Document:

ex10-62.htm

    
      

    

    Exhibit
10.62

    

    Executive
Employment Agreement

    

    This
Executive Employment Agreement (“Agreement”) between Freeport-McMoRan Copper
& Gold Inc., a Delaware corporation (the “Company”), and Kathleen L. Quirk
(the “Executive”) is dated effective as of January 29, 2008 (the “Agreement
Date”).

     

    W
I T N E S S E T H:

    

    WHEREAS,
the Executive currently serves as an officer of the Company;

     

    WHEREAS,
pursuant to the terms of this Agreement, the Company desires to retain the
services of the Executive and the Executive desires to continue to provide
services to the Company;

     

    WHEREAS,
during the course of providing services to the Company, the Executive has or
will have received extensive and unique knowledge of, experience in and access
to resources involving, the Mining Business (as defined below) at a substantial
cost to the Company, which Executive acknowledges has enhanced or substantially
will enhance Executive’s skills and knowledge in such business;

     

    WHEREAS,
during the course of providing services to the Company, Executive has had and
will continue to have access to valuable oral and written information, knowledge
and data relating to the business and operations of the Company and its
subsidiaries that is non-public, confidential or proprietary in nature and is
particularly useful in the Mining Business; and

     

    WHEREAS,
in view of the opportunities provided by the Company to Executive, the cost
thereof to the Company, and the need for the Company to be protected against
disclosures by Executive of the Company’s and its subsidiaries’ trade secrets
and other non-public, confidential or proprietary information, the Company and
Executive desire, among other things, to prohibit Executive from disclosing or
utilizing, outside the scope of his employment with the Company, any non-public,
confidential or proprietary information, knowledge and data relating to the
business and operations of the Company or its subsidiaries received by Executive
during the course of his employment, and to restrict the ability of Executive to
compete with the Company or its subsidiaries for a limited period of
time.

     

    NOW,
THEREFORE, for and in consideration of the continued employment of Executive by
the Company and the payment of salary, benefits and other compensation to
Executive by the Company, the parties hereto agree as follows:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    Article
I

     

    Employment
Capacity

     

    1.     Capacity and Duties of
Executive.  The Executive is employed by the Company to render
services on behalf of the Company as Executive Vice President and Chief
Financial Officer.  The Executive will perform such duties as are
assigned to the individual holding the title or titles held by him from time to
time in the Company’s By-laws and such other duties as may be prescribed from
time to time by the Chairman of the Board or the Company’s Board of Directors
(the “Board”), or the
Chief Executive Officer, which duties shall be consistent with the position of
Executive Vice President and Chief Financial Officer.

     

    2.     Term.  The term of
this Agreement (the “Employment Term”) will commence on the Agreement Date and
will expire January 1, 2012; subject to extension as provided in Article V,
Section 3(a) in the event of a Change of Control (as defined in Article V,
Section 2), and subject to any earlier termination of Executive’s employment
pursuant to this Agreement.  Commencing on January 1, 2012, and each
January 1st
thereafter, the Employment Term will automatically be extended for one
additional year unless not later than August 1 of the immediately preceding
year, the Corporate Personnel Committee has given written notice to the
Executive that it does not wish to extend this Agreement.

     

    3.     Devotion to
Responsibilities.  The Executive will devote significant
business time to the business of the Company, will use his best efforts to
perform faithfully and efficiently his duties under this Agreement, and will not
engage in or be employed by any other business; provided, however, that nothing
herein will prohibit the Executive from (a) serving as an officer and director
of McMoRan Exploration Co. (“McMoRan”), FM Services Company or any of their
affiliates or successors, (b) serving as a member of the board of directors,
board of trustees or the like of any for-profit or non-profit entity that does
not compete with the Company, or performing services of any type for any civic
or community entity, whether or not the Executive receives compensation
therefor, (c) investing his assets in such form or manner as will require no
more than nominal services on the part of the Executive in the operation of the
business of the entity in which such investment is made, or (d) serving in
various capacities with, and attending meetings of, industry or trade groups and
associations, as long as the Executive’s activities permitted by clauses (a),
(b), (c) and (d) above do not materially and unreasonably interfere with the
ability of the Executive to perform the services and discharge the
responsibilities required of him under this
Agreement.  Notwithstanding clause (c) above, the Executive may not,
without the approval of the Corporate Personnel Committee of the Board,
beneficially own 5% or more of the equity interests of a business organization
required to file periodic reports with the Securities and Exchange Commission
under the Securities Exchange Act of 1934 (the “Exchange Act”) other than the
Company or McMoRan, and the Executive may not beneficially own more than 2% of
the equity interests of any business organization that competes with the
Company.  For purposes of this paragraph, “beneficially own” has the
meaning ascribed to that term in Rule 13d-3 under the Exchange Act.

     

    
      
        
        

      

      
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    Article
II

     

    Compensation
and Benefits

     

    1.     Salary.  The Company
will pay the Executive a salary (“Base Salary”) at an annual rate per fiscal
year of the Company (“Fiscal Year”) of $650,000, which will be payable to the
Executive in equal semi-monthly installments.  Base Salary may be
remitted to the Executive on behalf of the Company by an affiliate of the
Company.

     

    2.     Bonus.  The
Executive will be eligible to receive an annual incentive bonus (the “Bonus”),
payable, if at all, only with respect to services that the Executive provides to
the Company.  Any Bonus will be determined, accrued and paid in
accordance with the terms of the Company’s 2005 Annual Incentive Plan, as
amended, or any incentive or bonus compensation plan that is a successor or
substitute therefor, that covers certain individuals designated by the Corporate
Personnel Committee of the Board (the “Committee”).  The Executive
acknowledges and agrees that this Section 2 imposes no obligation on the Company
to award any bonus to the Executive.

     

    3.     Award of Restricted Stock
Units.  Effective on the Agreement Date or as otherwise
provided by resolution of the Corporate Personnel Committee of the Company’s
Board of Directors approving such grant, Executive shall receive 75,000
restricted stock units on the terms and conditions set forth in a restricted
stock unit agreement entered into between the Company and the Executive, the
form of which is attached hereto as Exhibit A.

     

    4.     Equity Awards and Long-Term
Performance Units.  The Executive will continue to be eligible
to participate in all short-term and long-term equity and non-equity incentive
plans in which the Executive currently participates or which may be offered in
the future to the most senior executives of the Company.

     

    5.     Vacation.  The
Executive will be entitled to paid vacation and holidays as provided to
executives of the Company generally.

     

    6.     Indemnification and
Insurance.  In accordance with the Company’s Certificate of
Incorporation, the Company will indemnify the Executive, to the fullest extent
permitted by applicable the law, for any and all claims brought against him
arising out his services to the Company and its subsidiaries.  In
addition, the Company will continue to maintain a directors’ and officers’
insurance policy covering the Executive substantially in the form of the policy
in existence as of the Agreement Date to the extent such policy remains
available at reasonable commercial terms.

     

    7.     Other Benefits.  The
Executive will continue to be entitled to all benefits and perquisites presently
provided to him or generally to the most senior executives of the Company and be
eligible to participate in and receive all benefits under welfare benefit plans,
practices, policies and programs (including, without limitation, medical,
prescription, dental, disability, employee life, group life, accidental death
and travel accident insurance plans and programs) available generally to the
most senior executives of the Company.

     

    8.     Expenses.  The
Executive will be entitled to receive prompt reimbursement for all reasonable
business expenses (including food, transportation, entertainment and lodging)

     

    
      
        
        

      

      
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    incurred
from time to time on behalf of the Company in the performance of his duties,
upon the presentation of such supporting invoices, documents and forms as the
Company reasonably requests.

     

    Article
III

     

    Termination
of Employment

     

    1.     Death.  The
Executive’s status as an officer and employee will terminate immediately and
automatically upon the Executive’s death.

     

    2.     Disability.  The
Company may terminate Executive’s status as an officer and employee for
“Disability” as follows:

     

    (a)    If the
Executive has a disability that entitles him to receive benefits under the
Company’s long-term disability insurance policy in effect at the time either
because he is Totally Disabled or Partially Disabled, as such terms are defined
in the Company’s policy in effect as of the Agreement Date or as similar terms
are defined in any successor policy, then the Company may terminate Executive’s
status as an officer and employee effective on the first day on which the
Executive receives a payment under such policy (or on the first day that he
would be so eligible, if he had applied timely for such payments).

     

    (b)    If the
Company has no long-term disability plan in effect, and if (i) because of
physical or mental illness the Executive is rendered incapable of satisfactorily
discharging his duties and responsibilities under this Agreement for a period of
90 consecutive days and (ii) a duly qualified physician chosen by the Company
and reasonably acceptable to the Executive or his legal representatives so
certifies in writing, the Board will have the power to determine that the
Executive has become disabled.  If the Board makes such a
determination, the Company will have the continuing right and option, during the
period that such disability continues, and by notice given in the manner
provided in this Agreement, to terminate the status of Executive as an officer
and employee.  Any such termination will become effective 30 days
after such notice of termination is given, unless within such 30-day period, the
Executive becomes capable of rendering services of the character contemplated
hereby (and a physician chosen by the Company and reasonably acceptable to the
Executive or his legal representatives so certifies in writing) and the
Executive in fact resumes such services.

     

    (c)    The
“Disability Effective Date” will mean the date on which termination of
Executive’s status as an officer and employee becomes effective due to
Disability.

     

    3.     Cause.  The Company
may terminate the Executive’s status as an officer and employee for “Cause,”
which is defined as follows:

     

    (a)    The
Executive’s willful and continued failure to perform substantially the
Executive’s duties with the Company or its affiliates (other than any such
failure resulting from incapacity due to physical or mental illness), after a
written demand for substantial performance is delivered to the Executive by the
Board, which specifically identifies the manner in which the Board believes that
the Executive has not substantially performed the Executive’s
duties;

     

    
      
        
        

      

      
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    (b)     The
Executive’s material breach of this Agreement after a written demand is
delivered to the Executive by the Board, which specifically identifies the
manner in which the Board believes that the Executive has materially breached
this Agreement;

     

    (c)     The final
conviction of the Executive or an entering of a guilty plea or a plea of no
contest by the Executive to a felony;

     

    (d)     Unauthorized
acts or omissions by the Executive that could reasonably be expected to cause
material financial harm to the Company or materially disrupt Company
operations;

     

    (e)     The
Executive’s commission of an act of dishonesty (even if not a crime) resulting
in the enrichment of the Executive at the expense of the Company;
or

     

    (f)     The
Executive’s knowing falsification or knowing attempted falsification of
financial records of the Company in violation of SEC Rule 13b2-1.

     

    For
purposes of this provision, no act or failure to act, on the part of the
Executive, will be considered “willful” unless it is done, or omitted to be
done, by the Executive in bad faith or without a reasonable belief that the act
or omission was in the best interests of the Company or its
affiliates.  Any act, or failure to act, based on authority given
pursuant to a resolution duly adopted by the Board, the instructions of a more
senior officer of the Company or the advice of counsel to the Company or its
affiliates will be conclusively presumed to be done, or omitted to be done, by
the Executive in good faith and in the best interests of the Company or its
affiliates.  The termination of employment of the Executive will not
be deemed to be for Cause unless and until there has been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Board at a meeting of
the Board called and held for such purpose (after reasonable notice is provided
to the Executive and the Executive is given an opportunity, together with
counsel, to be heard before the Board), finding that, in the good faith opinion
of the Board, the Executive has engaged in any of the conduct described in
subparagraphs (a) through (f) above, and specifying the particulars of such
conduct.

     

    4.     Good Reason.  The
Executive may terminate his status as an officer and employee for “Good Reason,”
which is defined as follows:

     

    (a)    Any
failure by the Company or its affiliates to comply with any of the provisions of
this Agreement (including, but not limited to, the failure to provide the
Executive with the position set forth in Article I, Section 1 and, at a minimum,
the Base Salary set forth in Article II, Section 1), other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith that is
remedied within 10 days after receipt by the Company of written notice thereof
from the Executive; or

     

    (b)    The
assignment to the Executive of any duties inconsistent in any material respect
with Executive’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by this
Agreement, or any other action that results in a diminution in such position,
authority, duties or responsibilities, excluding for this 

     

    
      
        
        

      

      
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    purpose
an isolated, insubstantial and inadvertent action not taken in bad faith that is
remedied within 10 days after receipt by the Company of written notice thereof
from the Executive.

     

    (c)    Following
a Change of Control, as defined in Article V hereof, “Good Reason” will also
include:

     

    (i)     Any
failure of the Company to provide the Executive with the position, authority,
duties and responsibilities at least commensurate in all material respects with
the most significant of those held, exercised and assigned at any time during
the 120-day period immediately preceding the Change of
Control.  Executive’s position, authority, duties and responsibilities
after a Change of Control shall not be considered commensurate in all material
respects with Executive’s position, authority, duties and responsibilities prior
to a Change of Control unless after the Change of Control the Executive holds an
equivalent position in the Company;

     

    (ii)    The
Company or its affiliates requiring the Executive to be based at any office or
location other than the office or location where Executive was employed
immediately preceding the Change of Control, or requiring the Executive to
travel on business to a substantially greater extent than required immediately
prior to a Change of Control; or

     

    (iii)    Any
failure by the Company to comply with and satisfy Article VIII, Sections 1(c)
and (d) of this Agreement.

     

    Any
determination of “Good Reason” made by the Executive in good faith and based
upon his reasonable belief and understanding shall be conclusive.

     

    5.     Termination by the
Company.  In addition to termination for death, Disability or
Cause, the Company may at any time terminate the Executive’s status as an
officer and employee for any reason or for no reason at all.

     

    6.     Retirement.  In
addition to termination for death or Good Reason, the Executive may at any time
retire and terminate his status as an officer and
employee.  “Retirement” (and variants thereof) for purposes of this
Agreement is defined as the Executive’s voluntary termination of his status as
an officer and employee at any time after reaching age 54, but shall not include
a termination for Good Reason.

     

    7.     Notice of Termination; Termination
Date.

     

    (a)     Other
than as a result of the death of Executive, any termination of Executive’s
status as an officer and employee shall be communicated to the other party by
Notice of Termination given in accordance with Article VIII, Section 2 of this
Agreement.  For purposes of this Agreement, a “Notice of Termination”
means a written notice that (i) indicates the specific termination provision in
this Agreement on which the party relies,  (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination under the provisions so indicated and (iii)
if the Termination Date (as defined below) is other than the date of receipt of
such notice, specifies the Termination Date.  The Company’s failure to
set forth in the Notice of Termination any fact or circumstance that contributes
to a showing of Disability or Cause will not negate the effect of the notice nor
waive 

     

    
      
        
        

      

      
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    any right
of the Company or preclude the Company from asserting such fact or circumstance
in enforcing the Company’s rights.

     

    (b)     “Termination
Date” means, if Executive’s status as an officer and employee is terminated (i)
by reason of Executive’s death, the date of Executive’s death, (ii) by reason of
Disability, the Disability Effective Date, (iii) by the Company other than by
reason of death or Disability, the date of delivery of the Notice of Termination
or any later date specified in the Notice of Termination, which date will not be
more than 30 days after the giving of the notice, or (iv) by the Executive other
than by reason of death, the date of delivery of the Notice of Termination or
any later date specified in the Notice of Termination, which date will not be
more than 30 days after the giving of the notice.

     

    Article
IV

     

    Obligations
upon Termination

     

    1.     Separation from
Service.  No payments or benefits provided herein that are paid
because of a termination of employment under circumstances described herein
shall be paid, unless such termination of employment also constitutes a
“separation from service” within the meaning of Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”) and the regulations and guidance
issued thereunder (“Section 409A”).

     

    2.     Death, Disability, or
Retirement.  If (A) the Executive’s status as an officer and
employee is terminated by reason of the Executive’s death or Retirement, or (B)
the Company terminates the Executive’s status as an officer and employee by
reason of Executive’s Disability then, subject to the six-month delay set forth
in Article VIII, Section 14, if applicable,:

     

    (a)     The
Company will pay the Executive or his legal representatives the amount of the
Executive’s Base Salary earned through the Termination Date to the extent not
previously paid (the “Accrued Obligations”);

     

    (b)     No later
than sixty (60) days following the end of the fiscal quarter during which the
Termination Date occurs, the Company will pay to the Executive or his legal
representatives a pro rata bonus in an amount determined by calculating the
bonus that the Executive would receive for the Fiscal Year in which the
Termination Date occurs based upon the level of achievement of the applicable
performance goals through the end of the fiscal quarter in which the Termination
Date occurs, annualized as if such level of performance had continued throughout
the entire Fiscal Year and then multiplying such bonus amount by the fraction
obtained by dividing the number of days in the year through the Termination Date
by 365 (the “Pro Rata Bonus”);

     

    (c)     The
Company will pay or deliver, as appropriate, all other benefits due to
Executive  pursuant to any employee benefit plans and incentive plans
maintained by the Company or its subsidiaries with respect to services rendered
by the Executive prior to the Termination Date; and

     

    (d)     In the
case of Executive’s Retirement, for a period commencing on the Termination Date
and ending on the earlier of  (i) the third anniversary of the
Termination Date, or (ii) the date that the Executive accepts new employment
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    Company
will at its expense maintain and administer for the continued benefit of
Executive all insurance and welfare benefit plans in which Executive was
entitled to participate as an employee of the Company as of the Termination
Date, except medical reimbursement benefits under the Company’s flex plans,
provided that Executive’s continued participation is possible under the general
terms and provisions of such plans and all applicable laws.  If the
Executive is a “specified employee” governed by Article VIII, Section 14, to the
extent that any benefits provided to the Executive under this Article IV,
Section 2(d) are taxable to the Executive, then, with the exception of
nontaxable medical insurance benefits, the value of the aggregate amount of such
taxable benefits provided to the Executive pursuant to this Article IV, Section
2(d) during the six month period following the Termination Date shall be limited
to the amount specified by Section 402(g)(1)(B) of Code for the year in which
the termination occurred.  The Executive shall pay the cost of any
benefits that exceed the amount specified in the previous sentence during the
six month period following the date of termination, and shall be reimbursed in
full by the Company during the seventh month after the Termination
Date.  The coverage and benefits (including deductibles and costs)
provided under any such benefit plan in accordance with this paragraph during
the Continuation Period will be no less favorable to Executive than the most
favorable of such coverages and benefits as of the Termination
Date.  If Executive’s participation in any such benefit plan is barred
or any such benefit plan is terminated, the Company will use commercially
reasonable efforts to provide Executive with compensation or benefits
substantially similar or comparable in value to those Executive would otherwise
have been entitled to receive under such plans.  At the end of the
Continuation Period, the Executive will have the option to have assigned to him,
at no cost and with no apportionment of prepaid premiums, any assignable
insurance owned by the Company that relates specifically to the
Executive.  Subject to the general terms and provisions of the plans
and all applicable laws, the Executive will be eligible for coverage under the
Company’s retiree medical plan or the Consolidated Omnibus Budget Reconciliation
Act (“COBRA”) at the end of the Continuation Period or earlier cessation of the
Company’s obligation under the foregoing provisions of this
paragraph.

     

    To the
extent that the amounts payable under this Article IV, Section 2(d) are
reimbursements and other separation payments described under Treasury
Regulations Section 1.409A-1(b)(9)(v), such payments do not provide for the
deferral of compensation.  If they do constitute deferral of
compensation governed by Section 409A, they shall be deemed to be reimbursements
or in-kind benefits governed by Treasury Regulations Section
1.409A-3(i)(1)(iv).  If the previous sentence applies, (i) the amount
of expenses eligible for reimbursement or in-kind benefits provided during the
Executive’s taxable year shall not affect the expenses eligible for
reimbursement or in-kind benefits in any other taxable year, (ii) the
reimbursement of an eligible expense must be made on or before the last day of
the Executive’s taxable year following the taxable year in which the expense was
incurred and (iii) the right to reimbursement or in-kind benefits shall not be
subject to liquidation or exchange for another benefit.

    

    3.     Cause.  If the
Company terminates the Executive’s status as an officer and employee for Cause,
the Company will pay to the Executive the Accrued Obligations.  The
Company will have no further obligation to the Executive other than for
obligations imposed by law and obligations for any benefits due the Executive
pursuant to any employee benefit plans 

     

    
      
        
        

      

      
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    and
incentive plans maintained by the Company or its subsidiaries with respect to
services rendered by the Executive prior to the Termination Date.

     

    4.     Termination by Executive for Good
Reason or by Company for Reasons other than Death, Disability or
Cause.  If the Executive terminates his status as an officer
and employee for Good Reason or the Company terminates the Executive’s status as
an officer and employee other than for death, Disability or Cause, then subject
to the six-month delay set forth in Article VIII, Section 14, if
applicable:

     

    (a)    The
Company will pay to the Executive the Accrued Obligations and the Pro Rata
Bonus;

     

    (b)    Within
twenty (20) business days of the Termination Date, the Company will pay to the
Executive in a lump sum in cash an amount equal to three times the sum of (i)
the Executive’s Base Salary in effect at the Termination Date and (ii) average
of the Bonuses paid to the Executive for the immediately preceding three Fiscal
Years, not including any
premium received in connection with Executive’s participation in any restricted
stock program offered by the Company;

     

    (c)    All stock
options will become immediately exercisable as of the Termination Date and will
remain exercisable until the expiration date specified in the applicable notice
of grant of nonqualified stock option;

     

    (d)    All
restricted stock units granted to the Executive, except the restricted stock
units granted pursuant to Article II, Section 3 herein, will vest as of the
Termination Date to the extent not previously vested and will convert to common
stock of the Company, provided any applicable performance conditions have been
met as of the Termination Date;

     

    (e)    The
Executive’s performance units under the Company’s Long-Term Performance
Incentive Plan will be credited with the annual earnings per share or net loss
per share (as defined in the plan) for the Fiscal Year in which the Termination
Date occurs and all amounts credited to the Executive’s performance unit account
will be fully vested and will be paid out within 60 days of the end of the
Fiscal Year in which the Termination Date occurs;

     

    (f)    The
Company will pay or deliver, as appropriate, all other benefits due the
Executive pursuant to any employee benefit plans maintained by the Company or
its subsidiaries with respect to services rendered by the Executive prior to the
Termination Date; and

     

    (g)    For the
Continuation Period, the Company shall at its expense maintain and administer
for the continued benefit of Executive the benefits provided for under Article
IV, Section 2(d).

     

    5.     Resignation from Boards of
Directors.  If Executive is a director of the Company and his
employment is terminated for any reason other than death, the Executive will, if
requested by the Company, immediately resign as a director of the Company and
its subsidiaries.  If such resignation is not received within 20
business days after the Executive actually receives written notice from the
Company requesting the resignations, the Executive will forfeit any right to
receive any payments pursuant to this Agreement.

     

    
      
        
        

      

      
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    Article
V

     

    Change
of Control

     

    1.     Applicability.  In
the event that a Change of Control occurs during the Employment Term, then the
provisions of this Article V shall be applicable.

     

    2.     Definition
of Change of Control.

     

    (a) “Change
of Control” means (capitalized terms not otherwise defined will have the
meanings ascribed to them in paragraph (b) below):

     

    (i)     the
acquisition by any Person together with all Affiliates of such Person, of
Beneficial Ownership of the Threshold Percentage or more; provided, however,
that for purposes of this Article V, Section 2(a)(i), the following will not
constitute a Change of Control:

     

    (A) any
acquisition (other than a “Business Combination,” as defined below, that
constitutes a Change of Control under Article V, Section 2(a)(iii) hereof) of
Common Stock directly from the Company,

     

    (B) any
acquisition of Common Stock by the Company or its subsidiaries,

     

    (C) any
acquisition of Common Stock by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation or other entity
controlled by the Company, or

     

    (D) any
acquisition of Common Stock pursuant to a Business Combination that does not
constitute a Change of Control under Article V, Section 2(a)(iii) hereof;
or

     

    (ii)     individuals
who as of the effective date of this Agreement, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the effective date of this Agreement whose election, or nomination for election
by the Company’s shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board will be considered a member of
the Incumbent Board, unless such individual’s initial assumption of office
occurs as a result of an actual or threatened election contest with respect to
the election or removal of directors or any other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Incumbent Board; or

     

    (iii)    the
consummation of a reorganization, merger or consolidation (including a merger or
consolidation of the Company or any direct or indirect subsidiary of the
Company), or sale or other disposition of all or substantially all of the assets
of the Company (a “Business Combination”), in each case, unless, immediately
following such Business Combination:

     

    
      
        
        

      

      
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    (A)     the
individuals and entities who were the Beneficial Owners of the Company Voting
Stock immediately prior to such Business Combination have direct or indirect
Beneficial Ownership of more than 50% of the then outstanding shares of common
stock, and more than 50% of the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, of
the Company, and

     

    (B)     no Person
together with all Affiliates of such Person (excluding the Company and any
employee benefit plan or related trust of the Company or any subsidiary of the
Company) Beneficially Owns 30% or more of the then outstanding shares of common
stock of the Company or 30% or more of the combined voting power of the then
outstanding voting securities of the Company, and

     

    (C)     at least
a majority of the members of the board of directors of the Company were members
of the Incumbent Board at the time of the execution of the initial agreement,
and of the action of the Board, providing for such Business Combination;
or

     

    (iv)         
approval
by the shareholders of the Company of a complete liquidation or dissolution of
the Company.

