<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A (No.1)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________
TO ______________.
COMMISSION FILE NO. 0-22233
ENDOCARDIAL SOLUTIONS, INC.
- ---------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 41-1724963
- -------- ----------
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1350 ENERGY LANE (612) 644-7890
SUITE 110 --------------
SAINT PAUL, MINNESOTA 55108 (REGISTRANT'S TELEPHONE NUMBER
- ---------------------------- INCLUDING AREA CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES
AND ZIP CODE)
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 TWELVE (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
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INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
COMMON STOCK, $.01 PAR VALUE 8,976,182
- ----------------------------
(Class) (NUMBER OF SHARES OUTSTANDING AT MARCH 31, 1998)
<PAGE>
The undersigned registrant hereby amends Part II, Item 6(a), entitled
"Exhibits", of its Quarterly Report on Form 10-Q for the quarter ended March
31, 1998 to amend and refile Exhibit 10.1.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
10.1** License Agreement, dated January 30, 1998, between the Company
and Medtronic, Inc.
27* Financial Data Schedule (EDGAR filing only)
99* Cautionary Statement
</TABLE>
* Previously filed.
** Pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended, confidential portions of Exhibit 10.1 have been deleted and filed
separately with the Securities and Exchange Commission pursuant to a request
for confidential treatment.
(b) Reports
The Company filed no reports on Form 8-K during the quarter ended March 31,
1998.
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
ENDOCARDIAL SOLUTIONS, INC.
Dated: July 31, 1998 By: /s/ James W. Bullock
-------------------------------------
James W. Bullock
President and Chief Executive Officer
(Principal Executive Officer)
Dated: July 31, 1998 By: /s/ Leota L. Pearson
-------------------------------------
Leota L. Pearson
Controller
(Principal Financial and Accounting
Officer)
<PAGE>
EXHIBIT 10.1
LICENSE AGREEMENT
This License Agreement is made this 30th day of January, 1998, by and among
Endocardial Solutions, Inc. ("Licensee"), a Delaware corporation, and Medtronic,
Inc. ("Medtronic"), a Minnesota corporation.
RECITALS:
A. Medtronic has developed certain technology related to catheter
navigation and mapping.
B. Medtronic desires to grant, and Licensee desires to obtain, a license
to the "Licensed Technology" (as defined below) in the "Field of Use" (as
defined below) in accordance with all of the terms of this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
As used herein, the following definitions and terms shall have the
designated meanings:
1.1 "ACTION" shall mean any claim, action, suit or proceeding, whether
civil or criminal, or in law or equity and including any arbitration.
1.2 "AFFILIATE" of any entity shall mean any other entity that directly,
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, the first entity. "CONTROL" shall mean owning
more than 50 percent of the total voting power of the entity.
1.3 "CONFIDENTIAL INFORMATION" shall mean all written or oral information
provided to a party (the "receiving party") by a party (the "disclosing party")
or its employees, agents or consultants, excluding any information which:
(a) is or becomes publicly available through no fault of the
receiving party; or
(b) can be reasonably demonstrated to have been known to the
receiving party independently of any disclosure of "Confidential
Information" by the disclosing party or its employees, agents or
consultants; or
<PAGE>
(c) is disclosed to the receiving party by a third party who, to the
best of the receiving party's knowledge, is lawfully in possession of the
same and has the right to make such disclosure without restriction; or
(d) has been independently developed by the receiving party without
reference to the information disclosed to the receiving party by the
disclosing party or its employees, agents or consultants.
All "Confidential Information" disclosed to the receiving party in writing under
this Agreement shall ultimately be in writing and bear a legend "Proprietary",
"Confidential" or words of similar import.
1.4 "EXPIRATION" or "EXPIRED" shall mean with respect to a particular
patent, the patent's expiration, abandonment, cancellation, disclaimer, award to
another party other than Medtronic or an Affiliate of Medtronic in an
interference proceeding, or declaration of invalidity or unenforceability of all
claims thereof by a court or other authority of competent jurisdiction
(including a re-examination or reissue proceeding) from which no further appeal
has or can be taken. References to an "Unexpired" patent shall mean a patent
that has not Expired.
1.5 "FIELD OF USE" shall mean electrophysiological intracardiac mapping
applications for the treatment of cardiac arrhythmias.
1.6 "FIRST COMMERCIAL INTRODUCTION" shall mean the first commercial sale
by Licensee of any product which incorporates any invention described in the
patents and other intellectual property constituting the Licensed Technology
within the Field of Use in the United States, Japan or any country that is a
member of the European Union.
1.7 "LAW" shall mean any law, regulation, rule, ordinance or governmental
regulation or guideline or any judicial, administrative or arbitration, order or
award, judgment, writ, injunction or decree which is applicable to a person or
by which a person is bound.
1.8 "LICENSED PRODUCTS" shall mean medical products, devices, or systems,
including software, the development, manufacture, use or sale of which uses or
incorporates any of the Licensed Technology.
1.9 "LICENSED TECHNOLOGY" shall mean (i) the issued patents, and patents
arising out of the patent applications, listed on Exhibit A hereto, including,
specifically, U.S Patent No. (***) issued to (***) and assigned to Medtronic,
(ii) all reissues, continuations, continuations-in-part, extensions,
reexaminations, and foreign counterparts thereof, (iii) all trade secrets and
know-how owned by Medtronic prior to the date of this Agreement which relate
- --------------------
*** Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.
<PAGE>
specifically and directly to 3-D electrode localization devices and techniques
as disclosed in the patents or patent applications listed on Exhibit A,
including but not necessarily limited to software developed specifically to
practice the inventions disclosed in the patents included in the Licensed
Technology, and iv) new patents arising out of patent applications filed, or
inventions reduced to practice, within twelve (12) months of the "Effective
Date" (as defined in Section 3.1) of this Agreement that are owned by Medtronic,
arise out of Medtronic's work with (***) and relate specifically and directly to
3-D electrode localization devices and techniques.
