Section 7

Registration Rights

     7.1 Registration Under the Securities Act of 1933. None of the Common Stock issued to
Angiotech pursuant to Sections 1.1 or 1.2 hereof or following the exercise of the Warrant (the
“Shares”) have been registered for purposes of public distribution under the Securities Act.

     7.2 Registrable Securities. As used herein the term “Registrable Security” means each
of the Shares, and any shares of Common Stock issued upon any stock split or stock dividend in
respect of such Shares; provided, however, that with respect to any particular Registrable
Security, such security shall cease to be a Registrable Security when, as of the date of
determination, (i) it has been effectively registered under the Securities Act and disposed of
pursuant thereto, (ii) registration under the Securities Act is no longer required for subsequent
public distribution of such security under Rule 144(k) promulgated under the Securities Act or
otherwise, or (iii) it is no longer held by Angiotech. The term “Registrable Securities” means any
and/or all of the securities falling within the foregoing definition of a “Registrable Security.”
In the event of any merger, reorganization, consolidation, recapitalization or other change in
corporate structure affecting the Common Stock, such adjustment shall be made in the definition of
“Registrable Security” as is appropriate in order to prevent any dilution or enlargement of the
rights granted pursuant to this Section 7.

     7.3 Piggyback Registration. If, following the second anniversary of the date hereof
and terminating on the seventh anniversary of the date hereof, the Company proposes to prepare and
file any new registration statement or post-effective amendments thereto covering equity or debt
securities of the Company, or any such securities of the Company held by its shareholders (in any
such case, other than in connection with a merger, acquisition or pursuant to Form S-8 or

8

 

successor form) (for purposes of this Section 7, collectively, the “Registration Statement”), it
will give written notice of its intention to do so by certified mail, return receipt requested
(“Notice”), at least thirty (30) business days prior to the filing of each such Registration
Statement, to Angiotech. Upon the written request of Angiotech, made within twenty (20) business
days after receipt by Angiotech of the Notice, that the Company include any of Angiotech’s
Registrable Securities in the proposed Registration Statement, the Company shall use its best
efforts to effect the registration under the Securities Act of the Registrable Securities which it
has been so requested to register (“Piggyback Registration”), at the Company’s sole cost and
expense and at no cost or expense to (except as provided in Section 7.4(a) hereof).

     Notwithstanding the provisions of this Section 7.3, the Company shall have the right at any
time after it shall have given written notice pursuant to this Section 7.3 (irrespective of whether
any written request for inclusion of Registrable Securities shall have already been made) to elect
not to file any such proposed Registration Statement, or to withdraw the same after the filing but
prior to the effective date thereof.

     7.4 Covenants of the Company With Respect to Registration. The Company covenants and
agrees as follows:

     (a) The Company shall pay all costs, fees and expenses (other than underwriting fees,
discounts and nonaccountable expense allowance applicable to the Registrable Securities and
fees and expenses of counsel retained by Angiotech) in connection with all Registration
Statements including, without limitation, the Company’s legal and accounting fees, printing
expenses, and blue sky fees and expenses.

     (b) The Company will use its reasonable best efforts to take all necessary action which
may be required in qualifying or registering the Registrable Securities included in the
Registration Statement for offering and sale under the securities or blue sky laws of such
states as are reasonably requested by Angiotech.

     (c) To the fullest extent permitted by law, the Company will indemnify and hold
Angiotech harmless against any losses, claims, damages, or liabilities to which it may
become subject under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or violations
(collectively a “Violation”) by the Company: (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, including any
preliminary prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein not misleading,
or (iii) any violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any state securities law in connection with the offering
covered by the Registration Statement; and the Company will reimburse Angiotech for any
legal or other expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section shall not apply to

9

 

amounts paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent shall not be
unreasonably withheld, conditioned or delayed), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it arises out
of or is based upon a Violation which occurs in reliance upon and in conformity with written
information furnished to it expressly for use in connection with such registration by
Angiotech.

