Document:

exv10w4

 

Exhibit 10.4

CARDICA, INC.

BENEFITS AGREEMENT

     This
Benefits Agreement(“ Agreement”) is entered by and between Bernard Hausen, M.D.,
Ph.D. (“Executive”) and Cardica, Inc. (the “Company”), a Delaware corporation.
Executive and Company have executed this Agreement on ___, 2006 (the “Effective Date”).

     Whereas, Executive has been providing services to the Company pursuant to terms that
have been agreed upon from time to time (the “Existing Agreement”);

     Whereas, the Company desires to provide Executive with severance benefits not
contemplated by the Existing Agreement in return for his continued employment services; and

     Whereas, Executive wishes to provide personal services to the Company as an employee
in return for the compensation and benefits set forth in the Existing Agreement and as set forth
herein.

     Now, Therefore, in consideration of the mutual promises and covenants contained
herein, it is hereby agreed by and between the parties hereto as follows, effective as of the
Effective Date:

     1. Employment by the Company.

          1.1 Title and Responsibilities. Subject to the terms set forth herein, Executive
will be employed as the Company’s Chief Executive Officer. During his employment with the
Company, Executive will devote his best efforts and substantially all of his business time and
attention (except for vacation periods and reasonable periods of illness or other incapacity
permitted by the Company’s general employment policies) to the business of the Company.
Notwithstanding the foregoing, it is acknowledged and agreed that Executive shall be permitted to
engage in civic and not-for-profit activities; provided, that such activities do not materially
interfere with the performance of his duties hereunder.

          1.2 Executive Position. Executive will serve in an executive capacity and shall
report to the Company’s Board of Directors (the “Board”). Executive shall perform the duties of his
executive position as required by the Board.

          1.3 At-Will Employment. Executive’s relationship with the Company is at-will. The
Company shall have the right to terminate this Agreement and Executive’s employment with the
Company at any time with or without Cause (as defined in Section 4), and with or without advance
notice. In addition, the Company retains the discretion to modify the terms of Executive’s
employment, including but not limited to position, duties, reporting relationship, office location,
compensation, and benefits, at any time. Executive’s at-will employment relationship only may be
changed in a written agreement approved by the Board and signed by Executive and a duly authorized
officer of the Company. Executive also may be removed from any position he holds in the manner
specified by the Bylaws of the Company and applicable law.

          1.4 Company Employment Policies. The employment relationship between the parties
shall continue to be governed by the general employment policies and procedures of the Company,
including those relating to the protection of confidential information and assignment of
inventions, except that when the terms of this Agreement differ from or are in conflict with the
Company’s general employment

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policies or procedures, this Agreement shall control. To the extent not specified by this
Agreement or the Company’s general policies, the Existing Agreement shall control.

     2. Confidential Information. As a condition of his continued employment,
Executive must continue to comply with the Proprietary Information and Inventions Agreement (the
“Confidential Information Agreement”) he has executed previously. Nothing in this Agreement is
intended to modify in any respect the Confidential Information Agreement, and the Confidential
Information Agreement shall remain in full force and effect.

     3. Termination Of Employment. In addition to any vesting acceleration as
may be provided in agreements between the Company and Executive, Executive shall be eligible for
the benefits described in this Section 3.

          3.1 Definition of Cause. For purposes of this Agreement, “Cause” shall mean (i) a
felony or any crime involving moral turpitude or dishonesty; (ii) participation in a fraud,
misappropriation, or embezzlement of funds or property or act of dishonesty against the Company;
(iii) material breach of Company’s policies, provided Company has given Executive written
notification of the breach and has provided Executive with fifteen (15) days’ opportunity to cure
the breach; (iv) willful conduct or gross negligence which is materially injurious to the
reputation, business or business relationships of the Company or results in material damage to the
Company’s property; (v) Executive’s breach of the Employee Proprietary Information and Inventions
Agreement; or (vi) conduct which in the good faith and reasonable determination of the Company
demonstrates gross unfitness to serve.

          3.2 Definition of Good Reason. For purposes of this Agreement, “Good Reason” shall
include Executive’s resignation from his employment with the Company other than for Cause or
voluntary termination, upon thirty (30) days prior written notice to Company of (a) any change in
Executive’s duties or responsibilities which result in a material diminution or material adverse
change of Executive’s position, status or responsibilities of employment, but shall not include a
mere change in title or reporting relationship; (b) reduction by Company in Executive’s base salary
by greater than ten percent (10%) unless the salaries of all other executive officers are similarly
reduced; (c) a relocation of Executive’s place of employment with Company, to a location more than
thirty (30) miles from the location at which Executive performed duties as an employee immediately
prior to the Change of Control; (d) any material breach by Company of any agreement between
Executive and Company concerning Executive’s employment; or (e) any failure by Company to obtain
the assumption of any material agreement, including the material provisions of any option grant,
between Executive and Company concerning Executive’s employment by any successor or assign of the
Company (or related employer of same).

          3.3 Termination for Cause or Executive’s Resignation Without Good Reason. If the
Company terminates Executive’s employment at any time for Cause, or if Executive resigns at any
time without Good Reason, Executive’s salary shall cease on the date of termination, and Executive
will not be entitled to any Severance Benefits (as defined below), severance pay, pay in lieu of
notice or any other such compensation, any accelerated vesting of any stock, options or other stock
awards, other than payment of accrued salary and such other benefits as expressly required in such
event by applicable law or the terms of any applicable Company benefit plans.

          3.4 Termination Without Cause or Resignation with Good Reason. If the Company
terminates Executive’s employment at any time without Cause, or if at any time Executive resigns
his employment with Good Reason, Executive shall be eligible to receive as a severance payment (the
“Severance Benefits”) an amount equal to twelve (12) months of Executive’s then-current base
salary. Executive shall not be entitled to the Severance Benefits unless and until the release
requirements set forth in Section 4 of this Agreement are satisfied.

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          3.5 Cessation of Severance Benefits. If Executive violates the provisions of
Sections 2 of this Agreement, any Severance Benefits or other benefits being provided to Executive
will cease immediately, and Executive will not be entitled to any further compensation and benefits
from the Company.

          3.6 Application of Internal Revenue Code Section 409A. If the Company determines
that any of the Severance Benefits payments fail to satisfy the distribution requirement of Section
409A(a)(2)(A) of the Internal Revenue Code as a result of Section 409A(a)(2)(B)(i) of the Internal
Revenue Code, the payment of such benefit shall be accelerated to the minimum extent necessary so
that the benefit is not subject to the provisions of Section 409A(a)(1) of the Internal Revenue
Code. (It is the intention of the preceding sentence to apply the short-term deferral provisions
of Section 409A of the Internal Revenue Code, and the regulations and other guidance thereunder, to
the Severance Benefits payments, and the payment schedule as revised after the application of the
preceding sentence shall be referred to as the “Revised Payment Schedule.”) However, if there is
no Revised Payment Schedule that would avoid the application of Section 409A(a)(1) of the Internal
Revenue Code, the payment of such benefits shall not be paid pursuant to a Revised Payment Schedule
and instead shall be delayed to the minimum extent necessary so that such benefits are not subject
to the provisions of Section 409A(a)(1) of the Internal Revenue Code. The Board may attach
conditions to or adjust the amounts paid pursuant to this Section 4.4 to preserve, as closely as
possible, the economic consequences that would have applied in the absence of this Section 4.4;
provided, however, that no such condition or adjustment shall result in the payments being subject
to Section 409A(a)(1) of the Internal Revenue Code.

     4. Release. As a condition of receiving the Severance Benefits under this
Agreement to which Executive would not otherwise be entitled, Executive shall execute a release
substantially in the form attached hereto as Exhibit A (the “Release”) (the Company shall
determine the actual form of Release to be provided by Executive). Unless the Release is timely
executed by Executive and delivered to the Company after the termination of Executive’s employment
with the Company, Executive shall not receive any of the Severance Benefits provided for under this
Agreement.

     5. General Provisions.

          5.1 Notices. Any notices provided hereunder must be in writing and shall be deemed
effective upon the earlier of personal delivery (including, personal delivery by facsimile
transmission), delivery by express delivery service (e.g. Federal Express), or the third day after
mailing by first class mail, to the Company at its primary office location and to Executive at his
address as listed on the Company payroll (which address may be changed by either party by written
notice).

          5.2 Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will
not affect any other provision or any other jurisdiction, and such invalid, illegal or
unenforceable provision will be reformed, construed and enforced in such jurisdiction so as to
render it valid, legal, and enforceable consistent with the intent of the parties insofar as
possible.

          5.3 Waiver. If either party should waive any breach of any provisions of this
Agreement, he or it shall not thereby be deemed to have waived any preceding or succeeding breach
of the same or any other provision of this Agreement.

          5.4 Entire Agreement. Except as otherwise expressly set forth herein, this
Agreement, including its exhibits, constitutes the entire agreement between Executive and the
Company regarding the subject matter hereof. This Agreement is entered into without reliance on
any agreement, promise, or representation, other than those expressly contained or incorporated
herein, and, except for those changes expressly reserved to the Company’s or Board’s discretion in this Agreement, the terms
of this

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Agreement cannot be modified or amended except in a writing signed by Executive and a duly
authorized officer of the Company which is approved by the Board.

