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Exhibit 10.39    
    

 
 

LICENSE AND DEVELOPMENT AGREEMENT    
    

        THIS LICENSE AND DEVELOPMENT AGREEMENT is entered into on the 6th day of December 1996. 

	Between	 	INTRAVASCULAR MEDICAL, INC., having a place of business at 14609 Colony Way, Poway, California 92604, (hereinafter the "Licensor")
	

And	
 	
BAXTER HEALTHCARE CORPORATION, having a place of business at 3015 S. Daimler Street, Santa Ana, California 92705, (hereinafter the "Licensee")

WITNESSETH:

        WHEREAS
Licensor is the owner (subject to the rights of Medtronic, Inc. as defined in the Investment Agreement, Schedule A) of the entire right, title and interest in
proprietary technology and a patent family relating to certain devices and methods clearing blood clots and other obstructions in the lumens (hereinafter referred to as the "IVM System"), which are in
part the subject of U.S. Patent No. 5,423,799, invented by Man F. Shiu, M.D.; 

        WHEREAS
Licensee desires to obtain certain licensing rights with respect to the IVM System, as well as certain rights with respect to future developments and improvements; 

        WHEREAS
Licensee desires to have product development conducted by Licensor relating to the IVM System; and 

        WHEREAS
Licensor desires to provide such rights to Licensee on the terms and conditions set forth below; 

        NOW
THEREFORE, for and in consideration of the covenants and promises set forth below, the parties agree as follows: 

ARTICLE I  

        1.     As
used above and throughout this license and development agreement, the definitions of the following terms have the meanings set forth below: 

        1.1   "Affiliate"
shall mean any corporation, firm, association or other legal entity that directly or indirectly controls, is controlled by, or is under common control with,
a party, but only for so long as said control continues. For purposes of this definition, "control" 

 

means
possession of the power to direct voting rights of more than fifty percent (50%) of the shares having a right to vote for directors. 

        1.2   "Combination
Product" shall mean a product in which an IVM Technology Product is a component of a combination of functional elements or is a separate component sold in
combination with other products. 

        1.3   "Effective
Date" shall mean the date that both parties have formally executed this Agreement. 

        1.4   "Field"
shall mean the treatment or removal from non-coronary vasculature of atheroma, thrombus, or other substances or tissues known to block blood vessels. 

        1.5   "Improvements"
shall mean all research, developments, improvements, modifications or adaptations relating to any aspect of the IVM System, Licensed Patents, Technical
Information or Work Plan, which might reasonably be of commercial interest to either party in the design, use, manufacture or supply of the IVM Technology Products in the Field. 

        1.6   "IVM
Technical Information" shall mean all Technical Information that would be considered confidential in accordance with Section 15.1 at the time a sale of an
IVM Technology Product occurs creating a royalty obligation under Article VI below. 

        1.7   "IVM
Technology Products" shall mean any Licensed Product or any product made using IVM Technical Information. 

        1.8   "Joint
Improvements" shall mean Improvements which are jointly conceived, and/or reduced to practice, or written (as determined by United States patent or copyright law)
by Licensor, or by an employee consultant, agent, or representative of Licensor or some other person obligated to assign their rights to such Improvements to Licensor, and Licensee, or by an employee,
consultant, agent, or representative of Licensee or some other person obligated to assign their rights to such Improvements to Licensee. 

        1.9   "Licensed
Patents" shall mean any issued patents or which may issue claiming priority from GB 8829182 filed December 14, 1988 or U.S. Patent Application
No. 08/010,505 filed January 28, 1993, all applications claiming priority to those applications or their priority filings, and any divisions, continuations, and
continuations-in-part and corresponding international filings thereof, including all patent filings owned or licensable by Licensor relating to the IVM System and any patent
acquired or controlled by Licensor with the right to sublicense which dominates other Licensed Patents or covers IVM Technology Products; and Licensor warrants that Schedule 1.9 is a complete
list of all such patent filings existing as of the execution of this agreement, which will be updated as necessary to reflect additional filings, issuances, and overall status of the portfolio. 

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        1.10 "Licensed
Product" shall mean any product, the manufacture, use or sale of which literally infringes, on a country-by-country basis, an
unexpired, enforceable claim of the Licensed Patents. 

        1.11 "Licensed
Territory" shall mean the entire world. 

        1.12 "Licensee
Improvements" shall mean Improvements which are conceived and/or reduced to practice by any employee or consultant of Licensee who has access to Technical
Information without the assistance of Licensor. 

        1.13 "Licensor
Improvements" shall mean Improvements which are conceived and/or reduced to practice by any employee or consultant of Licensor without the assistance of
Licensee or which are licensed to or acquired by Licensor. 

        1.14 "Net
Sales" shall mean the net invoice price (gross billing price) which Licensee or its sublicensees charge to its arms-length customers for IVM Technology
Products or Licensed Products less sales, use, occupation and excise taxes and transportation, returns and allowances in lieu of returns. In no event shall the Net Sales be less than seventy percent
(70%) of the annual list price established by Licensee. In the event that IVM Technology Products are sold as Combination Products, "Net Sales" for the purpose of calculating royalties will be the
greater of: 

        (a)   the
average Net Sales of such IVM Technology Product portion (on a unit basis) of the Combination Product when sold separately within the previous year; or 

        (b)   if
the IVM Technology Product is sold in a Combination Product with any article which does not embody any of the claims of the IVM Technology Patents or the IVM
Technical Information and each item in such kit or combination is also sold separately, as for example a guidewire, the Net Sales of the IVM Technology Product included in such Combination Product
shall be determined by multiplying the gross invoiced selling price of such Combination Product, less applicable deductions and off-sets hereinabove referred to, by a fraction, the
numerator of which shall be Licensee's or its Affiliate's or sublicensee's published list price for the IVM Technology Product included in such Combination Product and the denominator of which shall
be Licensee's or its Affiliates' or sublicensee's published list price for the Combination Product. If the IVM Technology Product is sold in a Combination Product with any article which does not
embody any of the claims of the IVM Technology patents or the Technology Information and each item in such Combination
Product is not sold separately, the Net Sales of the IVM Technology Product included in such Combination Product shall be determined by multiplying the gross invoiced selling price of such Combination
Product, less applicable deductions and off-sets hereinabove referred to, by a fraction, the numerator of which shall be Licensee's or its Affiliates or sublicensee's fully burdened
manufacturing cost or purchase price paid for item(s) in such Combination Product which embody any of the claims of the IVM Technology Patents or the IVM Technical Information and the denominator of
which shall be Licensee's or its Affiliates' or sublicensee's 

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fully
burdened manufacturing cost or purchase price paid for all items contained in such Combination Product. 

In
countries where the net invoice price is not available to Licensee under its regular internal financial reporting procedures, Net Sales shall be the average net invoice price for IVM Technology
Products in the United States during the most recent calendar quarter in which the sale is made. Licensee shall keep regular books of account for its manufacturing and sales of said IVM Technology
Products. 

        1.15 "Steering
Committee" shall mean a committee composed of an equal number of representatives from each of Licensor and Licensee (to be one each unless decided otherwise),
which shall meet on at least a semi-annual basis (alternating between the parties' offices) to review technical progress in the Work Plan and consider and decide matters concerning the
conduct of the Work Plan, and to oversee the funded research relationship between the parties pursuant to Article III of this agreement. 

        1.16 "Technical
Information" shall mean all know-how, experience, drawings, prototypes, specifications, designs, tools, molds, diagrams, computer programs and
all other technical information known to Licensor up to the first commercial sale of IVM Technical Products relating to the IVM System, or IVM Technology Products and, for example, which might
reasonably be necessary or useful to Licensee in the design, use, manufacture or supply of the IVM Technology Products in the Field or in the operation of any process based thereon. 

        1.17 "Work
Plan" shall mean a product development programs mutually agreed by the parties, such Work Plan to be finalized by January 20, 1997. 

ARTICLE II  

        2.     Technical
Information, Due Diligence, and Investments 

        2.1   Within
thirty (30) days of the execution of this agreement, Licensor will supply Licensee with all Technical Information and other information and materials in
its possession relating to the IVM System that has not previously been disclosed and that is reasonably necessary or useful to enable Licensee to design, manufacture on a commercial scale, use and
sell IVM Technology Products in the Field. With respect to the molds which are currently in the possession of Licensor, during the term of this Agreement Licensee will have access to the molds,
ownership of which is to be retained by Licensor. 

        2.2   Licensor
warrants to the best of its knowledge and belief that Licensor is the owner of and has or will have the right to disclose and grant the use and other rights
herein relating to all Technical Information and Licensed Patents disclosed and/or licensed to Licensee hereunder. Licensor indemnifies Licensee against any and all losses, costs, and damages arising
from a breach of this warranty. 

