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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 0)*
CardioTech International, Inc.
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
14160C-10-0
(CUSIP Number)
Harvey M. Eisenberg, Esq.
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, NY 10112
(212) 408-2400
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
March 31, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and
is filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f)
or 240.13d-1(g), check the following box [X].
NOTE: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Section
240.13d-7 for other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of
the Act (however, see the Notes).
POTENTIAL PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM
DISPLAYS A CURRENTLY VALID OMB CONTROL NUMBER.
1
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CUSIP No. 14160C-10-0
1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
Dresdner Kleinwort Benson Private Equity Partners LP
13-3949246
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a)
(b) X
3. SEC Use Only
4. Source of Funds (See Instructions) WC
5. Check if Disclosure of Legal Proceedings Is Required Pursuant
to Items 2(d) or 2(e)
6. Citizenship or Place of Organization Delaware
Number of Shares
Beneficially 7. Sole Voting Power 1,136,484
Owned by Each
Reporting Person 8. Shared Voting Power 0
With:
9. Sole Dispositive Power 1,136,484
10. Shared Dispositive Power 0
11. Aggregate Amount Beneficially Owned by Each Reporting Person
1,136,484
12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions)
13. Percent of Class Represented by Amount in Row (11)
21.01%
14. Type of Reporting Person (See Instructions)
PN
2
<PAGE> 3
ITEM 1. SECURITY AND ISSUER
The name of the issuer is CardioTech International, Inc.
(hereinafter referred to as the "Issuer"). The address of the Issuer's principal
executive offices is 78E Olympia Avenue, Woburn, MA 01801. This statement
relates to the Issuer's Common Stock, $.01 par value (the "Common Stock").
ITEM 2. IDENTITY AND BACKGROUND
This statement is being filed by Dresdner Kleinwort Benson
Private Equity Partners LP, a Delaware limited partnership (hereinafter referred
to as "DKBPEP"), whose principal office is located at 75 Wall Street, New York,
New York 10005.
DKBPEP is engaged in making private equity investments in the
United States. The general partner of DKBPEP is Dresdner Kleinwort Benson
Private Equity Managers LLC, a Delaware limited liability company ("DKBPEM"),
which is engaged in managing DKBPEP's private equity investment business, and
whose principal office is located at the same address as DKBPEP.
During the past five years, DKBPEP has not been convicted in a
criminal proceeding. During the past five years, DKBPEP has not been a party to
a civil proceeding of a judicial or administrative body of competent
jurisdiction and was not or is not, as a result of such proceeding, subject to
a judgment, decree or final order enjoining any future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
The sole member of DKBPEM is Kleinwort Benson (USA) Inc.,
whose principal office is located at the same address as DKBPEP.
Kleinwort Benson (USA) Inc. is a wholly-owned subsidiary of
Kleinwort Benson Holdings, Inc. whose principal office is located at the same
address as DKBPEP.
Kleinwort Benson Holdings, Inc. is a wholly-owned subsidiary
of Inveresk Stockholders Ltd. ("Inveresk"), whose principal office is located at
20 Fenchurch Street, London EC3P 3DB.
Inveresk is a wholly-owned subsidiary of Kleinwort Benson
Limited, whose address is the same as that of Inveresk. Kleinwort Benson Limited
is wholly-owned by Kleinwort Benson Group plc. which is wholly owned by Dresdner
Investments (UK) plc, each of which's principal office are located at the same
address as Inveresk. Dresdner Investments (UK) plc is wholly owned by Zenon
Beteiligungsgesellschaft mbH ("Zenon"), a German corporation with its principal
offices located at Juergen-Ponto-Platz 1, D-60301 Frankfurt am Main, Germany.
Zenon is wholly-owned by Dresdner Bank AG, a German bank with its principal
office at the same address as Zenon.
<PAGE> 4
Set forth in Schedule A hereto and incorporated herein by
reference are the names, business addresses, principal occupations and
employments and citizenship of each director and executive officer of each of
the companies described above.
