EXHIBIT 10.20
AGREEMENT
This Agreement (the "Agreement"), dated February 28, 2005, (the "Effective
Date") is between the United States Department of Justice, Criminal Division,
Fraud Section (the "Department"), and Micrus Corporation and its Swiss
subsidiary Micrus S.A. (collectively Micrus).
A. INTRODUCTION
1. During the Department's ongoing criminal investigation into
potential violations of the Foreign Corrupt Practices Act, 15
U.S.C.Section.78dd-1, et seq., ("FCPA") relating to certain foreign
sales transactions and attempted transactions conducted by Micrus in
various countries including the French Republic, the Republic of
Turkey, the Kingdom of Spain and the Federal Republic of Germany
(the "Foreign Transactions"), described in APPENDIX A, and any other
transactions disclosed in writing to the Department, the Department
has notified Micrus that, in the Department's view, Micrus, acting
through certain of its officers, employees, agents and salespeople,
has violated federal criminal law. The Foreign Transactions involved
sales or attempted sales by Micrus of medical devices known as
embolic coils to publicly owned and operated hospitals. A
description of the Foreign Transactions is set forth in APPENDIX A,
attached hereto and incorporated by reference. APPENDIX B, also
attached hereto and incorporated by reference, is a non-public
document that reveals the identities of certain individuals and
entities involved in the Foreign Transactions.
In summary, the Department believes that Micrus, through certain of
its employees, agents or salespeople, corruptly authorized the
offer, promise to pay and the payment of money and other things of
value, and did, thereafter, offer, promise to pay and paid money and
other things of value, to foreign government officials to influence
them to purchase medical devices from Micrus.
2. As set forth in Section C below, Micrus accepts responsibility for
the conduct of its employees, agents and salespeople as described in
APPENDIX A. Micrus agrees that APPENDIX A is materially accurate
and, as more fully addressed in Section C below, Micrus agrees not
to contradict APPENDIX A. Micrus also acknowledges that from its
inception through and including August 2004, Micrus did not have an
FCPA compliance program in place. Micrus does not endorse, ratify,
or condone improper conduct and, as set forth below, will take steps
to prevent such conduct from occurring in the future.
3. The Department has determined that entry into the Agreement, as
opposed to institution of a criminal prosecution, is appropriate
under the circumstances. These circumstances include (a) Micrus'
voluntary disclosure to the Department of the conduct involved in
the Foreign Transactions and related conduct, (b)
Micrus' prompt disciplinary action respecting the officers and
employees primarily responsible for the conduct at issue in the
Foreign Transactions, (c) Micrus' on-going cooperation with the
Department in the Department's investigation, and (d) the absence of
any prior FCPA-related or other criminal history at Micrus.
B. MUTUAL OBLIGATIONS OF MICRUS AND THE DEPARTMENT
4. In exchange for the agreement of the Department as set forth in
paragraph 5 below, Micrus agrees:
(a) to accept responsibility as described in paragraph 2 above and
more fully in Section C below;
(b) that if Micrus Corporation goes public during the term of this
Agreement, Micrus Corporation will disclose the fact of this
Agreement and its material terms in its initial public filing
with the United States Securities and Exchange Commission
("SEC");
(c) to pay to the United States Treasury, within thirty (30)
calendar days of the Effective Date, a monetary penalty of $
450,000.00;
(d) to retain and pay for a Monitor as described more fully in
Section D below; and
(e) to continue to cooperate with the Department in its
investigation of the matters described herein (which
cooperation shall include an affirmative duty to fully and
truthfully disclose activities that Micrus reasonably believes
may violate the FCPA), as more fully described in Section E
below.
5. In exchange for Micrus' agreement to fulfill the obligations
described in paragraph 4 above, and subject to the terms and
conditions set forth below, the Department agrees that, except for
prosecutions for violations of Title 26 of the United States Code,
it will not prosecute Micrus under the FCPA for conduct that may
violate the FCPA based on the Foreign Transactions or any other
foreign transactions or events disclosed in writing by Micrus to the
Department on or before the Effective Date. This Agreement applies
to Micrus Corporation and Micrus S.A. only and does not prevent the
Department from investigating or prosecuting any other entities or
individuals.
