Master Development, Manufacturing & Supply Agreement

Exhibit 10.8


Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

MASTER DEVELOPMENT, MANUFACTURING AND SUPPLY AGREEMENT

This Master Development, Manufacturing and Supply Agreement (this " Agreement" ), Second Amended and Restated dated as of the 19th day of March, 2003, by and between ENABLE MEDICAL CORPORATION, a Delaware corporation with offices at 6345 Centre Park Drive, West Chester, Ohio 45069 (" Enable" ), and ATRICURE, INC., a Delaware corporation with offices at 6033 Schumacher Park Drive, West Chester. Ohio 45069 (" AtriCure" ), AtriCure and Enable may be referred to collectively as the " Parties" or individually as a " Party ."


W I T N E S S E T H :

WHEREAS, AtriCure is in the business of developing and manufacturing certain RF atrial ablation generators (the " AtriCure Generators" ) and devices; and


WHEREAS, Enable is in the business of providing development, engineering and manufacturing of certain medical devices and other applications; and

WHEREAS, AtriCure wished to engage Enable to (i) provide AtriCure with certain development services with respect to electrosurgical devices for use in conjunction with the AtriCure Generators, and (ii) manufacture for AtriCure its requirements (requirements as outlined in Exhibit A of this agreement) with respect to three electrosurgical devices, and Enable wished to accept such engagement; and


WHEREAS, in order to memorialize the foregoing engagement, AtriCure and Enable entered into a Amended and Restated First Master Development, Manufacturing and Supply Agreement, dated as of October 2, 2002 (" Amended and Restated Agreement" ); and

WHEREAS, AtriCure and Enable desire to replace the Amended and Restated Agreement upon the terms and conditions hereinafter set forth.


NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the Parties hereby agree as follows:

Summary of Coverage of Agreement

This Agreement principally covers the following, as more fully set forth below and subject to the terms and conditions set forth below: 1. Certain development services to be provided by Enable to AtriCure with respect to the electrosurgical devices as set forth in Exhibit A, hereto, (such electrosurgical devices being sometimes hereinafter referred to, collectively, as the " Devices" ).

2. Certain manufacturing services to be provided by Enable to AtriCure with respect to the electrosurgical devices as set forth in Exhibit B hereto.


EMC-ATR Agreement March 24, 2003-2 1 3. The licensing of certain Enable Technology to AtriCure, of certain AtriCure Technology to Enable, and of certain jointly created technology between the Parties in the Field of Use, which is the therapeutic ablation treatment for cardiac arrhythmia.

4. The limited use of certain Enable facilities, software, and equipment as set forth below.


Definitions

1. Field of Use means the therapeutic ablation treatment for cardiac arrhythmia.

2. Products means the Devices and accessories described in Exhibits A and B.

3. Enable Technology means that portion of Enable' s intellectual property rights, designs, know-how, trade secrets, patents, patent rights, and/or inventions that it actually utilizes in the provision of its services hereunder.

4. AtriCure Technology means the intellectual property rights, designs, know-how, trade secrets, patents, patent rights, inventions and other rights of, used by or claimed by AtriCure to, under or in connection with the AtriCure Generators or the Handpieces.

5. Product Specifications means written specifications, technical information, drawings, and quality standards agreed to by both Enable and AtriCure, in writing, relating to the design, development and manufacture of Products.

6. Point of Shipment means Enable' s main facility located in West Chester, Ohio.

7. Joint Technology means the intellectual property rights, designs, know-how, trade secrets, patents, patent rights, and/or inventions made or conceived on and after January 1, 2002 with material contributions by representatives of both AtriCure and Enable pursuant to this Agreement, exclusive of any Enable Technology or AtriCure Technology. 8. Saleable Release means Enable and AtriCure have approved in writing, Product designs and manufacturing processes to produce Devices for commercial distribution.

9. Concept/Feasibility Phase means a phase in the product development cycle that is focused or proving the efficacy of device concepts by building prototypes and models for bench testing, animal testing and clinical evaluations.

10. Year 1 means February 1, 2003 to January 31, 2004.

11. Year 2 means February 1, 2004 to January 31, 2005.


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Engagement; Collaboration

1. AtriCure hereby engages Enable, and Enable hereby accepts such engagement, to provide the development and manufacturing services for AtriCure as set forth in, and subject to the terms and conditions of this Agreement.

2. This Agreement is to become effective as of February 1, 2003 and shall remain in effect until January 31, 2005. This Agreement may be renewed for additional one year periods beyond January 31, 2005 solely upon written agreement by AtriCure and Enable on or before October 30, 2004. All fees, schedules and pricing referred to in this Agreement are for Year 1. Year 2 fees, schedules and pricing will be determined for Year 2 by January 1, 2004 unless noted otherwise.

