Document:

exv10w20

 

EXHIBIT 10.20

DISTRIBUTOR AGREEMENT

This Distributor Agreement is made, effective as of the 24th day of January 2006 (the
“Effective Date”), by and among Medtronic USA, Inc. (“Medtronic”) and VNUS Medical Technologies,
Inc. (“VNUS”).

RECITALS

     a)    Medtronic. Medtronic is a Minnesota corporation with its principal place of business at
710 Medtronic Parkway, Minneapolis, MN 55432-5604. Medtronic is a leading manufacturer of medical
technologies including products, therapies and services used to treat conditions such as heart
disease, neurological disorders, and vascular illnesses. The maintenance of Medtronic’s reputation
as the industry leader in performance and quality is a material element of this Agreement.

     b)    VNUS. VNUS is a Delaware corporation, with its principal place of business at 2200 Zanker
Road, Suite F, San Jose, CA 95131. VNUS is in the business of manufacturing and selling products
for minimally invasive treatment of venous disease. VNUS has an existing marketing and sales force
which can economically and effectively address the Market Segment (as defined below).

NOW, THEREFORE, the parties agree as follows:

I. DEFINITIONS

Whenever the following terms appear capitalized in this Agreement they shall have the indicated
meanings.

1.1    Market Segment and Territory. The terms “Market Segment” and “Territory” shall have the
meanings described on Schedule 1.1, attached hereto and may be revised from time to time as
mutually agreed in writing by Medtronic and VNUS.

1.2    Product(s). The terms “Product” or “Products” shall mean those Products described in Schedule
1.2 as amended from time to time (the “Products”).

1.3    User Warranty. The term “User Warranty” shall mean the written Medtronic warranty or
disclaimer of warranty which accompanies the Product when sold to a customer as such warranty is
established or revised by Medtronic from time to time, including all restrictions and limitations
on damages and remedies.

1.4    Customer. The term “Customer” shall mean any potential or existing customer of Product in the
Market Segment in the Territory except those existing Medtronic accounts that decline to be
converted to VNUS accounts pursuant to Sections 2.5 and 2.6.

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II. APPOINTMENT OF DISTRIBUTOR

2.1    Appointment of VNUS as Distributor. Subject to the terms and conditions of this Agreement,
Medtronic hereby appoints VNUS, and VNUS accepts such appointment, as Medtronic’s authorized
exclusive distributor with the exclusive right (even as to Medtronic but subject to Sections 2.5
and 2.6 below) to promote, market, sell, and distribute Products in the Market Segment in the
Territory. The parties acknowledge and agree that VNUS shall not sublicense any of its rights or
obligations to distribute Products in the Territory.

2.2    Term. Subject to the termination provisions in Article 9, VNUS’ appointment shall be effective
as of the Effective Date and shall continue for an initial term of five (5) years (the “Initial
Term”). This Agreement will automatically renew for two (2) additional twelve (12) month terms
(“Renewal Terms”) unless either party has given the other party written notice at least one hundred
twenty (120) days prior to the end of either the Initial Term or the first Renewal Term that it
intends to not renew the Agreement; provided, however, Medtronic may only give notice of
non-renewal if VNUS fails to satisfy its Minimum Annual Quota pursuant to Section 3.15. As used in
this Agreement, the Initial Term and any Renewal Term shall collectively be referred to as the
“Term”.

2.3    Products. If Medtronic decides to cease manufacture and sale of any particular Product,
Medtronic may delete such Product from Schedule 1.2, provided (i) Medtronic provides VNUS
with at least ninety (90) days prior written notice of such proposed removal of a particular
Product from Schedule 1.2, and (ii) such Product does not represent ten percent (10%) or more of
VNUS’ averaged unit sales during the six consecutive months immediately preceding Medtronic’s
written notice to VNUS of such proposed removal. Notwithstanding the removal of a particular
Product from Schedule 1.2, VNUS shall have the right to continue selling its existing inventory of
any such removed Product. At any time Medtronic may offer to add new products to those authorized
for promotion and distribution by VNUS, and VNUS may elect whether or not to accept such new
product (in which instance Schedule 1.2 shall be amended to add such new Product). Without
limiting the foregoing, Medtronic shall promptly notify VNUS of any new U-CLIP technology-related
products that are in development (or that otherwise become available to Medtronic) and are
applicable for use in the Market Segment and Territory, and in accordance with the foregoing
provision, VNUS may elect whether or not to accept such new product (in which instance Schedule 1.2
shall be amended to add such new Product). If VNUS elects not to accept such Product, Medtronic
may, in its sole discretion, market such Product or seek and retain other distributors for such
Product.

2.4    Direct Sales to New Customers. If Medtronic receives orders or requests for Products from New
Customers, Medtronic will refer such Customers to VNUS for the sale. Sales by VNUS to Customers
using Products in the Territory but outside the Market Segment (such as cardiac, bariatric and
other non-vascular applications) will not be included in the total sales by VNUS for purposes of
determining whether VNUS has met the Minimum Annual Quota pursuant to Section 3.15 for the period
in which the sale is made.

2.5    Medtronic Limited Right to Sell in Market Segment. Notwithstanding VNUS’ appointment as the
exclusive distributor of Product, Medtronic may sell Products in the Market Segment in the
Territory if such Products are sold as part of a kit or other combination with another Medtronic
product for use in a procedure in which the other Medtronic product is used. Medtronic may also
sell Products in the Market Segment in the Territory solely to those existing Medtronic accounts
that decline to be

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converted to VNUS accounts pursuant to Section 2.6. Except for Medtronic’s limited foregoing right, Medtronic shall not sell in the Market Segment in
the Territory any Products, either alone or in combination, that are used in arterial-venous access
grafts (AVG), arterial-venous access fistulas (AVF), and peripheral bypass procedures.

2.6    Existing Medtronic Accounts. Medtronic shall, upon execution of this Agreement, provide to VNUS
in writing a list of existing Medtronic accounts for Products that are within the VNUS Market
Segment and Territory as defined in Schedule 1.1. It is understood and agreed by the Parties that
VNUS shall affirmatively contact these accounts and offer to convert them to VNUS accounts.

III. DISTRIBUTOR’S RESPONSIBILITIES

     Subject to the other terms and conditions of this Agreement, VNUS shall perform the following
responsibilities:

3.1    Promote and Sell. VNUS shall use commercially reasonable efforts to promote, sell and support
the Products in the Market Segment in the Territory. Without limiting the generality or extent of
the foregoing, VNUS and anyone acting on its behalf shall not knowingly make any false or
misleading statements with regard to the Products of Medtronic or any of its competitors. All
representations and claims that VNUS or any of its representatives makes with respect to the
Products shall be fully consistent with all Medtronic labeling and shall conform to any
commercially reasonable policies or guidelines that Medtronic may from time to time reasonably
establish for its Products and inform VNUS in writing thereof.

3.2    Clinical Trials. Upon obtaining prior written approval from Medtronic, not to be unreasonably
withheld or delayed, VNUS may conduct and participate in the design, implementation, analysis and
publication of all studies and clinical trials associated with the Product(s) in the Market Segment
in the Territory.

3.3    Facility and Staff. VNUS shall maintain a place of business sufficient to carry out its duties
hereunder in a manner consistent with the standards commonly required of a company that sells
medical devices of commercial potential similar to the Products. VNUS shall also maintain a
trained sales staff that is (i) capable of promoting and selling the Products in a manner
consistent with all applicable laws and regulations, (ii) trained on the use and function of the
Products, and (iii) skilled and experienced in selling medical devices to the medical practice
areas in which the Products are used within the Market Segments and the Territory. To assure that
VNUS possesses thorough knowledge on the safe and effective use of the Products, VNUS shall
participate in Product training courses as reasonably requested by it or by Medtronic pursuant to
Section 4.4 below.

3.4    Inventory. VNUS shall maintain an inventory of Products reasonably necessary to fill its
forecasted sales under this Agreement. To assure the effectiveness and quality of the Products,
Medtronic may establish, and inform VNUS in writing of, reasonable policies or guidelines with
regard to the rotation, storage, or shelf life of Products. VNUS shall use commercially reasonable
efforts to comply with all such policies or guidelines and shall properly dispose of any Products
(consistently with all applicable laws and regulations concerning waste and the environment) which
are not useable as a result of the application of such policies or guidelines. Such policies may
include a requirement for minimum

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remaining shelf life at the time such Product is delivered to a
Customer. In no event shall Medtronic be responsible to accept return of or reimburse VNUS as a
result of any Product which becomes unusable due to the expiration of such minimum
shelf life; provided, however, the foregoing limitation shall not apply to any Product that has a shelf
life less than six (6) months when received by VNUS from Medtronic. All returned Products shall be
dealt with pursuant to Medtronic’s Returned Inventory Policy which is attached hereto as Schedule
3.4, as amended from time to time.

3.5    Product In-Service. VNUS shall perform post-sale delivery, instruction, and training to
Customers in a manner that is consistent with commercially reasonable standards or guidelines which
Medtronic may from time to time establish and inform VNUS in writing thereof.

3.6    No Modification of Products. VNUS shall sell the Products only in the form, condition and
packaging as provided or approved by Medtronic. VNUS shall not alter, modify or change any Product
or its package without Medtronic’s prior written consent.

3.7    User Warranty Delivery to Customer. VNUS shall deliver to each of the Customers the User
Warranty furnished by Medtronic with each Product, as revised from time to time.

3.8    Credit/Finance. VNUS shall make full payment to Medtronic of the purchase price for each
shipment of Product and of any other payment obligations it owes to Medtronic when due. VNUS shall
initially be granted credit terms of **** from date of receipt of invoice for its purchase
of Product. Such credit terms are contingent upon VNUS’ continued material compliance with all of
its monetary obligations to Medtronic. If, at any time in the reasonable opinion of Medtronic,
VNUS’ creditworthiness has materially deteriorated, Medtronic may modify or terminate such credit
terms; provided that such modification or termination shall not apply to any order which has been
previously accepted by Medtronic.

3.9    Device Tracking. VNUS shall maintain a system to track each Product in accordance with
applicable law, including 21 CFR 821, as amended, and such other reasonable requirements as
Medtronic may from time to time establish with respect to Product tracking. Such system will, at a
minimum, be able to track a Product to its final destination and shall have procedures in place
which facilitate locating each Product shipped in the event customer notifications or product
modifications are required. By the 15th of each calendar month during the term of this Agreement,
VNUS shall provide Medtronic with a written report identifying all Products which were placed in
service the preceding calendar month (“Product Tracking Report”). Such Product Tracking Report
shall be in the form requested by Medtronic but at a minimum shall include the name of the
Customer, the specific address where the Product was delivered, the date the Product was delivered,
the serial number (if any), model and Product name. The tracking system and the records
documenting the tracking shall be subject to audit by Medtronic at reasonable times upon reasonable
notice. Upon termination or expiration of this Agreement, VNUS shall, at Medtronic’s request,
deliver all then current records to Medtronic relating to the location of Products sold by VNUS in
the Market Segment in the Territory.

3.10    Customer Complaints, Incident Reports, and Recalls. VNUS shall use diligent, commercially
reasonable efforts to resolve all Customer complaints that relate solely to the quality of services
provided by VNUS in connection with Products. VNUS shall refer all complaints relating to Products
and all requests for service to Products to the Medtronic Product Complaint Coordinator at
****, or such other number as Medtronic may from time to time designate
in writing to

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VNUS. Medtronic shall resolve all such complaints and requests for service as soon
as practicable using diligent, commercially reasonable efforts. VNUS shall immediately report to
Medtronic any incident of which VNUS becomes aware that involves or may involve the failure or
malfunction of a Product or might constitute a reportable event under 21 CFR Section 803 (Medical
Device Reporting). Medtronic as the manufacturer of the Products shall be solely responsible for all medical device reporting to
regulatory agencies with respect to the Products. In the event either party has reason to believe
that one or more of the Products might be the subject of a recall or withdrawal from distribution,
such party shall immediately notify the other. Any decision as to whether or not to initiate a
recall or product replacement or product enhancement in accordance with Section 4.5, shall be
Medtronic’s, in its sole discretion. If such recall is required because of the negligent act or
wrongful omission of VNUS, then the costs and expenses of such recall shall be reimbursed by VNUS
to Medtronic. VNUS shall provide, at Medtronic’s expense, assistance reasonably requested by
Medtronic in connection with any reporting, recall, legal, or regulatory matter relating to the
Products. If VNUS in good faith disagrees in writing with Medtronic’s decision not to withdraw or
recall the Product, then VNUS may discontinue its distribution of such Product under this Agreement
until the issue is resolved.

3.11
   Restriction on Sales of Competitive Products.

	 	 	 	a.) Restriction. VNUS, including without limitation its employees, officers, and
agents, shall not sell, handle, promote, or be involved, directly or indirectly, in
the offering for sale, promotion, or manufacture of any product which may be used in
creating anastomoses or vascular approximation in the Territory (such product, a
“Competitive Product”). If VNUS, upon Medtronic’s offer, elects to add a new Product
to Schedule 1.2, VNUS shall have ninety (90) days after such amendment to cease
distributing any Competitive Product to the new Product added to Schedule 1.2.
Failure by VNUS to abide by the terms of this Section 3.11 shall be deemed a material
failure of VNUS’ obligations under this Agreement; provided, however, VNUS may cure
such failure immediately by ceasing to sell, distribute, and promote such Competitive
Product.
	 
	 	 	 	b.) Duration of Restriction. The restriction contained in this Section shall
continue for ****; provided, however, that if this Agreement is terminated
by VNUS for Medtronic’s Breach under Section 9.1(c), the restriction shall end upon
termination of the Agreement.

3.12    Accessories and Other Supplies. VNUS shall sell only Medtronic approved accessories, supplies
and consumables for use with the Products. VNUS may seek Medtronic’s approval to sell other
accessories, and such approval shall not to be unreasonably withheld.

3.13    Compliance with Laws and Medtronic Policies. VNUS recognizes that compliance with all
applicable laws and maintaining a high standard of ethical behavior in the conduct of its
activities under the Agreement is an essential requirement of this Agreement. VNUS, therefore,
agrees as follows:

     (a) To comply with all applicable laws, rules, and regulations in its activities relating to
the marketing, promotion, and sale of Products, including without limitation, those promulgated by
the U.S. Food and Drug Administration as applicable to the Products,

     (b) To conduct all activities under this Agreement in accordance with the provisions of the
Medtronic Code of Conduct and U.S. Business Conduct Standards attached hereto as Schedule 3.13 (the

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“Medtronic Compliance Requirements”) as amended from time to time by Medtronic with written notice
to VNUS,

     (c) To require its employees who interact with customers who purchase Products, or who are
in a position to influence customer purchasing decisions regarding Products, to complete
training on the Medtronic Compliance Requirements, and

     (d) To provide Medtronic access to VNUS’ relevant books and records relating to the sale of
Products for the sole purpose of verifying VNUS’ compliance with the requirements of this Article
3, provided, such access shall be conducted after reasonable prior notice by Medtronic to VNUS
during VNUS’ ordinary business hours and shall not be more frequent than twice during any calendar
year.

Failure to comply with any requirement of this Article shall be deemed a material breach of this
Agreement by VNUS and shall entitle Medtronic to terminate this Agreement in accordance with
Section 9.1(b).

3.14    Exclusive Source for Medtronic Products. VNUS shall only sell Products obtained directly from
Medtronic to Customers; that is, VNUS may not sell any new or used Product that has been obtained
from any source other than Medtronic.

3.15    Purchase Quota. During the Term, VNUS shall purchase the minimum annual requirements
specified in Schedule 3.15 (the “Minimum Annual Quota”), provided that Medtronic supplies on a
timely basis the amounts of Product ordered by VNUS. The Minimum Annual Quota will be allocated
over the applicable year in minimum quarterly amounts also specified in Schedule 3.15 (the “Minimum
Quarterly Quota”). Subject to Section 5.6 and the remaining terms of this Section 3.15, if VNUS
fails to purchase the Minimum Annual Quota in any contract year or the Minimum Quarterly Quota for
any two consecutive quarters (whether or not the quarters are in the same contract year), that
failure shall be deemed a material breach of the Agreement and Medtronic shall have the right to
terminate this Agreement upon ninety (90) days written notice to VNUS; provided that VNUS may cure
the breach within the ninety (90) day notice period by paying Medtronic an amount equal to
**** of the amount by which VNUS failed to meet the applicable Minimum Quota.
Waiver by Medtronic of its right to terminate this Agreement under this Section 3.15 in any one or
more instance shall not be deemed a waiver of such right for any subsequent failure by VNUS to meet
the Minimum Annual Quota or the Minimum Quarterly Quota. The parties
agree that for **** of this Agreement, the Minimum Annual Quota will increase at a rate of
****  year-over-year.