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        2.3   Upon
execution of this agreement, the parties will enter into an Investment Agreement specifying Licensee's purchase of certain IVM common stock and option to purchase
all outstanding IVM stock. An executed copy of the Investment Agreement is attached hereto as Schedule B and incorporated herein by reference. 

ARTICLE III  

        3.     Product
Development 

        3.1   In
a program of product development with a commencement date of the Effective Date, Licensor, with the close cooperation of Licensee, shall use commercially reasonable
efforts, including the
provision of qualified personnel, equipment, materials and facilities, to conduct the development and meet the milestones set forth in the Work Plan. Any Improvements or any developments relating to
the IVM System or IVM Technology Products will be analyzed jointly by the parties. The Work Plan is estimated to last ten (10) months, but may be extended by mutual agreement of the parties. A
detailed outline of activities to be performed in the course of the Work Plan, with anticipated dates of completion of each aspect and a cost budget will be set forth in the Work Plan. The Work Plan
may be revised at any time with the written consent of the parties. Licensor acknowledges that time is of the essence with respect to the successful completion of the Work Plan. 

        3.2   Within
ninety (90) days of the Steering Committee informing the parties in writing of the contemplated successful completion of the Work Plan, Licensee will
initiate internal qualification of any proposed product(s). Licensee's failure to commence internal qualification within that time period shall constitute grounds for Licensor to terminate the
agreement under Section 9.2. 

        3.3   Within
ten (10) days after the end of each month during the Work Plan, Licensor shall provide the Steering Committee with progress reports containing a detailed
description of the work conducted by it in the course of the Work Plan and of the results thereof. The parties shall keep the Steering Committee fully informed regarding their analysis of the
Improvements and potential commercial products and processes. 

        3.4   (a)
Licensee shall pay Licensor up to Four Hundred Thousand Dollars ($400,000.00) for work performed in accordance with the Work Plan (such payments including, for
example, costs of qualified personnel, advisors, equipment, materials, facilities, overhead, etc.). 

        (b)   Licensee
shall make an upfront payment of $40,000 upon the parties' mutual agreement on the Work Plan as described in Section 1.17 against which Licensor shall
charge for work performed under the Work Plan. Thereafter, Licensor shall invoice Licensee 

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on
a monthly basis for the amounts incurred and such payments will be due within thirty (30) days following Licensee's receipt of the invoice. 

ARTICLE IV  

        4.     Improvements

        4.1   Licensor
and Licensee shall forthwith disclose to each other in confidence and in such detail as reasonably required all Improvements that it may develop or acquire
during the term of this agreement. 

        4.2   Licensor
hereby agrees, on behalf of itself and all staff, employees, and/or consultants performing work under this agreement or otherwise involved in making
Improvements, to (i) assign to Licensee an undivided joint interest in all Licensor Improvements, (including any and all patents and patent applications thereon), developed during the term of
the Work Plan; (ii) communicate to Licensee any facts known by Licensor relating to the patentability of Licensor Improvements; and (iii) have inventors sign all lawful oaths and papers,
execute all divisional, continuing, provisional, and reissue applications and priority documents, and otherwise generally work together with Licensee in to obtain patent protection on such Licensor
Improvements in all countries in which the parties mutually agree to file patent applications. 

        4.3   Licensee
hereby agrees, on behalf of itself and all staff, employees, and/or consultants performing work under this agreement or otherwise involved in making
Improvements, to (i) assign to Licensor an undivided joint interest in all Licensee Improvements, (including any and all patents and patent applications thereon), developed during the term of
the Work Plan; (ii) communicate to Licensor any facts known by Licensee relating to the patentability of Licensee Improvements; and (iii) have inventors sign all lawful oaths and papers,
execute all divisional, continuing, provisional, and reissue applications and priority documents, and otherwise generally work together with Licensor in obtaining patent protection on such Licensee
Improvements in all countries in which the parties mutually agree to file patent applications. 

        4.4   Joint
Improvements shall be jointly owned by the parties and licensed pursuant to Sections 5.2 and 5.3 below. 

        4.5   Except
for the license grant under Section 5.3 below, no rights in any intellectual property rights of Licensee are conveyed hereunder to Licensor, even if such
intellectual property rights are required to practice the Improvements. In particular, no owned rights under any patents of Licensee are conveyed hereunder, again even if such rights are required to
practice the Improvements. 

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ARTICLE V  

        5.     Grant
of Licenses 

        5.1   Licensor
hereby grants to Licensee and Affiliates an exclusive license, including the right to grant sublicenses, under the Technical Information and Licensed Patents to
practice methods and to manufacture, have manufactured, import, use, offer to sell, sell and otherwise dispose of products in the Field within the Licensed Territory. 

        5.2   With
respect to any Licensor Improvements which are developed prior to the first commercial sale of an IVM Technology Product, Licensor's joint interest in Licensee
Improvements developed during the Work Plan and Licensor's rights in and to Joint Improvements, such Improvements and rights shall be deemed to be Technical Information and/or Licensed Patents, as the
case may be, and shall be subject to the grant under Section 5.1. 

        5.3   With
respect to Licensee Improvements which are developed during the Work Plan, Licensee's joint interest in Licensor Improvements developed during the Work Plan and
Licensee's rights in and to Joint Improvements, Licensee hereby grants Licensor and Affiliates a royalty-free exclusive license, including the right to grant sublicenses, under any such
Improvements to practice methods and manufacture, have manufactured, import, use, offer to sell, sell and otherwise dispose of products outside the Field. 

        5.4   With
respect to Licensor Improvements developed after the first commercial sale of IVM Technology Products, Licensor hereby grants to Licensee the exclusive right to
negotiate rights in and to such Licensor Improvements for use within the Field for a period of sixty (60) days from Licensor's written disclosure to Licensee of such Licensor Improvements. 

        5.5   With
respect to Licensee Improvements developed after the completion of the Work Plan, Licensee hereby grants to Licensor the exclusive right to negotiate rights in and
to such Licensee Improvements for use outside the Field for a period of sixty (60) days from Licensee's written disclosure to Licensor of such Licensee Improvements. 

        5.6   The
licenses granted hereunder shall be effective as of the Effective Date and shall include the right or the licensed party to sell and otherwise dispose of products
under it's own trademarks or any other trademarks, and separately or in combination with any other products. 

        5.7    Covenant Not to Sell.    Licensee agrees and covenants not to sell or market, directly or indirectly, any
products which incorporates any IVM Technical Information or sell products covered by the Licensed Patents, for use outside the Field. In the event that Licensee learns that such Products are being
sold or marketed outside the Field, it shall take all reasonable actions required to stop such sales and/or marketing. 

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ARTICLE VI  

        6.     Reports
and Payments 

        6.1   In
addition to the research payments provided for in Section 3.4.a., Licensee agrees to make the following payments to Licensor, provided such events occur during
the term of this agreement: 

        (a)   Two
Hundred Fifty Thousand Dollars ($250,000.00) license issue fee payable on January 2, 1997; and 

        (b)   Five
Hundred Thousand Dollars ($500,000.00) after both the Work Plan and Licensee's internal qualification (as specified in Section 3.2) have been successfully
completed and Licensee has begun human clinical testing of IVM Technology Products. In the event that Licensee begins human clinical testing, the Work Plan and the internal qualification will be
deemed to have been completed. This amount is due within thirty (30) days of commencement of such human clinical testing. 

        (c)   Five
Hundred Thousand Dollars ($500,000.00) after a 510(k) or PMA covering IVM Technology Products has been submitted by Licensee to the United States Food and Drug
Administration (FDA) or other appropriate agency as required by United States laws. This amount is due within thirty (30) days of such submission. 

        6.2   Licensee
shall during the term of this agreement pay to Licensor a royalty based on the annual Net Sales of Licensed Products by Licensee its Affiliates or sublicensees
as follows: six percent (6%) on Net Sales of Licensed Products until Net Sales of IVM Technology Products exceed Ten Million Dollars ($10,000,000.00); and thereafter eight percent (8%) on Net Sales of
Licensed Products until Net Sales
of IVM Technology Products exceed Twenty-Five Million Dollars ($25,000,000.00); and thereafter ten percent (10%) on all Net Sales of Licensed Products after Net Sales of IVM Technology
Products exceed Twenty-Five Million Dollars ($25,000,000); such totals to be calculated on a yearly basis in accordance with the "Year" definition specified in
Section 7.4(d)(i) and (ii) below. 

