-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PzpQMQivWd5fLgEKowUOZYumLYalI0PFUkYuyoorLuNiY0V5D0VpPhv8oy9wGlLW xZvvyB6e/N7Qsbx6410KOA== 0000891618-96-001366.txt : 19960730 0000891618-96-001366.hdr.sgml : 19960730 ACCESSION NUMBER: 0000891618-96-001366 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960729 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENDOSONICS CORP CENTRAL INDEX KEY: 0000883420 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 680028500 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-19880 FILM NUMBER: 96599909 BUSINESS ADDRESS: STREET 1: 6616 OWENS DRIVE CITY: PLEASANTON STATE: CA ZIP: 94588 BUSINESS PHONE: 5107340464 MAIL ADDRESS: STREET 1: 6616 OWENS DR CITY: PLEASANTON STATE: CA ZIP: 94588 10-K/A 1 FORM 10-K/A DATED DECEMBER, 31, 1995 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM 10-K/A (MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from_______________ to_______________ Commission file number 0-19880 ENDOSONICS CORPORATION (Exact name of registrant as specified in its charter) Delaware 68-0028500 (State of incorporation) (I.R.S. Employer Identification No.) 6616 Owens Drive Pleasanton, California 94588 (Address of principal executive office, Zip Code) Registrant's telephone number, including area code: (510) 734-0464 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: COMMON STOCK ($.001 PAR VALUE) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] [Cover page 1 of 2] 2 The aggregate market value of voting stock held by non-affiliates of the Registrant, as of March 15, 1996 was approximately $137,500,774 (based on the closing price for shares of the Registrant's Common Stock as reported by the Nasdaq National Market for the last trading day prior to that date). Shares of Common Stock held by each officer, director, and holder of 5% or more of the outstanding Common Stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes. On March 15, 1996 approximately 13,408,100 shares of the Registrant's Common Stock, $.001 par value, were outstanding. DOCUMENTS INCORPORATED BY REFERENCE. Portions of the Registrant's Proxy Statement for the Annual Meeting of Stockholders held on May 24, 1996 are incorporated by reference into Part III. [Cover page 2 of 2] 3 ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (c) Exhibits 10.23* Imaging/Therapeutic Combination Devices Development Agreement dated as of February 2, 1996 by and between Cordis Corporation ("Cordis") and the Company. 10.24* Exclusive Distribution Agreement dated February 2, 1996 by and between Cordis and the Company. 10.25* License Agreement dated March 14, 1996 by and between CVD and Advanced Cardiovascular Systems, Inc. ("ACS") - -------------------------- * Confidential Treatment Requested 4 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on July 26, 1996. ENDOSONICS CORPORATION By: /s/ DONALD D. HUFFMAN --------------------- Donald D. Huffman Vice President, Finance and Administration 5 INDEX TO EXHIBITS
Sequentially Exhibit Numbered Number Description Page - ------ ----------- ---- 10.23* Imaging/Therapeutic Combination Devices Development Agreement dated as of February 2, 1996 by and between Cordis Corporation ("Cordis") and the Company. 10.24* Exclusive Distribution Agreement dated February 2, 1996 by and between Cordis and the Company. 10.25* License Agreement dated March 4, 1996 by and between CVD and Advanced Cardiovascular Systems, Inc. ("ACS")
- ------------------------------ * Confidential Treatment Requested EX-10.23 2 IMAGING/THERAPEUTIC DEVICES DEVELOPMENT AGREEMENT 1 Exhibit 10.23 * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. IMAGING/THERAPEUTIC COMBINATION DEVICES DEVELOPMENT AGREEMENT This Imaging/Therapeutic Combination Devices Development Agreement is made this 2nd day of February 1996 by and between Cordis Corporation, a Florida corporation doing business at 14201 N.W. 60th Avenue, Miami Lakes, FL 33014, USA ("Cordis") and EndoSonics Corporation, a Delaware corporation doing business at 6616 Owens Drive, Pleasanton, CA, USA ("EndoSonics"). W I T N E S S E T H: WHEREAS, EndoSonics develops and markets intravascular imaging systems, diagnostic imaging catheters and combined angioplasty-imaging catheters; WHEREAS, Cordis develops and markets medical devices, components and equipment, including angioplasty catheters and stents; WHEREAS, EndoSonics and Cordis desire to cooperate in the development and marketing of advanced, cost effective imaging/therapeutic combination devices for optimal stent delivery and improved angioplasty procedures by integrating their proprietary technology and know-how; NOW THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. SECTION 1: DEFINITIONS As used herein the following terms when used in their capitalized form shall have the following meanings (such meanings shall be equally applicable to both the single and the plural forms of each term): 1.1. "Agreement" shall mean this Imaging/Therapeutic Combination Devices Development Agreement, as amended, modified, or supplemented from time to time by the parties as set forth herein. 1.2. "Confidential Information' shall have the meaning provided in Section 8 hereof. 1.3. "Development Plan" means the development program containing a schedule of milestones for the completion of the Product as shall be mutually agreed upon in writing between Cordis and EndoSonics during the Initial Specification Phase. 1.4. "Dollars" or "$" shall mean United States Dollars. 1.5. "Exclusive Distribution Agreement" means the agreement so named of even date herewith between Cordis and EndoSonics. 1.6. "Initial Specification Phase" shall have the meaning set forth in Section 2.l hereof. 2 1.7. "Product" means the products to be developed under this Agreement. The specific product and design specifications will be defined and mutually agreed upon in writing by the parties during the Initial Specification Phase. 1.8. "Term" shall have the meaning provided in Section 4.1 hereof. 1.9. "Territory" shall have the meaning provided in the Exclusive Distribution Agreement. 2. SECTION 2: DEVELOPMENT 2.1. Initial Specification Phase EndoSonics and Cordis shall each use its best efforts to jointly define, and agree in writing on, the Product specifications and Development Plan within a period of [*] days following the date of this Agreement. Said period is hereinafter referred to as the "Initial Specification Phase". The tasks to be performed in the Initial Specification Phase are defined in Exhibit A Incorporated herein. Within [*] days following the date of this Agreement, EndoSonics and Cordis shall meet at EndoSonics' facilities to start the Initial Specification Phase. If EndoSonics and Cordis, within the Initial Specification Phase, are unable to agree on Product Specifications or the Development Plan, including a budget and Cordis' support thereof, either party shall have the right to terminate the Agreement and the Exclusive Distribution Agreement without any further obligations. 2.2. Cordis Support: During the Initial Specification Phase, EndoSonics and Cordis shall agree on (i) the specific phases and major milestones of the Development Plan (ii) the support provided by Cordis during each phase of the Development Plan, (iii) the manner in which Cordis' funding will be disbursed; and (iv) the manner in which Cordis' funding and/or services contributions will be accounted for. During the Term, Cordis shall provide technical, developmental, product, regulatory, clinical trial, clinical efficacy study and manufacturing support and project funding for a total aggregate amount of [*] US Dollars [*] over a period not to exceed 30 months. 2.3. Project Manager: During the Initial Specification Phase, EndoSonics shall appoint a Project Manager and Cordis shall appoint a Technical Liaison to act as contact persons for the exchange of information during the Term hereof. The Project Manager shall provide progress reports on a regular basis. Such reports shall enable EndoSonics and Cordis to review the progress and activities carried out under the Development Plan. The format and scope of said reports shall be agreed upon prior to the completion of the Initial Specification Phase. * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 2. 3 2.4. Development Plan: EndoSonics shall use best efforts to carry out the Development Plan for the Product in accordance with the terms of the Development Plan and within all agreed upon timetables and milestones set forth therein. In addition, EndoSonics agrees to limit the expenditure resulting from the Development Plan to the agreed upon funding. EndoSonics' failure to meet the agreed upon milestones for a period of more than [*] days, or EndoSonics exceeding the agreed upon budget by more than [*] shall constitute a material breach and basis for termination of this Agreement under Section 4. Notwithstanding the foregoing, in no event shall Cordis be required to provide support (i.e. money and services) in excess of a total aggregate amount [*] US Dollars ([*]). Cordis agrees to use commercially reasonable efforts to timely provide EndoSonics with all support required from Cordis in accordance with the Development Plan. Any material change in the Development Plan shall be agreed to in writing between EndoSonics and Cordis. Unless otherwise expressly provided herein, EndoSonics shall be solely responsible for the conduct of all phases of the Development Plan, provided, however, that EndoSonics agrees to consult in good faith with Cordis regarding the Development Plan and Cordis agrees to provide the assistance and support set forth in the Development Plan. 2.5. Review Meetings: EndoSonics shall invite Cordis to attend and participate in person-to- person progress review meetings, occurring quarterly or more or less often as mutually agreed by the parties in writing. In the event that Cordis elects to attend such a meeting, the Project Manager and the Technical Liaison and/or other personnel designated by EndoSonics or Cordis shall attend and participate in such meeting. 2.6. Disclosure of Information: Each party hereto shall take reasonable steps to assist the other to obtain, and make available to the other on a timely basis all information needed for the successful completion of the Development Plan, including, but not limited to, results of medical and clinical trials and results of technical, regulatory and safety studies and evaluations performed by such party. All disclosures hereunder are subject to the confidentiality provisions of Section 8 below. 2.7. Exclusive Development: During the Term, EndoSonics shall not enter into agreements with any other parties for the development, manufacture, or sale of a product for use in the intracoronary ultrasound market, similar to Product. 3. SECTION 3: DISTRIBUTION AND TRANSFER PRICE 3.1 Distribution rights Upon successful completion of the Development Plan, Cordis shall have exclusive distribution rights for the Product in the Territory, under terms and conditions set forth in the Exclusive Distribution Agreement and at transfer prices as provided in section 3.2 * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 3. 4 below. Cordis' purchase of Product shall count towards the Minimum Purchase Amount as specified in the Exclusive Distribution Agreement. 3.2. Transfer Price Prior to completion of the Development Plan, the parties hereto shall negotiate in good faith a reasonable transfer price to be paid by Cordis to EndoSonics for specified unit quantities of the Product to be purchased by Cordis. Such transfer price shall not exceed [*]. 4. SECTION 4: TERM - TERMINATION 4.1. Term: The term ("Term") of this Agreement shall commence the date hereof, and, unless terminated sooner pursuant to the provisions of Section 4.2, shall terminate 30 months from the date hereof or upon completion of the Product in accordance with the Development Plan, whichever comes first; provided, however, that this Agreement may be extended upon the mutual written consent of the parties. Notwithstanding anything contained in this Agreement to the contrary, if this Agreement expires or terminates prior to the expiration or termination of the Distribution Agreement, the exclusive distribution rights granted to Cordis pursuant to Section 3.1 shall survive as long as the Distribution Agreement remains in full force and effect. 4.2. Termination of Agreement: This Agreement shall terminate upon the happening of any of the following events: (a) either party's failure to cure the breach of any material term, covenant or condition of this Agreement within 30 days after the breaching party receives notice of such breach; (b) immediately upon termination of the Exclusive Distribution Agreement; (c) immediately upon written notice to one party upon a material change in control of the other party including, without limitation, the acquisition or merger of the other party, except for the contemplated merger between Johnson & Johnson and Cordis Corporation; (d) immediately upon either parties' cessation to function as a going concern; (e) immediately upon either parties' dissolution, liquidation, insolvency, bankruptcy, assignment for the benefit of creditors or admission in writing of its inability to pay its debts as they mature. * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 4. 5 4.3. Obligations upon Termination or Expiration: Upon the expiration or termination of this Agreement, Cordis shall have no obligation to EndoSonics except with respect to amounts incurred by EndoSonics in the performance of its obligations under this Agreement prior to such expiration or termination. Notwithstanding anything contained herein, Cordis shall not be responsible for any costs incurred by EndoSonics that exceed budgeted amounts unless EndoSonics obtains Cordis' written consent prior to incurring overruns. 5. SECTION 5; PROPRIETARY RIGHTS Except as expressly agreed in writing between the parties, all proprietary rights, title, and interest (including all patent rights, copyrights, trade secret rights and other intellectual property rights throughout the world ("Proprietary Rights")) with respect to the Product, including, but not limited to, all inventions (whether or not patentable), know-how, discoveries, ideas and improvements thereof, which are (a) developed or conceived solely by employees of Cordis as a result of this work performed hereunder shall be owned by Cordis; (b) developed or conceived solely by employees of EndoSonics as a result of the work performed hereunder shall be owned by EndoSonics; (e) inseparably contributed, by employees of both parties shall be jointly owned by EndoSonics and Cordis. 6. SECTION 6: REPRESENTATIONS AND WARRANTIES OF ENDOSONICS EndoSonics hereby represents and warrants to Cordis that: (a) it has the power to execute, deliver and perform the terms and conditions of this Agreement and has taken all the necessary action to authorize the execution, delivery and performance hereof; (b) the execution, delivery and performance of this Agreement will not contravene any provision of any law, statute, rule, regulation or policy of any local, state or governmental authority of which it is actually aware; (c) the execution, delivery and performance of this Agreement will not constitute a violation of, be in conflict with, or result in, breach of any agreement or contract to which it is a party or to which it is bound; (d) this Agreement constitutes a legal, valid and binding agreement of EndoSonics and is enforceable in accordance with its terms and conditions except as such enforcement may be limited by general principles of bankruptcy, insolvency or other similar laws affecting, (a) creditors' rights generally; or (b) the regulation of competition or franchise; (e) it shall comply with all applicable laws, regulations, ordinances, statutes, decrees, or proclamations of all governmental authorities, of which it is actually 5. 