3.16    Product Sales Outside Market Segment or Territory. If VNUS receives orders or requests for
Products from customers outside the Territory and Market Segment, VNUS will refer such customers to
Medtronic for the sale. During the Term, VNUS shall not sell Products outside the Market Segment
or Territory without Medtronic’s prior written consent which may be granted in Medtronic’s sole
discretion.

3.17    Business Review. A VNUS representative shall meet quarterly with Vice President, Sales for
Medtronic Cardiac Surgery (or such other person designated by Medtronic) to report on and discuss
sales and operations during the prior quarter and discuss future objectives, plans and strategies.

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IV. MEDTRONIC’S RESPONSIBILITIES

     Subject to the other terms and conditions of this Agreement, Medtronic shall undertake to
perform the following responsibilities:

4.1    Manufacture and Provide Products. Medtronic shall use commercially reasonable efforts to
manufacture (or have manufactured) the Products and shall supply the Products to VNUS, subject to
availability, upon the terms and conditions of this Agreement. Products shall, at the time of
delivery to VNUS, (i) have been manufactured in accordance with the specifications and all
applicable laws and regulations including without limitation all FDA regulations and QSR and cGMP
(as applicable); (ii) be sterile; (iii) have the standard minimum shelf life customarily applicable
to such Products when sold by Medtronic; and (iv) be packaged in accordance with the Product
labeling provisions of Section 4.2. Upon VNUS’ reasonable request, Medtronic shall provide access
to Medtronic’s facilities that manufacture and distribute the Product; such access shall be
conducted after reasonable prior notice by VNUS to Medtronic during Medtronic’s ordinary business
hours and shall not be more frequent than twice during an annual period.

4.2    Product Labeling. All Product labeling shall be mutually acceptable to both parties and shall
be in compliance with all Medtronic policies and all applicable laws and regulations. In order to
minimize the potential for cross-selling in the Market Segment in the Territory, Products shall be
labeled and packaged as VNUS product with VNUS look and styling, including different part numbers
and statements that the Products were manufactured by Medtronic for distribution by VNUS.

4.3    Promotional Materials. Medtronic shall provide to VNUS such sales literature, advertising and
promotional materials, and other information, programs, and sales support by VNUS in selling the
Products. Notwithstanding the foregoing, VNUS may develop and/or use unique promotional materials
and sales tools other than those supplied by Medtronic, provided VNUS has received Medtronic’s
prior written approval, such approval not to be unreasonably withheld. Medtronic agrees to review
all marketing and promotional materials within ten (10) business days after initial receipt from
VNUS. If editing changes or approval are not received within the aforementioned period,
Medtronic’s approval will be deemed granted. VNUS shall comply with applicable Medtronic policies
with regard to the use of Medtronic’s copyright notice. Other than the cost for materials provided
by Medtronic pursuant to this section, VNUS will be responsible for all expenses associated with
its advertising and promotion of the Products, unless otherwise agreed to in writing prior to the
expenditure.

4.4    Training and Support. Medtronic shall offer such general and specialized sales and technical
training, materials and support as necessary to adequately train all appropriate VNUS personnel.
The costs and expenses of training VNUS representatives shall be ****. Such clinical and technical support shall be provided by Medtronic to VNUS personnel at
reasonable locations of VNUS’ choice, and shall include at a
minimum (a) **** of
technical and Product training of appropriate VNUS personnel during **** of
this Agreement; (b) an additional **** of follow up training during
the subsequent ****; and (c) appropriate training as the parties mutually determine is necessary for
any and all new Products.

4.5    Product Changes. Medtronic may, at any time, modify, alter, change, or improve a Product. Any
such change shall be effective sixty (60) days after Medtronic provides VNUS with a written notice

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to that effect however changes to a Product based upon requirements under applicable federal law or
regulation shall not be subject to a sixty (60) day notice requirement.

4.6
   Sales outside the Market Segment and Territory. Except as provided in Sections 2.5 and 2.6, in
the event that either party becomes aware that Products are being sold or have been sold at any
time within the previous six (6) month period by Medtronic or its distributors, licensees or agents
in the Market Segment in the Territory, such party shall provide the other party with written
notice of such sales activity. Medtronic shall cease such sales activity in the Market Segment and
in the Territory within thirty (30) days of such notice. Within sixty (60) days of the foregoing
written notice, Medtronic will compensate VNUS in an amount equal to
**** of the sale price of all such products in the Market Segment in the Territory. Likewise, in the event that
either party becomes aware that Products are being sold or have been sold at any time within the
previous six (6) month period by VNUS outside the Market Segment and Territory, such party will
provide written notice to the other party of any such VNUS sales activity outside of the Market
Segment and Territory. VNUS shall cease such activity within thirty (30) days. Within sixty (60)
days of the foregoing notice, VNUS will compensate Medtronic in an amount equal to
**** of the sale price of all such products outside the Market Segment and Territory.

V. ORDERING; DELIVERY AND ACCEPTANCE

5.1    Initial Stocking Order. VNUS shall be entitled to purchase a one-time initial stocking order
of Products at a **** discount off of the Product Transfer Price set forth in Schedule
6.1.

5.2    Purchase Orders. VNUS shall order Products from Medtronic by submitting written purchase
orders identifying the number(s) and type(s) of Products ordered, the requested delivery date(s)
and any additional information required to enable Medtronic to fill the order. All orders for
Products will be pursuant to such standard terms as the parties may establish from time to time at
the prices set forth in Section 6.1 below. All orders for Products will be subject to acceptance
by Medtronic, provided Medtronic will not unreasonably reject any purchase order for Products that
meet this Section 5.2 and is for a quantity of Products not in
excess of **** of VNUS’ most recent
forecast pursuant to Section 5.5. Medtronic will accept or reject each such order submitted by
VNUS within ten (10) business days after receipt of the order. Accepted orders will be
non-cancelable. For clarity, any documents submitted to Medtronic in addition to Medtronic’s
standard terms are for informational purposes only and are not part of the terms of sale.

5.3    Delivery. Medtronic shall use commercially reasonable efforts to deliver accepted orders for
Products on time pursuant to the purchase order. However, in no event shall Medtronic be
responsible for any loss or damage which is claimed to have been caused by a delay in shipping an
order, whether or not Medtronic may have been advised of the possibility of such loss or damages.
Medtronic shall not be responsible for any loss or damage which is claimed to have been caused by a
delay in shipping an order, whether or not Medtronic may have been advised of the possibility of
such loss or damages, provided Medtronic performed its manufacture and delivery obligations with
commercially reasonable care. Medtronic shall ship Product by a commercially reasonable carrier of
VNUS’ choice. All Products shall be shipped to VNUS FOB (Incoterms 2000) Medtronic’s distribution
facility. Title and risk of loss shall transfer to VNUS upon delivery of Product to the carrier
for transport to VNUS.

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5.4
   Inspection and Rejection.

     (a) Returned Goods. If any Product does not conform to the order or is defective at the time
it was shipped to VNUS then VNUS may return the defective Product to Medtronic within thirty (30) days of receipt by VNUS; provided that VNUS (i) notifies Medtronic or such agent
as Medtronic may designate, (ii) describes the defect or non-conformity, (iii) obtains approval for
return in accordance with Schedule 5.4, and (iv) complies with such other return instructions as
Medtronic may reasonably require. Upon receiving return authorization VNUS may ship the defective
or non-conforming Product to the Medtronic location authorized by Medtronic, properly labeled,
freight prepaid, and fully insured at face value. Subject to Medtronic’s right to verify that the
Product was defective or non-conforming at the time of shipment to VNUS, Medtronic shall, at VNUS’
option, either replace the Product and reimburse VNUS for its out of pocket shipping and insurance
expenses or refund the purchase price paid for by VNUS for the Product involved. In the event that
VNUS elects replacement, Medtronic shall supply such replacement Product at no additional cost
within fifteen (15) days of Medtronic’s receipt of such Product. In no event shall Medtronic be
responsible to replace or refund for any Product (a) that has been damaged by abuse or misuse, (b)
for which any unauthorized service or repair was performed or attempted, (c) that was repossessed,
(d) has been used as a demonstration unit, or (e) was damaged by or during transport to VNUS. The
repair and replacement provided for in this section shall be VNUS’ sole and exclusive remedy for
any claim relating to any alleged defect or nonconformity in the Products. In the case of Product
having latent defect(s) that are not reasonably detectable at the time of acceptance, VNUS may
reject such Product by giving written notice to Medtronic of VNUS’ rejection of such Product within
ten (10) days after discovery of such defects, but such notice may in no event be later than one
(1) year after receipt of such shipment.

     (b) Notwithstanding anything to the contrary in Section 5.4(a), Medtronic shall not be
responsible for replacing or refunding any Product (i) that has been damaged in transit by VNUS’
carrier or by abuse or misuse by VNUS or its agent or customer, (ii) for which any unauthorized
service or repair was performed or attempted, (iii) that was re-processed, (iv) has been used as a
demonstration unit, or (e) was damaged by or during transport to VNUS. The repair and replacement
provided for in this Section 5.4 shall be VNUS’ sole and exclusive remedy for any claim relating to
any alleged defect or nonconformity in the Products, but subject to Article 10.

5.5
   Forecasts. VNUS will provide Medtronic with a
**** month rolling non-binding forecast
of Product purchases on a **** basis by ****.

5.6    Failure to Supply. If Medtronic fails to supply on a timely basis any material amounts of
Product(s) ordered by VNUS, the parties shall confer in good faith to solve the supply problem and
Medtronic shall use its best efforts to cure such problem and to keep VNUS informed on a regular
basis until such cure is implemented. If Medtronic is forced to allocate production and
distribution of the Products among its various distributors and customers, Products will be
allocated to VNUS in a share proportional to that percentage of Medtronic’s total sales of the
Product, which VNUS’ sales comprised in the preceding twelve (12) month period, with the exception
of the initial twelve month period of this Agreement, which proportion shall be determined on the
basis of projected twelve (12) month sales. If, as a result of such allocation, VNUS is unable to
purchase on a timely basis the Minimum Annual Quota or Minimum Quarterly Quota (as applicable), the
applicable Quota will be reduced by the amount of bona fide orders from VNUS that Medtronic is
unable to fill.

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omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

 

 

VI. PRICE AND RESALE TERMS

6.1    Product Transfer Pricing. For all orders of Product other than the initial stocking order
pursuant to Section 5.1 above, Medtronic will charge VNUS the current list price for the
Products, less the discount set forth on Schedule 6.1 (the result, the “Product Transfer Price”).
The current list price for the Products is attached hereto in Schedule 6.1. All Product pricing
information, including list price, distributor discount, and Product Transfer Prices, shall be
deemed Confidential Information under this Agreement. The Product Transfer Prices set forth on
Schedule 6.1 shall be applicable for **** following the
Effective Date. After ****, the Parties agree that the Product Transfer Price may increase
once every **** months for the remaining term of the Agreement, at a maximum rate of ****
..

     (a) Increased Product Transfer Prices will not apply to purchase orders accepted by Medtronic
before the effective date of the price increase unless such orders provide for delivery more than
thirty (30) days after the date of acceptance of the order. ****.

     (b) All listed Product Transfer Prices are exclusive of delivery charges, freight, insurance,
state and local use, sales and similar taxes. When such charges apply they may appear as separate
items on Medtronic invoices.

6.2    Resale Price. VNUS retains the sole and exclusive right to establish the prices at which it
distributes and resells the Products in the Market Segment in the Territory, in its sole
discretion.

VII. WARRANTY; DISCLAIMER; LIMITATION OF LIABILITY

7.1    Mutual Representation and Warranties. Each of Medtronic and VNUS represents and warrants to
the other that as of the Effective Date (a) it has the full corporate power to enter into and
perform this Agreement; and (b) this Agreement constitutes a legal, valid and binding obligation.

7.2    Medtronic Representations and Warranties. Medtronic represents, warrants, and covenants that:

     (a) at the time of shipment, Product supplied by Medtronic hereunder (i) shall meet the
specifications provided by Medtronic for such Product, (ii) shall not be adulterated or misbranded
within the meaning of the U.S. Federal Food, Drug and Cosmetic Act (the “Act”), and (iii) shall be
manufactured in accordance with QSR and cGMP (as applicable) and as defined by the Act;

     (b) as of the Effective Date, (i) Medtronic has not granted any rights to any third party to
promote or sell Products in the Market Segment in the Territory, and (ii) all Products listed on
Schedule 1.2 have been approved by the FDA for sale and distribution in the Territory; and

     (c) during the Term, (i) neither Medtronic nor its affiliates shall, nor shall they cause,
license, or permit others to, promote, license, sell or cause to be sold Products within the Market
Segment in the Territory, except to the extent permitted under Section 2.6 hereto, and (ii)
Medtronic shall obtain and

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the Securities Exchange Act of 1934, as amended.

 

 

maintain all necessary approvals and clearances for all Products that are promoted and/or sold by VNUS in the Market Segment in the Territory.

7.2    VNUS Representations and Warranties. VNUS represents, warrants, and covenants that it will
direct its sales and marketing personnel to promote and/or sell Products for use solely in the
Market Segment in the Territory.

7.3    User Warranty. The User Warranty, attached hereto as Schedule 7.3, is the only warranty
granted by Medtronic to a Customer of a Product covering such Product. Medtronic will provide a
copy of the User Warranty with each Product sold hereunder to which it applies. In addition,
Medtronic may supply VNUS with point-of-sale copies of the User Warranty for pre-sale disclosure to
prospective users. VNUS shall comply with all applicable federal or state laws relating to
disclosure of product warranties and limitations, including but not limited to those of the Federal
Trade Commission. NO WARRANTY OTHER THAN THE USER WARRANTY IS EXPRESSED OR IMPLIED BY MEDTRONIC.
MEDTRONIC SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. The User Warranty shall be deemed to commence on the earlier of (1) the date
VNUS delivered the Product to the Customer as reported to Medtronic in the monthly Product Tracking
Report or (2) six (6) months from the date on which the Product was received by VNUS from
Medtronic.

VIII. INTELLECTUAL PROPERTY

8.1    Rights to Intellectual Property. Except as expressly set forth in Section 8.2 below, VNUS
shall have no right or license under this Agreement to utilize any information, know-how,
proprietary data, trademarks, or patent rights which VNUS may have or may secure in the future
relating to any of the Products, except as may be incidental only to the marketing, promotion,
distribution and/or sale of the Products and the right to use such Products by VNUS’ Customers.
VNUS may not reproduce any copyrighted material of Medtronic without the prior written consent of
Medtronic.

8.2    Trademark Use. Subject to the terms and conditions of this Agreement, including with
limitations of this Section 8.2 below, Medtronic hereby grants to VNUS a non-exclusive license
under the Medtronic logos, trademarks, and service marks that appear on the Products or in any
Medtronic-furnished marketing collateral specific to the Products (“Medtronic Marks”) in the
Territory solely to market and promote the Products to the Market Segment in the Territory for the
Term. VNUS shall not use Medtronic’s name, or any other similar name or any other trademark of
Medtronic except in advertising, pamphlets, or other materials promoting the Products. VNUS may
label the Products with the statement “Manufactured by Medtronic for Distribution by VNUS.” All
such materials referencing Medtronic or Products must be approved in writing by Medtronic prior to
their use or dissemination, such approval not to be unreasonably withheld. VNUS may not use
Medtronic’s name or any of Medtronic’s trademarks in its corporate or business name, or in any
other manner which Medtronic deems adverse to its interests. Use of any Medtronic trademark or
trade name associated with the Products may be done only in accordance with usage guidelines as
established by Medtronic from time to time. Upon the termination of VNUS’ appointment it shall
immediately discontinue any further use or display of Medtronic trademarks, trade names or any mark
or name (except as to sales of remaining inventory of Products as permitted in Section 9.3). VNUS
shall notify Medtronic if it becomes aware of any unauthorized use of Medtronic trademarks or trade
names or of the use of any mark or name which might

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confuse the public.

IX. TERMINATION

9.1    Termination. This Agreement may be terminated prior to the expiration of its Term pursuant to
any of the following provisions:

     (a) Failure to Satisfy Minimum Annual Quota or Minimum Quarterly Quota.

          (i) Subject to Section 3.15, and only after giving effect to any payment by VNUS to Medtronic
pursuant to such Section 3.15, if VNUS does not satisfy the applicable Minimum Annual Quota or the
Minimum Quarterly Quota for two consecutive quarters (but provided such inability was not caused by
Medtronic failing to timely supply Products ordered by VNUS), Medtronic shall have the right to
terminate the Agreement.