          5.5 Counterparts. This Agreement may be executed in separate counterparts, any one
of which need not contain signatures of more than one party, but all of which taken together will
constitute one and the same Agreement. Signatures transmitted via facsimile shall be deemed the
equivalent of originals.

          5.6 Headings and Construction. The headings of the sections hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof or to affect the meaning
thereof. For purposes of construction of this Agreement, any ambiguities shall not be construed
against either party as the drafter.

          5.7 Successors and Assigns. This Agreement is intended to bind and inure to the
benefit of and be enforceable by Executive, the Company, and their respective successors, assigns,
heirs, executors and administrators, except that Executive may not assign any of his duties
hereunder and he may not assign any of his rights hereunder without the written consent of the
Company.

          5.8 Attorney Fees. If either party hereto brings any action to enforce his or its
rights hereunder, the prevailing party in any such action shall be entitled to recover his or its
reasonable attorneys’ fees and costs incurred in connection with such action.

          5.9 Arbitration. To provide a mechanism for rapid and economical dispute
resolution, Executive and the Company agree that any and all disputes, claims, or causes of action,
in law or equity, arising from or relating to this Agreement (including the Release) or its
enforcement, performance, breach, or interpretation, or arising from or relating to Executive’s
employment with the Company or the termination of Executive’s employment with the Company, will be
resolved, to the fullest extent permitted by law, by final, binding, and confidential arbitration
held in San Mateo County, California and conducted by JAMS, Inc. (“JAMS”), under its
then-applicable Rules and Procedures. By agreeing to this arbitration procedure, both Executive
and the Company waive the right to resolve any such dispute through a trial by jury or judge or by
administrative proceeding. Executive will have the right to be represented by legal counsel at any
arbitration proceeding at his expense. The arbitrator shall: (a) have the authority to compel
adequate discovery for the resolution of the dispute and to award such relief as would otherwise be
available under applicable law in a court proceeding; and (b) issue a written statement signed by
the arbitrator regarding the disposition of each claim and the relief, if any, awarded as to each
claim, the reasons for the award, and the arbitrator’s essential findings and conclusions on which
the award is based. The Company shall bear all fees for the arbitration, except for any attorneys’
fees or costs associated with Executive’s personal representation. The arbitrator, and not a
court, shall also be authorized to determine whether the provisions of this paragraph apply to a
dispute, controversy or claim sought to be resolved in accordance with these arbitration
procedures. Notwithstanding the provisions of this paragraph, the parties are not prohibited from
seeking injunctive relief in a court of appropriate jurisdiction to prevent irreparable harm on any
basis, pending the outcome of arbitration. Any awards or orders in such arbitrations may be
entered and enforced as judgments in the federal and the state courts of any competent
jurisdiction.

          5.10 Governing Law. All questions concerning the construction, validity and
interpretation of this Agreement shall be governed by the law of the State of California without
regard to conflicts of laws principles.

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     In Witness Whereof, the parties have executed this Benefits Agreement
effective as of the Effective Date written above.

COMPANY:

Cardica, Inc.

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	 

	 	     Robert Newell
	 	 
	 

	 	     Chief Financial Officer
	 	 

EXECUTIVE:

Bernard Hausen, M.D., Ph.D.

 

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EXHIBIT A

Release Agreement

I understand that my employment with Cardica, Inc. (the “Company”) terminated effective
___, ___(the “Separation Date”). The Company has agreed that if I choose to sign this
Release Agreement (“Release”), the Company will pay me certain severance benefits (minus the
standard withholdings and deductions) pursuant to the terms of the Employment Agreement (the
“Agreement”) entered into and effective as of ___, 2005, between myself and the Company, and
any agreements incorporated therein by reference. I understand that I am not entitled to such
severance benefits unless I sign this Release and allow it to become effective. I understand that,
regardless of whether I sign this Release, the Company will pay me all of my accrued salary and
vacation through the Separation Date, to which I am entitled by law.

In consideration for the severance benefits I am receiving under the Agreement, I hereby generally
and completely release the Company and its officers, directors, agents, attorneys, employees,
shareholders, parents, subsidiaries, and affiliates from any and all claims, liabilities, demands,
causes of action, attorneys’ fees, damages, or obligations of every kind and nature, whether they
are now known or unknown, arising at any time prior to or on the date I sign this Release. This
general release includes, but is not limited to: (a) all claims arising out of or in any way
related to my employment with the Company or the termination of that employment; (b) all claims
related to my compensation or benefits from the Company, including salary, bonuses, commissions,
vacation pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any
other ownership interests in the Company; (c) all claims for breach of contract, wrongful
termination, and breach of the implied covenant of good faith and fair dealing (including, but not
limited to, any claims based on or arising from the Agreement); (d) all tort claims, including
claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and
(e) all federal, state, and local statutory claims, including claims for discrimination,
harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights
Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990, the federal Age
Discrimination in Employment Act of 1967 (as amended), and the California Fair Employment and
Housing Act (as amended). Notwithstanding the release in the preceding sentence, I am not
releasing any right of indemnification I may have for any liabilities arising from my actions
within the course and scope of my employment with the Company or within the course and scope of my
role as a member of the Board of Directors of the Company.

In releasing claims unknown to me at present, I am waiving all rights and benefits under Section
1542 of the California Civil Code, and any law or legal principle of similar effect in any
jurisdiction: “A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if known by him must have
materially affected his settlement with the debtor.”

If I am forty (40) years of age or older as of the Separation Date, I acknowledge that I am
knowingly and voluntarily waiving and releasing any rights I may have under the federal Age
Discrimination in Employment Act of 1967, as amended (“ADEA”). I also acknowledge that the
consideration given for the waiver in the above paragraphs is in addition to anything of value to
which I was already entitled. I have been advised by this writing, as required by the ADEA that:
(a) my waiver and release do not apply to any claims that may arise after the date that I sign this
Release; (b) I should consult with an attorney prior to signing this Release (although I may choose
voluntarily not to do so); (c) I have twenty-one (21) days within which to consider this Release
(although I may choose voluntarily to sign this Release earlier); (d) I have seven (7) days
following the date that I sign this Release to revoke the Release by providing written notice of
revocation to the Company’s Board of Directors; and (e) this Release will not be effective until
the eighth day after this Release has been signed by me (“Effective Date”).

Understood and Agreed:

Bernard Hausen, M.D., Ph.D.

 

	 	 	 	 	 
	Dated:

	  	 

	 	 

A-1exv10w13

 

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

EXHIBIT 10.13

LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

 

 

9 December 2005

LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

THIS AGREEMENT (“Agreement”), made this 9th day of December, 2005 (“Effective Date”), is
entered into by and between Cook Incorporated, an Indiana corporation having a place of business at
750 Daniels Way, Bloomington, Indiana 47404, USA, and its Affiliates (“Cook”), and Cardica, Inc., a
Delaware corporation having a place of business at 900 Saginaw Drive, Redwood City, CA 94063, and
its Affiliates (“Cardica”).

RECITALS

	A.	 	Cardica is developing a medical device known as the X-Port for use in femoral access closure
procedures, among other applications.
	 
	B.	 	Cook in engaged in the business of developing, manufacturing and selling medical devices.

	C.	 	Cook is amenable to funding certain development work to be performed by Cardica in exchange
for receiving a license under the terms and conditions set forth herein to continue to develop
and to commercialize the X-Port device worldwide for femoral access closure procedures, as
further described in this Agreement.

The parties agree as follows:

ARTICLE I

DEFINITIONS

In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings
set forth below:

	1.1	 	“Affiliates” with respect to a party means any entity, existing now or in the future,
domestic or foreign, that directly or indirectly controls, is controlled by or is under common
control with such party; provided that such entity will be considered an Affiliate only for
the time during which such control exists.

	1.2	 	“Approval” means receipt from the applicable regulatory authority in a given country or
countries to market a Product in such country or countries.

	1.3	 	“Cardica Know-How” means Information that (a) is necessary or useful for the research,
development or commercialization of Products, and (b) is Controlled by Cardica. Cardica
Know-How shall exclude Cardica Patents.

	1.4	 	“Cardica Patents” means a Patent that (a) claims the Product or any component thereof, or any
other method, apparatus, material or article of manufacture useful in the development,
manufacture, use or sale of Product, and (b) is Controlled by Cardica.

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

1.

 

	1.5	 	“Clinical Feasibility Trial” means the initial human clinical trial conducted in Europe on
Products that is expected to include between 100 and 200 subjects.

	1.6	 	“Control” means, with respect to any Information or intellectual property right, the right
and power of the relevant party to grant the right to make, use, sell, offer to sell, and
import, or to grant a license or a sublicense to, such Information or intellectual property
right as provided for herein and without violating the terms of any agreement or other
arrangement with any Third Party.