6 aware, including, without limitation, the regulatory authorities having jurisdiction over the Product, EndoSonics and the Territory; (f) EXCEPT AS SET FORTH IN THIS SECTION 6, ENDOSONICS MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AND EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE PRODUCT OR THE PERFORMANCE OR NON- INFRINGEMENT THEREOF. ENDOSONICS HAS NOT AUTHORIZED ANYONE TO MAKE ANY REPRESENTATION OR WARRANTY OTHER THAN AS PROVIDED ABOVE. 7. SECTION 7: REPRESENTATIONS AND WARRANTIES OF CORDIS: Cordis hereby represents and warrants to EndoSonics that: (a) it has the power to execute, deliver and perform the terms and conditions of this Agreement and has taken all the necessary action to authorize the execution, delivery and performance hereof; (b) the execution, delivery and performance of this Agreement will not contravene any provision of any law, statute, rule, regulation or policy of any local, state or governmental authority of which it is actually aware; (c) the execution, delivery and performance of this Agreement will not constitute a violation of, be in conflict with, or result in, breach of any agreement or contract to which it is a party or to which it is bound; (d) this Agreement constitutes a legal, valid and binding agreement of Cordis and is enforceable in accordance with its terms and conditions except as such enforcement may be limited by general principles of bankruptcy, insolvency or other similar laws affecting; (a) creditors' rights generally; or (b) a regulation of competition or franchises; (e) it shall comply with all applicable laws, regulations, ordinances, statutes, or proclamations of all governmental authorities of which it is actually aware including, without limitation, the regulatory authorities having jurisdiction over the Product, Cordis and the Territory. (f) EXCEPT AS SET FORTH IN THIS SECTION 7, CORDIS MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AND EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE PRODUCT OR THE PERFORMANCE OR NON-INFRINGEMENT THEREOF. CORDIS HAS NOT AUTHORIZED ANYONE TO MAKE ANY REPRESENTATION OR WARRANTY OTHER THAN AS PROVIDED ABOVE. 6. 7 8. SECTION 8: CONFIDENTIALITY During the Term it is anticipated that the parties shall disclose to each other confidential or proprietary information, including but not limited to trade secrets, know-how, documentation, pre-clinical and clinical data, product development plans, specifications, forecasts, customer information, notes, reports, models, and samples ("Confidential Information"). Only such information that is marked or labeled by a party as "Confidential Information" shall be considered Confidential Information. If a party orally transmits information that it deems to be of a confidential nature, such party shall, within thirty (30) days from the transmittal thereof, summarize such information in a written form and mark such information "Confidential" and provide a copy of such writing to the other party. The duty of confidentiality set forth herein shall not apply to information that: (a) is, at the time of disclosure, in the public domain and generally available; (b) after disclosure, enters the public domain except where such entry is a direct result of a breach of this Agreement; (c) prior to disclosure, was already known to the party receiving such information, as evidenced by its written records; (d) subsequent to disclosure, is obtained from a third party in possession of such information and not under a contractual or fiduciary obligation to keep such information in confidence; (e) is developed by the receiving party in the course of work entirely independent of any disclosure hereunder by employees without access or use of the disclosing party's Confidential Information and such development can be documented to the reasonable satisfaction of the other party hereto; (f) is filed with any governmental or regulatory authority to the extent required or desirable to secure governmental or regulatory approval for marketing of the Product (provided the receiving party shall first notify the disclosing party of the extent of the proposed disclosure and seek to limit disclosure and to obtain confidential treatment) and (g) is provided to pre-clinical and clinical investigators where necessary or desirable for their information to the extent normal and usual in the custom of the trade and under a confidentiality agreement with essentially the same confidentiality provisions contained in this Section 8; (h) is disclosed pursuant to any judicial or governmental requirement or order. Except as expressly allowed herein, the receiving party shall hold in confidence and not use or disclose any Confidential Information of the disclosing party and shall similarly bind its employees in writing. All Confidential Information heretofore disclosed in writing by either party, including any Confidential Information which may be exchanged between the parties during the term of this Agreement, shall be deemed to have been disclosed under this Agreement and shall be subject to the provisions of this Section 8. 7. 8 9. SECTION 9: INDEMNIFICATION 9.1. Indemnification by Cordis: Except with respect to any of the following that arises from gross negligence or willful misconduct of EndoSonics or its agents and subject to Section 9.3 Cordis shall indemnify, defend and hold harmless EndoSonics, its directors, officers, employees, representatives and agents from and against any and all claims, suits, losses, damages, costs, fees and expenses incurred by EndoSonics (including reasonable attorney's fees), and other liabilities asserted by parties, both governmental and nongovernmental, resulting from or arising out of (a) any misrepresentation of Cordis contained herein or breach of any warranty made by Cordis; (b) any breach, violation or non-performance of any covenant, condition or agreement in this Agreement by Cordis; and (c) the material inaccuracy of any representation of the Product made by Cordis. 9.2 Indemnification by EndoSonics: Except with respect to any of the following that arises from the gross negligence or willful misconduct of Cordis or its agents and subject to Section 9.3, EndoSonics shall indemnify, defend and hold harmless Cordis, its directors, officers, employees, representatives and agents from and against any and all claims, suits, losses, damages, costs, fees and expenses (including reasonable attorneys' fees), and other liabilities asserted by third parties, both governmental and nongovernmental, resulting from or arising out of (a) any misrepresentation of EndoSonics contained herein or breach of any warranty made by EndoSonics, (b) any breach, violation or nonperformance of any covenant, condition or agreement in this Agreement by EndoSonics, (c) the material inaccuracy of any representation of the Product made by EndoSonics. 9.3 Limitations to Indemnify: The indemnities of Sections 9.1 and 9.2 shall not apply (a) if the indemnified party fails to give the indemnifying party prompt notice of any claim it receives and such failure materially prejudices the indemnifying party, or (b) unless the indemnifying party is given the opportunity to approve any settlement. Furthermore, the indemnifying party shall not be liable for attorneys' fees or expenses of litigation of the indemnified party unless the indemnified party gives the indemnifying party the opportunity to assume control of the defense or settlement. In addition, if the indemnifying party assumes such control, it shall only be responsible for the legal fees and litigation expenses of the attorneys it designates to assume control of the litigation. In no event shall the indemnifying party assume control of the defense of the indemnified party without the consent of the indemnified party (which consent shall be given or not at its sole discretion). 8. 9 10. SECTION 10: MISCELLANEOUS 10.1 Relationship of Parties: The relationship of Cordis to EndoSonics hereunder shall be solely that of an independent contractor. Cordis and EndoSonics each acknowledge and agree that neither Cordis nor EndoSonics is an employee, employer, agent, partner, or joint venturer of the other. Neither Cordis nor EndoSonics shall have or hold itself as having the right or authority to assume or create any obligation or responsibility, whether express or implied, on behalf of or in the name of the other, except with the express written authority of the other. 10.2 Notices: All notices, requests, demands and other communications required or permitted to be given hereunder shall be in writing, shall be deemed to have been duty given when delivered in person, or when sent by telex or telecopy or other facsimile transmission (with the receipt confirmed), or on the fifth business day after posting thereof be registered or certified mail, return receipt requested, prepaid and addressed as follows (or such other address as the parties may designate by written notice in the manner of aforesaid): If to Cordis: Cordis Corporation 14201 N.W. 60th Avenue Miami Lakes, Florida 33014 USA Attention: A.J. Novak Vice President and CFO Telephone: (305) 824-2357 Facsimile: (305) 824-2440 If to EndoSonics: EndoSonics Corporation 6616 Owens Drive Pleasanton, California 94588 USA Attention: R. Warnking President & CEO Telephone: (510) 734-0464 Telefax: (510) 734-0465 10.3 Governing Law: This Agreement shall be governed by and construed in all respects in accordance with the laws of the State of Florida (except that the United States federal law will govern copyright and trademark matters). 9. 10 10.4 Non-Assignment: This Agreement may not be assigned by either party without the prior written consent of the other party. 10.5 Entire Agreement: This Agreement sets forth the entire understanding of the parties with respect to the subject matter hereof. This Agreement supersedes all prior representations, agreements and understandings among the parties with respect to such subject matter. 10.6 Remedies Cumulative: The rights, powers and remedies set forth herein are cumulative and shall be in addition to any and all other rights, powers and remedies provided by law. The exercise of any right or remedy hereunder shall not in any way constitute a cure under this Agreement, or prejudice either party in the exercise of any of its rights under this Agreement or law. 10.7 Attorneys' Fees: If litigation between the parties arises out of or relates to this Agreement, the prevailing party of any such litigation shall, for as long as allowed by the law and jurisdiction ruling the litigation, be entitled to recover from the other party its reasonable attorneys' and legal assistants' fees and other costs incurred in such litigation (including appellate litigation). 10.8 Amendment: No changes or amendments or alterations shall be effective unless in writing and signed by all parties hereto. 10.9 Waiver: No waiver of any default in the performance of any of the duties or obligations arising out of this Agreement shall be valid unless in writing and signed by the waiving party. Waiver of any one default shall not constitute or be construed as creating waiver of any other default or defaults. No course of dealing between the parties shall operate as a waiver or preclude the exercise of any rights or remedies under this Agreement. Failure on the part of either party to object to any act or failure to act of the other party, or declare the other party in default, regardless of the extent of such default, shall not constitute a waiver by the party of its rights hereunder. 10.10 Severability: If any provision of this Agreement shall be held to be unenforceable in whole or in part, then the invalidity of such provision shall not be held to invalidate any other provision herein and all other provisions shall remain in full force and effect. 10.11 Force Majeure: 10. 11 No delay or failure of EndoSonics or Cordis to perform any of their respective obligations under this Agreement shall be considered a breach of this Agreement if it results from any cause beyond the control of EndoSonics or Cordis, as the case may be, including, without limitation, any act of God, earthquake, hurricane, fire, flood, strike, lockout or other dispute, natural catastrophe, severe weather or public emergency, insurrection, riot, war, transportation shortage, or actions of governmental authorities. 10.12 Survival of Sections: The obligations set forth in Sections 4.3, 5, 7, 8 and 9 shall survive the termination of this Agreement. 10.13 Counterparts: This Agreement may be executed in one or more counterparts, including facsimile counterparts, each of which shall be deemed an original and all which together shall constitute one and the same agreement. 10.14 Captions: The captions contained in this Agreement are inserted only as a matter of convenience and in no way define, limit or extend the scope or intent of this Agreement or any provision hereof. 10.15 LIMITATION OF LIABILITY: NEITHER PARTY SHALL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT UNDER ANY LEGAL OR EQUITABLE THEORY FOR (I) ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES. (II) COST OF PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY OR SERVICES OR (III) FOR ANY MATTER BEYOND ITS REASONABLE CONTROL. 11. 12 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. EndoSonics Corporation R. Warnking By: /s/ R. Warnking Title: President and Chief Executive Officer Cordis Corporation A.J. Novak By: /s/ A.J. Novak Title: Vice President and Chief Financial Officer 12. 13 * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. EXHIBIT A INITIAL SPECIFICATION PHASE It is understood between the parties that the key objective of the Agreement is the further development and marketing of advanced, cost-effective imaging/therapy combination devices for optimal stent delivery and improved angioplasty procedures, through integration of EndoSonics' and Cordis' proprietary knowledge and know-how. During the Initial Specification Phase, EndoSonics and Cordis shall agree how this key objective is best accomplished and shall jointly define: (a) Product and marketing specifications, including but not limited to physical characteristics, functional capabilities, image quality, acoustic capabilities, therapeutic capabilities, biocompatibility, sterilization specifications and shelf life. (b) Product cost targets. (c) Phased project schedule, milestones to be reached, means to measure achievement of milestones, and funding required for each phase. (d) Methodology to ensure that Product specifications are met at milestone completion dates. (e) Regulatory standards to be met. (f) Clinical trial and validation requirements. (g) Critical success factors of the project, and how they will be managed. (h) Development risks and how they will be managed. (i) Resources and staffing required to complete the Development Plan. 13. EX-10.24 3 EXCLUSIVE DISTRIBUTION AGREEMENT DATED 02/02/96 1 Exhibit 10.24 * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. EXCLUSIVE DISTRIBUTION AGREEMENT This Exclusive Distribution Agreement is made this 2nd day of February 1966 by and between Cordis Corporation, a Florida corporation doing business at 14201 N.W. 60th Avenue, Miami Lakes, FL 33014, USA ("Cordis") and EndoSonics Corporation, a Delaware corporation doing business at 6616 Owens Drive, Pleasanton, CA, USA ("EndoSonics"). WITNESSETH: WHEREAS, Cordis and EndoSonics entered into a formal Distribution Agreement on the 29th day of August, 1994 that was followed by an Agreement to Amend on July 20, 1995; WHEREAS, Cordis S.A. (Belgium) and EndoSonics Nederland B.V., a wholly owned subsidiary of EndoSonics, entered into a formal Exclusive Distribution Agreement on the first day of November, 1994 that was followed by an Agreement to Amend on December 20, 1994 and a Second Agreement to Amend on the first day of June, 1995; WHEREAS, Cordis, Cordis S.A. (Belgium), and EndoSonics, EndoSonics Nederland B.V, mutually desire to extend their business relationships, replacing said agreements by this Agreement between Cordis and EndoSonics; NOW THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. SECTION 1: DEFINITIONS As used herein the following terms when used in their capitalized form shall have the following meanings (such meanings shall be equally applicable to both the singular and the plural forms of each term): 1.1. "Act" shall mean any act, statute, or regulation of any kind governing the products in the Territory or part of the Territory, including the United States Federal Food, Drug and Cosmetic Act (21 U.S.C. Sections 301-392 (1993)). 