     

    (b) As used
in this Section 2 and elsewhere in this Agreement, the following terms have the
meanings indicated:

     

    (i)     Affiliate:  “Affiliate”
means a Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, another
specified Person.

     

    (ii)    Beneficial
Owner:  “Beneficial Owner” (and variants thereof), with respect to a
security, means a Person who, directly or indirectly (through any contract,
understanding, relationship or otherwise), has or shares (A) the power to vote,
or direct the voting of, the security, and/or (B) the power to dispose of, or to
direct the disposition of, the security.

     

    (iii)   
Company
Voting Stock:  “Company Voting Stock” means any capital stock of the
Company that is then entitled to vote for the election of
directors.

     

    (iv)         
Majority
Shares:  “Majority Shares” means the number of shares of Company
Voting Stock that could elect a majority of the directors of the Company if all
directors were to be elected at a single meeting.

     

    (v)   Person:  “Person”
means a natural person or entity, and will also mean the group or syndicate
created when two or more Persons act as a syndicate or other group (including
without limitation a partnership, limited partnership, joint venture or other
joint undertaking) for the purpose of acquiring, holding, or disposing of a
security, except that “Person” will not include an underwriter temporarily
holding a security pursuant to an offering of the security.

     

    (vi) Threshold
Percentage:  “Threshold Percentage” means 30% of all then outstanding
Common Stock.

     

    
      
        
        

      

      
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    3.     Effect.

     

    Upon a
Change of Control, the Employment Term and the benefits provided by Article II
hereof shall automatically continue following such Change of Control for a
period equal to the then remaining Employment Term or three years from the Change of
Control, whichever period is longer, subject to any earlier termination of
Executive’s status as an employee pursuant to this Agreement.

     

    4.     Obligations upon Termination
Following a Change of Control.

     

    (a)     Death, Disability or
Retirement.  If, after a Change of Control and during the
Employment Term, (i) the Executive’s status as an officer and employee is
terminated by reason of the Executive’s death, (ii) the Company terminates the
Executive’s status as an officer and employee by reason of Executive’s
Disability, or (iii) the Executive Retires and terminates his status as an
officer and employee, then the Company shall pay to the Executive the benefits
and payments provided for in Article IV, Section 2, subject to the six-month
delay set forth in Article VIII, Section 14, if applicable.

     

    (b)     Cause.  If,
after a Change of Control and during the Employment Term, the Executive’s status
as an officer and employee is terminated by the Company for Cause, the Company
shall pay to the Executive the benefits and payments provided for in Article IV,
Section 3.

     

    (c)     Termination by Executive for
Good Reason or by Company for Reasons other than Death, Disability or
Cause.  If, after a Change of Control and during the Employment
Term, the Executive terminates his status as an officer and employee for Good
Reason, or the Company terminates the Executive’s status as an officer and
employee other than for death, Disability or Cause, then, subject to the
six-month delay set forth in Article VIII, Section 14, if
applicable,:

     

    (i)     The
Company shall pay to the Executive the Accrued Obligations and the Pro Rata
Bonus;

     

    (ii)     Within
twenty (20) business days of the Termination Date, the Company shall pay to the
Executive in a lump sum in cash an amount equal to three times, the sum of (A)
the Executive’s Base Salary in effect at the Termination Date and (B) the
highest bonus paid to the Executive for any of the immediately preceding three
Fiscal Years, not including any premium received in connection with the
Executive’s participation in any restricted stock program offered by the
Company;

     

    (iii)    The
Company will pay or deliver, as appropriate, all other benefits due the
Executive pursuant to any employee benefit plans and incentive plans maintained
by the Company or its affiliated companies with respect to services rendered by
the Executive prior to the Termination Date; and

     

    (iv)    For the
Continuation Period, the Company shall at its expense maintain and administer
for the continued benefit of Executive the benefits provided for under Article
IV, Section 2(d).

     

    
      
        
        

      

      
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    (d)     Resignation from Board of
Directors.  If the Executive is a director of the Company and
his status as an officer and employee is terminated for any reason other than
death, the Executive shall, if requested by the Company, immediately resign as a
director of the Company and its subsidiaries.  If such resignation is
not received within 20 business days after the Executive actually receives
written notice from the Company requesting the resignation, the Executive shall
forfeit any right to receive any payments pursuant to this
Agreement.

     

    (e)     Nondisclosure,
Noncompetition and Proprietary Rights.  The rights and
obligations of the Company and the Executive contained in Article VI hereof
shall continue to apply after a Change of Control.

     

    5.     Excise Tax
Provision.

     

    (a)     Notwithstanding
any other provisions of this Agreement, if a Change of Control occurs during the
original or extended term of this Agreement, in the event that any of the
payments or benefits received or to be received by or attributable to the
Executive in connection with the Change of Control or the Executive’s
termination of employment (whether pursuant to the terms of this Agreement or
any other plan, arrangement or agreement with the Company, any Person whose
actions result in a Change of Control or any Person affiliated with the Company
or such Person) (all such payments and benefits, including the payments and
benefits under Article V, Section 4(c) hereof, but excluding any payment to be
made pursuant to this Article V, Section 5, being hereinafter referred to as the
“Initial Payments”) will be subject (in whole or in part) to an excise tax
imposed by section 4999 of the Code or any similar tax (the “Excise Tax”), the
Company shall pay to the Executive an additional amount (the “Gross-Up Payment”)
such that the net amount retained by the Executive, after deduction of (i) any
Excise Tax on the Initial Payments, (ii) any federal, state and local income and
employment taxes on the Gross-Up Payment, (iii) any Medicare tax on the Gross-Up
Payment, and (iv) the Excise Tax on the Gross-Up Payment, shall be equal to the
Initial Payments.  Notwithstanding the foregoing provisions of this
Article V, Section 5(a), if it shall be determined that the Executive is
entitled to a Gross-Up Payment, but that the present value as of the date of the
Change of Control, determined in accordance with Sections 280G(b)(2)(ii) and
280G(d)(4) of the Code (the “Present Value”), of the Initial Payments does not
exceed 110% of the greatest Present Value of Initial Payments  that
could be paid to the Executive such that the receipt thereof would not give rise
to any Excise Tax (the “Safe Harbor Cap”), then no Gross-Up Payment shall be
made to the Executive and the amounts payable to the Executive under this
Agreement shall be reduced to the maximum amount that could be paid to the
Executive such that the Present Value of the Initial Payments does not exceed
the Safe Harbor Cap.  The reduction of the amounts payable hereunder,
if applicable, shall be made by reducing the benefits as elected by the
Executive.  For purposes of reducing the Initial Payments to the Safe
Harbor Cap, only amounts payable under this Agreement (and no other Initial
Payments) shall be reduced.  If the reduction of the amounts payable
hereunder would not result in a reduction of the Present Value of the Initial
Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall
be reduced pursuant to this provision.

     

    (b)     For
purposes of determining whether any of the Initial Payments will be subject to
the Excise Tax and the amount of such Excise Tax, (i) all of the Initial
Payments shall be treated as “parachute payments” (within the meaning of the
Code) unless, in the opinion of 

     

    
      
        
        

      

      
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    tax
counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by
the accounting firm which was, immediately prior to the Change of Control, the
Company’s independent auditor (the “Auditor”), such payments or benefits (in
whole or in part) do not constitute parachute payments, (ii) all “excess
parachute payments” within the meaning of the Code shall be treated as subject
to the Excise Tax unless, in the opinion of Tax Counsel, such excess parachute
payments (in whole or in part) represent reasonable compensation for services
actually rendered (within the meaning of the Code) in excess of the “Base
Amount” (within the meaning set forth in the Code) allocable to such reasonable
compensation, or are otherwise not subject to the Excise Tax, and (iii) the
value of any noncash benefits or any deferred payment or benefit shall be
determined by the Auditor in accordance with the principles of the
Code.  For purposes of determining the amount of the Gross-Up Payment,
the Executive shall be deemed to pay federal income tax at the highest marginal
rate of federal income taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at the highest marginal
rate of taxation in the state and locality of the Executive’s residence on the
date of termination of the Executive’s employment (or if there is no date of
termination, then the date on which the Gross-Up Payment is calculated for
purposes of this Article V, Section 5), net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and local
taxes.

     

    (c)     In the
event that the Excise Tax is finally determined to be less than the amount taken
into account hereunder in calculating the Gross-Up Payment, the Executive shall
repay to the Company, within ten business days following the time that the
amount of such reduction in the Excise Tax is finally determined, the portion of
the Gross-Up Payment attributable to such reduction (plus that portion of the
Gross-Up Payment attributable to the Excise Tax and federal, state and local
income and employment taxes imposed on the Gross-Up Payment being repaid by the
Executive, to the extent that such repayment results in a reduction in the
Excise Tax and a dollar-for-dollar reduction in the Executive’s taxable income
and wages for purposes of federal, state and local income and employment taxes,
plus interest on the amount of such repayment at 120% of the rate provided in
section 1274(b)(2)(B) of the Code).  In the event that the Excise Tax
is determined to exceed the amount taken into account hereunder in calculating
the Gross-Up Payment (including by reason of any payment the existence or amount
of which cannot be determined at the time of the Gross-Up Payment), the Company
shall make an additional Gross-Up Payment in respect of such excess (plus any
interest, penalties or additions payable by the Executive with respect to such
excess) within ten business days following the time that the amount of such
excess is finally determined.  The Executive and the Company shall
each reasonably cooperate with the other in connection with any administrative
or judicial proceedings concerning the existence or amount of liability for
Excise Tax with respect to the Initial Payments.

     

    (d)     Subject
to the six-month delay set forth in Article VIII, Section 14, if applicable, the
Gross-Up Payment provided in this Article V, Section 5 shall be made not later
than the “Payment Day.”  The Payment Day shall be the tenth business
day following the date of termination, or, if the Executive becomes entitled,
before the Executive’s employment is terminated, to a Gross-Up Payment under
this Article V, Section 5, then not later than the tenth business day following
the date as of which the present value of the Initial Payments is calculated for
purposes of determining the amount of such Gross-Up
Payment.  Notwithstanding the preceding provisions of this Article V,
Section 5(d), if the amount of the Gross-Up Payment 

     

    
      
        
        

      

      
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    cannot be
finally determined on or before the Payment Day, the Company shall pay to the
Executive on the Payment Day an estimate, as determined in accordance with
Article V, Section 5(b), of the minimum amount of the Gross-Up Payment to which
the Executive is clearly entitled and shall pay the remainder of the Gross-Up
Payment (together with interest on the unpaid remainder at 120% of the rate
provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can
be determined but in no event later than the thirtieth day after the Payment
Day.  In the event that the amount of the estimated Gross-Up Payment
so made exceeds the amount subsequently determined to have been due, such excess
shall constitute a loan by the Company to the Executive, payable on the tenth
business day after demand by the Company (together with interest at 120% of the
rate provided in section 1274(b)(2)(B) of the Code).  At the time that
any Gross-Up Payment is made pursuant to Article V, Section 5(a) (and at the
time that any additional Gross-Up Payment is made pursuant to Article V, Section
5(c)), the Company shall provide the Executive with a written statement setting
forth the manner in which any such payment was calculated and the basis for such
calculations including, without limitation, any opinions or other advice the
Company has received from Tax Counsel, the Auditor or other advisors or
consultants (and any such opinion or advice which is in writing shall be
attached to the statement). Notwithstanding any other provision hereof, the
Gross-Up Payment (including any additional Gross-Up Payment made pursuant to
Article V, Section 5(c)) must be paid no later than the end of the calendar year
following the year in which the Executive remits the related taxes, as required
by Treasury Regulations Section 1.409A-3(i)(l)(v).

     

    Article
VI

     

    Nondisclosure,
Noncompetition and Proprietary Rights

     

    1.     Certain
Definitions.  For purposes of this Agreement, the following
terms will have the following meanings:

     

    (a)    “Confidential
Information” means any information, knowledge or data of any nature and in any
form (including information that is electronically transmitted or stored on any
form of magnetic or electronic storage media) relating to the past, current or
prospective business or operations of the Company and its subsidiaries, that at
the time or times concerned is not generally known to persons engaged in
businesses similar to those conducted or contemplated by the Company and its
subsidiaries (other than information known by such persons through a violation
of an obligation of confidentiality to the Company), whether produced by the
Company and its subsidiaries or any of their consultants, agents or independent
contractors or by Executive, and whether or not marked confidential, including
without limitation information relating to the Company’s or its subsidiaries’
products and services, business plans, business acquisitions, processes, product
or service research and development ideas, methods or techniques, training
methods and materials, and other operational methods or techniques, quality
assurance procedures or standards, operating procedures, files, plans,
specifications, proposals, drawings, charts, graphs, support data, trade
secrets, supplier lists, supplier information, purchasing methods or practices,
distribution and selling activities, consultants’ reports, marketing and
engineering or other technical studies, maintenance records, employment or
personnel data, marketing data, strategies or techniques, financial reports,
budgets, projections, cost analyses, price lists, formulae and analyses,
employee lists, customer records, customer lists, customer source lists,
proprietary computer software, and internal notes and memoranda relating to any
of the foregoing.

     

    
      
        
        

      

      
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    (b)     “Mining
Business” means the exploration, mining, production, marketing and sale of
metals and ore containing metals.

     

    2.     Nondisclosure of Confidential
Information.  Executive will hold in a fiduciary capacity for
the benefit of the Company all Confidential Information obtained by Executive
during Executive’s employment (whether prior to or after the Agreement Date) and
will use such Confidential Information solely within the scope of his employment
with and for the exclusive benefit of the Company.  For a period of
five years after the Termination Date, Executive agrees (a) not to communicate,
divulge or make available to any person or entity (other than the Company) any
such Confidential Information, except upon the prior written authorization of
the Company or as may be required by law or legal process, and (b) to deliver
promptly to the Company any Confidential Information in his possession,
including any duplicates thereof and any notes or other records Executive has
prepared with respect thereto.  In the event that the provisions of
any applicable law or the order of any court would require Executive to disclose
or otherwise make available any Confidential Information, Executive will give
the Company prompt prior written notice of such required disclosure and an
opportunity to contest the requirement of such disclosure or apply for a
protective order with respect to such Confidential Information by appropriate
proceedings.

     

    3.    Limited Covenant Not to
Compete.  For a period of six months after the Termination
Date, Executive agrees that, with respect to each State of the United States or
other jurisdiction, or specified portions thereof, in which the Executive
regularly (a) makes contact with customers of the Company or any of its
subsidiaries, (b) conducts the business of the Company or any of its
subsidiaries, or (c) supervises the activities of other employees of the Company
or any of its subsidiaries, and in which the Company or any of its subsidiaries
engages in Mining Business as of the Termination Date, including without
limitation the counties of Yavapai, Gila, Greenlee, Graham and Pima, all in the
State of Arizona, Grant, New Mexico, Clear Creek, Colorado, and the countries of
Indonesia, Spain, Peru, Chile and the Democratic Republic of the Congo
(collectively, the “Subject Areas”), Executive will restrict his activities
within the Subject Areas as follows:

     

    (a)    Executive
will not, directly or indirectly, for himself or others, own, manage, operate,
control, be employed in an executive, managerial or supervisory capacity by,
consult with, assist or otherwise engage or participate in or allow his skill,
knowledge, experience or reputation to be used in connection with, the
ownership, management, operation or control of, any company or other business
enterprise engaged in the Mining Business within any of the Subject Areas;
provided, however, that nothing contained herein will prohibit Executive from
making passive investments as long as Executive does not beneficially own more
than 2% of the equity interests of a business enterprise engaged in the Mining
Business within any of the Subject Areas.  For purposes of this
paragraph, “beneficially own” will have the same meaning ascribed to that term
in Rule 13d-3 under the Exchange Act;

     

    (b)     Executive
will not call upon any customer of the Company or its subsidiaries for the
purpose of soliciting, diverting or enticing away the business of such person or
entity, or otherwise disrupting any previously established relationship existing
between such person or entity and the Company or its subsidiaries;

     

    
      
        
        

      

      
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    (c)     Executive
will not solicit, induce, influence or attempt to influence any supplier,
lessor, lessee, licensor, partner, joint venturer, potential acquiree or any
other person who has a business relationship with the Company or its
subsidiaries, or who on the Termination Date is engaged in discussions or
negotiations to enter into a business relationship with the Company or its
subsidiaries, to discontinue or reduce or limit the extent of such relationship
with the Company or its subsidiaries;

     

    (d)     Without
the consent of the Company, Executive will not make contact with any of the
employees of the Company or its subsidiaries with whom he had contact during the
course of his employment with the Company for the purpose of soliciting such
employee for hire, whether as an employee or independent contractor, or
otherwise disrupting such employee’s relationship with the Company or its
subsidiaries; and

     

    (e)     Without
the consent of the Company, Executive further agrees that, for a period of one
year from and after the Termination Date, Executive will not hire any employee
of the Company or its subsidiaries as an employee or independent contractor,
whether or not such engagement is solicited by Executive.

     

    4.     Nondisparagement.  During
and after the Employment Term, the Executive agrees to refrain from making any
statements and from taking any actions that disparage or could reasonably be
expected to harm the reputation of the Company and its subsidiaries or any of
their directors, officers or employees, and agrees that he will not voluntarily
assist or otherwise participate in any action or proceeding undertaken by any
other person that disparages or could reasonably be expected to materially harm
the reputation of the Company and its subsidiaries or any of their directors,
officers or employees.  Similarly, the Company agrees that its
directors and officers shall refrain from making any statements and from taking
any actions that disparage or could reasonably be expected to harm the
reputation of the Executive and agrees that its directors and officers will not
voluntarily assist or otherwise participate in any action or proceeding
undertaken by any other person that disparages or could reasonably be expected
to materially harm the reputation of the Executive.

     

    5.     Injunctive Relief; Other
Remedies.  Executive acknowledges that a breach by Executive of
Sections 2, 3 or 4 of this Article VI would cause immediate and irreparable harm
to the Company for which an adequate monetary remedy does not exist; hence,
Executive agrees that, in the event of a breach or threatened breach by
Executive of the provisions of Sections 2, 3 or 4 of this Article VI, the
Company will be entitled to injunctive relief restraining Executive from such
violation without the necessity of proof of actual damage or the posting of any
bond, except as required by non-waivable, applicable law.  Nothing
herein, however, will be construed as prohibiting the Company from pursuing any
other remedy at law or in equity to which the Company may be entitled under
applicable law in the event of a breach or threatened breach of this Agreement
by Executive, including without limitation the recovery of damages and/or costs
and expenses, such as reasonable attorneys’ fees, incurred by the Company as a
result of any such breach or threatened breach.  In addition to the
exercise of the foregoing remedies, the Company will have the right upon the
occurrence of any such breach to offset the damages of such breach as determined
by the Company, against any unpaid salary, bonus, commissions or reimbursements
otherwise owed to Executive.  In particular, Executive acknowledges
that the payments provided under Article IV are conditioned upon Executive
fulfilling any 

     

    
      
        
        

      

      
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    noncompetition
and nondisclosure agreements contained in this Article VI.  If
Executive at any time materially breaches any noncompetition or nondisclosure
agreements contained in this Article VI, then the Company may offset the damages
of such breach, as determined solely by the Company, against payments otherwise
due to Executive under Article IV or, at the Company’s option, suspend payments
otherwise due to Executive under Article IV during the period of such
breach.  Executive acknowledges that any such offset or suspension of
payments would be an exercise of the Company’s right to offset or suspend its
performance hereunder upon Executive’s breach of this Agreement; such offset or
suspension of payments would not constitute, and shall not be characterized as,
the imposition of liquidated damages.

     

    6.     Requests for Waiver in Cases of Undue
Hardship.  If the Executive should find that any of the
limitations in this Article VI impose a severe hardship on his ability to secure
other employment, then the Executive may ask the Company to waive the specified
limitations before accepting employment that otherwise would be a breach of
Executive’s obligations under this Agreement.  Such request must be in
writing and set forth the name and address of the organization with which
employment or another prohibited relationship is sought and the position, duties
or other activities that Executive seeks to perform, and the location of
performance.  The Company will consider the request and, in its sole
discretion, decide whether and on what conditions to grant such
waiver.

     

    7.    Governing Law of this Article VI;
Consent to Jurisdiction.  Any dispute regarding the
reasonableness of the covenants and agreements set forth in this Article VI or
the territorial scope or duration thereof, or the remedies available to the
Company upon any breach of such covenants and agreements, will be governed by
and interpreted in accordance with the laws of the State of the United States or
other jurisdiction in which the alleged prohibited competing activity or
disclosure occurs, and, with respect to each such dispute, the Company and
Executive each hereby consent to the jurisdiction of the state and federal
courts sitting in the relevant State (or, in the case of any jurisdiction
outside the United States, the relevant courts of such jurisdiction) for
resolution of such dispute, and agree that service of process may be made upon
him or it in any legal proceeding relating to this Article VI by any means
allowed under the laws of such jurisdiction.

     

    8.    Executive’s Understanding of this
Article.  Executive hereby represents to the Company that he
has read and understands, and agrees to be bound by, the terms of this Article
VI.  Executive acknowledges that the geographic scope and duration of
the covenants contained in Article VI are the result of arm’s-length bargaining
and are fair and reasonable in light of (a) the importance of the functions
performed by Executive and the length of time it would take the Company to find
and train a suitable replacement, (b) the nature and wide geographic scope of
the operations of the Company and its subsidiaries, (c) Executive’s level of
control over and contact with the business and operations of the Company and its
subsidiaries in various jurisdictions where same are conducted and (d) the fact
that all facets of the Mining Business are conducted by the Company and its
subsidiaries throughout the geographic area where competition is restricted by
this Agreement.  It is the desire and intent of the parties that the
provisions of this Agreement be enforced to the fullest extent permitted under
applicable law, whether now or hereafter in effect and, therefore, to the extent
permitted by applicable law, the parties hereto waive any provision of
applicable law that would render any provision of this Article VI invalid or
unenforceable.

     

    
      
        
        

      

      
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    Article
VII

     

    Binding
Arbitration

     

    1.     Binding Agreement to
Arbitrate.  Any claim or controversy arising out of any
provision of this Agreement (other than Article VI hereof), or the breach or
alleged breach of any such provision, will be settled by binding arbitration
administered by the American Arbitration Association (the “AAA”) under its
National Rules for the Resolution of Employment Disputes as in effect at the
time of the claim or controversy (the “Rules”), and judgment on the award
rendered by the arbitrator(s) may be entered in any court having jurisdiction
thereof.

     

    2.     Selection and Qualifications of
Arbitrators.  If no party to the arbitration makes a claim in
excess of $1.0 million, exclusive of interest and attorneys’ fees, the
proceedings will be conducted before a single neutral arbitrator selected in
accordance with the Rules.  If any party makes a claim that exceeds
$1.0 million, the proceedings will be conducted before a panel of three neutral
arbitrators selected in accordance with the Rules.

     

    3.    Location of
Proceedings.  The place of arbitration will be in Phoenix,
Arizona.

     

    4.    Remedies.  Any award
in an arbitration initiated under this Article VII will be limited to actual
monetary damages, including if determined appropriate by the arbitrator(s) an
award of costs and fees to the prevailing party.  “Costs and fees”
mean all reasonable pre-award expenses of the arbitration, including
arbitrator’s fees, administrative fees, travel expenses, out-of-pocket expenses
such as copying, telephone, witness fees and attorneys’ fees.  The
arbitrator(s) will have no authority to award consequential, punitive or other
damages not measured by the prevailing party’s actual damages, except as may be
required by statute.