	1.7	 	“Cook Know-How” means Information that (a) is necessary or useful for the research,
development or commercialization of Products, and (b) is Controlled by Cook. Cook Know-How
shall exclude Cook Patents.

	1.8	 	“Cook Patents” means a Patent that (a) covers the Product or any component thereof, or any
other method, apparatus, material or article of manufacture useful in the development,
manufacture, use or sale of Product, (b) claiming an invention conceived by employees or
agents or independent contractors of Cook that have access to the Confidential Information of
Cardica related to the Product, and (c) is Controlled by Cook.

	1.9	 	“Field” means use of the Product in any suitable medical procedure anywhere in the body.

	1.10	 	“Invention” means any article, material, process or technology, whether or not patentable,
made or conceived in the course of developing and commercializing Products pursuant to this
Agreement, in whole or in part by a party, its employees, agents, or independent contractors,
that have access to the Confidential Information of the other party .

	1.11	 	“Information” means (a) techniques and data relating to the development, manufacture, use or
sale of Products, including, but not limited to, inventions, practices, methods, knowledge,
know-how, skill, experience, test data including pre-clinical and clinical test data,
analytical and quality control data, regulatory submissions, correspondence and
communications, marketing, pricing, distribution, cost, sales, manufacturing, patent and legal
data or descriptions, and (b) compositions of matter, devices, prototypes, articles of
manufacture, assays and biological, chemical or physical materials relating to development,
manufacture, use or sale of Products.

	1.12	 	“Net Sales” means the gross revenue actually received by Cook, its Affiliates or sublicensees
from the commercial sale of the Products during a given period of time, minus, to the extent
billed to the purchaser, the costs of (i) sales, value added and/or use taxes, (ii) duties and
similar governmental assessments paid, (iii) transportation, packing, shipping, and
insurances, (iv) discounts allowed and taken (not to exceed two percent (2%) of the gross
revenue actually received), and (v) amounts allowed or credited due to rejections and/or
returns. If the Products are sold as part of a kit, then royalties due with respect to Net
Sales of Products will be determined using the formula set forth in
Sections 5.4(C) and (D). Net Sales shall be determined in accordance with generally
accepted accounting principles, consistently applied.

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

2.

 

	1.13	 	“Other Cardica IP” shall mean any intellectual property rights that are necessary or useful
for the research, development or commercialization of Products, and Controlled by Cardica,
other than the Cardica Patents and Cardica Know-How.

	1.14	 	“Other Cook IP” shall mean shall mean any intellectual property rights that are necessary or
useful for the research, development or commercialization of Products, and developed by Cook
employees having access to the Confidential Information of Cardica related to the Product and
Controlled by Cook, other than the Cook Patents and Cook Know-How.

	1.15	 	“Patent” means (a) unexpired United States and foreign patents, including without limitation
any substitution, extension, registration, confirmation, reissue, re-examination, renewal of
such patents and (b) pending applications for such patents, including without limitation any
continuation, divisional or continuation-in-part thereof and any provisional applications.

	1.16	 	“Product” means the product designated by Cardica as of the Effective Date of this Agreement
as the X-Port device, size [*] as illustrated in Exhibit C of this Agreement, and any
improvements thereto relating to vascular access closure developed under this Agreement,
including without limitation X-Port devices in formats other than size [*], expressly
excluding any devices not relating to vascular access closure, such as any device used in the
closure of holes made in the performance of an anastomosis.

	1.17	 	“Sunk Costs” means pro-rated amounts for any work actually performed by Cardica under the
Development Plan up to the effective date of termination and supported by documentation
provided by Cardica to Cook, including [*] overhead for such work and all expenditures for
such work and non-cancelable commitments that are consistent with the original budget and
milestones set forth in the Development Plan and incurred by Cardica in performing the
Development Plan prior to Cardica’s receipt or refusal of Cook’s notice of termination.

	1.18	 	“Territory” means worldwide.

	1.19	 	“Third Party” means any person or entity other than Cardica or Cook, or their respective
Affiliates.

	1.20	 	“Unexpectedly Low Sales” means sales in three consecutive quarters of a number of Products
less than [*] of the number forecast under Section 2.4.

	1.21	 	“Valid Claim” means an unexpired claim of an issued Patent which has not been found to be
unpatentable, invalid or unenforceable by an unreversed and unappealable decision of a court
or other authority in the subject country and that has not been disclaimed or admitted to be
invalid or unenforceable through reissue, disclaimer or otherwise.

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

3.

 

ARTICLE II

DEVELOPMENT AND COMMERCIALIZATION

	2.1	 	Development Committee. Each party will appoint two (2) representatives to form a development
committee that will be responsible for making day to day decisions regarding the strategy for
the development of prototypes of Products in accordance with this Agreement (“Development
Committee”). Such decisions will be made by unanimous consent of the Development Committee.
In the event unanimous consent regarding a development issue can not be reached by the
Development Committee during any meeting of the Development Committee, then a cooling off
period of at least two (2) but no more than seven (7) calendar days will follow such meeting
after which period all of the members of the Development Committee will meet again. In the
event that the Development Committee is unable to achieve unanimous consent after the cooling
off period, a senior executive from each party will meet to resolve the issue.

	2.2	 	Prototype Product Development. The respective obligations of the parties for developing
prototypes of the Product are set forth in Attachment A to this Agreement (“Development
Plan”), which may be modified from time to time to time in accordance with Section 11.9
(Integration) of this Agreement, and which is hereby incorporated by reference. Each party
will use commercially reasonable efforts to perform its obligations under the Development
Plan. In the event a conflict arises between this Agreement and the Development Plan, the
terms of this Agreement will control.

	2.3	 	Production Product Development. After the development of a prototype of a Product that the
Development Committee considers suitable and feasible for successful commercialization
(“Feasible Prototype”), Cook will use commercially reasonable efforts to develop a production
version of the Product for sale in the Field and in the Territory, at its expense, within a
specified time period to be agreed upon by the parties. Without limiting the foregoing, Cook
will use commercially reasonable efforts to apply for a CE Mark and FDA Approval within a
reasonable period of time after the development of a Feasible Prototype. It is understood
that commercially reasonable efforts to develop a production version of the Product may be
unsuccessful, and that neither party guarantees or can guarantee that commercially reasonable
efforts to implement the Development Plan will result in a production version of the Product
or in a saleable Product.

	2.4	 	Commercialization. Cook will use commercially reasonable efforts to commercialize Products
for use in the Field in each country in the Territory in which it obtains regulatory approval,
at its expense. Without limiting the foregoing, Cook will be responsible, at its cost, for
promoting, detailing and distributing Products for use in the Field in each country in the
Territory in which it obtains regulatory approval, and will book all resulting Product sales.
Following the Approval of Product, Cook will provide to Cardica on a semi-annual basis its
good faith non-binding quarterly forecast of Product sales in the Field and in the Territory
for the following eighteen (18) month period.

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

4.

 

	2.5	 	Development Costs. Except as otherwise expressly provided in this Agreement, each party will
make its resources available that it reasonably deems necessary to fulfill its obligations
under this Agreement and shall bear its own costs incurred with respect thereto.

	2.6	 	Specifications. The Development Committee will approve Product specifications for each type
of Product being developed, which specifications may be updated from time to time.

ARTICLE III

OWNERSHIP OF INTELLECTUAL PROPERTY

	3.1	 	Ownership of Inventions. Ownership by the parties of Inventions will be determined in
accordance with the rules of inventorship and ownership under US law.

	3.2	 	Joint Inventions. With respect to Inventions jointly owned by the parties, each party will
enjoy all of the rights of an owner thereof with no duty to account to the other party
regarding any economic benefit realized and no need to seek approval from the other party for
its disclosure or use of such Invention, except with respect to exclusivity provisions
expressly stated in this Agreement. Each party’s interest in such jointly owned Inventions
and intellectual property rights therein will be included in such party’s intellectual
property rights that are either licensed to the other party or the subject of covenants made
to the other party pursuant to this Agreement.

	3.3	 	Prosecution. The parties will cooperate in good faith to decide whether to seek patent
protection for any Inventions that are owned jointly by the parties. The party solely owning
an Invention will be responsible, but not obligated, for filing and prosecuting patent
applications on such Inventions, and maintaining patents issued thereon, at such party’s sole
expense. If a party responsible for filing patent applications on Inventions solely owned by
such party decides not to proceed with the filing, prosecution or maintenance of patent
applications and patents on such Invention (without first filing a continuation or
continuation in part of any such application), such party shall notify the other party in
writing in advance of relevant deadlines, and the other party shall have the right, but not
the obligation, to assume responsibility for such activities, on behalf of the sole owner but
at the assuming party’s sole expense. The parties will meet to discuss whether or not to
pursue patent protection for Inventions jointly owned by the parties. If the parties agree to
pursue such protection for such Inventions, they shall designate one party to be responsible
for filing and prosecuting patent applications on such Inventions, and for maintaining patents
issuing thereon. Unless otherwise agreed by the parties, the parties will share equally all
expenses of pursuing and maintaining patent protection on jointly owned Inventions that they
agree to pursue under this Section 3.3. Each party will have the right to review and comment
on the other party’s correspondence with any patent office with regard to patent applications
and patents on Inventions that are necessary or useful for the development and
commercialization of Products in the Field.

