CARDICA, INC. REGISTRATION RIGHTS AGREEMENT November 7, 2006
Table Of Contents
| Page | ||||
SECTION 1. GENERAL |
1 | |||
1.1 Definitions |
1 | |||
SECTION 2. REGISTRATION; RESTRICTIONS ON TRANSFER |
3 | |||
2.1 Restrictions on Transfer |
3 | |||
2.2 Demand Registration |
4 | |||
2.3 Piggyback Registrations |
5 | |||
2.4 Form S-3 Registration |
7 | |||
2.5 Expenses of Registration |
8 | |||
2.6 Obligations of the Company |
8 | |||
2.7 Termination of Registration Rights |
9 | |||
2.8 Delay of Registration; Furnishing Information |
9 | |||
2.9 Indemnification |
10 | |||
2.10 Assignment of Registration Rights |
12 | |||
2.11 Amendment of Registration Rights |
12 | |||
2.12 Limitation on Subsequent Registration Rights |
12 | |||
2.13 Rule 144 Reporting |
12 | |||
SECTION 3. MISCELLANEOUS |
13 | |||
3.1 Governing Law |
13 | |||
3.2 Survival |
13 | |||
3.3 Successors and Assigns |
13 | |||
3.4 Entire Agreement |
13 | |||
3.5 Severability |
13 | |||
3.6 Amendment and Waiver |
14 | |||
3.7 Delays or Omissions |
14 | |||
3.8 Notices |
14 | |||
3.9 Attorneys’ Fees |
14 | |||
3.10 Titles and Subtitles |
14 | |||
3.11 Counterparts |
14 | |||
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CARDICA, INC.
This Registration Rights Agreement (the “Agreement”) is entered into as of the 7th
day of November, 2006, by and among Cardica, Inc., a Delaware corporation (the “Company”),
and Guidant Investment Corporation, a California corporation (“Guidant”).
Recitals
Whereas, the Company is issuing shares of the Company’s Common Stock (the “Common
Stock”) to Guidant pursuant to that certain Note Conversion Agreement (the “Note Conversion
Agreement”) of even date herewith;
Whereas, the obligations in the Note Conversion Agreement are conditioned upon the
execution and delivery of this Agreement;
Whereas, the Company and Guidant have agreed to the registration rights set forth
below; and
Whereas, all capitalized terms used but not defined herein shall have the meanings
given to them in the Investor Rights Agreement (as defined below).
Now, Therefore, in consideration of the mutual promises, representations, warrants,
covenants and conditions set forth in this Agreement and in the Note Conversion Agreement, the
parties mutually agree as follows:
SECTION 1. GENERAL.
1.1 Definitions. As used in this Agreement the following terms shall have the following
respective meanings:
(a) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(b) “Form S-3” means such form under the Securities Act as in effect on the date hereof or any
successor or similar registration form under the Securities Act subsequently adopted by the SEC
which permits inclusion or incorporation of substantial information by reference to other documents
filed by the Company with the SEC.
(c) “Holder” means any person owning of record Registrable Securities that have not been sold
to the public or any assignee of record of such Registrable Securities in accordance with Section
2.10 hereof.
(d) “Investor Rights Agreement” means the Amended and Restated Investor Rights Agreement dated
August 19, 2003 between the Company and the Investors named therein, as amended by that certain
Consent to Grant of Registration Rights and Amendment to Amended and Restated Investor Rights
Agreement of even date herewith.
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(e) “Investor Rights Agreement Holders” means all Holders as defined in the Investor Rights
Agreement.
(f) “Piggyback Registrable Securities” means all Registrable Securities under this Agreement
and all Registrable Securities under the Investor Rights Agreement.
(g) “Register,” “registered,” and “registration” refer to a registration effected by preparing
and filing a registration statement in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document.