     

    5.    Opinion.  The award
of the arbitrators will be in writing, will be signed by a majority of the
arbitrators, and will include findings of fact and a statement of the reasons
for the disposition of any claim.

     

    Article
VIII

     

    Miscellaneous

     

    1.    Binding
Effect.

     

    (a)     This
Agreement will be binding upon and inure to the benefit of the Company and any
of its successors or assigns.

     

    (b)     This
Agreement is personal to the Executive and will not be assignable by the
Executive without the consent of the Company (there being no obligation to give
such consent) other than such rights or benefits as are transferred by will or
the laws of descent and distribution.

     

    (c)     The
Company will require any successor to or assignee of (whether direct or
indirect, by purchase, merger, consolidation or otherwise) all or substantially
all of the assets of the Company (i) to assume unconditionally and expressly
this Agreement and (ii) to agree to perform all of the obligations under this
Agreement in the same manner and to the same extent as would have been required
of the Company had no assignment or succession occurred, such 

     

    
      
        
        

      

      
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    assumption
to be set forth in a writing reasonably satisfactory to the
Executive.  In the event of any such assignment or succession, the
term “Company” as used in this Agreement will refer also to such successor or
assign.

     

     

    (d)     The
Company shall also require all entities that control or that after the
transaction will control (directly or indirectly) the Company or any such
successor or assignee to agree to cause to be performed all of the obligations
under this Agreement, such agreement to be set forth in a writing reasonably
satisfactory to the Executive.

     

    2.     Notices.  All
notices hereunder must be in writing and unless otherwise specifically provided
herein, will be deemed to have been given upon receipt of delivery
by:  (a) hand (against a receipt therefor), (b) certified or
registered mail, postage prepaid, return receipt requested, (c) a nationally
recognized overnight courier service (against a receipt therefor) or (d)
telecopy transmission with confirmation of receipt.  All such notices
must be addressed as follows:

     

    If to the
Company, to:

     

    Freeport-McMoRan
Copper & Gold Inc.

    One North
Central Avenue

    Phoenix,
Arizona 85004

    Attention:  Chairman
of Corporate Personnel Committee

    

    If to the
Executive, to:

     

    Kathleen
L. Quirk

    One North
Central Avenue

    Phoenix,
Arizona 85004

    

    or such
other address as to which any party hereto may have notified the other in
writing.

    

    3.     Governing Law.  This
Agreement will be construed and enforced in accordance with and governed by the
internal laws of the State of Delaware without regard to principles of conflict
of laws, except as expressly provided in Article VI above with respect to the
resolution of disputes arising under, or the Company’s enforcement of, Article
VI of this Agreement.

     

    4.     Withholding.  The
Executive agrees that the Company has the right to withhold, from the amounts
payable pursuant to this Agreement, all amounts required to be withheld under
applicable income and/or employment tax laws, or as otherwise stated in
documents granting rights that are affected by this Agreement.

     

    5.     Severability.  If
any term or provision of this Agreement or the application thereof to any person
or circumstance, will at any time or to any extent be invalid, illegal or
unenforceable in any respect as written, Executive and the Company intend for
any court construing this Agreement to modify or limit such provision
temporally, spatially or otherwise so as to render it valid and enforceable to
the fullest extent allowed by law.  Any such provision that is not
susceptible of such reformation will be ignored so as to not affect any other
term or 

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    provision
hereof, and the remainder of this Agreement, or the application of such term or
provision to persons or circumstances other than those as to which it is held
invalid, illegal or unenforceable, will not be affected thereby and each term
and provision of this Agreement will be valid and enforced to the fullest extent
permitted by law.

     

    6.     Waiver of
Breach.  The waiver by either party of a breach of any
provision of this Agreement will not operate or be construed as a waiver of any
subsequent breach thereof.

     

    7.     Remedies Not
Exclusive.  Except as provided in Article VII hereof, no remedy
specified herein will be deemed to be such party’s exclusive remedy, and
accordingly, in addition to all of the rights and remedies provided for in this
Agreement, the parties will have all other rights and remedies provided to them
by applicable law, rule or regulation.

     

    8.     Legal Fees.

     

    (a)     Except as
otherwise provided herein, the Company agrees to pay all legal fees and expenses
that the Executive may reasonably incur as a result of any contest by the
Company, the Executive or others with respect to the validity or enforceability
of, or liability under, any provision of this Agreement (including as a result
of any contest by the Executive about the amount or timing of any payment
pursuant to this Agreement), provided that the Executive prevails on any
material claim.

     

    (b)    The
Company agrees to pay, as incurred, all legal fees and expenses that the
Executive may reasonably incur in connection with any tax audit or proceeding to
the extent attributable to the application of section 4999 of the Code to any
payment or benefit provided under this Agreement.

     

    (c)    The
payment of or reimbursement for legal fees under this Article VIII, Section 8,
shall comply with the requirement that non-qualified deferred compensation be
paid on a specified date or pursuant to a fixed schedule, which requires that
(1) the amount of benefits or reimbursements provided during one calendar year
shall not affect the amount of benefits or reimbursements to be provided in any
other calendar year, (2) the reimbursement of any eligible expense shall be made
no later than the last day of the calendar year following the year in which the
expense was incurred, and (3) the right to reimbursement or benefits hereunder
is not subject to liquidation or exchange for another benefit.

     

    9.     Company’s Reservation of
Rights.  The Executive acknowledges and understands that he
serves at the pleasure of the Board and that the Company has the right at any
time to terminate or change the Executive’s status as an officer and employee of
the Company, subject to the rights of the Executive to claim the benefits
conferred by this Agreement.

     

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

     

    10.     Jury Trial
Waiver.  THE PARTIES HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING TO WHICH THEY ARE PARTIES INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS
AGREEMENT.

     

    11.     Survival.  The
rights and obligations of the Company and Executive contained in Article VI of
this Agreement will survive the termination of the
Agreement.  Following the Termination Date, each party will have the
right to enforce all rights, and will be bound by all obligations, of such party
that are continuing rights and obligations under this Agreement.

     

    12.     Prior Change of Control
Agreement.  This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings, oral or written, between the parties hereto
with respect to the subject matter hereof.  Specifically, the Change
of Control Agreement between the Executive and the Company dated February 3,
2004, shall automatically terminate as of the effectiveness of this
Agreement. This
Agreement may not be amended orally, but only by an agreement in writing by the
parties hereto.

     

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

     

    14.     Section 409A of the Internal Revenue
Code.

     

    (a)     It is the
intention of the parties that payments or benefits payable under this Agreement
not be subject to the additional tax imposed pursuant to Section 409A, and the
provisions of this Agreement shall be construed and administered in accordance
with such intent.  To the extent any potential payments or benefits
could become subject to Section 409A, the parties shall cooperate to amend this
Agreement with the goal of giving the Executive the economic benefits described
herein in a manner that does not result in such tax being imposed.  If
the parties are unable to agree on a mutually acceptable amendment, the Company
may, without the Executive’s consent and in such manner as it deems appropriate,
amend or modify this Agreement or delay the payment of any amounts hereunder to
the minimum extent necessary to meet the requirements of Section
409A.

     

    (b)     If
Executive is a “specified employee,” any payments payable as a result of
Executive’s termination of employment (other than as a result of death) shall
not be payable before the earlier of (i) the first business day that is more
than six months after Executive’s Termination Date, (ii) the date of Executive’s
death, or (iii) the date that otherwise complies with the requirements of
Section 409A.  “Specified employee” shall mean the Executive if the
Executive is a key employee under Treasury Regulations Section 1.409A-1(i)
because of final and binding action taken by the Board or its Corporate
Personnel Committee, or by operation of law or such regulation.

     

    (c)     No
acceleration of payments and benefits provided for in this Agreement shall be
permitted, except that the Company may accelerate payment, if permitted by
Section 

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    409A, as
necessary to allow the Executive to pay FICA taxes on amounts payable hereunder
and additional taxes resulting from the payment of such FICA amount, or as
necessary to pay taxes and penalties arising as a result of the payments
provided for in this Agreement failing to meet the requirements of Section
409A.

     

     

     

    [remainder
of page intentionally blank]

     

     

     

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the Company and the Executive have caused this Agreement to be
executed as of the Agreement Date.

     

    Freeport-McMoRan Copper & Gold
Inc.

    

    By:         
/s/  H. Devon Graham,
Jr.                                                                   

          
H. Devon Graham, Jr.

             
Director and Chairman of the

                   
Corporate Personnel Committee of the

       Board of
Directors

    

    Executive

    

     

                                                       
 /s/ Kathleen L.
Quirk

                                    Kathleen
L. Quirk

    
 

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    Signature
Page of Executive Employment Agreement

    between
Freeport-McMoRan Copper & Gold Inc.

    and
Kathleen L. Quirk

    

    

    

    

    
      
         

      

      
        24

        
          

        

      

      
         

        
          Exhibit
A to

          Executive
Employment Agreement

          

          

        

      

    

    FREEPORT-McMoRan
COPPER & GOLD INC.

    

    FORM
OF

    PERFORMANCE-BASED

    RESTRICTED
STOCK UNIT AGREEMENT

    UNDER
THE 2006 STOCK INCENTIVE PLAN

    

    AGREEMENT
dated as of January 29, 2008 (the “Grant Date”), between Freeport-McMoRan Copper
& Gold Inc., a Delaware corporation (the “Company”), and Kathleen L. Quirk
(the “Executive” or the “Participant”).

     

    1.     (a)           The
Executive and the Company have entered into an Executive Employment Agreement
effective as of January 29, 2008 (the “Employment Agreement”). As set forth in
Article II, Section 3 of the Employment Agreement, and pursuant to the
Freeport-McMoRan Copper & Gold Inc. 2006 Stock Incentive Plan (the “Plan”),
the Executive is hereby granted effective the Grant Date 75,000 restricted stock
units (“Restricted Stock Units” or “RSUs”) on the terms and conditions set forth
in this Agreement and in the Plan.

     

    (b)   
Defined
terms not otherwise defined herein shall have the meanings set forth in Section
2 of the Plan.

     

    (c)   
Subject
to the terms, conditions, and restrictions set forth in the Plan and herein,
each RSU granted hereunder represents the right to receive from the Company, on
the respective scheduled vesting date for such RSU set forth in Section 2(a) of
this Agreement or on such earlier date as provided in Section 2(b) of this
Agreement or Section 5(b) of this Agreement (the “Vesting Date”), one share (a
“Share”) of common stock of the Company (“Common Stock”), free of any
restrictions, all amounts notionally credited to the Participant’s Dividend
Equivalent Account (as defined in Section 4 of this Agreement) with respect to
such RSU, and all securities and property comprising all Property Distributions
(as defined in Section 4 of this Agreement) deposited in such Dividend
Equivalent Account with respect to such RSU.

     

    (d)   Provided
the condition of Section 6 of this Agreement has been met, as soon as practicable
after the Vesting Date (but no later than 2 1⁄2 months from such date) for any
RSUs granted hereunder, the Participant shall receive from the Company the
number of Shares to which the vested RSUs relate, free of any restrictions, a
cash payment for all amounts notionally credited to the Participant’s Dividend
Equivalent Account with respect to such vested RSUs, and all securities and
property comprising all Property Distributions deposited in such Dividend
Equivalent Account with respect to such vested RSUs.

     

    2.     (a)           Provided
the condition of Section 6 of this Agreement has been met, the RSUs granted
hereunder shall vest in installments as follows:

     

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

    
      	
              Scheduled Vesting
      Date

               

              Grant
      Date

              January
      1, 2009

              January
      1, 2010

              January
      1, 2011

              January
      1, 2012

            	
              Number of
      RSUs

               

              15,000

              15,000

              15,000

              15,000

              15,000

            

    

    

    (b)    Notwithstanding
Section 2(a) of this Agreement, at such time as there shall be a Change in
Control of the Company, all unvested RSUs shall be accelerated and shall
immediately vest.

     

    (c)    Until the
respective Vesting Date for an RSU granted hereunder, such RSU, all amounts
notionally credited in any Dividend Equivalent Account related to such RSU, and
all securities or property comprising all Property Distributions deposited in
such Dividend Equivalent Account related to such RSU shall be subject to
forfeiture as provided in Section 5 of this Agreement.

     

    3.     Except as
provided in Section 4 of this Agreement, an RSU shall not entitle the
Participant to any incidents of ownership (including, without limitation,
dividend and voting rights) in any Share until the RSU shall vest and the
Participant shall be issued the Share to which such RSU relates nor in any
securities or property comprising any Property Distribution deposited in a
Dividend Equivalent Account related to such RSU until such RSU
vests.

     

    4.     From and
after the Grant Date of an RSU until the issuance of the Share payable in
respect of such RSU, the Participant shall be credited, as of the payment date
therefor, with (i) the amount of any cash dividends and (ii) the amount equal to
the Fair Market Value of any Shares, Subsidiary securities, other securities, or
other property distributed or distributable in respect of one share of Common
Stock to which the Participant would have been entitled had the Participant been
a record holder of one share of Common Stock at all times from the Grant Date to
such issuance date (a “Property Distribution”).  All such credits
shall be made notionally to a dividend equivalent account (a “Dividend
Equivalent Account”) established for the Participant with respect to all RSUs
granted hereunder with the same Vesting Date.  All credits to a
Dividend Equivalent Account for the Participant shall be notionally increased by
the Account Rate (as hereinafter defined), compounded quarterly, from and after
the applicable date of credit until paid in accordance with the provisions of
this Agreement.  The “Account Rate” shall be the prime commercial
lending rate announced from time to time by JPMorgan Chase Bank, N.A. or by
another major national bank headquartered in New York, New York designated by
the Committee.  The Committee may, in its discretion, deposit in the
Participant’s Dividend Equivalent Account the securities or property comprising
any Property Distribution in lieu of crediting such Dividend Equivalent Account
with the Fair Market Value thereof.

     

    5.     (a)           Except
as set forth in Section 5(b) of this Agreement, all unvested RSUs provided for
in this Agreement, all amounts credited to the Participant’s Dividend Equivalent
Accounts with respect to such RSUs, and all securities and property comprising
Property Distributions deposited in such Dividend Equivalent Accounts with
respect to such RSUs shall 

     

    
      
        
        

      

      
        A-2

        
          

        

      

      
        
        

      

    

    immediately
be forfeited on the date the Participant ceases to be an Eligible Individual
(the “Termination Date”).

     

    (b)          
Notwithstanding
the foregoing, and provided the condition of Section 6 of this Agreement has
been met, if the Participant ceases to be an Eligible Individual (the
“Termination”) by reason of the Participant’s death or Disability, all the
unvested RSUs granted hereunder, all amounts credited to the Participant’s
Dividend Equivalent Accounts with respect to such RSUs, and all securities and
property comprising Property Distributions deposited in such Dividend Equivalent
Accounts with respect to such RSUs shall vest as of the Participant’s
Termination Date.

     

    6.    The other
provisions of this Agreement notwithstanding, no unvested RSU granted hereunder
shall vest on its scheduled Vesting Date under Section 2(a) of this Agreement or
upon the Participant’s Termination pursuant to Section 5(b) of this Agreement
unless the average of the Return on Investment for the five calendar years
preceding the year in which such event occurs is at least 6% and, if required or
deemed necessary to satisfy the requirements to qualify such RSU as
“performance-based compensation” under Section 162(m), the appropriate members
of the Committee shall have certified that such condition has been
met.  Any unvested RSUs that do not vest upon the occurrence of any of
such events as a result of the failure to meet the condition of this Section 6,
all amounts credited to the Participant’s Dividend Equivalent Accounts with
respect to such RSUs, and all securities and property comprising Property
Distributions deposited in such Dividend Equivalent Accounts with respect to
such RSUs shall immediately be forfeited.

     

    7.    The RSUs
granted hereunder, any amounts notionally credited in the Participant’s Dividend
Equivalent Accounts, and any securities and property comprising Property
Distributions deposited in such Dividend Equivalent Accounts are not
transferable by the Participant otherwise than by will or by the laws of descent
and distribution or pursuant to a domestic relations order, as defined in the
Code.

     

    8.    All
notices hereunder shall be in writing and, if to the Company, shall be delivered
personally to the Secretary of the Company or mailed to One North Central
Avenue, Phoenix, Arizona, 85004, addressed to the attention of the Secretary;
and, if to the Participant, shall be delivered personally or mailed to the
Participant at the address on file with the Company.  Such addresses
may be changed at any time by notice from one party to the other.

     

    9.           
This
Agreement is subject to the provisions of the Plan.  The Plan may at
any time be amended by the Board, except that any such amendment of the Plan
that would materially impair the rights of the Participant hereunder may not be
made without the Participant’s consent.  The Committee may amend this
Agreement at any time in any manner that is not inconsistent with the terms of
the Plan and that will not result in the application of Section 409A(a)(1) of
the Code.  Notwithstanding the foregoing, no such amendment may
materially impair the rights of the Participant hereunder without the
Participant’s consent.  Except as set forth above, any applicable
determinations, orders, resolutions or other actions of the Committee shall be
final, conclusive and binding on the Company and the Participant.

     

    
      
        
        

      

      
        A-3

        
          

        

      

      
        
        

      

    

    10.         
The
Participant is required to satisfy any obligation in respect of withholding or
other payroll taxes resulting from the vesting of any RSU granted hereunder or
the payment of any securities, cash, or property hereunder, in accordance with
procedures established by the Committee, as a condition to receiving any
securities, cash payments, or property resulting from the vesting of any RSU or
otherwise.

     

    11.           Nothing
in this Agreement shall confer upon the Participant any right to continue in the
employ of the Company or any of its Subsidiaries, or to interfere in any way
with the right of the Company or any of its Subsidiaries to terminate the
Participant’s employment relationship with the Company or any of its
Subsidiaries at any time.

     

    12.    As used
in this Agreement, the following terms shall have the meanings set forth
below.

     

    (a)     “Change in Control”
shall have the meaning set forth in Article V, Section 2 of the Employment
Agreement.

     

    (b)     “Disability”
shall have occurred if the Participant is (i) unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, or (ii) by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous period of not
less than 12 months, receiving income replacement benefits for a period of not
less than 3 months under an accident and health plan covering employees of the
Participant’s employer.

     

    (c)     “Fair
Market Value” shall, with respect to a share of Common Stock, a Subsidiary
security, or any other security, have the meaning set forth in the
Freeport-McMoRan Copper & Gold Inc. Policies of the Committee applicable to
the 2006 Stock Incentive Plan, and, with respect to any other property, mean the
value thereof determined by the board of directors of the Company in connection
with declaring the dividend or distribution thereof.

     

                                   
(d)     “Managed Net
Income” shall mean, with respect to any year, the sum of (i) the net income (or
net loss) of the Company and its consolidated subsidiaries for such year as
reviewed by the Company’s independent auditors and released by the Company to
the public; plus (or minus) (ii) the minority interests’ share in the net income
(or net loss) of the Company’s consolidated subsidiaries for such year as
reviewed by the Company’s independent auditors and released by the Company to
the public; plus (or minus) (iii) the effect of changes in accounting principles
of the Company and its consolidated subsidiaries for such year plus (or minus)
the minority interests’ share in such changes in accounting principles as
reviewed by the Company’s independent auditors and released by the Company to
the public.

     

                                   
(e)     “Net Cash
Provided by Operating Activities” shall mean, with respect to any year, the net
cash provided by operating activities of the Company and its consolidated
subsidiaries for such year as reviewed by the Company’s independent auditors and
released by the Company to the public.

     

    
      
        
        

      

      
        A-4

        
          

        

      

      
        
        

      

    

    (f)     “Net
Interest Expense” shall mean, with respect to any year, the net interest expense
of the Company and its consolidated subsidiaries for such year as reviewed by
the Company’s independent auditors and released by the Company to the
public.

     

    (g)    “Return
on Investment” shall mean, with respect to any year, the result (expressed as a
percentage) calculated according to the following formula:

     

    a + (b -
c)

    d

    

    in which
“a” equals Managed Net Income for such year, “b” equals Net Interest Expense for
such year, “c” equals Tax on Net Interest Expense for such year, and “d” equals
Total Investment of Capital for such year.

    

    (h)     “Tax on
Net Interest Expense” shall mean, with respect to any year, the tax on the net
interest expense of the Company and its consolidated subsidiaries for such year
calculated at the appropriate statutory income tax rate for such year as
reviewed by the Company’s independent auditors.

     

    (i)     “Total
Investment of Capital” shall mean, with respect to any year, the sum of (i) the
weighted average of the stockholders’ equity in the Company and its consolidated
subsidiaries for such year, (ii) the weighted average of the minority interests
in the consolidated subsidiaries of the Company for such year, (iii) the
weighted average of the redeemable preferred stock of the Company for such year
and (iv) the weighted average of the long-term debt of the Company and its
consolidated subsidiaries for such year, all as shown in the quarterly balance
sheets of the Company and its consolidated subsidiaries for such
year.

     

    IN WITNESS WHEREOF, the parties hereto
have executed this Agreement as of the day, month, and year first above
written.

     

    

    FREEPORT-McMoRan COPPER & GOLD
INC.

    

    

    By: 
________________________________

     

                                                      

                                        ________________________________

                                                  (Participant)

    

                                        ________________________________

                                                (Street
Address)

    

                                        ________________________________

                                               (City) (State) (Zip
Code)

    
      
         

      

      
        A-5ex10-1.htm

  

    Exhibit
10.1

    

    EXCLUSIVE
PATENT LICENSE AGREEMENT

    

    This
agreement (hereinafter referred to as “Agreement”) dated and effective as
of:

    17
December 2007 (“Effective Date”) is by and between:

    

    

    

    Ethicon
Endo-Surgery, Inc., a corporation organized under the laws of the State of Ohio,
having its principal office at 4545 Creek Road, Cincinnati, Ohio 45242
(hereinafter referred to as “EES”)

    

    AND

    

    Cyberonics,
Inc., having an address at 100 Cyberonics Blvd., Houston, TX 77058 (hereinafter
referred to as “Licensor”).

    

    (each a
“Party” and both collectively the “Parties”)

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    TABLE
OF CONTENTS

    

    
      	
              1.

            	
              BACKGROUND

            	
              3

            
	 
      	 
      	 
      
	
              2.

            	
              DEFINITIONS

            	
              3

            
	 
      	 
      	 
      
	
              3.

            	
              LICENSE
      GRANT AND SUBLICENSING RIGHTS

            	
              8

            
	 
      	 
      	 
      
	
              4.

            	
              PAYMENTS

            	
              9

            
	 
      	 
      	 
      
	
              5.

            	
              ASSIGNMENTS
      OF ROSLIN AGREEMENT AND RIGHTS OF FIRST REFUSAL

            	
              13

            
	 
      	 
      	 
      
	
              6.

            	
              RECORD
      KEEPING, REPORTS, CURRENCY & ROYALTY TRANSFER

            	
              15

            
	 
      	 
      	 
      
	
              7.

            	
              ENFORCEMENT

            	
              18

            
	 
      	 
      	 
      
	
              8.

            	
              PATENT
      PROSECUTION AND MAINTENANCE

            	
              19

            
	 
      	 
      	 
      
	
              9.

            	
              WARRANTIES
      AND RESPRESENTATIONS

            	
              21

            
	 
      	 
      	 
      
	
              10.

            	
              INDEMNIFICATION

            	
              24

            
	 
      	 
      	 
      
	
              11.

            	
              ZABARA
      LICENSE AGREEMENT

            	
              24

            
	 
      	 
      	 
      
	
              12.

            	
              TERM
      & TERMINATION

            	
              25

            
	 
      	 
      	 
      
	
              13.

            	
              MISCELLANEOUS

            	
              26

            
	 
      	 
      	 
      
	
              A.

            	
              ATTACHMENT
      A

            	
              34

            
	 
      	 
      	 
      
	
              B.

            	
              ATTACHMENT
      B

            	
              35

            
	 
      	 
      	 
      
	
              C.

            	
              ATTACHMENT
      C

            	
              37

            
	 
      	 
      	 
      
	
              D.

            	
              ATTACHMENT
      D

            	
              38

            
	 
      	 
      	 
      
	
              E.

            	
              ATTACHMENT
      E

            	
              39

            
	 
      	 
      	 
      
	
              F.

            	
              ATTACHMENT
      F

            	
              41

            

    

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    1.           BACKGROUND

    
      	
               
      

            	
              a.

            	
              Licensor
      has represented to EES that it owns or has obtained exclusive licenses
      under the Licensed Patents (defined
below).