C. MICRUS' ACCEPTANCE OF RESPONSIBILITY
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6. The obligation of Micrus referenced in paragraphs 2 and 4(a) above
to accept responsibility means that Micrus shall undertake all of
the duties imposed upon it in this Section C. The obligation shall
have no other or additional meaning.
7. In the event that the Department, in its sole reasonable discretion,
determines that Micrus has knowingly, willfully and materially
breached any provision of this Agreement, then APPENDIX A (as
supplemented by APPENDIX B) shall be a binding admission by Micrus
as to the Criminal Division of the Department of Justice and any
United States Attorney's Office. Further, and irrespective of
whether Micrus has or has not breached the Agreement, Micrus will
not, through its present or future directors, officers, employees,
agents, attorneys or affiliates, make any public statements,
including statements or positions in litigation in which any United
States department or agency is a party, contradicting any statement
of fact set forth in APPENDIX A (standing alone or as interpreted
through APPENDIX B). Any such contradictory public statement by
Micrus, its present or future directors, officers, employees,
agents, attorneys or affiliates shall constitute a breach of this
Agreement, and Micrus thereafter shall be subject to prosecution as
set forth in Section F of this Agreement.
8. The decision of whether any public statement by any such person
contradicting a statement contained in APPENDIX A will be imputed to
Micrus for the purpose of determining whether Micrus has breached
this Agreement shall be at the sole reasonable discretion of the
Department. Upon the Department's reaching a determination that such
a contradictory statement has been made by Micrus, the Department
shall so notify Micrus in writing and Micrus may avoid a breach of
this Agreement by publicly repudiating such statement within seven
(7) business days after written notification by the Department.
9. Paragraphs 7 and 8 above are not intended to apply to any statement
made by any individual in the course of any criminal, regulatory or
civil case initiated by any governmental or private party against
such individual, unless such individual has authority to and is
speaking on behalf of Micrus; provided that, solely for the purposes
of the Department's determination of whether Micrus has breached
this Agreement, any statement made by Former Executive A and Former
Executive B, irrespective of the context, shall not be attributable
to Micrus. Notwithstanding Micrus' obligation not to contradict any
statement set forth in APPENDIX A, Micrus may take good faith
positions in litigation involving any private party, which good
faith positions shall not be deemed to constitute violations of
Micrus' obligations pursuant to paragraph 7 above.
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D. FCPA COMPLIANCE MONITOR
10. The obligation of Micrus referenced in paragraph 4(d) above to
retain and pay for a Monitor means that Micrus shall undertake all
of the duties imposed upon it in this Section D.
11. Micrus agrees that within 45 days from the Effective Date of this
Agreement, and for a period of at least thirty-six (36) months from
February 28, 2005, it will retain and pay for an outside,
independent law firm (the "Monitor"), selected and paid for by
Micrus and approved by the Department. It shall be a condition of
the Monitor's retention that the Monitor is independent of Micrus
and that no attorney-client relationship shall be formed between
them. If Micrus, the Monitor or any other party or tribunal asserts
or determines that communications between the Monitor and Micrus are
protected by the attorney-client privilege or that documents created
or reviewed by Micrus or the Monitor in connection with the
Monitor's work are protected by the work product doctrine, then
Micrus shall waive only as to the Department any protections
afforded to such communications and documents. Any revocation of
these waivers shall constitute a breach of this Agreement. The
sharing of such communications by the Monitor with the Department is
not intended to constitute a waiver of any privilege under any
federal or state law that would shield from disclosure to any other
third party any such communications.
12. The Monitor shall:
(a) monitor Micrus' compliance with this Agreement;
(b) monitor Micrus' implementation of and adherence to policies
and procedures relating to FCPA compliance (the "Policies and
Procedures");
(c) ensure that the Policies and Procedures are appropriately
designed to accomplish their goals;
(d) report to the Department, on at least a semi-annual basis and
between thirty (30) and forty-five (45) calendar days before
the end of the Monitor's term, as to Micrus' compliance with
this Agreement; and
(e) coordinate with the SEC and provide information about Micrus
as requested by that agency.