(h) “Registrable Securities” means (a) Common Stock of the Company issued upon conversion of
the Notes pursuant to the Note Conversion Agreement; and (b) any Common Stock of the Company issued
as a dividend or other distribution with respect to, or in exchange for or in replacement of, such
above-described securities. Notwithstanding the foregoing, Registrable Securities shall not
include any securities (i) sold by a person to the public pursuant to a registration statement,
(ii) sold in a private transaction in which the transferor’s rights under Section 2 of this
Agreement are not assigned or (iii) held by a Holder (together with its affiliates) if all shares
of Common Stock of the Company issued upon conversion of the Notes held by such Holder (and its
affiliates) may be sold pursuant to Rule 144 during any ninety (90) day period. For the purposes
of this Agreement, the term “affiliate” shall include, in the case of Guidant Investment
Corporation (“Guidant”), The Guidant Foundation (“Foundation”) so long as Foundation is an
“accredited investor” within the meaning such term is given in the Securities Act, as hereinafter
defined.
(i) “Registrable Securities then outstanding” shall be the number of shares determined by
calculating the total number of shares of the Company’s Common Stock that are Registrable
Securities then issued and outstanding.
(j) “Registration Expenses” shall mean all expenses incurred by the Company in complying with
Sections 2.2, 2.3 and 2.4 hereof, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company, reasonable fees and
disbursements not to exceed ten thousand dollars ($10,000) of a single special counsel for the
Holders, blue sky fees and expenses and the expense of any special audits incident to or required
by any such registration (but excluding the compensation of regular employees of the Company which
shall be paid in any event by the Company).
(k) “SEC” or “Commission” means the Securities and Exchange Commission.
(l) “Securities Act” shall mean the Securities Act of 1933, as amended.
(m) “Selling Expenses” shall mean all underwriting discounts and selling commissions
applicable to the sale.
(n) “Special Registration Statement” shall mean a registration statement relating to any
employee benefit plan under Form S-8 or similar form or with respect to any corporate
reorganization or other transaction under Rule 145 of the Securities Act.
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SECTION 2. REGISTRATION; RESTRICTIONS ON TRANSFER.
2.1 Restrictions on Transfer.
(a) Each Holder agrees not to make any disposition of all or any portion of the Registrable
Securities unless and until:
(i) There is then in effect a registration statement under the Securities Act covering such
proposed disposition and such disposition is made in accordance with such registration statement;
or
(ii) (A) Such Holder shall have notified the Company of the proposed disposition and shall
have furnished the Company with a detailed statement of the circumstances surrounding the proposed
disposition, and (B) if reasonably requested by the Company, such Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition
will not require registration of such shares under the Securities Act. It is agreed that the
Company will not require opinions of counsel for transactions made pursuant to Rule 144 except in
unusual circumstances.
(iii) Notwithstanding the provisions of paragraphs (i) and (ii) above, no such registration
statement or opinion of counsel shall be necessary for a transfer by a Holder which is (A) a
partnership to its partners or former partners in accordance with partnership interests, (B) a
corporation to its shareholders in accordance with their interest in the corporation, (C) a limited
liability company to its members or former members in accordance with their interest in the limited
liability company, (D) to the Holder’s family member or trust for the benefit of an individual
Holder, or (E) any entity to any of its affiliates; provided that in each case the transferee will
be subject to the terms of this Agreement to the same extent as if he were an original Holder
hereunder.
(b) Each certificate representing Registrable Securities shall (unless otherwise permitted by
the provisions of the Agreement) be stamped or otherwise imprinted with legends substantially
similar to the following (in addition to any legend required under applicable state securities
laws):
“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS
AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS
COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.”
“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE HELD BY A PERSON WHO
MAY BE DEEMED TO BE AN AFFILIATE OF CARDICA, INC. FOR PURPOSES OF
RULE 144 PROMULGATED UNDER THE SECURITIES ACT OF
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1933, AS AMENDED (THE “ACT”) AND MAY BE SOLD ONLY IN COMPLIANCE
WITH RULE 144 PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT OR PURSUANT TO A VALID EXEMPTION FROM REGISTRATION UNDER THE
ACT.”
(c) The Company shall be obligated to reissue promptly unlegended certificates at the request
of any holder thereof if the holder shall have obtained an opinion of counsel (which counsel may be
counsel to the Company) reasonably acceptable to the Company to the effect that the securities
proposed to be disposed of may lawfully be so disposed of without registration, qualification or
legend.