3. The provisions of this Agreement supercede any conflicting provisions of any other Agreement between AtriCure and Enable with respect to the subject matter hereof and of any purchase order delivered hereunder. In the event of any conflict between the provisions of this Agreement and the Exhibits hereto, the provisions of this Agreement shall govern and control. 4. AtriCure hereby represents and warrants that it owns or has the rights to use all of the AtriCure Technology and that the same does not infringe any rights of any third party.

5. Enable hereby represents and warrants that it owns or has the rights to use all of the Enable Technology and that the same does not infringe any rights of any third party.

6. Notwithstanding anything herein to the contrary, (i) AtriCure hereby acknowledges that it has no ownership interest in, and shall not by virtue of this Agreement be deemed to have or obtain any ownership interest in, the Enable Technology or any portion(s) thereof or any improvements thereto, all of which shall be and remain the property of Enable and (ii) Enable hereby acknowledges that it has no ownership interest in, and shall not by virtue of this Agreement be deemed to have or obtain any ownership interest in, the AtriCure Technology or any portion(s) thereof or any improvements thereto, all of which shall be and remain the property of AtriCure.

7. Subject to the terms, conditions and limitations set forth herein, each Party shall have an undivided one-half interest in all Joint Technology only outside of the Field of Use. Notwithstanding the joint ownership of the Joint Technology outside of the Field of Use, and except as may be expressly set forth in this Agreement, neither Party shall have the obligation to account to the other Party for any further development, distribution, commercialization or other use of the Joint Technology outside of the Field of Use.

8.

Within the field of Use Enable agrees to and hereby does grant to AtriCure a perpetual, world-wide, royalty-free, irrevocable, exclusive, transferable license to make, have made, manufacture, modify, offer for sale, sell and use any and all of


EMC-ATR Agreement March 24, 2003-2 3

the Joint Technology contributed or owned by Enable. Further, within the Field of Use Enable agrees that it may not: (a) use the Joint Technology for any purpose other than as contemplated by this Agreement; (b) exploit the Joint Technology for the benefit of any person or entity other than AtriCure; or (c) license or otherwise transfer any of its rights to the Joint Technology in any manner which is inconsistent with the terms of this Agreement.

9. During the term of this Agreement, AtriCure hereby grants Enable a world-wide, royalty-free, non-exclusive, non-transferable license to use and make the AtriCure Technology as necessary or appropriate for Enable to perform its services hereunder.

10. During the term of this Agreement, Enable hereby grants to AtriCure a world-wide, royalty-free, irrevocable, exclusive, transferable license to make, have made, manufacture, offer for sale, sell and use the Enable Technology solely in the Field of Use. Upon the termination or expiration of this Agreement, unless this Agreement shall have been terminated by Enable as a result of an uncured material breach by AtriCure, the foregoing license shall automatically and without any further action required by any Party, become perpetual in the Field of Use.

11. Each Party hereby agrees to promptly take such further actions and execute and deliver such further instruments and documents as may be necessary or appropriate to more fully effectuate the transactions provided for in this Agreement.

12. Each Party hereby represents and warrants to the other Party that it is not under any obligation, restriction or limitation, contractual or otherwise, to or in favor of any other individual or entity, which would in any way prohibit or impede it from entering into or performing its duties and responsibilities hereunder.

13. Each Party shall cooperate to facilitate the other Party' s performance of all of its services hereunder. 14. The provisions of paragraphs 3., 4., 5., 6. 7., 8., 10., 11., 12. above and this paragraph 14, shall survive the expiration or termination of this Agreement.

15.

ENABLE, for itself and on behalf of its shareholders and affiliates, agrees that ATRICURE shall be entitled to rights of first refusal over any proposed sale or assignment of any controlling interest in the shares of ENABLE or any proposed sale, assignment or license of any of its material assets. In the event that at any during the term, ENABLE, its affiliates or shareholders shall propose to enter into any binding commitment for the sale of a controlling interest in the share capital of ENABLE or for the sale, assignment or license of any material assets of ENABLE (a " Proposed Transaction" ), then ENABLE shall notify ATRICURE of its intention to enter into such Proposed Transaction and shall advise ATRICURE of the material terms and conditions of such Proposed Transaction. ATRICURE shall have a period of sixty (60) days from the date of


EMC-ATR Agreement March 24, 2003-2 4

receipt of any notice of a Proposed Transaction from ENABLE to exercise its rights under this agreement to acquire such controlling interest in ENABLE or material assets of ENABLE on substantially the same terms as the Proposed Transaction. In the event that ATRICURE shall not elect to exercise its rights of first refusal under this agreement with respect to a Proposed Transaction, then ENABLE shall be entitled to complete the Proposed Transaction with a party other than ATRICURE on substantially the same terms as were described to ATRICURE in the notice of the Proposed Transaction delivered by ENABLE.

Development Services

1. Development services include the following Enable capabilities:

(a) Building of prototypes and functional models.

(b) Design engineering and CAD support.

(c) Design and building of custom manufacturing equipment, fixtures, tooling, and gages.

(d) Validation of manufacturing processes.