1.10 "NET SALES" of Licensed Products for a particular period shall mean
the amounts that Licensee or any Affiliate of Licensee invoices third parties
(eliminating transactions between Affiliates) for sales of Licensed Products
during such period, excluding sales, use or excise tax, freight, duty or
insurance included therein, and credits or repayments due to rejection, defect
or return. If Licensee or any Affiliate of Licensee sells at a single price or
rate a packaged combination of products, not all of which if sold individually
would be Licensed Products, then "Net Sales" of Licensed Products with respect
to such sales of packaged products shall equal the total sales price of the
packaged combination multiplied by the ratio of the individual retail list price
of the Licensed Products contained in the packaged combination to the sum of all
individual retail list prices of every item in the packaged combination (if all
of such items were sold separately). If all such items are not sold separately,
any item not sold separately shall have a price attributed to it for purposes of
this definition consistent with pricing of similar products or their functional
equivalents. Without limitation of the foregoing, Net Sales shall include all
transfers of Licensed Products that Licensee or any Affiliate of Licensee
records as a sale pursuant to generally accepted accounting principles
consistently applied. Net Sales which are denominated in currencies other than
U.S. Dollars shall be converted into U.S. Dollars on a monthly basis at the
average of the applicable daily exchange rates listed in the Wall Street Journal
for the calendar month in which such Net Sales occurred, or on such other basis
to which the parties may hereafter mutually agree.
1.11 "PRODUCT LIABILITY CLAIMS" shall mean claims for personal injury or
death based on alleged breach of product warranty, strict liability in tort, or
negligent product design or manufacture.
1.12 "QUARTER" means each three-month period ending March 31, June 30,
September 30, and December 31.
- -----------------
*** Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.
<PAGE>
ARTICLE 2
LICENSE; TERM AND TERMINATION
2.1 LICENSE GRANT. Subject to the terms and provisions hereof, Medtronic
hereby grants to Licensee a worldwide, non-transferable, and non-sublicensable
(except as expressly provided in Section 2.6 below) license to make, have made,
use and sell Licensed Products in the Field of Use. The licensed granted shall
be co-exclusive, meaning that Medtronic or any Affiliate of Medtronic shall also
have the worldwide right to make, have made, use, sell or otherwise
commercialize and exploit the Licensed Technology in the Field of Use, provided
that Medtronic shall not grant any licenses (other than to an Affiliate of
Medtronic or a supplier of Medtronic or its Affiliate, provided any sale of
Licensed Products by such supplier is to Medtronic or a Medtronic Affiliate or
is under trademarks owned by Medtronic or a Medtronic Affiliate) to the Licensed
Technology in the Field of Use during the term of this Agreement. In addition,
Medtronic agrees that it shall not manufacture Licensed Products in the Field of
Use on an original equipment manufacturer basis ("Medtronic OEM basis") for any
person or entity. The term "Medtronic OEM basis" includes, without limitation,
the manufacture and sale of a Licensed Product to any person or entity for (i)
incorporation into or sale as such other person's or entity's product, or (ii)
the resale of such Licensed Product by such person or entity under trademarks
other than those owned by Medtronic or a Medtronic Affiliate.
2.2 RESTRICTION ON OEM SALES. The license granted to Licensee pursuant to
this Agreement shall not be used by Licensee in such a way as to manufacture
Licensed Products on an original equipment manufacturer basis ("Licensee OEM
basis") for any person or entity. The term "Licensee OEM basis" includes,
without limitation, the manufacture and sale of a Licensed Product to any person
or entity for (i) incorporation into or sale as such other person's or entity's
product, or (ii) the resale of such Licensed Product by such person or entity
under trademarks other than those owned by Licensee. It is the intent of the
parties that the license granted herein be used for the sole and exclusive
benefit of Licensee and its Affiliates in the Field of Use.
2.3 TERM OF LICENSE. Unless otherwise terminated under provisions of this
Article 2: the license granted under Section 2.1, as it pertains to the patents
and patent applications included within the Licensed Technology, shall continue
until such time as all of the patents included within the Licensed Technology
(and all extensions thereof) have Expired while the license granted under
Section 2.1, as it pertains to any know-how or trade secret information of
Medtronic included within the Licensed Technology, shall continue in perpetuity.
2.4 TERMINATION. Notwithstanding the provisions of Section 3.5, if
Licensee (i) violates the prohibitions on sublicensing or manufacturing on an
OEM basis under this Agreement, or (ii) fails to restrict its sales of Licensed
Products and other activities hereunder to the Field of Use, then Medtronic may
terminate this Agreement, at its option and without prejudice to any of its
other legal and equitable rights and remedies, including, but not limited to,
seeking monetary damages and/or an injunction, by giving Licensee sixty (60)
days' notice in writing, particularly specifying the breach. Such notice of
termination shall not be effective if
<PAGE>
Licensee cures the specified breach within such sixty (60) day period. During
such 60-day period, one or more executive officers of each party (meaning for
purposes hereunder any vice president or higher level officer) shall meet or
correspond to discuss such alleged breach and/or attempted cure thereof, and
attempt in good faith to resolve any dispute between the parties with respect
thereto; provided that if any such dispute is not resolved to Medtronic's
satisfaction, then Medtronic may terminate this Agreement without prejudice to
any of its other legal and equitable rights and remedies including, but not
limited to, seeking monetary damages and/or an injunction. If Licensee cures
the breach during the 60-day period but, within one (1) year thereafter, engages
in the same or a substantially similar breach, then Medtronic may terminate this
Agreement, at its option and without prejudice to any of its other legal and
equitable rights and remedies, including, but not limited to, seeking monetary
damages and/or an injunction, by giving written notice to Licensee and without
providing Licensee further opportunity to cure such breach. Licensee may
terminate this Agreement at any time in its discretion upon sixty (60) days'
prior written notice. Termination of this Agreement shall not affect Licensee's
obligation to grant and honor the warrant under Section 3.2 and, if First
Commercial Introduction or Change of Control of Licensee occurs prior to such
termination, the warrant under Section 3.3 and shall not result in any refund to
Licensee of any consideration previously paid to Medtronic. The parties
acknowledge that, with respect to any other breaches by Licensee of the terms,
conditions or agreements of this Agreement, Medtronic may pursue its full legal
and equitable rights and remedies against Licensee, including, but not limited
to, seeking monetary damages and/or an injunction.
2.5 DELIVERY AND RETURN OF CONFIDENTIAL INFORMATION. Upon termination of
this Agreement or the license granted hereunder as provided herein, Licensee
shall within 30 days of such termination return to Medtronic all Confidential
Information of Medtronic. Notwithstanding the foregoing, Licensee shall have
the right to retain in strict confidence one copy of such Confidential
Information in its legal department files solely for archival purposes only.