            

    

    

    
      	
               
      

            	
              a.

            	
              EES
      desires to obtain an exclusive license under the Licensed Patents from
      Licensor.

            

    

    

    
      	
               
      

            	
              b.

            	
              Licensor
      is willing to grant such a license to EES upon the terms and conditions
      set forth below.

            

    

    

    
      	
               
      

            	
              c.

            	
              Therefore,
      in consideration of the mutual promises contained in this Agreement, the
      Parties agree as follows:

            

    

    

    
      	
               
      

            	
              2.

            	
              DEFINITIONS

            

    

    

    
      	
               
      

            	
              a.

            	
              “Affiliate”
      is any entity that directly or indirectly controls, is controlled by, or
      is under common control with EES, and for such purpose “control” shall
      mean the possession, direct or indirect, of the power to direct or cause
      the direction of the management and policies of the entity, whether
      through the ownership of voting securities, by contract or
      otherwise.

            

    

    

    
      	
               
      

            	
              b.

            	
              “Calendar
      Quarter” means the usual and customary EES calendar quarter, used for
      internal accounting purposes, of approximately three (3) months, in which
      each of the first two months consist of four weeks and the third month
      consists of five weeks.

            

    

    

    
      	
               
      

            	
              c.

            	
              “Calendar
      Year” shall mean the period of time commencing on January 1 and
      terminating on December 31 of each
year.

            

    

    

    
      	
               
      

            	
              d.

            	
              “Clinical(s)”
      shall mean any clinical trial or clinical trials on humans or animals of
      one or more Products such as those that are required to be performed in
      order to obtain approval or clearance from a Regulatory Agency before
      commencing commercial marketing and sale of such
  Products.

            

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

    
      	
               
      

            	
              e.

            	
              “Current
      Net Selling Price” shall mean the net selling price of a product at the
      time of sale, net of the items referred to in Article 2.t (definition of
      “Net Sales”).

            

    

    

    
      	
               
      

            	
              f.

            	
              “Field
      of Use” shall mean the treatment (including therapeutic or diagnostic) by
      means of a device that applies electrical signals directly or indirectly
      to the vagus, trigeminal or glossopharyngeal nerves i) for weight
      reduction, or ii) for hypertension or diabetes (including impaired fasting
      glycaemia, impaired glucose tolerance or insulin resistance) in patients
      having a body mass index of 25 or
more.

            

    

    

    
      	
               
      

            	
              g.

            	
              “First
      Commercial Sale” shall mean the first commercial sale of a Licensed
      Product by EES, not in connection with a Clinical, in an arms length
      transaction to an independent third
party.

            

    

    

    
      	
               
      

            	
              h.

            	
              “First
      Competitive Sale” shall mean the first U.S. commercial sale by an
      independent third party of any surgically implanted electrical stimulation
      device for the Field of Use, not in connection with a Clinical, in an arms
      length transaction to an independent
party.

            

    

    

    
      	
               
      

            	
              i.

            	
              “Force
      Majeure” shall mean any unforeseen causes beyond a Party’s control
      including, but without limitation, acts of God or public enemy, acts or
      other order of a government, fire, flood or other natural disasters,
      embargoes, accidents, explosions, strikes or other labor disturbances
      (regardless of the reasonableness of the demands of labor), shortage of
      fuel, power or raw materials, inability to obtain or delays of
      transportation facilities, incidents of war, or other unforeseen events
      causing the inability of a Party, acting in good faith with due diligence,
      to perform its obligations under this
Agreement.

            

    

    

    
      	
               
      

            	
              j.

            	
              “Licensed
      Know-How” is all unpatented technology, information, special abilities,
      inventions and/or know-how developed particularly for or useful primarily
      in the Field of Use owned or controlled by the Licensor as of the
      Effective Date of this Agreement, including any and all unpatented data,
      processes, techniques, methods,
products,

            

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    apparatuses,
materials and compositions developed particularly for or useful primarily in the
Field of Use, including, but not limited to, the Licensed Know-How, if any,
listed in Attachment G.; provided, however, that, Licensed Know-How does not
include any technology, information, special abilities, inventions or know-how
developed particularly for or useful primarily in an indication outside the
Field of Use, including, but not limited to, any invention made the subject of a
patent application pending as of the Effective Date or any technology,
information, special abilities, inventions or know-how relating to the design or
manufacture of surgically implanted electrical stimulation devices and
associated products.

    

    
      	
               
      

            	
              k.

            	
              “Licensed
      Patent(s)” are the Licensed Cyberonics Patent(s) and the Licensed Roslin
      Patents.

            

    

    

    
      	
               
      

            	
              l.

            	
              “Licensed
      Cyberonics Patent(s)” are the patents and patent applications listed in
      Attachment B1.  Licensed Cyberonics Patents shall also include
      any other counterparts of those listed in Attachment B1 worldwide, as well
      as any and all continuations, continuations-in-part, divisions, renewals,
      reissues, reexaminations, extensions, and patents of addition and patents
      of importation of those listed in Attachment
B1.

            

    

    

    
      	
              m.

            	
              “Licensed
      Roslin Patents” shall mean those Licensed Patents as defined in the Roslin
      Agreement, including those patents listed in Attachment
  B2.

            

    

    

    
      	
               
      

            	
              n.

            	
              “Licensed
      Product” shall mean any Licensed Cyberonics Product or any Licensed Roslin
      Product.

            

    

    

    
      	
               
      

            	
              o.

            	
              “Licensed
      Method” shall mean any Licensed Cyberonics Method or any Licensed Roslin
      Method.

            

    

    

    
      	
               
      

            	
              p.

            	
              “Licensed
      Cyberonics Method” is any procedure, the practice of which would, but for
      the licenses granted under this Agreement, infringe at least one Valid
      Claim of a Licensed Cyberonics
Patent.

            

    

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              q.

            	
              “Licensed
      Cyberonics Product” is any device or component thereof, the manufacture,
      use or sale of which would, but for the licenses granted under this
      Agreement, infringe (including inducement to infringe) at least one Valid
      Claim of a Licensed Cyberonics
Patent.

            

    

    

    
      	
               
      

            	
              r.

            	
              “Licensed
      Roslin Method” is any procedure, the practice of which would, but for the
      license granted under this Agreement and the Roslin Agreement, infringe at
      least one Valid Claim of a Licensed Roslin
  Patent.

            

    

    

    
      	
               
      

            	
              s.

            	
              “Licensed
      Roslin Product” is any device or component thereof, the manufacture, use
      or sale of which would, but for the licenses granted under this Agreement
      and the Roslin Agreement, infringe (including inducement to infringe) at
      least one Valid Claim of a Licensed Roslin
  Patent.

            

    

    

    
      	
               
      

            	
              t.

            	
              “Licensed
      Other Product” is any device or component thereof, the manufacture, use or
      sale of which would, but for the licenses granted under this Agreement,
      infringe (including inducement to infringe) at least one Valid Claim of an
      Other Patent, and is not otherwise a Licensed Cyberonics Product or a
      Licensed Roslin Product.

            

    

    

    
      	
               
      

            	
              u.

            	
              “Minimum
      Royalty Term” shall mean the period of time commencing upon Licensor
      giving EES written notice of the First Competitive Sale under Article 4.c
      and ending on February 1, 2011.  The Minimum Royalty Term shall
      be tolled for any period of time during which EES is able to demonstrate
      to the reasonable satisfaction of Licensor that no surgically implanted
      electrical stimulation device for the Field of Use is actively being
      offered for commercial sale by a third
party.

            

    

    

    
      	
               
      

            	
              v.

            	
              “Net
      Sales” is the revenue which EES or its Affiliates invoice for the sale of
      the Licensed Products to unaffiliated third parties, less the following
      amounts to the extent included in invoiced
  amounts:

            

    

    

    
      	
               
      

            	
              i.

            	
              discounts,
      including cash discounts, or rebates actually allowed or
      granted;

            

    

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              ii.credits
      or allowances actually granted upon claims or returns regardless of the
      party requesting the return;

            

    

    

    
      	
               
      

            	
              iii.freight
      charges paid by EES or its Affiliates for delivery;
  and

            

    

    

    
      	
               
      

            	
              iv.taxes
      or other governmental charges levied on or measured by the invoiced amount
      whether absorbed by the billing or the billed
  party.

            

    

    

    
      	
              w.

            	
              “PMA”
      shall mean Pre-market Approval for medical devices as described under the
      FDC Act and Title 21 Code of Federal Regulations Part
  814.

            

    

    

    
      	
               
      

            	
              x.

            	
              “Product”
      is any device, the manufacture, use or sale of which would, but for the
      licenses granted under this Agreement, infringe (including inducement to
      infringe) at least one Valid Claim of a Licensed
  Patent.

            

    

    

    
      	
               
      

            	
              y.

            	
              “Regulatory
      Agency” shall mean the U.S. Food and Drug Administration, U.S. Department
      of Health and Human Services, or any foreign government
      equivalent.

            

    

    

    
      	
               
      

            	
              z.

            	
              “Regulatory
      Approval” shall mean approval or clearance from a Regulatory Agency to
      sell a Product including that granted by the FDA under a 510(k) or a PMA
      application process or a substantially equivalent foreign government
      process.

            

    

    

    
      	
              aa.

            	
              “Roslin
      Agreement” shall mean the License Agreement dated as of August 22, 2000 by
      and between Mitchell S. Roslin and Cyberonics, Inc., a copy of which is
      attached as Attachment D.

            

    

    

    
      	
              bb.

            	
              “Term”
      shall have the meaning as set forth in Article 12.a of this
      Agreement.

            

    

    

    
      	
              cc.

            	
              “Valid
      Claim” is a bona fide, unexpired issued claim in a Licensed Patent that
      has not been held invalid or unenforceable by a decision of a court or
      other governmental agency of competent jurisdiction, unappealable or not
      appealed within the time allowed for appeal, and that has not been
      admitted to be invalid by the Licensor or its successors or assigns
      through reissue or disclaimer.

            

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    

    
      	
              dd.

            	
              “Zabara
      Agreement” shall mean the License Agreement dated as of March 15, 1998
      between Jacob Zabara and Cyberonics, Inc., a copy of which is attached as
      Attachment 0.

            

    

    

    
      	
              ee.

            	
              “510(k)”
      shall mean pre-market notification for medical devices as described under
      the FDC Act and Title 21 of the Code of Federal Regulations part 807,
      subpart E.

            

    

    

    
      	
               
      

            	
              3.

            	
              LICENSE
      GRANT AND SUBLICENSING RIGHTS

            

    

    

    
      	
               
      

            	
              a.

            	
              Subject
      to the terms and conditions of this Agreement, Licensor grants EES an
      exclusive worldwide license for the Field of Use under the Licensed
      Patents and Licensed Know-How to make, have made for, use, have used for,
      sell, have sold for, offer to sell, import and/or otherwise dispose of
      Products, to practice, have practiced for, teach and have taught for
      Licensed Methods, and to otherwise commercially exploit the Licensed
      Know-How and the technology disclosed in the Licensed Patents and Licensed
      Know-How.

            

    

    

    
      	
               
      

            	
              b.

            	
              Subject
      to the terms and conditions of this Agreement, Licensor grants EES a
      non-exclusive worldwide royalty-free license for the Field of Use under
      each claim in a patent that issues to Licensor during the Term and that
      incorporates express reference to one or more of the following indications
      for use of nerve stimulation therapy: weight reduction, hypertension or
      diabetes (“Other Patents”).

            

    

    

    
      	
               
      

            	
              c.

            	
              Licensor
      shall disclose to EES Licensed Know-How, if any, reasonably required to
      enable EES to enjoy the benefit of the licenses granted in this
      Agreement.  The parties shall agree as to the means by which
      such Licensed Know-How shall be communicated by Licensor to EES, such
      means to insure reasonably prompt transfer of the information to EES
      without imposing an undue burden on
Licensor.

            

    

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              d.

            	
              EES
      shall have the exclusive right to grant sublicenses under the rights
      granted EES in this Agreement subject to the terms of this Article
      3.c.

            

    

    

    
      	
               
      

            	
              i.

            	
              EES
      shall have the right to extend the licenses granted herein to any of its
      Affiliates, upon the terms and conditions of this Agreement, and EES
      agrees to be responsible for the performance by such Affiliates of all of
      EES’s obligations hereunder, including without limitation the payment of
      earned royalties set forth in Article 4.b herein on Net Sales of the
      Licensed Product by the Affiliates to whom the licenses have been
      extended.

            

    

    

    
      	
               
      

            	
              ii.EES
      shall have the right to extend sublicenses under the Licensed Patents to
      third parties (such licenses shall exclude Licensed Know-How and be
      restricted to the Field of Use), upon the terms and conditions of this
      Agreement.  Any sublicense that EES grants to a third party
      shall be nonexclusive.  EES shall provide written notice to
      Licensor of any sublicense granted to a third party.  The notice
      shall identify the sublicensee, provided that the agreement between EES
      and said sublicensee allows for such identification, but need not disclose
      the terms of the sublicense.  EES shall require any such
      sublicensee to mark its Licensed Products in accordance with 35 U.S.C.
      § 287 

            

    

    

    
      	
               
      

            	
              iii.EES
      shall pay Licensor an amount of revenue from the Licensed Products sold or
      royalties advanced by the third-party sublicensee equal to the amount
      Licensor would have received from EES if EES had sold such Licensed
      Product.

            

    

    

    
      	
               
      

            	
              iv.Subject
      to the terms of this Article 3.c, the granting by EES of sublicenses shall
      be in the discretion of EES, and EES shall have the sole power to
      determine whether or not to grant sublicenses and the royalty rates and
      terms and conditions of any such
sublicenses.

            

    

    

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              4.

            	
              PAYMENTS

            

    

    

    
      	
               
      

            	
              a.

            	
              In
      consideration for the execution of this Agreement, and for the exclusive
      license granted to EES under Article 3 herein, EES shall pay Licensor the
      non-refundable sum of $9.5 Million within 15 business days after the
      Effective Date.

            

    

    

    
      	
               
      

            	
              i.

            	
              Such
      payment shall be wired pursuant to instructions from
    Licensor.

            

    

    

    
      	
               
      

            	
              b.

            	
              In
      further consideration for the license granted to EES under Article 3
      herein, EES shall pay Licensor on a quarterly basis during the Term an
      earned royalty of:

            

    

    

    
      	
               
      

            	
              1)

            	
              ***%
      on Net Sales of any Licensed Cyberonics Product that is not a Licensed
      Roslin Product;

            

    

    

    
      	
               
      

            	
              2)

            	
              ***%
      on Net Sales of Licensed Roslin Product; provided that, EES shall pay
      Licensor ***% on Net Sales of Licensed Roslin Product as to which Licensor
      or EES is entitled to a credit against royalties in accordance with the
      Roslin Agreement; or

            

    

    

    
      	
               
      

            	
              3)

            	
              ***%
      on Net Sales of any Licensed Other
Product.

            

    

    

    
      	
               
      

            	
              i.

            	
              No
      earned royalties shall be payable on Net Sales of any Licensed Product in
      conjunction with any Clinicals.  No earned royalties shall be
      payable on Net Sales of any Licensed Product sold in a country before the
      date upon which EES obtains Regulatory Approval from such
      country.  For the avoidance of doubt, EES shall be obligated to
      pay royalties on Net Sales of any Licensed Product in countries where EES
      is exempt from obtaining Regulatory Approval for Licensed
      Products.

            

    

    

    
      	
               
      

            	
              ii.No
      multiple earned royalties shall be payable because a Licensed Product is
      covered by more than one of the Licensed
  Patents.

            

    

    

    
      	
              iii.  

            	
              For
      the avoidance of doubt, earned royalties payable on the Net Sales of a
      Licensed Product covered under a Valid Claim of a Licensed Roslin Patent
      shall be calculated solely as set forth in Attachment
  B1.

            

    

    
      	
               
      

            	
              ***
      Portions of this page have been omitted pursuant to a Confidential
      Treatment request and filed separately with the
  Commission.

            

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    

    
      	
               
      

            	
              iv.EES,
      in its sole discretion, may take a license from an unaffiliated third
      party under, or assignment of, patents or know-how that arguably cover in
      whole or in part any aspect of a Licensed Product or Licensed Method under
      terms requiring EES to pay such third party a lump sum and/or an earned
      royalty for the sale of such Licensed Product.  As to each
      country for which EES takes such a third-party license or assignment, the
      earned royalty EES pays Licensor on the Net Sales of the Licensed Product
      in such country under this Article 4.b shall be reduced by an amount equal
      to one-half of the earned royalty EES is required to pay such third party
      in such country; provided, however, that the earned royalty payable to
      Licensor shall in no case be reduced below a) ***% of Net Sales of a
      Licensed Cyberonics Product that is not a Licensed Roslin Product; or b)
      ***% on Net Sales of Licensed Roslin Product; provided that, EES shall pay
      Licensor no less than ***% on Net Sales of Licensed Roslin Product as to
      which Licensor or EES is entitled to a credit against royalties in
      accordance with the Roslin Agreement.  If EES takes such a
      third-party license or assignment for one or more lump sum payments only
      (no earned royalties), then the earned royalties EES pays Licensor on the
      Net Sales of the Licensed Product under this Article 4.b shall be reduced
      by 25% (but shall never be reduced below x) ***% of Net Sales of a
      Licensed Cyberonics Product that is not a Licensed Roslin Product; or y)
      ***% on Net Sales of Licensed Roslin Product; provided that, EES shall pay
      Licensor no less than ***% on Net Sales of Licensed Roslin Product as to
      which Licensor or EES is entitled to a credit against royalties in
      accordance with the Roslin Agreement) until the cumulative amount by which
      such royalties are reduced equals 25% of such lump sum
      payments.

            

    

    

    
      	
              c.  

            	
              Licensor
      shall give written notice to EES showing evidence reasonably satisfactory
      to EES that the First Competitive Sale has occurred.

            
	 	 
	 	 

    

    
      	
               
      

            	
              ***
      Portions of this page have been omitted pursuant to a Confidential
      Treatment request and filed separately with the
  Commission.

            

    

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    

    
      	
              i.  

            	
              During
      the Minimum Royalty Term, EES shall pay Licensor a one-time payment of
      $*** Million within 60 days of EES receiving such written
      notice.

            

    

    

    
      	
               
      

            	
              ii.During
      the Minimum Royalty Term, and commencing with the first Calendar Year
      after the First Competitive Sale, EES shall pay Licensor the minimum
      annual royalties as set forth in the following schedule.  Such
      amounts shall be paid quarterly and become due within 60 days following
      the end of the Calendar Quarter.  For the avoidance of doubt,
      the last such quarterly minimum royalty payment shall be due within 60
      days following the end of the Calendar Year 2010, with no further
      quarterly minimum royalty payments due for the year 2011 and all
      subsequent Calendar Years during the Term.  In addition, for the
      avoidance of doubt, examples showing the manner in which these payments
      are made are set forth in Attachment
C.

            

    

    

    
      	
              First
      Calendar Year after the First Competitive Sale

            	
              $*** Million

            
	
              Second
      Calendar Year after the First Competitive Sale

            	
              $*** Million

            
	
              Third
      Calendar Year after the First Competitive Sale

            	
              $***
  Million

            

    

    

    
      	
              d.  

            	
              For
      any given year during the Minimum Royalty Term, any minimum royalty amount
      payable by EES to Licensor for a given Calendar Quarter under Article 4.c shall be reduced by the earned royalty
      payable by EES to Licensor under Article 4.b
      for such given Calendar Quarter.  However, if the earned royalty
      payable by EES to Licensor under Article 4.b
      exceeds the minimum royalty owed by EES to Licensor under Article 4.c, then EES shall only pay the earned royalty
      amount owed to Licensor under Article 4.b.  The earned royalty payable on Net
      Sales of the Licensed Product for each Calendar Year during the Minimum
      Royalty Term shall be credited at the end of each Calendar Year to reflect
      any overpayment of such earned royalties with respect to the minimum
      royalty payments due during such Calendar Year, and such credit shall
      carry forward to subsequent Calendar Quarters as
  necessary.

            

    

    

    
      	
               
      

            	
              ***
      Portions of this page have been omitted pursuant to a Confidential
      Treatment request and filed separately with the
  Commission.

            

    

    

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    

    
      	
               
      

            	
              e.

            	
              Licensor
      shall consider the up-front payment set forth in Article 4.a above as
      complete satisfaction of any duty, whether express or implied, that could
      be imposed on EES to commercially exploit its rights during the term of
      this Agreement, and is accepted by Licensor in lieu of any best efforts or
      other obligation on the part of
    EES.  Furthermore,

            

    

    Licensor
acknowledges that EES has assumed sole responsibility for obtaining governmental
approvals, including Regulatory Approvals, and Licensor shall not have any
redress against EES for failure to perform under this Agreement if EES is unable
or unwilling for any reason whatsoever to obtain such governmental
approvals.

    

    
      	
               
      

            	
              f.

            	
              In
      the event that a Licensed Product is sold as part of a surgical kit or
      combination product, then for purposes of computing earned royalties, the
      following guidelines shall apply to the determination of the selling price
      of the Licensed Products:

            

    

    

    
      	
               
      

            	
              i.

            	
              Net
      Sales of such Licensed Product shall be based on the Current Net Selling
      Price of the Licensed Product sold as a stand-alone product;
      or

            

    

    

    
      	
               
      

            	
              ii.If
      the computation set forth in Article 4.f.i cannot be made for any reason,
      then Net Sales of such Licensed Product shall be based on the product of
      (x) a fraction, the numerator of which is the standard material and labor
      cost of such Licensed Product and the denominator of which is the standard
      material and labor cost of all of the components within the surgical kit,
      times (y) the Current Net Selling Price of the surgical
    kit.

            

    

    

    
      	
               
      

            	
              g.

            	
              In
      the event that EES sells a Licensed Product in a country where such sale
      is not covered by a Valid Claim of a Licensed Patent in that country and a
      third party is commercially selling a surgically implantable electrical
      stimulation device within the Field of Use in that country and such
      third-party device is manufactured in a country where such manufacturing
      is not covered by a Valid Claim of a Licensed Patent in the country of
      manufacture, then the amount of earned royalties EES owes Licensor under
      Article 4.b for sales in that country
      (including royalties previously reduced in Article 4.b.iv) will be reduced by 50%.  In the
      event that EES reduces royalties under this Article, EES shall give
      written notice to Licensor showing evidence, reasonably satisfactory to
      Licensor, that a third party is commercially selling a surgically
      implantable electrical stimulation device within the Field of Use in that
      country, including the country within which such device was
      manufactured.

            

    

    
    

    
      

      
        
          
          

        

        
          13

          
            

          

        

         

        
          
          

        

      

      
      

      
        	
                 
      

              	
                5.

              	
                ASSIGNMENT
      OF ROSLIN AGREEMENT AND RIGHT OF FIRST
REFUSAL

              

      

      

    

    
      	
               
      

            	
              a.

            	
              Assignment.  Licensor
      hereby assigns, sets over and transfers to EES all of Licensor’s right,
      title and interest in, to and under the Roslin Agreement. Unless otherwise
      agreed to by the Parties herein, EES hereby accepts such assignment and
      assumes and agrees to pay, perform and discharge when due all of the
      liabilities and obligations of Licensor arising under the Roslin Agreement
      on or after the Effective Date.

            

    

    

    
      	
               
      

            	
              i.

            	
              If
      EES terminates this Agreement in accordance with Section 12 (Term and
      Termination), subsection b or Licensor terminates this Agreement in
      accordance with Section 12.c, then EES shall, effective as of the date of
      termination, assign, set over and transfer to Licensor all of EES’ right,
      title and interest in, to and under the Roslin Agreement; provided that
      Licensor shall accept such assignment and assume and agree to pay, perform
      and discharge when due all of the liabilities and obligations of EES
      arising under the Roslin Agreement on or after the effective date of such
      assignment.

            

    

    

    
      	
               
      

            	
              ii.Licensor
      and EES each hereby covenants and agrees that it will, at any time and
      from time to time if requested by the other Party, or its successors or
      assigns, do, execute, deliver and acknowledge, or will cause to be done,
      executed, delivered and acknowledged, to such other Party, or its
      successors or assigns, as the case may be, such and all further acts,
      assignments, assumptions and additional papers and instruments as such
      other Party may reasonably request, and do or cause to be done all acts or
      things as often as such other Party may reasonably request and which may
      be proper or necessary or advisable for better evidencing or effecting the
      assignments, assumptions and other agreements made hereby, and effectively
      to carry out the intent hereof.