Insofar as the requirements of Items 3-6 inclusive of this
Schedule 13D Statement require that, in addition to DKBPEP, the information
called for therein should be given with respect to each of the persons listed in
this Item 2, including the directors and executive officers thereof, the
information provided in Items 3-6 with respect to DKBPEP should also be
considered fully responsive with respect to the aforementioned persons who have
no separate interests in the Issuer's Common Stock which is required to be
reported thereunder. Although the definition of "beneficial ownership" in Rule
13d-3 under the Securities and Exchange Act of 1934, as amended (the "Exchange
Act"), might also be deemed to constitute these persons beneficial owners of the
Issuer's Common Stock acquired by DKBPEP, neither the filing of this statement
nor any of its contents shall be deemed an admission that any of such persons is
a beneficial owner of the Issuer's Common Stock acquired by DKBPEP or a member
of a group together with DKBPEP either for the purpose of Schedule 13D of the
Exchange Act or for any other purpose with respect to the Issuer's Common Stock.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Description of Transactions
On March 31, 1998, DKBPEP and the Issuer entered into a Note
Purchase Agreement (the "Note Purchase Agreement"). Pursuant to the Note
Purchase Agreement, DKBPEP purchased $1,660,000 in aggregate principal amount of
a 7% Convertible Senior Secured Note due March 31, 2003 (the "Note"). The
aggregate principal amount of the Note is immediately convertible (following
applicable notice to the Issuer and subject to applicable regulatory approvals)
into 832,080 shares of Common Stock of the Issuer at the initial conversion
price of $1.995 per share of Common Stock (subject to certain adjustments as
described in the Note).
Interest on the Note is payable quarterly by the Issuer at the
rate of 7% per annum in the form of either cash or additional Notes ("Additional
Notes") at the election of DKBPEP. The Additional Notes are issuable in the
identical form as the Note, and the aggregate principal amount thereof is
immediately convertible (following applicable notice to the Issuer and subject
to applicable regulatory approvals) into Common Stock at the same conversion
price as is applicable to the Note. As of November 12, 1998, DKBPEP had received
interest payments with respect to the Note in the form of Additional Notes in
the aggregate principal amount of $58,608.38. Such Additional Notes are
immediately convertible (following applicable notice to the Issuer and subject
to applicable regulatory approvals) into 29,377 shares of Common Stock. DKBPEP
currently expects to receive additional quarterly payments of interest on the
Note in the form of Additional Notes which would also be convertible into
additional shares of Common Stock at the same conversion price as is applicable
to the Note.
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The conversion price applicable to the Note and the Additional
Notes is subject to certain anti-dilution provisions which, if triggered, would
have the effect of increasing the number of shares of Common Stock issuable upon
conversion of the Note and the Additional Notes. Such anti-dilution provisions
would be triggered by, among other things, the issuance by the Issuer of Common
Stock at less than either the conversion price applicable to the Note or the
then current market price of the Common Stock (subject to certain exceptions set
forth in the Note and the Additional Notes). The conversion price applicable to
the Note and the Additional Notes is also subject to certain adjustments upon
the occurrence of a change of control of the Issuer or the receipt by DKBPEP of
a notice of optional redemption from the Issuer. The effect of such conversion
price adjustments also would increase the number of shares of Common Stock
issuable upon conversion of the Note and the Additional Notes, as further
described therein.
The Note and the Additional Notes are secured by a pledge of
all of the stock of the Issuer's subsidiary, CardioTech International, Ltd. and
the proceeds of the Issuer's key-man life insurance with respect to its chief
executive officer. The Note and the Additional Notes are subject to (i) optional
redemption at the election of the Issuer (subject to payment of a redemption
premium), (ii) mandatory redemption at the election of DKBPEP upon either a
change of control of the Issuer (subject to payment of a redemption premium) or
upon acceleration following an event of default and (iii) repayment in full at
maturity on March 31, 2003.
The Note Purchase Agreement obligated DKBPEP to purchase
additional Notes upon the attainment by the Issuer of certain operating
milestones described in the Note Purchase Agreement. On November 12, 1998,
pursuant to an amendment to the Note Purchase Agreement and in lieu of
purchasing such additional Notes, DKBPEP purchased 500,000 shares of Series A
Preferred Stock of the Issuer (the "Preferred Shares") for an aggregate purchase
price of $500,000. The Preferred Shares are immediately convertible into 275,027
shares of Common Stock of the Issuer at the initial conversion price of $1.818
per share of Common Stock (subject to certain adjustments as described in the
certificate of designations for the Preferred Shares) based on the original cost
of the Preferred Shares (plus any accrued but unpaid dividends thereon).
The Preferred Shares are subject to optional redemption at the
election of the Issuer (subject to payment of a redemption premium) and
mandatory redemption at the election of DKBPEP upon a change of control of the
Issuer, to the extent such change of control has been approved by the Issuer
(subject to payment of a redemption premium).