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13. Micrus agrees that the Monitor may also disclose its reports, as
directed by the Department, to any other federal, state or foreign
law enforcement or regulatory agency in furtherance of an
investigation of any matters related to the Foreign Transactions and
any matters relating to any other transaction that has been or is
discovered by, or brought to the attention of, the Department in
connection with the Department's investigation of Micrus (the
"Subject Matters"). During the Monitor's term, no amendments or
changes will be made to the Policies and Procedures without the
prior approval of the Monitor.
E. MICRUS' COOPERATION
14. The obligation of Micrus referenced in paragraph 4(e) above to
cooperate means that Micrus shall undertake all of the duties
imposed upon it in this Section E.
15. During the term of this Agreement, Micrus agrees to cooperate fully
with the Department, the Monitor, and, as directed by the
Department, with any other federal, state or foreign law enforcement
or regulatory agency regarding the Subject Matters.
16. The duty to cooperate includes an affirmative duty of full and
truthful disclosure. Micrus shall truthfully disclose to the
Department all information respecting the activities of Micrus and
its present and former directors, officers, employees, agents,
distributors, attorneys and affiliates relating to the Subject
Matters about which the Department shall inquire, or which Micrus
reasonably believes is material to the investigation by the
Department into the Subject Matters.
17. Micrus agrees that its cooperation shall also include, but is not
limited to, the following:
(a) providing reasonable access to Micrus' documents relating to
the Subject Matters, and to all directors, officers,
employees, agents, salespeople, attorneys and affiliates,
whether or not located in the United States, and to Micrus'
facilities for that purpose;
(b) assembling, organizing and producing, or taking reasonable
steps to effectuate the production of, on request from the
Department, all documents, records, or other tangible evidence
related to the Subject Matters in Micrus' possession, custody,
or control in such reasonable format as the Department
requests;
(c) not asserting a claim of attorney-client or work-product
privilege as to any (1) memoranda of witness interviews
(including exhibits) and documents created contemporaneously
with and related to the Foreign Transactions or with and
related to other transactions or events underlying the Subject
Matters (including, but not limited to, transactional
documents and emails,
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but excluding any advice or attorney work-product relating to
or given in connection with Micrus' internal investigation or
the investigations conducted by the Department), and (2)
documents reflecting contemporaneous legal advice given to
Micrus in connection with the Foreign Transactions or other
transactions or events underlying the Subject Matters
(excluding any advice or attorney work-product relating to or
given in connection with Micrus' internal investigation or the
investigation of the Department). In making production of any
such documents, Micrus neither expressly nor implicitly waives
its right to assert any privilege that is available under law
against persons or entities other than the Department
concerning the produced documents or the subject matters
thereof;
(d) using its reasonable best efforts to make available its
present or former directors, officers, employees, agents,
salespeople, attorneys and affiliates to provide information
and/or testimony related to the Subject Matters as requested,
including sworn testimony before a federal grand jury or in
federal trials, as well as interviews with federal law
enforcement authorities. Cooperation under this sub-paragraph
will include identification of witnesses who, to Micrus'
knowledge, may have material information regarding the Subject
Matters;
(e) providing testimony and other information deemed necessary to
identify or establish the original location, authenticity, or
other evidentiary foundation necessary to admit into evidence
documents in any criminal or other proceeding related to the
Subject Matters;
(f) interfacing with the Monitor in connection with Micrus'
implementation of and adherence to the Policies and Procedures
and the Monitor's reporting duties described in Section D
above.
18. With respect to any information, testimony, document, record or
other tangible evidence provided to the Department pursuant to this
Agreement, Micrus consents to any and all disclosures to other
federal, state or foreign law enforcement or regulatory agencies of
such materials as the Department, in its sole reasonable discretion,
deems appropriate in furtherance of the Department's investigation
of the Subject Matters.
19. Micrus authorizes the Department to share information from and about
Micrus with other federal, state or foreign law enforcement or
regulatory agencies and hereby waives any confidentiality afforded
to that information by law, agreement or otherwise that would,
absent authorization by Micrus, prohibit or limit such sharing. No
further waivers of confidentiality shall be required in that regard.