     (d) to the extent permitted by law, Angiotech will indemnify and hold harmless the
Company, each of its directors, each of its officers, each person, if any, who controls the
Company within the meaning of the Securities Act, any underwriter and any other investor
selling securities under the Registration Statement or any of such other investor’s,
trustees, partners, directors or officers or any person who controls such investor, against
any losses, claims, damages or liabilities (joint or several) to which the Company or any
such director, officer, controlling person, underwriter or other such investor, or trustee,
partner, director, officer or controlling person of such other investor may become subject
under the Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are
based upon any Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information furnished by
Angiotech; and Angiotech will reimburse any legal or other expenses reasonably incurred by
the Company or any such director, officer, controlling person, underwriter or other
investor, or trustee, partner, officer, director or controlling person of such other
investor in connection with investigating or defending any such loss, claim, damage,
liability or action if it is judicially determined that there was such a Violation;
provided, however, that the indemnity agreement contained in this Section shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of Angiotech, which consent shall not be
unreasonably withheld, conditioned or delayed.

     (e) promptly after receipt by an indemnified party under this Section of notice of the
commencement of any action (including any governmental action), such indemnified party
shall, if a claim in respect thereof is to be made against any indemnifying party under this
Section, deliver to the indemnifying party a written notice of the commencement thereof and
the indemnifying party shall have the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other indemnifying party similarly noticed,
to assume the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own counsel, with the
fees and expenses to be paid by the indemnifying party; and provided further, that if there
is more than one indemnified party, the indemnifying party shall pay for the fees and
expenses of one counsel for any and all indemnified parties to be mutually agreed upon by
such indemnified parties, unless representation of an indemnified party by the counsel
retained by the other indemnified parties would be inappropriate due to actual or potential
differing interests between such indemnified parties. The failure to deliver written notice
to the indemnifying party within a reasonable time of the commencement of any such action,
if materially prejudicial to its ability to defend such action, shall relieve such
indemnifying

10

 

party of any liability to the indemnified party under this Section, but the omission so
to deliver written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section.

     (f) if the indemnification provided for in this Section is held by a court of competent
jurisdiction to be unavailable to an indemnified party with respect to any losses, claims,
damages or liabilities referred to herein, the indemnifying party, in lieu of indemnifying
such indemnified party thereunder, shall to the extent permitted by applicable law,
contribute to the amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and of the indemnified party on the other in
connection with the Violation(s) that resulted in such loss, claim, damage or liability, as
well as any other relevant equitable considerations. The relative fault of the indemnifying
party and of the indemnified party 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 indemnifying party
or by the indemnified party and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission. No person or
entity guilty of fraudulent misrepresentation (within the meaning of Section 11 of the
Securities Act) shall be entitled to contribution from any person or entity who shall not
have been guilty of such fraudulent misrepresentation.

Section 8

Restrictions on Transferability of Securities;

Compliance with Securities Act; Voting Agreement

     8.1 Restrictions on Transfer. Except as expressly permitted by this Agreement,
Angiotech agrees and covenants that it shall not sell, transfer, encumber or dispose of the
Securities, whether by sale, assignment, exchange, gift, bequest, pledge, encumbrance or transfer
either by operation of law or any other means.

     8.2. First Refusal to Company. If Angiotech decides to effect a transfer of the
Securities, it shall first deliver written notice to the Company of such intent to transfer
(“Notice of Transfer”), which Notice of Transfer shall specify (i) the number of shares of Common
Stock proposed to be transferred (collectively the “Offered Stock”), (ii) the date of the proposed
transfer, which shall not be less than 60 days after the actual receipt of such Notice of Transfer
by the Company, (iii) the identity, including the complete name, address and telephone number of
the proposed transferee of the Offered Stock (the “Proposed Transferee”), and (iv) the proposed
consideration to be received and terms of payment upon such transfer (such consideration and the
terms of payment being hereinafter referred to collectively as the “Offer Price”). The Notice of
Transfer shall be accompanied by a copy of any bona fide written offer made to or received from the
Proposed Transferee. Such Notice of Transfer shall constitute an offer to sell and transfer the
Offered Stock, in whole or in part, to the Company at the Offer Price, and the date of such offer
(the “Offer Date”) shall be the date of actual receipt by the Company of the Notice of Transfer.
The Company shall promptly furnish a copy of the Notice

