LICENSE AND DEVELOPMENT AGREEMENT

Development Agreement

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MICROVISION INC

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Title: LICENSE AND DEVELOPMENT AGREEMENT
Governing Law: Delaware Date: 3/17/2005
Industry: Scientific and Technical Instr. Sector: Technology

LICENSE AND DEVELOPMENT AGREEMENT, Parties: microvision inc

Exhibit 10.29

Execution Copy

LICENSE AND DEVELOPMENT AGREEMENT

THIS LICENSE AND DEVELOPMENT AGREEMENT is made as of December 30, 2004 (the " Effective Date ") by and between MICROVISION, INC. , a corporation organized under the laws of the state of Delaware (hereinafter referred to as " MVIS "), and ETHICON ENDO-SURGERY, INC. , a wholly-owned subsidiary of Johnson & Johnson, and a corporation organized under the laws of Ohio (hereinafter referred to as " Ethicon "). Each of Ethicon and MVIS may hereafter be referred to as a "Party" or collectively as "Parties."

WHEREAS , MVIS and Ethicon entered into a Technology Feasibility Agreement (now terminated) in which the Parties collaborated in an initial development program directed to Micro-Electro-Mechanical Systems (" MEMS ") resonant scanning mirror image capture devices for use in all medical endoscopic applications with the exception of photo dynamic therapy, confocal imaging, dental, arthroscopic and ear, nose and throat.

WHEREAS , The Parties wish to continue with the further development of the MEMS resonant scanning mirror image capture devices.

WHEREAS , If the product development is successful, the Parties wish to have the developed product commercialized for applications in the Field (defined below), and further, to grant Ethicon an option for MVIS to supply the developed product to Ethicon for use within the Field.

NOW, THEREFORE , in consideration of the foregoing recitals and the mutual covenants and agreements contained herein, the Parties hereto, intending to be legally bound, do hereby agree as follows:

ARTICLE 1
DEFINITIONS

1.1 "Agreement" means this License and Development Agreement and all exhibits, schedules, addenda and other attachments hereto, as amended from time to time.

1.2 "Affiliate" of a Party means any entity or person that directly or indirectly controls, is controlled by or is under common control with such Party. For purposes of this definition, "control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting securities, by contract or otherwise.

1.3 "Background MVIS Copyrights" means any original works of authorship fixed in any tangible medium of expression, including computer software (both source code and object code) and mask works as defined in Section 901 of the U.S. Copyright Act, whether developed prior to the Term or during the Term, that are owned or under the Control of MVIS, and that are incorporated into any Licensed Product or any documentation related to a Licensed Product.

1.4 "Background MVIS Intellectual Property" means, collectively, the Background MVIS Patent Rights, Background MVIS Copyrights and Background MVIS Know-How.

1.5 "Background MVIS Know-How" means all Know-How owned or under the Control of MVIS that directly relates to the Licensed Products that (a) is not Developed MVIS Know-How, and (b) is necessary to manufacture and commercialize the Licensed Product.

1.6 "Background MVIS Patent Rights" means all Patent Rights owned or Controlled by MVIS that relate to Licensed Products for use in the Field, whether existing prior to the Term or developed during the Term, including such Patent Rights under the patents and patent applications set forth in Exhibit A , which, with respect to Patent Rights owned by Third Parties, are subject to the terms and conditions of the license agreements between MVIS and the Third Party licensors.

1.7 "Bankruptcy Event" means (i) voluntary or involuntary proceedings are instituted by or against an entity in bankruptcy or under Title 7 of the U.S. Code, or (ii) proceedings are instituted by or against an entity for the dissolution of such entity, which proceedings, if involuntary, shall not have been dismissed within sixty (60) days after the date of filing, or (iii) substantially all of the assets of such entity are seized or attached and not released within sixty (60) days thereafter, or (iv) MVIS's bankruptcy trustee rejects this Agreement under Title 11.

1.8 "Calendar Quarter" means the usual and customary Ethicon calendar quarter, used for internal accounting purposes, of approximately three (3) months, in which each of the first two months consist of four weeks and the third month consists of five weeks.

1.9 "CPI" means the percent change over 12 months, not seasonally adjusted, of Consumer Price Index-All Urban Consumers, US City Average, All Items Less Food and Energy as published by the United States Department of Labor Bureau of Labor Statistics.