     (b) Breach of Agreement. If either party materially fails to perform an obligation or
condition of this Agreement (other than VNUS’ failure to satisfy the Minimum Annual Quota and/or
the Minimum Quarterly Quota) and fails to cure such default within sixty (60) days of receipt of
written notice of such default from the other party specifying the nature of such default, then the
party giving the notice may terminate this Agreement by sending a separate written notice of
termination to the defaulting party. Any material violation of any material law or regulation
applicable to this Agreement or any violation of the Medtronic Code of Conduct or U. S. Business
Conduct Standards shall be deemed an incurable breach. In the event of a breach that cannot
reasonably be cured within sixty (60) days of receipt of written notice of a breach, then the
alleged breaching party shall have such additional time as necessary not to exceed an additional
thirty (30) days (for a total of ninety [90] days) to cure the breach if the alleged breaching
party (i) during such sixty (60) day period has submitted a plan, that if successfully carried out,
would be effective in curing such breach, and has commenced execution of such plan, and (ii)
diligently pursues such plan thereafter.

     (c) Bankruptcy. Either party may terminate this Agreement effective immediately upon delivery
of written notice to the other party, if the other party (i) ceases to actively conduct its
business, (ii) files a voluntary petition for bankruptcy or has filed against it an involuntary
petition for bankruptcy, (iii) makes a general assignment for the benefit of its creditors, or (iv)
applies for the appointment of a receiver or trustee for substantially all of its property or
assets or permits the appointment of any such receiver or trustee who is not discharged within
thirty (30) days of such appointment.

9.2    Effect of Termination. Upon the effective date of termination or expiration of VNUS’
appointment for any reason, VNUS shall immediately cease to be an authorized Medtronic distributor
(except as to sales of remaining inventory of Products as permitted in Section 9.3 below) and there
shall be nothing payable by either party except as may be due as a result of prior sales and these
shall be paid as they become due. Either party may, at its option, cancel any outstanding orders
for purchase which have not been shipped by the effective date of the termination. All obligations
with respect to Confidentiality, return of intellectual property and other obligations which by
their nature are continuing shall survive the termination of this Agreement. Neither party shall
be liable to the other for damages of any kind resulting from or caused by said termination,
including, but not limited to, damages related to losses through commitments on obligation or
leases, loss of investment, or present or prospective profits,

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the Securities Exchange Act of 1934, as amended.

 

 

inability to meet obligations, or any other causes or reasons whatsoever.

9.3    Repurchase/Sale of Inventory. Upon any termination of this Agreement, Medtronic shall have the
right, exercisable in its sole discretion, to buy back from VNUS all or any of the Products owned
by VNUS on the date of termination. The price Medtronic shall pay for
the Products will be ****. Products repurchased from
VNUS by Medtronic pursuant to this Section 9.3 shall be shipped promptly by VNUS as instructed by
Medtronic, at Medtronic’s commercially reasonable expense, to a location specified by Medtronic. For a period not to exceed six (6) months from the date of
termination, VNUS may in its sole discretion, sell or otherwise properly dispose of any Products
which are not purchased by Medtronic, provided such sales and disposal are performed in accordance
with the terms set forth in this Agreement.

9.4    Return of Materials. Upon termination of its appointment, VNUS shall immediately return to
Medtronic all promotional and other Product related materials previously provided by Medtronic to
VNUS (except for a reasonable quantity as needed by VNUS to sell the remaining inventory of
Products, as permitted in Section 9.3). If VNUS has paid Medtronic for any of the materials
returned, Medtronic shall reimburse VNUS the purchased price of such returned materials to the
extent, and only to the extent that such materials are currently useable by Medtronic.

9.5    Non-solicitation. For a period of twelve (12) months after expiration or termination of this
Agreement for whatever reason, VNUS will not solicit for employment, directly or through a third
party agent, or hire any person who was a Medtronic Cardiac Surgery employee during the twelve
months preceding the termination date of this Agreement. For a period of twelve (12) months after
expiration or termination of this Agreement for whatever reason, Medtronic’s Cardiac Surgery
business unit will not solicit for employment, directly or through a third party agent, or hire any
person who was an employee of VNUS during the twelve (12) months preceding the termination date of
this Agreement. Nothing contained in this Agreement will prevent either party from hiring any
employee of the other party if the employee’s application for employment was in response to an
advertisement of general circulation and such employee was not solicited by the hiring party
directly or through a third party agent.

X. INDEMNITIES

10.1    Medtronic’s Indemnification. Medtronic shall indemnify, defend and hold harmless VNUS and
each of its subsidiaries, officers, directors, employees, shareholders and distributors from and
against and in respect of any and all assessments, losses, damages, liabilities, interest and
penalties, costs and expenses (including, without limitation, reasonable legal fees and
disbursements incurred in connection therewith and in seeking indemnification therefore, and any
amounts or expenses required to be paid or incurred in connection with any action, suit,
proceeding, claim, appeal, demand, assessment or judgment) finally awarded (“Indemnifiable
Losses”), resulting from, arising out of, or imposed upon or incurred by any person to be
indemnified hereunder by reason of any third party demands, claims, suits, actions or causes of
action against such person based upon: (i) any breach of representation, warranty, covenant or
agreement by Medtronic under this Agreement, (ii) Product Liability Damages with respect to the
Products, or (iii) other negligence or intentional misconduct of Medtronic, provided that in no
event shall Medtronic be liable for matters for which VNUS is responsible under Section 10.2 below
or for punitive or exemplary damages. Medtronic shall maintain product liability insurance or
self-insurance in such amounts as ordinary good business practice for its type of business would
make advisable and shall upon

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request provide VNUS with evidence of this coverage. “Product
Liability Damages” means any liability, claim or expense, including but not limited to reasonable
attorneys’ fees and medical expenses, arising in whole or in part out of claims of third parties
for personal injury or loss of or damage to property relating to or arising out of the Products,
whether based on strict liability in tort, negligent manufacture of product, or any other
allegation of liability arising directly from the design, testing, manufacture, packaging, labeling
(including instructions for use), or sale of the Products.

10.2    VNUS’ Indemnification. VNUS shall indemnify, defend and hold harmless Medtronic and each of
its subsidiaries, officers, directors, employees, shareholders and suppliers from and against and
in respect of any and all Indemnifiable Losses resulting from, arising out of, or imposed upon or
incurred by any person to be indemnified hereunder by reason of any third party demands, claims,
suits, actions or causes of action against such person based upon: (i) any breach of
representation, warranty, covenant or agreement by VNUS under this Agreement, (ii) product claims
whether written or oral, made or alleged to be made, by VNUS in its advertising, publicity,
promotion, or sale of any Products where such product claims were not provided by or approved by
Medtronic, (iii) negligent handling by VNUS of the Products or changes, additions or modifications
to the Products by VNUS, (iv) Product Liability Damages with respect to the Products to the extent
they are caused by the negligent or intentionally wrongful acts of VNUS, (v) Product Liability
Damages caused by non-Medtronic products sold by VNUS, or (vi) other negligence or intentional
misconduct of VNUS; provided that in no event shall VNUS be liable for matters for which Medtronic
is responsible under Section 10.1 above or for punitive or exemplary damages. VNUS shall maintain
liability insurance or self-insurance in such amounts as ordinary good business practice for its
type of business would make advisable and shall provide Medtronic with evidence of this coverage.

10.3    Procedure. If a claim by a third party is made and a party (the “Indemnitee”) intends to
claim indemnification under this Article 10, the Indemnitee shall promptly notify the other party
(the “Indemnitor”) in writing of any claim in respect of which the Indemnitee or any of its
subsidiaries, directors, officers, employees, shareholders, suppliers or distributors intends to
claim such indemnification and the Indemnitor shall have sole control of the defense and/or
settlement thereof, provided that the Indemnitee may participate in any such proceeding with
counsel of its choice at its own expense. The indemnity agreement in this Article 10 shall not
apply to amounts paid in settlement of any Indemnifiable Losses if such settlement is effected
without the consent of the Indemnitor, which consent shall not be withheld unreasonably. The
failure to deliver written notice to the Indemnitor within a reasonable time after the commencement
of any such action, if adversely prejudicial to its ability to defend such action, shall relieve
such Indemnitor of any liability to the Indemnitee under this Article 10, but the omission to so
deliver written notice to the Indemnitor shall not relieve the Indemnitor of any liability that it
may otherwise have to any Indemnitee other than under this Article 10. If the Indemnitor fails to
provide defense of the claim, and diligently defend or settle the same, the Indemnitee may defend
or settle the claim without prejudice to its rights to indemnification hereunder. The Indemnitee
under this Article 10, its employees and agents, shall cooperate fully with the Indemnitor and its
legal representatives and provide full information in the investigation of any Indemnifiable Losses
covered by this indemnification.

10.4    Patent. Medtronic shall indemnify, defend and hold harmless VNUS from any cost, expense,
liability or damage to the extent that it is based upon a claim that any Product purchased or sold
by VNUS infringes a patent of the United States (or the manufacture or use of such Product
infringes such a patent); provided that VNUS shall promptly notify Medtronic of such claim, permit
Medtronic to assume control

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the Securities Exchange Act of 1934, as amended.

 

 

of the defense of such claim, and fully cooperate in the defense of
such claim. If the use or sale of a Product is enjoined by order or settlement, then Medtronic
shall have the option to (1) procure for VNUS the right to continue using or selling the Product,
(2) replace the Product with a non-infringing Product or to modify the Product, (3) modify the
Product so it becomes non-infringing, or (4) accept return of the infringing Product and grant VNUS
a credit for VNUS’ purchase price of such Product. The foregoing shall be the entire liability of
Medtronic for patent infringement by Products furnished hereunder.

THIS SECTION 10.4 STATES MEDTRONIC’S TOTAL RESPONSIBILITY AND LIABILITY, AND THE VNUS’ SOLE REMEDY, FOR ANY ACTUAL OR ALLEGED INFRINGEMENT OF ANY PATENT,
TRADEMARK OR COPYRIGHT BY ANY PRODUCT DELIVERED HEREUNDER OR ANY PART THEREOF. THIS ARTICLE IS IN
LIEU OF AND REPLACES ANY OTHER EXPRESS, IMPLIED OR STATUTORY WARRANTY AGAINST INFRINGEMENT. IN NO
EVENT SHALL MEDTRONIC BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES
RESULTING FROM ANY SUCH INFRINGEMENT.

10.5    LIMITATION OF LIABILITY

     IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR COSTS OF PROCUREMENT OF SUBSTITUTE
GOODS BY ANYONE. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY OTHER PERSON
FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT OR INCIDENTAL DAMAGES, HOWEVER CAUSED AND ON ANY THEORY OF
LIABILITY ARISING OUT OF THIS AGREEMENT, AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGE. THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL
PURPOSE OF ANY LIMITED REMEDY PROVIDED HEREIN. NOTWITHSTANDING THE FOREGOING PROVISIONS OF THIS
SECTION, THE LIMITATIONS OF LIABILITY SET FORTH IN THIS SECTION SHALL NOT APPLY TO (i) CLAIMS
ARISING UNDER ARTICLE 8 (INTELLECTUAL PROPERTY) OR (ii) THIRD PARTY CLAIMS FOR PERSONAL INJURY,
DEATH OR PHYSICAL DAMAGE TO PROPERTY WHICH ARE SUBJECT TO THE INDEMNIFICATION PROVISIONS OF ARTICLE
10.1 OR 10.2.

XI. CONFIDENTIAL INFORMATION

11.1    Definition. A party’s “Confidential Information” is defined as any information of one party
(the “Disclosing Party”) that is disclosed to the other party (the “Receiving Party”), including
without limitation, technical product data, business plans, product pricing, sales goals, marketing
information and other information not generally available to the public. Notwithstanding anything
to the contrary in this Agreement, Confidential Information does not include information that (a)
is already known by the Receiving Party at the time of disclosure by evidence of such Receiving
Party’s written records; (b) becomes, through no act or fault of the Receiving Party, publicly
known; (c) is received by the Receiving Party without restriction on the Receiving Party’s
disclosure or use, from a third party which itself had no obligation to keep such information
confidential; or (d) is independently developed by the Receiving Party without access or reference
to the Confidential Information of the Disclosing Party.

11.2    Restrictions. Each party shall maintain in confidence any Confidential Information received

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from the other party or, in the case of Medtronic, of any of its suppliers or purchasers during the
Term and shall not publish, disseminate, or disclose such Confidential Information except to the
extent necessary to carry out its duties hereunder without the express written permission of the
Disclosing Party. Each Receiving Party shall use at least the same degree of care to protect the
Confidential Information of the Disclosing Party as it does to protect its own Confidential
Information and in all cases shall use commercially reasonable efforts to protect such information.
This obligation of confidentiality shall expire five (5) years after the termination or expiration
of this Agreement.

11.3    Exceptions. A party may disclose Confidential Information of the other party to the
extent required to be disclosed by a court or governmental agency pursuant to a statute,
regulation, or valid order; provided, however, that the Receiving Party first notifies the
Disclosing Party and gives the Disclosing Party the opportunity to seek a protective order, or to
contest such required disclosure.

11.3    Return of Confidential Information. All Confidential Information shall be returned to the
Disclosing Party at the request of the Disclosing Party upon the termination or expiration of this
Agreement.

XII. GENERAL PROVISIONS

12.1    Independent Contractor Relationship. VNUS is and shall remain an independent contractor and
is not and shall not be deemed to be an employee, joint venturer, partner, or franchisee of
Medtronic for any purpose. Accordingly, VNUS shall be exclusively responsible for the manner in
which it performs its duties under this Agreement and for the profitability or lack thereof of its
activities under this Agreement. All financial obligations associated with VNUS’ business are the
sole responsibility of VNUS. VNUS does not have, and shall not represent itself as having, any
right or authority to obligate or bind Medtronic in any manner whatsoever.

12.2    Waivers. Failure of either party at any time to require strict performance of the other party
of the provisions of this Agreement shall not act as a waiver of such provisions, nor shall the
waiver of a breach of the Agreement by either party constitute a waiver of such provision for any
subsequent breach.

12.3    Entire Agreement and Modifications. This Agreement, together with its schedules, exhibits and
addendums, if any, contains the entire and only agreement between the parties with respect to the
sale and purchase of Medtronic products. Any representations or terms and conditions not
incorporated in this Agreement shall not be binding upon either party. No attempted modification
of this Agreement shall be binding upon either party unless in writing and signed in the same
manner as the original Agreement. If any provision of this Agreement is held to be invalid, it
shall not affect the enforceability of the remaining provisions.

12.4    Assignment. VNUS may not transfer, assign, nor delegate the rights or the duties of this
Agreement without the prior written consent of Medtronic. Notwithstanding the foregoing, either
party may assign its rights and obligations under this Agreement with the prior written consent of
the non-assigning party, such consent not to be unreasonably withheld or delayed, to any person or
entity with which such party is merged or by which it is acquired or which purchases all or
substantially all of its assets or stock; provided, if the non-assigning party does not give its
consent, this Agreement is automatically terminated at the time of the merger, acquisition, or
sale, as applicable.

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12.5    Governing Law. This Agreement and the relationship between the parties shall be governed by
the laws of the State of New York, without giving effect to its conflicts of law provisions.

12.6    Dispute Resolution. All disputes and disagreements between the parties arising out of or
relating to any provision of this Agreement or the breach, termination, or validity thereof, shall
be resolved in accordance with the following provisions:

	 	a)	 	For any dispute that cannot be resolved in the normal course of business, the
parties shall attempt in good faith to resolve such dispute by negotiation between
senior level executives who have authority to settle the controversy and who are at
a higher level of management than the persons with direct responsibility for
administration of this Agreement. Any party may give the other party written
notice that a dispute has not been resolved in the normal course of business.
	 
	 	b)	 	Any dispute which has not been resolved within a reasonable time by
negotiation under subsection (a), above, shall be resolved through binding arbitration
in accordance with the Center for Public Resources Non-Administered Arbitration Rules
in effect on the date of this Agreement. Unless the parties agree otherwise, the
arbitration shall be conducted by three independent and impartial arbitrators who
shall be appointed by CPR in accordance with CPR’s rules governing the arbitration.
The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. 1-16.
The place of arbitration shall be New York County, New York, USA and shall be
conducted in the English language. The arbitrators are not empowered to make any
award in excess of compensatory damages and each party hereby irrevocably waives any
right to recover such damages with respect to any dispute resolved by arbitration.
Any judicial proceeding to enforce a decision of the arbitrators under this Agreement
shall be instituted and conducted in U.S. District Court in New York County, New York,
U.S.A.
	 
	 	c)	 	The statute of limitations of the State of New York applicable to the
commencement of a lawsuit shall apply to the commencement of an arbitration hereunder.
	 
	 	d)	 	All negotiations pursuant to this Section 12.6 are confidential and shall be
treated as compromise and settlement negotiations for purposes of applicable rules of
evidence.