1.2. "Agreement" shall mean this Exclusive Distribution Agreement, as amended, modified, or supplemented from time to time. 1.3. "Confidential Information" shall have the meaning provided in Section 20 hereof. 1.4. "Delivery Schedule" shall have the meaning provided in Section 6 hereof. 1.5. "Disclosure Letter" shall have the meaning provided in Section 2.1 hereof. 1.6. "Dollars" or "$" shall mean United States Dollars. 1.7. "GMPs" shall mean the good manufacturing practices for medical devices set forth by any Act governing the products in the Territory or part of the Territory, including United States 21 C.F.R. Section 820 (1993). 1.8. "Minimum Purchase Amount" shall have the meaning provided in Section 5 hereof. 2 1.9. "Person" shall mean any individual, partnership, corporation, trust or other entity. 1.10. "Products" shall mean the products as defined in Exhibit A. 1.11. "Records" shall have the meaning provided in Section 8 hereof. 1.12. "Renewal Term" shall have the meaning provided in Section 3.1 hereof. 1.13. "System" shall mean any of the systems as defined In Exhibit A. 1.14. "Term" shall have the meaning provided in Section 3.1 hereof. 1.15. "Territory" shall mean the geographical territory of North America, Europe, the Middle East and Africa as further defined in Exhibit E and explained in Section 2 hereof. 1.16. "Trademarks" shall mean each trademark, trade name, service marks, the name "EndoSonics" or any derivation thereof, brand names, signs, symbols or slogans now or hereafter used by EndoSonics in connection with the Products. 2. SECTION 2: APPOINTMENT; TERMINATION OF EXISTING DISTRIBUTORS; AMENDMENT OF TERRITORY; RELATIONSHIP OF PARTIES 2.1 Appointment: EndoSonics hereby appoints Cordis as its exclusive distributor of the Products in the Territory, except in those geographic areas where EndoSonics currently has distributor relationships as disclosed in the disclosure letter incorporated as Exhibit F ("Disclosure Letter"). Cordis hereby accepts such appointment. Upon termination or expiration of the distributor relationships disclosed in the Disclosure Letter, as set forth in Section 2.2 below, Cordis shall have the exclusive right within the Territory to obtain Products from EndoSonics hereunder and to market and distribute the Products. Cordis shall not distribute or otherwise promote the Products in any way in the geographic areas where EndoSonics has current distributor relationships, disclosed in the Disclosure Letter, without the prior written authorization of EndoSonics. Subject to the terms and conditions of this Agreement, during the Term and each Renewal Term, if any, EndoSonics shall not appoint any other distributor, sales agent or other representative with responsibility for the sale, distribution or marketing of the Products in the Territory. During the Term and each Renewal Term, if any, Cordis shall not sell or commercially promote in the Territory products that compete with Products, nor shall Cordis represent, or provide either directly or indirectly marketing services to, any manufacturer or distributor in the Territory, that relate to such competing products. 2. 3 2.2 Termination of Existing Distributors: EndoSonics shall, in consultation with Cordis, use its best efforts to efficiently and effectively terminate the business relationships and/or contractual obligations with its current distributors other than Cordis, or Cordis-appointed distributors, pursuant to the Disclosure Letter. To the extent that such termination would involve a breach of contract with EndoSonics' current distributors, EndoSonics and Cordis shall negotiate in good faith the sharing of cost, if any, incurred by EndoSonics in terminating such contractual obligations. 2.3 Relationship of Parties: The relationship of Cordis to EndoSonics hereunder shall be solely that of an independent contractor. Cordis and EndoSonics each acknowledge and agree that neither Cordis nor EndoSonics is an employee, employer, agent, partner, or joint venturer of the other. Neither Cordis nor EndoSonics shall have or hold itself as having the right or authority to assume or create any obligation or responsibility, whether express or implied, on behalf of or in the name of the other, except with the express written authorization of the other. 3. SECTION 3: TERM - TERMINATION 3.1. Term: The term ("Term") of this Agreement shall commence on January 1, 1996, and, unless terminated sooner pursuant to the provisions of Section 3.2, shall terminate on December 31, 1998; provided, however, that this Agreement may be extended for successive one-year periods (each such period, a "Renewal Term") upon the mutual written consent of the parties. 3.1 Termination of Agreement: This Agreement shall terminate upon the happening of any of the following events: (a) either party's failure to cure the breach of any material term, covenant, or condition of this Agreement within 30 days after the breaching party receives notice of such breach; (b) immediately upon written notice to one party upon the change in the structure or organization of the other party including, without limitation, the acquisition or merger of the other party, except for the contemplated merger between Johnson & Johnson and Cordis Corporation; (c) immediately upon written notice upon either party's cessation to function as a going concern; or (d) immediately upon written notice upon either party's dissolution, liquidation, insolvency, bankruptcy, assignment for the benefit of creditors or admission in writing of its inability to pay its debts as they mature. 3. 4 3.3. Obligations upon Termination or Expiration: If this Agreement is terminated by Cordis, pursuant to Section 3.2, Cordis shall have no further obligation to EndoSonics except with respect to payment for Products accepted by Cordis or shipped by EndoSonics prior to such termination, provided the sale of such Products is not restricted by a regulatory authority having jurisdiction over the Products. Upon complete termination or expiration of this Agreement, all rights granted by EndoSonics to Cordis shall cease immediately, except that Cordis may sell, market or distribute any Products for a period of [*] following such termination for which it has paid the full purchase price after such termination or expiration. If Cordis has not sold, marketed or distributed its remaining inventory of the Products at the expiration of such [*] period, EndoSonics may extend such [*] period for an additional [*]. If EndoSonics refuses to extend such [*] period, EndoSonics shall purchase all of Cordis' remaining inventory of the Products that are in new and unused condition at Cordis' purchase price; provided, however, that EndoSonics shall only be required to pay Cordis fair market value for any Products having an expired sterilization or expiration date. If Cordis terminates this Agreement pursuant to Section 3.2, or if EndoSonics terminates this Agreement [*]. Additionally, Cordis' maximum liability under this Agreement shall be limited to [*]. 4. SECTION 4: PRICE; PAYMENT TO CORDIS; PAYMENT TO EndoSonics; ORDERS 4.1. Price: EndoSonics shall sell the Products to Cordis at prices and conditions set forth in Exhibit A. During the Term, EndoSonics and Cordis shall jointly review Products and prices every 6 months. 4.Z Payment to Cordis: In the event EndoSonics ships Products directly to Cordis' customers in the Territory, invoices such customers and receives full payment therefor, EndoSonics shall pay Cordis an amount equal to [*] less the sum of (a) [*] and (b) [*]. 4.3. Payment to EndoSonics: EndoSonics shall invoice Cordis for all Products purchased by Cordis and Cordis shall pay EndoSonics within [*] from the date of receipt of each such invoice. No part of any amount payable to EndoSonics hereunder may be reduced due to any counterclaim, set-off, adjustment or other right which Cordis might have against EndoSonics, any other party or otherwise. * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 4. 5 4.4. Orders: All orders for Products submitted by Cordis shall be initiated by a written Cordis purchase order. Such purchase orders may set forth a delivery date, shipping schedules, destination and other instructions. Shipping schedules specified in any purchase order shall be binding on EndoSonics unless EndoSonics objects in writing within 5 days of the receipt of such purchase order. All North America orders for Products shall be placed with EndoSonics Corporation, USA. All Europe, Middle East and Africa orders for Products shall be placed with EndoSonics Europe B.V., The Netherlands. Notwithstanding anything to the contrary, Cordis shall have no right to cancel purchase orders accepted by EndoSonics except if the Agreement is terminated pursuant to Section 3.2(b)-(e), or to the extent the sale of the Products is restricted by a regulatory authority having jurisdiction over the Products, in which case Cordis shall be proportionally excused from the Minimum Purchase Amount obligations under Section 5. At Cordis' request, EndoSonics shall ship the Products directly to Cordis' customers. In such case EndoSonics will invoice Cordis for any applicable freight, handling, insurance, customs duties, taxes and related charges. EndoSonics may, upon the written approval of Cordis, make deliveries of shipments in installments or at times different than those stated in purchase orders corresponding to shipped Products. Such partial shipments shall be billed upon shipment by EndoSonics. Unless Cordis requests otherwise, all Products ordered by Cordis shall be packed for shipment and storage in accordance with EndoSonics' standard commercial practices. It is Cordis' obligation to notify EndoSonics of any special packaging requirements (which shall be at Cordis' expense). EndoSonics shall use best commercial efforts to deliver Products no later than the date specified for such delivery on the relevant purchase order for such Products and no earlier than the date ten days prior to such specified date. Risk of loss and damage to a product shall pass to Cordis upon delivery of such Products to a carrier of EndoSonics' choice. In the event of any discrepancy between any term of any purchase order and this Agreement, the terms of this Agreement shall govern. 5. SECTION 5: MINIMUM PURCHASE AMOUNT During the Term, Cordis shall use reasonable efforts to purchase Products for minimum annual purchase amounts (the "Minimum Purchase Amount") as set forth in Exhibit B. For the purposes of this provision, a "purchase" of Products within the time periods as stipulated in Exhibit B shall mean EndoSonics' shipment of such Products on or before the last day of each of such time periods. Cordis' failure to meet the Minimum Purchase Amount for any calendar year shall constitute a material breach and basis for termination of this Agreement under Section 3. If EndoSonics fails to make Products resulting from its "Pinnacle" development program commercially available to Cordis by April 30, 1996, Cordis shall be proportionally excused from meeting the Minimum Purchase Amount. 5. 6 6. SECTION 6: DELIVERY SCHEDULE Upon execution of this Agreement, Cordis shall provide EndoSonics with a six-month rolling forecast which includes a two-month binding delivery schedule (the "Delivery Schedule"). The rolling forecast shall be updated monthly by Cordis. Unless otherwise agreed between parties or stipulated on a binding purchase order, EndoSonics shall use best commercial efforts to deliver the Products (a) within 3 months of the placement of a purchase order by Cordis in the event such order was not part of the Delivery Schedule (b) within 2 months of the placement of a purchase order by Cordis in the event such order was part of the Delivery Schedule. If EndoSonics is not able to deliver the Products as mentioned above, nor to respect other delivery dates specifically agreed to or binding between the parties, Cordis shall then have the option to cancel the order and be proportionally excused from the Minimum Purchase Amount obligations under Section 5. The repeated failure by EndoSonics to deliver Products as set forth above shall be considered a material breach of this Agreement and, at Cordis' option, a basis for termination pursuant to Section 3.2(a). 7. SECTION 7: ADVERTISING Cordis shall initiate promotions and advertisements to market the Products in the Territory. All costs associated with any such activities shall be borne by Cordis. EndoSonics shall, on an ongoing basis, provide to Cordis all designs, artwork, commercial and technical data and informational material created by EndoSonics in connection with the Products to facilitate the production of promotional and advertising materials by Cordis. 8. SECTION 8: MAINTENANCE OF RECORDS Cordis and EndoSonics shall, in compliance with applicable law, including GMPs, maintain accurate records (the "Records") regarding the Products including, without limitation, records of direct sales of products to third parties, lot numbers, serial numbers, and other manufacturing documentation necessary to ensure traceability of Products. The Parties shall retain the Records pursuant to the GMPs and applicable law. 9. SECTION 9: TRADEMARKS AND PROTECTION OF PROPRIETARY RIGHTS 9.1. Registration of Trademarks: EndoSonics shall, at its expense, use reasonable efforts to protect and maintain all registrations, filings and issuance of its Trademarks in full force and effect. 9.2. Title: The proprietary rights of EndoSonics in and to the Products and any items related thereto are protected by the law of copyright, trademark, trade secrets and unfair competition. Cordis shall have no proprietary interest whatsoever in the Trademarks. 6. 7 9.3. Notification of Infringement: Cordis shall promptly notify EndoSonics of any infringement, of which Cordis has knowledge, of the proprietary rights of EndoSonics in and to the Products or the Trademarks in the Territory and shall cooperate with EndoSonics in any action by EndoSonics to investigate or remedy any such infringement. All costs and expenses of investigating and remedying any such infringement shall be borne by EndoSonics. 9.4. Use of Trademarks and Software License: EndoSonics hereby grants to Cordis a non-exclusive license to use the Trademarks for the purpose of identifying and marketing the Products in the Territory. Any use of the Trademarks will be in accordance with such instructions as EndoSonics may give Cordis from time to time. Upon the expiration or earlier termination of this Agreement, the non-exclusive license granted hereunder to Cordis shall expire and Cordis shall immediately cease using the Trademarks; provided, however, that Cordis may continue to use such Trademarks to market, distribute or sell any inventory of the Products in Cordis' possession at the time of such expiration or termination as permitted pursuant to section 3.3. Except for its affiliated companies, distributors and agents, Cordis shall not grant any sublicenses to use the Trademarks to any Person, agent or other party without the prior written consent of EndoSonics in each instance. For each System sold, EndoSonics is licensing Cordis and its end customer with a one-time paid in full perpetual license to use the EndoSonics software, related updates and later releases on the specific System sold. 9.5. Quality Control: In order to comply with EndoSonics' quality control standards, Cordis shall (a) use the Trademarks in compliance with all relevant laws and regulations in the Territory; (b) accord EndoSonics, after previous written request, the right to inspect all marketing and promotional materials in Cordis' possession containing the Trademarks in order to confirm that Cordis' use of such Trademarks is in compliance with this Agreement; and (c) not modify any of the Trademarks in any way and not use any of the Trademarks on any goods or services other than the Products or in connection therewith. In the event EndoSonics has a good faith and substantial reason to believe that Cordis is not complying with this provision, EndoSonics may, within 30 days of a written notification to Cordis stating and justifying the reasons, suspend Cordis' right to use the Trademarks until such time as Cordis gives EndoSonics adequate assurances that it has taken corrective measures and that it will thereafter comply with this provision. 