2.6 NO SUBLICENSE, TRANSFER OR CHANGE OF CONTROL.
(a) Licensee may not sublicense any of its rights or obligations under
this Agreement, except that Licensee may grant sublicenses to Affiliates of
Licensee, provided that (i) Licensee shall cause such sublicensee to comply with
all of Licensee's obligations hereunder, and (ii) any such sublicense granted by
Licensee shall terminate automatically upon the earlier of such sublicensee
ceasing to be an Affiliate of Licensee or termination of this Agreement.
(b) Licensee may not assign or transfer in any manner any of its rights or
obligations under this Agreement, except that all of Licensee's rights and
obligations under this Agreement may be assigned as part of a sale or other
transfer of substantially all of the business of Licensee. If such transfer or
if a "Change of Control of Licensee" results in Licensee or its business
directly or indirectly becoming part of, or an Affiliate of, a "Medtronic
Competitor" as defined in Exhibit B, then in addition to the fees and warrants
required under Article 3, after such transfer or such Change of Control of
Licensee, Licensee shall pay a royalty (the "Royalty" or "Royalties") equal
<PAGE>
to (***) percent (***%) of Net Sales thereafter of Licensed Products. For
purposes of this Agreement, a "Change of Control of Licensee" means any of the
following events: (i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934) acquires "beneficial ownership"
(as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly
or indirectly, of securities of Licensee or of an entity that directly or
indirectly owns Licensee, or is an Affiliate that directly or indirectly
controls Licensee, (referred to as "Licensee Parent") representing 50% or more
of the combined voting power (with respect to the election of directors) of
Licensee's or Licensee Parent's, as the case may be, then outstanding
securities; (ii) the consummation of a merger, share exchange, combination or
consolidation of Licensee or Licensee Parent, as the case may be, with or into
any other corporation, which would result in the voting securities of Licensee
or Licensee Parent, as the case may be, outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) less than 50% of the combined
voting power (with respect to the election of directors) of the securities of
Licensee or Licensee Parent, as the case may be, or of such surviving entity
outstanding immediately after such merger, share exchange, combination or
consolidation; or (iii) the consummation of a plan of complete liquidation of
Licensee or Licensee Parent, as the case may be, or of an agreement for the sale
or disposition by Licensee or Licensee Parent, as the case may be, of all or
substantially all of Licensee's or Licensee Parent's, as the case may be,
business or assets. The parties acknowledge that the intent of this Section is
to prevent any of the rights granted to Licensee under this Agreement from
inuring to the benefit of any Medtronic Competitor either directly or indirectly
without thereafter the Royalty on Net Sales of Licensed Products being paid to
Medtronic.
2.7 ACCESS TO MEDTRONIC'S CONSULTANT. Upon reasonable notice by Licensee
to Medtronic, during the first two months after execution of the Agreement,
Medtronic will use reasonable efforts to make (***) and a lead design engineer
of Medtronic that is familiar with the Licensed Technology (mutually selected by
the parties) available at such person's place of work to meet with Licensee,
subject to (***)'s or such engineer's other commitments and schedule, for up to
an aggregate ten hours in the case of ** or 40 hours in the case of the design
engineer, in the presence of one or more Medtronic representatives, to disclose
to Licensee on Medtronic's behalf those trade secrets and know-how included
within the Licensed Technology to allow Licensee to better understand and
practice the inventions disclosed therein to which the license under this
Agreement pertains. No such disclosures by (***) or Medtronic's design engineer
on Medtronic's behalf nor payment to (***) or Medtronic's design engineer shall
be deemed to amend, negate, or otherwise modify the exclusive consulting or
employment relationship between (***) or such design engineer, as the case may
be, and Medtronic or to transfer or otherwise grant any rights to Licensee other
than those rights to the Licensed Technology specifically set forth in this
Agreement.
- -----------------
*** Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.
<PAGE>
ARTICLE 3
LICENSE CASH PAYMENT AND WARRANTS
3.1 LICENSE CASH PAYMENT. On the date of the execution of this Agreement
by the parties (the "Effective Date"), Licensee shall immediately pay to
Medtronic a non-refundable royalty of One Million Five Hundred Thousand Dollars
($1,500,000) by wire transfer of such amount in immediately available funds to
an account designated by Medtronic.
3.2 INITIAL WARRANT. On the Effective Date, Licensee shall also
immediately grant and deliver to Medtronic or to a subsidiary designated by
Medtronic, as an additional royalty payment, the warrant (the "Initial Warrant")
attached as Exhibit C, entitling the holder to purchase 447,554 shares of common
stock of Licensee, which Licensee represents is equal to 5% (five percent) of
the total issued and outstanding common stock of Licensee as of the Effective
Date. The per share exercise price of such Initial Warrant shall be the average
closing price of Licensee's common stock for the twenty (20) trading days ending
on and including the trading day immediately preceding the Effective Date. The
Initial Warrant shall be immediately exercisable and shall expire four (4) years
from the Initial Warrant's issuance. Licensee represents that the Initial
Warrant conforms to and complies with the specifications set forth in this
Section 3.2.
3.3 ADDITIONAL WARRANT. Upon the First Commercial Introduction, Licensee
shall promptly grant and deliver (within thirty (30) days of the First
Commercial Introduction) to Medtronic or to a subsidiary designated by
Medtronic, as an additional royalty payment, an additional warrant (the
"Additional Warrant"), in the form attached as Exhibit C, except that: (i) the
Additional Warrant shall entitle the holder to purchase 223,777 shares of common
stock of Licensee, which Licensee represents is equal to 2.5% (two and one-half
percent) of the total issued and outstanding common stock of Licensee as of the
Effective Date; (ii) the per share exercise price of such Additional Warrant
shall be equal to: (A) 1.25 (one and one-quarter) times the average closing
price of Licensee's common stock for the twenty (20) trading days ending on and
including the trading day immediately preceding the date of the First Commercial
Introduction, in the event the Additional Warrant is being issued because of the
First Commercial Introduction, (B) the average closing price of Licensee's
common stock for the twenty (20) trading days ending on and including the
trading day immediately preceding the date of the announcement of the proposed
Change of Control, in the event the Additional Warrant is being issued because
of a Change of Control as provided in clause (iv) below, and (C) 1.25 (one and
one-quarter) times the average closing price of Licensee's common stock for the
twenty (20) trading days ending on and including the trading day immediately
preceding the 24-month anniversary date of the execution of this Agreement, in
the event the Additional Warrant is being issued prior to the First Commercial
Introduction as provided in the last sentence of this Section 3.3; (iii) the
Additional Warrant shall not become exercisable (except in the event of a Change
of Control of Licensee, as defined in Section 2.6) until the one-year
anniversary of the Additional Warrant's issuance and shall expire five (5) years
from the date of the Additional Warrant's issuance; and (iv) notwithstanding
anything herein to the contrary, the Additional Warrant shall,
<PAGE>
if not already issued, be issued immediately prior to any Change of Control of
Licensee and, shall, by its terms, automatically become exercisable immediately
prior to any Change of Control of Licensee. Furthermore, if the First
Commercial Introduction has not occurred by the twenty-four (24) month
anniversary of the execution of this Agreement, then the Licensee shall have the
right to issue and deliver to Medtronic the Additional Warrant as of such
twenty-four (24) month anniversary, provided, however, that if Licensee does not
issue and deliver such Additional Warrant to Medtronic by such twenty-four (24)
month anniversary, the license granted under this Agreement shall, without any
action on the part of the parties hereto, thereafter be a nonexclusive license
and the Additional Warrant shall not be issued and delivered until the First
Commercial Introduction.