        6.3   If
Licensee sells, during the term of this Agreement, a product for removing blood clots from vessels that is an IVM Technology Product but not a Licensed Product, then
for up to ten (10) years from the first commercial sale of IVM Technology Products, Licensee will pay royalties on the Net Sales of such products as follows: two and one-half
percent (2.5%) of Net Sales of such products until Net Sales of IVM Technology Products exceed Ten Million Dollars ($10,000,000.00); and thereafter three and one-half percent (3.5%) on Net
Sales of such products until Net Sales of IVM Technology Products exceed Twenty-Five Million Dollars ($25,000,000.00); and thereafter four and one-half percent (4.5%) on all
Net Sales of such products after Net Sales of IVM Technology Products exceed Twenty-Five 

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Million
Dollars ($25,000,000); such totals to be calculated on a yearly basis in accordance with the "Year" definition specified in Section 7.4(d)(i) and (ii) below. After said
ten (10) year period, this royalty obligation will be paid-up in full and no additional royalty obligation will be due on future sales of such products. Only a single royalty will
be due for any product sold during this Agreement. 

        6.4   All
royalties and other payments made under this Agreement shall be payable in United States dollars; and all international and domestic sales of IVM Technology Products
shall be reported in equivalent United States Dollars. All conversions of currency into United States Dollars shall be made at the end of the relevant quarter in accordance with the rate published for
the purchase of U.S. Dollars in the Wall Street Journal on that date or by such other published source as may be agreed upon by the parties hereto from time to time. 

        6.5   Licensee
shall at all times keep accurate books and records in connection with the manufacture and sale of IVM Technology Products. On or before the forty-fifth day
(45th) day after the last day of each calendar quarter that IVM Technology Products are sold during the term of this agreement, Licensee shall (i) provide a written accounting to Licensor of
the Net Sales made by Licensee, Affiliates and/or its sublicensees for the previous calendar quarter of all IVM Technology Products and the royalties due and payable to Licensor during that period,
and (ii) pay to Licensor all royalties due and payable during that period. 

        6.6   Once
each calendar year, Licensor shall have the right, at Licensor's expense, to request an independent certified public accountant to (i) inspect the books and
records of Licensee, its Affiliates
and sublicensees containing any data material to the computation of royalties hereunder, (ii) make copies thereof to the extent necessary to verify the royalty payments due and owing and paid
to Licensor under this agreement, and (iii) certify to Licensor the accuracy of the accountings provided by Licensee to Licensor. In order to exercise its right, Licensor shall give Licensee
written notice of its desire to exercise the right, which Licensor shall forward to such accountant, and within seven (7) days from the date of such notification to Licensee, notify Licensee of
the name and address of such accountant or accountancy firm. Such accountant shall meet the prior approval of Licensee, which approval shall be given to Licensor within seven (7) days of
receipt by Licensee of such notification, and which approval shall not be unreasonably denied. Such inspection shall then take place within a reasonable period from the date of the receipt by Licensor
of the approval. 

        6.7   If,
as a result of the inspection of Licensee's records by the accountant, the accountant determines that the royalty due in accordance with this article was higher than
was reported in the quarterly reports made by Licensee and paid to Licensor, Licensee shall pay to Licensor within thirty (30) days of notice of such determination, the additional royalties due
and owing Licensor and reimburse Licensor its reasonable costs of such inspection. If the accountant determines that the royalty due was less than that reported in the quarterly reports made by
Licensee and paid to Licensor, Licensor shall refund the amount of overpayment to Licensee within thirty (30) days of notice of such determination. 

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        6.8   The
examination by the independent accountant shall be confidential as to third parties in that such accountant shall be instructed by Licensor not to disclose to
Licensor any information except that which should have been contained in Licensee's report under this Article. 

ARTICLE VII  

        7.     Due
Diligence and Minimums 

        7.1   Licensee
shall use commercially reasonable efforts in pursuing the commercialization of IVM Technology Products throughout the Licensed Territory, using efforts
comparable to the efforts used by it with respect to its other products of comparable commercial value. 

        7.2   Licensee
shall be entitled to exercise prudent and reasonable business judgment for the development, approval and marketing of such products in meeting its due diligence
obligations hereunder. 

        7.3   Licensee
shall use commercially reasonable efforts to obtain all necessary governmental approvals for the manufacture, use and sale of such products. 

        7.4   If
the Licensee is unable to perform any of the following: 

        (a)   during
1997, and each calendar year thereafter until commercialization of IVM Technology Products, make annual expenditures including any payments made under
Section 3.4(a) above, of at least Two Hundred Fifty Thousand Dollars ($250,000.00), such commercialization to be at Licensee's sole discretion and shall include the direct costs of developing,
marketing, and the like incurred by Licensee relating to such products; or 

        (b)   submit
a 510K covering an IVM Technology Product to the United States Food and Drug Administration ("FDA") or other regulatory agency as required by United States law
within eighteen (18) months of completion of the Work Plan; provided, however, that a material change after the Effective Date in the policies, procedures or requirements of such submission, or
a change in classification from a 510(k) to a PMA, a change in regulatory clinical protocol, a change in reviewer, or an adverse clinical outcome causing a delay thereto shall extend this required
submission date as agreed by the Steering Committee; or 

        (c)   make
its first sale of an IVM Technology Product within ninety (90) days following the date on which approval for such product has been obtained from the FDA or
other appropriate governmental agency; 

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        (d)   achieve
annual sales of non-coronary blood clot management products of at least Forty Million Dollars ($40,000,000.00), provided further that at least Twelve
Million Dollars ($12,000,000) of such sales be made either outside the United States or for use outside the United States; or 

        (e)   achieve
the minimum annual sales of IVM Technology Products set forth in Schedule 7.4(e), attached hereto and incorporated herein by reference, which minimum
annual sales shall be determined as follows: 

          (i)  "Year
1" shall be the twelve (12) month period following Licensee's first sale of an IVM Technology Product; and 

         (ii)  each
succeeding twelve (12) month period shall constitute a new "Year"; and 

        (iii)  during
the first two "Years" if the annual sales for a particular "Year" are less than specified in Schedule 7.4(e), then Licensee will have the right to pay
Licensor an additional sum as may be necessary to bring the royalty payment due for such year up to the amount specified in Schedule 7.4(e), but if such additional sum is not timely paid; 

then
Licensor shall have the right and option to reduce Licensee's exclusive license under Section 5.1 to a nonexclusive license. This right, if exercised by Licensor, supersedes the rights
granted in Section 5.1, but not the other rights granted in Article V or otherwise in this agreement. 

        7.5   If
the Licensee fails to use commercially reasonable efforts under Sections 7.1 and 7.3, other than Licensee's failure to perform under Section 7.4, then Licensor
shall have the option either to reduce Licensee's exclusive license under Section 5.1 to a nonexclusive license, or to terminate this Agreement by paying to Licensee a termination fee equal to
the amounts paid by Licensee to Licensor under Section 6. l(a), (b) and (c). 

        7.6   To
exercise the right to reduce the license under Section 5.1 to a nonexclusive license for lack of diligence under Section 7.4, Licensor must give the
Licensee written notice of the deficiency. Licensee thereafter has ninety (90) days to cure the deficiency. If Licensor has not received satisfactory tangible evidence that the deficiency has
been cured by the end of the ninety (90) day period, then the Licensor may, at its option, reduce the Licensee's exclusive license to a nonexclusive license by giving written notice to the
Licensee. These notices shall be subject to Article XII. Upon reduction of Licensee's exclusive license to a non-exclusive license, the applicable royalty rates shall be as follows: 

        (a)   two
and one-half percent (2.5%) on Net Sales of Licensed Products until Net Sales of IVM Technology Products exceed Ten Million Dollars ($10,000,000.00); and
thereafter three and one-half percent (3.5%) on Net Sales of Licensed Products 

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until
Net Sales of IVM Technology Products exceed Twenty-Five Million Dollars ($25,000,000.00); and thereafter four and one-half percent (4.5%) on all Net Sales of Licensed
Products after Net Sales of IVM Technology Products exceed Twenty-Five Million Dollars ($25,000,000); and 

        1b)  two
percent (2%) on Net Sales of IVM Technology Products which are not Licensed Products until Net Sales of IVM Technology Products exceed Ten Million Dollars
($10,000,000.00); and thereafter three percent (3%) on Net Sales of IVM Technology Products which are not Licensed Products until Net Sales of IVM Technology Products exceed Twenty-Five
Million Dollars ($25,000,000.00); and thereafter four percent (4%) on all Net Sales of IVM Technology Products which are not Licensed Products after Net Sales of IVM Technology Products exceed
Twenty-Five Million Dollars ($25,000,000). 

        7.7   If
Licensor exercises its option to reduce Licensee's exclusive license to a nonexclusive license for lack of diligence and thereafter Licensor grants to a third party
under another agreement a nonexclusive license to manufacture, use or sell IVM Technology Products at royalty rates more favorable than those contained herein, then the Licensee shall have the option
for a period of one year after written notice from the Licensor of such rates to substitute all royalty rates of the other agreement for all corresponding royalty rates of this agreement, provided the
Licensee becomes obligated to the same terms and conditions of the other license. 

