DISTRIBUTION AGREEMENT

EXHIBIT 10.23

MICRUS ENDOVASCULAR CORPORATION

and

BIOTRONIK AG

LICENSE, DEVELOPMENT

and

DISTRIBUTION AGREEMENT

As of January 6, 2006

** Certain confidential information contained in this document, marked by brackets, has been omitted and filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

TABLE OF CONTENTS

-i-

LICENSE, DEVELOPMENT
AND
DISTRIBUTION AGREEMENT

     This LICENSE, DEVELOPMENT AND DISTRIBUTION AGREEMENT (together with the attachments and exhibits hereto, the “ Agreement ”) is entered into as of January 6, 2006 (the “ Effective Date ”) by and between Micrus Endovascular Corporation, a corporation established under the laws of Delaware and having its principal place of business at 610 Palomar Avenue, Sunnyvale, CA 94085, USA (“Micrus”); and Biotronik AG, a Swiss corporation having a principal place of business at Ackerstrasse 6, CH-8180 Bülach, Switzerland (“ Biotronik ”).

RECITALS

     WHEREAS, Biotronik solely owns or controls intellectual property rights in certain technology related to vascular interventional devices;

     WHEREAS, Biotronik is a leading manufacturer and distributor of interventional cardiology devices and has developed proprietary technology for stents and delivery systems;

     WHEREAS, Micrus desires to obtain from Biotronik an exclusive license for neurovascular use and a co-exclusive license for carotid stent products under all of Biotronik’s intellectual property, and Biotronik desires to grant Micrus such licenses;

     WHEREAS, Micrus wishes to develop, manufacture, sterilise and label products for neurovascular intervention in humans and to sell the developed products;

     WHEREAS, Biotronik wishes to be appointed as contract developer and supplier for such developed products, which includes development according to the product specification of Micrus, manufacturing, sterilisation and labelling of the products.

     NOW, THEREFORE, for and in consideration of the mutual observance of the covenants hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1. DEFINITIONS.

     1.1 All references to particular Exhibits, Articles and Sections shall mean the Exhibits to, and Articles and Sections of, this Agreement, unless otherwise specified. References to this “ Agreement ” include the Exhibits. For the purposes of this Agreement, the following words and phrases shall have the following meanings:

     1.2 “ Affiliate ” of an entity means, for so long as one of the following relationships is maintained, any corporation or other business entity owned by, owning, or under common ownership with a party to this Agreement to the extent of at least fifty percent (50%) of the equity (or such lesser percentage that is the maximum allowed to be

owned by a foreign corporation in a particular jurisdiction) having the power to vote on or direct the affairs of the entity and any person, firm, partnership, corporation, or other entity actually controlled by, controlling or under common control with a party to this Agreement.

     1.3 “ AMS ” means absorbable metal stents and the related technology.

     1.4 “ Calendar Quarter ” shall mean a period, with respect to the first Calendar Quarter only, starting on the Effective Date and ending March 31, 2006, and then each successive period of three (3) consecutive calendar months ending June 30, September 30 December 31, or March 31 of the following year.

     1.5 “ Claim ” means a complaint or proceeding filed or initiated against a party hereto by a Third Tarty alleging damage to, or infringement of the rights of, such third party or an affiliate or predecessor in interest of such Third Party, or any complaint or proceeding of a government agency alleging violation of any law.

     1.6 “ Confidential Information ” shall mean all written information and data provided by one Party to the other hereunder and marked “Confidential” or a reasonable equivalent thereof or, if disclosed orally, visually or in some other form, is summarized in writing, is identified as “Confidential” and is provided to the other Party within thirty (30) days of such disclosure, except any portion thereof which:

          (a) is known to the recipient, as evidenced by its written records, before receipt thereof under this Agreement;

          (b) is disclosed to the recipient without restriction after acceptance of this Agreement by a Third Party who has the right to make such disclosure;

          (c) is or becomes part of the public domain through no breach of this or any other Agreement; or

          (d) is independently developed, as evidenced by its written records, by or for the recipient by individuals or entities without use of or reference to the information disclosed to the recipient by the disclosing Party hereunder.

     All non-public information concerning neurovascular use developed during the course of work performed under this Agreement shall be deemed to be the Confidential Information of Micrus , unless specified otherwise in the applicable written Statement of Work. All non-public information concerning coronary or distal use developed during the course of work performed under this Agreement shall be deemed to be the Confidential Information of Biotronik , unless specified otherwise in the applicable written Statement of Work.

     1.7 “ Contract Year ” shall mean a period, with respect to the first Contract Year only, starting on the Effective Date and ending on March 31, 2007 and then each successive period of twelve (12) consecutive calendar months commencing on April 1 and ending on March 31 of the following year.