3.4 REGISTRATION RIGHTS. Upon execution of this Agreement, Licensee shall
immediately execute and deliver to Medtronic or to a subsidiary designated by
Medtronic the registration rights agreement (the "Registration Rights
Agreement") attached as Exhibit D hereto, providing the registration rights set
forth therein with respect to the shares issuable pursuant to the Initial
Warrant and the shares issuable pursuant to the Additional Warrant.
3.5 PAID-UP LICENSE. Upon receipt by Medtronic of the royalty to be paid
by Licensee in cash under Section 3.1 and receipt by Medtronic or its designated
subsidiary of the warrants, constituting additional royalties, to be granted by
Licensee under Sections 3.2 and 3.3, the license granted by Medtronic to
Licensee under Section 2.1 shall be fully paid-up and no further payments shall
be due to Medtronic from Licensee under this Agreement, except for the Royalty
payments as and when required under Sections 2.6 and 4.5.
ARTICLE 4
ADDITIONAL OBLIGATIONS
4.1 RESTRICTIONS ON USE. Licensee will use all reasonable efforts to
ensure that all Licensed Products designed, developed, manufactured or sold by
Licensee or its Affiliates are not used outside of the Field of Use. Such
reasonable efforts shall include, but not be limited to:
(i) causing all such Licensed Products to be packaged, labeled,
advertised, marketed and otherwise identified and promoted in such manner
as to ensure to the fullest extent reasonably possible, subject to all
applicable laws and regulations, that such Licensed Products are not used
in an application outside of the Field of Use; and
(ii) advising Licensee's and its Affiliates' sales forces of such
Licensed Products, and any authorized distributors which are actively
promoting, representing and selling such Licensed Products, of the
permitted Field of Use hereunder and the provisions of this Section 4.1.
4.2 CONFIDENTIALITY. The parties acknowledge that the patent applications
listed in Exhibit A hereto, the inventions claimed therein, and all trade
secrets and know-how included
<PAGE>
within the Licensed Technology constitute "Confidential Information" of
Medtronic, subject to the exceptions set forth in Section 1.3. Licensee agrees
not to disclose or use any Medtronic Confidential Information except as
expressly permitted in connection with the exercise of its rights hereunder.
Licensee shall not disclose Medtronic Confidential Information to any employee
or consultant unless such employee or consultant is obligated under a
confidentiality agreement to maintain such Medtronic Confidential Information in
strict confidence, and not to use such information other than, in accordance
with the terms of this Agreement. Licensee agrees to hold the Medtronic
Confidential Information in strict confidence and treat it with not less than
the same degree of care to avoid disclosure as Licensee employs with respect to
Licensee's information of like importance.
4.3 INFRINGEMENT BY THIRD PARTY. Licensee shall promptly notify Medtronic
in writing if Licensee knows or has reason to believe that the rights of
Medtronic or Licensee relating to the Licensed Technology are being infringed by
a third party.
4.4 COVENANT REGARDING CLAIMS. Licensee agrees, for itself and for its
Affiliates, successors, assigns, and other parties claiming any title or license
to any Licensed Technology, not to sue or otherwise assert any claim against
Medtronic, or any of its Affiliates, successors, assigns, customers, vendors, or
others in contractual privity with any of the foregoing, by reason of or with
respect to the use of such Licensed Technology, or any improvements thereto, by
Medtronic or any of its Affiliates or any such other party; provided, however,
the foregoing shall not prevent any action on the part of Licensee, its
Affiliates, successors or assigns brought to enforce Licensee's rights and
Medtronic's obligations under this Agreement.
4.5 REPORTS AND PAYMENTS. From and after the event giving rise to the
Royalty obligation as provided in Section 2.6, within forty-five (45) days after
the end of each Quarter, Licensee shall provide Medtronic with a written report
indicating (i) the amount of Net Sales of Licensed Products during such Quarter,
and (ii) the amount of the Royalties due for such Quarter. Simultaneously with
making such report, Licensee shall pay to Medtronic the amount of Royalties then
due.
4.6 RECORDS. Licensee agrees to keep accurate written records sufficient
in detail to enable Medtronic to verify the information contained in the reports
described in Section 4.5. Such records for a particular Quarter shall be
retained by Licensee for a period of not less than four years after the end of
such Quarter.
4.7 AUDIT OF RECORDS. Upon reasonable notice and during regular business
hours, Licensee shall from time to time (but no more frequently than once
annually) make available the records referred to in Section 4.6 for audit by an
independent nationally recognized accounting firm selected by Medtronic to
verify the accuracy of the reports provided to Medtronic. Such representatives
shall execute a suitable confidentiality agreement reasonably acceptable to
Licensee prior to conducting such audit. Such representatives may disclose to
Medtronic only their conclusions regarding the accuracy and completeness of the
reports described in Section 4.5 and the records related thereto, and shall not
disclose Licensee's confidential business information
<PAGE>
to Medtronic without the prior written consent of Licensee. Such audits shall
be at Medtronic's cost and expense; provided that if any such audit reveals
underpayment of Royalties by five percent (5%) or more for any year, then
Licensee shall reimburse Medtronic for the fees and expenses of Medtronic's
independent auditors incurred by Medtronic in connection with such audit.
ARTICLE 5
INTELLECTUAL PROPERTY
5.1 NO OTHER REPRESENTATION OR WARRANTY. Medtronic represents that it
owns all right, title and interest in and to the Licensed Technology.