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F. BREACH OF THE AGREEMENT
20. For a period of twenty-four (24) months from February 28, 2005
should the Department, in its sole reasonable discretion, determine
that Micrus has knowingly and willfully given false, incomplete, or
misleading information under this Agreement, or has committed any
federal crimes subsequent to the date of this Agreement, or that
Micrus otherwise has knowingly, willfully and materially breached
any provision of this Agreement (including, as determined in the
sole reasonable discretion of the Department, whether Micrus has
knowingly and willfully failed to perform the duties imposed upon it
in Section D above respecting the Monitor), the Department may, at
its sole reasonable discretion, terminate this Agreement. In the
event of termination, Micrus shall, in the Department's sole
reasonable discretion, thereafter be subject to prosecution for any
federal criminal violation, including prosecution for acts subject
to the release of liability in paragraph 5 above.
21. Subject to paragraph 24 below, in the event that the Department, in
its sole reasonable discretion, determines that Micrus has
knowingly, willfully and materially breached any provision of this
Agreement, then APPENDIX A (as supplemented by APPENDIX B) shall be
a binding admission by Micrus as to the Department only, and (a) the
Department may use and admit into evidence in any proceeding and for
any purpose, and without objection by Micrus, APPENDICES A and B,
(b) all statements made, or documents provided, to the Department,
by or on behalf of Micrus or any of its current or former directors,
officers, employees, agents, distributors, attorneys or affiliates
(including without limitation information obtained by Micrus during
its investigation or in the course of cooperating with the
Department under this Agreement), and any testimony given by Micrus
and any current or former directors, officers, employees, agents,
distributors, attorneys or affiliates before a grand jury, the
United States Congress, the SEC or elsewhere, and any leads derived
from such statements, documents and testimony, shall be admissible
in evidence in any and all criminal proceedings brought by the
Department against Micrus, and (c) Micrus shall not assert any claim
under the United States Constitution, Rule 410 of the Federal Rules
of Evidence, or any other law, rule or regulation that any such
statements made, or documents or testimony provided, by or on behalf
of Micrus or any of its current or former directors, officers,
employees, agents, distributors, attorneys or affiliates, prior or
subsequent to this Agreement, or any leads there from, should be
suppressed.
22. Subject to paragraph 9 above, the decision whether conduct and
statements of any individual will be imputed to Micrus for the
purpose of determining whether Micrus has willfully and materially
breached any provision of this Agreement shall be in the sole
reasonable discretion of the Department.
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G. WAIVER OF STATUTE OF LIMITATIONS AND CURE OF BREACH
23. With respect to any prosecutions under the FCPA for conduct that may
violate the FCPA based on the Foreign Transactions or any other
foreign transactions or events disclosed in writing by Micrus to the
Department on or before the Effective Date which are not time-barred
by the applicable statute of limitations as of the Effective Date,
Micrus agrees that the applicable statute of limitation period for
any such prosecutions shall be tolled for a period of time equal to
the term of this Agreement (or, in the event of termination pursuant
to paragraph 20 above, the date of written notice of such
termination) so that such prosecutions may be commenced against
Micrus in accordance with this Agreement, notwithstanding the
expiration of the statute of limitations between the Effective Date
and expiration of this Agreement (or, in the event of termination
pursuant to paragraph 20 above, the date of written notice of such
termination). Micrus' tolling of the statute of limitations is
knowing and voluntary and in express reliance on the advice of
counsel.
24. Should the Department determine that Micrus has committed a knowing,
willful and material breach of any provision of this Agreement, the
Department shall, within a reasonable time, provide written notice
to Micrus of the alleged breach, and Micrus shall have twenty-one
(21) calendar days from the date of that written notice in which to
make a presentation to the Chief of the Fraud Section of the
Criminal Division of the Department of Justice to demonstrate that
no breach has occurred, or, to the extent applicable, that the
breach is not a knowing and willful material breach or has been
cured. Should Micrus fail to make a presentation to the Chief of the
Fraud Section of the Criminal Division within the twenty-one (21)
calendar day period, or such additional period upon which the
parties agree in writing, it shall be conclusively presumed that
Micrus is in knowing, willful and material breach of this Agreement.