12.7    Force Majeure. If the performance of any obligation of this Agreement except for the payment
of money is prevented, restricted, or interfered with by reason of strike, labor dispute, natural
disaster, war, the acts of government or any other cause outside the reasonable control of the
parties, then the party so affected shall give prompt notice to the other party and shall be
excused from such performance to the extent made necessary by such event.

12.8    Notices. Any notice required or permitted by this Agreement shall be in writing and shall be
sent by prepaid registered or certified mail, return receipt requested, internationally recognized
courier or personal delivery, or by fax with confirming letter mailed under the conditions
described above in each case addressed to the other party at the address shown below or at such
other address for which such party give notice hereunder. Such notice shall be deemed to have been
given when delivered:

If to Medtronic:

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Medtronic USA, Inc.

7601 Northland Drive North

Minneapolis, MN 55428

Attn: VP and General Manager, Cardiac Surgery

With a copy to:

Medtronic USA, Inc.

7601 Northland Drive North

Minneapolis, MN 55428

Attn: VP and Senior Counsel, Cardiac Surgery

If to VNUS:

VNUS Medical Technologies, Inc.

2200 Zanker Road, Suite F

San Jose, CA 95131

Attn: Chief Financial Officer

12.9    Counterparts. This Agreement may be executed in counterparts, each of which will be
considered an original, but all of which together will constitute the same instrument.

Signature Page to Follow

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the date first written
above.

	 	 	 	 
	MEDTRONIC, INC.

	 	VNUS MEDICAL TECHNOLOGIES, INC.	 
	 
	/s/
Clifton W. Owens
	 	/s/ R. McCrae	 
	 

	 	 	 
	Name

	 	Name	 
	 
	Vice
President & General Manager RST
	 	VP, Bus. Dev. & Mfg.	 
	 

	 	 	 
	Title

	 	Title	 
	 
	January 24,
2006
	 	1/25/06	 
	 

	 	 	 
	Date

	 	Date	 
	 
	 	 	 
	Attachments: Schedules

	 	 	 

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SCHEDULE 1.1

MARKET SEGMENT & TERRITORY

Market Segment

All vascular surgery procedures.

Exclusions: All non-vascular surgical procedures.

Territory

Entire United States

Exclusions:

Markets outside the United States

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SCHEDULE 1.2

U-CLIPTM PRODUCTS

	 	 	 	 	 
	 	 
	UCLIPTM Anastomotic Devices	 
	All U-CLIPTM 2 - pack
configurations are shipped as 24 packs per carton, all 8 - pack
configurations are shipped as 18 packs per carton.
	 	 
	Product Order	 	 	 	U-CLIPTM Count
	Number	 	Product Description	 	(clips per carton)
	 	 
	****

	 	****
	 	****
	****

	 	****
	 	****
	****

	 	****
	 	****
	****

	 	****
	 	****
	****

	 	****
	 	****
	****

	 	****
	 	****
	****

	 	****
	 	****
	****

	 	****
	 	****
	****

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Page 20

****Certain confidential information contained in this document, marked with 4 asterisks,
has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

 

	 	 	 	 	 
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	         UCLIPTM
Anastomotic Miscellaneous Products

	 	 
	****

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Page 21

****Certain confidential information contained in this document, marked with 4 asterisks,
has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

 

SCHEDULE 3.13

MEDTRONIC CODE OF CONDUCT

AND

U.S. BUSINESS CONDUCT STANDARDS

(attached)

Page 22

****Certain confidential information contained in this document, marked with 4 asterisks,
has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

 

 

****Certain confidential information contained in this document, marked with 4 asterisks, has
been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

 

Code of Conduct

 

	 	 	 	 	 
	Compliance With The Law
	 	 	2	 
	 
	 	 	 	 
	Employee Responsibility
	 	 	2	 
	 
	 	 	 	 
	Improper Payments
	 	 	2	 
	 
	 	 	 	 
	Customer Relationships
	 	 	2	 
	 
	 	 	 	 
	Fair Dealing
	 	 	3	 
	 
	 	 	 	 
	Recordkeeping
	 	 	3	 
	 
	 	 	 	 
	Antitrust/Competition
	 	 	4	 
	 
	 	 	 	 
	Export Controls, Economic Sanctions,
	 	 	 	 
	and International Boycotts
	 	 	4	 
	 
	 	 	 	 
	Conflict of Interest
	 	 	4	 
	 
	 	 	 	 
	Insider Trading
	 	 	5	 
	 
	 	 	 	 
	Intellectual Property and Confidential Information
	 	 	5	 
	 
	 	 	 	 
	Corporate Opportunities
	 	 	6	 
	 
	 	 	 	 
	Protection and Proper Use of Company Assets
	 	 	6	 
	 
	 	 	 	 
	Clinical and Regulatory Affairs
	 	 	6	 
	 
	 	 	 	 
	Quality
	 	 	6	 
	 
	 	 	 	 
	Environmental Management
	 	 	6	 
	 
	 	 	 	 
	Safety and Health
	 	 	7	 
	 
	 	 	 	 
	Productive Work Environment
	 	 	7	 
	 
	 	 	 	 
	Political Activity
	 	 	7	 
	 
	 	 	 	 
	People Acting on Behalf of Medtronic
	 	 	7	 
	 
	 	 	 	 
	Government, Analyst, and Media Inquiries
	 	 	7	 
	 
	 	 	 	 
	Code of Ethics For Senior Financial Officers
	 	 	7	 

 ****Certain confidential information contained in this document, marked with 4 asterisks, has
been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

 

 

Code of Conduct

 

Medtronic’s reputation throughout the world for legal, moral, and ethical behavior is one of
our most valuable assets. This reputation has been built upon a policy of strict compliance with
the law and the conduct of the business with the highest standards of moral and ethical behavior.
Medtronic’s Mission Statement and our code of business conduct (the “Code”) provide the guidance
essential to the successful global operation of Medtronic. Together, they reflect our shared values
and our collective commitment to Medtronic’s standards.

The Code is intended to inform employees of their legal and ethical obligations to Medtronic and
our customers. Given the legal and regulatory complexity of the markets in which we do business,
the Company has also distributed Business Conduct Standards which set forth legal compliance
requirements on a local country basis. In addition, Medtronic’s Chief Executive Officer, Chief
Financial Officer, Corporate Controller and Treasurer are subject to additional policies set forth
in Medtronic’s Code of Ethics for Senior Financial Officers, which is part of this Code.

Each supervisor and manager is responsible for ensuring employee understanding and compliance with
the Code and applicable Business Conduct Standards. Key management employees will be required each
year to confirm that they are not aware of unreported violations of the Code or the relevant
Business Conduct Standards and to ensure that appropriate training on Code responsibilities has
been properly communicated to each management employee under their direction.

No Code or Business Conduct Standards can cover every possible business situation which may arise
in the complex regulatory environment in which Medtronic operates. If you have any doubts or
concerns regarding the Code or any conduct, please review these issues with your local management
or Medtronic Legal Counsel. You may also contact the Chief Compliance Officer or use the
“Compliance Line” described in the Code.

Medtronic considers compliance with this Code to be vital. The Company’s reputation for quality
products and high standards and our passion for the Medtronic Mission Statement can only be
maintained by consistently honest and ethical dealings. All employees of Medtronic and its
subsidiaries around the world must adhere to this Code and the applicable Business Conduct
Standards.

Arthur D. Collins, Jr.

Chairman and CEO

****Certain confidential information contained in this document, marked with 4 asterisks, has
been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

 

 

Code of Conduct

 

COMPLIANCE WITH THE LAW

Medtronic and its employees shall comply with all applicable laws and regulations. If it is
not possible for Medtronic to participate successfully in any business segment in any part of the
world while complying with this policy, Medtronic will not participate in that business segment.

EMPLOYEE RESPONSIBILITY

Employees are expected to know and follow the laws of each relevant market in which Medtronic
does business. Employees are also expected to comply with the provisions of this Code and the
relevant Business Conduct Standards. Managers are expected to ensure such compliance. It is the
responsibility of every employee to promptly bring violations and suspected violations of the Code
to the attention of the Company, through management, Medtronic Legal Counsel, or the Chief
Compliance Officer, or by using the Medtronic Compliance Line described below. Employees at all
levels are prohibited from retaliating against or threatening anyone for reporting or supplying
information about a policy or conduct concern.

Medtronic has established and will maintain a written program to ensure compliance with
the law and with these and other policies the Company may adopt. The program consists, among other
things, of the Medtronic Code and Business Conduct Standards, training programs, annual
Certifications of Compliance to be completed by key personnel, periodic audit, and a
Compliance Line. The toll-free Compliance Line is available to all employees to report conduct
believed to be in violation of the Code or any applicable Business Conduct Standards. Information
transmitted through the Compliance Line will be investigated thoroughly and the identity of the
source will be maintained in confidence, unless otherwise required by law. Enclosed is a
wallet-sized card, which includes the U.S. Compliance Line number as well as access codes for
countries outside the U.S. where such a line is permitted.

Adherence to all laws and regulations in the countries in which we operate, and to the policies in
this Code as well as the Business Conduct Standards, is a condition
of employment for every
Medtronic employee. Violations could expose the employee and Medtronic to civil and criminal
liability and could harm the Company’s reputation and competitive position. Violations will be
dealt with promptly and may result in disciplinary measures up to and including the termination of
employment.

Although the Code and Business Conduct Standards provide a framework to guide business conduct,
they do not cover every situation. Please contact Medtronic Legal Counsel if you need assistance in
understanding or interpreting them. The Audit Committee will consider any request for a waiver
of any provision of this Code for executive officers. Only the Board of Directors or the Audit
Committee may approve a waiver for executive officers. Waivers will be granted only in exceptional
circumstances and will be promptly disclosed as required by law.

IMPROPER PAYMENTS

No bribes, kickbacks, or other payments for illegal purposes shall be made to or for the
benefit of government employees or officials, customers, or others. This policy extends not only
to direct payments, but also to indirect payments made in any form through consultants or other
third parties.

CUSTOMER RELATIONSHIPS

No benefit will be given to a customer with an explicit or implicit requirement to use
or purchase Medtronic products. “Customer” is used throughout these policies to mean any person or
entity that is in a position to purchase or influence a decision to purchase Medtronic products.
Certain discounts, rebates, free products, demos, equipment loaners, and warranty services
furnished in the ordinary course of business are permitted, provided such benefits comply
with local Business Conduct Standards.

 ****Certain confidential information contained in this document, marked with 4 asterisks, has
been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

 

 

Code of Conduct

 

Donations, Gifts, and Business Courtesies

Donations to customers or organizations closely affiliated with customers shall entail a
benefit to society and shall be made to promote better health care, demonstrate good corporate
citizenship, or serve a genuine educational function. Such donations
must comply with local
Business Conduct Standards.

The giving of gifts is generally prohibited. An exception is made in some countries for gifts which
are modest in amount, recognized as a custom of the trade, and which could in no way cause
Medtronic to be embarrassed or obligated. All gifts must comply with local Business Conduct
Standards.

Business courtesies such as meals, transportation, and entertainment provided to a
customer must be modest in amount and related to a legitimate business purpose (e.g., explanation
or demonstration of Medtronic products, application of products, service capabilities, or
training). Such courtesies must be in compliance with local Business Conduct Standards.

Payments to Customers

Medtronic may compensate customers for consulting, research and other services rendered, and
reasonable costs incurred where the services have value to Medtronic and are rendered for fair
market value. Such arrangements must be in writing in a form approved by the Medtronic Legal
Department and must comply with local Business Conduct Standards.

Medtronic has a responsibility to provide instruction, education, and training on the safe and
effective use of its products to health care providers. If Medtronic provides honoraria or
reimbursement of travel, living, or meal expenses to participants, the amount must be reasonable
and in compliance with local Business Conduct Standards.

Medtronic may, under some circumstances, underwrite the cost of continuing medical education
conferences or professional meetings (e.g., registration fees, travel, living, and meal expenses).
The laws regarding this type of support are complicated and such payments are not allowed in
every country. In some countries, payments can be made only to the sponsor of the event or the
institution of the attendee. All such payments must comply with local Business Conduct Standards.

FAIR DEALING

All
employees should deal fairly with Medtronic’s customers, suppliers, competitors and
employees. No one should take unfair advantage of anyone through manipulation, concealment, abuse
of privileged information, misrepresentation of material facts, or any other
unfair-dealing practice.

RECORDKEEPING

Medtronic entities will maintain accurate Company records and accounts in order to ensure
legal and ethical business practices and to prevent fraudulent activities. Finance managers for
Medtronic businesses, including subsidiaries worldwide, have the responsibility to express their
independent views to, and raise any significant issues with, the Chief Financial Officer.

Records and accounts must be complete and not misleading. All Company accounting records, and the
reports produced from those records, must be kept and presented in accordance with all applicable
laws and relevant accounting standards.

No undisclosed or unrecorded funds or assets of Medtronic may be maintained for any purpose. No
more than one set of books may be maintained and no false or artificial entries may be made in any
accounts.

 ****Certain confidential information contained in this document, marked with 4 asterisks, has
been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

 

 

Code of Conduct

 

ANTITRUST/COMPETITION

Antitrust laws in the U.S. and competition laws outside the U.S. exist to ensure free and open
competition in the marketplace, a principle that Medtronic fully supports. Violation of these laws
can result in civil liability and criminal penalties for Medtronic and its employees.

These laws are complex and, consequently, employees may not take any collaborative action with a
competitor, or take any action that could have an improper anti-competitive effect, without prior
advice from Medtronic Legal Counsel. Examples of prohibited conduct include:

	•	 	Agreements or understandings with competitors, either directly or
through others, to fix prices, divide customers or territories, or
restrict sales;
	 
	•	 	Exchange of pricing or other proprietary information with competitors;
and
	 
	•	 	Illegal tying, illegal price discrimination or refusals to deal.

Medtronic management is expected to maintain basic familiarity with the principles and purposes of
the antitrust laws as they apply to Medtronic business, and to abstain from any activities
that might violate or create any appearance of intention to violate such laws. Medtronic
employees are expected to understand the antitrust principles that apply to their activities. All
employees are to seek guidance from Medtronic Legal Counsel in any circumstances where doubt
exists.

 

EXPORT CONTROLS, ECONOMIC SANCTIONS, AND INTERNATIONAL BOYCOTTS

Medtronic must comply with export control and economic sanctions laws of the United States, as
well as those of other countries in which it does business. These laws restrict transfers, exports,
and sales of products or technical data from the United States to
certain prescribed countries and
persons as well as re-exports of certain such items from one non-U.S. location to another. They
also prohibit or restrict other business and financial dealings with certain countries,
governments, and parties. Medtronic and its employees are required to comply with these laws
without exception. These laws are complicated and employees should contact Medtronic’s
Export/Import Compliance Manager and/or Medtronic Legal Counsel whenever a question arises.

In addition, U.S. law prohibits cooperation with certain boycotts imposed by some countries against
others and further requires that any request in furtherance or support of such boycotts be reported
to the U.S. Government. The most notable of these is the Arab boycott of Israel. Medtronic
employees may not cooperate with any prohibited boycotts and must report any request for
cooperation immediately to management, the Medtronic Export/Import Compliance Manager, and/or
Medtronic Legal Counsel.

CONFLICT
OF INTEREST

Medtronic employees owe a duty of undivided business loyalty to the Company. This duty is
breached when an employee engages in activities that cause a conflict of interest. Conflicts of
interest may arise when considerations of gain or benefit to an employee or an employee’s
immediate family members conflict with or appear to conflict with the employee’s obligation to
serve Medtronic’s best interest or the employee’s ability to perform company work objectively and
effectively. Anything that would be

 ****Certain confidential information contained in this document, marked with 4 asterisks, has
been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

 

 

Code of Conduct

 

a conflict of interest for an employee may also be a conflict of interest if it involves an
immediate family member. Conflicts of interest can take many forms, not all of which can be
addressed by this Code.

