Document:

Exhibit 10.28

Exhibit 10.28

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

License Agreement

This License Agreement (this “Agreement”) is made as of August 16, 2010
(“Agreement Date”), by and between Cardica, Inc., a Delaware corporation having its
principal place of business at 900 Saginaw Drive, Redwood City, CA 94063 (“Cardica”), and Intuitive
Surgical Operations, Inc., a Delaware corporation having its principal place of business at 1266
Kifer Road, Sunnyvale, California 94086 (“Intuitive”). Capitalized terms that are used,
but not defined, on this page of this Agreement shall have the meanings set forth in Section 1.

Background

A. Cardica is in the business of, among other things, developing and manufacturing surgical
devices;

B. Intuitive is in the business of, among other things, developing, marketing, and selling
robotic surgical systems;

C. Intuitive desires to license from Cardica rights related to clip appliers and/or staplers
and cutters to be installed on Intuitive’s Robotic Systems;

D. Cardica desires to license such rights to Intuitive, subject to the terms and conditions
set forth herein;

E. Contemporaneously with the execution of this Agreement, Cardica and Intuitive are entering
into (a) an Equity Purchase Agreement (“Equity Agreement”) pursuant to which Intuitive will
purchase three million dollars (US$3,000,000) of equity in Cardica and (b) a Registration Rights
Agreement (“Registration Rights Agreement”).

F. Cardica and Intuitive are contemplating entering into a Development Agreement
(“Development Agreement”) pursuant to which Cardica and Intuitive will co-develop cutting
and stapling devices, and clip applier devices.

In view of the foregoing and for other good and valuable consideration, receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:

1. Definitions.

1.1. Certain Definitions. For purposes of this Agreement, in addition to the terms
that are defined on first use in this Agreement, the following terms shall have the following
meanings:

(a) “Affiliate” shall mean a person that directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with, the Person
specified. For purposes of this definition, the terms “control”, “controlled by”, and “under
common control with” shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person and, in the case of an entity,
shall require (i) in the case of a corporate entity, direct or indirect ownership of more than 50
percent of the securities having the right to vote for the election of directors, and (ii) in the
case of a non-corporate entity, direct or indirect ownership of more than 50 percent of the equity
interests with the power to direct the management and policies of such non-corporate entity.

 

 

 

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

(b) “Multi-fire Clip Applier” [*]

(c) “Commercialize” (or any form thereof, e.g., “Commercialization”) shall mean to
sell, offer for sale, import, export, distribute, promote, and market, together with other
activities typically associated with commercialization of a medical product.

(d) “Commercially Reasonable Efforts” means timely application of efforts and
resources, consistent with the exercise of prudent business judgment by a company with similar
financial resources which intends to exploit a medical product of similar market potential with a
view to making a profit, taking into account such matters as product efficacy and safety, size of
market, anticipated labeling, competitiveness of alternative products, strength of patent or trade
secret protection, likelihood of obtaining Regulatory Approval, and commercially appropriate
prioritization with respect to other company projects and products.

(e) “Confidential Information” shall mean all ideas and information of any kind that
are held in confidence by one Person and transferred, disclosed, or made available by such Person
to a receiving Person and are identified at the time of disclosure as being proprietary or
confidential, or would reasonably be regarded as proprietary or confidential by a reasonable Person
in like circumstances. The obligations in this Agreement with respect to Confidential Information
shall not apply to any portion of the Confidential Information that the receiving Person can
demonstrate by legally sufficient evidence (i) now or hereafter, through no act or failure to act
on the part of the receiving Person, is or becomes public; (ii) is known to the receiving Person or
one of its Affiliates at the time such person receives such Confidential Information from the
disclosing Person; (iii) is hereafter furnished to the receiving Person by an unrelated third
Person without violating any agreement with the disclosing Person; or (iv) is independently
developed by the receiving Person or one of its Affiliates without use of any Confidential
Information received from the other Person.

(f) “Control” or “Controlled” shall mean the ability of a Person to grant a
license or sublicense under Intellectual Property, other than as a result of this Agreement and
without violating the terms of any agreement or other arrangement with any third party.

(g) “Field of Use” shall mean the use of Robotics to perform a diagnostic or
therapeutic medical procedure.

(h) “Governmental Authority” shall mean any nation, territory, or government (or union
thereof), foreign, domestic, or multinational, any state, local, or other political subdivision
thereof, and any bureau, court, tribunal, board, commission, department, agency, or other entity
exercising executive, legislative, judicial, regulatory, or administrative functions of government,
including all taxing authorities and all European notified bodies, including notified bodies within
the sense of Article 16 of the European Union Medical Device Directive 93/42/EEC, and all other
entities exercising regulatory authority over medical products or devices.

 

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[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

(i) The phrase “has application in the Field of Use” or “have application in the
Field of Use” shall mean that a reasonable person, skilled in the Field of Use and the
technology related to the relevant Licensed IP, could reasonably conclude that the technology,
enhancement, or other item in question might well have commercial value if utilized (with or
without further enhancement or development) in the Field of Use.

(j) “Improvement Period” shall mean the period of time beginning on the Agreement Date
and expiring on the [*] of the Agreement Date.

(k) “Improvement Period Patent Rights” [*]

(l) “Intellectual Property” or “IP” shall mean: (i) Patent Rights; (ii)
trademarks, service marks, trade names, brand names, certification marks, designs, logos and
slogans, commercial symbols, business name registrations, domain names, trade dress and other
indications of origin and general intangibles of like nature, the goodwill associated with the
foregoing, and registrations in any domestic or foreign jurisdiction of, and applications in any
such jurisdiction to register, the foregoing, including any extension, modification, or renewal of
any such registration or application; (iii) research and development data, formulae, ideas,
know-how, research, analysis, experiments, proprietary processes and procedures, algorithms, models
and methodologies, technical information, technologies, techniques, innovations, creations,
concepts, designs, industrial designs, procedures, trade secrets and confidential information, and
rights in any domestic or foreign jurisdiction to limit the use or disclosure thereof by any
person; (iv) writings and other works of authorship of any type (including patterns, drawings,
data, the content contained on any web site), whether copyrightable or not, in any such
jurisdiction, and any copyrights and moral rights therein (“Copyrights”); (v) computer
software (whether in source code or object code form), databases, compilations, and data; and (vi)
registrations or applications for registration of copyrights in any domestic or foreign
jurisdiction, and any renewals or extensions thereof; and (vii) any similar intellectual property
or proprietary rights.

(m) “Know-How” shall mean all data and information owned by, used by, held for use by
or on behalf of, licensed to, or otherwise Controlled by Cardica or a Cardica Affiliate and
maintained in confidence by Cardica or a Cardica Affiliate, including all processes, plans,
designs, research, operating manuals, methods, compounds, formulae, discoveries, developments,
designs, drawings, technology, techniques, procedures, specifications, inventions, computer
programs, and any other scientific or technical data or information conceived, memorialized,
developed, and/or reduced to practice, in each case whether or not patentable in any jurisdiction.
Until such time as any particular patent has been published in accordance with
the terms of a patent application or such patent application has been published, the term
“Know-How” shall be deemed to include all inventions disclosed in such patent application.

 

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[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

(n) “Licensed IP” shall mean the following, but only to the extent having application
in the Field of Use:

(i) (A) All Patent Rights owned and/or Controlled by Cardica or any Cardica Affiliate on the
Agreement Date and (B) Improvement Period Patent Rights owned and/or Controlled by Cardica or any
Cardica Affiliate;

(ii) All Cardica Know-How that is owned and/or Controlled by Cardica on the Agreement Date
and/or during the Improvement Period; and

(iii) All Intellectual Property as defined in Subsections (iii)—(vii) of Section 1.1(l) that
is owned and/or Controlled by Cardica on the Agreement Date and/or during the Improvement Period.

The Licensed IP shall include, but not be limited to, the Patent Rights set forth on Exhibit 1.1(n)
attached hereto. The Patent Rights in Section 1.1(n)(i) are referred to herein as the “Licensed
Patent Rights.” In the event that Cardica is acquired by a third party or otherwise undergoes a
Change of Control involving a third party (such third party or its successor in such Change of
Control hereinafter referred to as a “Buyer”), then the Intellectual Property of such Buyer held,
owned, controlled or developed by such Buyer or its Affiliates (whether prior to or after such
acquisition) shall be excluded from the Licensed IP unless such Intellectual Property was owned
and/or Controlled by Cardica prior to such acquisition or Change of Control.

(o) “Lien” shall mean all liens, pledges, charges, mortgages, encumbrances,
restrictions, licenses, adverse rights or claims, and security interests of any kind or nature
whatsoever.

(p) “Litigation Matter” shall mean any claim, investigation, arbitration, grievance,
litigation, action, suit, or proceeding, administrative or judicial, to which a Party is (or, to
such Party’s knowledge, is threatened in writing to be made) a party, or relating to the Licensed
IP, the Reload, clips, staples, Cardica’s cutting and stapling instruments, Cardica’s clip
appliers, or this Agreement (whether such Party is a plaintiff, defendant, or otherwise), at law or
in equity or otherwise, or before any Governmental Authority.

(q) “Party” shall mean each of Intuitive and Cardica (including their respective
Affiliates), who together are sometimes referred to as the “Parties”. As used in this
Agreement, references to “third parties” do not include either Party or the Affiliates of
either Party.

(r) “Patent Costs” shall mean the costs and expenses paid to outside legal counsel,
Governmental Authorities, and other third parties incurred in connection with preparing, filing,
prosecuting, obtaining, and maintaining Licensed IP, or taking any Patent Prosecution Action,
including costs and expenses of patent interference, re-examination, reissue,
protest, opposition, nullification, and similar proceedings (and any appeal thereof in any
court or administrative agency).

 

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[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

(s) “Patent Prosecution Action” shall mean any and all actions that may be taken in
connection with preparing, filing, prosecuting, obtaining, and maintaining throughout the world
patent protection for Licensed IP, including patent applications and other related material
submissions and correspondence with any patent authorities, and including with regard to any patent
interference, re-examination, reissue, protest, opposition, nullification, and similar proceedings
(and any appeal thereof in any court or administrative agency).

(t) “Patent Rights” means (i) any and all written, oral, and visual ideas, concepts,
and inventions, whether or not any such idea, concept, or invention has been filed as a patent
application or submitted by the inventor(s) to any attorney or other person for evaluation as to
patentability, (ii) any patents, patent applications, any patents issuing therefrom worldwide, and
all provisional rights with respect to patent applications, (iii) any improvements, substitutions,
divisionals, patents of addition, continuations, continuations-in-part, reissues, renewals,
registrations, confirmations, re-examinations, extensions, supplementary protection certificates,
term extensions (under applicable patent law or regulation or other law or regulation), and
certificates of invention of any patents or patent applications, and (iv) all rights to exploit any
of the foregoing.

(u) The term “Person” shall mean an individual, corporation, partnership, limited
partnership, limited liability company, unincorporated association, trust, joint venture, union or
other organization or entity, including a Governmental Authority.

(v) “Cardica Know-How” shall mean any Know-How owned or Controlled by Cardica or any
Cardica Affiliate that has application in the Field of Use.

(w) “Change of Control” shall mean, with respect to either Party, the sale or
announcement of signing of definitive agreements pursuant to a sale of all or substantially all of
assets or issued and outstanding capital stock of such Party, or merger or consolidation involving
such Party in which stockholders of such Party immediately before such merger or consolidation do
not own immediately after such merger or consolidation capital stock or other equity interests of
the surviving corporation or entity representing more than fifty percent in voting power of capital
stock or other equity interests of such surviving corporation or entity outstanding immediately
after such merger or consolidation. If a signed definitive agreement does not close, then no
Change of Control is deemed to have occurred.

(x) “Regulatory Approval” shall mean any and all approvals (including any necessary
governmental price or reimbursement approvals), licenses, registrations, or authorizations of the
applicable Governmental Authority necessary for the use, storage, import, promotion, marketing, and
Commercialization of the clip appliers, stapling and cutting instruments, Reloads, staples, or
clips that fall within the scope of the license granted under Section 2.1(a).

(y) “Reload” shall mean a cartridge with staples and with or without a cutting device.

(z) “Robotics” shall mean a [*]

(aa) “Stapler” [*]

 

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[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

(bb) “Sublicensee” shall mean any person to whom (i) Intuitive sublicenses its rights
under this Agreement in the manner provided in Section 2.3 or (ii) grants a covenant not to sue
with respect to its rights under the Licensed IP in the Field of Use, but the term “Sublicensee”
shall not include any person who manufactures a Reload for Intuitive or an Affiliate of Intuitive
but does not sell such Reloads other than to Intuitive or an Affiliate of Intuitive.

(cc) “Technology” shall mean any idea, data, writing, invention, discovery,
improvement, trade secret, development, know-how, method, technique, formula, process, or other
technology, whether or not patentable, copyrightable, or protectable as a trade secret,
confidential information, or know-how, or any other form of intellectual property.

(dd) “Vascular Anastomosis” shall mean of or related to a surgical process of joining
two blood vessels together.

(ee) “Net Sale(s)” shall mean the sale revenues by Intuitive or its Affiliates or
Sublicensees, less the following (in each case to the extent related to products generating such
revenues): (i) discounts or rebates actually allowed or granted from the billed amount, (ii)
credits or allowances actually allowed or granted for returns, (iii) transportation costs actually
paid by the selling Person, and (iv) sales taxes or the like that are included in the billed amount
and actually paid by the selling Person.