The parties further understand and agree that the Chief of the Fraud
Section's exercise of discretion under this paragraph is not subject
to review in any court or tribunal outside the Criminal Division of
the Department of Justice. In the event of a knowing, willful and
material breach of this Agreement that results in a prosecution of
Micrus, such prosecution may be premised upon any information
provided by or on behalf of Micrus to the Department at any time,
including Micrus' presentation to the Chief of the Fraud Section of
the Criminal Division, unless otherwise agreed when the information
was provided.
H. MERGER OR SALE OF MICRUS
25. Micrus agrees that if it sells or merges all or substantially all of
its business operations as they exist as of the Effective Date of
this Agreement to or into a single purchaser or group of affiliated
purchasers during the term of this Agreement, Micrus shall include
in any contract for sale or merger a provision binding the
purchaser/successor to the obligations described in this Agreement.
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I. AGREEMENT BINDING ONLY ON MICRUS AND THE DEPARTMENT
26. Except as noted below in this Section I, this Agreement is binding
on Micrus and the Department, but specifically does not bind any
other federal agencies, or any state or local law enforcement or
licensing authorities, although the Department will bring the
cooperation of Micrus and its compliance with its obligations under
this Agreement to the attention of federal, state and foreign law
enforcement or licensing agencies or authorities, if requested by
Micrus or its attorneys. Furthermore, nothing in this Agreement
restricts in any way the ability of the Department to proceed
against any other entity or against any individuals, including but
not limited to current or former directors, officers, employees,
agents, distributors, attorneys or affiliates of Micrus.
27. This Agreement also does not bind any department or agency of the
United States Government respecting prosecutions, if any, of Micrus
or any other entity or individual for violations of Title 26 of the
United States Code.
J. TERM OF AGREEMENT
28. This Agreement expires three (3) years from the Effective Date;
provided, that if on the Effective Date the Department, the SEC or
any other federal enforcement or regulatory agency with which the
Department has directed Micrus to cooperate is then conducting any
investigation, prosecution or proceeding relating to the Subject
Matters, then this Agreement shall expire on the date that any such
investigation, prosecution or proceeding is finally terminated, as
determined by the governmental department or agency conducting the
investigation, prosecution or proceeding.
29. Between thirty (30) and sixty calendar days (60) before the
expiration of this Agreement or at such other time as the parties
shall agree in writing, Micrus shall submit to the Department a
written certification that Micrus is in compliance with this
Agreement.
30. Paragraph 5 above shall survive termination of the Agreement, unless
the Agreement is terminated due to Micrus' knowing, willful and
material breach pursuant to Section F above. In the event of such a
breach pursuant to Section F, Paragraph 21 shall survive termination
of the Agreement.
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K. NOTICES
31. All notices to Micrus Corporation required or permitted by this
Agreement shall be in writing and shall be given by first class,
postage prepaid mail and by facsimile transmission, effective in
each case upon the later of the date of mailing and of facsimile
transmission, addressed as follows:
Micrus Corporation
Xxxx Xxxxxxxx, President and CEO
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile: 408.830.5910
With a copy to:
Xxxxxxx Xxxxxxx
Xxxxxx Xxxxxx White & XxXxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Facsimile: 415.772.6268
32. All notices to Micrus S.A. required or permitted by this Agreement
shall be in writing and shall be given by courier and by facsimile
transmission, effective in each case upon the later of the date of
delivery to the courier and of facsimile transmission, addressed as
follows:
Micrus S.A.
Xxxxxxx Xxxxx, Executive Vice President
En Xxxxxxx 00
XX-0000 Xxxxxxxx-Xxxx-Xxxxxxx
Xxxxxxxxxxx
Facsimile: x00.00.000.0000
With a copy to:
Xxxxxxx X. Xxxxxxx
Xxxxxx Xxxxxx White & XxXxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Facsimile: 415.772.6268
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L. MISCELLANEOUS
33. Micrus Corporation and Micrus S.A. hereby warrant and represent that
the Board of Directors of each has duly authorized, in a specific
resolution, the execution and delivery of this Agreement by Micrus
Corporation and Micrus S.A., and that the person signing the
Agreement has authority to bind Micrus Corporation and Micrus S.A.,
respectively. Micrus further agrees that it will deliver
concurrently with an executed copy of this Agreement a copy of the
respective requisite corporate resolutions by Micrus Corporation and
Micrus S.A.'s Board of Directors authorizing them to enter into this
Agreement.