1.10 "Change in Control" means in respect of a Party hereto (i) the liquidation or dissolution of such Party or the sale or other transfer by such Party (excluding transfers to subsidiaries) of all or substantially all of its assets; or (ii) the occurrence of a tender offer, stock purchase, other stock acquisition, merger, consolidation, recapitalization, or other transaction, as a result of which any person, entity or group (a) becomes the beneficial owner, directly or indirectly, of securities of such Party representing more than 50% of the ordinary shares of such Party or representing more than 50% of the combined voting power with respect to the election of directors (or members of any other governing body) of such Party's then outstanding securities, (b) obtains the ability to appoint a majority of the Board of Directors (or other governing body) of such Party, or obtains the ability to direct the operations or management of such Party or any successor to such Party's business; provided, however, that Change in Control shall not include the issuance by a Party of equity to the public through a public offering or offerings.

1.11 "Control" means with respect to any Intellectual Property Right, possession by a Party of the ability to grant the other Party a license or sublicense without violating the terms of any agreement, or otherwise affecting any arrangement with any Third Party.

1.12 "Developed Ethicon Copyrights" means any original works of authorship fixed in any tangible medium of expression, including computer software (both source code and object code) and mask works, as defined in Section 901 of the U.S. Copyright Act, developed in the course of a Development Program that are owned or Controlled by Ethicon pursuant to Article 9.1 (Ownership of Intellectual Property Rights).

1.13 "Developed Ethicon Intellectual Property" means, collectively, the Developed Ethicon Patent Rights, Developed Ethicon Copyrights and Developed Ethicon Know-How.

1.14 "Developed Ethicon Know-How" means all Know-How developed in the course of a Development Program that is owned or Controlled by Ethicon pursuant to Article 9.1 (Ownership of Intellectual Property Rights).

1.15 "Developed Ethicon Patent Rights" means all Patent Rights under the patents and patent applications covering inventions made in the course of the Development Program that are owned or Controlled by Ethicon pursuant to Article 9.1 (Ownership of Intellectual Property Rights).

1.16 "Developed Joint Intellectual Property" means, collectively, the Developed Joint Patent Rights and all other Intellectual Property Rights developed in the course of a Development Program that are owned or Controlled jointly by the Parties pursuant to Article 9.1 (Ownership of Intellectual Property Rights).

1.17 "Developed Joint Patent Rights" means all Patent Rights to all inventions made in the course of a Development Program that are owned or Controlled jointly by the Parties pursuant to Article 9.1 (Ownership of Intellectual Property Rights).

1.18 "Developed MVIS Copyrights" means any original works of authorship fixed in any tangible medium of expression, including computer software (both source code and object code) and mask works, as defined in Section 901 of the U.S. Copyright Act, developed in the course of a Development Program that are owned or Controlled by MVIS pursuant to Article 9.1 (Ownership of Intellectual Property Rights).

1.19 "Developed MVIS Intellectual Property" means, collectively, the Developed MVIS Patent Rights, Developed MVIS Copyrights and Developed MVIS Know-How.

1.20 "Developed MVIS Know-How" means all Know-How developed in the course of a Development Program that is owned or Controlled by MVIS pursuant to Article 9.1 (Ownership of Intellectual Property Rights).

1.21 "Developed MVIS Patent Rights" means all Patent Rights to all inventions made in the course of a Development Program that are owned or Controlled by MVIS pursuant to Article 9.1 (Ownership of Intellectual Property Rights).

1.22 "Development Program" means collectively the Initial Development Program and future development programs to develop Licensed Products that the Parties mutually agree to undertake in accordance with the terms and conditions of this Agreement.

1.23 [ ]*

1.24 "Ethicon Improvement Patent Rights" means all Patent Rights owned or Controlled by Ethicon, excluding Developed Ethicon Patent Rights, directed to the Licensed Products (including Patent Rights directed to MEMS image capture technology generally).

1.25 "Ethicon Patented Product" means a product which, but for the licenses granted under this Agreement by Ethicon to MVIS, would infringe at least one Valid Claim of the Developed Ethicon Patent Rights or Ethicon Improvement Patent Rights in the country in which any such instrument or component thereof is made, used, offered for sale, sold, imported or otherwise disposed of solely within the Field.

1.26 "Ethicon Patent Rights" means all Developed Ethicon Patent Rights and Ethicon Improvement Patent Rights owned or Controlled by Ethicon.

1.27 "Ethicon Product" means [ ]*

1.28 "Events of Default" has the meaning given in Article 11.4.

1.29 "FDA" means the United States Food and Drug Administration.

1.30 "Field" means [ ]* as may be subsequently limited by MVIS exercising its Grant Back Option for one or more Sub-Field in accordance with Article 5.8 (MVIS Sub- Field Grant Back Option).