            

    

    

    
      	
               
      

            	
              b.

            	
              Right
      of First Refusal.  During the Term, if Licensor develops an
      invention that is capable for use within the Field of Use (the
      “Invention”) and elects, at its sole discretion, to license, sell or
      otherwise dispose of such Invention for the Field of Use, Licensor
      will

            

    

    be
obligated to notify EES in writing of the Invention and provide EES with a copy
of any patent application(s) for such Invention and any prototypes and other
intellectual property developed relating to the Invention (the “Written
Notification”).

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    
      	
               
      

            	
              i.

            	
              If
      EES is interested in licensing the Invention within the Field of Use, EES
      will have 90 days from the Written Notification (the “Option Period”) to
      negotiate an agreement to license the Invention (the "Invention
      License").

            

    

    

    
      	
               
      

            	
              ii.

            	
              During
      the Option Period, Licensor shall negotiate in good faith in an effort to
      consummate the Invention License with EES.  If the Parties are
      unable to enter into the Invention License or agree in principle to enter
      into the Invention License by execution of a term sheet during the Option
      Period, then Licensor shall be free, during the twelve-month period
      commencing on expiration of the Option Period (the “Out-License Period”),
      to negotiate and enter into a license or assignment agreement with a third
      party or parties at pricing, terms, conditions and other provisions no
      less favorable to Licensor than provisions Licensor offered to
      EES.   If Licensor fails to conclude a license or
      assignment agreement with a third party during the Out-License Period and
      Licensor thereafter elects to license, sell or otherwise dispose of the
      Invention, then Licensor and EES shall follow the procedures outlined in
      this Section 5.b once again, commencing with Licensor’s Written
      Notification to EES.

            

    

    

    
      	
               
      

            	
              iii.

            	
              If
      EES is not interested in acquiring the Invention for the Field of Use, EES
      shall provide to Licensor written notice to that effect within ninety (90)
      days from Written Notification for such Invention, and Licensor shall be
      free to negotiate with a third party the sale or license of the
      Invention.

            

    

    

    
      	
               
      

            	
              iv.

            	
              For
      the avoidance of doubt, Licensor is obligated to offer EES the Right of
      First Refusal as defined in this Section 5.b. for each and every Invention
      Licensor develops that is capable for use within the Field of Use if
      Licensor elects, at its sole discretion, to license, sell or otherwise
      dispose of such Invention for the Field of
Use.

            

    

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              6.

            	
              RECORD
      KEEPING, REPORTS, CURRENCY & ROYALTY
  TRANSFER

            

    

    

    
      	
               
      

            	
              a.

            	
              EES
      shall keep accurate books and records of the Net Sales of Licensed
      Products, and of all payments due Licensor
      hereunder.  Commencing with the First Commercial Sale, EES shall
      deliver to Licensor written reports (“Reports”) of Net Sales of the
      Licensed Product during the preceding Calendar Quarter, on or before the
      sixtieth day following the end of each Calendar Quarter.  The
      Reports shall include Net Sales (including Net Sales by third-party
      sublicensees, if any), a calculation of the earned royalty due Licensor,
      and shall be accompanied by the monies due.  The earned royalty
      payable on Net Sales of the Licensed Product outside the U.S. shall be
      estimated for each Calendar Quarter, and adjusted at the end of each
      calendar year to reflect actual Net Sales and the earned royalty payable
      thereon.

            

    

    

    
      	
               
      

            	
              b.

            	
              Licensor
      shall have the right after 30 days advance written notice to EES, at its
      own expense, to nominate an independent accountant acceptable to and
      approved by EES (which approval shall not be unreasonably
      withheld).  Such accountant shall have access to EES’s records
      during reasonable business hours for the sole purpose of verifying the
      royalties payable for the two preceding Calendar Years.  This
      right may not be exercised more than once in any Calendar
      Year.  Licensor shall solicit or receive only information
      relating solely to the accuracy of the Report and the royalty payments
      made according to Article 4.b, 4.e, and 4.f.  EES shall be
      entitled to withhold approval of an accountant if the accountant refuses
      to agree to the terms of a reasonable confidentiality agreement that
      protects EES’s confidential information, except as necessary for
      disclosure to Licensor to establish the accuracy of the
      Reports.

            

    

    

    
      	
               
      

            	
              c.

            	
              All
      earned royalties and minimum royalties, including those based on sales
      outside the U.S., shall be paid in United States Dollars.  The
      rate of exchange for such payments from sales in a foreign country shall
      be the same rate as that used for internal financial accounting purposes,
      in accordance with Generally Accepted Accounting Principles, as reported
      in EES’s books.

            

    

    

    
      	
               
      

            	
              d.

            	
              If
      a foreign government prohibits the transfer of royalties out of a
      particular foreign country, EES has the right to place Licensor’s
      royalties in a mutually acceptable independent bank account in the name of
      Licensor and under the complete control of Licensor, provided that EES
      informs Licensor of the name of the bank, the bank account number and the
      amount of money deposited therein.  After Licensor has been so
      notified, those monies will be considered completely controlled by
      Licensor, and EES will not have any further responsibility with respect to
      those monies or that bank account.  Licensor shall cooperate
      with EES to establish such an account if requested by
  EES.

            

    

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    
      	
               
      

            	
              e.

            	
              EES
      will make all payments to Licensor under this Agreement without deduction
      or withholding for taxes except to the extent that any such deduction or
      withholding is required by law in effect at the time of
      payment.

            

    

    

    
      	
               
      

            	
              i.

            	
              Any
      tax required to be withheld on amounts payable under this Agreement will
      promptly be paid by EES on behalf of Licensor to the appropriate
      governmental authority, and EES will furnish Licensor with proof of
      payment of such tax.  Any such tax required to be withheld will
      be an expense of and borne by
Licensor.

            

    

    

    
      	
               
      

            	
              ii.EES
      and Licensor will cooperate with respect to all documentation required by
      any taxing authority or reasonably requested by EES to secure a reduction
      in the rate of applicable withholding
taxes.

            

    

    

    
      	
               
      

            	
              iii.If
      EES had a duty to withhold taxes in connection with any payment it made to
      Licensor under this Agreement but EES failed to withhold, and such taxes
      were

            

    

    assessed
against and paid by EES, then Licensor will indemnify and hold harmless EES from
and against such taxes (excluding any penalty arising as a consequence of EES’s
failure to withhold).  If EES makes a claim under this Article
6.e.iii, it will comply with the obligations imposed by Article 6.e.i as if EES
had withheld taxes from a payment to Licensor.

    

    
      	
               
      

            	
              f.

            	
              Unless
      prohibited by law or an agreement with a third party, prior to a public
      disclosure concerning pre-clinical and clinical data for the Licensed
      Products by EES or its clinical investigators, EES agrees to use
      commercially reasonable efforts to provide Licensor with an advanced
      summary of such pre-clinical and clinical data pertaining to the use of
      Products in the Field of Use. (For the avoidance of doubt any breach of
      this article 6.f by EES shall not be a
      material breach)

            

    

    

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    
      	
               
      

            	
              7.

            	
              ENFORCEMENT

            

    

    

    
      	
               
      

            	
              a.

            	
              In
      the event that either Party becomes aware of an infringement in the Field
      of Use by a third party of any Licensed Patent hereunder, such Party shall
      notify the other of the infringement in writing within 30
      days.

            

    

    

    
      	
               
      

            	
              b.

            	
              EES
      shall have the right, but not the obligation, at its sole expense and with
      counsel of its own choice, to enforce the Licensed Patents in the Field of
      Use against any infringer, including the right to file suit for patent
      infringement naming Licensor as a party, and the right to settle such suit
      without Licensor’s consent.  Notwithstanding the foregoing, in
      no event shall EES enter into an agreement with a third party consenting
      to the invalidity or unenforceability of any Licensed Patent without the
      prior written consent of Licensor.  However, nothing herein
      shall preclude EES from challenging the validity or enforceability of any
      Licensed Patent in a court or patent office proceeding, or in a dispute
      resolution proceeding brought under Attachment A.  Licensor
      shall permit the use of its name in all such suits, sign all necessary
      papers, and do all reasonable things necessary, at EES’s expense, to
      facilitate the prosecution of such infringement suits.  EES
      shall incur no liability to Licensor as a consequence of such litigation,
      the conduct

            

    

    of such
litigation or any unfavorable decision resulting from it, including any decision
holding any of the Licensed Patents invalid or unenforceable.  Nothing
in this Agreement shall prohibit EES from challenging the validity or
enforceability of a Licensed Patent in any venue.

    

    
      	
               
      

            	
              c.

            	
              If
      EES prevails in such a suit or settles with such third party infringer,
      any and all settlement amounts, damages, and costs recovered in connection
      therewith shall first be allocated, pro rata, to Licensor’s and EES’s
      reasonable attorney’s fees and expenses, and next towards payment to
      Licensor of royalties based upon the sales of the infringing third-party
      devices equal to the amount Licensor would have received from EES if EES
      had sold such instruments.  EES shall keep the balance remaining
      from any recoveries, by way of judgment, award, decree or settlement
      resulting from such suit.

            

    

    

    
      	
               
      

            	
              d.

            	
              If
      within 180 days following the notice required by Article 7.a EES fails
      either to file suit to enforce the Licensed Patents or to give Licensor
      written notice of its intent to file suit within a reasonable period of
      time, then Licensor shall have the right, but not the obligation, at its
      sole expense and with counsel of its own choice, to enforce the Licensed
      Patents in the Field of Use against any infringer, and the right to settle
      such suit without EES’s consent.  Notwithstanding the foregoing,
      in no event shall Licensor consent to the invalidity or unenforceability
      of any Licensed Patent without the prior written consent of
      EES.  Licensor shall incur no liability to EES as a consequence
      of such litigation, the conduct of such litigation or any unfavorable
      decision resulting from it, including any decision holding any of the
      Licensed Patents invalid or
unenforceable.

            

    

    

    
      	
               
      

            	
              e.

            	
              If
      Licensor undertakes the enforcement or defense of the Licensed Patents by
      litigation, Licensor shall pay EES ***% of the balance remaining from any
      cash recoveries by way of judgment, award, decree or settlement resulting
      from such suit, after deduction of costs and attorneys fees, if not
      included in the recoveries.

            

    

     

    
      
      

      
        	
                 
      

              	
                ***
      Portions of this page have been omitted pursuant to a Confidential
      Treatment request and filed separately with the
  Commission.

              

      

      

    

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    
      	
               
      

            	
              8.

            	
              PATENT
      PROSECUTION AND MAINTENANCE

            

    

    

    
      	
               
      

            	
              a.

            	
              Licensor
      is solely responsible for the continued prosecution of any pending patent
      applications included in the Licensed Patents, as well as the prosecution
      of patent applications subsequently filed pursuant to Articles 8.a.ii and
      8.a.iv below.

            

    

    
    

    

    
      	
               
      

            	
              i.

            	
              Licensor
      shall issue as a patent each application included in the Licensed Patents
      which receives an allowance from the appropriate patent
      office.

            

    

    

    
      	
               
      

            	
              ii.The
      parties shall consult with each other concerning the desirability of
      filing additional patent applications (continuations and divisionals) to
      seek an increase in the amount of protection afforded by the Licensed
      Patents.  Upon the reasonable request of EES, Licensor shall
      prepare and file such applications.

            

    

    

    
      	
               
      

            	
              iii.Licensor
      shall pay all government fees in any given country required to maintain
      the Licensed Patents.

            

    

    

    
      	
               
      

            	
              iv.To
      the extent not already barred, Licensor shall file patent applications in
      the following countries:

            

    

    
      	
               
      

            	
              1)

            	
              EPO
      (All)

            

    

    
      	
               
      

            	
              2)

            	
              Russia

            

    

    
      	
               
      

            	
              3)

            	
              Mexico

            

    

    
      	
               
      

            	
              4)

            	
              Canada

            

    

    
      	
               
      

            	
              5)

            	
              Brazil

            

    

    
      	
               
      

            	
              6)

            	
              Japan

            

    

    
      	
               
      

            	
              7)

            	
              Australia

            

    

    
      	
               
      

            	
              8)

            	
              India

            

    

    
      	
               
      

            	
              9)

            	
              China

            

    

    
      	
               
      

            	
              10)

            	
              Korea

            

    

    
      	
               
      

            	
              11)

            	
              Israel

            

    

    
      	
               
      

            	
              12)

            	
              Singapore

            

    

    
      	
               
      

            	
              13)

            	
              Hong
      Kong

            

    

    

    
      	
               
      

            	
              b.

            	
              Licensor
      shall file patent applications in other foreign countries which may be
      designated in writing by EES, and EES shall be permitted to consult with
      Licensor in the selection of foreign patent counsel and in the preparation
      and prosecution of said foreign patent
  applications.

            

    

    

    
      	
               
      

            	
              c.

            	
              Licensor
      shall promptly notify EES in the event Licensor decides to abandon or
      discontinue prosecution of any one or more patent applications included in
      Licensed Patents, or discontinue maintaining an issued patent included in
      the Licensed Patents.

            

    

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    Such
notification will be given as early as possible, which in no event will be less
than 60 days prior to the date on which patent(s)\application(s) will become
abandoned.

    

    
      	
               
      

            	
              i.

            	
              Licensor
      may abandon, withdraw or discontinue prosecution of such
      patent(s)\application(s) by giving EES written notice at least 60 days
      prior to such abandonment.

            

    

    

    
      	
               
      

            	
              ii.Thereafter,
      EES shall have the option, exercisable upon written notification to
      Licensor, to assume full responsibility for the maintenance and/or
      prosecution of such patent(s)\application(s), in which event all right,
      title and interest in and to such patent(s)\application(s) shall be
      promptly assigned by Licensor to EES.  Thereafter, EES shall
      have no further royalty obligations to Licensor for any Licensed Product
      covered solely by one or more claims of such
      patent(s)\application(s).

            

    

    

    
      	
               
      

            	
              d.

            	
              EES
      shall reimburse Licensor for the reasonable attorney fees, maintenance
      fees, and other costs related to the filing, prosecution, and maintenance
      of the Licensed Patents incurred by Licensor after the Effective Date in
      all countries other than the United States.  Upon request from
      Licensor, EES shall make payment directly to the attorney prosecuting such
      applications if such attorney submits an invoice directly to
      EES.  EES shall not be responsible for and shall not be required
      to pay for any such prosecution and filing expenses under this paragraph
      unless such expenses are submitted to EES along with an invoice that
      provides an itemized accounting for expenses incurred and services
      actually rendered.  If Licensor grants any third party a license
      under a Licensed Patent outside of the Field of Use, all money due by EES
      for such Licensed Patent under this article 8.d shall be reduced by
  50%.

            

    

    

    
      	
               
      

            	
              e.

            	
              Within
      60 days of the Effective Date, Licensor shall provide EES with copies of
      Licensor’s file histories for each patent application included in the
      Licensed Patents pending worldwide.

            

    

    

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              f.

            	
              Licensor
      shall promptly provide EES with all correspondence delivered to or
      received from any Patent Office in connection with the Licensed
      Patents.  EES, upon its own initiative, shall have the right to
      consult with Licensor regarding proposed amendments to the claims of
      patent applications included in the Licensed Patents during prosecution to
      ensure that the scope of patent coverage is
      adequate.  

            

    

    

    
      	
               
      

            	
              9.

            	
              WARRANTIES
      AND REPRESENTATIONS

            

    

    

    
      	
               
      

            	
              a.

            	
              Each
      party represents and warrants to the other
that:

            

    

    

    
      	
               
      

            	
              i.

            	
              it
      has the power to execute, deliver and perform the terms and conditions of
      the Agreement and has taken all necessary action to authorize the
      execution, delivery and performance
hereof;

            

    

    

    
      	
               
      

            	
              ii.the
      execution, delivery or performance of this Agreement will not constitute a
      violation of, be in conflict with, or result in, a breach of any agreement
      or contract to which it is a party or under which it is
    bound;

            

    

    

    
      	
               
      

            	
              iii.this
      Agreement constitutes the legal, valid and binding Agreement of such party
      enforceable in accordance with its terms;
and

            

    

    

    
      	
               
      

            	
              iv.in
      complying with the terms and conditions of this Agreement and carrying out
      any obligations hereunder, it will comply with all applicable laws,
      regulations, ordinances, statutes, decrees or proclamations of all
      governmental authorities having jurisdiction over such
    party.

            

    

    

    
      	
               
      

            	
              b.

            	
              Licensor
      expressly warrants and represents as of the Effective Date
      that:

            

    

    

    
      	
               
      

            	
              i.

            	
              it
      owns all right, title, and interest in and to, or owns an exclusive
      license under, the Licensed Patents and Licensed Know-How free and clear
      of all encumbrances,

            

    

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    and no
third party has notified Licensor that it is claiming any ownership of or right
to the Licensed Patents, except as indicated in the Roslin Agreement and the
Zabara Agreement;

    

    
      	
               
      

            	
              ii.it
      is presently aware of no patents or patent applications, not already
      previously disclosed to EES in writing, owned by a third party which would
      present any issue of infringement by reason of the manufacture, use or
      sale of any Product;

            

    

    

    
      	
               
      

            	
              iii.no
      Licensed Patent is involved in any pending or threatened litigation,
      arbitration, administrative or other proceedings, or governmental
      investigation, other than ordinary patent application prosecution
      proceedings;

            

    

    

    
      	
               
      

            	
              iv.it
      has not received any notice of invalidity or infringement of any of the
      Licensed Patents or obtained any legal opinions of counsel on
      patentability, validity or infringement related
  thereto;

            

    

    

    
      	
               
      

            	
              v.

            	
              it
      is empowered to grant the licenses granted
  herein;

            

    

    

    
      	
               
      

            	
              vi.it
      has no outstanding encumbrances or agreements, including any agreements
      with academic institutions, universities, or third-party employers,
      whether written, oral or implied, which would be inconsistent with the
      licenses granted herein;

            

    

    

    
      	
               
      

            	
              vii.it
      has fulfilled all of its obligations under the Roslin and Zabara
      Agreements including, but not limited to, its obligations under articles
      3.02(a) and (b) of the Roslin Agreement resulting in Roslin receiving at
      least $150,000 under such articles;

            

    

    

    
      	
               
      

            	
              viii.

            	
              it
      will not default its obligations under the Zabara Agreement;
      and

            

    

    

    
      	
               
      

            	
              ix.

            	
              it
      is not aware of any information, such as prior art, that would raise a
      substantial question of the validity or enforceability of any of the
      Licensed Patents.

            

    

    

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              c.

            	
              EES MAKES NO REPRESENTATION OR
      WARRANTY THAT IT WILL MARKET A LICENSED PRODUCT OR, IF EES DOES MARKET A
      LICENSED PRODUCT THAT SUCH LICENSED PRODUCT SHALL BE THE EXCLUSIVE MEANS
      BY WHICH EES WILL PARTICIPATE IN THIS FIELD. FURTHERMORE, ALL BUSINESS
      DECISIONS INCLUDING, WITHOUT LIMITATION, THE DESIGN, MANUFACTURE, SALE,
      PRICE AND PROMOTION OF LICENSED PRODUCTS AND THE DECISION WHETHER TO SELL
      A LICENSED PRODUCT SHALL BE WITHIN THE SOLE DISCRETION OF
  EES.

            

    

    

    
      	
               
      

            	
              d.

            	
              OTHER
      THAN THOSE MENTIONED ABOVE, NEITHER PARTY MAKES ANY OTHER EXPRESS OR
      IMPLIED WARRANTIES, AND THERE ARE NO IMPLIED WARRANTIES OF MERCHANTABILITY
      OR FITNESS FOR A PARTICULAR
PURPOSE.

            

    

    

    
      	
              10.

            	
              INDEMNIFICATION

            

    

    

    
      	
               
      

            	
              a.

            	
              Licensor
      shall be liable to EES for and shall defend, indemnify and hold EES (and
      its directors, officers, employees and agents) harmless against any
      liability, damages or loss, other than loss of potential sales, and from
      any claims, suits, proceedings, demands, recoveries or expenses (“Loss”),
      in connection with any Products arising out of, based on, or caused
      by:

            

    

    

    
      	
               
      

            	
              i.

            	
              the
      gross negligence or intentional wrongdoing of Licensor and its
      Affiliates;

            

    

    

    
      	
               
      

            	
              ii.breach
      by Licensor of any of its representations, warranties or covenants made
      herein.

            

    

    

    
      	
               
      

            	
              b.

            	
              EES
      shall be liable for and shall defend, indemnify and hold Licensor (and it
      directors, officers, employees, and agents,) harmless against any Loss, in
      connection with any Product arising out of, based on or caused
      by:

            

    

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    

    
      	
               
      

            	
              i.

            	
              the
      gross negligence or intentional wrongdoing of EES, its Affiliates or
      sublicensees;

            

    

    

    
      	
               
      

            	
              ii.breach
      by EES, its Affiliates or sublicensees of any of its representations,
      warranties or covenants made
herein;

            

    

    

    
      	
               
      

            	
              iii.alleged
      defects in material, workmanship, design, adequacy of warning, or other
      product liability claim with respect to Products manufactured, used or
      sold by EES, its Affiliates, or sublicensees;
  and

            

    

    

    
      	
               
      

            	
              iv.claims
      of patent infringement made with respect to such
  Products.

            

    

    

    
      	
              11.

            	
              ZABARA
      LICENSE AGREEMENT

            

    

    

    
      	
               
      

            	
              a.

            	
              Licensor
      will continue to assume all obligations and liabilities under the Zabara
      Agreement.

            

    

    

    
      	
               
      

            	
              b.

            	
              Licensor
      shall provide written notice to EES concurrent with x) delivery of notice
      (written or otherwise) of Licensor’s intent to terminate the Zabara
      Agreement in accordance with Section 10 of the Zabara Agreement, or y)
      receipt of notice (written or otherwise) that the Zabara Agreement may be
      terminated in accordance with Section 10 of the Zabara
      Agreement.

            

    

    

    
      	
               
      

            	
              i.

            	
              In
      the event the Zabara Agreement is terminated and provided that EES
      executes an agreement with Zabara that requires EES to pay a lump sum
      and/or an earned royalty under such agreement, then any earned royalty EES
      owes Licensor under this Agreement shall be reduced by an amount equal to
      the earned royalty EES is required to pay under such agreement. If EES is
      required to pay a lump sum(s) under such agreement, then the earned
      royalties EES pays Licensor under this Agreement shall be reduced by 50%
      until the cumulative amount by which such royalties are reduced equals the
      amount of such lump sum(s).

            

    

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

    

    
      	
               
      

            	
              ii.In
      the event that the Zabara Agreement is terminated, EES shall not be liable
      to Licensor for earned royalties based upon post-termination sales of
      Products covered only by patents subject to the Zabara
      Agreement.

            

    

    

    
      	
               
      

            	
              c.

            	
              In
      the event that the Zabara Agreement is terminated pursuant to Section 10
      of the Zabara Agreement and without EES written consent to do so, Licensor
      shall pay EES $500,000 within 60 days after such
    termination.

            

    

    

    
      	
              12.

            	
              TERM
      & TERMINATION

            

    

    

    
      	
               
      

            	
              a.

            	
              Unless
      otherwise terminated in accordance with the provisions below, the term of
      this Agreement (“Term”) shall be from the Effective Date until the date
      upon which the last of the Licensed Patents or Other Patents
      expires.

            

    

    

    
      	
               
      

            	
              b.

            	
              EES
      may terminate this Agreement upon 90 days written notice to Licensor, and
      such termination shall become effective at the end of such 90-day notice
      period.  Provided Licensor has not breached any of its
      warranties and representations set forth in Article 9.b above, termination
      under this Article 12.b shall not relieve EES of its obligation to pay
      earned royalties incurred prior to the effective date of such
      termination.

            

    

    

    
      	
               
      

            	
              c.

            	
              Either
      party may terminate this Agreement upon 120 days written notice for any
      material breach or default of the other party.  Such termination
      shall become effective at the end of the 120-day period unless during such
      period the party in breach or default cures such breach or default.
      Notwithstanding the preceding sentence, from the date either party
      notifies the other party that it wishes to commence a proceeding in
      accordance with the dispute resolution procedures set forth in Attachment
      A until the date such proceeding has been concluded, the running of the
      time period referred to in

            

    

    this
paragraph for curing a breach shall be suspended with respect to the subject
matter of the dispute, claim or controversy.