2. Licenses and Technology Transfer.

2.1. License Grants to Intuitive.

(a) Cardica hereby grants to Intuitive a worldwide, perpetual, irrevocable, exclusive license
under the Licensed IP to practice such Licensed IP in the Field of Use, such exclusive license
including but not limited to the right to make, have made, use, offer for sale, sell, market,
import, export, distribute, Commercialize, in any manner whatsoever, and enforce (even against
Cardica and its Affiliates) the Licensed IP in the Field of Use, as set forth in Section 5 of this
Agreement. The license from Cardica to Intuitive does not extend to Vascular Anastomosis products.
To be clear, in the event a patent claim under the Licensed IP covers a Vascular Anastomosis
application and another application within the Field of Use, the license from Cardica to Intuitive
shall exclude the Vascular Anastomosis application but shall include the other application within
the Field of Use. For avoidance of doubt, the license in this Section 2 becomes irrevocable on the
Agreement Date.

(b) The license granted under Section 2.1(a) shall not be sublicensable by Intuitive except as
set forth in Section 2.3.

 

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[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

(c) Cardica agrees that it will not, and will ensure that its Affiliates do not, during the
License Term assign, transfer, convey, or otherwise dispose of any Licensed IP that has application
in the Field of Use (an “IP Transfer”) unless such IP Transfer shall have been made subject
to the license grant and exclusivity requirements set forth in this Section 2.1 and to the other
express terms of this Agreement, including, in particular, Section 12.10. However, nothing in this
section prohibits Cardica from granting a security interest in the Licensed IP to a creditor, if
such a security interest is required by the creditor for Cardica to obtain financing, provided that
the creditor recognizes the validity of the preexisting licenses and sublicenses granted to
Intuitive under Section 2 and agrees in writing to take the security interest subject to these
preexisting licenses, sublicenses, and the terms of this Agreement.

(d) Cardica agrees that it shall not, and will ensure that its Affiliates do not, utilize or
practice, or grant any rights to any third party with respect to, the Licensed IP in the Field of
Use that are in any way inconsistent with the rights granted to Intuitive under this Agreement.

(e) Intuitive will, where reasonably practical, mark all applicable medical devices, or
packaging thereof, with a notice of the applicable Licensed Patent Rights.

(f) For any Licensed IP Controlled by Cardica or its Affiliates that is sublicensed to
Intuitive under Section 2.1(a), Intuitive agrees to pay, if applicable and necessary for Intuitive
to benefit from such sublicensed Patent Rights, on a pass-through basis, royalty or other monetary
obligation for royalty obligation in the original license grant to Cardica of such sublicensed
Patent Rights. For avoidance of doubt, the pass-through obligation under this Section 2.1(f) shall
be deducted from any Royalty Payment due Cardica under Section 4.

(g) Cardica shall disclose to Intuitive a listing of all worldwide patent applications and
patents included in the Licensed IP on the Agreement Date. For any such patent applications or
patents licensed by Cardica or its Affiliates, Cardica shall disclose to Intuitive the associated
license grant so that Intuitive may determine the extent of Control of such patent applications or
patents by Cardica or its Affiliates. This listing of patent applications and patents, and
associated license terms if applicable, shall include at least those referred to in Cardica’s most
recent Form 10-K filing with the United States Securities and Exchange Commission, to the extent
falling within the definition of Licensed IP.

2.2. Non-Exclusive License to Use Technical Information.

(a) Cardica shall provide Intuitive with any and all information in the possession of Cardica
and its Affiliates, without limitation as to kind, that may be reasonably required by Intuitive or
a Intuitive Affiliate to support regulatory submissions as to products covered by the Licensed IP
in the Field of Use (the “Products”), or for any purposes related to the Commercialization of the
Products (but subject to any third party confidentiality obligations); and hereby grants to
Intuitive and its Affiliates a non-exclusive, worldwide, irrevocable,
perpetual, transferable and royalty-free license to use such information, including the
information described in Section 2.2 (b), to support regulatory submissions as to the Products,
and/or for any purposes related to the development, manufacture, and Commercialization of the
Products. The license granted under this Section 2.2 shall not be sublicensable by Intuitive
except as set forth in Section 2.3.

 

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[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

(b) Cardica shall provide to Intuitive, via electronic delivery to an Intuitive supplied,
secure ftp site, on a bi-weekly basis or upon a Change of Control, the following information for
archiving by Intuitive ; and hereby grants to Intuitive and its Affiliates a non-exclusive,
worldwide, irrevocable, perpetual, transferable and royalty-free license to use such information to
support regulatory submissions as to the Products, or for any purposes related to the
Commercialization of the Products:

(i) Technical Review records, including agendas, minutes and presentations

(ii) CAD files and drawings for the Products (including packaging, labeling, assemblies, test
fixtures and assembly fixtures)

(iii) Design input/output (customer requirements documents, product requirements and
specifications, supporting documents, marketing studies)

(iv) Risk analysis (FMEAs, hazard analysis, quality requirements)

(v) Tooling strategy documents (component and assembly tooling quotes, supplier contact
information)

(vi) Design Validation & Verification documents (engineering test protocols/reports/summaries)

(vii) Clinical testing records (including protocols, reports, pictures, summaries)

(viii) Regulatory documents (510k/technical files of predicate, associated documents of new
design).

2.3. Sublicenses. Intuitive shall have the right to sublicense, in whole or in part,
the rights granted herein to the Licensed IP, within the Field of Use without Cardica’s prior
consent, subject to the following:

(a) Sublicense Agreement. Intuitive shall execute a written sublicense with each
Sublicensee which shall be subject to Intuitive’s rights and obligations under the terms of this
Agreement. Intuitive shall report the granting of all such sublicenses to Cardica within thirty
(30) days of the granting of the same, and along with such notification shall provide a copy of the
sublicense agreement. Intuitive shall cause any such sublicense agreement contains terms that are
at least as protective of the Licensed IP and Confidential Information as the terms set
forth in this Agreement, and that also include no provisions that would be in violation of the
license grant set forth in this Agreement. Intuitive shall be obligated to use Commercially
Reasonable Efforts in monitoring the performance of its Sublicensees and shall indemnify Cardica
for any material violation by a Sublicensee of its obligations related to the Licensed IP under a
sublicense agreement. For avoidance of doubt, Intuitive does not have any obligation to report any
sublicense to any wholly owned subsidiary or Affiliates.

 

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[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

(b) Performance of Other Obligations by Sublicensees. Intuitive shall, and by this
Agreement hereby does, agree to cause any Sublicensee to assume and agree to perform all of the
covenants and obligations of Intuitive to Cardica contained in this Agreement as fully and to the
same extent as if such person were Intuitive under this Agreement but with such modifications as
may be appropriate to reflect the extent, if any, to which the sublicense is narrower in scope than
the license grant contained this Agreement.

(c) Distributors. Intuitive may exercise its rights and obligations under this
Agreement through its distributors and sub-distributors through multiple tiers. Such exercise
shall not constitute a sublicense.

3. License Payments.

3.1. Irrevocable License Fee. Intuitive shall pay to Cardica an initial, one-time,
license fee of Nine Million Dollars (US$9,000,000) (“Irrevocable License Fee”) not later
than five (5) business days after the execution of this Agreement by both Parties. The payment of
the Irrevocable License Fee shall be a condition precedent to the effectiveness of this Agreement.
If the Irrevocable License Fee is not paid within five (5) business days after execution of this
Agreement, this Agreement shall lapse and be deemed null, void, and of no effect.

3.2. [*]

3.3. Payment Terms. Intuitive shall notify Cardica in writing on the occurrence of
the [*]. All payments due from Intuitive to Cardica shall be made by wire transfer of immediately
available funds to an account designed by Cardica. All payments shall be made in U.S. dollars. If
Intuitive is required by law to withhold any tax to the tax or revenue authorities in any country
regarding any payments or royalties, such amount shall be deducted from the amounts to be paid by
Intuitive, and Intuitive shall notify Cardica and promptly furnish Cardica with copies of any tax
certificate or other documentation evidencing such withholding.

4. Royalty Payments.

4.1. [*] Reload. Upon first commercial sale by Intuitive or an Affiliate or
Sublicensee of a [*] Stapler, and for a period not to exceed [*] years from such first commercial
sale, Intuitive or an Affiliate shall pay Cardica a [*] royalty (“[*] Royalty”) on Intuitive or
Intuitive Affiliate or Sublicensee Reload Net Sales in any jurisdiction in which at least one valid
granted patent owned or Controlled by Cardica has one or more claims that (i) include one or more
novel features associated with such [*] Reload and/or corresponding anvil, and (ii) would
be infringed absent a license from Cardica by the use, sale, importation, or manufacture of
any such [*] Reload.

 

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[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

4.2. [*] Stapler and Reload. Upon first commercial sale by Intuitive or an Affiliate
or Sublicensee of an [*] Stapler, and for a period not to exceed [*] years from such first
commercial sale, Intuitive or an Affiliate shall pay Cardica a [*] royalty (“[*] Royalty”) on:

(a) Intuitive or Intuitive Affiliate or Sublicensee [*] Stapler Net Sales in any jurisdiction
in which at least one valid granted patent owned or Controlled by Cardica has one or more claims
that (i) include one or more novel features of such [*] Stapler apart from an associated [*] Reload
and/or corresponding anvil, and (ii) would be infringed absent a license from Cardica by the use,
sale, importation, or manufacture of any such [*] Stapler; and

(b) Intuitive or Intuitive Affiliate or Sublicensee [*] Reload Net Sales in any jurisdiction
in which at least one valid granted patent owned or Controlled by Cardica has one or more claims
that (i) include one or more novel features associated with such [*] Reload and/or corresponding
anvil, and (ii) would be infringed absent a license from Cardica by the use, sale, importation, or
manufacture of any such [*] Reload and/or corresponding anvil.

4.3. [*] Stapler and Reload. Upon first commercial sale by Intuitive or an Affiliate
or Sublicensee of a [*] Stapler, and for a period not to exceed [*] years from such first
commercial sale, Intuitive or an Affiliate shall pay Cardica a [*] royalty (“[*] Royalty”) on:

(a) Intuitive or Intuitive Affiliate or Sublicensee [*] Stapler Net Sales in any jurisdiction
in which at least one valid granted patent owned or Controlled by Cardica has one or more claims
that (i) include one or more novel features of such [*] Stapler apart from an associated [*] Reload
and/or corresponding anvil, and (ii) would be infringed absent a license from Cardica by the use,
sale, importation, or manufacture of any such [*] Stapler; and

(b) Intuitive or Intuitive Affiliate or Sublicensee [*] Reload Net Sales any jurisdiction in
which at least one valid granted patent owned or Controlled by Cardica has one or more claims that
(i) include one or more novel features associated with such [*] Reload and/or corresponding anvil,
and (ii) would be infringed absent a license from Cardica by the use, sale, importation, or
manufacture of any such [*] Reload and/or corresponding anvil.

4.4. Multi-fire Clip Applier. Upon first commercial sale by Intuitive or an
Affiliate or Sublicensee of a Multi-fire Clip Applier, and for a period not to exceed [*] years
from such first commercial sale, Intuitive shall pay Cardica a [*] royalty (“Multi-fire Clip
Applier Royalty”) on:

(a) Intuitive or Intuitive Affiliate or Sublicensee Multi-fire Clip Applier Net Sales in any
jurisdiction in which at least one valid granted patent owned or Controlled by Cardica has one or
more claims that (i) include one or more novel features of such Multi-fire Clip Applier apart from
an associated clip, and (ii) would be infringed absent a license from Cardica by the use, sale,
importation, or manufacture of any such Multi-fire Clip Applier; and

 

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[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

(b) Intuitive or Intuitive Affiliate or Sublicensee Multi-Fire Clip Applier clip Net Sales in
any jurisdiction in which at least one valid granted patent owned or Controlled by Cardica has one
or more claims that (i) include one or more novel features associated with such clips, and (ii)
would be infringed absent a license from Cardica by the use, sale, importation, or manufacture of
any such clips.

4.5 Other Products. Either Party may develop one or more products other than those
set forth in paragraphs 4.1—4.4 above (“Other Products”), including without limitation staplers or
Reloads in other sizes. Upon first commercial sale by Intuitive or an Affiliate or Sublicensee of
any such Other Products, regardless of which Party develops such Other Products, and for a period
not to exceed [*] years from such first commercial sale, Intuitive or an Affiliate shall pay
Cardica a [*] royalty (“Other Products Royalty”) on Intuitive or Intuitive Affiliate or Sublicensee
Other Products Net Sales in any jurisdication in which at least one valid granted patent owned or
Controlled by Cardica has one or more claims that would be infringed absent a license by the use,
sale, importation, or manufacture of any Other Products.

4.6 Royalty Payments and Reports. At the end of each calendar quarter, Intuitive
shall calculate royalty amounts payable to Cardica pursuant to this Section 4 with respect to Net
Sales generated in such calendar quarter, which amounts shall be converted to United States dollars
at such time in accordance with Intuitive’s standard practice for currency conversion, applied
consistently across its organization and product lines. Intuitive or an Intuitive Affiliate shall
pay such amount in United States dollars within forty-five (45) days after the end of such calendar
quarter. Each payment of royalties due to Cardica shall be accompanied by a statement of the
amount of gross sales of the royalty-bearing products during the applicable calendar quarter, an
itemized calculation of Net Sales showing deductions provided for in the definition of Net Sales
during such calendar quarter, and a calculation of the amount of royalty payment due on such Net
Sales for such calendar quarter.