*This portion of the Exhibit has been omitted pursuant to a Request for Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934, as amended. The complete Exhibit, including the portions for which confidential treatment has been requested, has been filed separately with the Securities and Exchange Commission.

1.31 "Intellectual Property" or "Intellectual Property Rights" means patents, Patent Rights, design rights, trademarks, service marks, trade names, trade dress, copyrights, works of authorship, mask work rights, database rights, Know-How, and trade secrets, and any other intellectual property rights, and any and all registrations and applications for all of the foregoing throughout the world.

1.32 "Initial Development Program" means the Development Program set forth in Exhibit B under which the Parties develop a Licensed Product.

1.33 "Initial Development Statement of Work" means the statement of work as set forth in Exhibit B and amended from time to time as mutually agreed to by the Parties and where any inconsistencies between the terms of Articles 1 through 13 of this Agreement and Exhibit B shall be controlled by the terms of Articles 1 through 13.

1.34 "Know-How" means all know-how, trade secrets, inventions, disclosures of inventions, data, processes, techniques, procedures, compositions, devices, methods, formulas, protocols, and information, whether or not patentable, which are confidential, including, without limitation, all chemical, biochemical, toxicological and scientific research information.

1.35 "Licensed Products" means [

1.36 "MVIS Intellectual Property" means collectively Background MVIS Intellectual Property and Developed MVIS Intellectual Property.

1.37 "MVIS Patent Rights" means collectively Background MVIS Patent Rights, Developed MVIS Patent Rights and MVIS's interests in Developed Joint Patent Rights.

1.38 "Medical Field" means [

1.39 "Net Sales" means [

1.40 "Patent Rights" means all rights under patents and patent applications and any and all patents issuing therefrom (including utility, model and design patents and certificates of invention), together with any and all substitutions, extensions (including supplemental protection certificates), registrations, confirmations, reissues, divisionals, continuations, continuations-in-part, re-examinations, renewals and foreign counterparts of the foregoing.

1.41 "Patented Product" means a Licensed Product which, but for the licenses granted under this Agreement, would infringe at least one Valid Claim of the MVIS Patent Rights in the country in which any such instrument or component thereof is made, used, offered for sale, sold, imported or otherwise disposed of solely within the Field.

1.42 "Phase 2 Initial Funding" means the initial funding of [

]* toward Phase 2 development that Ethicon provided to MVIS pursuant to that letter from Ethicon to MVIS dated October 14, 2004, Ethicon Purchase Orders [ ]*.

1.43 "Regulatory Agency" means the regulatory agency in a country other than the United States, which performs the same or equivalent function as the FDA in the United States with respect to the Licensed Product, and any reference to a rule or requirement of the FDA herein shall, if the circumstances make it applicable, refer to the equivalent rule or requirement of any Regulatory Agency.

1.44 "Sub-Field" means individually the following medical areas within the Field [

]*.

1.45 "Sublicensee" shall mean any Third Party sublicensee of the rights granted by one Party to the other Party under this Agreement or the Supply Addendum.

1.46 "Supply Addendum" means the Supply Addendum between MVIS and Ethicon in the form attached hereto as Exhibit D that may be entered into by the Parties pursuant to Article 4.4 of this Agreement (Supply Addendum Option).

1.47 "Territory" means worldwide.

1.48 "Third Party" means any person or entity other than MVIS or Ethicon or an Affiliate of MVIS or Ethicon.

1.49 "Valid Claim" means a claim of any issued U.S. or foreign patent included within the MVIS Patent Rights, which claim has not lapsed, been canceled or become abandoned and has not been declared invalid or unenforceable by an unreversed and unappealable decision or judgment of a court or other appropriate body of competent jurisdiction, and which has not been admitted to be invalid or unenforceable through reissue, disclaimer or otherwise.