MEDTRONIC MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE
LICENSED TECHNOLOGY OR ANY LICENSED PRODUCTS, INCLUDING WITHOUT LIMITATION,
ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
PATENTABILITY, PATENT VALIDITY, NON-INFRINGEMENT, OR WARRANTIES ARISING FROM
COURSE OF DEALING OR USAGE OF TRADE.
5.2 CONTROL OF LICENSED TECHNOLOGY. Medtronic shall have the sole and
exclusive right, in Medtronic's absolute discretion, to exercise complete
control over the Licensed Technology, including, but not limited to, the right
to (i) prosecute any alleged infringement, misappropriation or misuse of the
Licensed Technology, and (ii) apply for, prosecute, or cause the issuance,
amendment, abandonment, maintenance, re-examination or reissue of any patents
included within the Licensed Technology, or any patent applications listed in
Exhibit A hereto.
5.3 INDEMNIFICATION.
(a) Licensee shall indemnify, defend and hold harmless Medtronic, its
Affiliates and Medtronic's and its Affiliates' respective officers, directors,
shareholders, employees and agents (collectively, all such indemnitees are
referred to in this Section 5.3(a) as "Medtronic Indemnitees") against and in
respect of any and all claims, demands, losses, obligations, liabilities,
damages (and including without limitation compensatory and punitive damages),
deficiencies, Actions, settlements, judgments, costs and expenses which the
Medtronic Indemnitees may incur or suffer or with which it may be faced
(including reasonable costs and legal fees incident thereto or in seeking
indemnification therefor) (collectively referred to as "Medtronic Damages")
arising out of or based upon (i) any Product Liability Claims resulting from
Licensee's development, manufacture, use, or sale of any Licensed Product, or
(ii) any breach of this Agreement by Licensee.
(b) Medtronic shall indemnify and hold harmless Licensee, its Affiliates
and Licensee's and its Affiliates' respective officers, directors, shareholders,
employees and agents (collectively, all such indemnitees are referred to in this
Section 5.3(b) as "Licensee Indemnitees") against and in respect of any and all
demands, losses, obligations, liabilities, damages (and
<PAGE>
including without limitation compensatory and punitive damages), deficiencies,
Actions, settlements, judgments, costs and expenses which the Licensee
Indemnitees may incur or suffer or with which it may be faced (including
reasonable costs and legal fees incident thereto or in seeking indemnification
therefor) (collectively referred to as "Licensee Damages") arising out of or
based upon any breach of this Agreement by Medtronic.
5.4 LICENSEE REGULATORY INTERACTION RIGHTS. Notwithstanding Section 5.2
above, interaction with the regulatory agencies in any country, including,
without limitation the FDA, concerning Licensed Products of Licensee or its
Affiliates in the Field of Use shall be exclusively conducted by Licensee and
Licensee shall be the official company sponsor. Subject to Section 5.3(a)
hereof, Licensee shall have complete authority to act as Licensee, in its sole
discretion, deems appropriate with respect to any such regulatory matter.
5.5 LICENSEE MARKETING RIGHTS. Subject to Sections 4.1 and 5.3(a) hereof,
nothing herein shall prevent or limit Licensee from setting its own prices for
Licensed Products or determining Licensee's marketing policies and practices in
its sole discretion.
5.6 TRADEMARK. Nothing in this Agreement shall be deemed to grant to
Licensee any right to use the trademark "Medtronic", the Medtronic corporate
logo, or any other trademark owned by Medtronic or its Affiliates.
ARTICLE 6
REPRESENTATIONS & WARRANTIES
6.1 ORGANIZATION. Each party represents and warrants to the other party
that such party is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation.
6.2 AUTHORIZATION OF TRANSACTION. Each party represents and warrants to
the other party that it has full power and authority (including full corporate
power and authority) to execute and deliver this Agreement and to perform its
obligations hereunder. All necessary corporate proceedings (including any
necessary approval by a party's board of directors) have been taken by such
party to duly authorize the execution, delivery, and performance of this
Agreement by such party. This Agreement constitutes the valid and legally
binding obligation of such party, enforceable against such party in accordance
with its terms and conditions.
ARTICLE 7
MISCELLANEOUS
7.1 ASSIGNMENT. Except as set forth in Section 2.6, Licensee may not
assign or transfer in any manner (whether by merger, share exchange, combination
or consolidation of any type, operation of Law, purchase or otherwise) any of
its rights or obligations under this
<PAGE>
Agreement. Any prohibited assignment or transfer shall be null and void.
Medtronic may assign or otherwise transfer its rights and obligations under this
Agreement to any successor in interest (by merger, share exchange, combination,
consolidation, operation of Law, purchase or otherwise), provided that such
assignee or successor agrees to be bound by the terms hereof.
7.2 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof and supersedes all
previous proposals or agreements, oral or written, and all negotiations,
conversations or discussions heretofore had between the parties related to the
subject matter of this Agreement.
7.3 SURVIVAL. All of the covenants, warranties and indemnifications made
in this Agreement are intended, or by their terms and provisions required, to be
observed and performed by the parties after the execution and delivery, and the
termination hereof and shall survive such execution, delivery and termination
and continue thereafter in full force and effect.
7.4 WAIVER, DISCHARGE, ETC. This Agreement may not be released,
discharged, abandoned, changed or modified in any manner, except by an
instrument in writing signed on behalf of each of the parties to this Agreement
by their duly authorized representatives. The failure of either party to
enforce at any time any of the provisions of this Agreement shall in no way be
construed to be a waiver of any such provision, nor in any way to affect the
validity of this Agreement or any part of it or the right of either party after
any such failure to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to be a waiver of any other or subsequent
breach.
7.5 EXECUTION IN COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become a binding agreement when one or more counterparts have been
signed by each party and delivered to the other party.
7.6 TITLES AND HEADINGS: CONSTRUCTION. The titles and headings to
Sections herein are inserted for the convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement. This Agreement shall be construed without regard to any presumption
or other rule requiring construction hereof against the party causing this
Agreement to be drafted.
7.7 BENEFIT. Nothing in this Agreement, expressed or implied, is intended
to confer on any person other than the parties to this Agreement or their
respective permitted successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
7.8 NOTICES. All notices or other communications to a party required or
permitted hereunder shall be in writing and shall be delivered personally or by
telecopy (receipt confirmed) to such party (or, in the case of an entity, to an
executive officer of such party) or shall be given by certified mail, postage
prepaid with return receipt requested, addressed as follows:
<PAGE>
if to Licensee, to:
Endocardial Solutions, Inc.