     1.8 “ Deliverables ” shall mean all tangible items to be delivered by Biotronik to Micrus as specified in a Statement of Work which will be developed pursuant to this Agreement and shall be deemed to include, but not be limited to, written descriptions, manuals, data-sheets, drawings, photographs, models, prototypes, tapes, disks, masks and circuitry.

     1.9 “ Developed Product ” shall mean any device, component and composition developed during the course of a project under this Agreement. The Products which the Parties have already agreed to develop (subject, with respect to each such Product, to the execution of a Statement of Work) are listed and specified in Exhibit A which is attached to this Agreement, and may be revised from time to time by the mutual written agreement of the Parties. Developed Product and Product may be used interchangeably herein.

     1.10 “ Development Steering Committee ” shall have the meaning set forth in Section 2.6.

     1.11 “ FTE ” shall mean a minimum of forty (40) hours per week for individual Biotronik scientific employees assigned to perform a project under a particular Statement of Work, or its equivalent if a given employee is assigned on a part-time basis and therefore multiple employees are added to provide a single FTE.

     1.12 “ Fully Burdened Manufacturing Cost ” shall mean the cumulative cost of a Product and shall include the direct and indirect cost of procuring and/or producing the Product in accordance with generally accepted accounting principles applied on a consistent basis by Biotronik. Direct costs shall include direct labor (including fringe benefits), direct materials (including taxes and duties) and third-party contract and licensing costs required to manufacture the Product, as well as all costs related to the approval process. Indirect costs (to be allocated to the production effort) shall include, but not be limited to, items treated as ‘manufacturing overhead,’ such as indirect labor and materials, reasonable fringe benefits, occupancy costs, depreciation of property, plant and equipment used in the manufacturing process and other costs reasonably allocable to the manufacturing process, to the extent that the foregoing are directly related to the production effort. For purposes of this Agreement, unless otherwise stated in the applicable Statement of Work, indirect costs shall be deemed to equal 40% of direct costs. Included in the cost of Product shall be manufacturing variances, including inventory reserves and non-conforming production runs. The Fully Burdened Manufacturing Costs for each Product shall be as set forth in the applicable Statement of Work.

     1.13 “ GAAP ” or “ U.S. generally accepted accounting principles ” shall mean the conventions, rules and procedures governing accounting practices as established, and revised or amended, by the U.S. Financial Accounting Standards Board or the U.S. Securities and Exchange Commission.

     1.14 “ Know-How ” shall mean all unpatented Confidential Information of Biotronik, technical information, materials and know-how owned and/or controlled by Biotronik now and/or during the Term, which relates to Licensed Patents or any Product and shall

include, without limitation, all chemical, pharmacological, toxicological, clinical, assay, control and manufacturing data and any other information, biological materials or related technology relating to any Product and that can reasonably be deemed to be useful or essential for the development and commercialization of any Licensed Product and strains, samples, analytical tools, etc.

     1.15 “ Licensed Patents ” shall mean (i) the patents and patent applications listed in Exhibit B; (ii) any international and foreign counterparts thereof; (iii) any divisionals, continuations, continuations-in-part, refilings, and extensions of any of the foregoing patents and patent applications (iii) all substitutions, reissues, renewals, reexaminations, patents of addition, and inventors certificates thereof; and (iv) all patents issuing from or claiming a priority date from any of the foregoing (which shall be deemed to have been added to Exhibit B); any Patents of Biotronik or its affiliates added to Exhibit B from time to time (which shall include any Patents covering Licensed Technology as identified by either Party from time to time).

     1.16 “ Licensed Technology ” shall mean (i) the Licensed Patents; (ii) the Product Know-How; (iii) Proprietary Rights; (iv) Technical Information; (v) the design of the product, inventions, analytical reference materials in or related to the Licensed Patents or any of the products listed on Exhibit A; and (vi) any other technology that Biotronik or its Affiliates may from time to time own, develop or license (for any period reasonably licenseable) from a Third Partiy during the Term, to the extent such technology has potential neurovascular applications, including without limitation balloon catheters, stents (including AMS) and stent delivery systems.

     1.17 “ Minimum Purchase Orders ” shall mean either the yearly or the quarterly minimum purchase amounts as agreed upon in the applicable Statement of Work, which will be reviewed at least once a year and shall be adapted to Biotronik ´s reasonable expectations in Micrus ´ reasonably commercializing each Product.

     1.18 “ Net Sales ” shall mean the gross amount received by Micrus or an Affiliate of Micrus for the sale or other disposition to a Third Party of a Product, less the following deductions for amounts actually incurred related to such sale or other disposition and included in the gross invoiced amount: (a) normal, customary sales commissions, customary credits and customary rebates and customary allowances and customary adjustments for rejections, recalls or returns (in the case of commissions to employees or Affiliates of Micrus the commission shall be deductible up to [***] % of the net price per product only); (b) freight, insurance; (c) sales, use, excise, value-added and similar taxes or duties imposed on the sale.