9.6. Cordis Trademarks: EndoSonics shall not, without the prior written consent of Cordis in each instance, use in any manner whatsoever, Cordis' name, its trademarks, logos, symbols or other images of Cordis or of any party affiliated therewith. 7. 8 10. SECTION 10: MEETINGS; EXHIBITS 10.1. Training Meetings: Cordis shall periodically make arrangements for EndoSonics' representatives to conduct training meetings with Cordis' sales force in the various countries of the Territory. EndoSonics and Cordis shall mutually agree on the date, time and location of such meetings and on the apportionment of the costs of such meetings. 10.2. Exhibits: Cordis and EndoSonics shall cooperate and assist each other in the presentation and exhibition of Products on symposia, conventions and such other professional gatherings as the parties shall mutually choose. 11. SECTION 11: REPRESENTATIONS AND WARRANTIES OF CORDIS Cordis represents and warrants to EndoSonics that as of the date hereof and at all times during the period of this Agreement: (a) it has the power to execute, deliver and perform the terms and conditions of this Agreement and has taken all the necessary action to authorize the execution, delivery and performance hereof; (b) the execution, delivery and performance of this Agreement will not contravene any provision of any law, statute, rule, regulation or policy of any local, state or governmental authority of which it is actually aware; (c) the execution, delivery and performance of this Agreement will not constitute a violation of, be in conflict with, or result in, breach of any agreement or contract to which it is a party or to which it is bound; (d) this Agreement constitutes a legal, valid and binding agreement of Cordis and is enforceable in accordance with its terms and conditions except as such enforcement may be limited by general principles of bankruptcy, insolvency or other similar laws affecting, (a) creditors' rights generally; or (b) a regulation of competition or franchises; (e) it shall comply with all applicable laws, regulations, ordinances, statutes, decrees, or proclamations of all governmental authorities of which it is actually aware including, without limitation, the regulatory authorities having jurisdiction over the Products, Cordis and the Territory; (f) it shall not modify or alter any of the Products or the Trademarks or add to or remove any items from the Products or to or from the containers or packages in which the Products are packaged without receiving EndoSonics' prior consent; (g) it shall not make any additional warranties or any false claims regarding the features, operations or marketing of the Products; and (h) it shall not employ deceptive or illegal practices in marketing, advertising or selling the Products. 8. 9 12. SECTION 12: REPRESENTATIONS AND WARRANTIES OF EndoSonics EndoSonics hereby represents and warrants to Cordis that: (a) EndoSonics has the power to execute, deliver and perform the terms and conditions of this Agreement and has taken all the necessary action to authorize the execution, delivery and performance hereof; (b) the execution, delivery and performance of this Agreement will not contravene any provision of any law, statute, rule, regulation or policy of any local, state or governmental authority of which it is actually aware; (c) the execution, delivery and performance of this Agreement will not constitute a violation of, be in conflict with, or result in, breach of any agreement or contract to which it is a party or to which it is bound, except as provided in the disclosure letter incorporated as Exhibit E; (d) this Agreement constitutes a legal, valid and binding agreement of EndoSonics and is enforceable in accordance with its terms and conditions except as such enforcement may be limited by general principles of bankruptcy, insolvency or other similar laws affecting, (a) creditors' rights generally; or (b) the regulation of competition or franchise; (e) it shall comply with all applicable laws, regulations, ordinances, statutes, decrees, or proclamations of all governmental authorities, of which it is actually aware, including, without limitation, the regulatory authorities having jurisdiction over the Products, EndoSonics and the Territory and the Products sold to Cordis; (f) the Products shall be manufactured in accordance with GMPs and the Act; (g) when tendered to Cordis, the Products shall be free from material defects in manufacture, workmanship and materials, and shall be in compliance with EndoSonics' design, manufacturing, packaging, labeling and sterilization specifications; and (h) EXCEPT FOR THE WARRANTIES MADE IN THIS SECTION 12 AND SECTION 13 AND THE WARRANTY MADE DIRECTLY TO PURCHASERS OF THE SYSTEM PURSUANT TO SECTION 16 HEREOF, EndoSonics DOES NOT WARRANT THE MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE PRODUCTS OR THE PERFORMANCE THEREOF, DOES NOT MAKE ANY WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO PRODUCTS, SPECIFICATIONS, SUPPORT, SERVICE OR ANYTHING ELSE AND DOES NOT MAKE ANY WARRANTY TO CORDIS' CUSTOMERS OR AGENTS. EndoSonics HAS NOT AUTHORIZED ANYONE TO MAKE ANY REPRESENTATION OR WARRANTY OTHER THAN AS PROVIDED ABOVE. 9. 10 13. SECTION 13: GUARANTY OF ENDOSONICS The articles comprising each shipment of the Products or other deliveries hereafter made by EndoSonics to, or in the order of Cordis, are hereby guaranteed at the time of such tender to not be Adulterated or Misbranded (as such terms are used within the meaning of the Act), or, an article which may not, under the provisions of Sections 404, 505 or 512 of the Act, be introduced into interstate commerce in the United States of America. 14. SECTION 14: ADDITIONAL OBLIGATIONS OF CORDIS 14.1. Marketing, Promotion, Distribution and Sale of the Products: Cordis shall provide adequate personnel and facilities, and maintain sufficient inventory of Products for demonstration purposes, necessary to perform its obligations hereunder. Within 30 days prior to the beginning of each calendar year, upon EndoSonics' request, Cordis shall prepare and submit to EndoSonics an outline of Cordis' marketing plan for such calendar year. 14.2. Marketing Managers: Cordis shall appoint a United States and a European intracoronary ultrasound marketing manager to interface with EndoSonics' United States and European clinical and support staff. 14.3. Product Recalls: In the event of any recall of the Products, either voluntary or otherwise, Cordis' responsibility shall be limited to cooperating and assisting EndoSonics in locating and retrieving such recalled Products, as requested by EndoSonics and at EndoSonics' expense. 14.4. Complaints and Returns: Cordis shall, as soon as reasonably practicable, notify, document and forward to EndoSonics all customer complaints and any Products returned in connection therewith. EndoSonics shall respond to Cordis within ten business days of receipt of a complaint and Cordis shall report EndoSonics' findings to customers, if applicable. EndoSonics shall work diligently to resolve all customer complaints. 15. SECTION 15: ADDITIONAL OBLIGATIONS OF ENDOSONICS 15.1. Supply of Product: EndoSonics shall supply Cordis' requirements for the Products in the Territory consistent with the delivery Schedule and the Minimum Purchase Amount. 15.2. Registration Support: EndoSonics shall assist Cordis in registering the Products in the Territory by providing Cordis with: 10. 11 (a) materials in EndoSonics' possession necessary to obtain health registrations and marketing approvals, licenses and permits; (b) certificates of analysis, export and compliance; (c) trademark authorizations; and (d) such other information as Cordis shall reasonably request from time to time. 15.3. Assistance: Upon execution of this Agreement EndoSonics shall, during the Term and each Renewal Term, if any: (a) deliver to Cordis all customer leads and inquiries in the Territory received in connection with the Products. Similarly, Cordis shall promptly refer any order for delivery of Products outside the Territory to EndoSonics; (b) provide reasonable assistance to Cordis in soliciting and consummating sales of the Products in the Territory. 15.4. Regulatory Reporting and Analysis of returned Products: EndoSonics shall file, or cause to be filed, all reports required of a manufacturer pursuant to the applicable medical device reporting regulations. EndoSonics, as the manufacturer of the Products, shall perform all failure analysis on the Products within 30 days of receipt of each failed product and shall file all reports required with the applicable regulatory agency. EndoSonics shall further cooperate with and assist Cordis in submitting all reports that Cordis, as distributor of the products, may be required to file. Cordis shall promptly provide EndoSonics with copies of all such reports. 15.5. Adverse Impact on the Products: Each party shall notify the other party's Regulatory Affairs and Quality Assurance Officer or other designee as soon as reasonably practicable of all actions or anticipated actions by any regulatory authority, that could adversely affect the manufacture, marketing, distribution or sale of the Products. Each party shall promptly provide copies to the other party of all reports, citations, violations, warnings and deficiencies received by such party in connection with the Products. 16. SECTION 16: SERVICE AND MAINTENANCE; INSTALLATION 16.1. Warranty and Service and Maintenance Agreements: EndoSonics shall make available to purchasers of the System its standard one-year warranty and an annual service and maintenance agreement, substantially in the forms set forth in Exhibit C and D, respectively. Such Warranty, service and maintenance for the [*] to the end customer shall be [*]. An annual service and maintenance agreement shall, exclusively through Cordis, be available in the Territory as from the [*] to the end customer. During the Term, Cordis' cost for such an annual service and maintenance agreement shall be $[*]. With respect to the Products, other than the * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 11. 12 System, EndoSonics shall offer purchasers thereof its standard warranty which shall be consistent with warranties offered by manufacturers of similar products and devices. 16.2. Service and Maintenance: As set forth on EndoSonics' maintenance and support program, incorporated as Exhibit D, EndoSonics shall be solely responsible within the Territory for the service, repair and maintenance of all Systems, including dispatching calls and providing Cordis reports from time to time; except that, in such countries where Cordis distributes the System through distributors, at Cordis' option, such distributors shall, during the Term and each Renewal Term, if any, be responsible for servicing, repairing and maintaining the System. In such cases, EndoSonics shall, at its expense, provide training to such distributors regarding the service, repair and maintenance of the System. Upon termination of this Agreement for any reason whatsoever, EndoSonics shall take such steps as are necessary to provide on-going service, repair and maintenance of the systems installed through Cordis to end customers. Cordis or the end customers of Cordis shall bear the cost of all service, repairs and maintenance performed that is not covered under warranty. 16.3. Installation: EndoSonics or an EndoSonics authorized representative shall be responsible within the Territory for the installation of the System with and at the location of the end customer indicated by Cordis and EndoSonics guarantees full installation at its cost and expense within 15 days of a written request for installation by Cordis, except that, in such countries where Cordis distributes the System through distributors, at Cordis' option, such distributors shall, during the Term and each Renewal Term, if any, be responsible for installation of the System. In such cases, EndoSonics shall, at its expense, provide training to such distributors regarding the installation of the System. 17. SECTION 17: INDEMNIFICATION 17.1. Indemnification by Cordis: Except with respect to any of the following that arises from gross negligence or willful misconduct of EndoSonics or its agents and subject to Section 17.3 Cordis shall indemnify, defend and hold harmless EndoSonics, its directors, officers, employees, representatives and agents from and against any and all claims, suits, losses, damages, costs, fees and expenses (including reasonable attorney's fees), and other liabilities asserted by parties, both governmental and nongovernmental, resulting from or arising out of (a) any misrepresentation of Cordis contained herein or breach of any warranty made by Cordis; (b) any breach, violation or nonperformance of any covenant, condition or agreement in this Agreement by Cordis; and (c) the material inaccuracy of any representation or warranty of the Products made by Cordis. 12. 13 17.2 Indemnification by EndoSonics: Except with respect to any of the following that arises from the gross negligence or willful misconduct of Cordis or its agents and subject to Section 17.3, EndoSonics shall indemnify, defend and hold harmless Cordis, its directors, officers, employees, representatives and agents from and against any and all claims, suits, losses, damages, costs, fees and expenses (including reasonable attorneys' fees), and other liabilities asserted by third parties, both governmental and nongovernmental, resulting from or arising out of (a) any misrepresentation of EndoSonics contained herein or breach of any warranty or guaranty made by EndoSonics, (b) any breach, violation or nonperformance of any covenant, condition or agreement in this Agreement by EndoSonics, (c) the design of the Products, (d) any injury to any property or person arising in connection with the design, manufacture, use or application of the Products, (e) any infringement or alleged infringement of the Products on any product, device, method, process, trade name, trademark or patent, and (f) any and all taxes, fees, fines, penalties, assessments, charges, expenses or other governmental levies assessed on the Products which are not attributable to Cordis' acts or omissions. 17.3 Limitations to Indemnify: The indemnities of Sections 17.1 and 17.2 shall not apply (a) if the indemnified party fails to give the indemnifying party prompt notice of any claim it receives and such failure materially prejudices the indemnifying party, or (b) unless the indemnifying party is given the opportunity to approve any settlement. Furthermore, the indemnifying party shall not be liable for attorneys' fees or expenses of litigation of the indemnified party unless the indemnified party gives the indemnifying party the opportunity to assume control of the defense or settlement. In addition, if the indemnifying party assumes such control, it shall only be responsible for the legal fees and litigation expenses of the attorneys it designates to assume control of the litigation. In no event shall the indemnifying party assume control of the defense of the indemnified party without the consent of the indemnified party (which consent shall be given or not at its sole discretion). 