(d) Any legend endorsed on an instrument pursuant to applicable state securities laws and the
stop-transfer instructions with respect to such securities shall be removed upon receipt by the
Company of an order of the appropriate blue sky authority authorizing such removal.
2.2 Demand Registration.
(a) Subject to the conditions of this Section 2.2, if the Company shall receive a written
request from the Holders of a majority of the Registrable Securities (the “Initiating Holders”)
that the Company file a registration statement under the Securities Act covering the registration
of at least a majority of the Registrable Securities then outstanding (or a lesser percent if the
anticipated aggregate offering price, net of underwriting discounts and commissions, would exceed
$2,500,000 (a “Qualified Public Offering”), then the Company shall, within twenty (20) days of the
receipt thereof, give written notice of such request to all Holders, and subject to the limitations
of this Section 2.2, effect, as expeditiously as reasonably possible, the registration under the
Securities Act of all Registrable Securities that the Holders request to be registered, provided
that each Holder must respond to the Company’s notice within fifteen (15) days of receipt thereof
and indicate the number of Registrable Securities such Holder requests be included in the
registration. Notwithstanding the foregoing, the maximum number of Registrable Securities to be
covered by a registration statement requested pursuant to this Section 2.2 prior to the first
anniversary of the date of this Agreement shall be 20% of the total Registrable Securities.
(b) If the Initiating Holders intend to distribute the Registrable Securities covered by their
request by means of an underwriting, they shall so advise the Company as a part of their request
made pursuant to this Section 2.2 or any request pursuant to Section 2.4 and the Company shall
include such information in the written notice referred to in Section 2.2(a) or Section 2.4(a), as
applicable. In such event, the right of any Holder to include its Registrable Securities in such
registration shall be conditioned upon such Holder’s participation in such underwriting and the
inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided
herein. All Holders proposing to distribute their securities through such underwriting shall enter
into an underwriting agreement in customary form with the underwriter or underwriters selected for
such underwriting by a majority in interest of the Initiating Holders (which underwriter or
underwriters shall be reasonably acceptable to the Company). Notwithstanding any other provision
of this Section 2.2 or Section 2.4, if the underwriter advises
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the Company that marketing factors require a limitation of the number of securities to be
underwritten (including Registrable Securities) then the Company shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto, and the number of
shares that may be included in the underwriting shall be allocated to the Holders of such
Registrable Securities on a pro rata basis based on the number of Registrable Securities held by
all such Holders (including the Initiating Holders). Any Registrable Securities excluded or
withdrawn from such underwriting shall be withdrawn from the registration. In no event will shares
of any other selling shareholder, including any Investor Rights Agreement Holder, be included in
such registration which would reduce the number of shares which may be included by Holders without
the written consent of Holders of not less than a majority of the Registrable Securities proposed
to be sold in the offering.
(c) The Company shall not be required to effect a registration pursuant to this Section 2.2:
(i) prior to the earlier of six (6) months following the date of this Agreement;
(ii) if the Company has effected one (1) registration pursuant to this Section 2.2 in the
twelve (12) months preceding such request, and such registration was declared or ordered effective;
(iii) if the Company shall furnish to Holders requesting a registration statement pursuant to
this Section 2.2, a certificate signed by the Chairman of the Board stating that in the good faith
judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company
and its shareholders for such registration statement to be effected at such time, in which event
the Company shall have the right to defer such filing for a period of not more than ninety (90)
days after receipt of the request of the Initiating Holders; provided that such right to delay a
request shall be exercised by the Company not more than once in any twelve (12) month period; or
(iv) if the Initiating Holders propose to dispose of shares of Registrable Securities that may
be immediately registered on Form S-3 pursuant to a request made pursuant to Section 2.4 below.