     1.19 “ Party ” shall mean either Micus or Biotronik, and “Parties” shall mean both Micrus and Biotronik.

“ Product ” shall mean a Developed Product that both (a) has been accepted by Micrus under Section 2.13; (b) is approved for sale and distribution by all applicable regulatory bodies and (c) the manufacture, use, sale, offer for sale or importation of which, but for

the license granted hereunder, would infringe one or more Valid Claims of Licensed Patents. Product and Developed Product may be used interchangeably herein.

     1.20 “ Proprietary Rights ” shall mean any and all inventions disclosed, described or claimed in the Licensed Patents,

          (a) any and all trade secrets and Technical Information relating to the Developed Product;

          (b) any and all copyrights relating to or covering the Developed Product or Technical Information; and

          (c) all other intellectual property of any type under the laws of any country throughout the world relating to or covering the Developed Product, methods of manufacture, methods of use, and any other novel invention the practice of which is necessary to exploit the Developed Product.

     1.21 “ Product Specifications ” shall mean any and all requirements of the Developed Products, including but not limited to technical, physical, chemical, environmental, labelling, packaging and supplementary requirements described in the product specifications and applicable Statement of Work.

     1.22 “ Statement of Work ” shall have the meaning given in Section 2.2.

     1.23 “ Technical Information ” shall mean any technical data or information relating to the Product, including, without limitation, know-how, data, skill, expertise, experience, models, drawings, materials, records, any and all preclinical and clinical studies including safety and efficacy data, procedures of testing and quality control requirements or any part or combination thereof, necessary to market the Product.

     1.24 “ Term ” shall have the meaning set forth in Section 14.1.

     1.25 “ Third Party ” shall mean a natural person, corporation, partnership, trust, joint venture, governmental authority or other legal entity or organization other than the Parties and/or their Affiliates.

     1.26 “ Valid Claim ” shall mean, with respect to each country, a claim of an issued, unexpired patent included in the Licensed Patents or the Joint Research Program Patents, that has not been (a) held invalid or unenforceable by a final court or governmental agency of competent jurisdiction or pursuant to binding arbitration, or (b) admitted in writing to be invalid or unenforceable by the holder(s) by reissue, disclaimer or otherwise. Unless (a) or (b) applies, an issued patent is considered to be unexpired for a period of twelve years from the date of signing of this agreement on. Micrus agrees not to challenge any of Biotronik ´s patents or Licensed Patents.

     1.30 “ Warranty Period ” shall mean the time period commencing upon shipment of a Product to Micrus or its designee and ending on the Product expiration date as indicated on the Product label.

     1.31 Interpretive Rules. For purposes of this Agreement, except as otherwise expressly provided herein or unless the context otherwise requires: (a) defined terms include the plural as well as the singular (and vice versa) and the use of any gender shall be deemed to include the other gender; (b) references to “ Articles ,” “ Sections ” and other subdivisions and to “ Schedules ” and “ Exhibits ” without reference to a document, are to designated Articles, Sections and other subdivisions of, and to Schedules and Exhibits to, this Agreement; (c) unless otherwise set forth herein, the use of the term “ including ” means “ including but not limited to ”; and (d) the words “ herein ,” “ hereof ,” “ hereunder ” and other words of similar import refer to this Agreement as a whole and not to any particular provision.

2. DEVELOPMENT; STEERING COMMITTEE.

     2.1 Collaboration. The parties shall collaborate in the development of Developed Products for neurovascular applications. The parties agree that the end goal of the research programs shall be the creation of Products. No material deviation in the subject matter, scope and development schedule of such research and development program shall be made without the mutual written agreement of both parties.

     2.2 Scope of Project. Biotronik and Micrus are concurrently executing the Statement of Work attached hereto as Exhibit C . Biotronik and Micrus may from time to time enter into separate statements of work for other development projects (each of which, a “Statement of Work”), as the parties mutually agree and each such Statement of Work shall be governed by this Agreement. Biotronik agrees to perform the development work described in each Statement of Work and to develop and test Developed Products meeting the technical specifications set forth in the applicable Statement of Work.

     2.3 Development Schedule. A timeline and schedule, including the major product milestones and target dates with respect to one or more Product(s), shall be described in each Statement of Work. The parties agree that the development schedule set forth shall be a reasonable schedule for the development work to be performed, and each party will put forth commercially reasonable efforts to comply with the timelines. Once signed by authorized representatives of both parties a Statement of Work shall become part of this Agreement.