18. SECTION 18: INSURANCE EndoSonics shall, during the Term and each Renewal Term, if any, purchase and maintain insurance naming EndoSonics as insured and Cordis as an additional insured, insuring EndoSonics' indemnification obligations set forth herein, except for Section 17.2(e), with such terms and coverages and in such companies satisfactory to Cordis and with such commercially reasonable increases and limits as Cordis may from time to time request, but initially in an amount not less than $[*] per occurrence combined single limit and $[*] in the aggregate, except for product liability insurance which will be in the amount of $[*]. EndoSonics shall furnish to Cordis policies or certificates evidencing such insurance coverage, which policies or certificates shall state that such insurance coverage may not be changed or canceled without at least 10 days prior written notice to Cordis. 19. SECTION 19: INSPECTIONS Cordis, its agents or representatives shall be provided with reasonable access to inspect EndoSonics' manufacturing facilities and manufacturing Records during EndoSonics' regular hours of business upon reasonable prior notice. EndoSonics shall * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 13. 14 cooperate with Cordis' inspectors and shall provide Cordis with copies of all documents reasonably required by Cordis to properly perform such inspections. 20. SECTION 20: CONFIDENTIALITY During the Term and each Renewal Term, if any, it is anticipated that the parties shall disclose to each other confidential or proprietary information ("Confidential Information"). Confidential Information shall include all technology, inventions, designs, processes, formulas, computer software, specifications, customer lists, product development plans, forecasts, and all other business, technical and financial Information provided to the other party. If a party orally transmits information that it deems to be of a confidential nature, such party shall, within 30 days from the transmittal thereof, summarize such information in a written form and mark such information "Confidential" and provide a copy of such writing to the other party. The duty of confidentiality set forth herein shall not apply to information that: (a) is, at the time of disclosure, in the public domain and generally available; (b) after disclosure, enters the public domain except where such entry is a direct result of a breach of this Agreement; (c) prior to disclosure, was already known to the party receiving such information, as evidenced by its written records; (d) subsequent to disclosure, is obtained from a third party in possession of such information and not under a contractual or fiduciary obligation to keep such information in confidence; (e) is filed with any governmental or any regulatory authority and available to the public; or (f) is disclosed pursuant to any judicial or governmental requirement or order. The parties' duty of confidentiality set forth above shall be limited to the Term, each Renewal Term, if any, and 12 months from the expiration thereof. 21. SECTION 21: TAXES 21.1 Cordis shall pay to or reimburse EndoSonics any value-added, sales, use, excise, property or other tax, tariff, duty or assessment levied or imposed by any governmental authority including, without limitation, any country, state, province, city or county, arising out of or related to the transactions contemplated under this Agreement which EndoSonics is at any time obligated to pay, charge or collect as a result of Cordis' sale of the Products (other than any tax based on corporate net income of EndoSonics). 21.2 In the event that any applicable law or treaty requires Cordis to withhold any part of the sale price of the Products and remit such amount to a governmental body as an advance payment of EndoSonics' tax liability, Cordis shall comply with the specific requirements of such law or treaty, and Cordis will do all of the following: 14. 15 (a) notify EndoSonics as soon as reasonably practicable of the assertion by governmental authorities of any such possible requirement; (b) promptly furnish EndoSonics with copies of all documents, assessments, and correspondence between Cordis and any governmental authorities which relate to such requirement; (c) assist EndoSonics in completing any documents required in order for EndoSonics to claim an appropriate credit against applicable taxes, seek a refund of the amount withheld or appeal or contest the assessment or claim; and (d) promptly cease any such withholding immediately upon the expiration, termination or rescission of such requirement. 22. SECTION 22: OBLIGATION TO MAKE PAYMENT IN US DOLLARS All payments to be made by either party hereunder shall be made in US Dollars, or such other currency as the parties may agree upon. In the event another currency is so agreed upon, then the amount to be paid shall be calculated using the New York foreign exchange selling rate for that other currency for the business day preceding the invoice date as published in the Wall Street Journal. Payments may be made via wire transfer upon the concurrence of both parties. 23. SECTION 23: MISCELLANEOUS 23.1 Notices: All notices, requests, demands and other communications required or permitted to be given hereunder shall be in writing, shall be deemed to have been duly given when delivered in person, or when sent by telex or telecopy or other facsimile transmission (with the receipt confirmed), or on the fifth business day after posting thereof by registered or certified mail, return receipt requested, prepaid and addressed as follows (or such other address as the parties may designate by written notice in the manner of aforesaid): If to Cordis: Cordis Corporation 14201 N.W. 60th Avenue Miami Lakes, Florida 33014 USA Attention: A.J. Novak Vice President and CFO Telephone: (305) 824.2357 Facsimile: (305) 824.2440 and Cordis S.A. (Belgium) Waterloo Office Park Dreve Richelle 161 H 1410 Waterloo Belgium 15. 16 Attention: P. Monks Managing Director Telephone: +32-2-352.1472 Facsimile: +32-2-352.1592 If to EndoSonics: EndoSonics Corporation 6616 Owens Drive Pleasanton, California 94588 USA Attention: R. Warnking President and CEO Telephone: (510) 734.0464 Telefax (510) 734.0465 and EndoSonics Europe B.V. Overschieseweg 54 3044 EG Rotterdam The Netherlands Attention: Dr. J.P.C. de Weerd Managing Director Telephone: +31-10-437.5977 Telefax: +31-10-437.5972 23.2. Governing Law: This Agreement shall be governed by and construed in all respects in accordance with the laws of the State of Florida (except that the United States federal law will govern copyright and trademark matters). 23.3. Non-Assignment: This Agreement may not be assigned by either party without the prior written consent of the other party. 23.4 Entire Agreement: This Agreement sets forth the entire understanding of the parties with respect to the subject matter hereof. This Agreement supersedes all prior representations, agreements and understandings among the parties with respect to such subject matter, specifically the formal Distribution Agreement entered into by Cordis and EndoSonics on the 29th day of August 1994, which was followed by an Agreement to Amend on July 20, 1995, and the Exclusive Distribution Agreement entered into by Cordis S.A. (Belgium) and EndoSonics Nederland B.V., a wholly owned subsidiary of EndoSonics, on the first day of November, 1994 that was followed by an Agreement to Amend on December 20, 1994 and a Second Agreement to Amend on the first day of June, 1995, all of which are hereby terminated. 23.5 Remedies Cumulative: 16. 17 The rights, powers and remedies set forth herein are cumulative and shall be in addition to any and all other rights, powers and remedies provided by law. The exercise of any right or remedy hereunder shall not in any way constitute a cure under this Agreement, or prejudice either party in the exercise of any of its rights under this Agreement or law. 23.6 Attorneys' Fees: If litigation between the parties arises out of or relates to this Agreement, the prevailing party of any such litigation shall, for as long as allowed by the law and jurisdiction ruling the litigation, be entitled to recover from the other party its reasonable attorneys' and legal assistants' fees and other costs incurred in such litigation (including appellate litigation). 23.7 Amendment: No changes or amendments or alterations shall be effective unless in writing and signed by all parties hereto. 23.8 Waiver: No waiver of any default in the performance of any of the duties or obligations arising out of this Agreement shall be valid unless in writing and signed by the waiving party. Waiver of any one default shall not constitute or be construed as creating waiver of any other default or defaults. No course of dealing between the parties shall operate as a waiver or preclude the exercise of any rights or remedies under this Agreement. Failure on the part of either party to object to any act or failure to act of the other party, or declare the other party in default, regardless of the extent of such default, shall not constitute a waiver by the party of its rights hereunder. 23.9 Severability: If any provision of this Agreement shall be held to be unenforceable in whole or in part, then the invalidity of such provision shall not be held to invalidate any other provision herein and all other provisions shall remain in full force and effect. 23.10 Force Majeure: No delay or failure of EndoSonics or Cordis to perform any of their respective obligations under this Agreement shall be considered a breach of this Agreement if it results from any cause beyond the control of EndoSonics or Cordis, as the case may be, including, without limitation, any act of God, earthquake, hurricane, fire, flood, strike, lockout or other dispute, natural catastrophe, severe weather or public emergency, insurrection, riot, war, transportation shortage, or actions of governmental authorities. 23.11 Survival of Sections: The obligations set forth in Sections 3.3, 8, 9.2, 9.6, 11, 12, 13, 14.3, 15.4, 15.5, 16.1, 16.2, 17 and 20 through 23 shall survive the termination of this Agreement. 23.12 Counterparts: 17. 18 This Agreement may be executed in one or more counterparts, including facsimile counterparts, each of which shall be deemed an original and all which together shall constitute one and the same agreement. 23.13 Captions: The captions contained in this Agreement are inserted only as a matter of convenience and in no way define, limit or extend the scope or intent of this Agreement or any provision hereof. IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date written above. EndoSonics Corporation R.J. Warnking By: /s/ R.J. Warnking Title: President & CEO Cordis Corporation A.J. Novak By: /s/ A.J. Novak Title: Vice President and CFO 18. 19 EXHIBIT A PRODUCTS AND PRICES 1. US Products and Price list
Description Part number Price [*] S7700471 [*] [*] S7700471i [*] [*] S9200054 [*] [*] [*] [*] C5400700 [*] Catheters Monthly shipping volume by catheter category Price Price Price [*] [*] [*] Visions(R) 3.5F OTW C8804700 [*] [*] [*] Visions(R) F/X C8852700 [*] [*] [*] Visions(R) Five-64(TM) [*] [*] [*] OTW Visions(R) Five-64(TM) [*] [*] [*] F/X Oracle(R)Micro OTW 2.0mm C8805120 [*] [*] [*] 2.5mm C8805125 [*] [*] [*] 3.0mm C8805130 [*] [*] [*] 3.5mm C8805135 [*] [*] [*] Oracle(R)Focus(TM)OTW 2.5mm [*] [*] [*] 3.0mm [*] [*] [*] 3.5mm [*] [*] [*] 4.0mm [*] [*] [*] Oracle(R) MegaSonics(TM) 2.5mm [*] [*] [*] OTW 3.0mm [*] [*] [*] 3.5mm [*] [*] [*] 4.0mm [*] [*] [*]
All US Products sales are F.O.B. Rancho Cordova, California (systems and system options) or Pleasanton, California (catheters). For pricing purposes, catheter categories include Visions(R), Visions(R) Five-64, Oracle(R) Micro, Oracle(R) Focus and Oracle(R) MegaSonics(TM). * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 19. 20 EXHIBIT A -(contd) 2. Europe Products and Price List
Description Part number Price EndoSonics [*] S7700471 [*] [*] S7700471i [*] [*] S9200054 [*] [*] [*] [*] C5400700 [*] Catheters Monthly shipping volume by catheter category Price Price Price [*] [*] [*] Visions(R) 3.5F C8804700 [*] [*] [*] OTW Visions(R) F/X C8852700 [*] [*] [*] Visions(R) Five- [*] [*] [*] 64(TM) OTW Visions(R) Five- [*] [*] [*] 64(TM) F/X Oracle(R) Micro 2.0mm C8805120 [*] [*] [*] OTW 2.5mm C8805125 [*] [*] [*] 3.0mm C8805130 [*] [*] [*] 3.5mm C8805135 [*] [*] [*] Oracle(R) Micro 2.0mm C8856120 [*] [*] [*] F/X 2.5mm C8856125 [*] [*] [*] 3.0mm C8856130 [*] [*] [*] 3.5mm C8856135 [*] [*] [*] Oracle(R) Focus(TM) 2.5mm [*] [*] [*] OTW 3.0mm [*] [*] [*] 3.5mm [*] [*] [*] 4.0mm [*] [*] [*] Oracle(R)Focus(TM) 2.5mm 66125 [*] [*] [*] F/X 3.0mm 66130 [*] [*] [*] 3.5mm 66135 [*] [*] [*] 4.0mm 66140 [*] [*] [*]
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 20. 21 2. Europe Products and Price List Description (cont'd)
Description Part Monthly shipping volume by catheter number category Price Price Price EndoSonics [*] [*] [*] Oracle(R) 2.5mm [*] [*] [*] MegaSonics (TM) OTW 3.0mm [*] [*] [*] 3.5mm [*] [*] [*] 4.0mm [*] [*] [*] Oracle(R) 2.5mm 36125 [*] [*] [*] MegaSonics(TM) F/X 3.0mm 36130 [*] [*] [*] 3.5mm 36135 [*] [*] [*] 4.0mm 36140 [*] [*] [*] Description Part Price number Du-MED INTRASOUND(R) 17002 [*] Peripheral Vascular Imaging System PRINCEPS(R) 50001 [*] Catheter 4.1 ccs PRINCEPS(R) 50003 [*] Catheter 4.3 ccs
All Europe Products sales are F.O.B. Rotterdam, The Netherlands, except the Oracle(R) Imaging System and In-Vision(TM) option which are F.O.B. Rancho Cordova, California. For pricing purposes, catheter categories include Visions(R), Visions(R) Five-64, Oracle(R) Micro, Oracle(R) Focus and Oracle(R) MegaSonics(TM). * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 21. 22 EXHIBIT B MINIMUM PURCHASE AMOUNT During the Term, Cordis shall use reasonable efforts to purchase Products for Minimum Annual Purchase Amounts as set forth below. Calendar Year Minimum Purchase Amount (M$) 1996 [*] 1997 [*] 1998 [*] * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 22. 23 EXHIBIT C WARRANTY 1. Systems Limited Warranty NOTICE: EndoSonics reserves the right to make changes in its products in order to improve design or performance. Subject to the conditions and limitations on liability stated herein, EndoSonics warrants that Systems as so delivered shall materially conform to EndoSonics' then current specifications for Systems, for a period of one year from the date of delivery. ANY LIABILITY OF EndoSonics WITH RESPECT TO THE SYSTEM OR THE PERFORMANCE THEREOF UNDER ANY WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHER THEORY WILL BE LIMITED EXCLUSIVELY TO SYSTEM REPAIR, REPLACEMENT OR, IF REPLACEMENT IS INADEQUATE AS A REMEDY OR, IN EndoSonics' OPINION IMPRACTICAL, TO REFUND THE PRICE PAID FOR THE SYSTEM. EXCEPT FOR THE FOREGOING, THE SYSTEM IS PROVIDED "AS IS" WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED. INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF FITNESS, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT. FURTHER, EndoSonics DOES NOT WARRANT, GUARANTEE, OR MAKE ANY REPRESENTATIONS REGARDING THE USE, OR THE RESULTS OF THE USE, OF THE SYSTEM OR WRITTEN MATERIALS IN TERMS OF CORRECTNESS, ACCURACY, RELIABILITY, OR OTHERWISE. Cordis understands that EndoSonics is not responsible for and will have no liability for any items or any services provided by any persons other than EndoSonics' authorized personnel. EndoSonics shall have no liability for delays or failures beyond its reasonable control. The happening of any one or more of the following events will void the warranty: 1 - Defects due to negligence, alteration. modification, installation or repair by anyone other than EndoSonics authorized personnel, or a representative of Cordis authorized by EndoSonics to repair the material. 2 - Abuse or misuse by end customer. 3 - Attempted or actual dismantling, disassembling, service or repair in a procedure not specifically authorized by EndoSonics. 4 - Operating the System in a manner that is not in conformance with purchase specifications and specifications contained in the Operator's manual, and/or supplements. 5 - Maintenance of the System which is not in accordance with procedures in the Operator's manual, and/or supplements. 6 - Repair, alteration or modification of the System in any way other than by EndoSonics' authorized personnel, or without EndoSonics' authorization. 23. 