1.50 Other Defined Terms. The following terms are defined in the following sections of this Agreement:

Defined Term	Section
Advisory Committees			Article 3.1
Appeal Arbitrator			Article 12.1(a)(vii)
Applicable Royalty Rate			Article 6.4
Buy Out Option	Article 5.9
Commercial Exploitation			Article 2.3
Confidential Information			Article 13.1(a)
CPR			Article 12.1(a)
Date of Termination			Article 4.1(b)
Developed IP Option			Article 14.6(a)
Development Fee Credits			Article 6.5(d)
Disclosing Party			Article 13.1(a)
Effective Date			Preamble
Eligible Sub	Field Article 5.8(a)
[ ]*
Ethicon			Preamble
Excluded Sub	Field Article 5.8(a)
Exclusive Licensed Products			Article 6.5(f)
Expiration Date			Article 11.1(a)
Evaluation Period			Article 14.2(c)
Evaluation Period Extension			Article 14.2(c)
Event of Default			Article 11.4
Force Majeure Event			Article 11.7
Grant Back Option			Article 5.8
Information Managers			Article 13.1(e)(i)
License Maintenance Fee		Article 6.5(a)
License Maintenance Fee Buyout		Article 6.5(e)
Licensor		Article 11.8
Licensee		Article 11.8
Maintenance Fee Year		Article 6.5
Maintenance Period Start Date		Article 6.5(a)
MEMS		Recitals
MVIS		Preamble
MVIS Licensors		Article 10.5
MVIS Transfer Price		Article 6.4
Outside Activities		Article 2.1
Project Managers		Article 3.1
Receiving Party		Article 13.1(a)
Regulatory Filings		Article 4.3(b)(i)
Restricted Exclusive License Option		Article 6.5(f)

Services	Article 4.1(a)
Supply Addendum Option	Article 4.4
Term	Article 11.1
Title 11	Article 11.8
[ ]*

ARTICLE 2
SCOPE OF DEVELOPMENT

2.1 Activities Outside the Scope of this Agreement. Except as specifically provided herein, all activities of the Parties that are not directly related to or are not performed or conducted in furtherance of this Agreement, including any activities, any process, product or technology developments, or any other inventions with Third Parties prior to, during or after termination or expiration of this Agreement, are outside the scope of this Agreement (the " Outside Activities "), and nothing herein is intended to limit, restrict or prohibit MVIS or its Affiliates from using the MVIS Intellectual Property Rights, or Ethicon or its Affiliates from using any Ethicon Patent Rights, for such Outside Activities, or is intended to be construed to grant an interest in or license to such Outside Activities to the other Party.

2.2 Licensed Products.

a. MVIS agrees that during the Initial Development Program, it shall not develop or commercially exploit, for any Third Party, Licensed Products for use within the Field.

b. MVIS agrees that during the Term of this Agreement, it shall not enter into any agreement with a Third Party that conflicts with the terms and conditions of this Agreement.

c. Ethicon agrees that during the term of the Initial Development Program, it (i) shall not develop, other than as part of the Initial Development Program, and (ii) shall not engage any Third Party to develop, any Licensed Product for use within the Field.

2.3 Commercial Exploitation [

2.4 No Naming Individuals. The Parties agree that as between themselves, the directors, officers, employees and individuals acting as agents of or for any Party to this Agreement shall not be named as parties to any suit or arbitration proceeding brought in connection with the transactions contemplated by this Agreement solely as a result of performing actions within the scope of their authority as a director, officer, employee or agent of a Party to this Agreement. This Article 2.4 is intended for the benefit of the respective Parties to this Agreement only. Either Party may waive the application of this provision as to its own directors, officers, employees, and agents, and no director, officer, employee, or agent of either Party is an intended third party beneficiary of this Article 2.4, and no such individual will have the right to enforce this Article 2.4.

ARTICLE 3
DEVELOPMENT PROGRAM MANAGEMENT

3.1 Formation. The activities of the Parties under this Agreement shall be managed by two project managers, one assigned by MVIS and one assigned by Ethicon (the " Project Managers "). The Parties may reassign their respective Project Managers at their sole discretion. The Project Managers may assign additional representatives from each Party to form advisory committees as may be required within each functional group (e.g. Regulatory, Clinical, R&D, and Manufacturing Operations) (the " Advisory Committees ").

3.2 Meetings. The Project Managers shall meet at least once per quarter or as they deem necessary at their discretion by teleconference or by meeting at locations and times to be determined by the Project Managers and/or Advisory Committee. If the Parties meet, meetings shall alternate locations between Blue Ash, Ohio and Bothell, Washington. Each Party shall bear all travel and related costs for its representatives. Each meeting shall be chaired by the Project Manager from the host Party.

3.3 Development Program. The Project Managers' role shall include supervising and managing the Development Program, defined in Article 4 below. In addition, the Project Managers are responsible for reviewing (and if necessary revising) specifications, budgets, timetables, prices, patent strategy, and clinical programs for the Development Program, and shall have the responsibility to communicate and approve the decisions regarding the foregoing. All such decisions shall be made by consensus between the Parties. Further, MVIS agrees to perform all Services under the Development Program utilizing any Ethicon specified design controls and other requirements for regulatory approval purposes that have been provided to MVIS in writing upon reasonable advance notice. MVIS further agrees that Ethicon shall have the right to audit MVIS's performance hereunder to ensure compliance with such specified design controls and regulatory approval requirements, including all Regulatory Agency design controls. Such audit shall be performed upon reasonable notice to MVIS during normal business hours at Ethicon's expense. MVIS shall make reasonable, mutually agreeable and timely efforts, at MVIS's expense, to close any identified audit gaps.