The following are examples of conflicts of interest:

	•	 	Consulting with or employment by a competitor,
supplier, or customer of Medtronic;
	 
	•	 	Holding a substantial equity, debt, or other financial interest in any
competitor, supplier, or customer;
	 
	•	 	Having a financial interest in any transaction involving the purchase
or sale by Medtronic of any products, materials, equipment, services,
or property, other than through Company-sponsored programs;
	 
	•	 	Using employees, materials, equipment or other assets of
Medtronic for any unauthorized purpose; or
	 
	•	 	Accepting any cash, gifts, entertainment, or benefits that are more
than modest in value from any competitor, supplier, or customer.

A manager must approve acceptance of any benefit of more than modest value from a competitor,
supplier, or customer.

Each
employee is responsible for avoiding conflicts of interest as well as the appearance of
such conflicts. Employees who are unsure whether they are involved in a conflict of interest or
whether an action might create a conflict of interest should discuss the issue with their
manager or with Medtronic Legal Counsel. A conflict of interest or potential conflict of
interest may sometimes be resolved or avoided if it is appropriately disclosed and approved.

 

However, in other instances, disclosure may not be sufficient and Medtronic may require that
the conduct be stopped or that actions taken be reversed where possible.

INSIDER TRADING

All Medtronic employees are prohibited from engaging in insider trading. Insider trading
is trading in Medtronic stock while aware of confidential information about the Company that
could, if it became public, affect the stock price. Disclosure of any information to another
person, such as a spouse or friend, which would enable them to gain a trading benefit not available
to the general public, is prohibited as well. Similar restrictions apply to trading in the stock
of other companies using confidential information that an employee has access to because of his
or her employment. This conduct is illegal and could subject the employee and Medtronic to civil
liability and criminal penalties.

INTELLECTUAL PROPERTY AND CONFIDENTIAL INFORMATION

Medtronic invests substantial resources in developing proprietary intellectual property
and confidential information. Confidential information is information that is not generally known
or readily available to others. Medtronic protects its intellectual property by seeking patent,
trademark, or trade secret protection. It protects its confidential information by taking
precautions to prevent inappropriate disclosure or loss of such information.

Medtronic respects the intellectual property of others. Early in the product development cycle,
Medtronic conducts patent searches to avoid infringing patents of others and, when necessary, makes
design changes or seeks licenses.

Confidential information is critical to Medtronic’s competitive advantage. This includes technical
know-how and data, trade secrets, business plans, marketing and sales programs, and sales figures,

 ****Certain confidential information contained in this document, marked with 4 asterisks, has
been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

 

 

Code of Conduct

 

as well as information relating to mergers and acquisitions, stock splits, divestitures, licensing
activities, and changes in senior management. Confidential information also includes personal
information about Medtronic employees, such as salaries, benefits, and information contained in
personnel files. Confidential information must not be shared with others outside Medtronic except
pursuant to approved business relationships; nor may Medtronic employees accept confidential
information from third parties, including competitors, without the authorization of Medtronic Legal
Counsel.

CORPORATE OPPORTUNITIES

Employees
may not take for personal use opportunities that are discovered through the use
of corporate property, information or position, nor may they use corporate property, information or
position for their own personal gain or to compete with Medtronic.
Employees have a duty to
advance Medtronic’s interests when the opportunity to do so arises.

PROTECTION AND PROPER USE OF COMPANY ASSETS

All
employees should protect Medtronic’s assets and promote their efficient use. Theft,
carelessness and waste have a direct impact on Medtronic’s profitability. All Medtronic
assets should be used for legitimate business purposes. Incidental and occasional personal use of
Medtronic assets such as computers, telephones and supplies is permitted.

CLINICAL AND REGULATORY AFFAIRS

Medtronic products are heavily regulated by governmental agencies, health ministries, and
other regulatory authorities worldwide. Every employee is responsible for compliance with worldwide
product regulation requirements, including marketing approvals,
conduct of

clinical studies, good manufacturing practice requirements and standards, design controls, labeling
and advertising controls, and any other product regulations and controls promulgated by
government agencies. Each employee is responsible for reporting any significant issues to
management and/or the Chief Regulatory Officer. Regulatory affairs managers have the responsibility
to express their independent views to, as well as raise any significant issues with, the Chief
Regulatory Officer. Medtronic is committed to maintaining an open, constructive and professional
relationship with regulators on matters of regulatory policy, submissions, compliance, and product
performance.

QUALITY

Medtronic is committed to producing the highest quality medical devices in the interest of
patient safety and to maintain its reputation for excellence through Customer-Focused Quality.
Medtronic will comply with all laws and regulations regarding the safety and efficacy of its
products and the standards for its manufacturing plants.

Each employee is responsible for reporting any concerns that relate to a compromise of quality to
management and/or the Chief Quality Officer. Quality Managers for Medtronic businesses, including
subsidiaries worldwide, have the responsibility to express their independent views to, as well as
raise any significant quality issues with, the Chief Quality Officer.

ENVIRONMENTAL MANAGEMENT

Medtronic is committed to doing business in an environmentally responsible manner
and will strive to improve its performance to benefit its employees, customers, communities,
shareholders, and the environment. All employees are responsible for
making sure that Medtronic’s
business is conducted in compliance with all applicable laws and in a way that is protective of the
environment.

 ****Certain confidential information contained in this document, marked with 4 asterisks, has
been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

 

 

Code of Conduct

 

SAFETY AND HEALTH

Medtronic is committed to a safe, healthy work environment that is in compliance with all
applicable laws and regulations. All employees are expected to develop a pro-active, cooperative
attitude toward issues of health and safety throughout the Company.

PRODUCTIVE
WORK ENVIRONMENT

Medtronic is committed to a productive work environment. Key elements for developing such
an environment include freedom from harassment in any form, a culture that recognizes and
appreciates the advantages of a diverse work force, and a decision process which seeks to
ensure that all employees are treated with dignity and respect.

Discrimination on the basis of race, religion, gender, color, ethnic or national origin, age,
disability, sexual preference, or marital status will not be allowed. This includes discrimination
in hiring, training, advancement, compensation, discipline, and
termination. Harassment, such as
racial or sexual harassment, will not be tolerated and should be reported to the appropriate
manager or Human Resources Representative.

POLITICAL ACTIVITY

Medtronic supports your right to participate actively in the political process. However, you
must have written approval in advance from the Medtronic Chief Executive Officer or General
Counsel for solicitations made during work hours or on Medtronic property on behalf of any
political party, candidate committee or other election fund. No corporate funds, or other corporate
assets, may be contributed directly to any political party, political committee, or candidate
for public office at the federal level, or at the state level unless permitted by law, with
the exception of funds used to administer the corporate political action committee.

PEOPLE ACTING ON BEHALF OF MEDTRONIC

Medtronic expects its independent dealers, distributors and agents to comply with the policies
set out in this Code. The Medtronic manager responsible for any such relationship must ensure that
the terms of the relationship are set out in a written agreement, provide a copy of the Code,
and require compliance with the Code in all dealings on Medtronic’s behalf. Promoting or engaging
in any practices that violate the principles of this Code may result in termination of the
relationship.

GOVERNMENT, ANALYST, AND MEDIA INQUIRIES

Medtronic must be made aware of any inquiries from the government, the financial/analyst
community, or the media so that it can properly and thoroughly respond. If a Medtronic employee is
contacted by a representative of a governmental agency seeking an interview or making a non-routine
request for documents, that employee should immediately contact Medtronic Legal Counsel so that
appropriate arrangements can be made to fully comply with the Company’s legal obligations. All
inquiries from the financial/ analyst community should be referred to Investor Relations. All media
inquiries should be referred to Corporate Media Relations in the U.S. or to the authorized person
or department outside the U.S.

CODE OF ETHICS FOR SENIOR FINANCIAL OFFICERS

In addition to being bound by all other provisions of this Code of Conduct, the Chief
Executive Officer (CEO), the Chief Financial Officer, Treasurer, Corporate Controller, and other
senior financial officers performing similar functions who have been identified by the CEO
(collectively, the “Senior Financial Officers”) are subject to additional specific
policies (collectively, the “Code of Ethics for Senior Financial Officers”). The Code of Ethics for
Senior Financial Officers

 ****Certain confidential information contained in this document, marked with 4 asterisks, has
been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

 

 

Code of Conduct

 

governs a number of areas including disclosures of material information that affect the
disclosures made by the Company in its public filings; reporting of internal financial control
deficiencies or fraud of which these Senior Financial Officers become aware; violations of
securities laws; and conflicts of interest between personal and business relationships. The
Code of Ethics for Senior Financial Officers is an addendum to the Medtronic Code of Conduct and
may be found at http://www.medtronic.com/corporate_governance/ code_ethics.html.

 ****Certain confidential information contained in this document, marked with 4 asterisks, has
been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

 

 

Code of Conduct

 

The Medtronic Mission

To contribute to human welfare by application of biomedical engineering

in the research, design, manufacture, and sale of instruments or appliances

that alleviate pain, restore health, and extend life.

To direct our growth in the areas of biomedical engineering where we display

maximum strength and ability; to gather people and facilities that tend to

augment these areas; to continuously build on these areas through

education and knowledge assimilation; to avoid participation in areas

where we cannot make unique and worthy contributions.

To strive without reserve for the greatest possible reliability and quality in

our products; to be the unsurpassed standard of comparison and to be

recognized as a company of dedication, honesty, integrity, and service.

To make a fair profit on current operations to meet our obligations,

sustain our growth, and reach our goals.

To recognize the personal worth of employees by providing an employment

framework that allows personal satisfaction in work accomplished,

security, advancement opportunity, and means to share in

the company’s success.

To maintain good citizenship as a company.

 ****Certain confidential information contained in this document, marked with 4 asterisks, has
been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

 

 

VISIT THE COMPLIANCE WEBSITE ON THE MEDTRONIC INTRANET AT

http://mitintra.corp.medtronic.com/cci/index.htm

To order copies of this booklet, send an e-mail to productlit@medtronic.com.

Provide your name, mail stop and cost center number.

Include the number of copies you are ordering.

	 	 	 	 	 
	United States of America

	 	Asia-Pacific
	 	Canada
	Medtronic Neurological

	 	Medtronic International, Ltd.
	 	Medtronic of Canada Ltd.
	710 Medtronic Parkway

	 	Suite 1602 16/F
	 	6733 Kitimat Road
	Minneapolis, MN 55432-5604

	 	Manulife Plaza
	 	Mississauga, Ontario L5N 1W3
	USA

	 	The Lee Gardens, 33 Hysan Avenue
	 	Canada
	Internet: www.medtronic.com

	 	Causeway Bay
	 	Tel. 1-905-826-6020
	Tel. 763-505-5000

	 	Hong Kong
	 	Fax 1-905-826-6620
	Fax 763-505-1000

	 	Tel. 852-2891-4456	 	 
	Toll-free 1-800-328-0810

	 	Fax 852-2891-6830	 	 
	 
	 	 	 	 
	Europe
	 	 	 	 
	Medtronic Europe Sarl

	 	Australia	 	 
	Route du Molliau 31

	 	Medtronic Australasia Pty. Ltd.	 	 
	Case Postale

	 	Unit 4/446 Victoria Road	 	 
	1131 Tolochenaz

	 	Gladesville NSW 2111
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	Switzerland

	 	Australia
	 	© Medtronic, Inc. 2005
	Internet: www.medtronic.co.uk

	 	Tel. 02-9879-5999
	 	All Rights Reserved
	Tel. +41-21-803-8000

	 	Fax 02-9879-5100
	 	Printed in USA
	Fax +41-21-803-8099

	 	Toll-free 1-800-251-760
	 	July 2005

	 	 	 
	

****Certain confidential information contained in this document, marked with 4 asterisks, has
been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

 

 

Medtronic U.S. Business Conduct Standards — 2004

Customer Relationships

 

Standard #1

General Provisions

 

No Medtronic employee or agent may offer or give a benefit to a Customer with an explicit or
implicit requirement to use or purchase Medtronic products, or as a reward for prior use or
purchase of Medtronic products.

Scope of Standards. These Standards are mandatory for interactions involving a transfer of
anything of value from Medtronic to a Customer (a “Customer Interaction”). If you are unsure about
the legality of a Customer Interaction or the Customer Interaction is not specifically allowed by
these Standards, you must consult with Medtronic Legal Counsel before entering into it. All
Medtronic employees and agents must comply with these Standards, the Medtronic Code of Conduct and
applicable law, including, for example, the antitrust, securities, FDA and export control laws.
Standards 1-8 do not apply to relationships with individual patients or to relationships with
entities that are not in the business of providing health care services or affiliated with such
entities.

Standards are Country-Specific. These Standards apply to interactions with Customers who
work in the U.S. Other country-specific Standards can be found at the Compliance site on the
Medtronic Intranet. The Standards of the country where the Customer works apply to that Customer.
Customer Interactions with Customers (whether U.S. or O.U.S.-based) who work or perform services
outside of the U.S. require notice to the area Medtronic Legal Counsel (or responsible area
corporate paralegal), followed by approval of an area Medtronic Vice President. If the Customer
Interaction is the primary responsibility of management outside of the U.S., but is with a U.S.
physician or for services performed by an individual or organization within the U.S., notice to the
U.S. business legal department followed by approval of a U.S. Medtronic Vice President is required.

“Customer” means any person or entity in a position to purchase, lease, recommend, use, or
arrange for the purchase or lease of or prescribe Medtronic products. Gifts, payments or other
benefits given to persons employed by a Customer or to a close family member of a Customer are
attributed to the Customer. Likewise, gifts, payments or other benefits that are given in the name
of a Customer or to an organization

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affiliated with a Customer are attributed to the Customer. An organization is “affiliated”
with a Customer if it is controlled by or under common control with the Customer, or if the
Customer is on the Board of the organization, receives material compensation from, or has an
investment interest in the organization.

“Medtronic Vice President,” “Medtronic Corporate Vice President” and “Medtronic Legal
Counsel.” References throughout the Standards to a “Medtronic Vice President” mean any Vice
President of Medtronic, Inc. A list of the “Medtronic Corporate Vice Presidents” is on the
Medtronic Compliance website. References to “Medtronic Legal Counsel” are to the
Medtronic-employed lawyers providing services to the businesses and geographies.

Compliance with Standards is required. All Medtronic employees and agents involved in
Customer Interactions are expected to know and comply with these Standards and with any
interpretive guidance given to them by Medtronic (e.g., by a Medtronic Manager (“Manager”) or
Medtronic Legal Counsel). Managers are responsible for ensuring compliance. Violations of the
Standards could expose the employee and Medtronic to civil and criminal liability. Adherence to
the Standards is a condition of employment for every employee and violations will be dealt with
promptly and may result in disciplinary measures up to and including the termination of employment.

Each business must develop and implement appropriate procedures for disciplining employees who
violate the Standards and for responding to violations by agents. These discipline policies are
subject to review and approval by the Medtronic General Counsel. Each business must also ensure
that all personnel involved in Customer Interactions receive mandatory training on the Standards at
a level appropriate to their position.

If an employee is in doubt about the meaning or application of a Standard, the employee should
contact a Manager or Medtronic Legal Counsel. If an employee is concerned that others may be
engaging in, or requiring that the employee engage in, conduct that is inconsistent with these
Standards, the employee should discuss the concern with a Manager or Medtronic Legal Counsel or
contact the Compliance Line at 800-488-3125.

If the Company is restricted from doing something, so are its agents and employees. If
these Standards restrict Medtronic’s interactions with a Customer, Medtronic employees and agents
are likewise restricted, even if no request for reimbursement is made of the Company. Agents of
Medtronic that interact with Customers on Medtronic’s behalf must be contractually required to
adhere to these Standards.

Payments to Customers may only be made by the Company. Only the Company can make
payments to, or on behalf of, or reimburse a Customer and only by Company

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check or wire transfer.
Any payment for travel expenses incurred by a Customer (e.g., lodging, meals, or transportation)
must be paid directly to the vendor (e.g., the hotel or airline) whenever practical. When
reimbursement is made to the Customer, original receipts or other supporting documentation is
required. When a Customer is expected to pay out-of-pocket for reimbursable travel expenses, the
Customer should be provided with modest per-diem spending guidelines in advance. Neither the
Company nor any Medtronic employee or agent may ever provide cash or a personal check to a
Customer.

Exceptions or amendments. In circumstances where conduct prohibited by these Standards
does not implicate underlying legal or ethical concerns, it may be appropriate to grant infrequent,
fact-specific exceptions. Exceptions must comply with all legal and regulatory requirements and
require the specific written approval of both a Medtronic Corporate Vice President and Medtronic
Legal Counsel. Amendments to the Standards require the approval of the Medtronic General Counsel.