     2.4 Development Responsibilities. Subject to the terms and conditions contained in this Agreement, Biotronik hereby agrees to use reasonable efforts to develop and obtain regulatory approval in the European Union (CE-Mark) and in the United States for manufacture and supply the Developed Products conforming to the Product Specifications in sufficient quantity (to meet demand therefore (i.e. at least [***]% of the Minimum Purchase Order amount for such Product). Biotronik will use reasonable efforts to perform development, clinical and regulatory approval activities in accordance with the applicable Project Schedule.

     2.5 Diligence in Development. Biotronik will use reasonable efforts consistent with effort used in Biotronik’s own priority research and development program

to conduct the research under and in accordance with the development program as described in each Statement of Work.

     2.6 Establishment and General Responsibilities of the Development Steering Committee. A Development Steering Committee (the “Development Steering Committee”) shall be established within thirty (30) days after the Effective Date of this Agreement. The Development Steering Committee shall consist of four (4) members, two (2) individuals appointed by Biotronik and two (2) individuals appointed by Micrus, in each event identified through written notice to the other party in accordance with this Agreement. Any member of the Development Steering Committee may designate a substitute to attend and perform the functions of that member at any meeting of the Development Steering Committee. The Development Steering Committee shall be responsible for review and adoption of annual budgets for development activities and annual budgets for clinical development activities, coordination of the supply of preclinical and clinical grade test materials, and the monitoring and oversight of the development program and the clinical activities, provided that each Statement of Work shall be subject to the approval of the Parties, and no change to a Statement or Work that would affect Micrus’ funding obligations thereunder (amount or milestones) shall be made without the approval of Micrus.

     2.7 Meetings. Meetings of the Development Steering Committee shall be held, at a minimum, every six (6) months (or more frequently as agreed by the Development Steering Committee), and will be held alternatively in California (such meetings to be chaired by an individual from Micrus) and Switzerland (such meetings to be chaired by an individual from Biotronik), or at such other location as may be determined by the Development Steering Committee, including, if applicable, by telephone. A quorum of the Development Steering Committee shall require the attendance of all four (4) members or their respective designees. A final copy of the minutes of each meeting, clearly describing any formal actions taken by the Development Steering Committee, shall be approved and signed by a representative from each party within thirty (30) days after the meeting. Any modifications to the development program generally, a particular Statement of Work or any clinical program (including the work, budget and timeline therefor) formally approved at any Development Steering Committee meeting shall be included in or attached to the minutes for such meeting. The Development Steering Committee will operate by unanimous consent, with each party having a single vote.

     2.8 Professional Standards. Biotronik shall make all commercially reasonable efforts to progress the development work in a timely manner using the highest professional standards consistent with good clinical practice and adherence to applicable laws and regulations. If Biotronik is delayed at any time in the progress of the timelines in the Project Schedule by causes beyond the control of Biotronik, then the timeline shall be extended by a Change Order Agreement for such reasonable time as the parties will agree but no longer than the time period of such delay outside their control. Agreement to such a Change Order Agreement will not be unreasonably withheld by Biotronik. Any such changes that result in additional charges shall be reflected in reasonable modifications to the budget and payment schedule.

     2.9 Change Process.

          (a) During the course of performance in connection with a Statement of Work, the parties may desire a change in scope of the anticipated effort. Requests for changes in services and all applicable modifications in compensation must be reflected in writing by a Change Order Agreement and expressly approved by an authorized individual on behalf of each of Biotronik and Micrus. Notwithstanding the above, an exception will apply if a requested modification involves the safety of a human subject, at which case Biotronik shall act on the requested change, and when practicable, to give written notice immediately to Micrus by telephone promptly followed in writing.

          (b) Change Orders may be approved and forwarded via hand-delivery, facsimile, electronic mail, or overnight courier. Absent compelling reasons, Change Orders will be considered and a response will be given within fifteen (15) days of Micrus’ or Biotronik’s request for same.

     2.10 Expenses. Except as expressly agreed otherwise by Micrus in a Statement of Work, Biotronik shall bear all of its own expenses arising from its performance of its obligations under this Agreement and each Statement of Work issued hereunder, including (without limitation) expenses for facilities, work spaces, utilities, management, clerical and reproduction services, supplies, and the like.

     2.11 Monthly Reports. Biotronik agrees to provide to Micrus at least monthly with a written report of the progress of the work required under each Statement of Work issued hereunder, any anticipated problems (resolved or unresolved), and any indication of delay in fixed or tentative schedules.

     2.12 Site Visits. Biotronik shall, from time to time and upon reasonable notice, allow access to its premises by Micrus for purposes of design review, “walkthroughs,” and discussions between Micrus and Biotronik management and personnel concerning the status and conduct of work being performed under any Statement of Work issued hereunder.