3.4 Patent Strategy. The Project Managers shall be responsible for managing and reviewing the patent strategy for inventions made in the course of the Development Program and shall meet monthly to review invention disclosures, identify patentable inventions, determine inventorship, and determine whether patents should be sought for such inventions in accordance with Article 9 (Intellectual Property Rights and Infringement).

ARTICLE 4
Development Program and Commercialization Activities

4.1 Development Services.

a. Ethicon wants MVIS to undertake development services for Ethicon in connection with the development of Licensed Products for use in the Field (collectively referred to as the " Services ") in accordance with Development Program(s), and MVIS will use commercially reasonable efforts to provide such Services. Services for the Initial Development Program are set forth in Exhibit B as the Initial Development Statement of Work. Each Party will keep the other informed of the progress of the work that is conducted at its facilities and shall permit the other Party's representatives to inspect the work from time to time as deemed reasonably necessary by the Party and upon prior approval of the other Party. In the event that Ethicon desires MVIS to undertake an additional Development Program to develop Licensed Products outside the scope of Services, Ethicon and MVIS shall negotiate a separate understanding similar in nature to the terms and statement of work of Exhibit B for each such additional Development Program(s).

b. Ethicon reserves the right at any time to discontinue all or any part of the Services for which MVIS is engaged for Ethicon, upon written notice (the " Date of Termination "). Ethicon shall be liable for [

c. Independent Contractor . For the purpose of this Agreement and the performance of the Services to be provided under this Agreement, MVIS shall be and shall be deemed to be, an independent contractor and not the agent or employee of Ethicon. MVIS shall be solely responsible for the payment when applicable of any licenses, taxes, or any other costs associated with MVIS's complying with pertinent laws and regulations. MVIS shall be solely responsible for complying with all pertinent laws and regulations applicable to the performance of Services under this Agreement and for the payment, when applicable, of any licenses, taxes or other costs associated with such compliance.

d. [

e. No Affirmative Obligation . In no event shall anything in this Agreement be construed to impose upon Ethicon an affirmative obligation to engage MVIS in any services other than the Services.

f. Changes . Any material changes and/or additions to the Development Program must be agreed to by both Parties in writing as authorized by Ethicon's and MVIS's Project Manager. MVIS and Ethicon recognize that changes or modifications to the Development Program may be required, that such changes or modifications may have a material impact upon projected costs and schedules, and each Party agrees to negotiate in a reasonable manner to reach agreement for any such changes or modifications. MVIS shall not be required to implement any changes to the Development Program unless and until such changes are agreed upon by both Parties in writing.

4.2 Initial Development Program and Services. As set forth in Exhibit B .

4.3 Ethicon Commercialization Activities. [ ]*

a. Sales and Marketing . Ethicon will sell, offer for sale, contract, distribute, enter orders, invoice, collect, and market the Licensed Products in the Territory.

b. Regulatory .

i. Ethicon shall be responsible for filing for regulatory approval for the Licensed Product developed during the Development Program in the United States and in all countries throughout the Territory (the " Regulatory Filings ").

ii. At Ethicon's request, MVIS shall provide Ethicon for its use in obtaining regulatory approvals for the Licensed Product copies of the following items that pertain to the Licensed Products to the extent that such items are Controlled by MVIS: all data, including, but not limited to, results and related information from clinical trials (if any), physical test data, biocompatability data, animal data, bench testing and stability data.

4.4 Supply Addendum Option. If Ethicon initiates Phase 4 of the Initial Development Program, Ethicon will have an option to enter into the Supply Addendum with MVIS (the " Supply Addendum Option "). At any time prior to the completion of Phase 4 of the Initial Development Program, Ethicon may exercise the Supply Addendum Option by providing MVIS with written notice of its desire to enter into the Supply Addendum. If Ethicon exercises the Supply Addendum Option, the Parties shall execute and deliver the Supply Addendum, subject only to the Parties' good faith negotiations and use of reasonable efforts to agree upon (i) Exhibit B (Specifications); (ii) Exhibit C (Supplied Licensed Products); and (iii) Schedule 2.02 (Transfer Prices) of the Supply Addendum. Upon entering into the Supply Addendum, the terms and

conditions of the Supply Addendum will be incorporated into and become part of this Agreement. Further, Ethicon shall have the unilateral right to amend Schedule 1.06 of the Supply Addendum (Competitors) at any time prior to executing its Supply Addendum Option, but may not add more than two companies to the list currently set forth on Schedule 1.12 of the form of Supply Addendum attached hereto as Exhibit D . If Ethicon desires for MVIS to supply Ethicon with one or more additional Licensed Products developed by MVIS under one or more additional Development Programs, the parties will negotiate in good faith and use reasonable efforts to agree upon amendment(s) to Exhibit B, Exhibit C, and Schedule 2.02 of the Supply Addendum so that MVIS may supply such additional Licensed Product(s) to Ethicon pursuant to the Supply Addendum.