34. This Agreement and APPENDICES A and B constitute the entire
agreement, and supercede all other prior agreements or
understandings, both oral and written, among the parties with
respect to the subject matter hereof.
35. This Agreement may not be modified except in writing signed by all
the parties.
36. The headings contained in this Agreement are for reference only and
shall not affect in any way the meaning or interpretation of this
Agreement.
37. This Agreement may be executed in counterparts, each of which shall
be deemed an original but all of which taken together shall
constitute one and the same agreement. The exchange of copies of
this Agreement and of signature pages by facsimile or electronic
transmission shall constitute effective execution and delivery of
this Agreement as to the parties and may be used in lieu of the
original Agreement for all purposes. Signatures of the parties
transmitted by facsimile or electronic transmission shall be deemed
to be their original signatures for all purposes.
XXXXXX X. XXXXXXXX
Chief, Fraud Section
Criminal Division
United States Department of Justice
By: /s/ Xxxx X. Xxxxxxxxxx
-------------------------------
XXXX X. XXXXXXXXXX
Deputy Chief
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ACKNOWLEDGMENT OF AGREEMENT
MICRUS CORPORATION
On behalf of Micrus Corporation I hereby certify the following:
I have read the Agreement and carefully reviewed every part of it with
counsel for Micrus Corporation. I understand the terms of the Agreement and
voluntarily agree, on behalf of Micrus Corporation, to its terms. Before signing
the Agreement, I consulted with Micrus Corporation's counsel, who fully advised
me of Micrus Corporation's rights, of possible defenses and of the consequences
of entering into the Agreement. No promises or inducements have been made to me
or Micrus Corporation other than those contained in the Agreement. Furthermore,
no one has threatened or forced me or, to my knowledge, any person authorizing
the Agreement on behalf of Micrus Corporation, to enter into this Agreement. I
am also satisfied with counsel's representation of Micrus Corporation in this
matter.
I certify that I am an officer of Micrus Corporation and that I have been
duly authorized by Micrus Corporation to execute this Agreement on its behalf.
Micrus Corporation
By: /s/ Xxxxxx X. Xxxxx Dated: February 28, 2005
---------------------------
Xxxxxx X. Xxxxx
Executive Vice President
and Chief Financial Officer
MICRUS S.A.
On behalf of Micrus S.A. I hereby certify the following:
I have read the Agreement and carefully reviewed every part of it with
counsel for Micrus S.A.. I understand the terms of the Agreement and voluntarily
agree, on behalf of Micrus S.A., to its terms. Before signing the Agreement, I
consulted with Micrus S.A.'s counsel, who fully advised me of Micrus S.A.'s
rights, of possible defenses and of the consequences of entering into the
Agreement. No promises or inducements have been made to me or Micrus S.A. other
than those contained in the Agreement. Furthermore, no one has threatened or
forced me or, to my knowledge, any person authorizing the Agreement on behalf of
Micrus S.A., to enter into this Agreement. I am also satisfied with counsel's
representation of Micrus S.A. in this matter.
I certify that I am an officer of Micrus S.A. and that I have been duly
authorized by Micrus S.A. to execute this Agreement on its behalf.
Micrus S.A.
By: /s/ Xxxxxxx Xxxxx Dated: February 28, 2005
------------------------
Xxxxxxx Xxxxx,
Executive Vice President
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I certify that I am counsel to Micrus Corporation and Micrus S.A. in this
matter and that I have carefully reviewed the Agreement with the duly authorized
Micrus officers whose signatures appear above.
Xxxxxx Xxxxxx White & XxXxxxxxx LLP
By: /s/ Xxxxxxx X. Xxxxxxx/DR Dated: February 28, 2005
-------------------------
Xxxxxxx X. Xxxxxxx
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