ARTICLE VIII  

        8.     Intellectual
Property Protection and Enforcement 

        8.1   Licensor
expressly warrants that, subject to the rights of Medtronic, Inc. as defined in the Investment Agreement set forth as Schedule A, Licensor is the
owner of the entire right, title and interest in the Licensed Patents, that Licensor has the unencumbered right to grant the exclusive license as provided in this agreement to Licensee, and that
Licensor has the full power and authority to enter into this agreement and to perform the obligations required under this agreement. 

        8.2   Except
as set forth in Schedule 8.2, Licensor represents and warrants that, to the best of Licensor's knowledge, Licensee's proposed manufacture, use or sale of
IVM Technology Products does not infringe any patent or trade secret rights owned by any other party. 

        8.3   Licensor
shall take reasonable efforts to prosecute all patent applications currently pending which, if issued, would constitute a Licensed Patent and will notify
Licensee within a reasonable time period of any issuances, abandonments, divisions, continuation applications, continuation-in-part applications, dominant and subordinate
applications, and all 

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international
counterparts that are now or may in the future be legally or equitably owned by Licensor. Licensor shall furnish to Licensee a copy of all documents received from or filed with the
patent offices where the Licensed Patents are pending within sixty (60) days of their receipt or filing by Licensor. 

        8.4   In
the event Licensor decides to abandon any issued patent within Licensed Patents, or patent application currently pending which, if issued, would constitute a Licensed
Patent, Licensor shall notify Licensee at least sixty (60) days prior to abandonment. Licensee in its sole discretion may continue the maintenance of such patent or the prosecution of such
application at its sole expense. 

        8.5   Licensor
shall take reasonable measures as may be necessary to maintain the validity of any Licensed Patent. 

        8.6   During
the term of this agreement, each party agrees to inform the other party promptly and in reasonably complete detail of any suspected infringement of a Licensed
Patent in the Field. Upon receipt of information concerning suspected infringement of the Licensed Patent in the Field, Licensee may, in its sole discretion and as exclusive licensee in the Field,
take appropriate measures to enforce the Licensed Patents, including bringing a patent infringement lawsuit. In such event, Licensor agrees to cooperate fully with Licensee during the lawsuit and
agrees to be named and otherwise joined, if necessary, as a party to the lawsuit. Unless the parties agree in writing otherwise, Licensee shall bear all expenses of a patent infringement lawsuit
brought by it, and any damages awarded as a result of a finding of a patent infringement in a lawsuit brought by Licensee shall be used first to reimburse the Licensee for its expenses of the lawsuit
(including attorneys fees) as paid, and any residual amount after reimbursement of expenses paid shall be divided between the parties with seventy-five percent (75%) of the residual amount
being retained by Licensee and twenty-five percent (25%) of the residual amount being retained by Licensor. Any damages required to be paid to any third person as a result of the bringing
of such a lawsuit shall be paid by Licensee. 

        8.7   If
Licensee declines to take appropriate action to enforce the Licensed Patents within a reasonable time after notification of suspected infringement within the Field or
the license rights specified in Section 5.1 have become non-exclusive in accordance with Article VII, Licensor shall have the right and may take whatever action is
appropriate to enforce the Licensed Patents, including bringing a patent infringement lawsuit. In such event, Licensee agrees to cooperate fully with Licensor, at Licensor's expense, during the
infringement lawsuit, and agrees to be joined, if necessary, as a party to the lawsuit. Unless the parties agree otherwise in writing, Licensor shall bear all expenses of a patent infringement lawsuit
brought by it and any damages awarded as a result of a finding of patent infringement in a patent infringement lawsuit brought by Licensor shall be used first to reimburse Licensor for the expenses of
the lawsuit (including attorneys fees) as paid, and any residual amount after reimbursement of such expenses shall be divided between the parties with seventy-five (75%) of the residual
amount being retained by Licensor and twenty-five percent (25%) of the 

13

 

residual
amount being retained by Licensee. Any damages required to be paid to any third person as a result of the bringing of such a lawsuit by Licensor shall be paid by Licensor. 

        8.8   During
the term of this agreement, should either Licensee or Licensor receive notice from any third party in which the third party alleges the invalidity of any claim of
the Licensed Patents, Licensee and Licensor mutually agree to consult with each other to determine the best course of action. Unless the parties otherwise agree, Licensor shall have the first right
but not the obligation to assume the primary responsibility at its expense for the conduct of the defense of any such claim. Licensee shall have first right, but not the obligation, to participate in
any such suit at its sole option and at its own expense. Each party shall reasonably cooperate with the party conducting the defense of the claim. Neither party shall enter into any settlement that
affects the other party's rights or interests without such other party's written consent, not to be unreasonably withheld. 

        8.9   Where
either party has developed or acquired an Improvement to which this Agreement applies, it shall not publish the same or do anything that might prejudice the
validity of any patent that might subsequently be granted on such Improvement until both parties have had at least ninety (90) working days from disclosure in writing of all information
relating to such Improvement to consider whether patent or other protection should be applied for. The parties will notify the other whether either intends to seek any relevant protection on an
Improvement. 

ARTICLE IX  

        9.     Term
and Termination 

        9.1   Subject
as hereinafter provided, this agreement shall continue in force in each country of the Licensed Territory until the later of (i) ten (10) years
from the first commercial sale of IVM Technology Products or (ii) expiry of the last to expire of the Licensed Patents in such country at which time Licensee will be entitled to exploit all
Licensed Patents and Technical Information without restriction or payment, unless this agreement is earlier terminated in accordance with the following provisions of this Article. 

        9.2   Licensee
may terminate this agreement at any time following one (1) year from the Effective Date by providing Licensor with one (1) month prior written
notice. All payments that have been triggered up to the point of termination will become immediately due. 

        9.3   If
either party is in breach of any obligation on it hereunder and in the case of a breach capable of remedy it shall not have been remedied by the defaulting party
within thirty (30) days of written notice specifying the breach and requiring its remedy, then the party not in breach of the obligation or condition may forthwith terminate this agreement by
notice without prejudice to the accrued rights of either party. 

14

 

        9.4   On
termination of this agreement for any reason, Licensee shall continue to have the right for a period of three (3) months from the date of termination to
complete deliveries on contracts in force at that date and to dispose of IVM Technology Products already manufactured subject to payment to Licensor of royalties thereon in accordance with
Article VI above. Upon termination of this Agreement for any reason other than by breach by Licensor, the license rights granted to Licensor in Section 5.2 shall survive. 

        9.5   Notwithstanding
the termination of this agreement for any reason whatsoever, the provisions of Article XV shall remain in force. 

ARTICLE X  

        10.   Force
majeure 

        10.1   If
either party to this agreement is prevented or delayed in the performance of any of its obligations under this agreement by force majeure and if such
party gives written notice thereof to the other party specifying the matters constituting force majeure together with such evidence as it reasonably can give and specifying the period for which it is
estimated that such prevention or delay will continue, then the party in question shall be excused the performance or the punctual performance as the case may be as from the date of such notice for so
long as such cause of prevention or delay shall continue. 

        10.2   For
the purpose of this agreement, "force majeure" shall be deemed to be any cause affecting the performance of this agreement arising from or
attributable to acts, events, omissions or accidents beyond the reasonable control of the party to perform and without limiting the generality thereof shall include the following: 

        10.2.1   strikes,
lock-outs or other industrial action; 

        10.2.2   civil
commotion, riot, invasion, war threat or preparation for war; 

        10.2.3   fire,
explosion, storm, flood, earthquake, subsidence, epidemic or other natural physical disaster; 

        10.2.4   impossibility
of the use of railways, shipping, aircraft, motor transport or other means of public or private transport; 

        10.2.5   political
interference with the normal operations of any party. 

15

 
ARTICLE XI  

        11.   General

        11.1   No
variation or amendment of this agreement shall bind either party unless made in writing and agreed to in writing by duly authorized officers of the
parties. 

        11.2   If
any provision of this agreement is agreed by the parties to be illegal, void or unenforceable under any law that is applicable hereto or if any court
of competent jurisdiction in a final decision so determines this agreement shall continue in force save that such provision shall be deemed to be exercised herefrom with effect from the date of such
agreement or decision or such earlier date as the parties may agree. 

        11.3   The
headings in this agreement are for convenience only and are not intended to have any legal effect. 

        11.4   A
failure by any party hereto to exercise or enforce any rights conferred upon it by this agreement shall not be deemed to be a waiver of any such rights
or operate so as to bar the exercise or enforcement thereof at any subsequent time or times. 