ARTICLE 5
GRANT OF LICENSE AND STANDSTILL

5.1 Development License to Background MVIS Intellectual Property. Subject to the terms and conditions of this Agreement, MVIS agrees to grant and hereby grants to Ethicon during the Term a co-exclusive (with MVIS), non-transferable license (with no right to sublicense) under the Background MVIS Intellectual Property to develop License Product(s) under a Development Program.

5.2 Standstill to Background MVIS Intellectual Property. During the Initial Development Program set forth in Exhibit B , and whether or not the development is successful, MVIS, its successors, assigns and transferees, shall not, and shall ensure that its officers, directors, employees, and agents do not directly or indirectly, (i) enter into, solicit, initiate, continue or encourage any discussions or negotiations with, (ii) respond to (other than to reject) any inquiries or proposals by, or (iii) provide any information to, or otherwise cooperate in any other way, with any corporation, partnership, person, limited liability company or other entity or group concerning the sale, transfer, disposition, licensing, or distribution of Background MVIS Intellectual Property relating to Licensed Products in the Field, or any other transaction which could in any material way encumber the ability of MVIS to grant to Ethicon exclusive worldwide rights to Background MVIS Intellectual Property relating to Licensed Products in the Field in accordance with the terms and conditions of this Agreement and the Supply Addendum.

5.3 License to Developed MVIS Intellectual Property. Subject to the terms and conditions of this Agreement and the Supply Addendum, MVIS hereby grants to Ethicon during the Term an exclusive, perpetual, non-transferable (other than as permitted in Article 13.4), royalty-bearing, sublicensable (as set forth in Article 5.7 (Sublicense Rights)) license under the Developed MVIS Intellectual Property and MVIS's interests in the Developed Joint Intellectual Property to develop one or more Licensed Product(s) under one or more Development Programs and to use, offer for sale, sell, or have sold (but not make, have made, or import) Licensed Products in the Territory solely within the Field. The exclusive license grant shall also include the right to reproduce, distribute, perform, and make derivative works of Developed MVIS Copyrights for the purpose of developing one or more Licensed Product(s) under one or more Development Programs and for the purpose of using, distributing, selling, offering for sale, marketing, and promoting (but not manufacturing or importing) Licensed Products in the Territory solely within the Field.

5.4 License to Make and Have Made. In the event that (a) Ethicon exercises its Supply Addendum Option, but MVIS refuses to negotiate in good faith and use reasonable efforts to enter into the Supply Addendum as required by Article 4.4 (Supply Addendum Option), (b) Ethicon and MVIS have entered into the Supply Addendum and Ethicon requests MVIS to supply an additional Licensed Product that was developed by MVIS under a Development Program but MVIS refuses to supply such Licensed Product to Ethicon, or (c) Ethicon receives a license under Article 5.5 to develop a Licensed Product, then MVIS shall expand the exclusive licenses of Articles 5.1 and 5.3 and grant to Ethicon (during the Term and subject to the terms and conditions of this Agreement) a non- transferable (other than as permitted under Article 13.4 (Assignment), sublicensable (as permitted under Article 5.7 (Sublicense Rights)), royalty-bearing, exclusive license under the Background MVIS Intellectual Property, Developed MVIS Intellectual Property and MVIS's interests in the Developed Joint Intellectual Property to make, have made, use, offer for sale, sell, have sold, and import such Licensed Product(s) referred to in clause (a), (b) or (c) above in the Territory solely within the Field. The exclusive license grant shall also include the right to reproduce, distribute, perform, and make derivative works of Background MVIS Copyrights, Developed MVIS Copyrights and MVIS's interests in the Developed Joint Intellectual Property solely for the purpose of making, having made, using, distributing, selling, offering for sale, marketing, and promoting such Licensed Products. If such license becomes effective, MVIS shall provide reasonable assistance, training and other information to Ethicon or its designee manufacturer in order for Ethicon or its designee to manufacture and have manufactured the Licensed Products at Ethicon's expense at MVIS's hourly consulting rate, which is not to exceed the rate MVIS offers to the United States Government.