2.3 Piggyback Registrations. The Company shall notify all Holders of Registrable Securities
in writing at least twenty (20) days prior to the filing of any registration statement under the
Securities Act for purposes of a public offering of securities of the Company (including, but not
limited to, registration statements relating to secondary offerings of securities of the Company,
but excluding Special Registration Statements) and will afford each such Holder an opportunity to
include in such registration statement all or part of such Registrable Securities held by such
Holder. Each Holder desiring to include in any such registration statement all or any part of the
Registrable Securities held by it shall, within fifteen (15) days after the above-described notice
from the Company, so notify the Company in writing. Such notice shall state the intended method of
disposition of the Registrable Securities by such Holder. If a Holder decides not to include all
of its Registrable Securities in any registration statement thereafter filed by the Company, such
Holder shall nevertheless continue to have the right to
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include any Registrable Securities in any subsequent registration statement or registration
statements as may be filed by the Company with respect to offerings of its securities, all upon the
terms and conditions set forth herein.
(a) Underwriting. If the registration statement under which the Company gives notice under
this Section 2.3 is for an underwritten offering, the Company shall so advise the Holders of
Registrable Securities. In such event, the right of any such Holder to be included in a
registration pursuant to this Section 2.3 shall be conditioned upon such Holder’s participation in
such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to
the extent provided herein. All Holders proposing to distribute their Registrable Securities
through such underwriting shall enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by the Company (or, in the case of a
registration statement initiated by shareholders of the Company, the underwriter selected by such
shareholders that is reasonably acceptable to the Company). Notwithstanding any other provision of
the Agreement, if the underwriter determines in good faith that marketing factors require a
limitation of the number of shares to be underwritten, the number of shares that may be included in
the underwriting shall be allocated (a) in the case of a registration statement initiated by the
Company for any offering of shares by the Company, first, to the Company; second, to the Holders
and Investor Rights Agreement Holders on a pro rata basis based on the total number of Piggyback
Registrable Securities held by the Holders and Investor Rights Agreement Holders; and third, to any
other shareholder of the Company (other than a Holder or an Investor Rights Agreement Holder) on a
pro rata basis and (b) in the case of a registration statement initiated by the Investor Rights
Agreement Holders, first, to the Investor Rights Agreement Holders and Holders on a pro rata basis
based on the total number of Piggyback Registrable Securities held by the Investor Rights Agreement
Holders and the Holders; and second, to any other shareholder of the Company (other than a Holder
or Investor Rights Agreement Holder) on a pro rata basis. In the case of a registration initiated
by the Company for the sale of shares by the Company, no such reduction shall (i) reduce the
securities being offered by the Company for its own account to be included in the registration and
underwriting, or (ii) reduce the amount of securities of the selling Holders and the selling
Registration Rights Agreement Holders included in the registration below twenty percent (20%) of
the total amount of securities included in such registration. In no event will shares of any other
selling shareholder, other than the Investor Rights Agreement Holders as set forth above, be
included in such registration which would reduce the number of shares which may be included by
Holders without the written consent of Holders of not less than a majority of the Registrable
Securities proposed to be sold in the offering. If any Holder disapproves of the terms of any such
underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the
underwriter, delivered at least ten (10) business days prior to the effective date of the
registration statement. Any Registrable Securities excluded or withdrawn from such underwriting
shall be excluded and withdrawn from the registration. For any Holder which is a partnership or
corporation, the partners, retired partners and shareholders of such Holder, or the estates and
family members of any such partners and retired partners and any trusts for the benefit of any of
the foregoing person shall be deemed to be a single “Holder,” and any pro rata reduction with
respect to such “Holder” shall be based upon the aggregate amount of shares carrying registration
rights owned by all entities and individuals included in such “Holder,” as defined in this
sentence.
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(b) Right to Terminate Registration. The Company shall have the right to terminate or
withdraw any registration initiated by it under this Section 2.3 prior to the effectiveness of such
registration whether or not any Holder has elected to include securities in such registration. The
Registration Expenses of such withdrawn registration shall be borne by the Company in accordance
with Section 2.5 hereof.