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

5.

 

	3.4	 	Enforcement.

	 	A.	 	Cook has the first right to enforce patents licensed to it by Cardica against
Third Parties that make, use, offer for sale, sell, or import products that are covered
by such patents and that are competitive with Products in the Field. If Cook elects
not to undertake such enforcement, then Cardica may request and Cook may, in its sole
discretion, permit Cardica to enforce such patents against such Third Parties, such
permission not to be unreasonably withheld.
	 
	 	B.	 	Each party will cooperate with the other party when asserting patents against
Third Parties in accordance with this Section 3.4. A party enforcing a patent against a
Third Party will give the other party notice prior to bringing any enforcement action
(including, but not limited to, injunctions or restraining orders). The other party
will have the right to participate or not participate in such enforcement, at its sole
discretion. If the other party chooses to participate, it will bear its own expenses
and/or share expenses, as the parties jointly determine to be appropriate. If the other
party chooses not to participate in an enforcement action brought in accordance with
this Section 3.4, it nonetheless agrees to be named in the enforcement action, and upon
request and at the cost of the enforcing party, will make available all relevant
information in its possession or under its control.
	 
	 	C.	 	Any money damages obtained as a result of any enforcement action under this
Section 3.4 shall first be allocated to reimburse the parties’ respective expenses of
such enforcement, and the remainder of such proceeds, if any, shall be allocated [*]
percent ([*]) to the party controlling such suit, and [*] percent ([*]) to the other
party.
	 
	 	D.	 	If the sales volume of the Product in a calendar year is less than $[*], Cook
may offset against any payment due under Sections 5.4 or 5.5 of this Agreement up to
[*] percent ([*]) of any monies expended by Cook in defending Products against
assertions of intellectual property rights by third parties. If the sales volume of
the Product in a calendar year is at least $[*], then Cook may offset against any
payment due under Sections 5.4 or 5.5 of this Agreement an amount that is the lesser of
(i) [*] percent ([*]) of any monies expended by Cook in defending Products against
assertions of intellectual property rights by third parties or (ii) [*] percent ([*])
of the total payment due to Cardica under Sections 5.4 and 5.5.

	3.5	 	Cardica Patent Prosecution. Cardica will use reasonable efforts to obtain patents included
in the Cardica Patents in [*]. Cardica will notify Cook of Cardica’s foreign filing decisions
with respect to each of the Cardica Patents in writing in advance of relevant deadlines, and
Cook will have the right, but not the obligation, to assume responsibility at Cook’s sole
expense for pursuing and/or maintaining foreign patent protection for any of the Cardica
Patents in any country that Cardica decides not to pursue or to abandon.

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

6.

 

ARTICLE IV

LICENSE AND COMMERCIALIZATION

	4.1	 	By Cardica. Subject to the terms and conditions of this Agreement, Cardica hereby grants to
Cook and its Affiliates an exclusive license in the Territory, bearing royalties as set forth
in this Agreement, with the right to grant sublicenses, under the Cardica Patents, Cardica
Know-How and Other Cardica IP, to make, have made, use, sell, offer for sale and import
Products for use solely in the Field and in the Territory. For clarity, Cardica grants the
foregoing exclusive license to the fullest extent possible under the Cardica Patents, Cardica
Know-How and Other Cardica IP in the Field and in the Territory with respect to Products,
retaining only rights to the extent necessary or useful for Cardica to perform its
responsibilities under the Development Plan with respect to Product in the Field and in the
Territory.

	4.2	 	Cardica Representations. Cardica represents and warrants that as of the Effective Date: (a)
Cardica has the right and power to enter into this Agreement and to grant the rights it grants
to Cook under this Agreement; (b) it has not assigned, granted a license under or otherwise
transferred or encumbered any intellectual property licensed to Cook under this Agreement in a
manner inconsistent with this Agreement, other than grants of security interests disclosed
pursuant to a letter agreement of even date herewith; (c) to its knowledge, Cook’s practice of
the license granted to Cook pursuant to this Agreement under the Cardica Know-How, Cardica
Patents and Other Cardica IP will not infringe any Patents owned or controlled by a Third
Party; (d) its performance under this Agreement is not inconsistent with any obligation owed
to a third party; and (e) its employees and/or agents assigned to perform work under a
Development Plan have executed agreements that enable Cardica to grant the rights it grants to
Cook under this Agreement. Additionally, Cardica represents, warrants and covenants that it
has not employed, contracted with or retained, and shall not employ, contract with or retain,
any person or entity in connection with the development or manufacture of Products in the
Field pursuant to this Agreement who has been or is debarred by the FDA under 21 U.S.C. §
335(a) or disqualified as described in 21 C.F.R. §812.119.

	4.3	 	By Cook. Cook agrees not to sue Cardica under any Cook Patents, Cook Know-How, or Other Cook
IP solely to the extent necessary or useful for Cardica to perform its responsibilities under
the Development Plan with respect to Product in the Field and in the Territory. Subject to
the terms and conditions of this Agreement, and upon request by Cardica, the parties shall
negotiate in good faith the terms of a non-exclusive, royalty-bearing license for use by
Cardica in developing and commercializing products other than the Products under all Cook
Patents, Cook Know-How and Other Cook IP covering Inventions as defined in Section 1.10, which
license Cook in its sole discretion may elect, but is not obligated, to execute with Cardica.

	4.4	 	Cook Representations. Cook represents and warrants that as of the Effective Date: (a) Cook
has the right and power to enter into this Agreement; (b) its performance under this Agreement
is not inconsistent with any obligation owed to a third party; (c) to its

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

7.

 

	 	 	knowledge, Cardica’s practice of the covenant not to sue granted to Cardica pursuant to
Section 4.3 of this Agreement under the Cook Know-How, Cook Patents and Other Cook IP will
not infringe any Patents owned or controlled by a Third Party; and (d) its employees and/or
agents assigned to perform work under a Development Plan have executed agreements that
enable Cook to grant the rights it grants to Cardica under this Agreement. Additionally,
Cook covenants that it shall not employ, contract with or retain any person or entity in
connection with the development, manufacture and commercialization of Products in the Field
pursuant to this Agreement who has been or is debarred by the FDA under 21 U.S.C. § 335(a)
or disqualified as described in 21 C.F.R. §812.119.
	 
	4.5	 	No Implied Licenses. Neither party grants to the other party any licenses or covenants not
to sue under such party’s intellectual property rights except as expressly provided in this
Agreement.

ARTICLE V

CONSIDERATION

	5.1	 	Signing Fee. Cook will pay Cardica a one-time payment of Five Hundred Thousand Dollars
($500,000) due after execution of this Agreement by both parties and payable within ten (10)
days after Cardica’s completion, to Cook’s satisfaction, of the tasks identified in the
paragraph entitled “Animal Testing” of the section identified as “Phase 1” of the Development
Plan attached to this Agreement as Exhibit A.

	5.2	 	Milestone Payments. Cook will pay Cardica a one-time payment of One Million Five Hundred
Thousand Dollars ($1.5 million) for the design and development of the first Feasible Prototype
of a Product in [*] format (as provided in the Development Plan) (“[*] Format”) in [*], each
due within thirty (30) days following the achievement of the relevant milestone as set forth
below:

	 	A.	 	[*] upon the date the Development Committee determines that the results of the
acute animal testing of Products in [*] Format in the Field as provided in the
Development Plan support the commencement of pre-production tooling efforts by Cardica.
	 
	 	B.	 	[*] upon completion of verification and validation testing as set forth in the
Development Plan and confirmed by the Development Committee of Products in [*] Format
produced by Cardica using the pre-production tooling described in Section 5.2(A)
(“Pilot Product”) to support commencement by Cook of a Clinical Feasibility Trial of
such Product in the Field.
	 
	 	C.	 	[*] upon the delivery of [*] ([*]) Pilot Products in [*] Format to Cook for use
in the first Clinical Feasibility Trial of such Products in the Field, as provided in
the Development Plan.

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

8.

 

	5.3	 	Reimbursement for Products in Other Formats. Cook will reimburse Cardica for additional
reasonable research, development and tooling costs actually incurred by Cardica for the
development of Feasible Prototypes and the production of Pilot Product in formats other than
[*] as requested by Cook and completed by Cardica in accordance with a research plan and
budget approved in advance and in writing by each member of the Development Committee. Such
reimbursements will be calculated using full time equivalent rates for engineering services
and labor and will include Cardica’s reasonable and actual out of pocket expenses for
fabrication of the pre-production tooling, fixtures and prototypes. Cardica shall add an
overhead charge of [*] percent ([*]) of the amounts to be so reimbursed, and Cook shall pay
such additional amounts, to compensate Cardica for overhead expenses. The agreed upon
research plan and budget will establish the milestones and timing to be met by Cardica in
order for such reimbursement payments to be made by Cook to Cardica.