4.7 Records; Audits. Intuitive shall maintain complete and accurate records in
sufficient detail to permit Cardica to confirm Intuitive’s Net Sales levels in order to assess
whether the [*] has been triggered and to verify the accuracy of any royalty payments or royalty
reports provided under this Agreement (the “Audit Purpose”). For a period of three (3) years from
the creation of individual records, such records shall be available during regular business hours,
upon reasonable prior notice and not more often than once each calendar year, for examination by an
independent accounting firm selected by Cardica and reasonably acceptable to Intuitive, for the
sole purpose of the Audit Purpose. The accounting firm shall disclose to Cardica only such
information as is necessary for the Audit Purpose. Any amounts shown to be owed but unpaid shall
be paid within thirty (30) days from the accountant’s report, plus interest from the original due
date. Any amounts shown to have been overpaid shall be credited against the subsequent royalty
payment. Cardica shall bear the full cost of any such audit.

 

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

5. Enforcement of Licensed IP.

5.1. Rights to Enforce.

(a) With respect to the enforcement and defense of the Licensed IP, Cardica and Intuitive
shall inform each other promptly in writing of any knowledge of any alleged infringement, misuse,
or misappropriation by any person of the Licensed IP that has application in the Field of Use (such
infringement, misuse, or misappropriation, the “Infringement”) and shall provide a summary
of any evidence indicating such Infringement. Cardica and Intuitive shall meet to discuss and
agree upon a strategy to resolve the alleged Infringement.

(b) Intuitive shall have the sole right but not the obligation to prosecute or seek to end at
its own expense any Infringement of the Licensed IP, to the extent that such Infringement occurs in
the Field of Use.

(c) The Party exercising its sole right of enforcement with respect to a particular
Infringement is defined as “Primary Enforcement Party”.

5.2. Enforcement by Primary Enforcement Party.

(a) When the Primary Enforcement Party takes action to prosecute any Infringement, it shall:

(i) be responsible for all costs of prosecuting such Infringement, except as provided in
Section 5.2(d);

(ii) provide the other Party with copies of all pleadings and other documents proposed to be
initially filed or served by the Primary Enforcement Party in sufficient time to allow for review
and comment by the other Party.

(iii) as reasonably requested by the other Party, regularly provide the other Party with
copies of all pleadings and other documents proposed to be filed or served by the Primary
Enforcement Party and other material submissions and correspondence in any way related to such
prosecution of such Infringement, as applicable, in sufficient time to allow for review and comment
by the other Party; and

(iv) provide the other Party and its counsel with a reasonable opportunity to consult with the
Primary Enforcement Party and its counsel regarding the filing, service of process, and contents of
any documents proposed to be filed or served by the Primary Enforcement Party and other material
submissions and correspondence in any way related to such prosecution of such Infringement or in
connection therewith, and the Primary Enforcement Party shall give consideration to the reasonable
requests of the other Party regarding the same.

(b) To the extent that the other Party is deemed an indispensable party in the Primary
Enforcement Party’s litigation involving the Licensed IP, the other Party agrees to join the
Primary Enforcement Party in such action. The Primary Enforcement Party shall
reimburse all of the other Party’s reasonable expenses, including attorney fees, and pay a
reasonable hourly consulting fee for use of the other Party’s personnel, in connection with
litigation involving the Licensed IP that the other Party is required to join as an indispensable
party.

 

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

(c) The other Party agrees to cooperate with the Primary Enforcement Party in any lawsuit that
the Primary Enforcement Party brings against a third party to enforce the Primary Enforcement
Party’s rights in the Licensed IP and to join the Primary Enforcement Party as a party to such
lawsuit if (i) requested by the Primary Enforcement Party and (ii) if the Primary Enforcement Party
agrees to (A) reimburse all of the other Party’s reasonable litigation expenses, including attorney
fees, in such lawsuit, and (B) pay a reasonable hourly consulting fee for use of the other Party’s
personnel in connection with such lawsuit.

(d) To the extent permissible under the Federal Rules of Civil Procedure, each Party shall
have the right, with counsel of its own choosing and at its own expense, to join in any of the
other Party’s litigation involving the Licensed IP.

5.3. Enforcement Action by Third Party.

(a) If any Party receives notice by counterclaim, declaratory judgment action or otherwise,
alleging the invalidity, unenforceability, non-infringement, misuse, or misappropriation with
respect to any Licensed IP, it shall bring such fact to the attention of the other Party, including
all relevant information related to such claim. Where such allegation is made in an patent
opposition, patent reexamination, patent interference or other patent office proceeding or in
otherwise connection with any Patent Prosecution Action, the provisions of Section 6 shall apply.
Where such allegation is made in a counterclaim to, or otherwise in connection with, a suit or
other action brought under Section 5.2, the provisions of Section 5.2 shall apply. In all other
cases, (i) for Licensed Patent Rights, the Party who prosecuted such Licensed Patent Right pursuant
to Section 6 shall have the first right to defend such action at its own expense and (ii) for any
other Licensed IP, Cardica shall have the first right to defend such action at its own expense;
provided, however, that in either case ((i) or (ii), if a Party pursuant to Section 5.2 elects to
bring an Infringement counterclaim, the provisions of Section 5.2 shall thereafter apply. If the
Party with the first right to defend any Licensed IP elects not to defend such action, it shall so
notify the other Party in writing, and the other Party shall have the right to defend such action,
at the other Party’s expense.

(b) The provisions of this Section 5.3 shall be in addition to, and not in lieu of, the
Parties’ indemnification obligations contained in Section 9, and in the event of any conflict
between the provisions of this Section 5.3 and the indemnification obligations contained in Section
9, the indemnification obligations contained in Section 9 shall be controlling.

(c) All actions taken by a Party to defend any Licensed IP pursuant to this Section 5.3 shall
be subject to the following conditions:

(i) such defending Party shall be responsible for all costs of prosecuting and defending
against such action;

(ii) as reasonably requested by the non-defending Party, the defending Party shall regularly
provide the non-defending Party with copies of all pleadings and other documents proposed to be
filed or served by the defending Party and other material submissions and correspondence in any way
related to such defense, as applicable, in sufficient time to allow review and comment by the
non-defending Party; and

 

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

(iii) the defending Party shall provide the non-defending Party and its counsel with a
reasonable opportunity to consult with the defending Party and its counsel, at the non-defending
Party’s own expense, regarding the filing, service of process, and contents of any documents
proposed to be filed or served by the defending Party and other material submissions and
correspondence in any way related to such defense or in connection therewith, and the defending
Party shall give consideration to the non-defending Party’s reasonable requests regarding the same.

5.4. Amounts Recovered. Any amounts recovered by either Party for past Infringement
that occurs in the Field of Use in connection with a suit pursuant to this Section 5, whether by
settlement or judgment, shall be used to reimburse the Parties for their reasonable out-of-pocket
costs and expenses in making such recovery (which amounts shall be allocated first to the party
acting as Primary Enforcement Party if such amounts are insufficient to cover such costs and
expenses in full). Any remainder that relates to an Infringement of Licensed IP occurring in the
Field of Use shall belong in full to Intuitive and/or an Affiliate of Intuitive (as applicable),
and any remainder that relates to an Infringement occurring outside the Field of Use of IP that is
owned or Controlled by Cardica or a Cardica Affiliate and that is not licensed to Intuitive shall
belong to Cardica.

5.5. Limitation on Settlements. The Parties agree that the primary goal in
litigating validity and enforceability issues associated with the Licensed IP shall be the
preservation of maximum claim breadth and enforcement rights, and the Parties shall cooperate with
each other in good faith to achieve this mutual goal. Except with the prior written consent of
the other Party, neither Party shall consent to entry of any judgment or enter into any settlement
with respect to any infringement or other action identified in this Section 5 that (i) would
result in monetary, injunctive, or other relief being imposed against the other Party, (ii) would
constitute or require any admission of liability or wrongdoing on the part of the other Party that
does not provide a full release of liability for the other Party, or (iii) would otherwise
materially diminish the claim scope of the applicable Licensed IP or affect its validity or
enforceability.

6. Prosecution of Patent Rights.

6.1. Prosecution and Maintenance of Patent Rights. For countries or regions that
grant Patent Rights (“Designated Jurisdictions”), Cardica shall use Commercially Reasonable Efforts
to prepare, file, prosecute, obtain, and maintain:

(a) all Licensed Patent Rights existing as of the Agreement Date; and

(b) all Licensed Patent Rights that come into existence after the Agreement Date in any
Designated Jurisdiction selected at Cardica’s discretion.

(c) With reference to Sections 6.1(a) and (b), Cardica shall otherwise take all Patent
Prosecution Actions as it shall deem to be commercially reasonable, in its discretion, in order to
protect and enhance the value of such Licensed Patent Rights, and shall pay all Patent Costs
incurred by Cardica in connection with the foregoing activities.

 

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

6.2. Cooperation with Respect to Licensed Patent Rights. Cardica shall regularly
provide Intuitive with copies of all patent applications that, upon filing, would be included in
the definition of Licensed Patent Rights in the Field of Use that are proposed to be filed by
Cardica or any Affiliate, and Cardica shall also provide Intuitive with copies of all other related
material submissions and correspondence with any patent authorities dealing with actual or
potential Licensed Patent Rights in the Field of Use, in sufficient time to allow for review and
comment by Intuitive. In addition, Cardica shall provide Intuitive and its counsel with an
opportunity to consult with Cardica and its counsel regarding Patent Prosecution Actions relating
to the Licensed Patent Rights and any decisions by Cardica not to take any Patent Prosecution
Actions, and Cardica shall take into consideration the reasonable requests of Intuitive regarding
the same. Cardica shall cooperate fully with Intuitive, at Intuitive’s reasonable request and
Intuitive’s sole expense for its own actions, in connection with the preparation, filing,
prosecution, obtaining and maintenance of, all Patent Prosecution Actions concerning the applicable
Licensed Patent Rights by Intuitive under this Section 6.2 (and in any other proceedings before a
patent official or office with respect thereto).

6.3. Election Not to Prosecute; Licensed Patent Rights; Right to Step In. If Cardica
elects not to:

(a) take any Patent Prosecution Action for any applicable Licensed Patent Rights necessary to
establish (e.g., prepare and file a patent application) or maintain such Licensed Patent Rights in
a particular Designated Jurisdiction;

(b) take any other action to prevent the forfeiture of commercially valuable rights with
respect to any applicable Licensed Patent Rights in a Designated Jurisdiction that is reasonably
necessary to establish or preserve such commercially valuable rights in such Designated
Jurisdiction; or

(c) pay the Patent Costs associated with any such Patent Prosecution Action or such other
action in any particular Designated Jurisdiction (in each case relating to Licensed Patent Rights),

(each of the foregoing a “Requested Prosecution Action”), then in each such case Cardica
shall so notify (“Non-Prosecution Notice”) Intuitive promptly in writing that it has made
such an election. Cardica shall provide such Non-Prosecution Notice to Intuitive on or before a
date that it reasonably believes would provide Intuitive with sufficient time to enable Intuitive
to meet any deadlines known to Cardica by which the Requested Prosecution Action must be taken to
establish or preserve commercially valuable rights in the Designated Jurisdiction to which such
Requested Prosecution Action relates. On receipt of any Non-Prosecution Notice, Intuitive shall
have the right but not the obligation to take the Requested Prosecution Action at its own expense,
and to take over Prosecution of the Patent Rights that were subject to the Non-Prosecution Notice,
and Cardica shall cooperate fully with Intuitive with respect to any such action. Intuitive shall
be deemed to have received a Non-Prosecution Notice with respect to any Requested Prosecution
Action if Cardica shall not have taken the Requested Prosecution Action within ten (10) days of a
written request by Intuitive that Cardica take such action.

 

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

7. Confidentiality.

7.1. Limited Disclosure and Use. Each of Intuitive and Cardica shall hold in
confidence any Confidential Information (including trade secrets) disclosed by the other or
otherwise obtained by such Party from the other Party as a result of this Agreement, and each of
Intuitive and Cardica shall protect the confidentiality thereof with the same degree of care that
it exercises with respect to its own information of a like nature, but in no event less than
reasonable care. Intuitive shall have the right to provide Confidential Information to its
Affiliates and Sublicensees, subject to the confidentiality obligations imposed by this Section
7.1. Without the prior written consent of the disclosing Party, a receiving Party shall not use,
disclose, or distribute any Confidential Information, in whole or in part, except as required to
perform such Party’s obligations under this Agreement or in exercise or furtherance of its rights
under this Agreement. Access to the disclosing Party’s Confidential Information shall be
restricted to the receiving Party’s employees, agents, and consultants, who, in each case, need to
have access to carry out a permitted use and are bound in writing to maintain the use and
confidentiality restrictions of such Confidential Information. The obligations set forth in this
Section 7.1 shall survive any termination or expiration of this Agreement in perpetuity (with
respect to trade secrets and confidential financial information) and for a period of five (5) years
(with respect to all other Confidential Information).

7.2. Exceptions. Each receiving Party may disclose Confidential Information, without
prior approval from the other Party, to the extent such disclosure is reasonably necessary to
protect intellectual property rights to which such Party has a right or license under this
Agreement, to prosecute or defend litigation, to comply with applicable law or regulations (e.g.,
Unites States Securities and Exchange Commission filings), to obtain necessary or desirable
Regulatory Approvals or concurrences, or to respond to a valid order of a Governmental Authority,
provided that, other than with respect to disclosure for protecting intellectual property rights in
connection with a Patent Prosecution Action in which such disclosure is required by applicable law,
the receiving Party shall (a) use reasonable efforts to secure confidential treatment of such
Confidential Information required to be disclosed, (b) use reasonable efforts to protect the
financial terms of this Agreement, and (c) unless precluded by applicable law from doing so, give
advance written notice to the disclosing Party sufficiently in advance of the proposed disclosure
so as to permit the disclosing Party to have the opportunity to object to such disclosure or
otherwise protect its Confidential Information.