24 If claims under this warranty become necessary, and the System or components of the System are to be returned, Cordis shall contact EndoSonics for instructions and issuance of a Returned Materials Authorization number. The System or components will not be accepted for warranty purposes unless the return has been authorized by EndoSonics. System parts or components repaired or replaced under warranty bear the same warranty expiration date as the original equipment. Consumable parts (including, but not limited to rechargeable batteries, etc.) are warranted only against defects in materials and workmanship. System parts purchased outside the original warranty period are warranted for a period of 90 days, subject to all of the restrictions contained in this Limited Warranty. Use of unauthorized replacement parts may void the warranty. In all cases, EndoSonics will be the sole judge as to what constitutes warrantable damage. 2. Catheters limited warranty Subject to the conditions and limitations on liability stated herein, EndoSonics warrants that Catheters, as so delivered, shall materially conform to EndoSonics' then current specifications for Catheters upon receipt. ANY LIABILITY OF EndoSonics, WITH RESPECT TO CATHETERS OR THE PERFORMANCE THEREOF UNDER ANY WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHER THEORY, WILL BE LIMITED EXCLUSIVELY TO CATHETER REPLACEMENT OR, IF REPLACEMENT IS INADEQUATE AS A REMEDY OR, IN EndoSonics' OPINION IMPRACTICAL, TO REFUND THE PRICE PAID FOR THE CATHETER. EXCEPT FOR THE FOREGOING, CATHETERS ARE PROVIDED "AS IS" WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF FITNESS, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NONINFRINGEMENT. FURTHER, EndoSonics DOES NOT WARRANT, GUARANTEE, OR MAKE ANY REPRESENTATIONS REGARDING THE USE, OR THE RESULTS OF THE USE, OF CATHETERS OR WRITTEN MATERIALS IN TERMS OF CORRECTNESS, ACCURACY, RELIABILITY, OR OTHERWISE. Cordis understands that EndoSonics is not responsible for and will have no liability for any items or any services provided by any persons other than EndoSonics authorized personnel. EndoSonics shall have no liability for delays or failures beyond its reasonable control. Additionally, this warranty does not apply if: 1. A Catheter is used in a manner other than described by EndoSonics in the Physicians Guide and Instructions for Use supplied with the Catheter. 2. A Catheter is used in a manner that is not in conformance with purchase specifications or specifications contained in the Physicians Guide and Instructions for Use. 3. A Catheter is re-used or re-sterilized. 4. A Catheter is repaired, altered or modified in any way by personnel other than EndoSonics authorized personnel, or without EndoSonics' authorization. 24. 25 If claims under this warranty become necessary, Cordis shall contact EndoSonics for instructions and issuance of a Returned Materials Authorization number, if a catheter is to be returned. Catheters will not be accepted for warranty purposes unless the return has been authorized by EndoSonics. 3. Additional limitations to warranty All Products should be inspected for obvious damage upon arrival. If Products have been damaged in transit, the EndoSonics Service department must be notified within 72 hours. All claims for nonconforming or defective Products must be made in writing within ten (10) days after delivery to Cordis, and any claims not made within this period shall be deemed waived and released. IN NO EVENT SHALL EndoSonics BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES DUE TO ANY CAUSE WHATSOEVER. No suit or action shall be brought against EndoSonics more than one year after the related cause of action has occurred. THE FOREGOING CONSTITUTES EndoSonics' SOLE LIABILITY AND CORDIS' SOLE REMEDY WITH RESPECT TO PRODUCTS SOLD BY EndoSonics. 25. 26 EXHIBIT D EXTENDED MAINTENANCE AGREEMENT PROGRAM CONDITIONS OF EXTENDED MAINTENANCE AGREEMENT Call Window 8:30 A.M. to 5:00 P.M. (Pacific Time Zone for USA, Central European Time for Europe) Monday through Friday excluding EndoSonics holidays. Response Time 48 Hour Response Time during specified call window. Payment Schedule Annually in advance. Term The Extended Maintenance Agreement shall be effective when signed by both parties. The initial term is twelve (12) months from the commencement date, unless modified on the face of the contract document. Eligibility for Service The Extended Maintenance Agreement shall only be valid as long as the equipment covered by it is properly installed, and is serviced by EndoSonics authorized personnel only. EndoSonics site environmental conditions must be met at all times. Service Responsibilities of EndoSonics 1 EndoSonics shall maintain the equipment in good condition and furnish space for calls received within the call window. Specifically, EndoSonics shall: A. Provide scheduled planned maintenance and safety check one (1) time per year. Planned maintenance is to be scheduled two weeks in advance within the call window, excluding holidays. B. Provide response to requests for remedial service within the call window. Requests for service outside these hours will be provided on a best effort basis at an additional charge. C. Provide all expenses incurred by EndoSonics Technical Representative including airfare, lodging, and travel time fees. D. Provide original parts or parts of at least equal quality. E. Provide all applicable safety and reliability modifications at no charge. F. Provide all applicable software updates at no charge. 26. 27 2. EndoSonics shall, at no additional cost to the customer, provide replacement equipment on loan, should EndoSonics fail to service or repair customer's equipment within a reasonable time period. 3. Parts not covered under this Agreement are: Supplies, Video Cassettes and Consumables. Responsibilities of Customer Customer shall notify EndoSonics immediately of equipment malfunction and allow EndoSonics full unrestricted access to all equipment and areas in which the equipment is commonly operated. Charges 1. Payments of service charges are due forty-five (45) days from the date of the Invoice. 2. All service calls received outside the call window are subject to a four (4) hour minimum charge and any additional hours necessary to complete the repair are based upon the overtime rates prevailing at the time. EndoSonics' overtime rates are: (a) one and one half (1.5) times the normal hourly rate after 5:00 P.M. and before 8:00 A.M. Monday through Friday and all day Saturday. (b) two (2) times the normal hourly rate on Sundays and scheduled EndoSonics holidays. 4. Charges are exclusive of, and Customer is responsible for, all sales, use, and like taxes where applicable. 27. 28 EXHIBIT E TERRITORY North America Portugal Morocco The United States of America Rumania Mozambique and its territories and Russia Namibia possessions Slovak Republic Niger Canada Slovenia Nigeria Mexico Spain Rep. Guinea Sweden Ruanda Switzerland Senegal Tajikistan Sierra Leone Europe Turkey Somalia Albania Turkmenistan South Africa Andorra Ukraine Sudan Armenia United Kingdom Swaziland Austria Uzbekistan Tunisia Belgium Yugoslavia Uganda Bosnia Herzegovina Zaire Bulgaria Zambia Byelorus Zimbabwe Croatia Africa Cyprus Algeria Czech Republic Angola Denmark Benin Middle East Estonia Burkina Faso Bahrain Finland Burundi Iran France Cameroon Iraq Georgia Central African Rep. Israel Germany Chad Jordan Greece Congo Kuwait Hungary Djibouti Lebanon Iceland Egypt Oman Ireland Equatorial Guinea Qatar Italy Eritrea Saudi Arabia Kazachstan Ethiopia Syria Kirgisia Gabon UAE Latvia Gambia Yemen, North Liechtenstein Ghana Lithuania Guinea Bissau Luxemburg Ivory Coast Macedonia Lesotho Malta Liberia Moldavia Libya Monaco Madagascar Netherlands Malawi Norway Mali Poland Mauritania 28. 29 EXHIBIT F DISCLOSURE LETTER 29 EX-10.25 4 LICENSE AGREEMENT DATED MARCH 4, 1996 1 Exhibit 10.25 * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. LICENSE AGREEMENT THIS LICENSE AGREEMENT is made and entered into effective as of March 4, 1996, by and between CardioVascular Dynamics, Inc., a Delaware corporation, having its principal place of business at 13900 Alton Parkway, Suite 122, Irvine, CA 92718 ("CVD"), and Advanced Cardiovascular Systems, Inc., a California corporation having its principal place of business at 3200 Lakeside Drive, Santa Clara, California 95052-8167 ("ACS"). RECITALS: A. CVD is engaged in the discovery, development, manufacture, and sale of medical devices for the diagnosis and treatment of vascular disease, including coronary angioplasty balloon catheters incorporating blood perfusion capabilities. B. CVD has developed or acquired and is the owner of all right title and interest in certain patent rights and the inventions covered thereby, as well as Know-How, relating to methods and apparatus comprising and related to a certain device known as the mechanical angioplasty catheter ("MAC"), that combines blood perfusion and coronary balloon angioplasty in a single device to treat vascular stenoses. C. ACS is and has been engaged in the discovery, development, manufacture and sale of medical devices for the diagnosis and treatment of vascular disease, including angioplasty balloon catheters having blood perfusion capability, and continues to be active in this area. 1 2 D. ACS previously acquired from CVD in a License Agreement effective as of January 15, 1995 (the "Prior Agreement"), an option to acquire the exclusive worldwide right and license, with a right to sublicense, in and to the MAC Technology and CVD Patent Rights (each as defined below) to make, have made, use and sell products covered thereby and to practice processes and methods thereunder (the "Option"). E. ACS exercised the Option in accordance with the terms of the Prior Agreement, and the parties desire to set forth the terms and conditions of the license granted pursuant to the Option in this Agreement. AGREEMENT: NOW, THEREFORE, the parties hereby agree as follows: 1. DEFINITIONS a. "MAC Technology" as used herein shall mean rights in and to CVD Patent Rights and the inventions covered thereby, and currently available CVD Know-How only as it relates to practice of said CVD Patent Rights. Improvements (as hereinafter defined) thereto shall also be included therein. b. "CVD Patent Rights" as used herein shall mean the patent rights held by CVD in the patents and patent applications identified on Exhibit A hereto, and the 2 3 inventions covered thereby, and Foreign Counterparts thereof (as hereinafter defined), as well as any additional patent rights CVD now owns or controls or may acquire in the future based upon applications which are continuations, continuations-in-part, divisionals or substitutes of the original applications upon which the aforementioned patent rights are based, and the inventions covered thereby, or Foreign Counterparts thereof, and upon any reexaminations, reissues, renewals or extensions thereof, and any patent rights which CVD now owns or controls or may acquire in the future relating to Improvements thereto. c. "Foreign Counterparts" as used herein shall mean foreign applications or issued foreign patents, which claim priority from, or share common priority with an identified United States patent or patent application, and the inventions covered thereby. d. "CVD Know How" as used herein shall mean confidential information regarding the MAC Technology, including, but not limited to, devices and methods relating thereto, technical and business information, design and manufacturing information and data, specifications and the like. "CVD Know-How" shall also include bench, animal and clinical testing results and the like, unless CVD is prohibited from disclosing such results due to confidentiality restrictions in agreements with third parties. e. "ACS Licensed Product" or "Licensed Product" as used herein shall mean a product which if made, used, or sold by ACS in the absence of the license 3 4 granted from CVD hereunder, would infringe a Valid Claim included in the CVD Patent Rights or other right of CVD in, or other use of, the MAC Technology. f. "Valid Claim" as used herein shall mean a claim of an issued patent that has not been held or declared invalid, unpatentable or unenforceable by the United States Patent and Trademark Office, a foreign patent office, or a court of competent jurisdiction from which no appeal can or has been taken. g. "Net Revenues" as used herein shall mean gross amounts received by ACS or any of its Affiliates or Sublicensees for sales of ACS Licensed Products, less any trade and quantity discounts, rebates, and credit for returned goods and cancellations, and shall exclude freight charges, taxes, duties and the like, all to the extent that any of the foregoing may be actually paid or allowed. Hereinafter, such reduction, discounts, credits and other charges, taxes and duties shall be referred to collectively as "Deductions." h. "Improvements" as used herein shall mean modifications of the ACS Licensed Products, CVD Know-How and related devices and methods of use, to the extent that same directly arise from technology covered by the MAC Technology and/or CVD Patent Rights, and are dominated by one or more claims of the CVD Patent Rights. i. "Affiliate" as used herein shall mean any company or entity which owns, or is at least fifty percent (50%) owned by, or is under common ownership with, a party hereto. 4 5 j. "Sublicensee" as used herein shall mean any sublicensee of the license rights granted hereunder or of a license which is the subject of an option granted hereunder. k. "Effective Date" as used herein shall mean the date first written above. 2. GRANT OF LICENSE TO ACS a. Effective as of February 14, 1996 (the "Option Exercise Date"), and subject to the terms and conditions set forth herein, CVD hereby grants to ACS an exclusive, non-transferable, worldwide right and license, with the right to sublicense the same as provided herein, in and to the MAC Technology to make, have made, use and sell, or otherwise dispose of products, and practice processes and methods thereunder. 3. DEVELOPMENT OF INVENTIONS a. As between the parties, inventions or know-how developed during the term of this Agreement solely by one party shall be owned exclusively by that party, regardless of any obligation of disclosure or licensing set forth herein regarding same. b. Inventions or Know-How relating to MAC Technology developed jointly by the parties shall be jointly owned by the parties, and will be included in the MAC Technology and licensed to ACS at no additional expense to ACS, subject to the provisions of Paragraph 12 below. 5 6 4. DISCLOSURE OF IMPROVEMENTS AND RIGHTS THERETO If CVD conceives, develops, acquires, or otherwise obtains rights to any Improvements to the MAC Technology, CVD shall immediately notify ACS and disclose each such Improvement to ACS in writing, including all information relating to, or necessary to practice the Improvement. 