2.4 Form S-3 Registration. In case the Company shall receive from any Holder or Holders of
Registrable Securities a written request or requests that the Company effect a registration on Form
S-3 (or any successor to Form S-3) or any similar short-form registration statement and any related
qualification or compliance with respect to all or a part of the Registrable Securities owned by
such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed registration, and any related qualification
or compliance, to all other Holders of Registrable Securities; and
(b) as soon as practicable, effect such registration and all such qualifications and
compliances as may be so requested and as would permit or facilitate the sale and distribution of
all or such portion of such Holder’s or Holders’ Registrable Securities as are specified in such
request, together with all or such portion of the Registrable Securities of any other Holder or
Holders joining in such request as are specified in a written request given within fifteen (15)
days after receipt of such written notice from the Company; provided, however, that the Company
shall not be obligated to effect any such registration, qualification or compliance pursuant to
this Section 2.4:
(i) if Form S-3 is not available for such offering by the Holders, or
(ii) if the Holders, together with the holders of any other securities of the Company entitled
to inclusion in such registration, propose to sell Registrable Securities and such other securities
(if any) at an aggregate price to the public of less than one million dollars ($1,000,000), or
(iii) if within thirty (30) days of receipt of a written request from any Holder or Holders
pursuant to this Section 2.4, the Company gives notice to such Holder or Holders of the Company’s
intention to make a public offering within ninety (90) days, other than pursuant to a Special
Registration Statement;
(iv) if the Company shall furnish to the Holders a certificate signed by the Chairman of the
Board of Directors of the Company stating that in the good faith judgment of the Board of Directors
of the Company, it would be seriously detrimental to the Company and its shareholders for such Form
S-3 registration to be effected at such time, in which event the Company shall have the right to
defer the filing of the Form S-3 registration statement for a period of not more than ninety (90)
days after receipt of the request of the Holder or Holders under this Section 2.4; provided, that
such right to delay a request shall be exercised by the Company not more than once in any twelve
(12) month period; or
(v) in any particular jurisdiction in which the Company would be required to qualify to do
business or to execute a general consent to service of process in effecting such registration,
qualification or compliance.
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(c) Subject to the foregoing, the Company shall file a Form S-3 registration statement
covering the Registrable Securities and other securities so requested to be registered as soon as
practicable after receipt of the request or requests of the Holders. Registrations effected
pursuant to this Section 2.4 shall not be counted as demands for registration or registrations
effected pursuant to Sections 2.2 or 2.3, respectively.
2.5 Expenses of Registration. Except as specifically provided herein, all Registration
Expenses incurred in connection with any registration, qualification or compliance pursuant to
Section 2.2 or any registration under Section 2.3 or Section 2.4 herein shall be borne by the
Company. All Selling Expenses incurred in connection with any registrations hereunder, shall be
borne by the holders of the securities so registered pro rata on the basis of the number of shares
so registered. The Company shall not, however, be required to pay for expenses of any registration
proceeding begun pursuant to Section 2.2 or 2.4, the request of which has been subsequently
withdrawn by the Initiating Holders unless (a) the withdrawal is based upon material adverse
information concerning the Company of which the Initiating Holders were not aware at the time of
such request or (b) the Holders of a majority of Registrable Securities agree to forfeit their
right to one requested registration pursuant to Section 2.2 or Section 2.4, as applicable, in which
event such right shall be forfeited by all Holders). If the Holders are required to pay the
Registration Expenses, such expenses shall be borne by the holders of securities (including
Registrable Securities) requesting such registration in proportion to the number of shares for
which registration was requested. If the Company is required to pay the Registration Expenses of a
withdrawn offering pursuant to clause (a) above, then the Holders shall not forfeit their rights
pursuant to Section 2.2 or Section 2.4 to a demand registration.
2.6 Obligations of the Company. Whenever required to effect the registration of any
Registrable Securities, the Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with respect to such Registrable
Securities and use all reasonable efforts to cause such registration statement to become effective,
and, upon the request of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for up to thirty (30) days or, if earlier,
until the Holder or Holders have completed the distribution related thereto. The Company shall not
be required to file, cause to become effective or maintain the effectiveness of any registration
statement that contemplates a distribution of securities on a delayed or continuous basis pursuant
to Rule 415 under the Securities Act.
(b) Prepare and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement for the period set forth in paragraph (a)
above.
(c) Furnish to the Holders such number of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such other documents as
they may reasonably request in order to facilitate the disposition of Registrable Securities owned
by them.