7.3. Use of Name; Disclosure of Terms of the Agreement. Except as required by
applicable law or regulation, neither Party shall use the name of the other Party or any Affiliate
of the other Party in any advertising without the prior written approval of the other
Party. Except as may be required by applicable law or regulation, neither Party shall disclose
any terms or conditions of this Agreement without the prior written consent of the other, provided
that (a) either Party may disclose such terms and conditions in order to comply with law or the
rules of any stock exchange on which its securities are listed; and (b) either Party may disclose
such terms and conditions to existing and potential lenders, material investors, and buyers who
have agreed in writing to keep such information confidential in accordance with provisions at least
as protective as those contained herein.

 

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

7.4. Termination. Each receiving Party shall, upon termination of this Agreement,
immediately discontinue use of the other’s Confidential Information (except to the extent that such
receiving Party retains a right or license to use such Confidential Information, or requires such
Confidential Information in order to complete the transactions and purposes of this Agreement).
Within thirty (30) days after termination of this Agreement, or upon receipt of written request by
the disclosing Party, if earlier, all materials containing such Confidential Information shall be
returned by the receiving Party or (with the disclosing Party’s prior written consent) destroyed,
provided, however, that each Party may retain copies of Confidential Information in which such
Party has a proprietary or licensed interest that survives termination, and the receiving Party
shall be entitled to retain a file copy of the Confidential Information under the control of its
general counsel or its outside counsel for archival purposes and for monitoring its obligations
under this Agreement, and in connection with any related obligations under law, Device Regulation,
or Regulatory Approvals.

7.5. Permitted Disclosure to Related Persons. Notwithstanding the preceding
provisions of this Section 7, this Section 7 allows, without prior approval of the other Party,
disclosure of Confidential Information or the terms and conditions of this Agreement: (i) by
Intuitive, to any Intuitive Affiliate, or to the respective auditors and business, financial, and
legal advisers of Intuitive or any Intuitive Affiliate who need to understand the proposed or
existing business relationship between Cardica and Intuitive, and (ii) by Cardica, to any Cardica
Affiliate, and to the respective auditors and business, financial, and legal advisers who need to
understand the proposed or existing business relationship between Cardica and Intuitive.

8. Representations and Warranties.

8.1. Mutual Representations and Warranties. Each Party hereby represents and warrants to
the other Party as follows:

(a) It is a corporation duly organized, validly existing, and in good standing under the laws
of the jurisdiction in which it is incorporated. It has corporate power to own its properties and
to conduct its business as currently owned and conducted.

(b) It has the full legal right and power to enter into and perform the transactions
contemplated by this Agreement, without need for any consent, approval, authorization, license or
order of, or notice to or filing with, any Governmental Authority or other person. The execution,
delivery, and performance by such Party of this Agreement and the consummation by it of the
transactions contemplated hereby have been duly and validly authorized and approved by all
necessary corporate action of such Party. This Agreement
evidences the legal, valid, and binding obligations of such Party, enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium, or similar laws relating to or affecting the rights and remedies of
creditors generally. This Agreement has been duly executed and delivered by such Party.

 

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

(c) The execution, delivery, and performance by it of this Agreement does not and will not
violate any applicable law or regulation, breach, create any liability, or loss of a benefit under
any agreement to which it is a party or by which it is bound.

(d) The execution, delivery, and performance by it of this Agreement does not require the
approval of any Governmental Authority nor the application for or filing of or for any license,
permit, approval, waiver, no-action, or similar permission from any Governmental Authority
(excluding the Regulatory Approvals expressly described in this Agreement).

8.2. Representations and Warranties of Cardica. Cardica hereby represents and
warrants, as at the Agreement Date, as follows:

(a) Title and Transfer. Cardica (i) owns and holds, free and clear of all Liens, all
right, title, and interest in the Licensed IP, with the exception of a security interest granted to
Century Medical; (ii) has the exclusive right to make, have made, use, sell, offer for sale,
market, import, export, distribute, Commercialize, and license the Licensed IP in the Field of Use
on a worldwide basis; and (iii) has the exclusive right to bring actions for the infringement of
the issued patents included in the Licensed IP in the Field of Use. Pursuant to this Agreement,
Cardica will license to Intuitive all of its right, title, and interest in and to all Licensed IP
in the Field of Use to the extent set forth in Section 2.1 of this Agreement, free and clear of all
Liens. Cardica has not granted (and is not obligated to grant) to any other person any license,
option, or other rights with respect to the Licensed IP in the Field of Use.

(b) Confidentiality. Cardica has taken reasonable efforts to protect the
confidentiality of any Know-How or confidential or proprietary information included in the Licensed
IP.

(c) No Contest of Validity or Patentability. There is no pending or, to the knowledge
of Cardica, threatened Litigation Matter (and Cardica has received no notice) (i) contesting the
patentability, validity, enforceability, ownership, or right to use, assign, license, sublicense,
or dispose of any Intellectual Property included in the Licensed IP that has application in the
Field of Use, or (ii) asserting that any Licensed IP that has application in the Field of Use (or
the design, manufacture, use, importation, marketing, offer for sale, or sale of any Cardica
stapling and cutting instruments, clip appliers, Reloads, staples, and/or clips) conflicts or will
conflict with the Intellectual Property of any other person.

(d) Misappropriation; Notice of Infringement. Cardica has not misappropriated from
any person any Technical Information, nor any of the Technology covered by any Licensed IP that has
application in the Field of Use or that relates in any way to clip appliers, stapling and cutting
instruments, Reload, staples, and/or clips. Cardica has received no notice of any infringement or
alleged infringement by any third party of the Licensed IP that has application in the Field of
Use.

(e) No In-Licensed IP. As at the Agreement Date, none of the Licensed IP has been
in-licensed from a third party.

 

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

8.3. Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NO PARTY MAKES ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY REPRESENTATIONS
OR WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT. NO PARTY
WARRANTS THAT THE OTHER PARTY WILL RECEIVE ANY PARTICULAR AMOUNT, OR ANY, REVENUES OR PROFITS AS A
RESULT OF ENTERING INTO THE BUSINESS ARRANGEMENTS DESCRIBED IN THIS AGREEMENT.

9. Indemnification; Limitation of Liability.

9.1. Cardica’s Indemnification Obligations. Cardica hereby agrees to indemnify,
defend, and hold harmless Intuitive, each of its Affiliates, and their respective Sublicensees,
directors, representatives, officers, employees, agents, attorneys, successors, and assignees
(collectively, the “Intuitive Indemnified Parties”), from and against, and in respect of,
any liability, injury, damage, loss (including, but not limited to, direct economic loss), or
expense (including, but not limited to, reasonable attorney fees and reasonable litigation
expenses), as and when incurred by or imposed upon the Intuitive Indemnified Parties in connection
with any third party claims, suits, actions, proceedings, demands, or judgments worldwide (“Third
Party Claims”) arising out of or resulting from (a) any infringement or alleged infringement of
third party Intellectual Property arising from Intuitive’s manufacture, use, or Commercialization
of medical devices and accessories for which Intuitive makes Royalty Payments under Section 4,
where the infringement or alleged infringement arises from the design and/or approval by Cardica of
all or part of such medical devices and accessories; and/or (b) Cardica’s breach of the
representations and warranties set forth in Section 8.

9.2. Notice of Claims. Within thirty (30) days after a Person seeking indemnification
hereunder (hereinafter the “Indemnified Party”) has received notice of or has acquired
knowledge of any Third Party Claim, the Indemnified Party shall, if such claim is indemnifiable by
the other Party pursuant hereto (hereinafter the “Indemnifying Party”), give the
Indemnifying Party written notice of such claim and the commencement or threatened commencement of
such Third Party Claim. Such notice shall state the nature and basis of such Third Party Claim,
and, if ascertainable, the amount thereof. Notwithstanding the foregoing, the failure of the
Indemnified Party to give such notice shall not excuse the Indemnifying Party’s obligation to
indemnify and defend the Indemnified Party, except to the extent the Indemnifying Party has
suffered damage or prejudice by reason of the Indemnified Party’s failure to give or delay in
giving such notice. Within ten (10) business days of receipt of any notice issued by the
Indemnified Party pursuant to this Section 9.2, the Indemnifying Party shall notify the Indemnified
Party whether the Indemnifying Party acknowledges its indemnification and defense obligation with
respect to the Third Party Claim which was the subject of the Indemnified Party’s notice or whether
it disclaims such obligations. In the event the Indemnifying Party disclaims or fails to timely
acknowledge its obligations with respect to any Third Part Claim, the Indemnified Party shall have
the right to defend such Third Party Claim, with counsel of its own selection, and compromise such
Third Party Claim without prejudice to its right to indemnification hereunder. In the event the
Indemnifying Party timely acknowledges its

 

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

obligations hereunder with respect to any Third Party Claim, the Indemnifying Party shall
defend the same with counsel in accordance with this Section. Where the Indemnifying Party shall
have acknowledged in writing its obligations hereunder with respect to any Third Party Claim, the
Indemnified Party may, at its expense, participate in the defense of such Third Party Claim and no
such Third Party Claim shall be settled by the Indemnified Party without the prior written consent
of the Indemnifying Party which consent shall not be unreasonably withheld or delayed. At any time
after the Indemnifying Party acknowledges its obligations hereunder with respect to any Third Party
Claim, the Indemnifying Party may request the Indemnified Party to agree in writing to the payment
or compromise of such Third Party Claim (provided such payment or compromise has been previously
approved in writing by the third party claimant), and, in the event the Indemnifying Party does so,
the Indemnified Party shall promptly agree in writing to such settlement, unless such settlement
would involve a remedy or remedies, other than the payment of money damages by the Indemnifying
Party, to which the Indemnified Party reasonably objects.

9.3. Third Party Beneficiaries. The Intuitive Indemnified Parties are intended to be
third party beneficiaries of the rights granted under this Section 9 and to have the right to
enforce such rights directly against the Indemnifying Party. There shall be no other third party
beneficiaries of this Agreement.

9.4. Limitation of Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY
INDIRECT, EXEMPLARY, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES ARISING IN CONNECTION WITH THIS
AGREEMENT, INCLUDING WITHOUT LIMITATION LOSS OF PROFITS OR REVENUES, WHETHER OR NOT SUCH DAMAGES
WERE WITHIN THE CONTEMPLATION OF THE PARTIES. This paragraph shall not apply to any violation or
infringement by a Party or its Affiliates of the Intellectual Property of the other Party or its
Affiliates, to any violation of the exclusive license grant provisions of Section 2.1, or to any
breach of Section 7.

10. Dispute Resolution and Governing Law

10.1. Disputes. In the event of any dispute or disagreement between the Parties which
may arise out of or in relation to this Agreement, the Parties agree to meet within thirty (30)
days and discuss in good faith a possible resolution thereof, which good faith efforts shall
include at least one in-person meeting between the Chief Executive Officers of each Party. If the
matter is not resolved within thirty (30) days of the first meeting between the Parties, then
except if the dispute or disagreement involves an allegation of fraud or other intentional
deception, either Party may proceed to arbitration under Section 10.2 below.

 

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

10.2. Binding Arbitration. Binding arbitration shall be administered by JAMS and conducted
under its Comprehensive Arbitration Rules and Procedures. The place of arbitration shall be San
Jose, California. The arbitration shall be conducted by three (3) neutral, independent arbitrator
with not less than fifteen (15) years of relevant experience in the subject matter of the dispute.
The arbitrator shall have no authority to award punitive damages. Each Party shall bear its own
costs and expenses and attorneys’ fees and an equal share of the arbitrator’s fees and any
administrative fees of arbitration. Except to the extent necessary to confirm an award or as may
be required by law, neither the Parties nor the arbitrator may disclose the existence, content, or
results of an arbitration without the prior written consent of both Parties. In no event shall an
arbitration be initiated after the date when commencement of a legal or equitable proceeding based
on the dispute, controversy or claim would be barred by the applicable statute of limitations.
Notwithstanding anything to the contrary herein, either Party may seek from any court having
jurisdiction any injunctive or provisional relief necessary to protect the rights or property of
such Party.

10.3. Patent Disputes. Notwithstanding anything to the contrary herein, any dispute,
controversy or claim relating to the scope, validity, enforceability or infringement of any Patent
Right shall be submitted to a court of competent jurisdiction in which such Patent Right was
granted or arose.

10.4. Governing Law and Jurisdiction. This Agreement and any dispute arising from the
performance or breach hereof shall be governed by, construed, and enforced in accordance with the
laws of the State of California without regard to conflict of laws provisions.

11. Term and Termination.

11.1. License Term. The “License Term” and the license grants set forth in
this Agreement shall take effect at the Agreement Date and shall continue until the expiration of
the last to expire of the Licensed Patent Rights, including any extensions thereof.

11.2. Material Breach by Cardica. If Cardica:

(a) materially breaches this Agreement and such breach remains uncured for thirty (30) days
following written notice of breach by Intuitive, or

(b) is subject to a petition for relief under any bankruptcy legislation, or makes an
assignment for the benefit of creditors, or is subject to the appointment of a receiver for all or
a substantial part of Cardica’s assets, and such petition, assignment, or appointment prevents
Cardica (as a legal or as a practical matter) from performing its obligations under this Agreement,
or such petition, assignment, or appointment is not otherwise dismissed or vacated within ninety
(90) days, then, on each such occasion, subject to Section 11.4, Intuitive shall also have the
right (i) to seek monetary damages for such material breach and/or equitable relief to prevent such
material breach from continuing or occurring again in the future, and/or (ii) to terminate this
Agreement for cause.