1350 Energy Lane, Suite 110
St. Paul, Minnesota 55108-5254
Attention: President and Chief Executive Officer
Telecopy Number: (612) 644-7897
and if to Medtronic, to:
Medtronic, Inc.
Corporate Center
7000 Central Avenue N.E.
Minneapolis, Minnesota 55432
with separate copies thereof addressed to:
Attention: General Counsel
Telecopy number: (612) 572-5459
Attention: Vice President, Corporate Development and
Associate General Counsel
Telecopy number: (612) 572-5404
Licensee or Medtronic may change their respective above-specified recipient
and/or mailing address by notice to the other party given in the manner herein
prescribed. All notices shall be deemed given on the day when actually
delivered as provided above (if delivered personally or by telecopy) or on the
day shown on the return receipt (if delivered by mail).
7.9 SEVERABILITY. If any provision of this Agreement is held invalid by a
court of competent jurisdiction, the remaining provisions shall nonetheless be
enforceable according to their terms. Further, if any provision is held to be
overbroad as written, such provision shall be deemed amended to narrow its
application to the extent necessary to make the provision enforceable according
to applicable Law and shall be enforced as amended.
7.10 MARKING. If requested by Medtronic, Licensee shall cause all Licensed
Products manufactured or sold under this license in the United States by it or
its Affiliates with a notice to the effect that such product is licensed under
the U.S. patents designated by Medtronic.
7.11 RIGHT OF FIRST OFFER. During the term of this Agreement, if
Medtronic determines to license any of the Licensed Technology for the field
of percutaneous myocardial revascularization, then Medtronic shall provide
notice to Licensee of its determination and give Licensee the opportunity to
negotiate in good faith with Medtronic for the grant of a license to Licensee
to make, use and sell Licensed Products in the field of percutaneous
myocardial
<PAGE>
revascularization. If a definitive agreement for such license has not been
entered into by the parties within sixty (60) days of the above-mentioned
notice, then Medtronic shall have no further obligation to conduct discussions
with Licensee and may enter into such agreements with third parties where the
material terms, in the aggregate, are no less favorable to Medtronic than those
offered by Licensee for acceptance by Medtronic to form a binding agreement
during such discussions with Medtronic.
(Signatures on the following page)
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this License Agreement
to be executed in the manner appropriate to each, effective as of the date first
above written.
ENDOCARDIAL SOLUTIONS, INC.
By: Jim Bullock
Its: President/CEO
MEDTRONIC, INC.
By: Michael Ellwein
Its: Vice President
<PAGE>
EXHIBIT A
U.S. PATENTS
Patent No. (***); Issued (***); Inventor: (***);
Entitled: (***)
U.S. PATENT APPLICATIONS
Serial No. (***); Filed (***); Inventor: (***)
Entitled: (***)
- -----------------
*** Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.
<PAGE>
EXHIBIT B
MEDTRONIC COMPETITORS
"Medtronic Competitors" for purposes of this Agreement include the following
entities, any Affiliates of any of the following entities or of any group or
combination of the following entities, or any successor thereto:
BROAD LINE
Arrow International
Baxter
Becton Dickinson
Biotronik Gmbh
Boston Scientific
C.R. Bard
Cook Medical
ELA Medical S.A.
Endosonics
Guidant Corporation
InControl
Johnson & Johnson
Mallinckrodt
Pfizer, Inc.
St. Jude Medical
Sulzer Ltd.
Sulzermedica
Terumo Corporation
United States Surgical Corporation
OTHER
Advanced Coronary Technologies
Arterial Vascular Engineering
Cardiovascular Dynamics
EP Medsystems
Global Therapeutics
Isostent
Kensey Nash
Merit Medical
Neocardia
Novoste
Perclose
<PAGE>
EXHIBIT C
WARRANT
THIS DOCUMENT IS SET UP USING HEADING NUMBERING STYLES. LEVEL 1 IS ALT 1, LEVEL
2 IS ALT 2 AND LEVEL 3 IS ALT 3. IF UNFAMILIAR WITH THIS FEATURE, PLEASE SEEK
ASSISTANCE.THIS WARRANT, AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE REOFFERED OR SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO
(1) REGISTRATION OR (2) AN OPINION OF COUNSEL FOR THE COMPANY OR OTHER COUNSEL
REASONABLY ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT
REQUIRED.
WARRANT
To Purchase 447,554
Shares of Common Stock of
ENDOCARDIAL SOLUTIONS, INC.
January 30, 1998
Endocardial Solutions, Inc., a Delaware corporation (the "Company"), for
value received, hereby certifies that Medtronic Asset Management, Inc., a
Minnesota corporation, or its registered assigns (the "Holder"), is entitled,
subject to the terms set forth below, upon exercise of this Warrant to purchase
from the Company, at any time or from time to time on or after the date hereof
and on or before 11:59 p.m. (Minneapolis, Minnesota time) on the four-year
anniversary of the date hereof, up to Four Hundred Forty-seven Thousand Five
Hundred Fifty-four (447,554) shares of Common Stock, $.01 par value, of the
Company ("Common Stock") at a purchase price per share equal to $11.1125
(subject to adjustment in accordance with Section 4 hereof), which number of
shares the Company hereby represents and warrants to equal five percent (5%) of
the total number of shares of Common Stock issued and outstanding on the date
hereof, and which per share purchase price the Company hereby represents and
warrants to equal the average closing price of Common Stock for the twenty (20)
trading days ending on and including the trading day immediately preceding the
date hereof. The shares issuable upon exercise or conversion of this Warrant,
and the purchase price per share, each as adjusted from time to time pursuant to
the provisions of this Warrant, are hereinafter referred to as the "Warrant
Shares" and the "Exercise Price," respectively.
This Warrant is further subject to the following provisions, terms and
conditions:
<PAGE>
EXERCISE OF WARRANT. This Warrant may be exercised by the Holder, in whole
or in part (but not as to any fraction of a share of Common Stock), by
surrendering this Warrant, with the Exercise Form attached hereto as Exhibit A
filled-in and duly executed by such Holder or by such Holder's duly authorized
attorney, to the Company at its principal office accompanied by payment of the
Exercise Price in the form of a check or wire transfer in the amount of the
Exercise Price multiplied by the number of shares as to which the Warrant is
being exercised.
CONVERSION OF WARRANT.