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(d) Use its reasonable efforts to register and qualify the securities covered by such
registration statement under such other securities or Blue Sky laws of such jurisdictions as shall
be reasonably requested by the Holders; provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to file a general
consent to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and perform its obligations
under an underwriting agreement, in usual and customary form, with the managing underwriter(s) of
such offering. Each Holder participating in such underwriting shall also enter into and perform
its obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such registration statement at any
time when a prospectus relating thereto is required to be delivered under the Securities Act of the
happening of any event as a result of which the prospectus included in such registration statement,
as then in effect, includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing. The Company will use reasonable efforts to amend or
supplement such prospectus in order to cause such prospectus not to include any untrue statement of
a material fact or omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances then existing.
(g) Use its reasonable efforts to furnish, on the date that such Registrable Securities are
delivered to the underwriters for sale, if such securities are being sold through underwriters, (i)
an opinion, dated as of such date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in an underwritten
public offering, addressed to the underwriters, if any, and (ii) a letter dated as of such date,
from the independent certified public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to underwriters in an underwritten
public offering addressed to the underwriters.
2.7 Termination of Registration Rights. All registration rights granted under this Section 2
shall terminate and be of no further force and effect when all Registrable Securities may be sold
pursuant to Rule 144 during a ninety (90) day period.
2.8 Delay of Registration; Furnishing Information.
(a) No Holder shall have any right to obtain or seek an injunction restraining or otherwise
delaying any such registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 2.
(b) It shall be a condition precedent to the obligations of the Company to take any action
pursuant to Section 2.2, 2.3 or 2.4 that the selling Holders shall furnish to the Company such
information regarding themselves, the Registrable Securities held by them and the intended method
of disposition of such securities as shall be required to effect the registration of their
Registrable Securities.
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(c) The Company shall have no obligation with respect to any registration requested pursuant
to Section 2.2 or Section 2.4 if, due to the operation of subsection 2.2(b), the number of shares
or the anticipated aggregate offering price of the Registrable Securities to be included in the
registration does not equal or exceed the number of shares or the anticipated aggregate offering
price required to originally trigger the Company’s obligation to initiate such registration as
specified in Section 2.2 or Section 2.4, whichever is applicable.
2.9 Indemnification. In the event any Registrable Securities are included in a registration
statement under Sections 2.2, 2.3 or 2.4:
(a) To the extent permitted by law, the Company will indemnify and hold harmless each Holder,
the partners, officers and directors of each Holder, any underwriter (as defined in the Securities
Act) for such Holder and each person, if any, who controls such Holder or underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the Securities Act, the
Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a “Violation”) by the Company: (i) any untrue statement or
alleged untrue statement of a material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments or supplements
thereto, (ii) the omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or (iii) any violation
or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities
law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state
securities law in connection with the offering covered by such registration statement; and the
Company will pay as incurred to each such Holder, partner, officer, director, underwriter or
controlling person for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action; provided however,
that the indemnity agreement contained in this Section 2.9(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the
Company be liable in any such case for any such loss, claim, damage, liability or action to the
extent that it arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection with such
registration by such Holder, partner, officer, director, underwriter or controlling person of such
Holder.
(b) To the extent permitted by law, each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration qualifications or compliance is
being effected, indemnify and hold harmless the Company, each of its directors, its officers and
each person, if any, who controls the Company within the meaning of the Securities Act, any
underwriter and any other Holder selling securities under such registration statement or any of
such other Holder’s partners, directors or officers or any person who controls such Holder, against
any losses, claims, damages or liabilities (joint or several) to which the Company or any such
director, officer, controlling person, underwriter or other such Holder, or partner, director,
officer or controlling person of such other Holder may become subject under the Securities Act, the
Exchange Act or other federal or state law, insofar as such losses, claims,
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damages or liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such Holder under an
instrument duly executed by such Holder and stated to be specifically for use in connection with
such registration; and each such Holder will pay as incurred any legal or other expenses reasonably
incurred by the Company or any such director, officer, controlling person, underwriter or other
Holder, or partner, officer, director or controlling person of such other Holder in connection with
investigating or defending any such loss, claim, damage, liability or action if it is judicially
determined that there was such a Violation; provided, however, that the indemnity agreement
contained in this Section 2.9(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld; provided further, that in no event shall
any indemnity under this Section 2.9 exceed the net proceeds from the offering received by such
Holder.