11.3. Material Breach by Intuitive. If Intuitive:

(a) materially breaches this Agreement and such breach remains uncured for thirty (30) days
following written notice of breach by Cardica, or

 

21

 

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

(b) is subject to a petition for relief under any bankruptcy legislation, or makes an assignment
for the benefit of creditors, or is subject to the appointment of a receiver for all or a
substantial part of Intuitive’s assets, and such petition, assignment, or appointment prevents
Intuitive (as a legal or as a practical matter) from performing its obligations under this
Agreement, or such petition, assignment, or appointment is not otherwise dismissed or vacated
within ninety (90) days, then on each such occasion, subject to Section 11.4, Cardica shall also
have the right to (i) seek monetary damages for such material breach and/or equitable relief to
prevent such material breach from continuing or occurring again in the future, and/or (ii)
terminate this Agreement for cause.

11.4. After Termination.

(a) After termination of this Agreement for any reason: the licenses granted in Section 2
shall continue despite termination, and Sections 5, 6, 7, 8, 9, 11, and 12 shall survive.

(b) If the Agreement is terminated for cause under Section 11.2 (Material Breach by Cardica),
Sections 3.2 and 4 shall terminate.

(c) If the Agreement is terminated for cause under Section 11.3 (Material Breach by
Intuitive), Sections 3.2 and 4 shall survive.

11.5. Section 365(n). All rights and licenses granted under or pursuant to this
Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of Title 11,
U.S. Code (the “Bankruptcy Code”), licenses of rights to “intellectual property” as defined
in the Bankruptcy Code. The Parties agree that Intuitive (as licensee under Section 2.1) shall
retain and may fully exercise all of their respective rights and elections under the Bankruptcy
Code. Each applicable licensor agrees during the License Term to create and maintain current
copies or, if not amenable to copying, detailed descriptions or other appropriate embodiments, of
all such Intellectual Property. All rights, powers, and remedies of each licensee provided under
this Section 11.5 are in addition to and not in substitution for any and all other rights, powers,
and remedies now or hereafter existing at law or in equity in the event of any such commencement of
a bankruptcy proceeding by or against the applicable licensor.

12. General.

12.1. Waivers and Amendments.

(a) This Agreement may be amended, modified, or supplemented only by a written instrument
executed by the Parties to this Agreement.

(b) No waiver of any provision of this Agreement, or consent to any departure from the terms
of this Agreement, shall be effective unless the same shall be in writing and signed by the Party
waiving or consenting thereto. No failure on the part of any Party to exercise, and no delay in
exercising, any right or remedy under this Agreement shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or remedy by such Party preclude any other or
further exercise thereof or the exercise of any other right or remedy. The waiver by any Party to
this Agreement of a breach of any provision of this Agreement shall not operate as a waiver of any
subsequent breach. All rights and remedies under this Agreement are cumulative and are in addition
to, and not exclusive of, any other rights and remedies provided by law.

 

22

 

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

12.2. Entire Agreement. This Agreement constitute the entire agreement between the Parties
to this Agreement with respect to the subject matter of this Agreement and supersede all prior
agreements and understandings, whether written or oral, between the Parties, or any of the Parties,
in connection with such subject matter.

12.3. Severability. If any provision of this Agreement is found invalid or
unenforceable by an arbitrator or court of competent jurisdiction, such provision shall be enforced
to the maximum extent permissible by law and the other provisions of this Agreement shall remain in
full force and effect.

12.4. Relationship of the Parties. This Agreement shall not constitute either Party
the agent or legal representative of the other Party for any purpose whatsoever, and neither Party
shall hold itself out as an agent of the other Party. This Agreement creates no relationship of
joint venturers, partners, associates, employment, or principal and agent between the Parties, and
both Parties are acting as independent contractors. Neither Cardica nor Intuitive is granted in
this Agreement any right or authority to, and shall not attempt to, assume or create any obligation
or responsibility for or on behalf of the other. Neither Cardica nor Intuitive shall have any
authority to bind the other to any contract, whether of employment or otherwise, and Cardica and
Intuitive shall bear all of their respective expenses for their operations, including the
compensation of their employees and the maintenance of their offices and service facilities.
Cardica and Intuitive shall each be solely responsible for their own employees and salespeople and
for their acts and the things done by them.

12.5. No Election of Remedies. Except as otherwise specifically provided in this
Agreement, the rights and remedies accorded in this Agreement to Cardica and Intuitive are
cumulative and in addition to those provided by law, and may be exercised separately, concurrently,
or successively.

12.6. Costs and Expenses. Except as expressly stated otherwise in this Agreement,
each Party shall bear its own costs and expenses of performance of this Agreement.

12.7. Force Majeure. No Party shall be liable for failure to perform any of its
obligations under this Agreement when such failure is due to fire, flood, strikes, labor troubles
or other industrial disturbances, legal restriction, riot, insurrection, or any other cause beyond
the reasonable ability of the Party affected thereby to control, and without such Party’s fault or
negligence (“Force Majeure”), provided that any Party claiming the existence of Force
Majeure shall give notice to the other Party not more than seven (7) days after the commencement of
the event of Force Majeure, and shall use prompt and diligent efforts to mitigate the effects of
Force Majeure. In the event that any event of Force Majeure prevents performance by a Party for
sixty (60) days or more, the other Party may terminate this Agreement for cause upon written notice
to the non-performing Party.

 

23

 

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

12.8. Notices. All notices, requests, demands, claims, and other communications under this
Agreement shall be in writing. Any notice, request, demand, claim or other communication under this
Agreement with respect to any alleged breach of this Agreement or the alleged termination of this
Agreement shall be deemed duly delivered (a) four (4) business days after it is sent by registered
or certified mail, return receipt requested, postage prepaid, or (b) one (1) business day after it
is sent for next business day delivery via a reputable nationwide overnight courier service, in
each case addressed to the intended recipient as set forth below. Any other form of notice,
request, demand, or other communication between the Parties shall be deemed duly delivered one (1)
business day after it is sent (i) for next business day delivery via a reputable nationwide
overnight courier service, (ii) via electronic facsimile transmission, with confirmation of
delivery, or (iii) via electronic mail communications, with electronic verification of delivery
requested, in each case addressed to the intended recipient as set forth below:

	 	 	 
	(a)

	 	if to Cardica, to:
	 
	 	 
	 

	 	Cardica, Inc.

900 Saginaw Drive

Redwood City, CA 94063

Attention: President

Facsimile No.: (650) 364-3134

E-mail: hausen@cardica.com
	 
	 	 
	(b)

	 	if to Intuitive, to:
	 
	 	 
	 

	 	Intuitive Surgical Operations, Inc.

1266 Kifer Road

Building 101

Sunnyvale, CA 94086-5304

Attention: General Counsel—Legal Dept.

Facsimile No.: (408) 523-1390

E-mail: mark.meltzer@intusurg.com

or at such other address for a Party as shall be specified by like notice.

12.9. Counterparts and Facsimile Signatures. This Agreement and all Exhibits,
Schedules and Appendices may be executed in two or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when two or more counterparts have
been signed by each Party and delivered to the other Party, it being understood that all Parties
need not sign the same counterpart. Facsimile execution and delivery of this Agreement and any
Exhibits, Schedules, and Appendices by any of the Parties shall be legal, valid, and binding
execution and delivery of such document for all purposes.

 

24

 

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

12.10. Benefits and Burdens; Assignments. This Agreement shall be binding upon and shall
inure to the benefit of each of the Parties as well as their respective legal representatives,
successors, and permitted assigns. This Agreement shall not be assignable or transferable, by
operation of law or otherwise, by either Party without the other Party’s written consent, which
consent shall not be unreasonably withheld, conditioned, or delayed, and with the exceptions that
either Party or its permitted assignee(s) may assign this Agreement (i) in whole or in part to an
Affiliate of the assigning Party so long as the assigning Party agrees in writing to remain liable
for the Affiliate’s performance of its obligations under this Agreement; or (ii) in whole to a
third party who acquires all or substantially all of the assets of the assigning Party or of the
assets of the business of the assigning Party to which this Agreement relates; or (iii) in whole to
any successor to the assigning Party by merger or consolidation; provided in each case the assignee
agrees in writing to assume the assigning Party’s obligations under this Agreement. Any attempt to
assign or transfer this Agreement or any portion thereof in violation of this Section 12.10 shall
be void.

12.11. Interpretation. When a reference is made in this Agreement to Sections or
Exhibits, such reference shall be to a Section of or Exhibit to this Agreement unless otherwise
indicated. References to Sections include subsections, which are part of the related Section
(e.g., a section numbered “Section 5.1(a)” would be part of “Section 5.1”, and references to
“Section 5.1” would also refer to material contained in the subsection described as “Section
5.1(a)”). The recitals to this Agreement constitute an integral part of this Agreement. Headings
contained in this Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement. The language used in this Agreement shall be
deemed to be the language chosen by the Parties to this Agreement to express their mutual intent,
and no rule of strict construction shall be applied against any Party (e.g., ambiguities, if any,
in this Agreement shall not be construed by default against either Party simply because one or the
other Party is deemed to have drafted the provision at issue). Whenever the context may require,
any pronouns used in this Agreement shall include the corresponding masculine, feminine, or neuter
forms, and the singular form of nouns and pronouns shall include the plural, and vice versa. Any
reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to
all rules and regulations promulgated thereunder, unless the context requires otherwise. Whenever
the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to
be followed by the words “but not limited to”. No summary of this Agreement prepared by any Party
shall affect the meaning or interpretation of this Agreement. All references to dollars in this
Agreement shall be to United States Dollars.

12.12. License Registration and Recordal. Subject to the confidentiality provisions
of Section 7, each Party shall have the right, at its sole cost and expense, to register, record,
and otherwise document the license granted in Section 2.1 in any country where there are any
pending or issued Licensed Patent Rights. Each Party shall have the right, at its sole cost and
expense, to register, record, and otherwise document any assignments of Licensed Patent Rights
provided for by this Agreement.

 

25

 

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

12.13. Public Announcement. Neither Cardica or any of its Affiliates or Representatives
shall issue any press release or make any public announcement or disclosure with respect to this
Agreement or the transactions contemplated hereby, including the Equity Agreement and the
Registration Rights Agreement, without the prior written consent of Intuitive, which will not be
unreasonably withheld or delayed, provided that in the event that Intuitive shall have previously
approved the form of a press release or other public disclosure, Cardica shall be free to continue
to disclose substantially the same information in additional public disclosures without having to
obtain Intuitive’s consent thereto. Additionally, Intuitive acknowledges that as a public company,
Cardica is required by law to file or disclose certain information with certain agencies or
authorities. In connection herewith, Intuitive acknowledges that Cardica will be required to file
each of this Agreement, the Equity Agreement and the Registration Rights Agreement with the U.S.
Securities and Exchange Commission (“SEC”) as a “material agreement” of Cardica, but Cardica shall
do so with respect to this Agreement under a request for confidential treatment which shall be
submitted to Intuitive for its approval (not to be unreasonably withheld or delayed) prior to
submission. Once information is so disclosed or filed and is thereby made publicly available,
Cardica shall be free to disclose substantially the same information in subsequent public filings
or in public disclosures without having to first obtain Intuitive’s prior written approval.

In Witness Whereof, the Parties have executed, or caused their duly authorized
representatives to execute, this License and Development Agreement under seal as of the date first
written above.

	 	 	 	 	 
	 	Cardica Inc.

 	 
	 	By:  	/s/ Bernard A. Hausen
 	 
	 	 	Name:  	Bernard A. Hausen 	 
	 	 	Title:  	President and CEO 	 
	 
	 	Intuitive Surgical Operations, Inc.

 	 
	 	By:  	/s/ Gary Guthart
 	 
	 	 	Name:  	Gary Guthart 	 
	 	 	Title:  	CEO 	 

 

26

 