     2.13 Delivery and Acceptance. Biotronik shall deliver each Deliverable called for by the applicable Statement of Work, including prototypes and final Developed Products, upon completion, for testing and acceptance to Micrus. Biotronik shall memorialize such delivery in a Delivery Confirmation that sets forth the nature and condition of the Deliverables, the medium of delivery, and the date of their delivery. Unless a different procedure for testing and acceptance is set forth in the applicable Statement of Work, Micrus shall commence acceptance testing following its receipt of the Deliverables at Micrus’ own facilities. Upon completion of such testing, but no longer than after four weeks, Micrus shall issue to Biotronik a written notice of acceptance or rejection of the Deliverables. In the event of rejection, Micrus shall give its reasons for rejection to Biotronik in reasonable detail. Biotronik shall use reasonable commercial efforts to correct any deficiencies or nonconformities and resubmit the rejected items as promptly as possible until the Deliverables are accepted; provided, however, that upon the third or any subsequent rejection or if the corrections are not

made within reasonable time to be mutually agreed upon after the initial rejection, Micrus may terminate the Statement of Work or, at Micrus’ election, this Agreement, unless the Deliverables are accepted during the notice period. Additionally, Micrus may, at its option, itself correct the deficiencies or engage a third party to correct such deficiencies, and Biotronik shall provide all reasonable assistance requested to Micrus and in such corrective actions, Micrus shall be permitted to set-off reasonable costs incurred for such corrective actions against future payments owed to Biotronik under this Agreement.

3. LICENSE GRANTS.

     3.1 Grant of License. Biotronik hereby grants to Micrus the exclusive (subject only to the provisions of Section 3.2), worldwide, perpetual, irrevocable (except as expressly provided herein) license under the Licensed Technology to develop, have developed, use, sell (directly or through its Affiliates and distributors), offer for sale and import, manufacture, and have manufactured Products, all of the foregoing for neurovascular applications only. For the sake of clarity, by “neurovascular applications” the Parties mean applications to treat aneurysms or arteriovenous malformations (AVMs) as well as other vascular conditions of the brain and the spinal cord.

     In case any of the Confidential Information leads to a patent, Biotronik hereby undertakes to license it free of charge to Micrus for neurovascular use, as Micrus undertakes to license it free of charge to Biotronik for cardiovascular use.

     3.2 Exclusivity. The license will be exclusive, and Biotronik and its Affiliates shall not sell (a) Developed Products or (b) any other products for neurovascular applications. Additionally, Biotronik and its Affiliates shall not license or grant rights under any Licensed Technology to any Third Party for neurovascular applications. Notwithstanding the foregoing, Biotronik shall have the right to have manufactured and sell (directly or through its Affiliates only) carotid stents developed by Biotronik using the Licensed Technology that are Developed Products hereunder, for any application other than neurovascular applications, provided that Biotronik pays half of the costs of development of such product (including clinical and regulatory expenses) in accordance with a Statement of Work signed by the Parties with respect to such Product.

     3.3 Clawback. If Micrus has not fulfilled a yearly Minimum Purchase Order of an approved Product, then Biotronik shall have the right to terminate the license only with respect to such Product by giving sixty (60) days advance written notice to Micrus, provided that Micrus may avoid such termination by curing said default during the sixty (60) day notice period. The AMS-Neuro license, however, will be terminated irrespective of the above mentioned requirements, if there is no commercial product available five years after the signing of this agreement unless such failure is due to the fault of Biotronik, and provided further that if on the fifth anniversary of the Effective date one or more products incorporating AMS technology is in an active EU or USA regulatory approval process, i.e. file submitted or pivotal trial ongoing, the deadline for delivery of a commercial product shall be extended to six years from the Effective Date.

     3.4 Biotronik Exclusive Rights. Micrus agrees that, for so long as Biotronik is (a) not in breach of its development or manufacturing obligations hereunder (b) able to meet Micrus’ reasonable requirements for development and manufacture of Products, Micrus will use Biotronik as its sole contract developer with respect to Products and its sole manufacturer of Products. If Micrus intends to seek a Third Party manufacturer or developer with respect to Products, Micrus will notify Biotronik in writing at least thirty (30) days prior to the commencement of such Third Party’s services (unless Micrus has previously notified Biotronik of a breach hereunder which breach remains uncured), and Biotronik shall have an opportunity to cure any breach or commit to additional services during such thirty (30) day period, subject to Micrus’ reasonable approval of the correction or proposed services.

4. RESEARCH PAYMENTS AND COSTS.

     4.1 Development Research Funding. Research and development costs relating to Developed Products shall be borne solely by Micrus except as expressly herein set forth or as set forth in the applicable Statement of Work (Lekton and Lekton blue not to exceed € 120.000). Each Statement of Work shall contain an annual budget for each Developed Product and the method for calculating costs incurred, including detailed FTE rates applicable to the project, together with any mark-up agreed to. The Parties agree that the mark-up applicable to development costs shall be [***] percent ([***]%) unless specified otherwise in an applicable Statement of Work. To the extent Biotronik incurs costs that are reflected in a written pre-approved budget (or if exceed the budget have been pre-approved in writing by Micrus), Biotronik shall invoice Micrus at the end of the then-current Calendar Quarter and Micrus shall make payment to Biotronik to reimburse such costs within 60 days of billing.