11

 

of Transfer to all of the members of its Board of Directors and schedule a special or regular
meeting of the Board of Directors to evaluate the Company’s capacity to purchase the Offered Stock
at the Offer Price. For a period of 30 days after the Offer Date, the Company shall have the right
and option (but not the obligation) to elect to purchase all or any portion of the Offered Stock.
If the Company exercises its right and option to purchase in whole or in part the Offered Stock,
the Company shall signify such exercise and the number of shares of Offered Stock to be purchased
by giving written notice to Angiotech (“Notice of Exercise”) within 30 days after the Offer Date.
The Notice of Exercise shall specify that the Company is exercising its right and option to
purchase all or any portion of the Offered Stock pursuant to this section 6. Upon such exercise by
the Company, Angiotech shall sell and transfer to the Company those shares of Offered Stock with
respect to which the option is exercised. Such transfer shall be on terms and conditions identical
to those set forth in the Notice of Transfer. Any Notice of Exercise which is mailed in the manner
provided herein shall be conclusively presumed to have been duly given when mailed, whether or not
Angiotech shall have actually received the Notice of Exercise.

     8.3 Failure to Exercise Refusal Right. If the Company does not exercise its rights
and options to purchase some or all of the Offered Stock at the Offer Price within the time
permitted under Section 6 above, then, within the 60-day period thereafter, Angiotech may transfer
to the Proposed Transferee those shares of Offered Stock with respect to which such rights and
options were not exercised; provided, however, that such transfer must be made in strict compliance
with the terms and conditions of such transfer as set forth in the Notice of Transfer, including,
without limitation, the Offer Price. Such transfer shall be made (a) pursuant to an effective
registration under the Securities Act or an exemption from the registration requirements thereof,
and (b) in accordance with applicable state law. If such transfer to the Proposed Transferee is
not consummated within the 60-day period described in this Section 8.3, the transfer shall not be
made and the restrictions of this Agreement shall again apply.

     8.4 Drag-Along Right. If the Board of Directors of the Company approves the sale of
substantially all of the capital stock or assets of the Company (each a “Merger Transaction”), then
the Company shall have the right (the “Drag-Along Right”), to require Angiotech to sell all, but
not less than all, of its Securities in favor of such Merger Transaction. The Company may exercise
the Drag-Along Right by written notice to Angiotech not later than 30 days prior to the closing of
the sale of the Merger Transaction. Such notice shall contain the terms and conditions of such
Merger Transaction. Angiotech has executed and delivered a proxy, in the form attached as Exhibit
A, in favor of the Company, allowing the Company to vote Angiotech’s Securities in favor of such
Merger Transaction.

     8.5 Restrictive Legend. Each certificate representing the Securities shall bear
substantially the following legend (in addition to any legends required under applicable securities
laws):

	 	(a)  	THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS UPON TRANSFER AND RIGHTS OF FIRST REFUSAL AND MANDATORY SALE
UPON THE HAPPENING OF CERTAIN EVENTS AS SET FORTH IN AN AGREEMENT AMONG THE
REGISTERED HOLDER AND THE

12

 

	 	   	CORPORATION, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE
CORPORATION.
	 
	 	(b)  	THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED FOR
INVESTMENT AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY APPLICABLE STATE SECURITIES LAW. SUCH SECURITIES MAY NOT BE PLEDGED,
SOLD, TRANSFERRED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
IT, STATING THAT SUCH PLEDGE, SALE, TRANSFER OR HYPOTHECATION IS EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF SAID ACT AND ANY APPLICABLE STATE SECURITIES
LAW.

     8.6 Transfer of Securities. Angiotech hereby covenants with the Company not to make
any sale of the Securities except either (i) in accordance with Rule 144, in which case Angiotech
covenants to comply with Rule 144, or (ii) in accordance with another exemption from the
registration requirements of the Securities Act. The legend set forth in Section 8.5 will be
removed from a certificate representing the Securities following and in connection with any sale
thereof pursuant to subsection (ii) hereof, but not in connection with any sale of Securities
pursuant to subsection (iii) hereof, and also will be removed at such time that the Securities may
be sold under Rule 144 without restriction as to volume and manner of sale.

Section 9

Miscellaneous

     9.1 Construction. The Company and Angiotech have participated jointly in the
negotiation and drafting of this Agreement. No presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

     9.2 Notices. Any notice, request, demand, waiver, consent, approval or other
communication that is required or permitted to be given to any party hereunder shall be in writing
and shall be deemed given only if delivered to the party personally or sent to the party by
telecopy, telegram or by registered or certified mail (return receipt requested) with postage and
registration or certification fees thereon prepaid, addressed to the party at its address set forth
below:

     If to the Company:

CABG Medical, Inc.