Exhibit 1.1(o) Cardica Patents and Patent Applications

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Docket	 	 	 	 	 	 	 	 	 	Filing	 	Issue	 	 	 
	No.	 	Title	 	Country	 	Serial No.	 	 	Date	 	Date	 	Patent No.	 
	002	 	Sutureless Closure for Connecting a Bypass Graft to a Target Vessel
	 	US	 	 	09/330,244	 	 	6/10/99	 	1/30/01	 	 	6,179,849	 
	003	 	Sutureless Closure and Deployment System for Connecting Blood Vessels
	 	US	 	 	09/314,278	 	 	5/18/99	 	8/6/02	 	 	6,428,550	 
	004	 	Implantable Medical Device Such as an Anastomosis Device
	 	US	 	 	09/437,428	 	 	11/15/99	 	7/16/02	 	 	6,419,681	 
	005	 	Trocar for Use in Deploying an Anastomosis Device and Method of Performing Anastomosis
	 	US	 	 	09/440,263	 	 	11/15/99	 	4/16/02	 	 	6,371,964	 
	007	 	Method and System for Attaching a Graft to a Blood Vessel
	 	US	 	 	09/132,711	 	 	8/12/98	 	10/8/02	 	 	6,461,320	 
	008	 	Method and System for Attaching a Graft to a Blood Vessel
	 	US	 	 	09/133,185	 	 	8/12/98	 	3/27/01	 	 	6,206,913	 
	009	 	Anastomosis System and Method for Controlling a Tissue Site
	 	US	 	 	09/363,255	 	 	7/28/99	 	5/21/02	 	 	6,391,038	 
	012	 	Everter and Threadthrough System for Attaching Graft Vessel to Anastomosis Device
	 	US	 	 	09/440,116	 	 	11/15/99	 	6/11/02	 	 	6,402,764	 
	013	 	Tissue Punch
	 	US	 	 	09/542,976	 	 	4/4/00	 	1/6/04	 	 	6,673,088	 
	016	 	Sutureless Closure and Deployment System for Connecting Blood Vessels
	 	US	 	 	09/664,588	 	 	9/18/00	 	9/7/04	 	 	6,786,914	 
	017	 	System for Deploying an Anastomosis Device and Method of Performing Anastomosis
	 	US	 	 	09/709,373	 	 	11/13/00	 	10/29/02	 	 	6,471,713	 
	018	 	Implantable Superelastic Anastomosis Device
	 	US	 	 	09/687,216	 	 	10/12/00	 	8/17/04	 	 	6,776,785	 
	022	 	Access Port System for Anastomosis
	 	US	 	 	09/967,684	 	 	9/28/01	 	7/5/05	 	 	6,913,609	 
	023	 	Sutureless Closure and Deployment System for Connecting Blood Vessels
	 	US	 	 	09/664,589	 	 	9/18/00	 	11/25/03	 	 	6,652,541	 
	030	 	Tissue Bonding System and Method for Controlling a Tissue Site During Anastomosis
	 	US	 	 	09/725,232	 	 	11/29/00	 	6/4/02	 	 	6,398,797	 
	031	 	Graft Vessel Preparation Device and Method for Using the Same
	 	US	 	 	09/712,044	 	 	11/13/00	 	4/29/03	 	 	6,554,764	 
	038	 	Sutureless Closure for Connecting a Bypass Graft to a Target Vessel
	 	US	 	 	09/705,819	 	 	11/6/00	 	3/25/03	 	 	6,537,287	 
	040	 	TM 2,813,408 CARDICA
	 	US	 	 	76/162,848	 	 	11/9/00	 	2/10/04	 	 	2,813,408	 
	043	 	Method and System for Attaching a Graft to a Blood Vessel
	 	US	 	 	09/778,003	 	 	2/7/01	 	12/24/02	 	 	6,497,710	 
	046	 	Method and System for Attaching a Graft to a Blood Vessel
	 	EPO	 	 	99941967.4	 	 	8/11/99	 	12/6/06	 	 	1,105,069	 
	052	 	Anastomosis System and Method for Controlling a Tissue Site
	 	US	 	 	09/842,792	 	 	4/27/01	 	11/12/02	 	 	6,478,804	 
	053	 	Method and System for Attaching a Graft to a Blood Vessel
	 	US	 	 	09/886,074	 	 	6/18/01	 	2/28/06	 	 	7,004,949	 
	056	 	System for Performing Anastomosis
	 	US	 	 	10/001,962	 	 	12/5/01	 	4/13/04	 	 	6,719,769	 
	[*]	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	058	 	Method and System for Attaching a Graft to a Blood Vessel
	 	US	 	 	09/924,556	 	 	8/9/01	 	5/9/06	 	 	7,041,110	 
	059	 	Method and System for Performing Closed-Chest Bypass Graft Surgery (Endo)
	 	US	 	 	09/993,438	 	 	11/13/01	 	3/22/05	 	 	6,869,437	 
	061	 	Sutureless Closure and Deployment System for Connecting Blood Vessels
	 	US	 	 	09/946,791	 	 	9/4/01	 	2/13/07	 	 	7,175,637	 
	062	 	Sutureless Anastomosis System
	 	DE	 	 	10084620.3	 	 	11/19/01	 	4/10/08	 	 	100 84 620	 
	063	 	Trocar for Use in Deploying an Anastomosis Device
	 	DE	 	 	10084618.1	 	 	11/19/01	 	8/27/09	 	 	100 84 618	 
	064	 	Implantable Medical Device Such as an Anastomosis Device
	 	US	 	 	10/003,406	 	 	12/6/01	 	3/25/03	 	 	6,537,288	 
	065	 	Trocar for Use in Deploying an Anastomosis Device and Method of Performing Anastomosis
	 	US	 	 	09/989,055	 	 	11/21/01	 	5/17/05	 	 	6,893,449	 
	100	 	Surgical Measurement Tool
	 	US	 	 	10/041,542	 	 	1/7/02	 	12/23/03	 	 	6,666,832	 
	101	 	Integrated Anastomosis Device
	 	US	 	 	10/057795	 	 	1/23/02	 	4/18/06	 	 	7,029,482	 

 

1

 

Exhibit 1.1(o) Cardica Patents and Patent Applications

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Docket	 	 	 	 	 	 	 	 	 	Filing	 	Issue	 	 	 
	No.	 	Title	 	Country	 	Serial No.	 	 	Date	 	Date	 	Patent No.	 
	102	 	Package for Surgical Tool or Tools
	 	US	 	 	10/055179	 	 	1/23/02	 	11/23/04	 	 	6,821,286	 
	103	 	TM: PASSPORT
	 	US	 	 	78/094302	 	 	11/20/01	 	6/22/04	 	 	2,856,707	 
	105	 	Surgical Tool for Creating an Incision in a Blood Vessel
	 	US	 	 	10/134081	 	 	4/24/02	 	5/12/09	 	 	7,530,987	 
	106	 	TM: Cardica Logo
	 	US	 	 	78/099022	 	 	12/18/01	 	7/26/05	 	 	2,978,174	 
	[*]	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	108	 	System for Performing Anastomosis (Anvil and Knife)
	 	US	 	 	10/151,441	 	 	5/20/02	 	10/23/07	 	 	7,285,131	 
	109	 	Tool for Performing End-to-End Anastomosis (End-to-End)
	 	US	 	 	10/083235	 	 	2/26/02	 	6/14/05	 	 	6,905,504	 
	110	 	Expander Tips CIP
	 	US	 	 	10/172781	 	 	6/14/02	 	11/8/05	 	 	6,962,595	 
	111	 	Everter and Threadthrough System for Attaching Graft Vessel to Anastomosis Device
	 	US	 	 	10/135,669	 	 	4/30/02	 	10/18/05	 	 	6,955,679	 
	112	 	Tissue Bonding System and Method for Controlling a Tissue Site During Anastomosis
	 	US	 	 	10/136,007	 	 	4/30/02	 	3/21/06	 	 	7,014,644	 
	114	 	Tool for Performing End-to-End Anastomosis (End-to-End)
	 	US	 	 	10/159,838	 	 	5/31/02	 	9/13/05	 	 	6,942,675	 
	115	 	TM App: C-Port
	 	US	 	 	78/140,994	 	 	7/3/02	 	7/26/05	 	 	2,978,174	 
	116	 	TM App: C-Port Logo
	 	US	 	 	78/201,791	 	 	1/9/03	 	7/12/05	 	 	2,968,231	 
	117	 	Method and System for Attaching a Graft to a Blood Vessel
	 	US	 	 	10/197,352	 	 	7/16/02	 	10/19/04	 	 	6,805,708	 
	118	 	Anastomosis Staple
	 	US	 	 	10/309,519	 	 	12/4/02	 	9/11/07	 	 	7,267,682	 
	120	 	Sutureless Closure and Deployment System for Connecting Blood Vessels
	 	US	 	 	10/223,011	 	 	8/16/02	 	10/31/06	 	 	7,128,749	 
	122	 	System for Preparing a Graft Vessel for Anastomosis
	 	US	 	 	10/426,838	 	 	4/30/03	 	9/23/08	 	 	7,427,261	 
	[*]	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	124	 	Anastomosis Method for Controlling a Tissue Site
	 	US	 	 	10/253,347	 	 	9/24/02	 	6/20/06	 	 	7,063,712	 
	125	 	Anastomosis System for Controlling a Tissue Site
	 	US	 	 	10/253,376	 	 	9/24/02	 	2/7/06	 	 	6,994,714	 
	[*]	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	127	 	Implantable Medical Device Such as an Anastomosis Device
	 	US	 	 	10/273,910	 	 	10/18/02	 	5/23/06	 	 	7,048,751	 
	129	 	PAS-port Logo (revised)
	 	US	 	 	78/201,801	 	 	1/9/03	 	7/18/06	 	 	3,117,830	 
	131	 	Graft Vessel Preparation and Method for Using the Same (Flapper)
	 	US	 	 	10/367,175	 	 	2/14/03	 	9/7/04	 	 	6,786,862	 
	134	 	Minimally Invasive Anastomosis System (Endo)
	 	US	 	 	10/439,382	 	 	5/16/03	 	9/18/07	 	 	7,270,670	 
	137	 	Implantable Superelastic Anastomosis Device
	 	US	 	 	10/461,269	 	 	6/13/03	 	12/4/07	 	 	7,303,569	 
	138	 	Sutureless Closure and Deployment System for Connecting Blood Vessels
	 	US	 	 	10/606,813	 	 	6/26/03	 	2/6/07	 	 	7,172,608	 
	142	 	System for Performing Anastomosis
	 	US	 	 	10/720,618	 	 	11/24/03	 	11/27/07	 	 	7,300,444	 
	143	 	Tool for Creating an Opening in Tissue
	 	US	 	 	10/659,057	 	 	9/9/03	 	2/26/08	 	 	7,335,216	 
	144	 	Sutureless Closure and Deployment System for Connecting Blood Vessels
	 	US	 	 	10/665,170	 	 	9/18/03	 	11/3/09	 	 	7,611,523	 
	145	 	Surgical Measurement Tool
	 	US	 	 	10/678,848	 	 	10/3/03	 	3/21/06	 	 	7,014,618	 
	146	 	Tissue Punch
	 	US	 	 	10/698,575	 	 	10/31/03	 	12/18/07	 	 	7,309,343	 
	147	 	DIV 013
	 	US	 	 	10/698,569	 	 	10/31/03	 	12/5/06	 	 	7,144,405	 
	148	 	CON 117
	 	US	 	 	10/714,365	 	 	11/14/03	 	3/28/06	 	 	7,018,388	 
	149	 	CIP 142
	 	US	 	 	10/750,712	 	 	12/31/03	 	5/13/08	 	 	7,371,243	 
	[*]	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	151	 	Integrated Anastomosis Tool with Graft Vessel Attachment Device and Cutting Device
	 	US	 	 	10/789558	 	 	2/27/04	 	4/15/08	 	 	7,357,807	 

 

2

 

Exhibit 1.1(o) Cardica Patents and Patent Applications

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Docket	 	 	 	 	 	 	 	 	 	Filing	 	Issue	 	 	 
	No.	 	Title	 	Country	 	Serial No.	 	 	Date	 	Date	 	Patent No.	 
	153	 	C-Port xA
	 	US	 	 	78/398,499	 	 	4/8/04	 	2/6/07	 	 	3,206,640	 
	155	 	CON 042
	 	US	 	 	10/842,998	 	 	5/11/04	 	5/9/06	 	 	7,041,112	 
	[*]	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	158	 	Method and System for Attaching a Graft Vessel to a Blood Vessel
	 	US	 	 	10/884,591	 	 	7/2/04	 	9/19/06	 	 	7,108,702	 
	[*]	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	160	 	Anastomosis Method for Controlling a Tissue Site
	 	US	 	 	10/897,783	 	 	7/23/04	 	5/15/07	 	 	7,217,285	 
	[*]	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	163	 	Anastomosis Device Having a Deployable Section
	 	US	 	 	10/934,862	 	 	9/3/04	 	11/25/08	 	 	7,455,677	 
	165	 	CON 123
	 	US	 	 	10/988,335	 	 	11/12/04	 	12/4/07	 	 	7,303,570	 
	167	 	xA
	 	US	 	 	11/054,265	 	 	2/9/05	 	3/23/10	 	 	7,682,368	 
	168	 	(CON 123)
	 	US	 	 	10/988,325	 	 	11/12/04	 	4/20/10	 	 	7,699,859	 
	170	 	Functional Package for an Anastomosis Procedure
	 	US	 	 	10/972,125	 	 	10/22/04	 	4/21/09	 	 	7,520,885	 
	173	 	Intravascular Stapling Tool
	 	US	 	 	11/022,551	 	 	12/23/04	 	12/9/08	 	 	7,462,185	 
	174	 	Vascular Closure System
	 	US	 	 	11/093,003	 	 	3/28/05	 	3/18/08	 	 	7,344,544	 
	175	 	DIV 059
	 	US	 	 	11/083,721	 	 	3/18/05	 	2/16/10	 	 	7,662,162	 
	176	 	Trocar for Use in Deploying an Anastomosis Device and Method of Performing Anastomosis
	 	US	 	 	11/066,522	 	 	2/25/05	 	12/23/08	 	 	7,468,066	 
	178	 	Intravascular Stapling Tool
	 	US	 	 	11/158,413	 	 	6/22/05	 	3/16/10	 	 	7,678,121	 
	180	 	Tracheotomy Procedure with Integrated Tool
	 	US	 	 	11/367,904	 	 	3/3/06	 	5/20/08	 	 	7,373,939	 
	[*]	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	184	 	Method for End-to-End Anastmosis
	 	US	 	 	11/133,621	 	 	5/20/05	 	3/25/08	 	 	7,347,864	 
	185	 	Tissue Closure System
	 	US	 	 	11/158,414	 	 	6/22/05	 	1/22/08	 	 	7,320,692	 
	188	 	CIP 174
	 	US	 	 	11/282,177	 	 	11/18/05	 	12/2/08	 	 	7,458,978	 
	[*]	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	196	 	Anastomosis Tool with Improved Graft Vessel Loading
	 	US	 	 	11/451,222	 	 	6/12/06	 	11/6/07	 	 	7,291,157	 
	[*]	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	198	 	Apparatus and Method for Closing an Atrial Appendage
	 	US	 	 	11/432,932	 	 	5/12/06	 	8/4/09	 	 	7,569,064	 
	[*]	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	206	 	Surgical Stapler (Multifeed)
	 	US	 	 	11/672,858	 	 	3/8/07	 	1/6/09	 	 	7,473,258	 
	[*]	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	211	 	Surgical Stapler (Multifeed)
	 	US	 	 	11/686,320	 	 	3/14/07	 	5/19/09	 	 	7,533,790	 
	[*]	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	214	 	System for Closing an Aneurysm From Inside
	 	US	 	 	11/780,648	 	 	7/20/07	 	6/29/10	 	 	7,744,610	 
	215	 	Flex-A TM
	 	US	 	 	77/174,651	 	 	5/7/07	 	1/15/08	 	 	3,368,638	 
	[*]	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	224	 	ANASTOMOSES MADE FAST & SIMPLE TM
	 	US	 	 	77/222,435	 	 	7/5/07	 	1/15/08	 	 	3,369,115	 
	[*]	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	231	 	Heart Defect Closure Apparatus
	 	US	 	 	11/953,791	 	 	12/10/07	 	3/2/10	 	 	7,670,348	 
	[*]	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	233	 	Method for Closing an Opening in Tissue With a Splayable Staple
	 	US	 	 	12/013,334	 	 	1/11/08	 	6/1/10	 	 	7,727,245	 
	[*]	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	236	 	Fallopian Tube Occlusion System
	 	US	 	 	12/140,967	 	 	6/17/08	 	6/8/10	 	 	7,730,889	 
	[*]	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	248	 	Surgical Stapler with Splaying Mechanism
	 	US	 	 	12/323,309	 	 	11/25/08	 	7/13/10	 	 	7,753,250	 
	[*]	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

3exv10w12

Exhibit 10.12

Execution Version

EMPLOYMENT AGREEMENT

          This is an EMPLOYMENT AGREEMENT (“Agreement”), dated this 10th day of August, 2010,
between New Century Transportation, Inc., a New Jersey corporation (together with its successors
and assigns, the “Company”), and Harry J. Muhlschlegel (“Employee”). This Agreement shall become
effective on the date on which a registration statement filed by the Company pursuant to the
Securities Act of 1933, as amended, for the issuance and sale of shares of the Company’s common
stock to the public is declared effective by the Securities and Exchange Commission, other than a
registration statement on Form S-4 or Form S-8 (the “Effective Date”). This Agreement shall be
null and void ab initio in the event that such a registration statement is not declared effective
by the Securities and Exchange Commission on or prior to December 31, 2010.