Limits on meals and hospitality. Meals or other hospitality permitted under these
Standards must be modest in value and subordinate in time and focus to the purpose of the
interaction. Except as provided under Standard 6 (Consulting), Medtronic-funded hospitality is
limited to modest meals and receptions. Medtronic may not pay for, contribute to, or hold parties
for Customers for the purpose of celebrating a non-business event, such as a holiday. Medtronic
may not pay for meals, receptions, other hospitality, or travel or lodging for a spouse or other
guest of a Customer.

Limits on travel. Travel provided for Customers outside of the 48 contiguous states (the
“Continental U.S.”), other than travel to the Continental U.S. originating outside of the
Continental U.S. or travel within a state located outside of the Continental U.S., must be approved
by a Medtronic Corporate Vice President. Such travel may be allowed only if the location is
necessary to accomplish the purpose of the trip (e.g., to bring Customers to a specialized lab when
similar facilities are not available in the Continental U.S.), or if most of the anticipated
attendees do not live in the Continental U.S. but do live convenient to the proposed location.
Except as provided under Standard 6 (Consulting), Medtronic-provided travel is limited to coach
class travel.

Limits on lodging. The locations of any Medtronic-sponsored business meeting, Training and
Education session, or consulting meeting must be modest and selected based upon program
requirements and convenience of attendees. Any lodging provided to a Customer must be provided at
an “Approved Medtronic Customer Meeting Facility” or at a hotel with a rate no higher than an
Approved Medtronic Customer Meeting Facility for that locale. A list of the Approved Medtronic
Customer Meeting Facilities will be maintained by the Medtronic Corporate Event Planners in
conjunction
with the Medtronic Corporate Legal Department and is available on the Medtronic Compliance website.

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No lodging may be provided at a resort or Resort Location. “Resort Locations” are areas, other
than major metropolitan areas, known primarily as recreation or vacation destinations (e.g., ski,
golf, beach, spa, fishing, vineyard, horseback-riding, hunting or fishing destinations, such as
Aspen, Pebble Beach, Naples, or Napa Valley). If a business unit with headquarters located in a
Resort Location sponsors a meeting for its Customers, and for the convenience of its staff or
Customers locates the meeting convenient to its headquarters, the Resort Location restriction does
not apply, unless the hotel is located on, or immediately adjacent to, a resort property (e.g.,
beside a golf course or beach, on the grounds of a vineyard or at the foot of a ski hill).

Oversight. The Medtronic Executive Committee will include compliance issues as an agenda
item at least quarterly. Each Business President, Geography President, and Business General
Manager is responsible for ensuring that: 1) compliance issues are addressed at least quarterly at
their staff meetings or by a committee composed of high-level management and the chief financial
and legal officers for their business unit, at which a summary of the issues along with their
disposition is reviewed and a copy of the disposition is sent to the Medtronic General Counsel; 2)
that a comprehensive plan is in place to ensure that these issues are addressed throughout their
organizations, including policies and procedures requiring appropriate documentation, monitoring,
and retrospective review of activities governed by these Standards; and 3) all appropriate
personnel receive appropriate training on the Standards.

Key management employees will be required to complete annual Certifications of Compliance in which
they confirm that they are not aware of unreported violations of the Medtronic Code of Conduct or
the Business Conduct Standards.

Accuracy in reporting reimbursement-related information. Any product-related cost or
charge information (other than direct billings) provided by Medtronic to a government agency that
may be used for the purpose of setting reimbursement rates must be reviewed by Medtronic Legal
Counsel before it is reported to the agency.

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Medtronic U.S. Business Conduct Standards

 

Standard #2

Free or Reduced Charge Products: Discounts, Credits and Rebates,
Samples, Demos, Loaners and Warranties

 

Discounts furnished in the ordinary course of business are permitted, provided that they
comply with this Standard.

Scope of Standard. This Standard addresses “Discounts” (reductions from list price of the
amount charged for Medtronic products, including free items, credits and rebates) as well as
accessories, samples, demos, trial-period loans, product with no independent value, and warranties.

Discounts not permitted:

	 	•	 	Rebates paid in cash rather than by check;
	 
	 	•	 	Signing and conversion bonuses;
	 
	 	•	 	Discounts earned on products covered by a federal health care
program, but applied to products that are not covered by the program;
	 
	 	•	 	Discounts available when a product is covered by private payors, but not available when
it is covered by a federal health care program; and
	 
	 	•	 	Credits earned on trade-ins, in excess of the fair market value of the item that is
traded.

Legal review required. Prior review by Medtronic Legal Counsel is required for Discount
programs:

	 	•	 	That are based on Medtronic’s “share of an account” or involving “exclusivity” or “sole
vendor requirements”;
	 
	 	•	 	That result in the reduction of the product price below cost;
	 
	 	•	 	That are conditioned on the purchase of a package or bundle containing products that
are not all the same;
	 
	 	•	 	That involve multiple items with variable discount rates;
	 
	 	•	 	That may not be applied at the discretion of the Customer (i.e., that require the
discount be applied for a particular purpose, for example, to fund
the acquisition 

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	 	 	 	 of another product, or to support a research or education program), except credits
restricted to the purchase of more of the same product;

	 
	 	•	 	That involve Discounts paid prior to the purchase of the products on which they are
earned;
	 
	 	•	 	That are in a form other than a Discount taken at the time of sale as a reduction in
the invoice price, or a Discount paid later as a rebate or a credit for the same type of
item;
	 
	 	•	 	That extend for more than one year; or
	 
	 	•	 	That involve products with “No independent value,” as described below.

Prior review by Medtronic Legal Counsel is also required when:

	 	•	 	Paying unreimbursed medical expenses in connection with a warranty obligation (such
payment must be provided solely for the benefit of the patient and can only be made to a
Customer on a patient’s behalf);
	 
	 	•	 	Free product is provided for analysis under a Consulting Agreement, or as part of a
clinical trial or research project, to ensure that the underlying arrangement is consistent
with Standard 6 (Consulting) and the value of the free product to the Customer is
considered in setting fair market value compensation;
	 
	 	•	 	Entering into an agreement with a group purchasing or similar organization; or
	 
	 	•	 	Giving, loaning or consigning Medtronic products without charge except when the product
is provided:

	 	–	 	pursuant to a warranty;
	 
	 	–	 	 while equivalent Medtronic product is being repaired;
	 
	 	–	 	as a replacement as the result of regulatory action, to eliminate the risk of
failure, or for product that is accidentally damaged; or
	 
	 	–	 	consistent with the requirements set forth below under “Samples,” “Demos,”
“Accessories,” or “Indigent patients.”

Samples. A limited number (per evaluating physician) of free product samples may be given
to permit evaluation of products by Customers who are unfamiliar with the product. No-charge
loaners may also be provided in the same circumstances, but only for a reasonable evaluation
period.

Demos. Demonstration (functional or mock-up) products not for sale or use in patients may
be given free of charge, provided they are labeled “Not for Human Use.”

“Accessories” are single-use or disposable items (e.g., lead introducers and batteries)
that facilitate the use or operation of Medtronic products purchased by a Customer. Accessories
may be provided free of charge only if they may be given without charge under another provision of
Standard 2, or they are of nominal value (i.e., less than $100), are not eligible for separate
reimbursement under any federal health care program, are provided to any given Customer only
occasionally, and are equally available at no charge to all Customers.

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Indigent patients. Consistent with Standard 3 (Donations) and with any Medtronic policies
on Indigent patients, products may be given to Indigent patients when the doctor or facility will
not receive payment for the product or associated procedures.

Products with no independent value. Medtronic may give or lend products without charge
that are ancillary to and facilitate the use or operation of Medtronic products purchased by a
Customer (e.g., product-specific tools). These products must not have any value independent of the
primary product and must not be of personal use to the Customer. The recipient must acknowledge
receipt, and, in the case of a loan, ownership by Medtronic. Products do not qualify as having “no
independent value” if they are sometimes sold to Customers by Medtronic or any other manufacturer.

Documentation. Product sold or given to a Customer with more than a nominal list price,
other than Demos, must be invoiced.

	 	•	 	Disclosure. Discount terms must be set at the time of sale and reflected in a
written agreement. When the amount of the Discount is known at the time of sale, the net
price of each discounted item must be fully disclosed in writing to the Customer on the
invoice. Otherwise, the invoice must make clear reference to another document provided to
the Customer that explains the Discount terms, including its allocation among the invoiced
products. Each invoice for discounted product must include the notation that the price is
net of any Discount. Where the actual Discount is not known at the time of sale (e.g., in
the case of a volume rebate), the invoice should include a statement that the purchase
price may be subject to a Discount, and, when the Discount becomes known, a written
statement should be issued to the Customer noting the Discount and relating the Discount
back to the original invoice(s). Additional disclosures may be required in connection with
Discount programs designated above as requiring legal review.
	 
	 	•	 	Medicare reporting notification. The invoice must state that the Customer may
be obligated to report the Discount to Medicare, Medicaid or other federal health care
programs.
	 
	 	•	 	Sample-specific requirements. Invoices for sample product must indicate that
the product is provided at “no charge” and contain language similar to the words “Customer
should not seek reimbursement for this product.”
	 
	 	•	 	Warranty-specific requirements. The invoice must accurately report the price
reduction of the item (including any free item) that was obtained as part of the warranty
and inform the Customer of its reporting obligations under federal law. In circumstances
where eligibility for a price reduction under a warranty may be determined after the time
of sale (at which time a warranty credit is issued), the invoice must accurately report the
potential that additional price reductions may apply and inform the Customer of its
reporting obligations. When the value of the
warranty credit becomes known, Medtronic must provide the Customer with documentation of the
warranty credit.

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	 	•	 	Leases. Any product leased or lent to a Customer, with or without charge, with
more than a nominal list price must be the subject of a written lease agreement accurately
stating all material terms of the lease (in the case of relatively low-value items, such as
programmers, a letter from Medtronic setting forth the material terms and conditions upon
which the item is lent is sufficient).

Finance Department responsibilities. Business Shared Services and the Finance Department
for the applicable Medtronic business must ensure that invoicing and documentation of any Discounts
or other arrangements described in this Standard are in accordance with these requirements and
Medtronic financial policies.

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Medtronic U.S. Business Conduct Standards

 

Standard #3

Donations to Customers or Organizations Closely Affiliated With
Customers

 

Donations to Customers or organizations affiliated with Customers are permitted only if the
donation is intended to benefit society and promote better health care, demonstrate good corporate
citizenship, or serve a genuine educational function, and, except in rare instances, only where the
recipient is a tax-exempt charity.

“Donations” are contributions made by Medtronic to support a charitable purpose, and may be
made only to a tax-exempt charity, or, in rare instances, to individuals engaged in a genuine
charitable mission (“Charities”). Donations may not be linked, implicitly or explicitly, to an
agreement to use, order, recommend or refer for Medtronic products or used to reward prior
purchases. Donations may not result in a personal benefit to a Customer, as opposed to supporting
a charitable purpose. Product donations for use outside of the U.S. must not violate any export
control law.

Payments by Medtronic in return for items or services, and research grants or other payments made
to entities that are not Charities, should be evaluated under Standard 6 (Consulting) or Standard 8
(Medical Conferences). Donations made to a charity to sponsor or support attendance at conferences
must also meet the requirements of Standard 8.

Support of education. Donations that meet the requirements of Standard 3 may be made for
educational purposes, including:

	 	•	 	Supporting an endowed chair at an academic institution;
	 
	 	•	 	Subsidizing the education of fellows participating in fellowship programs with an
academic affiliation;
	 
	 	•	 	Subsidizing medical congresses and conferences; and
	 
	 	•	 	Educating the public on health care topics.

Support of research. Donations that meet the requirements of Standard 3 may be made to
support specific scientific research projects. These might include, for example,
donations to support basic scientific research. Support for research connected to Medtronic
therapies normally should be addressed under Standard 6 (Consulting).

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Other permissible purposes. Donations that meet all of the requirements of Standard 3 may
be made for other genuine philanthropic and charitable purposes that demonstrate good corporate
citizenship and represent a benefit to society; for example, support of activities directed at
providing services or products to Indigent patients (see Standard 2 [Discounts]).

Fundraising events. Support of fundraising events is only permitted where at least a
portion of the donation qualifies for a charitable tax deduction. Sponsorship of either Customer
participation in (e.g., the entrance fee to a charitable golf tournament), or Customer attendance
at (e.g., tickets for a charitable gala), fundraising events is prohibited, except where the
participants or attendees are selected by the donee or where the event involves only a meal or
reception and qualifies as a business courtesy under Standard 5 (Business Courtesies).

“Infrastructure” support. Monetary donations may not be made to a Customer to support
construction or renovation of Customer facilities, or to equip Customer facilities. However,
Medtronic may purchase tickets to, or sponsor, a qualifying fundraising event (see above) even if
the proceeds are designated for such purposes, and Medtronic may make donations of Medtronic
equipment to support a charitable purpose. If the transfer of equipment is not to a charity and
for a charitable purpose, the limitations in Standard 2 (Discounts) apply.

Support for lobbying. Donations that meet all other requirements of Standard 3 are
permitted even when the recipient will apply some or all of the donation for lobbying activities.
However, prior review by the Washington Government Affairs Office is required to ensure that these
initiatives are consistent with Medtronic’s legislative goals and are likely to be effective.

Mechanics of payment. Donations may be made only through wire transfer to the recipient’s
official bank accounts or through Medtronic check made payable to the official name of the Charity.
Reimbursement for monetary donations made through the use of expense reports is expressly
prohibited.

Transmittal letter. A transmittal letter from Medtronic clearly explaining the purpose of
the donation must be sent prior to or with the donation. The transmittal letter must be approved
by Medtronic Legal Counsel or, if the payment is less than $2,500, be in a form that has been
approved by Medtronic Legal Counsel and used without material modification.

Approval process. Each business unit must establish a process for receiving, reviewing and
acting on all charitable donation proposals according to pre-established criteria consistent with
Standard 3. Personnel that are part of the sales organization

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may not be involved in this process except to respond to Customers’ questions about where to submit
an application for a donation. Budgets for donations may not reside in the sales organization.

All donations that exceed $1,000 or the equivalent fair market value must have prior approval of a
Medtronic Vice President. Donations that exceed $15,000 or the equivalent fair market value must
be approved by a Corporate Vice President.

Required documentation. The disposition of each request for a donation must be documented.
Also, all donations (whether of monetary or non-monetary items such as products or equipment) must
be supported by documentation demonstrating that: 1) the recipient is a Charity (this will
normally require evidence of the entity’s tax-exempt status); 2) the donation will be used for an
appropriate purpose (described above); 3) the amount of the donation is appropriate for the
proposed purpose (e.g., not in excess of the anticipated costs of a proposed project or event); and
4) the donation has been received by the Charity (i.e., a receipt or acknowledgment from the
recipient, or, if specified in the transmittal letter stating the purpose of the donation, a
canceled check).

Research grant requests must be accompanied by an explanation of the purpose of the research, a
detailed research protocol or other appropriate documentation, and a detailed budget or description
of how the requested funds will be applied. Educational grant requests must be accompanied by a
detailed explanation of the particular educational program involved, including date, place, and
program description, and a detailed budget or description of how the requested funds will be
applied.

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Medtronic U.S. Business Conduct Standards

 

Standard #4

Gifts

 

The giving or accepting of gifts is generally prohibited. An exception is made for: 1)
occasional modest gifts, but only if the gift benefits patients or serves a genuine educational
function; and 2) minimal-value, branded promotional items related to the Customer’s work or
benefiting patients.

Value, frequency and purpose of gifts. Gifts must benefit patients or serve a genuine
educational function. Except for medical textbooks and anatomical models, the fair market value
of any gift may not exceed $100. Gifts from any business unit, having a per-Customer aggregate
value in excess of $300 per year, are prohibited. In no event may gifts be given in the form of
cash, cash equivalents, or gift certificates, other than gift certificates for a specifically
identified item. Gifts that do not benefit patients or serve a genuine educational function, such
as food, flowers, wine, or other refreshments, are prohibited. Gifts to public employees (e.g.,
public university, public hospital or VA physicians, administrators or other employees) are
generally prohibited by the rules of those institutions, and Medtronic must not give any gifts that
violate these rules. It is the responsibility of the involved employee and the employee’s Manager
to determine the appropriateness of the type and amount of gift given in each circumstance.
Samples and other transactions described under Standard 2 (Discounts) should be considered under
that Standard rather than under this Standard. Gifts given in exchange or appreciation for
services should be treated as compensation and must conform to Standard 6 (Consulting). Gifts may
not be given as a “thank you” for the purchase of product.

Minimal-value, branded, promotional items. It is also occasionally permissible to give
minimal-value, branded, promotional items related to the Customer’s work or for the benefit of
patients. Examples include pens and notepads. Items such as golf balls and tee shirts are not
related to the Customer’s work or patient benefit, and are prohibited.