	5.4	 	Earned Royalties.

	A.	 	i) Cook will pay to Cardica (on a quarterly basis) during the Term of this Agreement a
royalty based on Net Sales by Cook, its Affiliates or sublicensees (“Earned Royalty”) of
Product units in the calendar year in which such quarter occurs, as follows:

	 	 	 
	 	 	Portion of Aggregate Number of
	Royalty Due (% of Net	 	Product Units Sold in Calendar
	Sales of Product Units)	 	Year
	[*]
	 	[*]
	[*]
	 	[*]
	[*]
	 	[*]

ii) In the event that Cook sells more than [*] units of Product per calendar year for [*]
consecutive calendar years at any time during the Term of this Agreement, then instead of
the Earned Royalty set forth in subsection 5.4(A)(i) above, the Earned Royalty shall be as
follows for the remainder of the Term of this Agreement:

	 	 	 
	 	 	Portion of Aggregate Number of
	Royalty Due (% of Net	 	Product Units Sold in Calendar
	Sales of Product Units)	 	Year
	[*]
	 	[*]
	[*]
	 	[*]
	[*]
	 	[*]

iii) In the event that within [*] years from the Effective Date of this Agreement no Cardica
Patent issues in the United States, or in any European Community country in

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

9.

 

which Product is manufactured, used, or sold, that has a Valid Claim that covers Product,
then instead of the Earned Royalty set forth in either subsection 5.4(A)(i) or 5.4(A)(ii)
above, Cook will pay to Cardica Earned Royalty, as follows, until such time as a Cardica
patent issues in the United States, or in any European Community country in which Product is
manufactured, used, or sold, that has a Valid Claim that covers Product, at which time Cook
will pay to Cardica Earned Royalty under section 5.4(A)(i) or 5.4(A)(ii), as applicable:

	 	 	 
	Royalty Due	 	Portion of Aggregate Number of
	(% of Net Sales of	 	PProduct Units Sold in Calendar
	Product Units)	 	Year
	[*]
	 	[*]
	[*]
	 	[*]
	[*]
	 	[*]

	 	 	The Earned Royalty is due on Net Sales of Products in any particular country in which Cook
sells Product irrespective of whether or not Cardica has obtained a Patent in the particular
country. The parties acknowledge that this Earned Royalty includes compensation to Cardica
for its research, development and technology transfer efforts relating to the Product.
	 
	B.	 	In the event that Cook must make payments to one or more Third Parties to obtain a license or
similar right within a particular country, or if Cook must make payments to one or more Third
Parties under a preexisting license within a particular country, in either case in the absence
of which Cook could not legally make, use or sell a Product in that particular country (“Third
Party Royalty”), then the Earned Royalty rate may be adjusted. Such adjusted Earned Royalty
rate shall be agreed to by both Cardica and Cook, such that both Cardica and Cook bear a
proportional burden.
	 
	 	 	Cardica and Cook shall both consent to any settlement agreement relating to assertion of
intellectual property rights against the Product. Any changes to the Earned Royalty rate
associated with that settlement agreement shall be agreed to by both Cardica and Cook, such
that both Cardica and Cook bear a proportional burden.
	 
	C.	 	If Cook, its affiliate or sublicensee sells a Product unit as part of a bundle or combination
of products (a “Bundle or Combination”), then the royalty due with respect to the Product
unit sold as part of such bundle or combination will be calculated by multiplying the royalty
rates set forth above by the Net Sales of the Bundle or Combination in such country during the
applicable reporting period, and then by the fraction, A/(A+B), where A is the average sale
price of the Product unit by Cook, its Affiliates or sublicensees when sold separately in
finished form in such country, and B is the average sale price charged by Cook, its Affiliates
or sublicensees of the other product(s) included in the Bundle or Combination when sold separately in finished form in such country, in each case
during the applicable reporting period.

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

10.

 

	D.	 	In the event either the Product unit or the other product(s) included in the Bundle or
Combination are not sold separately in finished form in such country, then the royalty due
with respect to a Product unit sold as part of a Bundle or Combination will be calculated by
multiplying the royalty rates set forth above by the Net Sales of the bundle or combination in
such country, and then by the fraction of F/(F+G) where F is the fair market value of the
Product unit and G is the fair market value of all other product(s) included in the Bundle or
Combination, as reasonably determined in good faith by Cook.
	 
	E.	 	Regardless of the number of Valid Claims included in the Cardica Patents claiming a given
Product, Cook will owe only one royalty with respect to the sale of each unit of such Product,
that royalty being the Earned Royalty set forth above.
	 
	5.5	 	Minimum Royalties.

	 	A.	 	Provided that the Product developed under this Agreement, whether in [*] Format
or any other format, for use in the Field does not have any identified or known design
defect, and that no Product performance problem (as determined based upon the Product
specifications) has arisen that affects Cook’s ability to sell such Product, Cook will
pay to Cardica during the Term of this Agreement a minimum royalty (“Minimum Royalty”)
in an amount equal to the following one-time payments under this Agreement: (i) [*]
for the first full calendar year following the earlier of FDA Approval or the grant of
a CE Mark for the Product in [*] Format for use in the Field, (ii) [*] for the first
full calendar year following the later of FDA Approval or the grant of a CE Mark for
the Product in [*] Format for use in the Field, (iii) [*] for the second full calendar
year following the later of FDA Approval or the grant of a CE Mark for Product in [*]
Format in the Field, (iv) [*] for the third full calendar year following the later of
FDA Approval or the grant of a CE Mark for the Product in [*] Format in the Field, and
(v) in each calendar year of the next ten (10) calendar years following the third
anniversary of the later of FDA Approval or the grant of a CE Mark for Products in [*]
Format in the Field, an amount equal to the sum of the minimum royalty for the previous
calendar year plus [*] of the minimum royalty for the previous calendar year. Any
amount paid by Cook in any calendar year as Earned Royalty that exceeds the minimum
royalty due for that calendar year may be applied and accumulated by Cook to satisfy
the minimum royalties for any of the subsequent calendar years provided above.
	 
	 	B.	 	In the event that Product meets the relevant specifications, but Cook has
experienced Unexpectedly Low Sales of Product in [*] consecutive calendar quarters not
by reason of any substantial lack of diligence by Cook in commercializing Products in
accordance with Section 2.4, Cook shall pay only a portion of the Minimum Royalty
(“Interim Period Payment”) for a time period (“Interim Period”) beginning upon the last
day of those [*] consecutive calendar

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

11.

 

	 	 	 	quarters of Unexpectedly Low Sales. During the Interim Period, each Interim Period
Payment shall be spent by Cardica solely on improvements to the Product, with the
amount of each Interim Period Payment to be approved by Cook and not to exceed the
actual amount spent by Cardica in the Interim Period on improvements to the Product
plus [*] percent ([*]) overhead. Cook’s obligation to pay Minimum Royalties under
this Agreement will resume in the first full calendar year after the cessation of
the Interim Period, which occurs at the end of the first quarter in which sales are
no longer Unexpectedly Low.
	 
	 	 	 	If sales of Product continue during the Interim Period, then Minimum Royalties do
not increase under Section 5.5(A) during the Interim Period. For example, if an
Interim Period occurs in the second year of this Agreement, and Product is sold
during the Interim Period, the Minimum Royalties due after cessation of the Interim
Period are the Minimum Royalties due in the second year under Section 5.5A,
regardless of the duration of the Interim Period. Cook is still obligated to pay
Cardica Earned Royalties during the Interim Period based on its sales of Product.
	 
	 	 	 	If no sales of Product are made during the Interim Period, then after the Interim
Period the Minimum Royalties revert to those set forth above in either Section
5.5A(i) or 5.5A(ii), based on the status of the relevant approvals. Further, the
determination of the Minimum Royalty due in subsequent calendar years under Section
5.5A is then calculated based on the date of cessation of the Interim Period. For
example, if an Interim Period occurs in the second year of this Agreement, and
Product is not sold during the Interim Period, and if both FDA approval and a CE
mark have been granted for the Product, then the Minimum Royalty due for the first
full calendar year after the Interim Period is as set forth in Section 5.5A(ii).
The Minimum Royalty due in the subsequent full calendar year would be as set forth
in Section 5.5A(iii), and so on.
	 
	 	C.	 	In the event Cook pays Cardica more than zero but less than the minimum
royalties set forth above for a period of [*] years, other than during an Interim
Period, then upon Cardica’s written notice to Cook, Cardica may in its sole discretion
terminate this Agreement for breach by Cook pursuant to Section 8.3 of this Agreement.

	5.6	 	Royalty Payments and Reports. Cook shall provide a report to Cardica within twenty (20) days
after the end of each quarter that summarizes the Net Sales during such quarter in a manner
sufficient to enable Cardica to comply with its reporting requirements. Within forty-five
(45) days after the end of each quarter (or, for the last quarter in a year, sixty (60) days
after the end of such quarter), Cook shall make all royalty payments payable to Cardica under
this Agreement with respect to such quarter. Along with such payments, Cook shall also
provide detailed information regarding the calculation of Earned Royalties due to Cardica,
including allowable deductions in the calculation of Net Sales of Product in the Territory.