BACKGROUND

          WHEREAS, the Company and Employee are party to an employment agreement, dated as of June 23,
2006 (the “Old Agreement”); and

          WHEREAS, the Company and Employee desire to enter into this Agreement to replace and supersede
the Old Agreement in its entirety.

          NOW, THEREFORE, intending to be legally bound, and in consideration of the mutual promises and
representations set forth in this Agreement, the Company and Employee agree as follows:

ARTICLE I- EMPLOYMENT AND TERM

     1.1. Employment Term. The Company agrees to employ Employee, and Employee accepts employment
with the Company, to serve as Chief Executive Officer of the Company, for a term commencing on the
Effective Date and continuing until December 31, 2012 (“Employment Term”), unless earlier
terminated pursuant to Article IV of this Agreement; provided, however, that the Employment Term
shall automatically renew for successive one-year terms beginning on January 1, 2013 and each
anniversary thereof unless either party provides to the other party written notice of its or his
intention to not renew the Employment Term at least 120 days prior to the next date on which the
Employment Term would otherwise renew; provided further, however, that if the Company provides
Employee with a notice of non-renewal, the Company shall state in such notice whether it desires
for Employee to continue in the employ of the Company on an at-will basis following the expiration
of the Employment Term.

     1.2. Employment Duties. During the Employment Term, Employee will report to the Company’s
Board of Directors (the “Board”) and shall render such services to the Company as are consistent
with his position and title and such other additional services as may be reasonably requested by
the Board. During the Employment Term, Employee shall devote his full time, ability and attention,
and his reasonable best efforts, to the business of the Company. During the Employment Term,
Employee shall not directly or indirectly render any services of a business, commercial, or
professional nature to any other person, organization or other entity, whether for compensation or
otherwise, directly or indirectly, without the prior written consent of the Board. Notwithstanding
the foregoing, the Company acknowledges that Employee’s continued activities related to investing
in commercial real estate shall not cause a violation of this Section 1.2 to the extent such
activities require an immaterial time commitment and provided further that they do not interfere
with Employee fulfilling his obligations to the Company hereunder.

 

 

ARTICLE II- COMPENSATION

     2.1. Base Salary. As compensation for services hereunder and in consideration of the
protective covenants set forth in Article III of this Agreement, during the Employment Term,
Employee shall be paid an annual base salary of $367,744, subject to increase at the discretion of
the Board (in addition to the automatic increase described herein), payable in accordance with the
Company’s normal payroll practices; provided, however, that from the Effective Date through
December 31, 2010, Employee’s annual rate of base salary shall be $330,969.60. During the
Employment Term, Employee’s base salary shall be increased at least annually in an amount that is
not less than the increase in the Consumer Price Index for the region covering New Jersey as
reported by the Bureau of Labor Statistics of the U.S. Department of Labor for the relevant time
period. Notwithstanding anything contained herein to the contrary, Employee’s base salary may be
reduced by the Board without the consent of Employee in connection with an across the board salary
reduction applicable to all employees of the Company whose position is at the (i) “Director” level
and above, provided that such reduction does not exceed 5% of Employee’s base salary as in effect
immediately prior to such reduction or (ii) “Managerial” level and above, provided that such
reduction does not exceed 10% of Employee’s base salary as in effect immediately prior to such
reduction and, in any case, provided that such reduction is at a percentage no greater than the
percentage applicable to any such other employee. Any such base salary reduction may not be
imposed more than one time during any three year period (measured from the end of the most recent
base salary reduction). Following the end of any such base salary reduction, Employee’s rate of
base salary shall be increased to the rate in effect immediately prior to such reduction.
Employee’s base salary, as it may be in effect from time to time, is referred to herein as “Base
Salary.”

     2.2. Bonus Award. During the Employment Term, Employee shall be eligible to earn an annual
bonus in the sole discretion of the Board (after considering recommendations from the Compensation
Committee of the Board) based on (i) individual performance, (ii) the Company’s (a) total revenue,
(b) earnings before interest, taxes, depreciation and amortization (with such adjustments as the
Board determines to be appropriate), (c) earnings per share, (d) operating ratio or (e) return on
invested capital and/or (iii) such other measures as determined by the Board in its sole discretion
(the “Bonus”). Employee’s target Bonus opportunity shall be 40% of Base Salary. Any Bonus awarded
to Employee shall be paid by no later than March 15th of the year following the year in
which such Bonus was earned.

     2.3. Employee Benefits. During the Employment Term, Employee shall be eligible to participate
in the Company’s employee benefit plans (in accordance with the terms thereof) that are generally
available to senior executives of the Company, as may be in effect from time to time.

     2.4. Car Allowance. During the Employment Term, the Company shall pay Employee a car
allowance of $1,750 per month in accordance with its generally applicable policies (as may be in
effect from time to time).

     2.5. Reimbursement of Expenses. The Company shall pay or reimburse Employee for all reasonable
travel, business, entertainment and other out-of-pocket expenses incurred or paid by him during the
Employment Term in connection with the performance of duties under this Agreement, in accordance
with the Company’s reimbursement policies (as may be in effect from time to time) and upon
submission of reasonably satisfactory evidence thereof.

 

 

 ARTICLE III- PROTECTIVE COVENANTS

     3.1. Non-Competition.

          a. Term of Restrictive Covenants. The term of the restrictive covenants in this Section 3.1
(the “Non-Compete Term”) shall commence on the Effective Date and shall terminate on (i) the second
anniversary of a termination of Employee’s employment that is (A) by the Company for Cause (as
hereinafter defined) or (B) by Employee other than a Justifiable Resignation (as hereinafter
defined) or (ii) subject to Section 3.1(c), the second anniversary of a termination of Employee’s
employment that is (A) by the Company without Cause or due to Disability (as hereinafter defined),
(B) by Employee due to a Justifiable Resignation or (C) in connection with, or following, the
expiration of the Employment Term without extension under Section 1.1.

          b. Non-Competition. During the Non-Compete Term, Employee shall not, unless acting as an
officer or employee of, or consultant to, the Company directly or indirectly, (i) own, manage,
operate, join, control or participate in the ownership, management, operation or control of, or be
connected as an officer, director, employee, stockholder, partner, advisor, consultant or otherwise
with, or provide any financing or lease any assets to, any entity that engages in or intends to
engage in any Competing Business (as hereinafter defined), or (ii) solicit, employ, retain as a
consultant, interfere with or attempt to entice away from the Company or its Affiliates (as
hereinafter defined), any Protected Employee (as hereinafter defined), or (iii) solicit, interfere
with or attempt to entice away from the Company or its Affiliates, any Person (as hereinafter
defined), firm or corporation which has been or is during the two-year period preceding the date on
which such determination is made a customer of the Company or any of its Affiliates. Ownership of
not more than 2% of the outstanding stock of any publicly traded company shall not be a violation
of this Section 3.1 so long as Employee does not participate in the management of such company.
Notwithstanding anything in this Section 3.1(b) to the contrary, the leasing of any currently owned
real property in New Jersey by the Employee or his Affiliates to any trucking company or similar
business in the event that such property is not leased, after it has been offered on the same
terms, to the Company, shall not be deemed to violate this Section 3.1(b).

     As used herein, “Affiliate” means, as to any Person, any Person directly or indirectly,
through one or more intermediaries, controlling, controlled by, or under common control with such
Person; provided, the term “control,” as used in this definition, shall mean with respect to any
Person, the possession, directly or indirectly, of the power to direct or cause the direction of
the management or policies of the controlled entity (whether through ownership of voting
securities, by contract or otherwise); “Competing Business” shall mean (i) any business or other
enterprise which engages in the regional, interregional, national or dedicated truckload or
less-than-truckload service in North America or (ii) a similar line of business or business
activities (which for purposes of Section 3.1(b) shall not include businesses primarily involved in
the repair and/or servicing of automobiles, trucks and other motor vehicles); “Person” means an
individual, a partnership, a corporation, an association, a joint stock company, a limited
liability company, a trust, a joint venture, an unincorporated organization and a governmental
entity or any department, agency or political subdivision thereof; and “Protected Employee” shall
mean any employee of the Company or its Affiliates employed at any time during the Employment Term
or during the one-year period thereafter, but shall not include the immediate family members
(including Employee’s siblings) of Employee.

          c. Extension of Non-Compete Term. In the case of a termination described in Section
3.1(a)(ii), the Company may provide Employee with written notice at least 90 days prior to the
expiration of the Non-Compete Term, that such Non-Compete Term will be extended by one additional
year (“Non-Compete Extension Notice”). If the Company provides the Non-Compete Extension Notice,
the Company shall, within

 

 

75 days after the Non-Compete Extension Notice is provided, make a single lump sum payment to
Employee equal to Employee’s Base Salary at the rate in effect on the date of his termination of
employment.

     3.2. Confidentiality. From and after the commencement of the Employment Term, Employee agrees
not to divulge, communicate, use to the detriment of the Company or for Employee’s benefit or the
benefit of any other person, firm, corporation, association or other entity, or misuse in any way,
in whole or in part, any proprietary or confidential information or trade secrets related to the
Company as they may exist from time to time, including, without limitation, the Company’s trade
secrets or other intellectual property rights, personnel information, know-how, customer lists, or
other confidential or proprietary data (collectively, “Confidential Information”). Employee
acknowledges that the list of the Company’s customers as it may exist from time to time, and the
Company’s proprietary or Confidential Information, and trade secrets, are valuable, special and
unique assets of the Company. Employee acknowledges and agrees that any information or data he has
acquired on any of these matters or items was received in confidence. Employee agrees to hold, as
the property of the Company, all memoranda, books, papers, letters and other data and all copies
thereof or therefrom, made by him or otherwise coming into his possession, and at any time to
deliver the same to the Company upon its demand, or in any event upon Employee’s termination of
employment for any reason. Confidential Information does not include information which (i) has
become publicly known and made generally available through no wrongful act of Employee, or (ii) has
been rightfully received by Employee from a third party who is authorized to make such disclosure.
If Employee is required by law, rule, regulation, order of a court of competent jurisdiction or a
governmental proceeding to disclose any Confidential Information, Employee shall provide the
Company with prompt written notice of such requirement so that the Company may seek an appropriate
protective order and/or waive Employee’s compliance with this Section 3.2. If, failing the entry
of a protective order or the receipt of a waiver hereunder, Employee is, in the opinion of
Employee’s counsel (the reasonable cost of which shall be paid by the Company upon presentation of
reasonable evidence that such expenses have been incurred), which counsel and opinion shall be
reasonably satisfactory to the Company, compelled to disclose the Confidential Information under
pain of liability for contempt or other censure or penalty, Employee may disclose only that portion
of such information as is legally required without liability hereunder; provided, however, that
Employee hereby agrees to notify the Company of such disclosure and assist the Company by using his
best efforts to obtain assurance that confidential treatment will be accorded such information.

     3.3. Reasonable Limitations. Employee acknowledges that, given the nature of Employee’s
employment with the Company and of the Company’s business, the covenants contained in this Article
III contain reasonable limitations as to time, geographical area and scope of activity to be
restrained, and do not impose a greater restraint than is necessary to protect the legitimate
business interests of the Company. In the event that the covenants contained in this Article III
shall be determined by any court of competent jurisdiction to be unenforceable by reason of their
extending for too long a period of time or over too large a geographical area or by reason of their
being too extensive in any other respect, they shall be interpreted to extend only over the longest
period of time for which they may be enforceable, and/or over the largest geographical area as to
which they may be enforceable and/or to the maximum extent in all other aspects as to which they
may be enforceable, all as determined by such court in such action.

     3.4. Extension of Non-Compete Term. The parties acknowledge that if Employee violates any of
the protective covenants in this Article III and the Company brings legal action for injunctive,
damages or other relief hereunder, the Company shall, as a result of the time involved in obtaining
the relief, be deprived of the benefit of the full Non-Compete Term of these protective covenants.
Accordingly, the length of time for which any such covenant shall be applicable shall be increased
by any period of violation or any other period required for litigation during which the Company
seeks to enforce this Article III.