        11.5   Neither
this agreement nor any interest hereunder shall be assignable by any party by operation of law or otherwise without the prior written consent or
agreement of the other party (which consent shall not be unreasonably withheld), except in connection with a sale or transfer of all or substantially all of the relevant business and assets of a party
to which this agreement relates. This agreement shall inure to the benefit of and shall be binding upon the parties and their successors and permitted assigns, and the name of a party appearing herein
shall be deemed to include the names of such party's successors and permitted assigns to the extent necessary to carry out the intent of this agreement. 

        11.6   Nothing
in this agreement is intended or shall be deemed to constitute a partnership, agency, employer-employee or joint venture relationship between the
parties. All activities by the parties hereunder shall be performed by them as independent contractors. No party shall incur any debts or make any commitments for or on behalf of the other party,
unless specifically authorized in writing by an officer of the other party. 

        11.7   This
agreement constitutes the entire agreement between the parties as to the subject matter hereof, and all prior negotiations, representations,
agreements and understandings are merged into, extinguished by and completely expressed by this agreement. 

16

 
ARTICLE XII  

        12.   Notices

        12.1   Any
notice required to be given hereunder by a party to the other shall be in writing and shall be served by sending the same by i) facsimile and
ii) registered (or recorded delivery) mail to the address of the other party as given herein or to such other address as that party may have previously notified to the party giving notice as
its address for such service, or (iii) personal delivery, and shall be considered effective seven (7) days after such mailing or upon receipt in the case of facsimile or personal
delivery. 

ARTICLE XIII  

        13.   Warranties,
Indemnification and Insurance 

        13.1   Licensor
represents that: 

        (a)   To
the best of its knowledge, Licensor has the right to grant to Licensee the rights and licenses granted in this agreement including, without limitation, the right to
make, use and sell JVM Technology Products without restriction in the Licensed Territory for the Field; 

        (b)   Licensor
is unaware of any other patent applications or patents, which are owned by, controlled by or licensed to Licensor or its Affiliates, that disclose or contain
claims directed to IVM Technology Products or their uses in the Field; and in the event any such patent applications or patents exist, Licensor hereby irrevocably grants a covenant not to sue Licensee
under such patent applications or patents (including patents issuing from such applications) during the term of this Agreement for uses within the scope of the licenses granted herein; 

        (c)   Licensor
has not previously granted and will not grant any rights to any third party that are inconsistent with the rights granted to Licensee herein; 

        (d)   Licensor
has the capacity, as well as the full power and authority, to enter into and carry out its development obligations under this agreement; and 

        13.2    Indemnification.    Licensor shall indemnify and hold harmless Licensee from and against any and all claims,
actions, liabilities, loses, damages and expenses ("Losses"), including reasonable attorneys' fees and such fees on appeal, incurred by Licensee in connection with any claims, actions or liabilities
arising out of or related to any warranties granted by Licensor. Licensee will promptly notify Licensor within a reasonable time after it becomes aware of any claim, action or proceeding that may be
subject to indemnification pursuant to this section and will cooperate with and authorize Licensor to carry out the sole management and 

17

 

defense
of such claim, action or proceeding. Licensor agrees that Licensee may participate and employ counsel of its own selection to defend and/or appeal the claim or action on behalf of Licensee.
Licensee will not compromise or settle any claim, action or proceeding subject to indemnification pursuant to this section without the prior written approval of Licensor. This section 13.2.
shall survive expiration or other termination, for any reason whatsoever, of this Agreement. 

        13.3    (a)    Infringement of Third Party Patents:    Licensee shall give Licensor prompt notice of each
claim or allegation that the manufacture, use or sale of IVM Technology Products, constitutes an infringement of a patent or patents owned by others. With respect to claims or allegations of
infringement which arise out of the use of IVM Technical Information or practicing the Licensed Patents within a particular country, (i) until litigation is commenced Licensor may use up to
seventy-five percent (75%) of the royalties to pay for or defray seventy-five percent (75%) of the expenses incurred relating to such claim or allegation, and (ii) upon
commencement of litigation relating to such claim or allegation Licensee shall have the right to retain seventy-five percent (75%) of the royalties otherwise payable to Licensor for sales
of IVM Technology Products in that country and to use such royalties to pay for or defray seventy-five percent (75%) of the costs of defending each such claim or allegation in that
country. Licensee hereby agrees that all royalties so retained shall be used to fund the costs of defending the infringement claims and allegations. During the defense of such claims or allegations,
Licensee shall submit written reports showing royalties accruing to Licensor and the expenses of defending against the claims or allegations of infringement. Upon termination of all proceedings
involving such claims or allegations, Licensee shall remit the balance, if any, of the royalties accrued but not yet paid to Licensor. 

        (b)    Settlement or Satisfying of Claim:    If the settling or satisfying of any such claim or allegation of patent
infringement requires the payment of royalties by Licensee to a third party for the manufacture, use or sale of IVM Technology Products, Licensee shall be entitled to deduct seventy-five
percent (75%) of those royalties paid to such third party from the royalties due Licensor under this Agreement, provided that in no event will the royalties payable to Licensor be reduced by more than
seventy-five percent (75%). Licensee shall further be entitled to retain or reduce the royalties payable to Licensor by an amount corresponding to seventy-five percent (75%) of
any payments made to settle or satisfy any such claim or allegation of patent infringement, provided that in no event will the royalties payable to Licensor be reduced by more than
seventy-five percent (75%). 

        (c)    License of Third Party Patents:    If Licensee determines that a license is required from a third party in
order to make, use and sell IVM Technology Products without infringing a third party patent because of the use of IVM Technical Information or practicing the Licensed Patents, and such a license is
acquired by Licensee, Licensee shall be entitled to deduct seventy-five percent (75%) of the royalties payable under said third party license from the royalties payable to Licensor under
this Agreement, provided that in no event will the royalties payable to Licensor be reduced by more than seventy-five percent (75%). 

18

 

        13.4   Licensee
represents that: 

        (a)   Licensee
has not previously entered into and will not enter into any agreement with a third party that is inconsistent with the obligations of Licensee herein; and 

        (b)   Licensee
has full power, right and authority to enter into and carry out its obligations under this agreement. 

        13.5    Product Indemnification.    Licensee shall indemnify and hold harmless Licensor from and against any and all
claims, actions, liabilities, loses, damages and expenses ("Losses"), including reasonable attorneys' fees and such fees on appeal, incurred by Licensor in connection with any claims, actions or
liabilities arising out of or related to (i) the testing, manufacture, marketing, distribution and sale of Licensed Products by Licensee and Licensee's activities related thereto;
(ii) the failure of Licensee to comply with all applicable laws, rules and/or regulations of any jurisdiction regarding approval of, advertising, selling, importing or exporting Licensed
Products; or (iii) any warranties granted by Licensee. Licensor will promptly notify Licensee within a reasonable time after it becomes aware of any claim, action or proceeding that may be
subject to indemnification pursuant to this section and will cooperate with and authorize Licensee to carry out the sole management and defense of such claim, action or proceeding. Licensee agrees
that Licensor may participate and employ counsel of its own selection to defend and/or appeal the claim or action on behalf of Licensor. Licensor will not compromise or settle any claim, action or
proceeding subject to indemnification pursuant to this section without the prior written approval of Licensee. This section 13.5. shall survive expiration or other termination, for any reason
whatsoever, of this Agreement. 

        13.6    Insurance.    Licensee shall maintain adequate product liability insurance covering the sale and use of
Licensed Products in such amounts and with such insurers as is customary in accordance with sound business practices in the surgical products industry. The liability insurance requirement of this
Paragraph may be satisfied through self-insurance. 

ARTICLE XIV  

        14.   Governing
Law and Disputes 

        14.1   The
construction, validity and performance of this agreement shall be governed in all respects by the laws of the State of California, U.S.A. 

        14.2   In
the event of any dispute, by and among the members of the Steering Committee or otherwise concerning any aspect of this agreement, including its
interpretation, performance, breach or termination, the procedures of this Article XIV shall apply. 

        14.3   Each
party shall use good faith efforts to resolve any dispute informally as soon as practicable. If the dispute is not resolved informally, the officers
of the parties shall meet 

19

 

at
a mutually agreeable time and place and attempt to resolve the dispute. The meeting shall occur within ten (10) days after either party's written request for the meeting. 

        14.4   The
parties agree to negotiate and attempt to settle, in good faith, any disputes arising out of this agreement. If the parties are unable to come to an
agreement, the dispute shall be finally settled by arbitration conducted in Orange County, California, in accordance with the CPR Non-Administered Arbitration Rules in effect on the date
of this agreement, by three independent and impartial arbitrators, none of whom shall be appointed by either party. These arbitrators shall be recommended by CPR, and shall be taken from the CPR panel
of distinguished neutrals. The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. Sec. 1-16, and judgment upon the award rendered by the arbitrator(s) shall be
entered by any court having jurisdiction thereof. The arbitrators shall award to one or more parties in the arbitration all or so much of such party's or parties' expenses for attorneys' fees and
costs as the arbitrators deem appropriate, taking into account the relative merits of the positions asserted by the parties and any prearbitration offers of settlement or compromise. The Arbitrator(s)
are not empowered to award damages in excess of compensatory damages and each party hereby irrevocably waives any right to recover such excess damages. 