     4.2 Reports. With each quarterly invoice under Section 4.1, Biotronik shall deliver a full and accurate accounting of development costs (by Product) for the relevant Calendar Quarter and a computation of the amounts payable.

     4.3 Procedures. Biotronik shall keep full and accurate accounting records of all costs in sufficient detail to determine the amounts payable under Section 4.1. Upon reasonable notice to Biotronik, Micrus shall have the right during normal business hours to have an independent certified public accountant, selected by Micrus and acceptable to Biotronik, audit on a confidential basis Biotronik’s financial records pertaining to development activities to verify the costs payable pursuant to this Agreement; provided, however, that such audit shall not take place more frequently than once in a Contract Year. An adjustment in payment shall be made upon demonstration of any underpayment or overpayment. Micrus agrees to cause the independent accountant to maintain any Biotronik financial records as Confidential Information subject to the restrictions of Section 22.

     4.4 Cost of Audits. The fees and expenses of an audit requested by Micrus pursuant to Section 4.3 shall be borne by Micrus; provided, however, that if any audit reveals that Biotronik overcharged Micrus under this Agreement as to the period being audited by more than five percent (5.0%) of the amount that was payable for such period,

then Biotronik shall, in addition to paying immediately to Micrus any such deficiency, reimburse Micrus for the cost of such audit.

     4.5 Period to be Kept. Biotronik shall retain all books and records it is required to maintain hereunder for the longer of: (a) five (5) years from the date of the invoice to which they pertain; or (b) the applicable time period as required by the laws of the country in which the cost originated.

5. LICENSE FEES; ROYALTY PAYMENTS.

     5.1 License Fees. Micrus shall make the following payments to Biotronik under this Agreement by wire transfer of immediately available funds:

          (a) Micrus will pay Biotronik an amount of € 500’000 within 5 business after the Effective Date.

          (b) Micrus will pay Biotronik an amount of € 500’000 after Biotronik has obtained CE Mark approval for stenosis application for the Lekton Blue but no later than December 31, 2006.

          (c) Micrus will pay Biotronik an amount of € 500’000 after Biotronik has obtained CE Mark approval for scaffolding (i.e. ischemic and aneurysm) applications for Lekton Blue, but no later than December 31, 2006.

          (d) Micrus will pay Biotronik an amount of € 100’000 once the CE Marks for stenosis application for the amber Lekton Motion Neuro has been approved by February 28. 2006,

          (e) Micrus will pay Biotronik an amount of € 100’000 once the CE Marks for scaffolding application for amber Lekton Motion Neuro has been approved by February 28. 2006.

      5.2 Royalties. In consideration of the worldwide license rights granted herein, Micrus shall pay to Biotronik royalties equal to [***] percent ([***] %) of Net Sales in any country where a Product is distributed. Micrus’ obligation to pay royalties to Biotronik under this Section 5.2 shall be imposed only once with respect to the same unit of Product, regardless of the number of Valid Claims pertaining thereto and regardless of the number of persons and countries involved in the manufacture, distribution and sale thereof. For the sake of clarity (and without limiting the provisions of Section 20.1 and 20.2 below), the obligation to pay royalties with respect to a Product shall apply so long as the Product is covered by one or more Valid Claims in either the United States or the European Union, provided that Biotronik will use reasonable efforts to obtain protection for any existing and new patents included in the Licensed Patents (to the extent not time-barred as of the Effective Date) in the United States, the European Union, Japan, China, Mexico, Argentina and Brazil.

      5.3 Terms of Payment. Within sixty (60) days following the end of each Calendar Quarter during the Term, Micrus shall pay earned royalties based on Net Sales during the previous Calendar Quarter. All royalty payments due to Biotronik shall be made in EUROS by wire transfer, as directed in writing by Biotronik.

      5.4 Taxation of Royalties. Insofar as any earned royalties that are due Biotronik under this Agreement are subject to taxation where the taxes are imposed on Biotronik, Biotronik agrees to bear such taxes. Biotronik hereby authorizes Micrus to withhold such taxes from the payments which are payable to Biotronik in accordance with this Agreement if Micrus is either required to do so under the laws of any jurisdiction or directed to do so by an agency of the government of any jurisdiction. Micrus shall furnish Biotronik with the best available evidence of payment whenever Micrus deducts such tax from any payments due Biotronik.