 

 

     3.5. Survival of Protective Covenants. Each covenant on the part of Employee contained in this
Article III is independent of any other provision of this Agreement or any other agreement between
the Company and Employee, and shall survive the termination of Employee’s employment with the
Company and the termination of this Agreement, and the existence of any claim or cause of action of
Employee against the Company, whether based on this Agreement or otherwise, shall not prevent the
enforcement of these covenants.

     3.6. Remedies for Breach. In the event of a breach of the covenants of this Article III,
Employee agrees that the Company may take appropriate legal action for damages including fees and
costs, enforcement and/or injunctive relief. The prevailing party in any such legal action under
Article III shall be entitled to recover its reasonable attorney’s fees and costs in connection
therewith. Employee further agrees that a breach by him of this Article III shall cause
irreparable harm to the Company and that its remedies at law for any breach or threat of breach of
the provisions of this Article III shall be inadequate, and that it shall be entitled to an
injunction or injunctions to prevent breaches of this Article III and to enforce specifically the
terms and provisions hereof, in addition to any other remedy to which the Company may be entitled
at law or in equity.

     3.7. Affiliates of the Company. The protective covenants in this Article III shall also
benefit the Companies’ Affiliates and these covenants shall be enforceable against Employee by each
of such Affiliates as third party beneficiaries.

ARTICLE IV- TERMINATION OF EMPLOYMENT

     4.1. Termination. The Company may terminate Employee’s employment with or without Cause;
provided, however, that Employee’s employment may not be terminated by the Company with or without
Cause unless such termination is approved by at least a majority of the Board (excluding Employee
if he is then a member of the Board). The term “Cause” means (i) an indictment of Employee in
connection with a crime involving moral turpitude or any felony, which materially adversely affects
the Company or the ability of Employee to satisfy all of his duties to the Company (including
pursuant to this Agreement); (ii) a conviction of, or a pleading of guilty or no-contest by,
Employee to any felony; (iii) Employee’s dishonesty, fraud, unethical or illegal act,
misappropriation or embezzlement which does (or would reasonably be likely to) materially damage
the Company’s reputation or the Company; (iv) material breach of Employee’s fiduciary duties to the
Company, after Employee has not cured such breach within twenty (20) days after written request by
the Board to do so; (v) Employee’s material failure to perform his job duties hereunder, after
Employee has not cured such failure within twenty (20) days after written request by the Board to
do so; (vi) willful or deliberate material violations of Employee’s obligations to the Company,
after Employee has not cured such violations within twenty (20) days after written request by the
Board to do so; or (vii) Employee’s material breach of any of the terms or conditions of this
Agreement, after Employee has not cured such breach within twenty (20) days after written request
by the Board to do so. In the event Employee’s employment is terminated for Cause, the Company’s
sole obligation to Employee shall be to pay to Employee his accrued but unpaid Base Salary and any
other vested benefits under the Company’s employee benefit plans in which Employee was
participating immediately prior to such termination (other than severance plans) (the “Accrued
Benefits”). Other than as set forth in Section 4.2 and Section 4.5, no payments or benefits shall
accrue to Employee after the date of Employee’s termination for any reason, including but not
limited to, if the Company terminates Employee without Cause, or Employee terminates his employment
voluntarily for a Justifiable Resignation. For purposes of this Agreement, “Disability” shall mean
Employee’s inability to perform his full duties with the Company for 90 consecutive calendar days
or for 180 calendar days (whether or not consecutive) in any twelve month period as a result of
incapacity due to mental or physical illness.

 

 

     4.2. Termination Other Than for Cause; Termination for Justifiable Resignation. If, during the
Employment Term or, upon or following the expiration of the Employment Term due to the Company’s
failure to renew the Employment Term (i) the Company terminates Employee’s employment for any
reason (including due to Disability) other than for Cause or (ii) Employee resigns and such
resignation is a Justifiable Resignation (a “Covered Termination”), then the Company shall pay to
Employee (in addition to the Accrued Benefits) severance in an amount equal to (y) Employee’s Base
Salary (without regard to any reduction imposed under Section 2.1 hereof) multiplied by 1.5, plus
(z) 18 months of Employee’s car allowance at the rate in effect immediately prior to such
termination (the “Severance Payment”). The Severance Payment shall be paid to Employee in a lump
sum on the first payroll date coincident with or next following the 60th day after
Employee’s termination of employment with the Company. In addition, for the period commencing on
the termination date and ending on the 18 month anniversary thereof, the Company shall pay the cost
of Employee’s (and his eligible dependents’) health care continuation premiums under the
Consolidated Omnibus Budget Reconciliation Act of 1985 (the “COBRA Payment”). It is agreed that
the Accrued Benefits, the Severance Payment and the COBRA Payment shall constitute all amounts owed
by the Company to Employee for his Covered Termination, and that no other payments or benefits
shall be owed by the Company to Employee in such an event. Notwithstanding anything herein to the
contrary, Employee shall not be entitled to receive the Severance Payment or any COBRA Payment
unless Employee executes a general release of claims in form and substance reasonably satisfactory
to the Company releasing the Company and its Affiliates from any claims Employee may assert against
the Company and its Affiliates arising out of his employment or the termination of his employment,
such that such release of claims is effective (with all revocation periods having expired), within
60 days after Employee’s termination of employment. Following the expiration of the Employment
Term due to the Company’s failure to renew the Employment Term, Employee’s employment may be
terminated for Cause only in accordance with the definition thereof, and the procedures, set forth
in Section 4.1.

     4.3. Definition of Justifiable Resignation. Employee’s resignation from the Company shall be
deemed a “Justifiable Resignation” if (1) during the Employment Term, there is (i) a material
diminution of Employee’s responsibilities hereunder, (ii) a decrease in Employee’s Base Salary
(other than a decrease consented to by Employee or authorized under Section 2.1), (iii) a
relocation of Employee’s principal place of employment by more than 10 miles from its current
location or (iv) any material violation of the Agreement by the Company; provided
that, with respect to clauses (i) and (iv), Employee must give a written notice to the
Board setting forth the specific nature of the alleged circumstances giving rise to a Justifiable
Resignation within sixty (60) days after the day such alleged circumstances giving rise to a
Justifiable Resignation arose and the Company fails to cure such alleged violation within twenty
(20) days following receipt of such written notice by Employee to the Board or (2) upon or
following the expiration of the Employment Term due to the Company’s failure to renew the
Employment Term, Employee resigns for any reason upon no less than ninety (90) days (or such
shorter period determined by the Company) advanced written notice to the Company.

     4.4. Resignation Other Than Justifiable Resignation. Employee may resign for reasons other
than Justifiable Resignation upon no less than ninety (90) days (or such shorter period determined
by the Company) advanced written notice to the Company. In such an event, the Company’s sole
obligation shall be to pay to Employee the Accrued Benefits.

     4.5. Death. Employee’s employment with the Company and the Employment Term shall immediately
terminate upon Employee’s death. In such an event, the Company’s sole obligation shall be to pay
to Employee’s estate or designated beneficiary, as applicable (i) the Accrued Benefits and (ii) an
amount equal to 12 months of Base Salary (without regard to any reduction imposed under Section 2.1
hereof), payable in a lump sum cash payment within 60 days after the date of Employee’s death.

 

 

ARTICLE V- MISCELLANEOUS

     5.1. 409A Compliance; Tax Withholding. Notwithstanding any other provision of this Agreement
to the contrary, if Employee is a “specified employee” within the meaning of Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”), and the regulations thereunder, and a
payment or benefit provided for in this Agreement would be subject to additional tax under Code
Section 409A if such payment or benefit is paid within six (6) months after Employee’s termination
of employment, then such payment or benefit required under this Agreement shall not be paid (or
commence) during the six (6) month period immediately following Employee’s termination of
employment except as provided in the immediately following sentence. In such an event, any
payments or benefits that would otherwise have been made or provided during such six (6) month
period and which would have incurred such additional tax under Code Section 409A shall instead be
paid to Employee in a lump-sum cash payment, without interest, on the earlier of (a) the first
business day of the seventh month following Employee’s termination or (b) the tenth business day
following Employee’s death. Employee’s right to reimbursement under this Agreement may not be
liquidated or exchanged for any other benefit. In addition, no reimbursement under this Agreement
may occur later than the last day of the calendar year immediately following the calendar year in
which such expenses were incurred, and the amount of expenses eligible for reimbursements provided
during any taxable year shall not affect the expenses eligible for reimbursement to be provided in
any other taxable year. In addition, “termination” as used throughout the Agreement shall mean
“separation from service” by Employee with respect to the Company within the meaning of Code
Section 409A, and any amounts payable to Employee hereunder upon his termination of employment that
are treated as “non-qualified deferred compensation” under Code Section 409A shall not be paid to
Employee unless and until he has incurred a separation from service within the meaning of Code
Section 409A. The Company may withhold from any payments owed under this Agreement all applicable
taxes, including but not limited to income, employment and social insurance taxes, as determined by
the Company.

     5.2. Modification of this Agreement. The parties hereto acknowledge and agree that no one
employed by or representing the Company has any authority to make oral statements which modify,
waive or discharge, in any manner, any provision of this Agreement. The parties hereto further
acknowledge and agree that no provision of this Agreement may be modified, waived or discharged
unless agreed to in writing, and signed and executed by Employee and the Company. Employee
acknowledges and agrees that in executing this Agreement he has not relied upon any representation
or statement made by the Company or its representatives, other than those specifically stated in
this Agreement.

     5.3. Notices. All notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given (i) three business days after mailing if mailed by certified or
registered mail, return receipt requested, (ii) one business day after delivery to Federal Express
or other nationally recognized overnight express carrier, if sent for overnight delivery with fee
prepaid, (iii) upon receipt if sent via facsimile with receipt confirmed, or (iv) upon receipt if
delivered personally, addressed as follows or to such other address or addresses of which the
respective party shall have notified the other:

 

 

If to Employee, to the address and fax number then on file with the Company:

If to the Company, to:

New Century Transportation, Inc.

45 East Park Drive

Westampton, NJ 08060

Attention: Chief Financial Officer

Fax No.: (609) 265-2231

with a required copy to:

Dechert LLP

Cira Centre

2929 Arch Street

Philadelphia, PA 19104

Attention: Carmen J. Romano

Fax No.: (215) 994-2222

     5.4. Waiver of Breach. The waiver by the Company or Employee of a breach of any provision of
this Agreement by the other party shall not operate or be construed as a waiver of any other or
subsequent breach by the other party of such provision or any other provision. No delay or omission
by the Company or Employee in exercising any right, remedy or power hereunder or existing at law or
in equity shall be construed as a waiver thereof, and any such right, remedy or power may be
exercised by the Company or Employee from time to time and as often as may be deemed expedient or
necessary by the Company or Employee in its or his sole discretion.

     5.5. Severability. It is the intention of the parties that the provisions contained herein
shall be enforceable to the fullest extent permissible under applicable law, but that the
unenforceability (or modification to conform to such law) of any provision or provisions hereof
shall not render unenforceable, or impair, the remainder hereof. If any term or provision of this
Agreement or the application thereof to any person or circumstance shall, either in whole or in
part, be held invalid or unenforceable by a court of competent jurisdiction, this Agreement shall
be deemed amended to delete or modify, as necessary, the offending provision or provisions and to
alter the bounds thereof in order to render it valid and enforceable; but in such event the
affected provisions of this Agreement shall be curtailed and restricted only to the extent
necessary to bring them within the applicable legal requirements, and the remainder of this
Agreement shall not be affected.

     5.6. Assignability. This Agreement shall be binding upon and inure to the benefit of the
Company, the successors and assigns of the Company and to any person or firm who may succeed to
substantially all of the assets of the Company. This Agreement shall be binding upon and inure to
the benefit of the heirs, executors or personal representatives of Employee. This Agreement shall
not be assignable by Employee.

     5.7. Applicable Law; Jurisdiction. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws (as opposed to the conflicts of laws provisions) of
the State of New Jersey.

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

 

 

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

     5.10. Acknowledgment. Employee acknowledges receipt of a copy of this Agreement, and agrees
that his obligations hereunder shall be binding upon his heirs and legal representatives. The
Company agrees that its obligations hereunder shall be binding upon its assigns and legal
representatives. The parties hereto acknowledge and agree that this Agreement contains the entire
agreement and understanding concerning the subject matter covered by this Agreement, and that this
Agreement supersedes and replaces any other existing agreement, whether written or oral, entered
into between Employee and the Company relating generally to the subject matter covered by this
Agreement, including specifically the Old Agreement and any agreement that provides for the payment
of severance benefits to Employee.

EMPLOYEE HAS READ THE ABOVE AGREEMENT, AND HAS BEEN GIVEN
ADEQUATE TIME TO CONSULT WITH AN ATTORNEY OR OTHER ADVISOR OF HIS CHOICE. EMPLOYEE
UNDERSTANDS THE AGREEMENT FULLY, AND AGREES TO ALL OF ITS TERMS.

*           *           *           *           *

 

 

          IN WITNESS WHEREOF, the undersigned have executed this Agreement on the day and year first
above written.

	 	 	 	 	 
	 	NEW CENTURY TRANSPORTATION, INC.

 	 
	 	By:  	/s/ Brian J. Fitzpatrick
 	 
	 	 	Name:  	Brian J. Fitzpatrick                	 
	 	 	Title:  	CFO 	 
	 
	 	 	 
	 	/s/ Harry J. Muhlschlegel
 	 
	 	HARRY J. MUHLSCHLEGEL

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