        14.5   Notwithstanding
the CPR Rules, the parties agree that limited discovery shall be allowed in accordance with the Federal Rules of Civil Procedure for a
period of 45 days after the initiation of the mediation or 120 days after the initiation of the arbitration process. See F.R.C.P.
26-37. All issues regarding compliance with discovery requests shall be decided by the Arbitrator(s) pursuant to the Federal Rules of Civil Procedure. 

        The
parties agree that the recipient of a discovery request shall have ten (10) business days after the receipt of such request to object to any or all portions of such request
and shall respond to any portions of such request not so objected within thirty (30) business days of the receipt of such request. All objections shall be in writing and shall indicate the
reasons for such objections. The objecting party shall ensure that all objections and responses are received by other parties within the above time
periods; failure to comply with the specified time period shall be addressed as outlined in the F.R.C.P. 37. Any party seeking to compel discovery following receipt of an objection shall file with the
other parties and the Arbitrator(s) a motion to compel, including a copy of the initial request and the objection. The Arbitrator(s) shall allow ten (10) business days for the responses to the
motion to compel before ruling. Claims of privilege and other objections shall be determined as they would be in United States federal court in a case applying California law. The Arbitrator(s) may
grant or deny the motion to compel, in whole or in part, including that the discovery request is or is not appropriate under the circumstances, taking into account the needs of the parties and the
desirability of making discovery expeditious and cost-effective. 

        The
statute of limitations of the State of California applicable to the commencement of a lawsuit shall apply be tolled as of initial written notification of a dispute to the other party
and shall be extended until commencement of arbitration if all interim deadlines have been complied with by the notifying party. 

20

 
ARTICLE XV  

        15.   Secrecy

        15.1   Licensor
and Licensee may disclose confidential information to each other to facilitate work under this agreement. Such information shall be safeguarded
and not disclosed to anyone without a "need to know" within the Licensee or the Licensor. Each party shall also strictly protect such information from disclosure to third parties. Unless otherwise
agreed to in writing, the terms and conditions of this agreement are confidential except as provided for by law. The obligation to keep confidential shall however not apply to information which is
already known to the party to which it is disclosed; to information that becomes part of the public domain without breach of this agreement; or to information obtained from third parties which have no
obligations to either contracting party to keep such information confidential. 

        IN
WITNESS WHEREOF the parties have caused this agreement to be executed by their duly authorized officers on the respective dates hereinafter set forth. 

	LICENSEE	 	LICENSOR
	BAXTER HEALTHCARE CORPORATION	 	INTRAVASCULAR MEDICAL, INC.
	Agreed and Understood:	 	Agreed and Understood:
	

Signature:	

/s/ Stewart Foster
	
 	

Signature:	

/s/  W. JERRY MEZGER      

	Name:	Stewart Foster
	 	(Print)	 	Name:	W. Jerry Mezger
	 	(Print)
	Title:	PRES. VASCULAR DIV
	 	Title:	PRESIDENT & CEO

	Date:	12/6/96
	 	Date:	12/6/96

	Address:	          
	 	Address:	          

	          
	 	          

	Facsimile Number:	 	          
	 	Facsimile Number:	 	          

	 12/6/96	 	 	 	 	 	 	 	 	 	 	 	 

21

QuickLinks

Exhibit 10.39

LICENSE AND DEVELOPMENT AGREEMENTQuickLinks
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Exhibit 10.40    
    

 
 

LICENSE AGREEMENT    
    

        This Agreement is made effective as of the close of business on November 20, 1998 ("Effective Date"), by and among Medtronic InStent, Inc.
("InStent"), a Delaware corporation, and Medtronic, Inc. ("Medtronic"), a Minnesota corporation. 

RECITALS:

        A.    Medtronic
has rights in certain patents and patent applications related to the use of nitinol in coil stents. 

        B.    Medtronic
desires to grant, and InStent desires to obtain, a non-exclusive license to the "Subject Technology" (as defined below) in the Peripheral Vascular
Field of Use and the Non-Vascular Field of Use (as defined below) in accordance with all of the terms of this Agreement. 

        NOW,
THEREFORE, the parties hereto agree as follows: 

ARTICLE 1
  Definitions  

        As used herein, the following definitions and terms shall have the designated meanings: 

        1.1   "Action" shall mean any claim, action, suit or proceeding, whether civil or criminal, or in law or equity and including
any arbitration. 

        1.2   "Affiliate" of any entity shall mean any other entity that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the first entity. Control shall mean owning 50 percent or more of the total voting power of the entity. 

        1.3   "Confidential Information" shall mean all information provided to a party (the "receiving party") by a party (the
"disclosing party") or its employees, agents or consultants, excluding any information which: 

        (a)   is
or becomes publicly available through no fault of the receiving party; or 

        (b)   can
be reasonably demonstrated to have been known to the receiving party and its Affiliates independently of any disclosure of "Confidential Information" by the
disclosing party or its employees, agents or consultants; or 

        (c)   after
the Effective Date is disclosed to the receiving party by a third party who, to the best of the receiving party's knowledge, is lawfully in possession of the same
and has the right to make such disclosure; or 

        (d)   has
been independently developed by the receiving party without reference to the information disclosed to the receiving party by the disclosing party or its employees,
agents or consultants. 

1

 

        All
"Confidential Information" disclosed to the receiving party under this Agreement shall ultimately be in writing and bear a legend "Proprietary", "Confidential" or words of similar
importance. Accordingly, all "Confidential Information" disclosed in any manner other than writing shall be preceded by an oral statement indicating that the information is proprietary or Confidential
and shall be followed by transmittal of a reasonably detailed written summary of the information provided to the receiving party with identification as "Confidential Information" designated as above
within 30 days. 

        1.4   "Expiration" or "Expired" shall mean with respect to a particular patent,
the Patent's expiration, abandonment, cancellation, disclaimer, award to another party other than Medtronic or an Affiliate of Medtronic in an interference proceeding, or declaration of invalidity or
unenforceability of all claims thereof by a court or other authority of competent jurisdiction (including a re-examination or reissue proceeding) from which no further appeal has or can be
taken. References to an "Unexpired" patent shall mean a patent that has not Expired. 

        1.5   "Fiscal Year" shall means the calendar year ending December 31. 

        1.6   "Law" shall mean any law, regulation, rule, ordinance or governmental regulation or guideline or any judicial,
administrative or arbitration, order or award, judgment, writ, injunction or decree which is applicable to a person or by which a person is bound. 

        1.7   "Licensed Products" any reference in this Agreement to "Licensed Products" generally shall mean Non-Vascular
Licensed Products and Peripheral Vascular Licensed Products. 

        1.8   "Net Sales" of Licensed Products for a particular period shall mean the amounts that InStent or any Affiliate of InStent
invoices third parties (eliminating transactions between Affiliates) for sales of Licensed Products during such period, excluding sales, use or excise tax, freight duty or insurance included therein,
and credits or repayments due to rejection, defect or return. If InStent or any Affiliate of InStent sells at a single price or rate a packaged combination of products, not all of which if sold
individually would be Licensed Products, then "Net Sales of Licensed Products" with respect to such sales of packaged products shall equal the total sales price of the packaged combination multiplied
by the ratio of the individual retail list price of the Licensed Products contained in the packaged combination to the sum of all individual retail list prices of every item in the packaged
combination (if all such items were sold separately). If all such items are not sold separately, any item not sold separately shall have a price attributed to it for purposes of this definition
consistent with pricing of similar products or their functional equivalents. Without limitation of the foregoing, Net Sales shall include all transfers of Licensed Products that InStent or any
Affiliate of InStent records as a sale pursuant to generally accepted accounting principles consistently applied. Net Sales which are denominated in currencies other than U.S. Dollars shall be
converted into U.S. Dollars on a monthly basis at the average of the applicable daily exchange rates listed in the Wall Street Journal for the calendar month in which such Net Sales occurred, or on
such other basis to which the parties may hereafter mutually agree. 

        1.9   "Non-Vascular Field of Use" shall mean esophageal, biliary, colon, rectal, prostate and urethral
applications. 

2

 

        1.10 "Non-Vascular Licensed Products" shall mean the current line of InStent's coil stents that incorporate
Nitinol alloys, designated under the trademarks EsophaCoil, EndoCoil, CoRectCoil, UroCoil and ProstaCoil, which are covered by a claim of any Unexpired patent included within the Subject Technology,
and any improvements thereto. 