5. RIGHTS AND OBLIGATIONS OF ACS a. As of the Option Exercise Date, ACS shall have a credit against future earned royalties of [*] dollars [*]. b. ACS shall make the following non-refundable license fee payments to CVD: i. [*] dollars ([*]) upon execution of this Agreement. ii. [*] dollars ($[*]) upon U.S. Food and Drug Administration ("FDA") approval of the first ACS Licensed Product. iii. [*] dollars ($[*]) upon commercial U.S. market release of the first ACS Licensed Product. c. ACS shall pay a royalty of [*] percent [*] of Net Revenues from ACS Licensed Products covered by a Valid Claim of a patent included in the CVD Patent Rights. If, in a particular country, there is no such patent but the ACS Licensed Product * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 6 7 is covered by CVD Know-How, then ACS shall pay a royalty of [*] percent ([*]) of Net Revenues from such products for a period of [*] years from the first sale of such ACS Licensed Product in such country. Such royalty payments shall be reduced by the amount of the credit set forth in subparagraph 5(a) above. d. Commencing in the calendar year in which commercial launch of an ACS Licensed Product occurs, in each calendar year in which CVD has received from ACS royalty payments of less than $[*] in respect of sales of ACS Licensed Product in such year, ACS shall pay to CVD a minimum annual royalty equal to the difference between the royalties actually paid to CVD by ACS in respect of ACS Licensed Products during such year and [*] dollars ([*]). However, during the calendar year in which commercial launch of an ACS Licensed Product occurs, the minimum annual royalty amount of such payment shall be pro rated (on a monthly basis). Such payments shall be paid to CVD by January 31 of the immediately subsequent calendar year. 6. MARKETING OF PERFUSION PRODUCTS a. ACS shall exercise reasonable efforts to develop a commercially viable ACS Licensed Product. In this regard the following shall apply: i. If ACS, or an Affiliate or Sublicensee, has not submitted a product incorporating the MAC Technology to the FDA for approval within twenty four (24) months after the Option Exercise Date, ACS shall either pay the required [*] dollar ([*]) advance royalty payment to CVD described in subparagraph 5(b)(ii) above, or shall return the original MAC Technology and all rights thereto * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 7 8 to CVD. Each of the parties shall have a royalty free and paid-up license to practice Improvements jointly developed by the parties. ii. If ACS, or an Affiliate or Sublicensee, has not released a product covered by or incorporating the MAC Technology on the U.S. market within one hundred eighty (180) days following FDA approval of such a product, ACS shall either pay the required [*] dollar ([*]) advance royalty payment to CVD described in subparagraph 5(b)(iii) above, or shall return the original MAC Technology and all rights thereto to CVD. Each of the parties shall have a royalty free and paid-up license to practice Improvements jointly developed by the parties. The payments provided for in this subparagraph shall be in lieu of the similar payments provided in paragraph 5(b)(ii) and (iii) above, and not in addition thereto. b. If the MAC Technology and the rights therein are transferred back to CVD, improvements, know-how, technology, patent rights, and other tangible and intangible property owned exclusively by ACS shall not be transferred to CVD. c. If the MAC Technology and the rights therein are transferred back to CVD, CVD will pay to ACS royalties amounting to [*] percent ([*]) of Net Revenues from the sale of products incorporating MAC Technology until any license fees and/or advance royalty payments made by ACS to CVD are repaid in full. * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 8 9 d. In the event that ACS (exercising its sole discretion) determines that an ACS Licensed Product is covered by one or more additional license agreements with unaffiliated third parties and ACS is required to pay a royalty to such third party in order to make, have made, use or sell a particular ACS Licensed Product, due to a blocking patent or other blocking rights of third parties which would prevent practice of the MAC Technology but for such license agreement(s), then the royalty rate at which payments are made to CVD for that particular ACS Licensed Product shall be subject to a reduction of one percentage point for each such additional license agreement. However, the royalty rate for any ACS Licensed Product shall not, in any event be less than [*] percent ([*]) for products covered by CVD Patent Rights, and [*] percent ([*]) for those covered only by CVD Know-How. The reduction of royalty under this subparagraph shall be subject to receipt by CVD of reasonable evidence (which shall, at a minimum, include identification of the blocking patent and a description of the manner in which the ACS Licensed Product would, absent such third party agreement be blocked) of the payment obligation to unaffiliated third parties by ACS and ACS' compliance therewith. 7. DRUG DELIVERY CATHETER OPTION a. If CVD develops one or more improved product concepts based on combining features of both the MAC Technology and CVD drug delivery technology in a single device, and CVD proceeds to the completion of in-vitro and in-vivo animal testing for such a device, CVD shall present such data, prototype device and other information CVD deems reasonably required to evaluate the feasibility of commercializing the device to ACS, together with an estimated budget for the cost of additional development and trials for such device, licensing fees therefor, and a projected * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 9 10 timetable for completing such development. ACS shall have ninety (90) days from receipt of such information to evaluate the device, make requisite inquiries for further information and/or clarification, if required, and notify CVD that ACS desires to license rights in and to such device (and the proprietary rights therein) and pursue development of a commercial product based on such information provided by CVD. During such time period, CVD agrees to entertain different or modified terms proposed by ACS, and to discuss and/or negotiate in good faith with ACS with respect to establishing the principal terms of a license and development agreement regarding the commercial exploitation of such device; provided, however, that if, within such ninety (90) day period the parties have not agreed upon such terms (in a memorandum of understanding or similar document) or ACS declines to exercise such option, then CVD shall be free to exploit such device as permitted hereunder. If ACS responds affirmatively within the ninety (90) day period and the parties have agreed upon the principal terms of a license and development agreement regarding the commercial exploitation of such device (and the proprietary rights therein), the two parties shall, on an expedited basis (which shall in no event continue beyond 60 days following notice to CVD to ACS's affirmative interest), exercise commercially reasonable, good faith efforts to execute a written license and development agreement regarding the commercial exploitation of such device (and the proprietary rights therein) in accordance with such terms. b. If the option to acquire rights to such a drug delivery perfusion catheter system is not exercised by ACS, and a drug delivery product employing MAC Technology is released to the market by CVD, Net Revenues to ACS hereunder shall be reduced by the amount of like revenues, if any, received by CVD from sales of such 10 11 drug delivery catheters during the corresponding period of time for royalty calculation and any resulting correction in royalties owed for that time period shall be reflected by a Deduction of the requisite amount applied to a subsequent quarter-annual royalty payment to CVD. ACS would in this later case grant back to CVD a non-exclusive license in and to the MAC Technology so as to enable CVD to make, use, sell and distribute said drug delivery perfusion catheter system product; provided that CVD shall not disclose to a third party confidential information of ACS without ACS's prior written consent. 8. OTHER LICENSE TERMS APPLICABLE a. No royalty shall be payable for transfers (by sale or otherwise) of ACS Licensed Products by ACS, or any of its Sublicensees or Affiliates, to CVD, provided such transferred Licensed Product is subsequently resold in a royalty- bearing transaction or is used clinically by ACS or its Affiliates or Sublicensees in an experimental or other like setting where no Net Revenues are generated. b. In the event that ACS, or any of its Affiliates or Sublicensees, markets the Licensed Product as part of a system or kit that incorporates or includes other products that are not royalty-bearing Licensed Products, Net Revenues for royalty purposes shall be computed using the average Net Revenues per unit of the corresponding royalty-bearing product when sold separately. If any royalty-bearing product is sold only as part of a system or kit that includes other products that are not royalty-bearing, and corresponding royalty-bearing products are not sold separately, then Net Revenues for royalty purposes shall include and refer to only that part of such sale reasonably allocable to the royalty-bearing product. In making such allocation, primary 11 12 consideration shall be given to the added value accorded by the royalty-bearing product to the kit as compared to the value if sold without it. In all such cases the applicable Deductions as set forth above shall also be taken into consideration in computation of the Net Revenues. c. Each Licensed Product shall be marketed and sold on its own merits in a manner consistent with the standard marketing practices of ACS. However, the foregoing clause shall not restrict ACS from bundling or otherwise combining Licensed Products with other products. If a Licensed Product is used as an inducement to purchase other products of ACS, the basis on which the royalties or share of Net Revenue are calculated for such Licensed Product shall be calculated based on the fair market value price of the applicable Licensed Product regardless of whether such Licensed Product is actually sold below a fair market value price. If a fair market value price cannot otherwise be established by the parties, a value added methodology such as that described in paragraph 8(b) above shall be used to establish a royalty basis for such Licensed Product. 9. PAYMENTS a. Royalty payments shall be made to CVD within sixty (60) days after the end of each calendar quarter during which royalties accrue. Each payment shall be accompanied by a report that reflects at least (i) the quantity of royalty-bearing products subject to reporting by virtue of activities of ACS, and its Affiliates and sublicenses; (ii) Net Revenues amounts; (iii) Deductions, if any, applied to determine Net Revenues; (iv) the applicable royalty rate, and (v) the royalties computed and due to CVD. No report shall be required for any calendar quarter prior to a quarter during which royalties first 12 13 accrue. Thereafter, a report shall be rendered for each calendar quarter during the remaining term of this Agreement. b. Royalties occurring on sales outside the United States shall be converted to United States dollars, with conversion of foreign currency where appropriate as of the last day of the royalty period based upon conversion rates in effect at the close of business in New York on such day, as published in the Wall Street Journal. The parties shall hold in confidence all information reported with respect to royalty payments, and shall refrain from disclosing such information to others, except as may be required internally for management purposes and except as may be required by Federal and State law or by governmental agencies. c. ACS shall not be required to make any royalty payments in contravention of the laws of any country, nor shall ACS be required to make a royalty payment in the United States if ACS is unable to recoup the amount of such royalty payments directly or indirectly from an entity within a country in which the sales on which such payments are based is made. In each country where the local currency is blocked or cannot be removed from the country, royalties accrued in each such country shall be paid in such country in local currency by deposit in a local bank designated by CVD. 10. RECORDS ACS and CVD shall keep or cause the responsible Affiliate or Sublicensee to keep true and accurate books and records with respect to all sales of royalty bearing products under this Agreement in accordance with customary accounting principles and in a manner consistent with. the accounting methods employed throughout its business. 13 14 Each of the parties shall have the right, at its own expense, through an established and reputable independent representative, to examine the relevant books and records of the other, or the responsible Affiliate or Sublicensee, at any reasonable time during business hours within five (5) days after notifying the other of its desire to do so. This examination shall take place no more than once each year and shall cover no more than the preceding three (3) calendar years. The examination shall be solely for the purpose of determining the correctness of the reports and payments required to be made by a party hereto and its Affiliates and Sublicensees. The independent representative shall report only on the accuracy of such records and shall not disclose specific entries except to the extent otherwise disclosed in reports rendered as provided hereunder. Any amount that is not paid when due shall bear interest at the lesser of one percent (1%) per month or the maximum amount permitted by applicable law. In the event that an examination determines that royalties in any particular payment period have been under-reported by 5% or more, the party that is the subject of such examination shall pay the costs, fees and expenses of said independent representative. 11. TAXES All taxes levied on account of royalties accruing under this Agreement shall be paid by CVD. If laws or regulations require the withholding of taxes, the taxes will be deducted by ACS from remittable royalty and shall be paid to the proper taxing authority. Proof of payment shall be sent to CVD within ninety (90) days following payment. 14 15 12. PROSECUTION OF PATENTS a. The cost of preparation and prosecution of the applications included in the CVD Patent Rights shall be paid by ACS, and ACS shall have control of the prosecution of such applications, whether by right of approval regarding the actions of CVD counsel or by using ACS' own counsel in such preparation and prosecution, as the parties mutually determine in each case; provided that CVD shall have reasonable opportunity to review and comment on any patent application prepared by ACS. If ACS determines that it does not wish to control the prosecution of such a patent application in any individual case, ACS shall have no obligation to pay the cost of prosecution or maintenance of such a patent but it shall notify CVD at least ninety (90) days prior to taking, or not taking, any action which would result in the abandonment, withdrawal, or lapse of any such patent or patent application. In such circumstance CVD shall control the prosecution thereof, and may independently choose to not go forward with prosecution (subject to notifying ACS, and the provisions of subparagraph 12(b) below) and in that event such patent shall not be included in the MAC Technology, but ACS shall retain a non-exclusive license to practice any such patent that is a joint invention of ACS and CVD as described under Paragraph 3 above. If CVD independently develops an Improvement and ACS does not wish to control or pay the cost of preparation or prosecution of a patent application thereon, the application and any patent granted therefrom covering such Improvement shall not be included in the CVD Patent Rights. b. If CVD elects not to file, prosecute or maintain any patent or patent application relating to the CVD Patent Rights and Improvements thereon, it shall notify ACS at least ninety (90) days prior to taking, or not taking, any action which would 15 16 result in the abandonment withdrawal, or lapse of any such patent or patent application. ACS shall then have the right to file, prosecute or maintain the patent or patent application at its own expense, and any patent rights granted thereon shall be solely owned by ACS, provided that CVD shall retain a non- exclusive license to practice any such patent rights that are a joint invention of ACS and CVD as described under Paragraph 3 above. Sales of ACS Licensed Products in the country in which such patent application had been filed or issued covered only by the claims of such patent rights owned by ACS shall not be royalty-bearing to CVD. c. The language of this subparagraph will also apply to Foreign Counterparts. The parties shall, after consultation, determine the countries, if any, where additional Foreign Counterparts will be prosecuted and maintained. The parties shall keep each other reasonably informed of the status of all patents included in the CVD Patent Rights and additional Foreign Counterparts thereof which they have responsibility for hereunder. d. Each party shall cooperate with the other party, as reasonably requested, to execute all lawful papers and instruments and to make all rightful oaths and declarations as may be necessary in the preparation and prosecution of any and all such patents and patent applications. The party that is paying the full cost of such preparation and prosecution shall also pay the reasonable out- of-pocket costs of such cooperation by the non-paying party. 