The Holder shall also have the right (the "Conversion Right") to
convert all or any portion of this Warrant into such number of shares
(rounded to the nearest whole share) of Company Common Stock equal to the
quotient obtained by dividing (i) the "Aggregate Warrant Spread" as of the
date the Conversion Right is exercised, by (ii) the "Market Price of the
Common Stock" as of the date the Conversion Right is exercised. The
Conversion Right shall be exercisable at any time or from time to time
prior to expiration of this Warrant by surrendering this Warrant with the
Conversion Form attached hereto as Exhibit B filled-in and duly executed by
such Holder or by such Holder's duly authorized attorney to the Company at
its principal office.
For purposes of this Section 2, the "Aggregate Warrant Spread" of all
or a portion of this Warrant as of a particular date shall equal (i) the
Market Price of the Common Stock multiplied by the number of shares of
Common Stock purchasable upon exercise of all or such portion of this
Warrant on such date, minus (ii) the Exercise Price multiplied by the
number of shares of Common Stock purchasable upon exercise of all or such
portion of this Warrant on such date. For purposes of this Section 2, the
"Market Price of the Common Stock" as of a particular date shall equal: (i)
if the Common Stock is traded on an exchange or is quoted on either the
Nasdaq National Market or Small-Cap Market, then the average of the closing
or last sale prices, respectively, reported for the ten (10) trading days
immediately preceding such date, or (ii) if the Common Stock is not traded
on an exchange, the Nasdaq National Market, or the Nasdaq Small-Cap Market
but is traded in the local over-the-counter market, then the average of the
mid-points between the highest bid and lowest asked quotations for each of
the ten (10) trading days immediately preceding such date.
EFFECTIVE DATE OF EXERCISE OR CONVERSION. Each exercise or conversion of
this Warrant shall be deemed effective as of the close of business on the day on
which this Warrant is surrendered to the Company as provided in Section 1 or
Section 2(a) above. At such time, the person or persons in whose name or names
any certificates for Warrant Shares shall be issuable upon such exercise or
conversion shall be deemed to have become the holder or holders of record of the
Warrant Shares represented by such certificates. Within ten (10) days after the
exercise or conversion of this Warrant in full or in part, the Company will, at
its expense, cause to be issued in the name of and delivered to the Holder or
such other person as the Holder may (upon payment by such Holder of any
applicable transfer taxes) direct: (i) a certificate or certificates for the
number of full Warrant Shares to which such Holder is entitled upon such
exercise or
<PAGE>
conversion, and (ii) unless this Warrant has expired, a new Warrant or Warrants
(dated the date hereof and in form identical hereto) representing the right to
purchase the remaining number of shares of Common Stock, if any, with respect to
which this Warrant has not then been exercised or converted.
ADJUSTMENTS TO EXERCISE PRICE. The above provisions are, however, subject
to the following:
(i) If the Company shall at anytime after the date of this Warrant
subdivide or combine the outstanding shares of Common Stock or declare
a dividend payable in Common Stock, then the number of shares of
Common Stock for which this Warrant may be exercised as of immediately
prior to the subdivision, combination or record date for such dividend
payable in Common Stock shall forthwith be proportionately decreased,
in the case of combination, or increased, in the case of subdivision
or dividend payable in Common Stock.
(ii) If the Company shall at anytime after the date of this
Warrant subdivide or combine the outstanding shares of Common Stock or
declare a dividend payable in Common Stock, the Exercise Price in
effect immediately prior to the subdivision, combination or record
date for such dividend payable in Common Stock shall forthwith be
proportionately increased, in the case of combination, or decreased,
in the case of subdivision or dividend payable in Common Stock.
If any capital reorganization or reclassification of the capital stock
of the Company, or share exchange, combination, consolidation or merger of
the Company with another corporation, or the sale of all or substantially
all of its assets to another corporation shall be effected in such a way
that holders of Common Stock shall be entitled to receive stock, securities
or assets with respect to or in exchange for Common Stock, then, as a
condition of such reorganization, reclassification, share exchange,
combination, consolidation, merger or sale, lawful and adequate provision
shall be made whereby the Holder shall thereafter have the right to receive
upon exercise of this Warrant upon the basis and upon the terms and
conditions specified in this Warrant and in lieu of the shares of the
Common Stock of the Company into which this Warrant was immediately
theretofore exercisable or convertible, such shares of stock, securities or
assets as may be issued or payable with respect to or in exchange for a
number of outstanding shares of such Common Stock equal to the number of
shares of such stock into which this Warrant was immediately theretofore
exercisable had such reorganization, reclassification, share exchange,
combination, consolidation, merger or sale not taken place, and in any such
case appropriate provisions shall be made with respect to the rights and
interests of Holder to the end that the provisions hereof (including
without limitation provisions for adjustments of the Exercise Price and of
the number of shares purchasable upon exercise or conversion of this
Warrant) shall thereafter be applicable, as nearly as may be, in relation
to any shares of stock, securities or assets thereafter deliverable upon
the exercise or conversion hereof. The Company shall not effect any
<PAGE>
such share exchange, combination, consolidation, merger or sale, unless
prior to the consummation thereof the successor corporation (if other than
the Company) resulting from such share exchange, combination, consolidation
or merger or the corporation purchasing such assets shall assume by written
instrument executed and mailed to the Holder at the last address of such
Holder appearing on the books of the Company, the obligation to deliver to
such Holder such shares of stock, securities or assets which, in accordance
with the foregoing provisions, such Holder may thereafter be entitled to
receive upon exercise or conversion of this Warrant.
If at anytime after the date of this Warrant the Company distributes
to all holders of Common Stock any assets (excluding ordinary cash
dividends), debt securities, or any rights or warrants to purchase debt
securities, assets or other securities (including Common Stock), the
Exercise Price shall be adjusted in accordance with the formula:
1
E = E x (O x M) - F
---------------
O x M
where:
1
E = the adjusted Exercise Price.
E = the current Exercise Price.
M = the average market price of Common Stock for the 30
consecutive trading days commencing 45 trading days before
the record date mentioned below.
O = the number of shares of Common Stock outstanding on the
record date mentioned below.
F = the fair market value on the record date of the aggregate of
all assets, securities, rights or warrants distributed. The
Company's Board of Directors shall determine the fair market
value in the exercise of its reasonable judgment.
The adjustment shall be made successively whenever any such distribution is
made and shall become effective immediately after the record date for the
determination of stockholders entitled to receive the distribution.