        1.11 "Peripheral Vascular Field of Use" shall mean peripheral vascular applications. Peripheral Vascular Field of Use shall
specifically exclude coronary vascular applications, aortic vascular applications, carotid applications, and neurovascular applications. 

        1.12 "Peripheral Vascular Licensed Products" shall mean the current line of InStent's coil stents that incorporate Nitinol
alloys, designated under the trademarks VascuCoil which are covered by a claim of any Unexpired patent included within the Subject Technology and any improvements thereto. 

        1.13 "Product Liability Claims" shall mean claims for personal injury or death based on alleged breach of product warranty,
strict liability in tort, or negligent product design or manufacture. 

        1.14 "Quarter" means each three-month period ending March 31, June 30, September 30, and
December 31. 

        1.15 "Subject Technology" shall mean (i) the issued patents, and patents arising out of the patent applications,
listed on Exhibit A hereto, together with all reissues, continuations, continuations-in-part, extensions, reexaminations, and foreign counterparts thereof. 

ARTICLE 2
  License; Term and Termination  

        2.1    License Grant.    Subject to the terms and provisions hereof, Medtronic hereby grants to InStent a worldwide,
royalty-bearing, non-exclusive, non-sublicensable, and non-transferable license under the Subject Technology to make, have made, use and sell:
(i) Non-Vascular Licensed Products in the Non-Vascular Field of Use and, (ii) Peripheral Vascular Licensed Products in the Peripheral Vascular Field of Use. 

        2.2    Restriction on OEM Sales.    The license granted pursuant to this Agreement shall not be used in such a way as
to manufacture Licensed Products on an original equipment manufacturer basis ("OEM basis") for any person or entity. The term "OEM basis" includes, without limitation, the manufacture and sale of a
Licensed Product to any person or entity for (i) incorporation into or sale with or as such other person's or entity's product, or (ii) the resale of such Licensed Product by such person
or entity under trademarks other than those owned by InStent. It is the intent of the parties that the license granted herein be used for the sole and exclusive benefit of InStent and its Affiliates
and that all licensing of third parties shall be the sole right of Medtronic in its sole and absolute discretion. 

        2.3    Term of License.    Unless otherwise terminated under provisions of this Article 2, this Agreement and
the license granted under Section 2.1 shall continue until such time as all of the patents (including patents arising out of the patent applications listed on Exhibit A) included within
the Subject Technology (and all extensions thereof) have Expired. 

3

 

        2.4    Termination.    If InStent breaches any of the material terms, conditions, or agreements of this Agreement
(including, without limitation, Section 4.1 or the scope of Section 2.1), then Medtronic may terminate this Agreement, at Medtronic's option and without prejudice to any of its other
legal and equitable rights and remedies, by giving InStent 60 days' notice in writing, particularly specifying the breach. Such notice of termination shall not be effective if InStent cures the
specified breach within such 60-day period. 

        2.5    Delivery and Return of Confidential Information.    Upon termination of this Agreement or the licenses granted
hereunder as provided herein, InStent shall within 30 days after such termination return to Medtronic all Confidential Information of Medtronic. 

        2.6    No Sublicense. Transfer or Change of Control.    

        (a)   InStent
shall not have any right to sublicense its rights under this Agreement. 

        (b)   InStent;
or any successor or other permitted transferee of InStent's rights hereunder (referred to collectively to this Section 2.6 as "InStent"), may not assign
or transfer in any manner (whether by merger or consolidation of any type, operation of Law, purchase or otherwise) any of its rights or obligations under this Agreement, except that all of InStent's
rights and obligations under this Agreement may be assigned in connection with a Change of Control of InStent that does not result in InStent becoming part of, or an Affiliate of a "Medtronic
Competitor" as defined in Exhibit B. A "Change of Control" of InStent that results in InStent becoming part of, or an Affiliate of, any Medtronic Competitor shall be deemed to be a prohibited
assignment and shall result in immediate termination of this Agreement. For purposes of this section, a "Change of Control" of InStent means any of the following events: (i) any "person" (as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) acquires "beneficial ownership" (as defined in Rule 13d-3 under the Securities Exchange Act of
1934), directly or indirectly, of securities of InStent representing 50% or more of the combined voting power (with respect to the election of directors) of InStent's then outstanding securities;
(ii) the consummation of a merger, combination or consolidation of InStent with or into any other corporation, other than a merger, combination or consolidation which would result in the voting
securities of InStent outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50%
of the combined voting power (with respect to the election of directors) of the securities of InStent or of such surviving entity outstanding immediately after such merger, combination or
consolidation; or (iii) the consummation of a plan of complete liquidation of InStent or of an agreement for the sale or disposition by InStent of all or substantiality all of InStent's
business or assets. The parties acknowledge that the intent of this section is to prevent any of the rights granted to InStent under this Agreement from inuring to the benefit of any Medtronic
Competitor without the express written consent of Medtronic, which consent may be withhold or granted in Medtronic's sole and absolute discretion. 

        2.7    Inventions.    The parties recognize that (a) InStent may (solely or jointly with persons other than
Medtronic employees or consultants), and without using any Confidential Information of Medtronic, create inventions relating to the subject matter of the Subject Technology disclosed or licensed to
InStent under this Agreement, and shall be the owner thereof, and (b) Medtronic may (solely or jointly with persons other than InStent employees or consultants), and without using any
Confidential Information of InStent, create inventions relating to the subject matter of the Subject Technology, and shall be the owner thereof. 

4

 
ARTICLES 3
  Royalties and Reports  

        3.1.    License Fee.    For each Fiscal Year, InStent shall pay to Medtronic a royalty (the "Royalty" or "Royalties")
equal to: (i) ten percent (10%) of Net Sales of Non-Vascular Licensed Products in such year and (ii) twelve percent (12%) of Net Sales of Peripheral Vascular Licensed
Products in such year. 

        3.2    Reports and Payments.    Within 45 days after the end of each Quarter, InStent shall provide Medtronic
with a written report indicating (i) the amount of Net Sales of Non-Vascular Licensed Products and Peripheral Vascular Licensed Products in the Non-Vascular Field of Use
and the Peripheral Vascular Field of Use during such Quarter, and (ii) the amount of the Royalties due for such Quarter. Simultaneously with making such report, InStent shall pay to Medtronic
the amount of royalties then due. 

        3.3    Records.    InStent agrees to keep accurate written records sufficient in detail to enable Medtronic to verify
the information contained in the reports described in Section 3.2. Such records for a particular Quarter shall be retained by InStent for a period of not less than four years after the end of
such Quarter. 

        3.4    Audit of Records.    Upon reasonable notice and during regular business hours, InStent shall from time to time
(but no more frequently than once annually) make available the records referred to in Section 3.3 for audit by an independent nationally recognized accounting firm selected by Medtronic to
verify the accuracy of the reports provided to Medtronic. Such representatives shall execute a confidentiality agreement reasonably acceptable to InStent prior to conducting such audit. Such
representatives may disclose to Medtronic only their conclusions regarding the accuracy and completeness of the reports described in Section 3.2 and the records related thereto, and shall not
disclose InStent's confidential business information to Medtronic without the prior written consent of InStent. Such audits shall be at Medtronic's cost and expense; provided that if any such audit
reveals underpayment of Royalties by five percent (5%) or more for any Quarter, then InStent shall reimburse Medtronic for the fees and expenses of Medtronic's independent auditors incurred by
Medtronic in connection with such audit. 

ARTICLE 4
  Additional Obligations  

        4.1    Restrictions of Use.    All Licensed Products manufactured or sold by InStent or its Affiliates under this
Agreement shall be packaged, labeled, advertised, marketed and otherwise identified and promoted in such manner as shall indicate, and InStent and its Affiliates in general shall use all reasonable
efforts to ensure, that all Non-Vascular Licensed Products shall not be used in any applications outside of the Non-Vascular Field of Use and that all Peripheral Vascular
Licensed Products shall not be used in any applications outside of the Peripheral Vascular Field of Use. 

        4.2    Limitations on License.    InStent acknowledges and agrees that the rights granted to InStent under the Subject
Technology expressly excludes any license or other rights pertaining 

5

 

to
breast localization devices, devices for soft-tissue attachments to bone, devices for anchoring bone to bone, and devices for anchoring artificial devices to bone. 

        4.3    Confidentiality.    The parties acknowledge that the patent applications listed on Exhibit A hereto and
the inventions claimed therein constitute "Confidential Information" of Medtronic. InStent agrees not to disclose or use any Medtronic Confidential Information except as expressly permitted in
connection with the exercise of its rights hereunder. InStent shall not disclose Medtronic Confidential Information to any employee or consultant unless such employee or consultant is obligated under
a confidentiality agreement to maintain such Medtronic Confidential Information in strict confidence, and not to use such information other than, in accordance with the terms of this Agreement.
InStent agrees to hold the Medtronic Confidential Information in strict confidence and treat it with not less than the same degree of care to avoid disclosure as InStent employs with respect to
InStent's information of like importance. 