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

12.

 

	5.7	 	Taxes. Cardica shall pay any and all taxes required by law that are levied on account of
royalties or other payments it receives under this Agreement. If laws or regulations require
that taxes be withheld, Cook will (a) deduct those taxes from the remittable royalty or other
payment, (b) pay the taxes to the proper taxing authority, and (c) send to Cardica within
fifteen (15) days following such payment evidence of the obligation together with proof of
payment.

	5.8	 	Sublicenses. In the event Cook or its Affiliate grants licenses or sublicenses to others to
sell Product, Cook shall account for and report to Cardica the sales of Product by the
sublicensee on the same basis as if such sales were Net Sales by Cook, and Cook shall pay to
Cardica Earned Royalties on such sales as if such sales of the sublicensee were Net Sales of
Cook, including but not limited to the exclusions from Net Sales set forth in Section 1.12.

	5.9	 	Non-Monetary Consideration. If Cook, its Affiliate or sublicensee receives any non-monetary
consideration in connection with the commercial sale of Product, Cook’s payment obligation
under Section 5.4 shall be based on the fair market value of such other consideration

	5.10	 	Records and Audit. Cook and its Affiliates shall keep or cause to be kept for a period of
three (3) years such records as are required to determine, in a manner consistent with this
Agreement, amounts due for any calendar year to Cardica pursuant to this Article V. At the
request (and expense) of Cardica, Cook and its Affiliates shall permit an independent
certified public accountant appointed by Cardica and reasonably acceptable to Cook, at
reasonable times and upon reasonable notice, to examine only those records as may be necessary
to determine, with respect to any calendar year ending not more than three (3) years prior to
Cardica’s request, the correctness or completeness of any report or payment made under this
Article V. The foregoing right of review may be exercised only once per year and only once
with respect to each such periodic report and payment. Results of any such examination shall
be (a) limited to information relating to the Product, (b) made available to both parties and
(c) subject to Article IX. Cardica shall bear the full cost of the performance of any such
audit, unless such audit discloses a variance to the detriment of Cardica of more than five
percent (5%) from the amount of the original report, royalty or payment calculation. In such
case, Cook shall bear the full cost of the performance of such audit.

ARTICLE VI

REGULATORY FILINGS AND COMMUNICATIONS

	6.1	 	Regulatory Approvals. Cook will be solely responsible for the preparation and filing of all
documents required in connection with seeking and obtaining regulatory approval of Products in
the Field in each country in the Territory, at its sole expense and discretion, including
without limitation the CE Mark, IDE applications and PMA (or equivalent) approvals, and will
solely own all rights in such documents and approvals.

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

13.

 

	6.2	 	Regulatory Information. To enable Cook and Cardica to comply with regulatory requirements,
Cook will provide Cardica with copies of all customer complaints received by Cook that allege
any Product used in the Field is defective and any reports of adverse events experienced in
connection with Products manufactured by Cook. For any such allegedly defective Product that
is returned to Cook or its Affiliate or sublicense by its customer, Cook will provide Cardica
with copies of all failure analysis or other reports proposed by Cook, its Affiliate or
sublicensee and submitted to the FDA or any other similar regulatory authority. Cook will
provide Cardica with copies of any Inspectional Observations (FDA Form 483) issued by the FDA
in connection with Products that are manufactured by or on behalf of Cook, or its Affiliate or
sublicensee, for use in the Field (or facilities used to manufacture same) and any response
thereto submitted by Cook, its Affiliate or sublicensee. Cook will provide Cardica with copies
of all reports filed by Cook, its Affiliate or sublicensee under FDA Medical Device Reporting
(MDR) regulations in connection with Products for use in the Field. For any Products used in
the Field that are recalled by Cook, its Affiliate or sublicensee, Cook will provide Cardica
with copies of all the applicable documentation that Cook submitted to comply with U.S.,
European and International regulatory laws and requirements, including but not limited to
documentation associated with receiving and administering the recalled Product and
notification of the recall to those persons for whom Cook, its Affiliate or sublicensee
replaced the recalled Product.

ARTICLE VII

SUPPLY

	7.1	 	Initial Supply. Cardica will supply, at Cook’s request and at no additional cost, [*] units
per each version of Product for use in preclinical and initial clinical trials, including but
not limited to any European Clinical Feasibility Trial.

	7.2	 	Technology Transfer. Upon determination by the Development Committee that a Product based on
a Feasible Prototype is ready for commercialization, Cook will have the option but not the
obligation to manufacture such Product, or to have such Product manufactured by a third party.
Cardica will continue to supply to Cook, upon Cook’s request and at a cost of [*] per unit,
such additional units of the Product over the [*] units described in Section 5.2(C) above as
Cook may reasonably request for the further testing and development of the Product. Upon the
first FDA Approval of a Product in the Field that is based on a Feasible Prototype that the
Development Committee determines is ready for commercialization, Cook will have the sole
responsibility for manufacturing such Product, or having such Product manufactured, at its
sole expense. Upon Cook’s request, to enable Cook to assume such responsibility, Cardica will
transfer to Cook, at no additional cost, all equipment, including all pre-production tooling,
and Cardica Know-How, including but not limited to, all trade secret, manufacturing and
supplier information included therein, related to the Products that is reasonably necessary
for Cook to manufacture such Product (“Transferred Product”). Upon request from Cook, Cardica
will provide, at no additional cost, reasonable technical assistance to Cook for the
Transferred Product based on the mutual availability of the parties, which assistance

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

14.

 

	 	 	may include: i) training of Cook personnel in connection with the manufacture of Transferred
Product, ii) advice concerning the manufacture of Transferred Product, and iii) testing of
sample Transferred Product to verify that such Transferred Product complies with applicable
specifications established by the Development Committee to confirm successful transfer of
technology to Cook hereunder. Additionally, on Cook’s request, the parties will negotiate
the terms under which Cardica may provide engineering services to assist Cook in the design
and modification of Transferred Product to meet customer and regulatory requirements.
	 
	7.3	 	Production Supply. Except as provided in Section 7.2 above, Cardica will have no obligation
to supply or have supplied any Transferred Product for use in further development and
commercialization of Products in the Field and in the Territory.

ARTICLE VIII

TERM AND TERMINATION

	8.1	 	Term. This Agreement will commence on the Effective Date and continue for a period of twenty
(20) years (“Term”), unless it is earlier terminated in accordance with Section 8.2 below.
This Agreement may be renewed thereafter for additional five (5) year terms by mutual
agreement of the parties.
	 
	8.2	 	Termination. Cook may terminate this Agreement for convenience at any time upon sixty (60)
days prior written notice to Cardica. Either party may terminate this Agreement for material
breach by the other party if such breach remains uncured for thirty (30) days after the
non-breaching party provides a notice to the breaching party specifying such breach in
reasonable detail. Upon termination of this Agreement, all licenses granted to Cook will
terminate, expect as otherwise provided in Sections 8.3(C), 8.4 and 8.5 of this Agreement, and
Cook’s obligation to pay any further royalties or payments of any kind, including but not
limited to payment of any minimum royalties set forth in Section 5.2 above that would have
been due after the effective date of termination, will also terminate, provided that any such
termination will not relieve Cook from any obligation to pay any such royalty or payment that
accrued prior to the effective date of termination.
	 
	8.3	 	Rights upon Termination by Cook for Convenience or Termination by Cardica for Material Breach
by Cook. Upon early termination of this Agreement under Section 8.2 by Cook for convenience,
or by Cardica for material breach by Cook:

	 	A.	 	Cook will pay Cardica a pro-rated payment for any work actually performed by
Cardica under the Development Plan up to the effective date of termination, to the
extent supported by documentation provided by Cardica to Cook. Such payments shall
include reimbursement for all expenditures and non-cancelable commitments that are
consistent with the original budget and milestones set forth in the Development Plan
that are incurred by Cardica in performing the Development Plan prior to the effective
date of termination; provided, however, in no event will such pro-rated payment exceed
three hundred thousand dollars
($300,000) over and above milestone payments already made to Cardica under paragraph
5.2.

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

15.

 

	 	B.	 	Cook will transfer to Cardica within thirty (30) days of the effective date of
termination or within a commercially reasonable period, whichever is sooner, all
documentation, and perform any actions and send any necessary notices to government
bodies and other entities (such as notified bodies to the European Union) that are
necessary to allow Cardica both to continue to develop, manufacture and commercialize
Products in the Field and to be the registered sponsor of clinical trials and related
regulatory filings for Products in the Field. Cardica within sixty (60) days of the
effective date of termination will reimburse Cook for its documented expenses relating
to the transfer not to exceed [*] Dollars ([*]). If an IDE or PMA is undertaken by Cook
for approval of the Product, then the filing fees, transfer costs and other costs
associated with the IDE and PMA (such as the costs of clinical studies) to be paid by
Cardica will not exceed a greater amount to be negotiated in good faith between the
parties. Cardica shall pay any negotiated amount in ten (10) equal installments due
semiannually based on the effective date of termination. The parties may elect to
enter into good faith negotiations with a view toward executing agreements pursuant to
which Cardica may purchase the production tooling owned by Cook for the Product and/or
pursuant to which Cook may distribute Product manufactured by or for Cardica under
terms and conditions agreeable to the parties.
	 