(d) Upon any adjustment of the Exercise Price, then and in each such
case, the Company shall give written notice thereof, by first class mail,
postage prepaid, addressed to the Holder of this Warrant at the address of
such Holder as shown on the books of the Company, which notice shall state
the Exercise Price resulting from such adjustment and the increase or
decrease, if any, in the number of shares for which this Warrant may be
exercised, setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based.
<PAGE>
COMMON STOCK. As used herein, the term "Common Stock" shall mean and
include the Company's presently authorized shares of common stock and shall also
include any capital stock of any class of the Company hereafter authorized which
shall not be limited to a fixed sum or percentage in respect of the rights of
the holders thereof to participate in dividends or in the distribution,
dissolution or winding up of the Company.
NO VOTING RIGHTS. This Warrant shall not entitle the Holder to any voting
rights or other rights as a shareholder of the Company unless and until
exercised or converted pursuant to the provisions hereof.
EXERCISE OR TRANSFER OF WARRANT OR RESALE OF COMMON STOCK. The Holder, by
acceptance hereof, agrees to give written notice to the Company before
transferring this Warrant, in whole or in part, or transferring any shares of
Common Stock issued upon the exercise or conversion hereof, of such Holder's
intention to do so, describing briefly the manner of any proposed transfer.
Such notice shall include an opinion of counsel reasonably satisfactory to the
Company that (i) the proposed exercise or transfer may be effected without
registration or qualification under the Securities Act of 1933, as amended (the
"Act") and any applicable state securities or blue sky laws, or (ii) the
proposed exercise or transfer has been registered under such laws. Upon
delivering such notice, such Holder shall be entitled to transfer this Warrant
or such Warrant Shares, all in accordance with the terms of the notice delivered
by such Holder to the Company, provided that an appropriate legend may be
endorsed on the certificates for such shares respecting restrictions upon
transfer thereof necessary or advisable in the opinion of counsel to the Company
to prevent further transfer which would be in violation of Section 5 the Act and
applicable state securities or blue sky laws.
If in the opinion of counsel to the Company or other counsel reasonably
acceptable to the Company the proposed transfer or disposition of this Warrant
or the Warrant Shares described in the written notice given pursuant to this
Section 7 may not be effected without registration of this Warrant or the
Warrant Shares, the Company shall promptly give written notice thereof to the
Holder within 10 days after the Company receives such notice, and such holder
will limit its activities in respect to such as, in the opinion of such counsel,
is permitted by law.
COVENANTS OF THE COMPANY. The Company covenants and agrees that all shares
which may be issued upon conversion of this Warrant will, upon issuance, be duly
authorized and issued, fully paid, nonassessable and free from all taxes, liens
and charges with respect to the issue thereof. The Company further covenants
and agrees that the Company will at all times have authorized, and reserved for
the purpose of issue upon exercise hereof, a sufficient number of shares of its
Common Stock to provide for the exercise of this Warrant.
CERTAIN NOTICES. The Holder shall be entitled to receive from the Company
immediately upon declaration thereof and at least thirty (30) days prior to the
record date for determination of shareholders entitled thereto or to vote
thereon (or if no record date is set, prior to the event), written notice of any
event which could require an adjustment pursuant to Section 4 hereof or of the
dissolution or liquidation of the Company. All notices hereunder shall be in
writing and shall be delivered personally or by telecopy (receipt confirmed) to
such party (or, in the case of an
<PAGE>
entity, to an executive officer of such party) or shall be sent by a reputable
express delivery service or by certified mail, postage prepaid with return
receipt requested, addressed as follows:
if to Medtronic, to:
Medtronic, Inc.
Corporate Center
7000 Central Avenue N.E.
Minneapolis, MN 55432
with separate copies thereof addressed to:
Attention: General Counsel
FAX (612) 572-5459
Attention: Vice President, Corporate Development and Associate General
Counsel
FAX (612) 572-5404
if to the Company to:
Endocardial Solutions, Inc.
1350 Energy Lane, Suite 110
St. Paul, MN 55108-5254
Attention: President and Chief Executive Officer
FAX (612) 644-7897
Any party may change the above-specified recipient and/or mailing address
by notice to all other parties given in the manner herein prescribed. All
notices shall be deemed given on the day when actually delivered as provided
above (if delivered personally or by telecopy) or on the day shown on the return
receipt (if delivered by mail or delivery service).
REGISTRATION RIGHTS. The Holders of this Warrant and the Warrant Shares
are entitled to the rights and benefits of all of the terms, provisions and
conditions of that certain Registration Rights Agreement dated January 30, 1998
between Medtronic, Inc. and the Company, provided an express sharing or
assignment of such rights and benefits is made to each such Holder by such
Holder's transferor.
MISCELLANEOUS.
No amendment, modification or waiver of any provision of this Warrant
shall be effective unless he same shall be in writing and signed by the
holder hereof.
This Warrant shall be governed by and construed in accordance with the
laws of the State of Minnesota.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
authorized officer and dated as of the date stated above.
ENDOCARDIAL SOLUTIONS, INC.
By:
James W. Bullock, President and Chief
Executive Officer
<PAGE>
Exhibit A
NOTICE OF EXERCISE OF WARRANT -- To Be Executed by the Registered Holder in
Order to Exercise the Warrant
The undersigned hereby irrevocably elects to exercise the attached Warrant
to purchase, for cash pursuant to Section 1 thereof, ________________ shares of
Common Stock issuable upon the exercise of such Warrant. The undersigned
requests that certificates for such shares be issued in the name of
____________________. If this Warrant is not fully exercised, the
undersigned requests that a new Warrant to purchase the balance of shares
remaining purchasable hereunder be issued in the name of ______________________.
Date: _________, ______
[name of registered Holder]
[signature]
[street address]
[city, state, zip]
[tax identification number]
<PAGE>
Exhibit B
NOTICE OF CONVERSION OF WARRANT -- To Be Executed by the Registered Holder
in Order to Convert the Warrant on a
Cashless Basis
The undersigned hereby irrevocably elects to convert, on a cashless basis,
a total of ______________ shares of Common Stock otherwise purchasable upon
exercise of the attached Warrant into such lesser number of shares of Common
Stock as determined by Section 2 of the Warrant. The undersigned requests that
certificates for such shares be issued in the name of
__________________________________. If this Warrant is not fully converted, the
undersigned requests that a new Warrant to purchase the balance of shares
remaining purchasable hereunder be issued in the name of ______________________.
Date: _________, ______
[name of registered Holder]
[signature]
[street address]
[city, state, zip]
[tax identification number]
<PAGE>
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