    

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              d.

            	
              Upon
      the termination of this Agreement, all rights and obligations of each
      party to this Agreement will terminate, except obligations for breaches of
      this Agreement occurring prior thereto.  Articles 10 and 13.j
      shall expressly survive any
termination.

            

    

    

    
      	
              13.

            	
              MISCELLANEOUS

            

    

    

    
      	
               
      

            	
              a.

            	
              All
      business decisions, including without limitation the design, manufacture,
      sale, price and promotion of the Licensed Product shall be within the sole
      discretion of EES.

            

    

    

    
      	
               
      

            	
              b.

            	
              After
      the Effective Date, Licensor may issue the press release set forth in
      Attachment E. In all other circumstances, no Party to this Agreement shall
      originate any publicity, news release or other public announcement,
      written or oral, whether relating to this Agreement or any arrangement
      between the Parties other than acknowledging the existence of any
      arrangement between the Parties, without the prior written consent of the
      other Party, except where such publicity, news release or other public
      announcement is required by law or regulation (including U.S. securities
      laws and regulations); provided that in such event, the Party issuing same
      shall still be required to consult with the other Party a reasonable time
      prior to its release to allow the other Party to comment on the use of its
      name and, after its release, shall provide the named Party with a copy
      thereof.

            

    

    

    
      	
               
      

            	
              c.

            	
              All
      notices hereunder shall be in writing and shall be deemed to have been
      duly given if delivered personally, one day after delivery to a nationally
      recognized overnight delivery service, charges prepaid, three days after
      sent by registered or certified mail, postage prepaid, or when receipt is
      confirmed if by, facsimile or other telegraphic
  means:

            

    

    

    
      	
               
      

            	
              i.

            	
              In
      the case of Licensor:

            

    

    Chief
Executive Officer

    Cyberonics,
Inc.

    100
Cyberonics Blvd.

    Houston,
Texas 77058

    

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

    With a
copy to (which will not constitute notice):

    Vice
President & General Counsel

    Cyberonics,
Inc.

    100
Cyberonics Blvd.

    Houston,
Texas 77058

    

    

    
      	
              ii.

            	
              In
      the case of EES:

            

    

    

    President

    Ethicon
Endo-Surgery, Inc.

    4545
Creek Road

    Cincinnati,
Ohio 45242

    

    With a
copy to (which will not constitute notice):

    Chief
Patent Counsel

    Johnson
& Johnson

    One
Johnson & Johnson Plaza

    Cincinnati,
Ohio  08933

    

    
      	
               
      

            	
              iii.Such
      addresses may be altered by written notice given in accordance with this
      Article.

            

    

    

    
      	
               
      

            	
              d.

            	
              Either
      Party may assign this Agreement or any rights and obligations contemplated
      herein to an Affiliate or to a company acquiring substantially all of the
      Party’s assets to which this Agreement relates without the consent of the
      other Party.  In all other instances, neither party shall assign
      this Agreement, any portion thereof nor any rights granted hereunder
      without the prior written consent of the other party.  Licensor
      shall not assign, sell, convey, dedicate to the public or otherwise
      dispose of any intellectual property licensed hereunder, including any
      Licensed Patents, without EES’s prior written consent.  Licensor
      shall indemnify and hold EES harmless from all liabilities, demands,
      damages, expenses and losses resulting from any such unauthorized
      act.  Subject to the foregoing, this Agreement shall bind and
      inure to the benefit of the respective parties hereto and their successors
      and assigns.

            

    

    

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              e.

            	
              Any
      delays in or failures of performance by either party under this Agreement
      shall not be considered a breach of this Agreement if and to the extent
      caused by Force Majeure, in which case any time for performance hereunder
      shall be extended by the actual time of delay caused by such Force
      Majeure.

            

    

    

    
      	
               
      

            	
              f.

            	
              The
      waiver by either party, whether express or implied, of any provisions of
      this Agreement, or of any breach or default of either party, shall not be
      construed to be a continuing waiver of such provision, or of any
      succeeding breach or default or of a waiver of any other provisions of
      this Agreement.  Failure to terminate this Agreement following
      breach or failure to comply with this Agreement shall not constitute a
      waiver of a party's defenses, rights or causes of action arising from such
      or any future breach or
noncompliance.

            

    

    

    
      	
               
      

            	
              g.

            	
              Any
      provision hereof which is prohibited or unenforceable in any jurisdiction
      shall, as to such jurisdiction, be ineffective only to the extent of such
      prohibition or unenforceability without invalidating the remaining
      provisions hereof or affecting the validity or enforceability of such
      provision in any other
jurisdiction.

            

    

    

    
      	
               
      

            	
              h.

            	
              All
      rights and licenses granted under or pursuant to this Agreement by
      Licensor to EES are, for all purposes of Section 365(n) of Title 11, U.S.
      Code (the “Bankruptcy Code”), licenses of rights to “intellectual
      property” as defined in the Bankruptcy Code.  The parties agree
      that EES, as a licensee of such rights under this Agreement, shall retain
      and may fully exercise all of its rights and elections under the
      Bankruptcy Code.  Licensor agrees during the term of this
      Agreement to create and maintain current copies or, if not amenable to
      copying, detailed descriptions or other appropriate embodiments, of all
      such licensed intellectual property.  If a case is commenced by
      or against Licensor under the Bankruptcy Code, then, unless and until this
      Agreement is rejected as provided in the Bankruptcy Code, Licensor (in any
      capacity, including debtor-in-possession) and its successors and assigns
      (including, without limitation, a Bankruptcy Code trustee) shall either
      perform all of the obligations provided in this Agreement to be performed
      by Licensor or provide to EES all such intellectual property (including
      all embodiments

            

    

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

    thereof)
held by Licensor and such successors and assigns, as EES may elect in a written
request, immediately upon such request.  If a Bankruptcy Code case is
commenced by or against Licensor, this Agreement is rejected as provided in the
Bankruptcy Code and EES elects to retain its rights hereunder as provided in the
Bankruptcy Code, then Licensor (in any capacity, including debtor-in-possession)
and its successors and assigns (including, without limitation, a Bankruptcy Code
trustee) shall provide to EES all such intellectual property (including all
embodiments thereof) held by Licensor and such successors and assigns
immediately upon EES’s written request therefor.  All rights, powers
and remedies of EES provided under this Article are in addition to and not in
substitution for any and all other rights, powers and remedies now or hereafter
existing at law or in equity (including, without limitation, the Bankruptcy
Code) in the event of any such commencement of a bankruptcy proceeding by or
against Licensor.  EES, in addition to the rights, powers and remedies
expressly provided herein, shall be entitled to exercise all other such rights
and powers and resort to all other such remedies as may now or hereafter exist
at law or in equity (including the Bankruptcy Code) in such event.

    

    
      	
               
      

            	
              i.

            	
              The
      parties hereto are entering into this Agreement as independent
      contractors, and nothing herein is intended or shall be construed to
      create between the parties a relationship of principal and agent,
      partners, joint venturers or employer and employee.  Neither
      party shall hold itself out to others or seek to bind or commit the other
      party in any manner inconsistent with the foregoing provisions of this
      Article.

            

    

    

    
      	
               
      

            	
              j.

            	
              The
      parties agree to be bound by the dispute resolution provisions set forth
      in Attachment A attached hereto.

            

    

    

    
      	
               
      

            	
              k.

            	
              It
      is the mutual desire and intent of the parties to provide certainty as to
      their future rights and remedies against each other by defining the extent
      of their mutual undertakings as provided herein.  The parties
      have in this Agreement incorporated all representations, warranties,
      covenants, commitments and understandings on which they have relied in
      entering into this Agreement and, except as provided for herein, neither
      party has made any covenant or other commitment to the other concerning
      its future

            

    

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

    action.  Accordingly,
this Agreement constitutes the entire agreement and understanding between the
parties with respect to the matters contained herein, and supersedes all prior
oral or written promises, representations, conditions, provisions or terms
related thereto.  The parties may from time to time during the term of
this Agreement modify any of its provisions by mutual agreement in
writing.

    

    
      	
               
      

            	
              l.

            	
              The
      inclusion of headings in this Agreement is for convenience only and shall
      not affect the construction or interpretation
  hereof.

            

    

    

    
      	
              m.

            	
              Except
      as otherwise expressly provided in this Agreement or as the context
      otherwise requires, the following rules of interpretation apply to this
      Agreement:

            

    

    

    
      	
               
      

            	
              i.

            	
              words
      in the singular will be held to include the plural and vice
      versa;

            

    

    

    
      	
               
      

            	
              ii.words
      of one gender will be held to include the other genders as the context
      requires;

            

    

    

    
      	
               
      

            	
              iii.“or”
      and “any” are not exclusive and the words “include” and “including,” and
      variations thereof, will not be deemed to be terms of limitation, but
      rather will be deemed to be followed by the words “without
      limitation”;

            

    

    

    
      	
               
      

            	
              iv.a
      reference to any agreement or other contract includes amendments
      thereto;

            

    

    

    
      	
               
      

            	
              v.

            	
              a
      reference to a law includes any amendment or modification to such law and
      any rules or regulations issued
thereunder;

            

    

    

    
      	
               
      

            	
              vi.a
      reference to a person includes its permitted successors and assigns;
      

            

    

    

    
      	
               
      

            	
              vii.a
      reference in this Agreement to an Article, Section, Attachment, Annex,
      Exhibit or Schedule is to the referenced Article, Section, Annex, Exhibit
      or Schedule of this Agreement; 

            

    

    

    
      
         

      

      
        30

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              viii.the
      terms “hereof,” “herein,” and “herewith” and words of similar import will,
      unless otherwise stated, be construed to refer to this Agreement as a
      whole (including all of the attachments hereto) and not to any particular
      provision of this Agreement;

            

    

    

    
      	
               
      

            	
              ix.all
      references to “$” or “dollars” herein mean U.S.
  dollars;

            

    

    

    
      	
               
      

            	
              x.

            	
              each
      of the representations, warranties, covenants and conditions contained
      herein is separate and not limited or satisfied by the existence, wording
      or satisfaction of any other representation, warranty, covenant or
      condition contained herein.

            

    

    

    
      	
               
      

            	
              n.

            	
              The
      parties have participated jointly in the negotiation and drafting of this
      Agreement.  In the event an ambiguity or question of intent
      interpretation arises, this Agreement shall be construed as if jointly
      drafted by the parties and no presumption or burden of proof shall arise
      favoring or disfavoring any Party by virtue of the authorship of any
      provision of this Agreement.

            

    

    

    
      	
               
      

            	
              o.

            	
              The
      parties are entering into this Agreement in good faith and after careful
      contemplation of terms, with the advice of counsel.  The Parties
      are not entering into this Agreement because of duress, whether financial
      or otherwise, nor has a Party identified any such duress to any other
      Party.

            

    

    

    
      	
               
      

            	
              p.

            	
              This
      Agreement will be governed by and construed in accordance with the Laws of
      the State of Delaware.

            

    

    

    
      	
               
      

            	
              q.

            	
              This
      Agreement may be executed in any number of counterparts, and each such
      counterpart hereof will be deemed to be an original instrument, but all
      such counterparts together will constitute but one agreement. Delivery of
      an executed counterpart of a signature page of this Agreement by facsimile
      will be effective as delivery of a manually executed counterpart of this
      Agreement.

            

    

    

    [SIGNATURE
PAGE TO FOLLOW]

    
      
         

      

      
        31

        
          

        

      

      
         

      

    

    

    This
Agreement is signed on the dates set forth below by duly authorized
representatives of EES and the Licensor, respectively.

    
      	
              Cyberonics,
      Inc.

            	
              Ethicon
      Endo-Surgery, Inc.

            
	 
      	 
      
	 
      	 
      
	
              By:
      /s/ Daniel J. Moore

            	
              By:
      /s/ Michelle
  Brennan

            
	
              Daniel
      J. Moore

            	
              Michelle
      Brennan

            
	
              Chief
      Executive Officer

            	
              Worldwide
      Vice President

            
	 
      	
              Business
      Development & Strategy

            
	 
      	 
      
	
              Date:
      12.17/07

            	
              Date:
      12/17/07

            
	 
      	 
      

    

    

     [ATTACHMENTS
TO FOLLOW]

    
      
         

      

      
        32

        
          

        

      

      
         

      

    

    

    Attachment
A

    Dispute
Resolution Clause

    

    

    Any
controversy or claim arising out of or relating to this Agreement shall be
resolved by arbitration before a single arbitrator in accordance with the
Commercial Arbitration Rules of the American Arbitration Association (“AAA”)
then pertaining (available at www.adr.org), except where those rules conflict
with this provision, in which case this provision controls. Any court with
jurisdiction shall enforce this clause and enter judgment on any award. The
arbitrator shall be selected within twenty business days from commencement of
the arbitration from the AAA’s National Roster of Arbitrators pursuant to
agreement or through selection procedures administered by the AAA. Within 45
days of initiation of arbitration, the parties shall reach agreement upon and
thereafter follow procedures, including limits on discovery, assuring that the
arbitration will be concluded and the award rendered within no more than eight
months from selection of the arbitrator or, failing agreement, procedures
meeting such time limits will be designed by the AAA and adhered to by the
parties. The arbitration shall be held in Wilmington, DE and the arbitrator
shall apply the substantive law of Delaware, except that the interpretation and
enforcement of this arbitration provision shall be governed by the Federal
Arbitration Act. Prior to appointment of the arbitrator or thereafter if he is
unavailable, emergency relief is available from any court to avoid irreparable
harm. THE ARBITRATOR SHALL NOT AWARD EITHER PARTY PUNITIVE, EXEMPLARY,
MULTIPLIED OR CONSEQUENTIAL DAMAGES, OR ATTORNEYS FEES OR COSTS.

    Prior to
commencement of arbitration, the parties must attempt to mediate their dispute
using a professional mediator from AAA, the CPR Institute for Dispute
Resolution, or like organization selected by agreement or, absent agreement,
through selection procedures administered by the AAA. Within a period of 45 days
after the request for mediation, the parties agree to convene with the mediator,
with business representatives present, for at least one session to attempt to
resolve the matter. In no event will mediation delay commencement of the
arbitration for more than 45 days absent agreement of the parties or interfere
with the availability of emergency relief.

    
      
         

      

      
        33

        
          

        

      

      
         

      

    

    Attachment
B1

    Licensed
Cyberonics Patents

    

    

    
      	
              Patent
      or Application

              Publication

              Number

            	
              Title

            
	
              5,188,104

            	
               Treatment
      of Eating Disorders by Nerve Stimulation

            
	
              5,231,988

            	
               Treatment
      of Endocrine Disorders by Nerve Stimulation

            
	
              5,263,480

            	
               Treatment
      of Eating Disorders by Nerve Stimulation

            
	
              5,540,730

            	
               Treatment
      of Motility Disorders by Nerve Stimulation

            
	
              5,540,734

            	
              Cranial
      Nerve Stimulation Treatments Using Neurocybernetic
    Prosthesis

            
	
              5,707,400

            	
               Treating
      Refractory Hypertension by Nerve Stimulation

            
	
              20060247719

            	
               Weight
      Loss Method and Device

            
	
              20060247721

            	
               Identification
      of Electrodes for Nerve Stimulation in the Treatment of Eating
      Disorders

            
	
              20060247722

            	
               Noninvasively
      Adjustable Gastric Band

            
	
              20070027483

            	
              Stimulating
      Cranial Nerve to Treat Disorders Associated with the Thyroid
      Gland

            
	
              20070027484

            	
               Autonomic
      Nerve Stimulation to Treat a Pancreatic Disorder

            
	
              20070027492

            	
               Autonomic
      Nerve Stimulation to Treat a Gastrointestinal Disorder

            
	
              20070027498

            	
               Selective
      Nerve Stimulation for the Treatment of Eating Disorders

            
	
              20070093870

            	
               Cranial
      Nerve Stimulation to Treat Eating
Disorders

            

    

    
      
         

      

      
        34

        
          

        

      

      
         

      

    

    Attachment
B2

    

    Roslin
Patents

    

    

    

    
      	
              Patent
      or Application Publication Number

            	
              Title

            
	
              6,587,719

            	
               Treatment
      of Obesity by Bilateral Vagus Nerve Stimulation

            
	
              6,609,025

            	
               Treatment
      of Obesity by Sub-Diaphragmatic Nerve Stimulation

            
	
              7,299,091

            	
               Treatment
      of Obesity by Bilateral Vagus Nerve Stimulation

            
	
              20040039427

            	
               Treatment
      of Obesity by Sub-Diaphragmatic Nerve
  Stimulation

            

    

    

    
      
         

      

      
        35

        
          

        

      

      
         

      

    

    Attachment
C

    Minimum
Royalty Payment Examples

    

    Example
1

    

    
      	
               
      

            	
              -

            	
              The
      First Competitive Sale occurs in November of 2007 and the competitive
      Product remains on the market
thereafter.

            

    

    

    
      	
              Period

            	
              Minimum
      Royalty Payment

            
	
              Upon
      notice, 2007

            	
              $***

            
	
              1Q,
      2008

            	
              $***

            
	
              2Q,
      2008

            	
              $***

            
	
              3Q,
      2008

            	
              $***

            
	
              4Q,
      2008

            	
              $***

            
	
              1Q,
      2009

            	
              $***

            
	
              2Q,
      2009

            	
              $***

            
	
              3Q,
      2009

            	
              $***

            
	
              4Q,
      2009

            	
              $***

            
	
              1Q,
      2010

            	
              $***

            
	
              2Q,
      2010

            	
              $***

            
	
              3Q,
      2010

            	
              $***

            
	
              4Q,
      2010

            	
              $***

            

    

    

    

    Example
2

    

    The First
Competitive Sale occurs in January of 2008.  In May of 2009, the
competitive Product is pulled from the market.  In December of 2009, a
second competitor launches a Product and remains on the market
thereafter.

    

    
      	
              Period

            	
              Minimum
      Royalty Payment

            
	
              Upon
      notice, 2008

            	
              $***

            
	
              1Q,
      2009

            	
              $***

            
	
              2Q,
      2009

            	
              –

            
	
              3Q,
      2009

            	
              –

            
	
              4Q,
      2009

            	
              –

            
	
              1Q,
      2010

            	
              $***

            
	
              2Q,
      2010

            	
              $***

            
	
              3Q,
      2010

            	
              $***

            
	
              4Q,
      2010

            	
              $***

            

    

    

    
      	
               
      

            	
              ***
      Portions of this page have been omitted pursuant to a Confidential
      Treatment request and filed separately with the
  Commission.

            

    

    

    
      
         

      

      
        36

        
          

        

      

      
         

      

    

    Attachment
D

    Roslin
Agreement

    

    
      
         

      

      
        37

        
          

        

      

      
         

      

    

    LICENSE AGREEMENT

     

    THIS AGREEMENT (“Agreement”)
dated as of August 22, 2000 (the “Effective Date”) by and between Mitchell
S. Roslin, M.D., a citizen of the United States of America residing in New York,
NY (“Licensor”), and Cyberonics, Inc., a Delaware corporation with offices in
Houston, Texas (“Licensee”).

     

    Recitals:

     

    Licensee
is engaged in designing, developing, investigating, testing, and marketing
specialized medical devices primarily used or to be used for treating disorders
by nervous system stimulation, and owns basic patents related to the use of
nerve stimulation for eating, endocrine and other disorders, including patents
on the use of vagus nerve stimulation (VNS) to treat obesity;

     

    Licensor
is medical doctor licensed to practice medicine in the State of New York, and is
a co-inventor with Burke T. Barrett of Licensee and Ramesh Reddy, M.D. on a
United States patent application for bi-lateral VNS for the treatment of
obesity, Serial No. 09/346,396, filed on or about July 1, 1999, and/or
continuations or divisions thereof, and a PCT counterpart application thereof
(collectively, “the ‘396 Application”), the original animal studies for which
were initiated by Licensor with participation, assistance, support, advice and
devices of Licensee; and

     

    Licensee
and Licensor desire to enter into an agreement under which Licensee will acquire
from Licensor the exclusive right and license to practice the inventions)
covered by the ‘396 Application to the fullest extent of Licensor’s right, title
and interest in and to the invention(s), and in and to all other inventions
conceived, made, reduced to practice, owned or controlled by Licensor in the
field of nervous system stimulation, on the terms and conditions set forth in
this Agreement.

     

    In
consideration of the foregoing recitals, and the mutual undertakings set forth
herein, Licensee and Licensor (collectively, “the Parties”) do hereby AGREE AS FOLLOWS:

     

    ARTICLE
I

    Definitions.

     

    As used
in this Agreement, terms shall have the following meanings:

     

    1.01           “Confidential
Information” shall mean information of Licensee
relating to its business plans, experimental products, research or development
activities, financial information, identity of customers and key personnel,
marketing and distribution, and other transactions, actual or prospective,
treated by Licensee as secret and protected as such by confidentiality or
nondisclosure agreements or the like and by applicable marking of documents and
other tangible items with words indicative of information of confidential or
secret content and with applicable notice where the content is communicated
orally or visually.

     

    
      
         

      

      
        38

        
          

        

      

      
         

      

    

    1.02           “FDA” shall mean the
U.S. Food and Drug Administration, which has responsibility under the law for,
among other things, establishing protocol for clinical investigation of medical
devices and granting Investigational Device Exemption (“IDE”), determining from
results of clinical investigation whether a medical device is safe and effective
for treating a disease or disorder, and granting Pre-Market Approval (“PMA”) of
medical devices.

     

    1.03           “Invention” shall mean
an advance, innovation, discovery, or improvement in a product, process, method,
or technique, whether patentable or not, conceived, made, or reduced to practice
by Licensor, alone or with others, or owned or controlled in whole or in part by
Licensor, at any time during the term of this Agreement, in the field of nervous
system stimulation.

     

    1.04           “Licensed Patents”
shall mean United States patent application Serial No. 09/346,396 filed
July 1, 1999 in the names of Mitchell Roslin and others for “Treatment of
Obesity by Bilateral Vagus Nerve Stimulation”, and all continuations,
continuations in part and divisions thereof, all patents issued, reissued,
reexamined, and renewed (e.g., by payment of maintenance fees or annuities, as
the case may be) thereon, and all counterparts (i.e., corresponding applications
and patents) and equivalents (i.e., statutorily protected or designated by
status of invention, characterized as other than a patent application or patent)
thereof filed or issued in other countries (including but not limited to
nationalizations under the Patent Cooperation Treaty (PCT) in the name
(with or without others), on behalf, or with concurrence of Licensor; and any
and all Inventions, whether or not applications for patent, patents or
equivalents are filed thereon, and, if filed, such patent, patents or
equivalents. The Licensed Patents as of the Effective Date hereof are set forth
in Exhibit A
(attached hereto and integrated herein), subject to modification from time to
time to add newly arising, filed or issued Licensed Patents as provided
herein.

     

    1.05           “Licensed Products”
shall mean any and all products, devices, apparatus, and systems, and “Licensed Methods”
shall mean any and all methods, techniques, and processes, covered by any
claim(s) of the Licensed Patents.

     

    1.06           “Net Sales” shall mean
gross sales of Licensed Products by Licensee or its sublicensee(s), as the case
may be, less taxes and tariffs (by whatever name they may be designated) imposed
by governmental authorities on the manufacture, sale, importation, lease or
storage of Licensed Products and actually paid by Licensee (or its
sublicensee(s)); packing and freight charges (including insurance costs for
transportation) actually included in Licensee’s (or its sublicensee’(s’))
invoices for Licensed Products; and credits for returns, discounts, and
allowances actually granted by Licensee (or it sublicensee(s)) to customers for
Licensed Products. In the event that a Licensed Product is disposed of in a
transaction with a third party other than an arms length sale between unrelated
parties, the transaction shall be treated and accounted for by Licensee and its
sublicensees, as applicable, as a typical sale at the average gross sales price
of the Licensed Product by Licensee or the sublicensee, as the case may be, in
the market in which such transaction occurred.

     

    
      
         

      

      
        39

        
          

        

      

      
         

      

    

    1.07           “License Fee” shall
mean a fee paid to Licensee by a sublicensee for the privilege of receiving a
sublicense, which is neither based on Net Sales by the sublicensee nor
deductible from royalties paid or payable to Licensee by the sublicensee for its
Net Sales.

     

    ARTICLE
II

    Grant
of License.