Documentation. The description and purpose of gifts should be documented and approved on
an expense report or comparable authorization process. Expenses for gifts must be clearly
identified as such and coded as directed by Finance.

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Medtronic U.S. Business Conduct Standards

 

Standard #5

Business Courtesies

 

Business Courtesies provided to a Customer in the context of a business meeting are limited to
meals, receptions, transportation and lodging, and must be modest in amount and related to a
legitimate business purpose.

Permissible business purpose. A “Business Meeting” is a meeting held for one of the
following business purposes: 1) explaining the features, use or other important aspects of
Medtronic products; 2) understanding the product-related service, or other concerns, needs or
demands of a Customer; 3) explaining the services and terms available from Medtronic; or 4)
negotiating contracts and sales terms.

Permissible Business Courtesies. The term “Business Courtesies” includes any meals,
receptions, transportation, lodging or entertainment provided to a Customer by Medtronic. This
Standard limits the Business Courtesies that Medtronic may provide in connection with a Business
Meeting to occasional modest meals and receptions incurred during the Business Meeting and travel
and lodging as provided below. No other Business Courtesies may be extended in connection with a
Business Meeting. A Medtronic employee must be present during any meal or reception and the
setting must be consistent with the business purpose. Unless the courtesy may be extended under
another Standard (see below), if there is no permissible business purpose for the meeting (i.e.,
the meeting is not a Business Meeting) or if there is no Medtronic employee in attendance, the
courtesy is a prohibited gift under Standard 4 (Gifts).

Courtesies in other contexts. For guidance relating to courtesies (i.e., any meal,
reception, transportation, lodging or entertainment) extended to Customers in connection with
Consultant Meetings, see Standard 6; Medtronic-sponsored Training and Education, see Standard 7; or
third-party medical conferences, see Standard 8.

Payment for travel, lodging and meals. If a Customer is asked to travel to an out-of-town
Business Meeting for Medtronic’s convenience, in addition to the meals and receptions described
above, Medtronic may cover modest travel (ground transportation and airfare), lodging and meals
associated with the trip as provided in Standard 1 (General Provisions). These trips are
appropriate only if they are to Medtronic’s offices

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or to other function-appropriate locations selected by Medtronic because of practical concerns, or
because of cost savings to Medtronic. Examples of appropriate reasons for trips are plant tours
and product demonstrations (where the product is not reasonably portable) when there is a real and
substantial business need for such a tour or demonstration.

Documentation of Business Courtesies. The description and business purpose of all Business
Meetings, along with the nature and amount of any Business Courtesies, the full names of those in
attendance, including the employment, agency or staff affiliation of any individual Customer, must
be documented and approved on an expense report or other appropriate authorization process.

Value and frequency of Business Courtesies. Each business unit must develop, with the
approval of the Business President and Medtronic Legal Counsel, general, per-individual Customer,
per-day spending limits for meals and receptions that are modest in amount. Each business unit
must also determine appropriate limits on frequency or aggregate spending. For administrative
convenience, nominal expenses (less than $25), and expenses incurred in connection with activities
governed by other Standards may be excluded from these limits.

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Medtronic U.S. Business Conduct Standards

 

Standard #6

Consulting, Research, and Advisory Arrangements

 

Medtronic may compensate Customers for consulting, research and other services rendered, and
reasonable costs incurred, where the services have value to Medtronic and are paid at no more than
fair market value. Such arrangements must be in writing in a form approved by Medtronic Legal
Counsel and comply with local Business Conduct Standards.

Purpose and payment. Agreements with Customers may be entered into only for services for
which there is a legitimate Medtronic need. Clinical trials, including post-market or outcomes
studies, must be based on a demonstrable need for data (e.g., for product approval, reimbursement,
or supplemental efficacy claims). Payments to support studies sponsored by Customer-consultants
(“Consultants”) are permissible if the outcome of the proposed study is likely to be of use to
Medtronic (see Standard 3 for charitable donations to support research). Consultants contracting
with Medtronic must be well qualified, in terms of available facilities and education or
experience. Compensation may not exceed the fair market value of services provided, and may not be
extended to the Consultant as a reward for prior business or as an inducement for future business.
Compensation must be structured on a measurable basis, such as payment based on a daily, hourly or
per-project rate, deliverables or milestones.

Approval process. Each business must establish mechanisms that require oversight and
approval by personnel qualified to arrange and evaluate the proposed arrangement according to
criteria consistent with Standard 6. Personnel in the sales organization may be involved in this
process only to the extent necessary to supply information about contractor qualifications or
interest. Budgets for Standard 6 arrangements may not reside in the sales organization. Members
of the sales organization may not deliver payment to Consultants.

Form of agreements. Agreements with Customers for the provision of services (e.g.,
training, educating, consulting, research, clinical study, focus group, and physician advisory
board) must: 1) be entered into prior to the start of the services and, without exception, prior
to payment; 2) be in writing and signed by the parties; 3) be approved by Medtronic Legal Counsel,
or, where the aggregate annual payment under the

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been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

 

agreement is less than $2,500, be in a form which has been approved by Medtronic Legal Counsel and
used without modification; and 4) specify the services to be provided, the term of the agreement,
the method of payment, and any obligation to reimburse for travel, lodging, and other related
expenses. Each agreement must specify a mechanism to verify that the required services are
performed (e.g., periodic progress reports or a final written study report). Each business unit
must develop an effective mechanism for substantiating that contracted services were provided
(e.g., Manager review or internal spot assessments), or that there is a documented, legitimate
reason that the services were not provided. A businessperson outside of the sales organization
must ensure that the agreement is carried out in accordance with its terms. Consulting agreements
should comply with the personal services safe harbor to the extent practicable. Agreements
providing for services on an as-needed basis with payment prior to receipt of services are
prohibited.

Required documentation. Files on all Consulting agreements must be maintained by the
business unit and must include the written agreement, rate of compensation, the basis for selecting
the Consultant (including the Consultant’s particular qualifications) and setting the compensation,
and need for the services. Each Consultant must represent and acknowledge in writing that they
have properly notified, and have received all necessary permissions from, all required parties
(e.g., hospital, employer, and regulators) if those parties are not signatories to the agreement.

Limits on use of Customer-Consultants. Consultants who are health care professionals may
not be paid to recommend the sale, lease or use of Medtronic products. They may be paid to speak,
write and provide Training and Education on Medtronic products and related disease states. They
may also provide technical expertise on behalf of Medtronic. For example, they may be involved in
advocacy efforts with payors for reimbursement of Medtronic products. In any case, they are
required to disclose their affiliation with Medtronic prior to providing services.

Medtronic may also jointly put on events with health care professionals (“co-marketing events”) at
which the professional promotes his or her own practice (possibly along with discussion of disease
states and therapies) at the same time that Medtronic promotes its therapies. For such
co-marketing events, Medtronic’s support should never exceed its fair portion of the event costs.
Since the health care professional’s contribution to the event is normally the time that he or she
spends preparing and speaking, Medtronic should not pay the health care professional an honorarium
or fee for his or her time, except in the case of an exception, see Standard 1 (General
Provisions).

Regardless of the value of the contract, whenever a Consultant who is a health care professional is
contracted to speak to potential Customers or referral sources about a Medtronic product, the
agreement must be approved by Medtronic Legal Counsel to ensure that it requires appropriate
disclosure of any conflict of interest and appropriate limitations on the scope of contracted
activities.

 16

 
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been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

 

Approval process. A U.S. Medtronic Vice President must sign all Consultant agreements
initiated within the U.S. For agreements with O.U.S. individuals or institutions, see Standard 1
(General Provisions). Delegation of this responsibility can only be made with the approval of the
Medtronic General Counsel.

Consultant meetings. All Consultant services must be performed pursuant to written
consulting agreements. Consequently, Consultants invited to meetings to perform consulting
services must have written consulting agreements in effect describing the services to be provided
at the meeting. Medtronic personnel with a bona fide interest in, and in a position to use, the
advice given by the Consultants must be in attendance at each Consultant meeting. Securing
consulting services must be the purpose of the meeting. Meals and hospitality should not compete
with, or take precedence over, the purpose of the meeting. Copies of the agenda and minutes of any
Consultant meeting must be maintained in each of the attending Consultants’ files (mentioned above)
and the agenda for group meetings must be reviewed by Medtronic Legal Counsel prior to issuing
invitations.

	 	•	 	Meals and hospitality. Medtronic may provide Consultants with modest meals,
receptions, lodging, ground transportation and other hospitality in connection with a
Consultant meeting. Hospitality beyond meals, receptions, travel and lodging, may be
offered only on days during which at least five hours of bona fide Consultant meetings are
scheduled. Each business unit must develop, with the approval of the Business President
and Medtronic Legal Counsel, general per-Consultant, per-day spending limits on meals and
hospitality extended in this context.
	 
	 	•	 	Travel and lodging. The locations of meetings with Consultants must meet the criteria
set out in Standard 1 (General Provisions). Medtronic may pay for reasonable travel costs
for Consultants in connection with a Consultant meeting, which may exceed coach class if
necessary to secure a Consultant’s services. Medtronic may not pay for the travel or other
expenses (including the cost of meals, receptions and other hospitality) of guests of
Consultants, or of any other person who is not a bona fide contributor to the meeting.

Payment. The appropriate Business President, Area President or Business General Manager
shall ensure that there is an approved written, executed agreement, and that there is evidence of
performance of the agreement prior to payment for services. Payments must be made by check or wire
transfer to the official name and address or account of the party contracting with Medtronic.

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24b-2 of the Securities Exchange Act of 1934, as amended.

 

Medtronic U.S. Business Conduct Standards

 

Standard #7

Training and Education Concerning Medtronic Products

 

Medtronic has a responsibility to make available instruction, education, and training on the
safe and effective use of its products to health care providers. If Medtronic provides
reimbursement of travel, living, or meal expenses to participants in connection with training and
education, the amount must be reasonable and in compliance with local Business Conduct Standards.

Training and Education meetings. Medtronic may provide Training and Education to Customers
to explain the safe and effective use of Medtronic products (“Training and Education”) to persons
who could benefit from it. Training and Education will normally be provided by Medtronic rather
than a third party, and includes: 1) training on how to use or implant a Medtronic product; 2)
training on indications or therapies appropriate for use of a Medtronic product, including
education regarding product-related disease states and the appropriate use of the product in the
continuum of care; and 3) training on the quality, properties, and/or design characteristics of a
Medtronic product, to the extent that such training provides health care professionals information
on how to use that product safely and effectively.

Training and Education must be the purpose for the program. Meals and receptions should not
compete with, or take precedence over, the educational program. Except on a travel day, Training
and Education should not be less than five hours for each program day. All Training and Education
must be adequately documented, including the agenda and a report on the costs, participants, and
faculty.

Oversight responsibilities. Each business unit is responsible for setting up and
maintaining a review and approval process for the Training and Education programs it sponsors. The
review process must include the course content, agenda (covering all events from arrival to
departure) and faculty.

Location of meetings. The locations for Medtronic-sponsored Training and Education must be
consistent with Standard 1 (General Provisions) and must be limited to the Continental U.S., except
when all of the attendees live in a U.S. state or territory outside of the Continental U.S.
Programs requiring “hands-on” training in surgical procedures

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24b-2 of the Securities Exchange Act of 1934, as amended.

 

should be held at Bakken Educational Centers, surgical training facilities, medical institutions or
other facilities appropriate for such purposes. Medtronic manufacturing or Medtronic R&D
facilities satisfying all of the criteria outlined in this paragraph may be appropriate locations.

Travel, lodging, meals and hospitality. Medtronic may pay for reasonable travel and
lodging costs incurred by attendees, consistent with Standard 1 (General Provisions). Medtronic
may provide attendees with modest meals and receptions in connection with a Training and Education
program. Medtronic may not pay for the travel or other expenses for guests of attendees, or for
any other person who does not have a bona fide professional interest in the information being
shared at the meeting. Each business unit must develop, with the approval of the Business
President and Medtronic Legal Counsel, general per-Customer, per-day spending limits on meals and
receptions extended in this context.

Reimbursement support programs. Medtronic may support accurate and responsible billing for
products and related procedures to Medicare and other payors and cost-effective use of Medtronic
products, by providing Customers with: 1) information about the economically efficient use of
Medtronic products (e.g., explaining where the product can most efficiently be used in the
continuum of care and how the product can be offered in a cost-effective manner); 2) coverage,
coding and billing information regarding Medtronic products or related services or procedures; and
3) technical or other support intended to aid in the appropriate and efficient use or installation
of Medtronic products.

Medtronic may not provide general practice management advice of material value to Customers without
charging fair market value. For example, except in exchange for fair market value, it is not
permissible to provide personnel or services to a Customer in situations that relieve the Customer
of hiring such personnel or purchasing such services. It is also not appropriate to provide
customized advice that is not product-focused.

 19

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24b-2 of the Securities Exchange Act of 1934, as amended.

 

 

Medtronic U.S. Customer Relationship Standards.

 

Standard #8

Medical Conferences, Congresses and Professional Meetings
Sponsored by Organizations Other than Medtronic

 

Medtronic has an interest in building awareness and understanding of its products and related
disease states through support for third-party scientific forums. For these purposes, Medtronic
may underwrite the cost of such third-party conferences or meetings and may subsidize the
attendance of health care professionals-in-training. Such payments must comply with local Business
Conduct Standards.

Qualifying conferences. Medtronic may support the following categories of events
(collectively “Conferences”) consistent with Standard 8:

	 	•	 	Nationally or regionally recognized meetings. Medtronic may support nationally or
regionally recognized, bona fide, independent, educational, scientific or policy-making
conferences, congresses and professional meetings that have a relationship to Medtronic
businesses or products.
	 
	 	•	 	Grand Rounds. A subsidy may be made to the institution sponsoring “Grand Rounds,” as
that term is normally understood, if: 1) the subsidy is made pursuant to a written
agreement that specifies the topics to be addressed; 2) the topics are related to the
therapies, uses or indications for a Medtronic product; and 3) the subsidy does not exceed
the normal and customary expenses associated with the conduct of the Grand Rounds.
	 
	 	•	 	Scientifically valuable roundtables or discussion groups. A subsidy may be made to
support high-caliber, scientifically valuable roundtables, panels or discussion groups
directed at advancing the state of medical knowledge about Medtronic therapies or
meaningfully addressing disease states or technology of interest to Medtronic.

Permissible subsidies. Subsidies may be provided to the Conference sponsor to reduce
overall Conference costs, support modest meals or receptions, or allow attendance by medical
students, residents, fellows, or other health care professionals-

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been omitted and filed separately 
with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

 

in-training (see selection requirements under “Scholarships” below). While Medtronic funds may be
applied to pay costs and expenses associated with faculty selected and retained by the Conference
sponsor, no payments may be made by Medtronic directly to faculty, and the selection of faculty
must be at the sole discretion of the sponsor. Payment or subsidy of transportation or other
expenses related to spouses or other guests of attendees is not permitted.

Required documentation. Medtronic may only support a Conference where the sponsor has
submitted an agenda demonstrating that the Conference or a portion thereof is dedicated to
education on Medtronic products or related disease states. There must also be an appropriate fee
charged of attendees for any CME or CEU credits granted.

If a meeting is sponsored by a Customer, Medtronic must also confirm and document that the meeting
will be held at a modest location, that hospitality will also be modest, and that the net meeting
costs will be equal or greater than the sum of all subsidies (from Medtronic or another party). If
a focus of the meeting is promotional rather than scientific, it must also comply with the
requirements of Standard 6 (Consulting) for co-marketing events. If Medtronic sponsors the
meeting, Standard 7 (Training and Education on Medtronic Products) applies.

Scholarships to health care professionals-in-training. Subsidies for attendance at
Conferences by medical students, residents, fellows, or other health care professionals-in-training
may be provided to bona fide training institutions as well as the Conference sponsor. In both
cases, the selection of subsidized attendees shall be at the discretion of the institution or
sponsor.

Medtronic-provided meals and receptions. Medtronic may host modest meals and receptions as
part of a Conference. Such events should not compete with or take precedence over the educational
portion of the Conference. Off-agenda interactions between Medtronic and a select group of
attendees should be treated under Standard 5 (Business Courtesies) if they are business meetings or
Standard 7 if they involve Training and Education on Medtronic products.