14505 — 21st Avenue North

Suite 212

Minneapolis, MN 55447-5602

Attn: President

13

 

If to Angiotech:

Angiotech Pharmaceuticals, Inc.

1618 Station Street

Vancouver, BC, Canada V6A 1B6

Attention: CBO

     9.3 Successors and Assigns. The provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors and assigns.

     9.4 Survival of Representations, Warranties and Agreements. The representations and
warranties of the Company in Section 3 hereof and the representations and warranties of Angiotech
in Section 4 hereof shall survive the purchase of the Securities for a period of twenty-four (24)
months following the Closing. All covenants and agreements set forth herein shall survive the
Closing without limitation, except as otherwise specifically provided herein.

     9.5 Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Minnesota, without giving effect to the conflicts of laws principles
thereof.

     9.6 Severability. The parties agree that (a) the provisions of this Agreement shall
be severable in the event that any provision hereof is held by a court of competent jurisdiction to
be invalid, void or otherwise unenforceable, (b) such invalid, void or otherwise unenforceable
provision shall be automatically replaced by another provision which is as similar as possible in
terms to such invalid, void or otherwise unenforceable provision but which is valid and
enforceable, and (c) the remaining provisions shall remain enforceable to the fullest extent
permitted by law.

     9.7 No Third Party Beneficiaries. Nothing herein expressed or implied is intended or
should be construed to confer upon or give to any person other than the parties hereto and their
successors and assigns any rights or remedies under or by reason of this Agreement.

     9.8 Entire Agreement. This Agreement constitutes the entire understanding of the
parties with respect to the subject matter hereof, and supersedes any prior agreements or
understandings, written or oral, between the parties with respect to the subject matter hereof.

     9.9 Amendment and Waiver. The parties may, by mutual agreement, amend this Agreement
in any respect in a writing executed by each party, and any party, as to such party, may waive any
of its rights hereunder. To be effective, any such waiver must be in writing and be signed by the
party providing such waiver. The rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies that any party may otherwise have at law or in equity. The
waiver by any party hereto of any breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach, whether or not similar.

14

 

     9.10 Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but which together shall constitute one and the same instrument.

     9.11 Headings. The headings preceding the text of the sections and subsections hereof
are inserted solely for convenience of reference, and shall not constitute a part of this Agreement
nor shall they affect its meaning, construction or effect.

     9.12 Public Announcement. In the event any party proposes to issue any press release
or public announcement concerning any provisions of this Agreement or the transactions contemplated
hereby, such party shall so advise the other party hereto, and the parties shall thereafter use
their best efforts to cause a mutually agreeable release or announcement to be issued. Neither
party will publicly disclose or divulge any provisions of this Agreement or the transactions
contemplated hereby without the other parties’ written consent, except as may be required by
applicable law (including applicable SEC rules and regulations).

     9.13 Further Assurances. Each party to this Agreement shall do and perform or cause
to be done and performed all such further acts and things and shall execute and deliver all such
other agreements, certificates, instruments and documents as the other party hereto may reasonably
request in order to carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.

     9.14 Expenses. Angiotech and the Company shall each pay their own expenses incident to
this Agreement and the preparation for, and consummation of, the transactions provided for herein.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the day
and year first written above.

	 	 	 	 	 
	 	 	CABG MEDICAL, INC.
	 
	 	 	 	 
	

	 	By:
	 	  /s/ John L. Babitt
	

	 	 	 	 
	

	 	Name:
	 	John L. Babitt
	

	 	Title:
	 	President, Chief Operating Officer and
	

	 	 	 	Chief Financial Officer
	 
	 	 	 	 
	 	 	ANGIOTECH PHARMACEUTICALS, INC.
	 
	 	 	 	 
	

	 	By:
	 	  K. Thomas Bailey
	

	 	 	 	 
	

	 	Name:
	 	K. Thomas Bailey
	

	 	Title:
	 	Vice President, Business Development

15

 

AMENDMENT TO INVESTMENT AGREEMENT

     THIS INVESTMENT AGREEMENT (the “Agreement”) is made as of April 7, 2005 by and between
CABG Medical, Inc., a Minnesota corporation (the “Company”) with its principal office at 14505
21st Avenue North, Minneapolis, Minnesota 55447, and Angiotech Pharmaceuticals, Inc., a
corporation organized and existing under the laws of the Province of British Columbia (“Angiotech”)
with its principal office at 1618 Station Street, Vancouver, British Columbia, Canada V6A 1B6.