	 	C.	 	If Cook is then manufacturing or supplying Product under the Agreement and upon
receipt of Cardica’s written request, Cook will continue to manufacture Products for
Cardica for use in the Field for a period not to exceed [*] from the effective date of
termination to allow Cardica time to engage an alternate supplier.
	 
	 	D.	 	Cook will not sue Cardica under any Cook Patents, Cook Know-How and Other Cook
IP solely to the extent necessary to allow Cardica to continue (itself or with or
through Third Parties) making, using, selling, offering for sale and importing Products
in the Field and in the Territory. In the event that Cook terminates this Agreement for
convenience under Section 8.2 or in the event that Cardica’s termination of this
Agreement based on Cook’s breach under Section 8.2 is determined by a court of
competent jurisdiction to have been proper under this Agreement, then Cook agrees for a
period of five (5) years from the effective date of such termination not to grant to
any competitor of Cardica any right under any Cook Patents, Cook Know-How and Other
Cook IP that would facilitate such competitor in making, using, selling, offering for
sale or importing Products in the Field and in the Territory.

	8.4	 	Rights upon Termination by Cook for Material Breach of Cardica.

	 	A.	 	Upon early termination of this Agreement under Section 8.2 by Cook for a
material breach by Cardica after full payment to Cardica of the milestone

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

16.

 

	 	 	 	payments set forth in Section 5.2 above, then the license granted to Cook under
Section 4.1 will survive, and subject to the payment of Earned Royalties under
Section 5.4, Cardica will transfer to Cook within thirty (30) days of the effective
date of termination or a commercially reasonable period, whichever is sooner, all
documentation and equipment, including all pre-production tooling, and perform any
actions and send any necessary notices to government bodies and other entities (such
as notified bodies) that are necessary to allow Cook to continue to develop,
manufacture and commercialize Products in the Field.
	 
	 	B.	 	In the event that Cook terminates this Agreement for breach by Cardica based on
Cardica’s failure to meet any of the milestones set forth in Section 5.2 above, then
Cardica will return to Cook the signing fee paid by Cook under Section 5.1 of this
Agreement and any milestone payment made by Cook under Section 5.2 of this Agreement,
minus any Sunk Costs.

ARTICLE IX

CONFIDENTIALITY

	9.1	 	Confidential Information. Each party receiving Confidential Information (the “Receiving
Party”) shall maintain in confidence all such Confidential Information disclosed by the other
party pursuant to this Agreement (the “Disclosing Party”), and shall not use, disclose or
grant the use of the Confidential Information for any purpose other than those permitted
hereunder, except on a need-to-know basis to its and its Affiliates’ actual or potential
business partners or sublicensees, directors, officers, employees, agents, consultants,
clinical investigators, contractors, distributors or permitted assignees, to the extent such
disclosure is reasonably necessary in connection with such party’s activities in connection
with its performance under and exercise of rights expressly provided in this Agreement. The
foregoing obligations shall apply for five (5) years after the expiration or termination of
this Agreement. To the extent that disclosure is authorized by this Agreement, prior to
disclosure, a party hereto shall obtain agreement of any such person to hold in confidence and
not make use of the Confidential Information of the other party for any purpose other than
those permitted by this Agreement. For purposes of this Agreement, “Confidential Information”
shall mean all information and materials, received by either party from or on behalf of the
other party pursuant to this Agreement, other than that portion of such information or
materials that is publicly disclosed by the disclosing party, either before or after it
becomes known to the Receiving Party; was known to the Receiving Party, without obligation to
keep it confidential, prior to when it was received from the Disclosing Party, as evidenced by
competent written proof; is subsequently disclosed to the Receiving Party by a Third Party
lawfully in possession thereof without obligation to keep it confidential; has been publicly
disclosed other than by the Disclosing Party and without breach of an obligation of
confidentiality with respect thereto; or has been independently developed by the Receiving
Party without the aid, application or use of Confidential Information, as evidenced by
competent written proof.

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

17.

 

	9.2	 	Permitted Disclosures. The confidentiality obligations contained in this Article IX shall
not apply to the extent that the Receiving Party is required (a) to disclose information by
law, order or regulation of a governmental agency or a court of competent jurisdiction or to
comply with the rules of a securities exchange, or (b) to disclose information to any
governmental agency for purposes of obtaining approval to test or market a product, provided
in either case that the Receiving Party shall provide written notice thereof to the other
party and reasonable opportunity to object to any such disclosure or to request confidential
treatment thereof, and shall use reasonable efforts to secure confidential treatment of or a
protective order for the information so required to be disclosed. Notwithstanding any other
provision of this Agreement, each Party may disclose Confidential Information of the other
Party as necessary to file or prosecute patent application, prosecute or defend litigation or
otherwise establish rights or enforce obligations under this Agreement, or submit regulatory
filings, but only to the extent that any such disclosure is necessary.

ARTICLE X

INDEMNIFICATION

	10.1	 	By Cook. Cook shall defend, indemnify and hold Cardica harmless from and against any and all
liability, loss, claims, suits, proceedings, expenses, recoveries and damages, including,
without limitation, legal costs and expenses (including reasonable attorney’s fees) resulting
from any claim by Third Parties arising out of Cook’s development, manufacture, use, storage,
transportation, promotion or sale of the Products in the Field and in the Territory under this
Agreement, Cook’s breach of this Agreement or any representations, warranties or covenants it
makes in this Agreement, or Cook’s gross negligence or willful misconduct; except to the
extent that such claim arises from Cardica’s design, manufacture, or use of the Products in
the Field and in the Territory, a breach by Cardica of this Agreement or any of the
representations, warranties or covenants it makes in this Agreement, or Cardica’s gross
negligence or willful misconduct.
	 
	10.2	 	By Cardica. Cardica shall defend, indemnify and hold Cook harmless from and against any and
all liability, loss, claims, suits, proceedings, expenses, recoveries and damages, including,
without limitation, legal costs and expenses (including reasonable attorney’s fees) resulting
from any claim by Third Parties arising out of Cardica’s design, manufacture, or use of the
Products in the Field and in the Territory under this Agreement (liability under the foregoing
sentence to be limited to the amount actually paid by Cook to Cardica under this Agreement),
Cardica’s breach of this Agreement or of any of the representations, warranties or covenants
it makes in this Agreement, or Cardica’s gross negligence or willful misconduct; except to the
extent that such claim arises from a breach by Cook of this Agreement or any of the
representations, warranties or covenants it makes in this Agreement, or Cook’s gross
negligence or willful misconduct.
	 
	10.3	 	Process. If either party is seeking indemnification under Sections 10.1 or 10.2, it shall
inform the indemnifying party of the Third Party claim giving rise to the obligation to

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

18.

 

	 	 	indemnify pursuant to such Section as soon as reasonably practicable after receiving notice
of the claim. The indemnifying party shall have the right to assume the defense of any such
third-party claim for which it is obligated to indemnify the indemnified party under Section
10.1 or 10.2. The indemnified party shall cooperate with the indemnifying party (and its
insurer) as the indemnifying party may reasonably request, and at the indemnifying party’s
sole cost and expense. The indemnified party shall have the right to participate, at its
own expense and with counsel of its choice, in the defense of any claim or suit that has
been assumed by the indemnifying party. Neither party shall have any obligation to
indemnify the other party in connection with any settlement made without the indemnifying
party’s written consent, provided that the indemnifying party does not unreasonably withhold
or delay any such written consent. If the parties cannot agree as to the application of
Section 10.1 or 10.2 to any Third Party claim, the parties may conduct separate defenses of
such claims, with each party retaining the right to claim indemnification from the other in
accordance with Section 10.1 or 10.2 upon resolution of the underlying claim.
	 
	10.4	 	Limitation of Liability. NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL,
CONSEQUENTIAL, EXEMPLARY OR INCIDENTAL DAMAGES (INCLUDING LOST OR ANTICIPATED REVENUES OR
PROFITS RELATING TO THE SAME), ARISING FROM ANY CLAIM RELATING TO THIS AGREEMENT, WHETHER SUCH
CLAIM IS BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, EVEN IF AN AUTHORIZED
REPRESENTATIVE OF SUCH PARTY IS ADVISED OF THE POSSIBILITY OR LIKELIHOOD OF THE SAME. NOTHING
IN THIS SECTION 10.4 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS SET FORTH IN
SECTIONS 10.1 AND 10.2.
	 