ARTICLE 5
  Intellectual Property  

        5.1    No Representation or Warranty.    MEDTRONIC MAKES NO WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE
SUBJECT TECHNOLOGY OR ANY LICENSED PRODUCTS, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, PATENTABILITY, PATENT VALIDITY,
NON-INFRINGEMENT, OR WARRANTIES ARISING FROM COURSE OF DEALING OR USAGE OF TRADE. 

        5.2    Control of Subject Technology.    Medtronic shall have the Sole and exclusive right, in Medtronic's absolute
discretion, to exercise complete control over the Subject Technology, including, but not limited to, the right to (i) prosecute any alleged infringement, misappropriation or misuse of the
Subject Technology, and (ii) apply for, prosecute, or cause the issuance, amendment, abandonment, maintenance, re-examination or reissue of any patents included within the Subject
Technology or patent applications listed on Exhibit A hereto. 

        5.3    Indemnification.    

        (a)   InStent
shall indemnify, defend and hold harmless Medtronic, its Affiliates and Medtronic's and its Affiliates' respective officers, directors, shareholders, employees
end agents (collectively, all such indemnitees are referred to in this Section 5.3(a) as "Medtronic Indemnitees") against and in respect of any and all claims, demands, losses, obligations,
liabilities, damages (and including without limitation compensatory and punitive damages), deficiencies, Actions, settlements, judgments, costs and expenses which the Medtronic Indemnitees may incur
or suffer or with which it may be faced (including reasonable costs and legal fees incident thereto or in seeking indemnification therefor) (collectively referred to as "Medtronic Damages") arising
out of or based upon (i) any Product Liability Claims resulting from InStent's development, manufacture, use, or sale of any Licensed Product, or (ii) any breach of this Agreement by
InStent. 

        (b)   Medtronic
shall indemnify and hold harmless. InStent, its Affiliates and InStent's and its Affiliates "respective officers, directors, shareholders, employees and agents
(collectively, all such indemnitees are referred to in this Section 5.3(b) as "InStent Indemnitees") against and in 

6

 

respect
of any and all demands, losses, obligations, liabilities, damages (and including without limitation compensatory and punitive damages), deficiencies, Actions, settlements, judgments, costs and
expenses which the InStent Indemnitees may incur or suffer or with which it may be faced (including reasonable costs and legal fees incident thereto or in seeking indernification therefor)
(collectively referred to as "InStent Damages") arising out of or based upon any breach of this Agreement by Medtronic. 

        5.4    Instent Regulatory Interaction Rights.    Notwithstanding Section 5.2 above, interaction with the
regulatory agencies in any country, including, without limitation the FDA, concerning Licensed Products of InStent or its Affiliates in the Non-Vascular Field of Use and the Peripheral
Vascular Field of Use shall be exclusively conducted by InStent and InStent shall be the official company sponsor. Subject to Section 5.3(a) hereof, InStent shall have complete authority to act
as InStent, in its sole discretion, deems appropriate with respect to any such regulatory matter. 

        5.5    InStent Marketing Rights.    Subject to Sections 4.1 and 5.3(a) hereof, nothing herein shall prevent or limit
InStent from setting its own prices for Licensed Products or determining InStent's marketing policies and practices in its sole discretion. InStent shall have no obligation to develop or market
Licensed Products, and shall have the unqualified right at any time to cease any and all development and marketing efforts. Nothing in this Agreement shall be construed to impose any liability on
InStent for failure to develop, make, use or sell any Licensed Products or to seek or procure regulatory approvals or notifications (except pursuant to Section 5.3(a)(i)) for any Licensed
Products). 

ARTICLE 6
  Representations & Warranties  

        6.1    Organization.    Each party represents and warrants to the other party that such party is a corporation duly
organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation. 

        6.2    Authorization of Transaction.    Each party represents and warrants to the other party that it has full power
and authority (including full corporate power and authority) to execute and deliver this Agreement and to perform its obligations hereunder. All necessary corporate proceedings (including any
necessary approval by the board of directors) have been taken by such party to duly authorize the execution, delivery, and performance of this Agreement by such party. This Agreement constitutes the
valid and legally binding obligation of such party, enforceable against such party in accordance with its terms and conditions. 

7

 
ARTICLE 7
  Miscellaneous  

        7.1    Assignment.    Except as set forth in Section 2.6, InStent may not assign or transfer in any manner
(whether by merger or consolidation of any type, operation of Law, purchase or otherwise) any of its rights or obligations under this Agreement. Any prohibited assignment or transfer shall be null and
void. Medtronic may assign or Otherwise transfer its rights and obligations under this Agreement to any successor in interest (by merger, consolidation, operation of Law, purchase or otherwise),
provided that such assignee or successor agrees to be bound by the terms hereof. 

        7.2    Entire Agreement.    This Agreement constitutes the entire agreement of the parties with respect to the subject
matter hereof and supersedes all previous proposals or agreements, oral or written, and all negotiations, conversations or discussions heretofore had between the parties related to the subject matter
of this Agreement. 

        7.3    Survival.    All of the covenants, warranties and indemnifications made in this Agreement are intended, or by
their terms and provisions required, to be observed and performed by the parties after the execution and delivery, and the termination hereof and shall survive such execution, delivery and termination
and continue thereafter in full force and effect. 

        7.4    Waiver, Discharge, Etc.    This Agreement may not be released, discharged, abandoned, changed or modified in
any manner, except by an instrument in writing signed on behalf of each of the parties to this Agreement by their duty authorized representatives. The failure of either party to enforce at any time
any of the provisions of this Agreement shall in no way be construed to be a waiver of any such provision, nor in any way to affect the validity of this Agreement or any part of it or the right of
either party after any such failure to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to be a waiver of any other or subsequent breach. 

        7.5    Execution in Counterparts.    This Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement, and shall become a binding agreement when one or more counterparts have been signed by each party and delivered to the other party. 

        7.6    Titles and Headings: Construction.    The titles and headings to Sections herein are inserted for the
convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. This Agreement shall be construed without regard to any presumption or
other rule requiring construction hereof against the party causing this Agreement to be drafted. 

        7.7    Benefit.    Nothing in this Agreement, expressed or implied, is intended to confer on any person other than the
parties to this Agreement or their respective permitted successors or assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. 

        7.8    Notices.    All notices or other communications to a party required or permitted hereunder shall be in writing
and shall be delivered personally or by telecopy (receipt confirmed) to such party (or, in the case of an entity, to an executive officer of such party) or shall be given by certified mail, postage
prepaid with return receipt requested, addressed as follows: 

8

 

if
to InStent, to: 

Medtronic
InStent, Inc.

6271 Bury Drive

Eden Prairie, Minnesota 55346

Attention: Chief Executive Officer

Telecopy number: (612) 937-0312 

and
if to Medtronic, to: 

Medtronic, Inc.

Corporate Center

7000 Central Avenue N.E.

Minneapolis, Minnesota 55432

with
separate copies thereof addressed to: 

	Attention:	 	General Counsel

Telecopy number: (612) 572-5459
	

Attention:	
 	

Vice President and Chief Development Officer

Telecopy number: (612) 572-5404

InStent
or Medtronic may change their respective above-specified recipient and/or mailing address by notice to the other party given in the manner herein prescribed. All notices shall be deemed given
on the day when actually delivered as provided above (if delivered personally or by telecopy) or on the day shown on the return receipt (if delivered by mail). 

        7.9    Severability.    If any provision of this Agreement is held invalid by a court of competent jurisdiction, the
remaining provisions shall nonetheless be enforceable according to their terms. Further, if any provision is held to be overbroad as written, such provision shall be deemed amended to narrow its
application to the extent necessary to make the provision enforceable according to applicable Law and shall be enforced as amended. 

        7.10    Marking.    If requested by Medtronic, InStent shall cause all Licensed Products manufactured or sold under
this license in the United States by it or its Affiliates with a notice to the effect that such product is licensed under the U.S. patents designated by Medtronic. 

9

 

        IN
WITNESS WHEREOF, each of the parties has caused this License Agreement to be executed in the manner appropriate to each, effective as of the date first above written. 

	 	 	MEDTRONIC INSTENT, INC.
	

 	
 	

By:	
 	

Robert L. Ryan

	 	 	Its:	 	Chief Operating Officer

	

 	
 	

MEDTRONIC, INC.
	

 	
 	

By:	
 	

/s/[ILLEGIBLE]

	 	 	Its:	 	Vice President and Chief Development Officer

10

QuickLinks

Exhibit 10.40

LICENSE AGREEMENT

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