(c) Promptly after receipt by an indemnified party under this Section 2.9 of notice of the
commencement of any action (including any governmental action), such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under this Section 2.9,
deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying
party shall have the right to participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by the indemnifying
party would be inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such proceeding. The failure
to deliver written notice to the indemnifying party within a reasonable time of the commencement of
any such action, if materially prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section 2.9, but the
omission so to deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this Section 2.9.
(d) If the indemnification provided for in this Section 2.9 is held by a court of competent
jurisdiction to be unavailable to an indemnified party with respect to any losses, claims, damages
or liabilities referred to herein, the indemnifying party, in lieu of indemnifying such indemnified
party thereunder, shall to the extent permitted by applicable law contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the Violation(s) that resulted in
such loss, claim, damage or liability, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be determined by a
court of law by reference to, among other things, whether the untrue or alleged untrue statement of
a material fact or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
11
omission; provided, that in no event shall any contribution by a Holder hereunder exceed the
net proceeds from the offering received by such Holder.
(e) The obligations of the Company and Holders under this Section 2.9 shall survive completion
of any offering of Registrable Securities in a registration statement and the termination of this
agreement. No Indemnifying Party, in the defense of any such claim or litigation, shall, except
with the consent of each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect to such claim or
litigation.
2.10 Assignment of Registration Rights. The rights to cause the Company to register
Registrable Securities pursuant to this Section 2 may be assigned by a Holder to a transferee or
assignee of Registrable Securities which (a) is a subsidiary, parent, general partner, limited
partner, retired partner, member or retired member, or an affiliate of a Holder, (b) is a Holder’s
family member or trust for the benefit of an individual Holder, or (c) acquires at least fifty
thousand (50,000) shares of Registrable Securities (as adjusted for stock splits and combinations);
provided, however, (i) the transferor shall, within ten (10) days after such transfer, furnish to
the Company written notice of the name and address of such transferee or assignee and the
securities with respect to which such registration rights are being assigned and (ii) such
transferee shall agree to be subject to all restrictions set forth in this Agreement.
2.11 Amendment of Registration Rights. Any provision of this Section 2 may be amended and the
observance thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company and the Holders of at
least a majority of the Registrable Securities then outstanding. Any amendment or waiver effected
in accordance with this Section 2.11 shall be binding upon each Holder and the Company. By
acceptance of any benefits under this Section 2, Holders of Registrable Securities hereby agree to
be bound by the provisions hereunder.
2.12 Limitation on Subsequent Registration Rights. After the date of this Agreement, for so
long as the Holders hold at least 1,000,000 shares of Registrable Securities, the Company shall
not, without the prior written consent of the Holders of at least a majority of the Registrable
Securities then outstanding, enter into any agreement with any holder or prospective holder of any
securities of the Company that would grant such holder registration rights pari passu or senior to
those granted to the Holders hereunder.
2.13 Rule 144 Reporting. With a view to making available to the Holders the benefits of
certain rules and regulations of the SEC which may permit the sale of the Registrable Securities to
the public without registration, the Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are understood and defined in
SEC Rule 144 or any similar or analogous rule promulgated under the Securities Act, at all times
after the effective date of the first registration filed by the Company for an offering of its
securities to the general public;
12
(b) File with the SEC, in a timely manner, all reports and other documents required of the
Company under the Exchange Act; and
(c) So long as a Holder owns any Registrable Securities, furnish to such Holder forthwith upon
request: a written statement by the Company as to its compliance with the reporting requirements
of said Rule 144 of the Securities Act, and of the Exchange Act (at any time after it has become
subject to such reporting requirements); a copy of the most recent annual or quarterly report of
the Company; and such other reports and documents as a Holder may reasonably request in availing
itself of any rule or regulation of the SEC allowing it to sell any such securities without
registration.
SECTION 3. MISCELLANEOUS.
3.1 Governing Law. This Agreement shall be governed by and construed under the laws of the
State of California as applied to agreements among California residents entered into and to be
performed entirely within California.