16 17 13. INFRINGEMENT BY THIRD PARTIES a. Each party will promptly notify the other party of any infringement or possible infringement of any of the CVD Patent Rights. ACS shall have the first right, but not the obligation, to prosecute infringement of the MAC Technology and CVD Patent Rights. CVD shall cooperate as reasonably required in such prosecution, and ACS shall bear the reasonable costs to CVD of such cooperation. b. If ACS fails to prosecute any such infringement within one hundred eighty (180) days after receiving notice thereof, CVD shall have the right, but not the obligation, to prosecute such infringement at its own expense. In such event ACS shall cooperate fully with CVD, and CVD shall bear the reasonable costs to ACS of such cooperation. c. Any net recovery obtained by the prosecuting party as a result of such proceedings, by settlement or otherwise, shall be retained by the prosecuting party. 14. CONFIDENTIALITY a. The parties contemplate that information may be disclosed to one another under this Agreement which is confidential in nature. In this regard, each party will maintain the confidential information of the other party in confidence and shall not make use thereof, in whole or in part, except as expressly authorized in this Agreement. b. Except as specifically provided, and as may be reasonably necessary to develop and market products and to enable Affiliates and Sublicensees to make, have 17 18 made, use and sell products licensed hereunder and to practice processes and methods as contemplated herein, each of the parties shall refrain from communicating (whether by disclosure or by providing access) any portion of the confidential information of the other party to any other person, firm, corporation or entity without first obtaining prior written permission from the other party. c. In recognition of the proprietary nature and value of the confidential information and the likelihood of loss of business by the other party in the event of unauthorized disclosure of its confidential information, the parties agree that the obligations of this Paragraph shall continue unabated regardless of expiration or termination of this Agreement for any reason, for a period of not less than five (5) years from the effective date of such expiration or termination. Neither party shall be obligated or required to maintain in confidence any information which it can demonstrate with written records: i. is at the time in question in the public domain, or is known to the receiving party prior to disclosure by the disclosing party without breach of any obligation of confidence; or ii. is or has been furnished to the receiving party by a third party not under a duty of confidentiality; or iii. is required to be disclosed by Federal or State Law, by a court of competent jurisdiction or by a governmental agency. 18 19 15. NO DISCLOSURE WITHOUT CONSENT OR LEGAL REQUIREMENT Neither party shall release any information to any third party with respect to the terms of this Agreement without the prior written consent of the other party (which consent shall not be unreasonably withheld). This prohibition includes, but is not limited to, press releases, educational and scientific conferences, promotional materials, and disclosures to (or discussions with) the media. It is understood, however that the parties shall have the right, in the exercise of reasonable business judgment, to provide required information (but which, with respect to patent applications and the information contained therein, shall only be provided to outside counsel without the prior written consent of the other party) concerning this Agreement to investors and potential investors, and to Affiliates and potential Sublicensees in order to enable them to carry out the activities contemplated hereunder and as each may determine, in its reasonable judgment, to be required by law. Each party agrees to notify the other party of its intention to disclose such information to a third party (but not the identify of the third party). 16. TERM This Agreement shall become effective on the Effective Date and shall continue, subject to earlier termination in accordance with other terms of this Agreement until the expiration of the last to expire of the licensed patents included in the CVD Patent Rights. 17. TERMINATION a. In the event that either of the parties breaches any of the terms or conditions of this Agreement including the obligation to pay royalties thereunder, the 19 20 other party may terminate this Agreement by giving at least sixty (60) days advance written notice, specifying the act or omission on which such termination is based. Should such breach be remedied within sixty (60) days of such notice, this Agreement shall remain in force, subject to continued compliance with all of the terms, conditions and limitations of this Agreement. Otherwise this Agreement shall automatically terminate at the end of such notice period. b. ACS, without affecting the rights of CVD, shall have the right to terminate its licenses under this Agreement, with or without cause, by giving thirty (30) days notice to CVD of its intent to terminate. c. Termination of any license granted under this Agreement shall not deprive either party of accrued rights including CVD's right to collect royalties on sales made prior to termination. Upon termination of this Agreement, ACS shall have the right to sell products licensed hereunder it has in its inventory. Such sales shall be subject to the obligations to pay royalty provided for hereunder. All other rights and obligations of the parties, including the obligations of confidentiality accruing prior to termination or expiration of this Agreement shall survive such termination or expiration. 18. COMPLIANCE WITH LAWS a. The parties shall comply with all prevailing laws, rules and regulations pertaining to the development, testing, manufacture, marketing, promotion and import or export of ACS Licensed Products. 20 21 b. ACS will be responsible for obtaining, at its cost and expense, all governmental approvals required to market ACS Licensed Products. 19. REPRESENTATIONS AND WARRANTIES CVD represents and warrants to ACS that it has the right to grant the licenses and rights granted herein and has full right and title to the patent rights and inventions included in the CVD Patent Rights, and that, to the best of its knowledge, no other person or entity has a claim or right to any aspect or part of the CVD Patent Rights, and that it has the unencumbered right to grant the licenses and rights granted in this Agreement, and that no other license, assignment, sale, agreement or encumbrance has, or will, be made or entered into which would conflict with this Agreement. CVD represents and warrants that, to its actual knowledge, based on its written records and without regard to patents in its possession that have not undergone substantive review, it is unaware of: (i) any basis on which CVD Patent Rights, or any portion thereof, are invalid or unenforceable; or (ii) any claims or right of any third party that could be infringed by practice of the MAC Technology. 20. INDEMNITY a. Each of the parties shall be responsible for its own errors and omissions and indemnifies, and agrees to defend and hold harmless, the other and its officers, directors, professional staff, employees, and agents, and any of their respective Affiliates, Sublicensees, respective successors, heirs and assigns (the "Indemnities"), against any claim , demand, liability, damage, loss, judgment or expense (including reasonable attorneys fees and expense and out-of- pocket litigation expense) incurred by or imposed upon the Indemnities arising out of its own activities hereunder (including 21 22 actions in tort, warranty or strict liability) except and to the extent due to negligence of the other party. Each of the parties shall notify the other promptly of any claim, demand, suit or action arising out of any activity hereunder, whether or not the subject of the indemnity herein, and each shall cooperate as reasonably required in the defense of the matter, and the other shall bear the reasonable out-of-pocket cost of such cooperation. The indemnifying party shall have sole control over any litigation or settlement thereof for which it is responsible under this Paragraph, and it shall not be required to pay any amount of any settlement to which it has not given its prior written consent. b. NEITHER PARTY SHALL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER THEORY FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES. 21. RELATIONSHIP OF THE PARTIES It is understood that the parties hereto are independent contractors engaged in the conduct of their own respective endeavors. Neither ACS nor CVD are to be considered the agent or employee of the other for any purpose, and no party hereto has the right or authority to enter into any contract or assume any obligation for the other or give any warranty or make any representation on behalf of another party except where and to the extent specifically authorized in writing to do so. 22 23 22. ASSIGNMENT This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and assigns, provided, however, that except as set forth in the next sentence, neither party may assign any obligation to provide services hereunder, in whole or in part, without the prior written consent of the other party except in connection with a merger, reorganization or sale of all or substantially all of the assets of such party. Notwithstanding any other provision to the contrary in this Agreement or the Prior Agreement (as defined below), ACS shall have the right to assign its rights and obligations under this Agreement to Guidant Corporation. ACS shall provide CVD with written notice of any such assignment within 30 days of making such assignment. 23. FORCE MAJEURE In the event any party hereto is prevented or is otherwise unable to perform any of its obligations under this Agreement due to fire, flood, earthquake, war, strikes, lockouts, labor troubles, failure of public utilities, injunctions, or other events beyond the reasonable control of the party affected, the affected party shall give notice promptly to the other party in writing and, thereupon, the affected party's nonperformance shall be excused and the time for performance of this Agreement shall be extended for the period of delay or inability due to such Force Majeure. 24. AMENDMENT Except as otherwise provided herein, this Agreement may not be amended, supplemented, or otherwise modified except by an instrument in writing signed by authorized representatives of CVD and ACS. 23 24 25. NO STRICT CONSTRUCTION This Agreement has been prepared jointly and shall not be strictly construed against any party. 26. WAIVER No waiver of any term, provision, or condition of this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be construed as a further or continuing waiver of such term, provision or condition of this Agreement. 27. COUNTERPARTS This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. 28. GOVERNING LAW This Agreement shall be construed in accordance with the laws of the State of California without reference to choice of law principles, as to all matters, including, but not limited to, matters of validity, construction, effect or performance. The venue for resolution of disputes hereunder shall be the courts located in Santa Clara County, California. 29. NOTICE a. Any notice, report or statement to either party required or permitted under this Agreement shall be in writing and shall be sent by certified mail, return 24 25 receipt requested, postage prepaid, or facsimile transmission with confirmation sent by certified mail as above, or by courier, such as Federal Express, DHL, or the like, with confirmation of receipt by signature requested, directed to the other party at its mailing address set forth below, or to such other mailing address as the respective parties may from time to time designate by prior notice in compliance herewith: ACS: Advanced Cardiovascular Systems, Inc. 3200 Lakeside Drive P.O. Box 58167 Santa Clara, CA 95052-8167 Fax: (408) 235-3987 Attn.: General Counsel CVD: CardioVascular Dynamics, Inc. 13844 Alton Parkway, Suite 140 Irvine, CA 92718 Fax: (714) 457-9561 Attn Michael R. Henson, Chairman & CEO b. Any such notice, report or statement sent in accordance with the requirements of Subparagraph a. above shall be deemed to be fully given upon dispatch, subject to proof of receipt. 30. SEVERABILITY If any term or provision of this Agreement, or the application thereof to any person or circumstance, shall to any extent be held invalid or unenforceable under any controlling law, that provision shall be considered severable and its invalidity shall not affect the remainder of this Agreement, which shall continue in full force and effect. The parties shall there upon negotiate in good faith a term there specifically declare that they would have entered into this carrying out, insofar as possible, the intention of severed term. 25 26 31. CAPTIONS Captions are inserted herein only as a matter of convenience and for reference, and in no way define, limit, or describe the scope of this Agreement or the intent of any provision herein. 32. SOLE UNDERSTANDING This Agreement and the Prior Agreement set forth the entire agreement and understanding between the parties as to the subject matter hereof and thereof, and supersede, integrate and merge all prior discussions, correspondence, negotiations, understandings, or agreements. The parties each represent and warrant that there are no conditions, definitions, warranties, promises, agreements, understandings or representations, or remaining obligations, written or oral, with respect to the subject matter of this Agreement or the Prior Agreement, other than as expressly provided in this Agreement or the Prior Agreement, or as the same may subsequently be amended in writing by mutual agreement duly executed by the affected parties hereto. This Agreement supersedes Sections 2a, 2c, 4a, 6a, 6c, 6d, 6e, 7, 8 and 34 of the Prior Agreement. If there are any inconsistencies between the terms of the remaining Sections of the Prior Agreement and the terms of this Agreement, the terms of this Agreement shall prevail. Except as superseded by this Agreement, the remaining terms of the Prior Agreement remain in full force and effect. 26 27 IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed in duplicate originals effective as of the day and year first above written. CardioVascular Dynamics, Inc. By: /s/ MICHAEL R. HENSON Michael R. Henson, Chairman and CEO ATTEST: Date: March 4, 1996 /s/ DANA P. NICKELL Advanced Cardiovascular Systems, Inc. By: /s/ PETER MEINNES Peter Meinnes, Vice President ATTEST: Date: March 4, 1996 /s/ GUY GARFIELD 27 28 EXHIBIT A License Agreement Between CardioVascular Dynamics and Advanced Cardiovascular Systems, Inc. (Relevant CVD Patents and Applicants) U.S. Applications and Patents Patent No. 5,344,402 issued September 6, 1994 on U.S. Application 08/084,820 filed June 30, 1993, with an Interventional PCT application filed June 1994 No. 08/208,617 filed March 8, 1994 - Amendment filed 1/11/96, Notice of Allowance Foreign Applications and Patents Foreign Counterparts filed in Japan, Belgium, France, Germany, Great Britain and The Netherlands in December 1994 on U.S. Application No. 08/084,820 08/357,420 - Notice of Allowance, Issue Fee Paid 2/7/96 08/357,401 - Filed 12/16/94 28 -----END PRIVACY-ENHANCED MESSAGE-----