	10.5	 	No Other Representations. EXCEPT AS EXPRESSLY SET FORTH HEREIN, THE TECHNOLOGY AND
INTELLECTUAL PROPERTY RIGHTS PROVIDED BY EACH PARTY HEREUNDER ARE PROVIDED “AS IS,” AND EACH
PARTY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING,
WITHOUT LIMITATION, THE WARRANTIES OF TITLE, MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES, OR ARISING
FROM A COURSE OF DEALING, USAGE OR TRADE PRACTICES, IN ALL CASES WITH RESPECT THERETO.
Without limiting the generality of the foregoing, neither party makes any warranty of any kind
related to: (i) the success of the research conducted by the parties under the Agreement; or
(ii) the safety or usefulness for any purpose of the technology or other materials or
information it provides hereunder.

ARTICLE XI

MISCELLANEOUS

	11.1	 	All notices relating to this Agreement will be given by fax, first class mail or courier
addressed as follows:

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

19.

 

	 	 	 	 	 
	 

	 	If to Cook:
	 	If to Cardica:
	 
	 	 	 	 
	 

	 	Cook Incorporated
	 	Cardica, Inc.
	 

	 	750 Daniels Way
	 	900 Saginaw Drive,
	 

	 	Bloomington, Indiana 47404
	 	Redwood City, CA 9406
	 

	 	Attn: Peter Yonkman
	 	Attn: Robert Newell
	 

	 	General Counsel
	 	Chief Financial Officer
	 

	 	Phone: (812) 339-2235
	 	Phone: (650) 331-7133
	 

	 	Fax: (812) 339-5369
	 	Fax: (650) 364-3134

	 	 	or any other address of which either party notifies the other in writing in accordance with
this Section 11.1. Any notice provided for in this Agreement will be deemed effective on
the date of actual receipt by the party.
	 
	11.2	 	Assignment. Neither party may assign this Agreement without the prior written consent of the
other party, which consent will not be unreasonably withheld. Notwithstanding the forgoing,
either party may, without the prior consent of the other party, assign this Agreement to its
parent or affiliate or to a successor, or to an acquiring entity in connection with a merger
or sale of substantially all of the assets of the business or product line to which this
Agreement relates. This Agreement will inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns. Any purported assignment not in
accordance with this Section 11.2 shall be void and of no force and effect
	 
	11.3	 	Relationship of the Parties. The parties are independent contractors. Neither party has any
express or implied right or authority to assume or create any obligations on behalf of the
other or to bind the other to any contract, agreement or undertaking with any Third Party.
Nothing in this Agreement is to be construed to create a partnership, joint venture,
employment or agency relationship between Cook and Cardica.
	 
	11.4	 	No Implied Waiver. No express or implied waiver, breach or default of any provision of this
Agreement is to be construed as a continuing waiver, and no waiver will prevent a party from
enforcing or acting upon any other provisions, subsequent breach or default by the other
party.
	 
	11.5	 	Publicity. Nothing in this Agreement is to be construed as granting either party any
right under the trademarks or trade names of the other party. Neither party will make any
statement to the media regarding the relationship of the parties without the prior written
approval of the other party. Each party may, however, without the consent of the other party,
describe the scope and purpose of this Agreement to customers in marketing presentations.
	 
	11.6	 	Force Majeure. Any delay or failure of a party to perform its obligations under this
Agreement will be excused to the extent that the delay or failure is caused by an event or
occurrence beyond the party’s reasonable control, such as, by way of example and not by way of
limitation, acts of God, actions by any governmental authority

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

20.

 

	 	 	(whether valid or invalid), terrorism, fires, floods, windstorms, explosions, riots, natural
disasters, wars, sabotage, labor problems (including lockouts, strikes and slowdowns),
inability to obtain power, material, equipment or transportation or court injunction or
order, provided that such party uses reasonable efforts to overcome such delay or failure.
	 
	11.7	 	Governing Law. This Agreement is to be construed in accordance with the laws of the State of
Delaware, without regard to its conflict of law rules.
	 
	11.8	 	Survival. Articles IX, X (solely to the extent relating to claims arising from activities
conducted during the Term of this Agreement or from Cardica’s practice of the covenant not to
sue granted to it pursuant to Sections 4.3) and XI, and Sections 3.1, 3.2, 3.3, 3.4(B), 3.5
(solely to the extent that the license granted to Cook under Section 4.1 survives termination
of this Agreement under Section 8.4), 4.1 (upon expiration of this Agreement as set forth in
Section 8.4), 5.6 through 5.10, 6.1 (solely to the extent that the license granted to Cook
under Section 4.1 survives termination of this Agreement under Section 8.4 ), 6.2, 8.2, 8.3,
8.4, 8.5, and 11.1, 11.2, 11.4, 11.7, 11.8 and 11.9 of this Agreement will survive its
expiration or termination. Termination or expiration of this Agreement shall not affect any
payment obligations that accrued prior to the effective date of such termination or
expiration.
	 
	11.9	 	Integration. This Agreement, including all attachments hereto, embodies the entire
understanding between the parties relating its subject matter and supercedes all prior written
or oral agreements relating to such subject matter. There are no representations, warranties,
agreements or understandings between the parties related to the subject matter of this
Agreement that are not contained herein. This Agreement may not be amended or modified except
in a writing that is dated and signed by the party against whom enforcement is sought. This
Agreement may be executed and delivered by facsimile and in any number of counterparts, each
such counterpart deemed to be an original, but all of which together constitute one and the
same document.

Each of the parties has caused this Agreement to be executed by its duly authorized representative.

	 	 	 	 	 	 	 	 	 
	COOK INCORPORATED	 	 	 	CARDICA, INC.
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Brian Bates
	 	 	 	By:
	 	/s/ Bernard Hausen
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Name: Brian Bates	 	 	 	Name: Bernard Hausen
	 
	 	 	 	 	 	 	 	 
	Title: Senior Vice President Business Development	 	 	 	Title: Chief Executive Officer
	 
	 	 	 	 	 	 	 	 
	Date: 12/9/05	 	 	 	Date: 12/12/05

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

21.

 

ATTACHMENT A

Development Plan

X-Port ([*]fr) Research and Development Plan

General Description

The X-Port ([*]fr) device is intended to close the entry hole created in the femoral artery
during diagnostic cardiology procedures that use a [*]fr or [*]fr sheath.

Sequence of Operation

The device is passed through the [*] sheath used in the procedure. Therefore, the length of
the device will be designed to accommodate most commercially available [*] sheaths of
standard length. The design incorporates [*] that are used to [*] with the vessel wall.
The [*] are deployed automatically by [*] shaft until the [*] activates a button on the
device. The device is then [*] until the [*] against the intimal surface of the vessel.
[*]. A secondary visual indicator is also incorporated to verify correct positioning. A
[*] is provided from the end of the device back to the handle. When the device is within
the [*] blood flow should be [*]. When the device is [*] into position against [*] the [*]
should stop. Once the position has been verified, the user [*] 316L stainless steel implant
to close the hole. At the end of the [*], the [registration anchors] are [*] so the device
can be easily removed from the vessel.

Phase 1: Proof of Concept Breadboard ([*])

Objective

Develop and demonstrate the basic device functionality at the scale of the final
design. Specifically, the following device design elements will be investigated.

• [*]

Technical Strategy

Device – [*] The distal portion of the [*] the design required [*] All of the
components required for these devices will be [*].

In order to ensure that the [*] the final commercial designs for feasibility and
full scale [*].

[*]

Application Requirements – Conduct a [*] Additionally, measurements will be taken
[*].

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

22.

 

Testing — The [*] prototypes will be tested [*] In addition, as functionality is
demonstrated [*].

Benchmarking – Identify and test competitive devices currently available for this
procedure.

Animal testing

A
prototype will be able to be inserted [*].

Deliverables

• [*]

Schedule

Completed
end of [*].

Phase 2: Feasibility Prototype Device ([*])

Objective

Develop
and demonstrate the fully automatic device functionality. Specifically, [*].

Technical Strategy

Device – [*]

Testing
— The feasibility prototypes will be tested on the [*]. In addition, as
functionality is demonstrated the devices will be used [*].

Deliverables

• [*]

Project Cost

$ [*]

Schedule

To be completed by [*]

Phase 3: Feasibility Commercial Device (Low Volume Production)

Objective

[*]

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

23.

 

Technical Strategy

Device – [*]

Testing – All of the test methods required for design verification [*] and validate
the design [*].

Deliverables

• [*]

Project/Product Cost

[*]

Schedule

To be completed by the end of [*]

Phase 4: Commercial Device (High Volume Production)

Objective

[*]

Technical Strategy

Device – [*]

Testing – All of the test methods required for design verification [*] and validate
the design [*].

Deliverables

• [*]

Project/Product Cost

• [*]

Schedule

Completed by the end of [*]

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

24.

 

ATTACHMENT B

Patent Rights

	 	 	 	 	 
	Serial No.	 	Filing Date	 	Title
	[*]

	 	[*]
	 	Vascular Closure System

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

25.

 

ATTACHMENT C

Product Drawing

[Attach drawing of product designated by Cardica as of the Effective Date as the X-Port device,
size [*]]

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

26.

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