3.2 Survival. The representations, warranties, covenants, and agreements made herein shall
survive any investigation made by the Holder and the closing of the transactions contemplated
hereby. All statements as to factual matters contained in any certificate or other instrument
delivered by or on behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the Company hereunder
solely as of the date of such certificate or instrument.
3.3 Successors and Assigns. Except as otherwise expressly provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs,
executors, and administrators of the parties hereto and shall inure to the benefit of and be
enforceable by each person who shall be a holder of Registrable Securities from time to time;
provided, however, that prior to the receipt by the Company of adequate written notice of the
transfer of any Registrable Securities specifying the full name and address of the transferee, the
Company may deem and treat the person listed as the holder of such shares in its records as the
absolute owner and holder of such shares for all purposes, including the payment of dividends or
any redemption price.
3.4 Entire Agreement. This Agreement and the Note Conversion Agreement and the other
documents delivered pursuant thereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and no party shall be liable or bound to any
other in any manner by any representations, warranties, covenants and agreements except as
specifically set forth herein and therein.
3.5 Severability. In the event one or more of the provisions of this Agreement should, for
any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not affect any other provisions of this Agreement, and this
Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been
contained herein.
13
3.6 Amendment and Waiver.
(a) Except as otherwise expressly provided in this Agreement, this Agreement may be amended or
modified only upon the written consent of the Company and the holders of at least a majority of the
Registrable Securities.
(b) Except as otherwise expressly provided in this Agreement, the obligations of the Company
and the rights of the Holders under this Agreement may be waived only with the written consent of
the holders of at least a majority of the Registrable Securities.
(c) For the purposes of determining the number of Holder or Investors entitled to vote or
exercise any rights hereunder, the Company shall be entitled to rely solely on the list of record
holders of its stock as maintained by or on behalf of the Company.
3.7 Delays or Omissions. It is agreed that no delay or omission to exercise any right, power,
or remedy accruing to any Holder, upon any breach, default or noncompliance of the Company under
this Agreement shall impair any such right, power, or remedy, nor shall it be construed to be a
waiver of any such breach, default or noncompliance, or any acquiescence therein, or of any similar
breach, default or noncompliance thereafter occurring. It is further agreed that any waiver,
permit, consent, or approval of any kind or character on any Holder’s part of any breach, default
or noncompliance under the Agreement or any waiver on such Holder’s part of any provisions or
conditions of this Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this Agreement, by law, or
otherwise afforded to Holders, shall be cumulative and not alternative.
3.8 Notices. All notices required or permitted hereunder shall be in writing and shall be
deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by
confirmed electronic mail or facsimile if sent during normal business hours of the recipient; if
not, then on the next business day, (c) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with written verification of
receipt. All communications shall be sent to the party to be notified at the address as set forth
on the signature pages hereof or at such other address as such party may designate by ten (10) days
advance written notice to the other parties hereto.
3.9 Attorneys’ Fees. In the event that any suit or action is instituted to enforce any
provision in this Agreement, the prevailing party in such dispute shall be entitled to recover from
the losing party all fees, costs and expenses of enforcing any right of such prevailing party under
or with respect to this Agreement, including without limitation, such reasonable fees and expenses
of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses
of appeals.
3.10 Titles and Subtitles. The titles of the sections and subsections of this Agreement are
for convenience of reference only and are not to be considered in construing this Agreement.
3.11 Counterparts. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one instrument.
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In Witness Whereof, the parties hereto have executed this Registration Rights
Agreement as of the date set forth in the first paragraph hereof.
| COMPANY: | HOLDER: | |||||||||
| Cardica, Inc. | Guidant Investment Corporation | |||||||||
| By: /s/ Xxxxxxxx X. Xxxxx | ||||||||||
|
|
||||||||||
By:
|
/s/ Xxxxxxx Xxxxxx | |||||||||
| Xxxxxxx Xxxxxx, M.D., Ph. D. | Print Name: Xxxxxxxx X. Xxxxx | |||||||||
| President and Chief Executive Officer | ||||||||||
| Print Title: Vice President — Legal and Secretary | ||||||||||
| Address: 000 Xxxxxxx Xxxxx | ||||||||||
| Xxxxxxx Xxxx, XX 00000 | Address: | |||||||||