5.5 License Rights to Develop and Have Developed. Except as provided in this Agreement, Ethicon will not, and will not engage any Third Party or Affiliate to, develop, modify, or improve any Licensed Product other than pursuant to a Development Plan under this Agreement that has been agreed to in advance by MVIS. Notwithstanding the foregoing, if MVIS refuses to perform development work with respect to a Licensed Product under this Agreement on commercially reasonable terms, then MVIS will grant Ethicon during the Term a license under Background MVIS Intellectual Property and Developed MVIS Intellectual Property to develop such Licensed Product or modifications or improvements, or engage a Third Party or Affiliate to conduct such development work. If such license becomes effective, MVIS shall provide reasonable assistance, training and other information to Ethicon or its designee developer in order for Ethicon or its designee to develop or have developed such Licensed Product at Ethicon's expense at MVIS's hourly consulting rate, which is not to exceed the rate MVIS offers to the United States Government.

5.6 License Rights to Affiliates. Ethicon shall have the right to extend all or any portion of the licenses granted herein or in the Supply Addendum to any of its Affiliates, upon the terms and conditions of this Agreement or the Supply Addendum (as applicable), provided Ethicon remains responsible for the performance of its Affiliates, and shall ensure that any such Affiliate complies with the relevant provisions of this Agreement, and that any such Affiliates also agrees in writing to be responsible for its performance of the relevant provisions of this Agreement.

5.7 Sublicense Rights. Ethicon may grant to one or more sublicenses under the licenses granted to Ethicon in Article 5.4 (License to Make and Have Made) and in Article 5.5 (License Rights to Develop and Have Developed) only as set forth in this Article 5.7. All Sublicenses granted under this Agreement must be consistent with the terms of this Agreement, must incorporate terms and conditions sufficient to enable Ethicon to comply with this Agreement, and must prohibit any further sublicense by a Sublicensee. Any sublicense granted by Ethicon (other than a sublicense to an Affiliate of Ethicon) shall be subject to the prior written approval of MVIS, which approval shall not be unreasonably withheld. Ethicon shall provide to MVIS a fully signed copy of all sublicense agreements and amendments thereto, including all exhibits, attachments and related documents within thirty (30) days of executing the same, which may be redacted to remove information other than the parties and the scope of the rights granted sufficient to show that the rights granted in the sublicense are consistent with this Agreement. Ethicon shall remain responsible to MVIS for any breach of this Agreement or any sublicense agreement by any Sublicensee and for the payment of all royalties and other amounts due under this Agreement, whether or not such payments are made by Ethicon, its Affiliates, or Sublicensees. Upon termination of this Agreement or any license granted hereunder for any reason, any sublicenses shall automatically terminate. If Ethicon assigns this Agreement to a Third Party as permitted under Article 13.4 (Binding Effect; Benefits; Assignment), any sublicense granted to an Affiliate of Ethicon shall automatically terminate.

5.8 MVIS Sub-Field Grant Back Option. Ethicon grants to MVIS an option to narrow the Field of the licenses granted in Articles 5.1, 5.3, 5.4 and 5.5 (Articles 5.4 and 5.5 only if applicable) subject to the terms and conditions below (the " Grant Back Option "):

a. Beginning one (1) year from the date of commencement by MVIS of Phase 4 of the Initial Development Program, MVIS may exercise its Grant Back Option for any Sub-Field in which (i) neither Ethicon nor any of its Affiliates is engaged with MVIS in a Development Program; or (ii) MVIS or Ethicon or any one its Affiliates or a Third Party contract manufacturer are not manufacturing a Licensed Product (each an " Eligible Sub-Field "). MVIS may exercise its Grant Back Option to exclude the one or more Eligible Sub-Fields from the Field upon payment of the Grant Back Option Exercise Fee of Article 6.7 and earned royalties set forth in Article 6.10 (each, upon such exercise, an " Excluded Sub-Field ").

b. Upon MVIS exercising its Grant Back Option for one or more of the Eligible Sub-Fields, then (i) Ethicon shall have no license rights under Articles 5.1, 5.3, 5.4 and 5.5 (Articles 5.4 and 5.5 only if applicable) with respect to such Excluded Sub-Field(s), and (ii) Ethicon agrees to and hereby grants MVIS a non-exclusive, perpetual, royalty-bearing license in accordance with the restricted right to grant sublicenses (as defined in clause (c) below), under the Developed Ethicon Intellectual Property and Ethicon Improvement Patent Rights to make, have made, use, sell, offer to sell, and import Licensed Products in the Territory in such Excluded Sub-Field(s). Ethicon may terminate the license in clause (ii) if MVIS fails to pay royalties due to Ethicon under such license within 30 days of receiving notice of such failure from Ethicon.