      5.5 Royalty Reduction for Third Party Patents. In the event any Products sold or otherwise distributed by Micrus or its Third Party Sublicensee(s) is covered by one or more patents owned or controlled by a Third Party, then the Royalty in accordance with section 5.2 payable by Micrus to Biotronik under this Agreement shall be reduced by the amount paid by Micrus to such Third Party, provided that in no event shall the amount due to Biotronik hereunder thereby be reduced to less than 10 % and by more than fifty percent (50%). A Royalty reduction shall not take place if Micrus succeeds in licensing in a license from a third party at a lesser price than demanded by Biotronik.

      5.6 Royalty Term; Single Royalty. Royalties shall be earned and paid to Biotronik until the last Valid Claim under the Licensed Patents covering the Product expires. No royalties shall be payable on sales of Products between Micrus and any Affiliate of Micrus, provided that such Affiliate is not an end user of such Products.

      5.7 Currency Transfer Restrictions. If in any country payment or transfer of funds out of such country is prohibited by law or regulation, the parties hereto shall confer regarding the terms and conditions on which Products shall be sold in such countries, including the possibility of payment of royalties to Biotronik in local currency to a bank account in such country or the renegotiation of royalties for such sales, and in the absence of any other agreement by the parties, such funds payable to Micrus shall be deposited in whatever currency is allowable by Biotronik in an accredited bank in that country that is acceptable to Biotronik.

6. ROYALTY REPORTS, PAYMENTS AND ACCOUNTING.

     6.1 Reports. With each quarterly payment made under Section 5.2, Micrus shall deliver a full and accurate accounting of all Net Sales (by Product) for the relevant Calendar Quarter and a computation of the aggregate earned royalties payable.

     6.2 Procedures. Micrus shall keep full and accurate accounting records of Net Sales in sufficient detail to determine the royalties payable to Biotronik. Upon reasonable notice to Micrus, Biotronik shall have the right during normal business hours to have an independent certified public accountant, selected by Biotronik and acceptable

to Micrus, audit on a confidential basis Micrus’ financial records pertaining to Product to verify the royalties payable pursuant to this Agreement; provided, however, that such audit shall not (a) take place more frequently than once in a Contract Year, or (b) cover records for more than the time period required for Micrus to report its taxes under the applicable country laws. An adjustment in payment shall be made upon demonstration of any underpayment or overpayment. Biotronik agrees to cause the independent accountant to maintain any Micrus financial records as Confidential Information subject to the restrictions of Section 22.

     6.3 Cost of Audits. The fees and expenses of an audit requested by Biotronik pursuant to Section 6.2 shall be borne by Biotronik; provided, however, that if any audit reveals that Micrus underpaid the royalties due to Biotronik under this Agreement as to the period being audited by more than five percent (5.0%) of the amount that was payable for such period, then Micrus shall, in addition to paying immediately to Biotronik any such deficiency, reimburse Biotronik for the cost of such audit.

     6.4 Period to be Kept. Micrus shall retain all books and records it is required to maintain hereunder for the longer of: (a) five (5) years from the date of the royalty payment to which they pertain; or (b) the applicable time period as required by the laws of the country in which the royalty has been generated.

     6.5 Marketing. Upon sale of a Product, Micrus shall use commercially reasonable efforts, consistent with its customary practices, to mark such Product (or where this is impractical, the Product packaging) with appropriate patent numbers according to all of the relevant laws. Such marking shall be in accordance with the requirements of the individual foreign countries, insofar as foreign sales are concerned.

7. MANUFACTURING; SUPPLY AND DISTRIBUTION.

     7.1 Exclusive Distribution Rights. Biotronik hereby appoints Micrus, and Micrus hereby accepts appointment, as exclusive distributor of the Developed Products for neurovascular applications during the term of this Agreement. Accordingly, Biotronik shall not during the term of this Agreement, supply Developed Products to any Third Party without Micrus’ prior written consent, which may be withheld by Micrus at its sole discretion.

     7.2 Packaging and Labeling. Biotronik shall supply the Products ready for sale in accordance with packaging and labeling instructions as specified in the Product Specification. The Product labeling shall include the statement “Manufactured exclusively for Micrus Endovascular Corporation” or such similar wording as is approved by Micrus, subject to the provisions of applicable law.

     7.3 Alteration of Products, Expired Products.

          (a) Micrus shall not be allowed to alter, amend or modify the Product or any Product packaging or labeling without prior written consent of Biotronik.

          (b) Micrus shall not sell any Products beyond their stated expiration date. Biotronik will not take any responsibility on expired Products and therefore will not refurbish or replace expired Products once accepted by Micrus.