     

    2.01           Exclusive
License.  Licensor agrees to grant and hereby does grant to
Licensee the exclusive worldwide right and license to all of Licensor’s rights
in and to the Licensed Patents, including but not limited to the exclusive
worldwide right and license to make, have made, use, sell, import, export and
otherwise dispose of the Licensed Products, and to practice the Licensed
Methods.

     

    2.02           Right to grant
Sublicenses.  The license granted to Licensee hereunder shall
include the exclusive right to grant sublicenses to third parties for the
exercise of any or all of the rights granted in the Licensee’s license in any
territory constituting a country, portion of a country, or countries of the
world.

     

    Article III.

    Royalties;
Advances; Audit.

     

    3.01           Royalties.

     

    (a)           Licensee
shall pay Licensor Royalties at the royalty rate specified in Exhibit B applied to
(i) Net Sales of Licensed Products by Licensee and its sublicensees and
(ii) any License Fees received by Licensee on account of
sublicenses.

     

    (b)           Royalties
shall be deemed earned when sales are made, but shall be due and payable
quarterly in United States dollars, within 90 days after the end of the
fiscal quarter of Licensee in which the applicable sales were made. Only one
Royalty shall be due per Licensed Product sold, regardless of the number of
Licensed Patents and/or claims that may apply or the number of times a Licensed
Product may be used to practice Licensed Methods.

     

    (c)           With
each quarterly payment of Royalties, Licensee shall furnish a quarterly report
to Licensor setting forth its own and its sublicensees’ cumulative gross sales,
permitted deductions and resulting Net Sales of the Licensed Products, License
Fees and the Royalty payment due thereon for the applicable fiscal quarter. If
no sales of Licensed Products were made in the quarter by Licensee or its
sublicensees, the report shall so state.

     

    3.02           Advances.

     

    (a)           Annual.  Licensee
shall pay Licensor annual advances (“Annual Advances”) against earned Royalties
in the amount of $25,000.00 each, to be paid on January 1 of each year,
retroactive to January 1, 2000, for a period of five years ending
December 31, 2004 (totaling $125,000.00), or until the first sale of a
Licensed Product, whichever occurs first.

     

    
      
         

      

      
        40

        
          

        

      

      
         

      

    

    Annual
Advances shall be deducted from Royalties earned at any time during the term of
this Agreement (or payable thereafter as provided herein).

     

    (b)           Milestone.  Licensee
shall also pay Licensor advances for each of the following milestones against
future earned Royalties (“Milestone Advances”), within 30 days after the
respective milestone is first reached during the term of this Agreement, in the
following amounts (up to a maximum cumulative amount of $325,000.00): (1)
$25,000.00 upon the first implant by Licensor of a Licensee VNS device in a
patient in the pilot clinical study of VNS as a treatment for obesity (which
milestone the parties acknowledge has been reached as of the date hereof), (2)
$50,000.00 upon completion of a 30-patient pilot clinical study of VNS as a
treatment for obesity, (3) $100,000.00 upon completion of a pivotal or Phase III
clinical study of VNS as a treatment for obesity that would support a Premarket
Approval (PMA) application to FDA and submission of the
results of that study as part of a PMA application submission to the FDA, and
(d) $150,000.00 upon FDA approval of VNS for the treatment of obesity. A
prerequisite for the payment of each Milestone Advance, in addition to actual
achievement of the respective milestone, is that Licensor shall have performed
the implant for milestone (1), and, except in the event of either his death or a
disability that prevents him from doing so, Licensor shall have been an active
advisor and clinical investigator in the achievement of each of milestones (2),
(3) and (4). Milestone Advances shall be deducted from Royalties earned at
any time during the term of this Agreement (or payable thereafter as provided
herein).

     

    (c)           Deductibility.  To
the extent that either or both the Annual Advances and Milestone Advances cannot
be deducted from earned Royalties because of an insufficiency of Net Sales of
Licensed Products, the non-deducted amounts of such advance payments shall not
be refundable by Licensor.

     

    3.03           Audit.

     

    (a)           Licensee
shall maintain books and records according to generally accepted accounting
principles bearing on its sales of the Licensed Products, and shall, on not less
than 30 days’ advance notice of Licensor’s intent to audit, make same
available for inspection and audit on its own premises during Licensee’s regular
business hours. Any such audit(s) shall be performed by a CPA designated and
paid by Licensor(Licensor’s auditor), not more often than annually during the
term of this Agreement, with respect to applicable sales made in the preceding
calendar year.

     

    (b)           Licensee
shall promptly pay any deficiency in Royalties payable to Licensor uncovered by
audit, with interest at an annual rate of 1% over the prime rate, calculated
from the date(s) the underpaid amount(s) should have been paid. If the
deficiency exceeds 10% of the Royalties actually earned for the year under
audit, Licensee shall reimburse Licensor’s cost of the audit. Licensor’s
agreement with its auditor shall require the auditor not to disclose to third
parties Confidential Information of Licensee obtained from the audit, and
Licensee may require Licensor’s auditor to sign a non-disclosure agreement to
that effect prior to allowing the audit.

     

    
      
         

      

      
        41

        
          

        

      

      
         

      

    

    3.04           Change of
Control.  In the event that Licensee undergoes a change in
control (measured as a change in legal or beneficial ownership, or a combination
thereof, by a single entity of more than 50% of Licensee’s capital stock
entitled to vote for the election of directors) from that which existed at the
Effective Date, Licensor shall, upon the occurrence of the change of control, be
within 60 days after the change of control is effected, due in cash the
difference between $450,000.00 and the sum of any Annual Advances or Milestone
Advances that have been made as of the occurrence of the change of control (such
difference being the “Accelerated Change of Control Payment”). Upon payment of
the Accelerated Change of Control Payment, Licensor will no longer be entitled
to any additional Annual Advances or Milestone Advances and a total of $450,000
(including any Royalties that have already been deducted as of the occurrence of
the change of control) will be deducted from Royalties earned at any time during
the term of this Agreement (or payable thereafter as provided
herein).

     

    Article IV.

    Prosecution
and Maintenance of Licensed Patents.

    

    4.01           Prosecution.  Licensee
shall have the right to prosecute or have prosecuted and bear the entire cost of
prosecuting the ‘396 Application, and all other applications among the Licensed
Patents, including any applications for patent or counterpart applications
Licensee may elect to file or have designated and Licensee shall pay all
government fees designated for maintaining the pendency of such applications and
of patents maturing therefrom.

     

    4.02           Notice.  Licensor
shall give Licensee notice of each and every Invention within 30 days after
conception thereof; and shall not make an Invention public without first having
given Licensee both notice thereof and a reasonable opportunity to file a patent
application on the Invention.

     

    Article V.

    Infringement.

     

    5.01           Of Patents of Third Parties
by Licensee or Its Sublicensees.  Licensee and/or its
sublicensees shall defend at their own expense all suits brought against them
for infringement of third party patents by their respective manufacture, use,
sale, or other disposition of Licensed Products. In no event shall Licensee
enter into a settlement containing terms purporting to affect the validity or
scope of a Licensed Patent without obtaining prior written consent of Licensor,
which shall not be withheld unreasonably.

     

    5.02           Of the Licensed Patents by
Third Parties.  During the term of this Agreement, Licensee
shall have the option but not the obligation, at its own expense, to investigate
and prosecute infringements of the Licensed Patents. Licensee shall be entitled
to the entirety of any recovery by way of settlement or award of money damages
based on a claim of infringement of a Licensed Patent (collectively, “Claim”),
provided, however, that any such recovery shall be treated as Net Sales and
subject to Licensor Royalties. If Licensee declines to take action against an
alleged infringer, it shall so notify Licensor who shall then have the right to
prosecute the infringer at its own expense, and in that event, Licensor and
Licensee shall share equally the

     

    
      
         

      

      
        42

        
          

        

      

      
         

      

    

    amount of
the recovery, if any, after deduction of Licensor’s costs, including attorney
fees, incurred for such prosecution.

     

    5.03           Joinder and Cooperation of
Licensee.  Licensee may join Licensor as a party plaintiff in
any suit or counterclaim instituted by Licensee for infringement or in defense
of validity of a Licensed Patent, provided that Licensee shall indemnify and
hold harmless Licensor from and against any damages, losses, awards, costs, and
expenses (including attorney’s fees) accrued as a result of or arising from or
in connection with such joinder. Whether joined or not, Licensor agrees upon
Licensee’s request to provide reasonable assistance and cooperation to Licensee
in advancing a Claim or in defending the validity of a Licensed Patent, subject
only to Licensee’s reimbursement or direct payment of costs incurred by Licensor
for or in connection with such assistance and cooperation.

     

    5.04           Non-refundable Royalties;
Adjustment.  Licensee shall not be entitled to a refund of
Royalties paid to Licensor, but if one or more (but less than all) of the
Licensed Patents is held by final decision of a court of last resort (as the
result of an appeal or a failure to timely prosecute an appeal) to be invalid or
unenforceable, Licensor and Licensee shall promptly negotiate an equitable
downward adjustment of the royalty rate as to the remaining patents which shall
apply to future Net Sales and Exhibit B shall
be modified in writing accordingly.

     

    Article VI.

    Representations
and Warranties.

     

    6.01           By
Licensor.  Licensor represents and warrants to Licensee that,
as of the Effective Date of this Agreement:

     

    (a)           Licensor
owns an undivided interest in the Licensed Patents and has complete power and
authority to enter into this Agreement and to grant the rights and licenses
granted herein to Licensee.

     

    (b)           Licensor
is not aware of any information which is material to the patentability or
validity of the ‘396 application that he not already brought to the attention of
Licensee.

     

    (c)           Licensor
has not entered into any agreement or understanding with any third party that
conflicts with this Agreement or the rights and licenses granted herein to
Licensee.

     

    6.02           By
Licensee.  Licensee represents and warrants to Licensor that,
as of the Effective Date of this Agreement:

     

    (a)           Licensee
has complete power and authority to enter into this Agreement, and to accept and
perform all of its other obligations on the terms and conditions set forth
herein.

     

    (b)           Licensee
does not require any approval from any third party to enter into this
Agreement.

     

    
      
         

      

      
        43

        
          

        

      

      
         

      

    

    (c)           Licensee’s
entry into this Agreement will not conflict with any other agreement or
understanding it has with a third party.

     

    (d)           Licensee
will defend, indemnify and hold harmless Licensor from and against any liability
for manufacture, use, sale, or other activity relating to the Licensed Products
or practice of the Licensed Methods, including without limitation all costs,
fees (including attorney’s fees), awards, damages, fines, and penalties finally
awarded against Licensee or Licensor for any Claim of personal injury, death,
emotional distress, property damage, or any other casualty or risk whatsoever.
Licensor shall promptly notify Licensee of any Claim or communication relating
thereto made to Licensor, shall furnish reasonable assistance and information to
Licensee for defense or settlement of such claim, and shall give Licensee
authority to assume control of the defense or settlement of the Claim including
the right to appoint counsel to implement such defense or
settlement.

     

    6.03           Disclaimers.
Nothing contained in this Agreement shall constitute a representation or
warranty by Licensor that:

     

    (a)           a
patent will issue from any application encompassed within the Licensed Patents
or Improvement Patents; or

     

    (b)           the
Licensed Patents are valid or enforceable; or

     

    (c)           the
manufacture, use, sale, or other activity relating to the Licensed Products or
practice of the Licensed Methods will be free from infringement of third party
patent(s).

     

    Article VII.

    Term
and Termination.

    

    7.01           Term. This Agreement
shall commence on the Effective Date, and shall remain in force until the last
Licensed Patent expires or is held invalid or unenforceable, unless terminated
earlier as provided herein.

     

    7.02           Termination.

     

    (a)           Licensor
or Licensee may terminate this Agreement and the licenses and rights granted to
Licensee herein by notice given to the other at any time after 90 days from
date of notice to the other of a breach which has not been cured prior to the
termination notice; provided, however, if the breach is other than a failure to
pay money and cannot reasonably be cured within 90 days but the party
charged with having committed the breach has taken reasonable steps to effect a
cure within that period and is acting with diligence to complete the cure, then
the notice period for breach shall be extended until the cure is effected, not
to exceed an additional 60 days. The licenses and rights granted herein
shall terminate upon termination of this Agreement.

     

    (b)           Upon
termination of this Agreement, Licensee and its sublicensees shall have the
right to sell or otherwise dispose of its and their then remaining inventory of
the

     

    
      
         

      

      
        44

        
          

        

      

      
         

      

    

    Licensed
Products, subject to compliance with all applicable provisions of
Article III above, including the continued payment of
Royalties.

     

    7.03           Surviving
Provisions.  The provisions of Articles III, V (to the extent
of any then-remaining obligations of the Parties), VI, section 7.02(b), and
sections 8.01, 8.03, 8.05, and 8.06, shall survive expiration or termination of
this Agreement.

     

    Article VIII.

    General.

     

    8.01           Notices.  Any
and all notices or other communications required or permitted to be given under
any of the provisions of this Agreement shall be in writing and shall be deemed
to have been duly given when personally delivered or the earlier of (i) 6
business days after the mailing thereof (postage prepaid, first class mail) and
(ii) the actual receipt thereof if delivered by facsimile transmission or
if mailed by first class registered mail, return receipt requested,
addressed:

     

    
      	 
      	 
      
	
              If
      to Licensor:

            	
              Mitchell
      S. Roslin, M.D.

            
	 
      	
              149
      Beach 144 Street

            
	 
      	
              Far
      Rockaway, NY 11694

            
	 
      	 
      
	
              With
      copy to:

            	
              Matthew
      I. Roslin, Esq.

            
	 
      	
              Executive
      Vice President

            
	 
      	
              MED3000
      Group, Inc.

            
	 
      	
              Foster
      Plaza 10

            
	 
      	
              680
      Andersen Drive

            
	 
      	
              Pittsburgh,
      PA 15220

            
	 
      	
              (Facsimile
      No: 412-937-9221)

            
	 
      	 
      
	
              If
      to Licensee:

            	
              Cyberonics,
      Inc.

            
	 
      	
              16511
      Space Center Boulevard, Suite 600

            
	 
      	
              Houston,
      TX 77058

              Attention:
      Robert P. Cummins

            
	 
      	
              (Facsimile
      No: 281-218-9332)

            
	 
      	 
      
	
              With
      copy to:

            	
              Blank
      Rome Comisky & McCauley LLP

            
	 
      	
              900
      17th Street, N.W., Suite 1000

            
	 
      	
              Washington,
      D.C. 20006

            
	 
      	
              Attention:
      Donald R. Greene, Esq.

            
	 
      	
              (Facsimile
      No: 202-463-6915)

            

    

    

    or to
such changed address as shall have been designated by notice.

    

    8.02           Assignment.  Licensor
shall not assign any rights or delegate any duties under this Agreement. Except
for an assignment to a successor in interest to Licensee’s business to which
this Agreement relates, Licensee shall not assign this Agreement without the
prior written

     

    
      
         

      

      
        45

        
          

        

      

      
         

      

    

    consent
of Licensor, which shall not be unreasonably withheld or delayed. Except as
otherwise provided herein, this Agreement shall be binding on and inure to the
benefit of each Party and their respective heirs, personal representatives,
executors, successors and assigns.

     

    8.03           Confidentiality.  Licensor
shall protect and preserve the confidentiality of all Licensee’s Confidential
Information which Licensor may learn in the course of performance under this
Agreement, and Licensor agrees not to disclose any such Confidential Information
to any third party or use it for his own benefit or the benefit of any third
party without the prior written consent of an authorized officer of
Licensee.

     

    8.04           Cooperation.  Each
Party shall cooperate, and shall take such further action and shall execute and
deliver such further documents as may be reasonably requested by the other Party
in order to carry out the provisions and purposes of this
Agreement.

     

    8.05           Construction and
Law.  This Agreement shall be governed and construed in
accordance with the laws of the State of Texas, U.S.A. applicable to contracts
made and to be performed therein.

     

    Article
and section headings contained in this Agreement are for purposes of convenience
of reference only, and are not intended to define or limit the contents of the
respective Articles or sections or to be otherwise used for construction of the
Agreement.

     

    8.06           Entire
Agreement.  This Agreement embodies the entire understanding of
the Parties respecting the subject matter hereof, and supersedes all prior and
contemporaneous agreements between them respecting that subject matter. This
Agreement may not be modified except by a written agreement specifically
referring to this Agreement and signed by both Parties. No waiver of any breach
or default hereunder shall be considered valid unless given in writing and
signed by the Party giving such waiver, and no waiver shall be deemed a waiver
of any other contemporaneous or subsequent breach or default.

     

    IN
WITNESS WHEREOF, the parties have executed this Agreement or caused it to be
executed by their respective duly authorized representatives, in one or more
counterparts, all of which taken together shall be deemed one original, as of
the Effective Date hereof.

     

    
      	 
      	
              LICENSEE

            
	 
      	 
      
	 
      	
              CYBERONICS,
      INC.

            
	 
      	 
      
	 
      	
              By:
      /s/ Pamela B.
    Westbrook

            
	 
      	
              Pamela
      B. Westbrook. Vice President,

              Finance
      and Administration & CFO

            
	 
      	 
      
	 
      	
              LICENSOR

            
	 
      	 
      
	 
      	
              By:
      /s/ Mitchell S.
  Roslin

            
	 
      	
              Mitchell
      S. Roslin, M.D.

            

    

    

    
      
         

      

      
        46

        
          

        

      

      
         

      

    

    EXHIBIT
A

    LICENSED
PATENTS

     

    
      	
              ·

            	
              U.S.
      Patent Application Serial No. 09/346,396, filed July 1, 1999 in
      the U.S. Patent and Trademark Office
(PTO).

            

    

     

    
      	
              ·

            	
              Patent
      Cooperation Treaty (PCT) Application Serial No. US/00/____ ,
      filed June 30, 2000 in United States Receiving Office, based on U.S.
      Serial No. 09/346,396.

            

    

     

    
      
         

      

      
        47

        
          

        

      

      
         

      

    

    EXHIBIT
B

    ROYALTY
RATE

     

    The
royalty rate payable under Article III of this Agreement shall
be:

     

    1.0 % on
the first US$10 million of Net Sales of the Licensed Products; and 0.5% of
Net Sales of the Licensed Products thereafter.

     

    

     

    
      
         

      

      
        48

        
          

        

      

      
         

      

    

    Attachment
E

    CYBX
Press Release

    

     

    CYBERONICS
LICENSES OBESITY-RELATED PATENTS

     

    HOUSTON,
Texas, [December xx], 2007 – Cyberonics, Inc. (NASDAQ:CYBX) announced that
effective [today] the
company has entered into an agreement with Ethicon Endo-Surgery, Inc., a Johnson
& Johnson company, granting Ethicon Endo-Surgery exclusive rights to the
company’s patents and patent applications pertaining to vagus nerve stimulation
(“VNS”) for the treatment of obesity and two related co-morbidities, diabetes
and hypertension, in overweight patients.

    

    Ethicon
Endo-Surgery has agreed to pay Cyberonics a signing fee of $9.5 million and
royalties on commercial sales of products covered by the subject
patents.

    

    “This
agreement advances our mission to improve the lives of people affected by
chronic neurological disorders,” commented Dan Moore, Cyberonics’ President and
Chief Executive Officer.  “Out-licensing our obesity-related patents
permits us to obtain value from these assets while we continue to focus on our
other strategic objectives – achieving positive cash flow and profitability,
growing our core epilepsy business, and appropriately developing our
treatment-resistant depression business – and provides an opportunity for a
device leader in the obesity space to utilize Cyberonics’ assets in developing
weight reduction solutions.”

    

    More than
46,000 patients worldwide have benefited from VNS Therapy during the past 10
years.

     

    ABOUT
VNS THERAPY AND CYBERONICS

     

     

    Information
on Cyberonics, Inc. and VNS Therapy is available at www.cyberonics.com and
www.VNSTherapy.com.

     

     

    SAFE
HARBOR STATEMENT

     

     

    This
press release contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended and Section 21E of the Securities
Exchange Act of 1934, as amended.  These statements can be identified
by the use of forward-looking terminology, including "may," "believe," "will,"
"expect," "anticipate," "estimate," "plan," "intend," and "forecast," or other
similar words.  Statements contained in this press release are based
upon information presently available to us and assumptions that we believe to be
reasonable.  We are not assuming any duty to update this information
should those facts change or should we no longer believe the assumptions to be
reasonable.  Investors are cautioned that all such statements involve
risks and uncertainties, including without limitation, statements concerning
achieving positive cash flow and profitability, growing our core epilepsy
business, appropriately developing our TRD business, and developing VNS as a
viable therapy for weight reduction. Our actual results may differ
materially.  Important factors that may cause actual results to differ
include, but are not limited to: continued market acceptance of VNS Therapy and
sales of our product; the development and satisfactory completion of clinical
trials and/or market test and/or regulatory approval of VNS Therapy for the
treatment of other indications; satisfactory completion of post-market studies
required by the U.S. Food and Drug Administration as a condition of approval for
the TRD indication; adverse changes in coverage or reimbursement amounts by
third parties; intellectual property protection and potential infringement
claims; maintaining compliance with government regulations and obtaining
necessary government approvals for new indications; product liability claims and
potential litigation; reliance on single suppliers and manufacturers for certain
components; the accuracy of management's estimates of future expenses and sales;
the results of the previously disclosed governmental inquiries; the potential
identification of new material weaknesses in our internal controls over
financial reporting; risks and costs associated with such governmental inquiries
and any litigation relating thereto or to our stock option grants, procedures,
and practices (including the previously disclosed private litigation);
uncertainties associated with stockholder litigation; and other risks detailed
from time to time in our filings with the Securities and Exchange Commission
(SEC).  For a detailed discussion of these and other cautionary
statements, please refer to our most recent filings with the SEC, including our
Annual Report on Form 10-K for the fiscal year ended April 27,
2007.

     

    
      
         

      

      
        49

        
          

        

      

      
         

      

    

    Attachment
F

    Zabara
Agreement

    
      
         

      

      
        50

        
          

        

      

      
         

      

    

    LICENSE AGREEMENT

     

    This
License Agreement (“Agreement”) is entered into as of March 15, 1988 by and
between CYBERONICS, INC., a Delaware corporation, having a principal place of
business at 827 W. Main Street, League City, TX 77573 (“Licensee”), and DR.
JACOB ZABARA, an individual residing at 200 Locust Street, #22F, Philadelphia,
PA 19106 (“Licensor”).

     

    WHEREAS,
Licensor owns a patent relating to Neurocyberenetic Prosthesis Technology (U.S.
Patent No. 4,702,254) and other pending patent applications and know-how,
and technology relating thereto (collectively referred to as the “Technology”);
and,

     

    WHEREAS,
Licensee wishes to obtain all exclusive license under the Licensed Patents as
hereinafter defined and under the Technology generally to further test and
develop the Technology and to manufacture and market products based on such
Technology upon the terms and conditions hereinafter set forth;

     

    NOW,
THEREFORE, in consideration of the promises and of the mutual covenants
hereinafter contained, the parties agree as follows:

     

    
      	
               
      

            	
              1.

            	
              Definitions.

            

    

     

    (a)           The
term “Licensed Patents,” as used in this Agreement, shall mean and include both
individually and collectively the United States and foreign patents and patent
applications listed in Schedule A attached to this Agreement, such
additional United States and foreign patent applications acquired by Licensor on
improvements and variations upon inventions disclosed in said listed
applications or other inventions “in the field of nerve stimulation, and such
additional patent applications as may be filed by Licensor pursuant to
Section 7 of this Agreement, all Letters Patent which shall issue on said
applications and any division thereof, and all reissues, continuations, or
extensions of said Letters Patent.

     

    (b)           The
term “Product,” as used in this Agreement, shall mean a product or portion of a
product that (i) embodies a device invention claimed in a Licensed Patent
(or which had been “claimed” in a Licensed Patent which has been declared
invalid), or (ii) which is specifically intended to be used to practice a
method claimed in a Licensed Patent (or which had been “claimed” in a Licensed
Patent which has been declared invalid) and which is manufactured and sold by or
for Licensee (or its sublicensees); provided that at the time and in the
territory of manufacture or sale of such Product a Licensed Patent is pending or
in force claiming such device or method (or such device or method had been
“claimed” in a Licensed Patent previously valid in the territory of manufacture
or sale but which has been declared invalid).