(e) Research, start-up, and qualification of supplier processes.

(f) Mechanical and electrical testing of materials.

2. Enable shall provide the development services for the Products as required under Exhibits A, hereto, and during Year 1, AtriCure shall pay Enable a monthly fee of $96,000 (such monthly fee being sometimes hereinafter referred to as a " Capitalized term" ) for such product development services. The capitalized term applies to development services as supplied by Enable employees and on-site contractors for the total monthly hours, as set forth in Exhibit C.

3. Enable shall provide development services for new device concepts that are in the Concept/Feasibility Phase. Such services are included in the capitalized term and the scope of such services shall not be extended beyond the Concept/Feasibility phase for those Devices not set forth in Exhibit A.

4. Enable shall be granted the right of first refusal to develop AtriCure disposable devices for Saleable Release during the term of this agreement, except under change of control, products which are outside the scope of Enables core competencies, and the 25% of hand piece purchases which are undetermined in year two of the agreement as referenced in the Manufacturing and Supply Section, page 6 paragraph 5.

5. AtriCure shall reimburse Enable for the following costs that are not inclusive to the capitalized term. Costs shall not exceed $[*] for Year 1 of the agreement.

(a) Hourly employee time charged to the projects, as set forth in exhibit A, prior to Saleable release, will be invoiced at the rates set forth in Exhibit D.

[*] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


EMC-ATR Agreement March 24, 2003-2 5 (b) Salary exempt and non-exempt employee time charged to the projects that exceed the total monthly hours as set forth in exhibit C, will be invoiced at the rates set forth in Exhibit D.

(c) AtriCure Product Development shall pre-approve all billable overtime.

6. AtriCure shall reimburse Enable for the following costs that are incurred during the completion of development services. Costs shall not exceed $[*] for Year 1 of the agreement. Enable will invoice AtriCure at actual plus any shipping and handling charges.

(a) Prior to Saleable Release, all materials, finished components, and indirect manufacturing materials used to qualify manufacturing processes, validate product designs, and qualify supplier processes.

(b) Materials and outside services used by Enable to design, prototype, build, install and qualify manufacturing equipment, fixtures, and gages. 7. AtriCure total cost for all referenced and planned projects, that are directly reimbursed to Enable under paragraphs 5. and 6., excluding the fixed " Capitalized term" fee, shall not exceed a total cost of $[*] during the Year 1 of this agreement.

8. AtriCure will be responsible for, at its own cost and expense:

(a) Tooling, gages, and fixtures used in the manufacture of components and subassemblies that reside at suppliers other than Enable. (b) Off-the-shelf assembly and inspection equipment that supports the manufacture of AtriCure products, as set forth in Exhibit B. (c) Items classified under paragraphs (a) and (b) are budgeted not to exceed $[*] during Year 1 of the agreement. 9. Enable will do everything within reasonable means to complete development services to meet AtriCure project milestones. Enable will notify AtriCure if requests for development services conflict or exceed Enable' s engineering capacity to complete services by requested due dates.

[*] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


EMC-ATR Agreement March 24, 2003-2 6 11. AtriCure will be responsible, at its own cost and expense, for the development, testing, maintenance and content of the Product Specifications for the Products.

12. AtriCure will be responsible for, at its own cost and expense (except as described in clause (k) below):

(a) Design and development of the Products, except for those service described by paragraph 1.

(b) Clinical testing of prototypes of Products, except for those service described by paragraph 1.

(c) Attaining the domestic regulatory approvals, and any foreign regulatory approvals, required to test, market, sell and, if applicable, export, each Product.

(d) Attaining CE Mark.

(e) The ongoing warehousing of finished Product.

(f) The content of labeling, packaging, warranty documentation, instructions for use, shipping, and traccability of Product to customers and retailers. (g) The start-up and validation of any sterilization vendor for AtriCure Devices.

(h) The annual re-validation and/or certification of sterilization processes for AtriCure Devices.

(i) The filing, prosecution, maintenance, and enforcement of any and all patent applications and patents covering all or any portion of the AtriCure Technology, and in certain circumstances as set forth in paragraph 11 below, the Joint Technology.

(j) The worldwide marketing, sales and distribution of Products under programs to the extent established by AtriCure. (k) Cooperating with Enable in the enforcement of intellectual property rights owned by Enable in the Enable Technology, as such effect the Products or Joint Technology in the Field of Use, provided that all expenses, including without limitation, legal and witness fees and related costs thereof, are paid or reimbursed by Enable.

9. Included in development services and covered under the capitalized term, Enable will:

(a) Assist AtriCure with the design and development of Products.


EMC-ATR Agreement March 24, 2003-2 7 (b) Assist AtriCure with the domestic regulatory approvals as required to market each Product.

(c) Assist AtriCure with the clinical testing of prototypes of Products.

(d) File, prosecute, maintain, and enforce patent applications and patents covering Enable Technology and in ce ...