     7.4 Marketing Efforts. Micrus shall have the following obligations with respect to the marketing and distribution of the Products:

          (a) to use reasonable commercial efforts to further the promotion, marketing, and distribution of the Products;

          (b) to provide adequate and appropriate training to its staff concerning the Products;

          (c) to use sales and technical literature as well as promotional artwork and training materials provided by Biotronik and reasonably acceptable to Micrus. Where appropriate, Micrus may alter such materials or develop any other materials in connection with the marketing and distribution of Products (product brochures and sales aids), which shall be subject to Biotronik’s prior written approval, which shall not be unreasonably withheld or delayed. Biotronik retains all right, title and interest in materials developed by Biotronik, and Micrus retains all right, title and interest in materials developed by Micrus.

     7.5 Trademarks. Micrus shall be the owner of and have the right to select new trademarks to be used in connection with the Products. To the extent (if any) that Biotronik is authorized by this Agreement to distribute Products, Biotronik shall have the right to distribute the Products free of charge under any trademark of its own. Micrus shall have the right to use the already existing Trademarks in Biotronik ´s property for said Products in accordance with good customary trademark practice, and to avoid taking any action that would in any manner impair or detract from the value of the Trademark or the goodwill and reputation of either Biotronik. Micrus acknowledges Biotronik’s ownership of Trademarks and related goodwill.

     7.6 Customer Service. Micrus shall provide customer service, including, but not limited to, taking orders, responding to customer inquiries, fulfilling requests for quotes on Product pricing, forwarding Product complaints to Biotronik on a timely basis, as legally required and providing such assistance and information as is reasonably requested.

     7.7 Sales and Technical Literature.

          (a) Biotronik shall provide to Micrus sales, advertising and technical literature and materials required by Micrus and shall make available copies of promotional artwork it may have prepared. If available, Biotronik may provide the same to Micrus in electronic format.

          (b) Any adjustments or modifications of sales, advertising and technical literature to the requirements of Micrus shall be charged to and covered by

Micrus. Said cost coverage is subject to quotation and budget approval by Micrus prior to commencement of any adjustment or modification. Payments are limited to the approved budget and shall be paid after acceptance of the adjustment or modification by Micrus. Biotronik shall hold the copyright of any adjusted or modified sales, advertising and technical literature.

8. FORECASTS, PURCHASE ORDERS, ORDER ACCEPTANCE.

     8.1 Forecasts.

          (a) Micrus agrees to provide Biotronik with a 12 (twelve) months binding forecast indicating Micrus’ intended purchases of the Products detailed to the individual variant by catalogue number and the calendar month of forecasted purchase. Micrus agrees to reach a double digit market share in the US and Europe for each Product.

          (b) Such forecast shall be updated by Micrus on a rolling monthly basis for each succeeding 12 (months) months period and shall be used for purposes of facilitating Micrus’ marketing plans and permitting Biotronik and its suppliers to meet their lead times for the Products. Micrus will use its commercially reasonable efforts to notify Biotronik promptly of any changes in its forecast.

     8.2 Purchase Order.

          (a) Micrus shall order Products by means of written Purchase Orders. The Purchase Order shall specify applicable prices, quantities by catalogue number, shipping schedule, shipping instructions, applicable Product Specification, any special requirements, and other similar matters which are necessary for the individual transaction. All orders are subject to acceptance by Biotronik, provided that Biotronik may only refuse a Purchase Order to the extent expressly permitted by this Agreement.

          (b) The first 3 (three) months of each forecast shall be covered by a firm Purchase Order in an amount of Products equal to such forecast for such three month period, and the quantitites to be ordered in the firm Purchase Order for the following month shall shall not deviate form the prior months ´s twelve-month forecasted quantities for such month by more than minus 50 % (minus fifty percent). Biotronik shall accept Purchase Orders calling for quantities exceeding the forecasted quantities but may limit accepted quantities to 130 % of the most recently forecasted quantities. Afterwards, Micrus will place Purchase Orders every month covering an additional month of supply period.

     8.3 Order Acceptance. Biotronik shall accept or refuse in writing Micrus’ issuance of any Purchase Order, within 5 (five) business days from the date when the order has been received and shall not be refused without just cause. Any Purchase Order that is not rejected within the above stated period shall be deemed accepted.

     8.4 Lead Time. Biotronik’s lead-time between cleared purchase order and product shipment is 6 (six) weeks.

     8.5 Purchase before Approval. If Micrus submits firm Purchase Orders to Biotronik before actual regulatory approval of the Products in Europe (CE-Mark) or US (FDA-mark), and if Biotronik accepts such orders, then if the regulatory approval of the Products as evidenced by a CE-mark or FDA-approval is not obtained prior to or on the ordered shipment date, then without further liability of the parties such Purchase Order shall be deemed to be completely cancelled.

     8.6 Minimum Purchase Orders. Micrus shall order the quarterly or annual Minimum Purchase Order quantities of each Product as shown