     

    2.Licensor’s Representations
& Warranties. Licensor represents and warrants that:

     

    (a)           He
owns the Licensed Patents and has the legal power and authority to extend the
rights granted to Licensee pursuant to this Agreement and he has not assigned,
licensed, pledged or compromised the Licensed Patents or made any commitments or
offers inconsistent with or in derogation of the rights created by this
Agreement.

     

    
      
         

      

      
        51

        
          

        

      

      
         

      

    

    (b)           Neither
the Licensed Patents nor any claims contained therein have been declared invalid
or unenforceable and to the best of Licensor’s knowledge there are no patent
infringement suits or asserted patent infringement claims pertaining to the
Licensed Patents and there are no suits or claims attacking the validity of any
Licensed Patent, and Licensor knows of no basis for any such claim.

     

    (c)           Licensor
has no knowledge of any information likely to have a material effect on the
validity or enforceability of any Licensed Patent or any claim thereof which was
not disclosed to the Patent Office of the respective countries in which Patent
Applications were filed during the prosecution of the application from which any
Licensed Patent matured or, with respect to pending applications, from which any
Licensed Patent may mature.

     

    
      	
               
      

            	
              3.License.

            

    

     

    (a)           Licensor
hereby grants to Licensee, and Licensee hereby accepts from Licensor, upon the
terms and conditions herein after specified, the exclusive, worldwide right and
license under the Licensed Patents and Technology to further test and develop
the Technology, to make, to have made, to use, to sell, to lease, to implant,
and to have implanted and otherwise dispose of Products and to sublicense the
rights created hereby pursuant to the terms of Section 5 hereof. Such
license shall be perpetual unless this Agreement is terminated pursuant to
Section 3.0 hereof.

     

    (b)           Any
person, firm, or corporation purchasing Products from Licensee or any
Sublicensee hereunder, and its successors and assigns, shall automatically enjoy
a royalty-free right under the Licensed Patents to implant and/or have implanted
and to use the particular Product, and to manufacture, purchase, implant, and
use any auxiliary products which may be necessary or desirable to provide a
complete implant.

     

    
      	
               
      

            	
              4.Royalties, Records and
      Reports.

            

    

     

    (a)           Licensee
agrees to pay to Licensor, in consideration for the license granted pursuant to
this Agreement, royalties on the Net Sales Value (as hereinafter defined) of all
Products sold during the term of this Agreement at the rate of six percent
(6.0%) on the first $12,000,000 of Net Sales Value and three percent (3.0%) on
all Net Sales Value after said $12,000,000, cumulative and not annual, for the
life of U.S. Patent No, 4,702,254, including any extensions, renewals,
continuations, divisions, or continuations-in-part thereof. Upon expiration of
the last to expire of U.S. Patent No. 4,702,254 (including any extensions
or renewals thereof) or any continuation, division or continuation-in-part
thereof, the royalty rate payable pursuant to this Section 4(a) shall be reduced
to two percent (2.0%) on the first $12,00.0,000 of Net Sales Value and one
percent (1.0%) on all Net Sales Value after said $12,000,000, cumulative and not
annual. It is understood and agreed that Licensee shall have no obligation to
make any payment to Licensor under this Section 4(a) or Section 4(d) from and
after the date on which all of the Licensed Patents (including any extensions or
renewals thereof) have expired or have been declared invalid by any judicial
decree, order or final judgment beyond right of further appeal, except royalties
at the percentile rate specified in this Section 4(a) or Section 4(b), as
the case may be, on the Net Sales Value of Products sold under the license
created by Section 3 of this

     

    
      
         

      

      
        52

        
          

        

      

      
         

      

    

    Agreement
prior to such date, and upon such date the license granted by Section 3
hereof shall be fully paid.

     

    (b)           If
U.S. Patent No. 4,702,254 and all continuations, divisions, and
continuations-in-part thereof are held invalid by any judicial decree, order or
final judgment beyond further right i of appeal, the-percentile rate at which
royalties shall be payable to Licensor pursuant to Section 4(a) shall be
retroactively reduced to two percent (2.0%) on the first $12,000,000 of Net
Sales Value and one percent (1.0%) on all Net Sales Value after said $12,000,000
with respect to Products sold after the filing of a claim in a court of
competent jurisdiction which claim results in the invalidation of U.S. Patent
No. 4,702,254 and all continuations, divisions and continuations-in-part
thereof (the “Claim”).

     

    (c)           In
the event of U.S. Patent No. 4,702,254 .and all continuations, divisions
and continuations-in-part thereof being declared invalid, and notwithstanding
anything to the contrary contained herein, no further royalty payments shall be
made to Licensor until such time as the aggregate royalties payable on products
sold after filing of the Claim at the percentile rate specified in Section 4(b)
are equal to the actual aggregate royalties already paid to Licensor on products
sold after filing of the claim, at which time royalty payments as provided in
this Section 4 shall resume. The right created by this Section 4(c) shall be a
right to recover excess royalties paid during the pendency of the claim from
future royalties payable to Licensor hereunder only; Licensee shall have no
right, claim or cause of action against Licensee to recover such excess
royalties from Licensor.

     

    (d)           Licensor
agrees to pay Licensee a minimum royalty of $36,000 per year ($12,000 per year
if the events specified in Section 4(b) occur), payable on a monthly basis until
a Product is first sold and on a quarterly basis thereafter. Payments made
pursuant to this Section 4(d) shall be paid at the beginning of the month or
quarter, as the case may be, and shall be deducted from any royalties payable
pursuant to Section 4(a) and shall not constitute an additional royalty
obligation of Licensee.

     

    (e)           The
term “Net Sales Value,” as used in this Section 4, shall mean the full
amount actually received by Licensee or its sublicensees (exclusive of sales by
Licensee to its sublicensees) for Products sold by Licensee or its sublicensees
to customers less the sum of the following, where applicable:

     

    (i)           Discounts
allowed, commissions paid in lieu of trade discounts, and commissions paid to
independent sales representatives or agents, in the amounts customary in the
trade;

     

    (ii)           Sales
and/or use taxes (or other taxes equivalent thereto), duties or any other taxes
or levies directly imposed by any governmental authority upon and with reference
to particular sales;

     

    (iii)           Outbound
transportation costs prepaid or allowed by way of freight equalization or
otherwise;

     

    (iv)           Cartons,
packing, and crating charged separately ;

     

    
      
         

      

      
        53

        
          

        

      

      
         

      

    

    (v)           Amounts
refunded, allowed, or credited in connection with shortages, returns, or
defective, articles;

     

    (f)           Where
proceeds from the sale of Products are received in currency other than United
States Dollars, the Net Sales Value of such foreign sales shall be the U.S.
Dollar equivalent of such proceeds determined by multiplying the foreign
currency actually received by the applicable exchange rate in effect on the last
day in the quarter in which such proceeds were received, as published in the
Wall Street Journal for such date.

     

    (g)           Only
one royalty shall be payable on a Product at the applicable percentile rate
specified in Section 4(a) or 4(b), as the case may be, regardless of the number
of Licensed Patents or use of Technology under which such Product has been
manufactured, used or sold. In those cases where a Product is sold as a part of
an article which includes additional materials or components, the production of
which does not use the inventions of the Licensed Patents, the Net Sales Value
shall be based on the sales price at which Licensee would sell the Product
independently of such other materials or components in an arm’s length
transaction.

     

    (h)           Licensee
agrees to keep full, true, and accurate records and books of account containing
all particulars which may be necessary to show the royalties payable to
Licensor. Such books of account shall be kept at Licensee’s principal place of
business and shall be available, upon thirty (30) days notice, for
inspection during business hours, by independent auditors reasonably acceptable
to Licensee appointed and paid by Licensor provided, however, that if upon audit
it is determined that Licensor is entitled, to., receive an additional royalty
amount in excess of five percent (5%) over the amount previously paid during the
period subject to “audit, then Licensee shall pay the reasonable fees and
expenses of such independent auditors. Such records shall be retained by
Licensee for a period of six (6) years following the end of the calendar
year to which they pertain; provided, however, that Licensor’s right to inspect
such records pursuant to this Section 4(h) shall be limited to the right to
inspect records pertaining to the two-year period ending on the close of the
calendar quarter immediately preceding such inspection. Only one such inspection
shall be made in any calendar year. The auditors shall disclose to Licensor only
the gross sales value of Products sold, the deductions therefrom, the Net Sales
Value thereof, and the amount of royalties due and payable to Licensor thereon,
along with any necessary supporting evidence. Any information obtained by the
auditors from any such inspection shall be kept confidential by Licensor and the
auditors and shall be used only for the purpose of determining the correctness
of the statements of Net Sales value and royalties due and payable to Licensor.
The auditors shall be employed expressly upon such terms and
conditions.

     

    (i)           Licensee
agrees that on or before the 60th day after the close of each of its quarterly
accounting periods throughout the term of this Agreement, Licensee shall forward
to Licensor a statement, certified by an Officer of Licensee, of the receipts
for Products sold by Licensee for which payment is received during the
accounting period preceding the period in which each such statement is rendered,
the aggregate in each category of deductions which have been made therefrom
pursuant to the provisions of section 4(e) above, and the royalties payable
thereon. Licensee shall concurrently forward to Licensor a Statement of the
receipts for Products sold by sublicensees for which Licensee received royalty
or other licensing fees from such sublicensees during the accounting period
preceding the period in which each such statement is rendered, the aggregate in
each category of deductions which have been made therefrom

     

    
      
         

      

      
        54

        
          

        

      

      
         

      

    

    pursuant
to Section 4(e) above, and the royalties payable thereon. Licensee shall
simultaneously pay to Licensor the amount of royalties due.

     

    (j)           The
parties agree that any subsequent downward adjustments of Licensee’s and its
sublicensees’ receipts from any particular sale of Products upon which royalties
have been paid, due to Product failure or inadequacy, cancellation of purchase
orders or contracts, or any other event causing Licensee to make a financial
refund to its customers, either in whole or in part, will be credited against
any future receipts on which royalties become payable.

     

    
      	
               
      

            	
              5.

            	
              Sublicensing.

            

    

     

    (a)           Licensee
shall have the exclusive right under the Licensed Patents to grant sublicenses
to others provided, however, that with respect to Products sold by any such
sublicensee, Licensee shall pay to Licensor royalties equal to the royalties
that would have been payable with respect to such Product sales had such sales
been made by Licensee. The Net Sales Value of sales made by any sublicensees
shall be aggregated with the Net Sales Value of Sales made by Licensee for
determination of the applicable royalty rate payable pursuant to Section 4(a) or
4(b), as the case may be.

     

    (b)           Licensee
shall consult with Licensor regarding any prospective sublicensees.
Notwithstanding the foregoing, the granting by Licensee of sublicenses under the
Licensed Patents shall be in the sole discretion of Licensee, and Licensee shall
have the sole power to determine whether or not to grant sublicenses, to whom
such sublicensees shall be granted and the royalty rates and terms and
conditions of such sublicenses.

     

    
      	
               
      

            	
              6.

            	
              Assignment.

            

    

     

    (a)           This
Agreement and the licenses and rights hereunder are not assignable by either
party without the prior written consent of the other party, which consent will
not be unreasonably withheld; provided, however, that without obtaining
Licensor’s consent, Licensee may assign its rights and obligations hereunder to
a successor in interest who acquires substantially all of the business of
Licensee whether by sale of substantially all of the assets, sale of stock,
merger or other form or corporate reorganization.

     

    (b)           This
Agreement shall inure to the benefit of and be binding upon Licensor and
Licensee, and their respective successors and assigns.

     

    
      	
               
      

            	
              7.

            	
              Future Filings; Patent
      Expenses.

            

    

     

    (a)           In
the event that Licensee should wish Licensor to file any patent applications
corresponding to any of the Licensed patents in specific countries other than
those enumerated in Schedule A or file any patent applications on
improvements and variations upon inventions disclosed in the Licensed Patents or
other inventions in the field of nerve stimulation, it shall advise Licensor in
writing, naming such countries or improvements, variations or inventions, as the
case may be. Licensor shall thereupon file patent applications as requested. All
such patent applications and patents shall be filed in the name of and, be the
property of Licensor and shall be included in the Licensed Patents. Licensee
shall pay the reasonable expenses,

     

    
      
         

      

      
        55

        
          

        

      

      
         

      

    

    including
reasonable fees for patent counsel, for filing, prosecuting, and paying
annuities or applicable maintenance fees on such requested patent applications,
on any patent applications relating to the Technology pending as of the date
thereof and shall pay the issuance fee of and any applicable maintenance fee on
any patent issued thereon. In the event Licensee elects to discontinue pursuing
any patent application or applications (whether or not such applications have
been prepared or filed) it shall so notify Licensor in writing and Licensor
shall discontinue pursuing such application or applications (or may pursue such
application or applications at its own expense); provided, however, that
Licensee shall pay the reasonable expenses, including reasonable fees for patent
counsel, incurred prior to Licensee notifying Licensor of its election not to
pursue an application or applications. Licensor further agrees that he will not
file any patent applications relating to the Licensed Patents, the Technology or
the field of nerve stimulation without the consent of Licensee; provided,
however, that if such consent is withheld, Licensor may file such application
but shall bear all expenses associated with such filing or any patent issuing
thereon.

     

    (b)           In
the event that Licensee notifies Licensor that Licensee would like Licensor to
file any patent applications pursuant to Section 7(a) and Licensor fails to take
reasonable steps within a reasonable amount of time to prepare and file such
application or applications, Licensee reserves the right hereunder to retain its
own patent counsel to prepare and prosecute any such patent applications, and
Licensor hereby agrees to assist and cooperate with Licensee’s patent counsel in
the preparation and prosecution of such patent applications; provided, however,
that notwithstanding Licensee’s retention of patent counsel, Licensee shall pay
the reasonable fees of Licensor’s patent counsel actually incurred in connection
with reviewing any patent applications prepared by Licensee’s patent
counsel.

     

    
      	
               
      

            	
              8.Covenants.

            

    

     

    (a)           Licensor
shall promptly furnish Licensee with copies of all applications for Letters
Patent licensed hereunder and shall keep Licensee promptly informed as to their
prosecution, sending Licensee copies of Patent Office actions and amendments to
such applications.

     

    (b)           Licensor
covenants that for the term of this Agreement he will use his best efforts to
renew and maintain all Licensed Patents (at Licensee’s expense as provided in
Section 7 hereof).

     

    (c)           Licensor
covenants that for the term of this Agreement he will not assign, license,
pledge or compromise the Licensed Patents nor make any commitments or offers
inconsistent with or in derogation of the rights created by this
Agreement.

     

    (d)           Licensee
covenants that for the term of this Agreement it will use its best efforts to
develop and market a Product or Products.

     

    9.Term.  This Agreement
shall expire at the earlier of (i) the end of the full term of each Letters
Patent included in the Licensed Patents or (ii) at such time as all of the
Licensed Patents shall have been declared invalid by any judicial decree, order
or final judgment beyond

     

    
      
         

      

      
        56

        
          

        

      

      
         

      

    

    further
right of appeal; provided, however, that the license created hereby shall
survive expiration of this Agreement as provided in Section 3(a) hereof. 

     

    10.Termination.

     

    (a)           This
Agreement may be terminated by Licensee as follows:

     

    (i)           For
the first three (3) years of this Agreement, Licensee may terminate this
Agreement without cause on the first, second or third anniversary of execution
hereof by Licensee provided Licensee gives written notice to Licensor of its
intention to terminate no later than sixty (60) days before such
anniversary.

     

    (ii)           If
this Agreement is not terminated within the first three years as set forth
above, this Agreement shall run for successive three-year periods starting from
the third anniversary of execution thereof by Licensee and may not be terminated
by Licensee without cause during such three-year periods but may be terminated
without cause by Licensee at the end of each such three-year period provided
Licensee gives notice of its intention to terminate no later than sixty
(60) days before the expiration of such three-year period;

     

    (iii)           In
addition to the foregoing, this Agreement may be terminated by Licensee in the
event that Licensor shall have materially breached any provision hereof,
provided that Licensee shall first give written notice of its intention to
terminate which notice shall state the grounds thereof and provided further that
Licensor shall have sixty (60) days to cure any alleged
breach.

     

    (b)           This
Agreement may be terminated by Licensor for cause only and provided that
Licensor shall first give written notice of his intention to terminate which
notice shall state the grounds thereof. Licensee shall have sixty (60) days
from receipt of any such notice to cure any alleged breach. Subject to the
provisions of Section 11 hereof, “Cause” for purposes of this Section 10(b)
shall be defined as:

     

    (i)           Failure
of Licensee to make royalty payments as provided in Section 4
hereof;

     

    (ii)           Failure
to begin feasibility clinical studies of the Technology (such as would be
permitted under the “Custom Devise” exemption of the United States Food and Drug
Administration (“FDA”)) within one (1) year of the date hereof if
stimulators developed and purchased from an independent producer are used or two
(2) years from the date hereof if a stimulator developed by Licensee is
used;

     

    (iii)           Failure
to begin formal clinical studies of the Technology (such as would be permitted
under the Investigational Device Exemption of the FDA) within three (3) years
from the date hereof;

     

    (iv)           Failure
to file a Pre-Market Approval Application with the FDA within six (6) years
from the date hereof.

     

    
      
         

      

      
        57

        
          

        

      

      
         

      

    

    (c)           Upon
termination of this Agreement pursuant to this Section 10, all licenses,
rights, and obligations hereunder shall cease and terminate and Licensee shall
immediately cease manufacturing and selling Products; provided, however, that
the licenses and rights granted under Section 3 hereof shall continue as to
all Products previously manufactured during the term of this Agreement, or
actually in manufacture upon the date of termination, for the full terms of the
Letters Patent under which such Product is manufactured, provided that royalties
are paid with respect to such Products pursuant to Section 4
hereof.

     

    11.Force
Majeure.  The time by which, the conditions subsequent
specified in Sections 10(b)(ii) — (iv) must be satisfied shall be extended
for a period of time equal to the period of any delay resulting from delays or
difficulties arising in connection with the clinical studies and/or obtaining
requisite regulatory approval provided such delays or difficulties are due to
events beyond the control of Licensee. 

     

    12.Marketing
Requirements.  Licensee shall
provide with all Products such notice or notices of the Licensed Patents
reasonably contemplated to comply with the laws of the countries under which
such Letters Patent have issued. 

     

    13.Technical
Assistance.  Licensor shall
assist, consult, and cooperate with Licensee in the development, design,
engineering, manufacturing/testing and inspection of the Products. Licensor
shall provide such assistance to Licensee at such times and for such duration as
Licensee shall reasonably request, provided such assistance does not interfere
with Licensor’s responsibilities as a faculty member of Temple University. For
two (2) years from the date of this Agreement, such assistance shall be
provided to Licensee without compensation (other than reimbursement of
out-of-pocket expenses reasonably incurred in connection with providing such
assistance). Following such initial two-year period, Licensor shall continue to
provide such assistance as Licensee may reasonably request and shall be
compensated therefor as provided in the separate consulting agreement executed
concurrently herewith. 

     

    14.Patent
Enforcement.  Licensee may
bring any action for infringement of the Licensed Patents either in Licensor’s
name alone or jointly with Licensor and Licensor agrees to assist Licensee in
any such action upon Licensee’s request. Any such action brought by Licensee
shall be solely at Licensee’s expense, and any amounts recovered thereby shall
be divided between Licensee and Licensor as follows: 

     

    (a)           Licensee
shall first recoup all expenses and legal fees expended in such
action,

     

    (b)           The
amount recovered, net of Licensee’s expenses and fees as provided in
Section 14(a), shall be divided eighty percent (80%) to Licensee and twenty
percent (20%) to Licensor.

     

    15.Public
Statements.

     

    (a)           Licensor
agrees not to publish or caused to be published any article, study, analysis, or
other writing concerning the Technology or stimulation of the vagus nerve for
the treatment of epilepsy and not to deliver or permit others to deliver any
oral presentation prepared by Licensor containing information concerning the
Technology or stimulation of the vagus nerve

     

    
      
         

      

      
        58

        
          

        

      

      
         

      

    

    for the
treatment of epilepsy (such writings and presentations being referred to as
“Public Statements”) prior to the earlier of (i) three years from the date
hereof, or (ii) the clinical investigators publishing or presenting the
results of the clinical studies of the Technology conducted on the initial is
patients. After such publication by the clinical investigators or three years,
whichever is earlier, Licensor shall not, for the term of this Agreement, make
any Public Statement without first obtaining the written consent of Licensee,
which consent shall not be unreasonably withheld. The restrictions on Licensor’s
right to make Public statements created by this Section 15(a) shall, terminate
immediately in the event that all of the clinical investigators withdraw from
the clinical study.

     

    (b)           Licensee
agrees that Licensor may have access to technical data generated in connection
with scientific studies concerning the Technology conducted by or on behalf of
Licensor and, subject to Section 15(a), may use such data in writings or
oral presentations concerning the Technology. Licensee further agrees that
Licensor will be named as a co-author in any article, study, analysis or other
writing concerning the Technology if Licensor actively participated in the
underlying research. Licensee further agrees that Licensor shall have the right
to review any article, study, analysis or other writing prepared by or on behalf
of Licensee prior to publication; provided, however, that Licensee reserves the
right to publish or present any such article, study, analysis or writing
notwithstanding Licensor’s objections thereto.

     

    16.General.

     

    (a)           Modification. This
Agreement may be modified only by a writing signed by each party.

     

    (b)           Nonwaiver. The
failure of any party to enforce at any time any of the provisions hereof shall
not be construed to be a waiver of the right of such party thereafter to enforce
any such provision.

     

    (c)           Notices. Notices
under this Agreement shall be sufficient only if mailed by certified or
registered United States mail, return receipt requested, or personally delivered
to the parties at their addresses first set forth above or as amended by notice
pursuant to this subsection. Notice by mail shall be deemed received three
(3) days after deposit.

     

    (d)           Entire Agreement.
This Agreement terminates the letter of intent between Licensor, Reese Terry,
Cyberonics, Inc., a Texas corporation (“Cyberonics Texas”), as amended and
assigned from Cyberonics Texas to Licensee, and supersedes all proposals, oral
or written, all negotiations, conversations or discussions between or among the
parties relating to this Agreement and all past course of dealing or industry
custom. The terms and conditions of this Agreement shall prevail,
notwithstanding any variance with the written instrument, submitted by any
party.

     

    (e)           Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be an
original and all of which together shall constitute one and the same
instrument.

     

    
      
         

      

      
        59

        
          

        

      

      
         

      

    

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

     

    

    
      	 
      
	
              LICENSOR:
      DR. JACOB ZABARA

            
	 
      
	
              /s/
      Jacob Zabara

            
	
                

            
	 
      
	
              LICENSEE:
      CYBERONICS, INC.

              a
      Delaware corporation

            
	 
      
	
              /s/
      Reese S. Terry, Jr.

            
	
                

            

    

    

    
      
         

      

      
        60

        
          

        

      

      
         

      

    

    SCHEDULE
A

    UPDATED
ATTACHMENT TO

    JACOB ZABARA LICENSE
AGREEMENT

    December 31,
1991

    
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	
              Date

            
	
              4,702,254

            	 
      	
              US

            	 
      	
              NeuroCybernetic
      Prosthesis

            	 
      	
              Oct.
      27, 1987

            
	
              4,867,164

            	 
      	
              US

            	 
      	
              NeuroCybernetic
      Prosthesis

            	 
      	
              Sept.
      19, 1989

            
	
              5,0258,807

            	 
      	
              US

            	 
      	
              NeuroCybernetic
      Prosthesis

            	 
      	
              June 25,
      1991

            
	
              577,549

            	 
      	
              Australia

            	 
      	
              NeuroCybernetic
      Prosthesis

            	 
      	
              March 3,
      1989

            
	
              1,259,379

            	 
      	
              Canada

            	 
      	
              NeuroCybernetic
      Prosthesis

            	 
      	
              September 12,
      1989

            
	
              0,156,854

            	 
      	
              Eurpoean

            	 
      	
              NeuroCybernetic
      Prosthesis

            	 
      	
              September 5,
      1990

            
	 
      	 
      	
              Austria,
      Belgium, Switzerland, Germany, France, United

            
	 
      	 
      	
              Kingdom,
      Liechtenstein, Luxembourg, Netherlands, Sweden

            
	
              503,504/84

            	 
      	
              Japan

            	 
      	
              Application
      Number

            	 
      	
              September 11,
      1984

            

    

    

    

    
      
         

      

      
        61

        
          

        

      

      
         

      

    

    Attachment
G

    

    Licensed
Know-How

    

    None

    

    
      
         

      

      
        62

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