RECITALS

     WHEREAS, the Company and Angiotech are parties to that certain Investment Agreement dated as
of March 22, 2005 (the “Investment Agreement”), pursuant to which (i) the Company agreed to sell to
Angiotech, and Angiotech agreed to purchase, 1,100,715 shares of the Company’s common stock and
(ii) Angiotech agreed to make an additional $5 million investment in the Company upon the
achievement by the Company of certain milestones set forth therein (the “Second Investment”);

     WHEREAS, the parties desire to modify certain provisions regarding the Second Investment.

     NOW, THEREFORE, in consideration of the respective agreements contained herein, and for other
good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto agree as follows:

     1) Defined Terms. Each capitalized term used herein that is not otherwise defined
herein shall have the meaning ascribed to such term in the Investment Agreement.

     2) Calculation of Share Total for First Investment. Pursuant to the terms of the
Investment Agreement, Angiotech agreed to purchase $5,000,000 worth of the Company’s common stock
at a 15% premium to the closing market price on March 22, 2005, the date of the Investment
Agreement. The closing market price on March 22 was $3.95. Therefore, the correct number of
shares to be issued to Angiotech was 1,100,715 ($5,000,000 divided by the sum of $3.95 multiplied
by 1.15%). While the Investment Agreement contained the correct closing share price and formula,
there was an error made in the final calculation of the total number of shares. As a result, in
Section 1.1 of the Investment Agreement, the total number of shares was listed as 1,104,972 instead
of the correct total of 1,100,715. The Investment Agreement is hereby amended to replace the
number 1,104,972 with the correct number, 1,100,715.

     3) Limitation on Maximum Number of Shares to be Issued to Angiotech pursuant to the
Investment Agreement. Pursuant to Section 1.2 of the Investment Agreement, Angiotech agreed to
make an additional $5,000,000 investment in the Company at a 15% premium to the closing market
price on the date the Company achieves the Net Sales Milestone. NASDAQ Stock Market Rule 4350(i),
however, requires shareholder approval for any present or potential issuance of common stock if the
number of shares of common stock to be issued is or will be equal to or in excess of 20% of the
number of shares or common stock outstanding before the issuance of the stock. On March 22, 2005,
the date upon which the Company and Angiotech executed the Investment

 

 

Agreement, the Company had 16,372,975 shares of common stock outstanding, representing all of
its issued and outstanding capital stock as of that date. Pursuant to Section 1.1 of the
Investment Agreement, the Company issued Angiotech 1,100,715 shares on March 22, 2005. In order to
ensure continued compliance with Rule 4350(i), under no circumstances will the Company issue
Angiotech more than 2,173,878 shares at the Second Closing (calculated by multiplying 16,372,975,
the Company’s outstanding shares as of March 22, 2005, by 19.999% (which equals 3,274,593 shares),
less the 1,100,715 shares issued to Angiotech on March 22, 2005).

     4) Miscellaneous. Except as expressly amended by this Amendment, all of the terms and
provisions of the Investment Agreement shall remain in full force and effect. This Amendment may
be executed in any number of counterparts, each of which shall be deemed as original and all of
which together shall constitute one instrument.

     IN WITNESS WHEREOF, each of the parties has caused this Amendment to Investment Agreement to
be executed in a manner appropriate for each and to be dated as of the date first above written.

	 	 	 	 	 
	 	 	CABG MEDICAL, INC.
	 
	 	 	 	 
	

	 	By:
	 	     /s/ John L. Babitt
	

	 	 	 	 
	 
	 	 	 	 
	

	 	Name:
	 	  John L. Babitt
	 
	 	 	 	 
	

	 	Its:
	 	President, Chief Operating Officer and
	

	 	 	 	Chief Financial Officer
	 
	 	 	 	 
	

	 	ANGIOTECH PHARMACEUTICALS, INC.

	 
	 	 	 	 
	

	 	By:
	 	  /s/ K. Thomas Bailey
	

	 	 	 	 
	 
	 	 	 	 
	

	 	Name:
	 	  K. Thomas Bailey
	 
	 	 	 	 
	

	 	Its:
	 	  Vice President, Business Development

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