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been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

 

SCHEDULE 3.15

ANNUAL AND QUARTERLY QUOTA

	 	 	 	 	 	 	 
	Individual Clips	 	Year-1*	 	Year-2**	 	Year-3***
	Annual Quota

	 	****
	 	****
	 	****
	Minimum Annual Quota

	 	****
	 	****
	 	****
	 

	 	 
	 	 
	 	 

	 	 	 	 	 	 	 	 	 	 	 
	Year One Individual Clips	 	Year-1*
	 	 	Q1#	 	Q2	 	Q3	 	Q4	 	Total
	Quarter Split

	 	****
	 	****
	 	****
	 	****
	 	****
	Quota

	 	****
	 	****
	 	****
	 	****
	 	****
	Minimum Quota

	 	****
	 	****
	 	****
	 	****
	 	****
	 

	 	 
	 	 
	 	 
	 	 
	 	 

	 	 	 	 	 	 	 	 	 	 	 
	Year Two Individual Clips	 	Year-2**
	 	 	Q1	 	Q2	 	Q3	 	Q4	 	Total
	Quarter Split

	 	****
	 	****
	 	****
	 	****
	 	****
	Quota

	 	****
	 	****
	 	****
	 	****
	 	****
	Minimum Quota

	 	****
	 	****
	 	****
	 	****
	 	****
	 

	 	 
	 	 
	 	 
	 	 
	 	 

*Year 1: Mar 1, 2006 to April 30, 2007

**Year 2: May 1, 2007 to April 30, 2008

***Year 3: May 1, 2008 to April 30, 2009

#Q1 of Calendar Year 2006 shall be defined as the period beginning March 1, 2006 and ending July
31, 2006.

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SCHEDULE 5.4

MEDTRONIC RETURNED INVENTORY POLICY

Returned Products

1. Authorization must be obtained from Medtronic Customer Service before the return of any product.

2. A Returned Goods Authorization (RGA) number will be given to you and must be clearly identified
on the carton of any returned product.

	 	a.	 	Information required for an RGA number includes the product catalog number and quantity
of product to be returned, the reason for the return, the customer P.O. number, the
Medtronic invoice number, and the date of invoice.

	 	b.	 	RGA number will be valid for 30 days from date of issuance. If product is not returned
within 30 days, RGA will be canceled.

	 	c.	 	Product must be returned to Medtronic in proper storage cartons.

3. Freight on all returned products must be prepaid.

4. Credit schedule for returned product:

	 	a.	 	Product shipped in error by Medtronic will receive full credit, including freight.

	 	b.	 	Product received by the customer in a damaged condition may be returned for full credit
or replacement, upon approval of a Medtronic Representative, within (5) working days from
the date of receipt by the customer.

	 	c.	 	All other product returned within 90 days of invoice date in saleable condition will be
subject to a 20% reprocessing fee. Except end-user complaints, which are a result of
product not meeting specifications.

	 	d.	 	Products not eligible for return will not receive credit, this includes:

	 	•	 	Product returned without an RGA number
	 
	 	•	 	Product returned more than 90 days after invoice date
	 
	 	•	 	Product that has deteriorated due to improper storage, handling, abuse or other
causes beyond the control of Medtronic
	 
	 	•	 	Product opened or used by the customer
	 
	 	•	 	Product that has been sterilized by the customer
	 
	 	•	 	Special order or custom product

	•	 	Product past expiration date

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SCHEDULE 6.1

U-CLIP TM PRODUCTS AND PRICING

U-CLIPTM Anastomotic Device

All U-CLIPTM 2-pack configurations are shipped as 24 packs per carton, all 8-pack configurations are shipped as 18 packs per carton.

																					
	 
	Product Order	 	 	 	 	 	U-CLIPTM	 	Carton	 	Distributor	 	 
	Number	 	Product Description	 	Count	 	List Price	 	Discount	 	Transfer Price
	 
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***

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	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	 
	UCLIPTM Anastomotic Miscellaneous Products

	 
	****
	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***	 	 	*	***
	 

 Page
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SCHEDULE 7.3

USER
WARRANTY

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	1.	 	Needle
	2.	 	Flexible Member
	3.	 	Transition (Light Blue)
	4.	 	Slide Release Sleeve (Metallic)
	5.	 	Clip
	6.	 	Stopper
	7.	 	Silver Ball

Explanation
of symbols on package labeling

	 	 	 
	

	 	Sterilized Using Irradiation
	 
	 	 
	

	 	Do Not Reuse
	 
	 	 
	

	 	Use By
	 
	 	 
	

	 	Lot Number
	 
	 	 
	

	 	Attention, See Instructions for use
	 
	 	 
	

	 	Manufacturer
	 
	 	 
	

	 	Quantity
	 
	 	 
	

	 	For US Audiences Only
	 
	 	 
	

	 	Nonpyrogenic

 

Important: These instructions provide guidance to the experienced surgeon using the U-CLIPÔ Device, sizes B140, B160, and B180. This is not a reference to surgical
clipping and suturing technique. Please read the following information carefully. Failure to properly follow the instructions may result in serious patient injury.

Indications: The U-CLIPÔ Device is intended for endoscopic and nonendoscopic soft tissue and prosthetic material approximation and/or attachment and the creation of
anastomoses in blood vessels, grafts, and other tubular structures.

Device Description: See Figure 1. Each clip is individually applied to the anastomotic, attachment, or approximation site.

Instructions for Use for the U-CLIPÔ Device

(Use of magnification is recommended.)

	1.	 	Grasp needle and lift clip from package.
	2.	 	If using laparoscopically, gently grasp the middle of the flexible member and push through the port (10 mm or larger). Check for visual damage or pre-release of the
clip prior to use. If the clip appears damaged, remove, discard, and use another clip.
	3.	 	Pierce the tissue in the desired location with the needle (Figure 2). The clip can be used in a single or double bite fashion.
	4.	 	Pull the needle until the tissue to be approximated rests
completely inside the clip. The tissue should fill approximately 3/4
of the space between clip arms (Figure 3).
	5.	 	Orient the clip so that the entire release sleeve (metallic tube), both ends of the clip, and the silver ball are visible. Position the clip so that tissue is fully
contained between the clip arms and both clip arms are visible (Figure 4).
	6.	 	To deploy the clip, gently hold the release sleeve (metallic tube) at the junction of the sleeve and transition zone (light blue) with graspers. With a second grasper,
gently hold the visible end of the clip. Pull on the release sleeve while putting counter tension on the clip (Figure 5). The clip will release from the needle assembly and
automatically close, holding the tissue and/or prosthetic material in place (Figure 6).
	7.	 	When extracting the needle assembly during a laparoscopic procedure, grasp the flexible member away from the needle and pull back through the port (10 mm or larger).
	8.	 	Discard needle assembly appropriately.
	9.	 	Repeat steps 1 through 8 to complete tissue approximation (Figure 7). After completion of the tissue approximation, check for undesirable tissue approximation or leaks
and place additional clips as necessary.

Note: If necessary to remove a clip, utilize standard surgical instruments by grasping the larger, distal end of the clip and then pulling away from the tissue.

CONTRAINDICATIONS

	•	 	Do not use for tubal ligation.

WARNING

	•	 	Failure to follow instructions may contribute to intraoperative and
postoperative failure of the anastomosis, attachment, or approximation,
resulting in serious patient injury.

PRECAUTIONS

	•	 	Caution: Federal Law (USA) restricts this device to sale
by or on the order of a physician.
	•	 	The U-CLIPÔ Device is designed and
intended for single use only: DO NOT RESTERILIZE OR REUSE.
	•	 	Do not use if package is damaged or opened, if product is accidentally contaminated before use, or if beyond expiration date.
	•	 	Do not hold the metallic release sleeve while manipulating the clip.
	•	 	When using needle drivers, do not apply excessive force directly on the clip.
	•	 	If the clip appears damaged, do not use. Discard or return to Medtronic.
	•	 	If using robotic needle drivers, do not “bottom out” needle drivers on flexible member.
	•	 	If the clip is inadvertently straightened during handling, discard and use a new clip.
	•	 	Use extra caution when working with gauze to avoid entangling the clips.
	•	 	Care should be exercised when removing clips, as tissue damage may occur.

ADVERSE EFFECTS

•    None known.

**** Certain confidential information contained in this document, marked with 4 asterisks, has
been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

 

 

THE FOLLOWING DISCLAIMER OF WARRANTY APPLIES TO UNITED STATES CUSTOMERS ONLY:

DISCLAIMER OF WARRANTY

ALTHOUGH THE U-CLIPÔ DEVICE, HEREAFTER REFERRED TO AS “PRODUCT” HAS BEEN
MANUFACTURED UNDER CAREFULLY CONTROLLED CONDITIONS, MEDTRONIC HAS NO CONTROL OVER THE
CONDITIONS UNDER WHICH THIS PRODUCT IS USED. MEDTRONIC, THEREFORE DISCLAIMS ALL
WARRANTIES, BOTH EXPRESS AND IMPLIED, WITH RESPECT TO THE PRODUCT, INCLUDING, BUT NOT
LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. MEDTRONIC SHALL NOT BE LIABLE TO ANY PERSON OR ENTITY FOR ANY MEDICAL
EXPENSES OR ANY DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES CAUSED BY ANY USE, DEFECT,
FAILURE OR MALFUNCTION OF THE PRODUCT, WHETHER A CLAIM FOR SUCH DAMAGES IS BASED UPON
WARRANTY, CONTRACT, TORT OR OTHERWISE. NO PERSON HAS ANY AUTHORITY TO BIND MEDTRONIC
TO ANY REPRESENTATION OR WARRANTY WITH RESPECT TO THE PRODUCT.

The exclusions and limitations set out above are not intended to, and should not be
construed so as to, contravene mandatory provisions of applicable law. If any part or
term of this Disclaimer of Warranty is held to be illegal, unenforceable or in conflict
with applicable law, by a court of competent jurisdiction, the validity of the
remaining portions of this Disclaimer of Warranty shall not be affected, and all rights
and obligations shall be construed and enforced as if this Disclaimer of Warranty did
not contain the particular part or term held to be invalid.

THE FOLLOWING DISCLAIMER OF WARRANTY APPLIES TO CUSTOMERS OUTSIDE THE UNITED STATES:

DISCLAIMER OF WARRANTY

ALTHOUGH THE U-CLIPÔ DEVICE, HEREAFTER REFERRED TO AS “PRODUCT” HAS BEEN
CAREFULLY DESIGNED, MANUFACTURED AND TESTED PRIOR TO SALE, THE PRODUCT MAY FAIL TO
PERFORM ITS INTENDED FUNCTION SATISFACTORILY FOR A VARIETY OF REASONS. THE WARNINGS
CONTAINED IN THE PRODUCT LABELING PROVIDE MORE DETAILED INFORMATION AND ARE CONSIDERED
AN INTEGRAL PART OF THIS DISCLAIMER OF WARRANTY. MEDTRONIC, THEREFORE, DISCLAIMS ALL
WARRANTIES, BOTH EXPRESS AND IMPLIED, WITH RESPECT TO THE PRODUCT. MEDTRONIC SHALL NOT
BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES CAUSED BY ANY USE, DEFECT OR
FAILURE OF THE PRODUCT, WHETHER THE CLAIM IS BASED ON WARRANTY, CONTRACT, TORT OR
OTHERWISE.

The exclusions and limitations set out above are not intended to, and should not be
construed so as to, contravene mandatory provisions of applicable law. If any part or
term of this Disclaimer of Warranty is held by any court of competent jurisdiction to
be illegal, unenforceable or in conflict with applicable law, the validity of the
remaining portion of the Disclaimer of Warranty shall not be affected, and all rights
and obligations shall be construed and enforced as if this Disclaimer of Warranty did
not contain the particular part or term held to be invalid.

	 	 	 
	Europe

	 	Americas
	 
	 	 
	Europe/Africa/Middle East

	 	Latin America
	Headquarters

	 	Medtronic Latin America
	Medtronic Europe Sàrl

	 	3750 NW 87th Avenue, Suite 700
	Route du Molliau 31

	 	Miami, FL 33178
	Case Postale

	 	USA
	CH-1131 Tolochenaz

	 	Tel. 305-500-9328
	Switzerland

	 	Fax 786-709-4244
	Internet: www.medtronic.co.uk
	 	 
	Tel. 41-21-802-7000
	 	 
	Fax 41-21-802-7900

	 	Canada
	 

	 	Medtronic of Canada Ltd.
	 

	 	6733 Kitimat Road
	Medtronic E.C. Authorized

	 	Mississauga, Ontario L5N 1W3
	Representative

	 	Canada
	Medtronic B.V.

	 	Tel. 905-826-6020
	Earl Bakkenstraat 10

	 	Fax 905-826-6620
	6422 PJ Heerlen

	 	Toll-free in Canada:
	The Netherlands

	 	1-800-268-5346
	Tel. 31-45-566-8000
	 	 
	Fax 31-45-566-8668
	 	 
	 

	 	United States
	 
	 	 
	Asia-Pacific
	 	 
	 

	 	Manufacturer:
	 

	 	Medtronic, Inc.
	Japan

	 	710 Medtronic Parkway
	Medtronic Japan

	 	Minneapolis, MN 55432-5604
	Solid Square West Tower 6F

	 	USA
	580 Horikawa-cho, Saiwai-ku

	 	Internet: www.medtronic.com
	Kawasaki, Kanagawa 210-0913

	 	Tel. 1-763-514-4000
	Japan

	 	Fax 1-763-514-4879
	Tel. 81-44-540-6112

	 	Toll-free in the USA:
	Fax 81-44-540-6200

	 	1-800-328-2518
	 

	 	(24-hour consultation)
	 
	 	 
	Australia
	 	 
	Medtronic Australasia Pty. Ltd.
	 	 
	Unit 4/446 Victoria Road
	 	 
	Gladesville NSW 2111
	 	 
	Australia

	 	©Medtronic, Inc. 2005
	Tel. 61-2-9879-5999

	 	All Rights Reserved
	Fax 61-2-9879-5100
	 	 
	 

	 	00LS1970.00
	 
	 	 
	Asia
	 	 
	Medtronic International Ltd.
	 	 
	Suite 1602 16/F, Manulife Plaza
	 	 
	The Lee Gardens, 33 Hysan Avenue
	 	 
	Causeway Bay
	 	 
	Hong Kong
	 	 
	Tel. 852-2891-4068
	 	 
	Fax 852-2591-0313
	 	 

**** Certain confidential information contained in this document, marked with 4 asterisks, has
been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.exv10w21

 

EXHIBIT 10.21

ADDENDUM

This
ADDENDUM is made and entered into this
24th day of January, 2006, and amends the Distributor
Agreement (“Agreement”) entered into by and between Medtronic, Inc. (“Medtronic”) and VNUS Medical
Technologies, Inc. (“VNUS”) effective January 24, 2006.

The parties hereby agree to amend the Agreement as hereinafter set forth.

Section XIII. **** Trial shall be added to the Agreement as follows:

XIII. **** Trial. Medtronic shall complete the **** Trial (the “Trial”) currently underway by
collecting and validating the long term data for submission of the Trial results in the form of a
paper to the **** or a peer-reviewed publication of substantially similar esteem. Medtronic and
VNUS hereby agree to share equally the total cost of completion of the Trial, which is estimated to
be ****, plus or minus ****.

It is agreed by the parties that if the costs of completing the Trial exceed or are lower than the
forecasted amount of $****, Medtronic will adjust the last payment required to be made by VNUS;
provided, however, in no case shall VNUS be responsible for an amount greater than **** of the
forecasted amount; i.e., no more than ****.

With reasonable notice to Medtronic and subject to patient consent, VNUS shall have
the right to audit the clinical data and review the process of completing the Trial. VNUS may
opt-out of this Article 13 and compensate Medtronic half of the costs actually incurred in
completing the Trial to the point of opting-out.

VNUS shall have the right but not an obligation to review financial data related to the completion
of the Trial.

Except to the extent provided above, the remaining terms and conditions of the Agreement shall
remain in full force and effect.

IN WITNESS WHEREOF, the parties have caused this Addendum to be executed on the date first written
above.

	 	 	 	 
	MEDTRONIC, INC.

	 	VNUS MEDICAL TECHNOLOGIES, INC.	 
	 
	/s/
Clifton W. Owens
	 	/s/ R. McCrae	 
	 

	 	 	 
	Name

	 	Name:	 
	 
	Vice
President & General Manager RST
	 	VP, Bus. Dev. & Mfg	 
	 

	 	 	 
	Title

	 	Title:	 
	 
	January 24,
2006
	 	1/25/06	 
	 

	 	 	 
	Date

	 	Date:	 
	 
	 	 	 

****Certain confidential information contained in this document, marked with 4 asterisks,
has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2
of the Securities Exchange Act of 1934, as amended.

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