c. MVIS may grant one or more sublicenses under the licenses granted to MVIS in Article 5.8(b) but only in combination with the license of MVIS Intellectual Property. All Sublicenses granted under this Agreement must be consistent with the terms of this Agreement, must incorporate terms and conditions sufficient to enable MVIS to comply with this Agreement, and shall prohibit any further sublicense by a Sublicensee. MVIS shall provide to Ethicon a fully signed copy of all sublicense agreements and amendments thereto, including all exhibits, attachments and related documents within thirty (30) days of executing the same, which may be redacted to remove information other than the parties and the scope of the rights granted sufficient to show that the rights granted in the sublicense are consistent with this Agreement. MVIS shall remain responsible to Ethicon for any breach of any sublicense agreement by any Sublicensee and for the payment of all royalties and other amounts due under this Agreement, whether or not such payments are made by MVIS, its Affiliates, or Sublicensees. Upon termination of the license granted by Ethicon in clause (ii) of paragraph (b) above, any sublicenses shall automatically terminate. If MVIS assigns this Agreement to a Third Party as permitted under Article 13.4 (Binding Effect; Benefits; Assignment), any sublicense granted to an Affiliate of MVIS shall automatically terminate.

5.9 Sub-Field Buy-Out Option. Ethicon, at its sole discretion, may buy-out MVIS's Grant Back Option for all of the Sub-Fields (other than the Excluded Sub-Fields) (the " Buy-Out Option ") at any time prior to MVIS exercising its Grant Back Option in those remaining Sub-Field(s) by paying to MVIS the Buy-Out Exercise Fee set forth in Article 6.8 or by paying MVIS the License Maintenance Fee Buyout under Article 6.5(e) (License Maintenance Buyout). If Ethicon exercises its Buy-Out Option for the remaining Sub-Field(s), then MVIS's Grant Back Option shall be null and void with respect to such remaining Sub-Field(s), but such exercise of the Buy-Out Option will not affect those Excluded Sub-Field(s) that were excluded from the Field upon MVIS's exercise of its Grant Back Option(s) prior to Ethicon's exercise of its Buy-Out Option.

5.10 License to Ethicon Improvement Patent Rights. Ethicon hereby grants to MVIS an exclusive, irrevocable, perpetual, royalty-free license, with the right to grant sublicenses (through multiple tiers), under the Ethicon Improvement Patent Rights to make, have made, use, sell, offer to sell, and import products and practice processes in the Territory but solely outside the Medical Field.

5.11 Reservation of Rights. All rights not expressly granted to Ethicon are reserved to MVIS, its Affiliates, and other licensees. Ethicon shall not exploit the MVIS Intellectual Property in any way other than expressly licensed in this Agreement or in the Supply Addendum.

ARTICLE 6
Payments

6.1 Upfront Fee. In consideration for the licenses and options granted by MVIS to Ethicon under this Agreement, Ethicon shall pay to MVIS an Upfront Fee of [ ]* within fifteen (15) calendar days after the Effective Date.

6.2 Initial Development Program Fee Payments. Per Exhibit B .

6.3 Royalty Payments. In the event that Ethicon is granted a license to make, have made, and import Licensed Products under Article 5.4 (License to Make and Have Made) of this Agreement or 8.01 (License) and 8.03 (Effect of Escrow Release) of the Supply Addendum, then, in such event, Ethicon shall pay MVIS an earned royalty of [ ]* on Net Sales of Ethicon Products made by Ethicon, its Affiliates, Sublicensees, or contract manufacturers during the Term, which royalties Ethicon will pay on a quarterly basis in accordance with Article 7.1. (Payment; Reports), and which payments will be fully creditable against the annual License Maintenance Fee as provided in Article 6.5 (License Maintenance Fee) below.

a. No earned royalties shall be payable on Net Sales of any Ethicon Product in conjunction with clinical tests or trials conducted prior to FDA approval of the such Licensed Product.

b. Earned royalties shall only be payable on Net Sales of an Ethicon Product that is made, used, imported or sold in a country where there is an MVIS Patent Right with a Valid Claim.

c. No multiple earned royalties shall be payable because any Patented Product is covered by more than one of the MVIS Patents Rights.

d. Ethicon shall have no minimum royalty obligations during the Term of this Agreement.

6.4 [

[

6.5 License Maintenance Fee.

[

*This portion of the Exhibit has been omitted pursuant to a Request for Confidentia

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