Dividends accrue and cumulate quarterly at a rate of 10% per
annum with respect to the original cost of the Preferred Shares (and any accrued
but unpaid dividends thereon). Although DKBPEP has the right to elect to receive
payment of such dividends in cash, DKBPEP currently expects such dividends to
accrue and cumulate. The Preferred Shares will be convertible into additional
shares of Common Stock to the extent that dividends continue to accrue, but are
unpaid, with respect to such Preferred Shares.
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The conversion price applicable to the conversion of the
Preferred Shares into Common Stock is subject to substantially the same
anti-dilution provisions as set forth in the Note and the Additional Notes. In
addition, the conversion price applicable to the Preferred Shares is subject to
certain adjustments upon the change of control of the Issuer, the commencement
of a non-consensual tender offer with respect to Issuer or the receipt by DKBPEP
of a notice of optional redemption from the Issuer. The effect of such
conversion price adjustments would increase the number of shares of Common Stock
issuable upon conversion of the Preferred Shares, as further described in the
certificate of designations therefor.
Notwithstanding the potential adjustments to the conversion
price applicable to the Preferred Shares, in accordance with the rules of the
American Stock Exchange (upon which the Common Stock is listed), the aggregate
number of shares of Common Stock issuable upon conversion of the Preferred
Shares currently is limited to 854,582 shares. The balance of the number of
shares of Common Stock which would otherwise be issuable upon conversion of the
Preferred Shares would be paid to the holders thereof in cash in an amount equal
to the then market price of such shares.
The funds DKBPEP used to acquire the Note and the Preferred
Shares were from its contributed capital.
Disclaimer of Group Status
DKBPEP disclaims that it is a member of a group with any other
persons either for purposes of this Schedule 13D or for any other purpose
related to its beneficial ownership of the Issuer's securities.
ITEM 4. PURPOSE OF THE TRANSACTION
The acquisition of the Issuer's securities has been made by
DKBPEP for investment purposes. Although DKBPEP has no present intention to do
so, DKBPEP may make additional purchases of securities either in the open market
or in privately negotiated transactions, including transactions with the Issuer,
depending on an evaluation of the Issuer's business prospects and financial
condition, the market for the Common Stock, other available investment
opportunities, money and stock market conditions and other future developments.
In addition, DKBPEP may acquire beneficial ownership of additional securities of
the Issuer as described in Item 3 above. Depending on these factors, DKBPEP may
decide to sell all or part of its holdings of the Issuer's securities in one or
more public or private transactions.
Pursuant to the Note Purchase Agreement, as long as the Notes
are outstanding, the holders of a majority of the then outstanding principal
amount of the Notes (initially, DKBPEP) have the right to designate a director
for election to the Board of Directors of the Issuer. Such director designee
will be a member of the Nominations Committee, Compensation Committee and
Executive Committee of the Board of Directors of the Issuer.
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Except as set forth in this Item 4, DKBPEP has no present
plans or proposals that relate to or would result in any of the actions
specified in clauses (a) through (j) of Item 3 of Schedule 13D. However, DKBPEP
reserves the right to propose or participate in future transactions which may
result in one or more of such actions, including but not limited to, an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, of a material amount of assets of the Issuer or its subsidiaries,
or other transactions which might have the effect of causing the Issuer's Common
Stock to cease to be listed on the American Stock Exchange or causing the Common
Stock to become eligible for termination of registration, under Section 12(g) of
the Exchange Act.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) DKBPEP currently owns no Common Stock of the Issuer. Upon
conversion of the Note, the Additional Notes and the Preferred Shares issued as
of November 12, 1998, subject to the receipt of applicable regulatory approvals,
DKBPEP would acquire 21.01% of the issued and outstanding shares of Common Stock
(determined after giving effect to the conversion).
(b) Upon conversion of the Note, the Additional Notes and the
Preferred Shares, DKBPEP would have sole voting power and dispositive power with
respect to the shares of Common Stock acquired upon such conversion.
(c) Except as reported in Item 6 below and incorporated herein
by reference, there have been no transactions by DKBPEP in the Common Stock
during the past sixty days which are required to be reported in this Statement.
(d) No person other than DKBPEP has the right to receive or
the power to direct the receipt of dividends from or the proceeds from the sale
of the Common Stock owned beneficially by DKBPEP.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Reference is made to the information disclosed under Items 3
and 4 of this Statement which is incorporated by reference in response to this
Item. In addition to such information, the following contracts, arrangements,
understandings or relationships are reported hereunder.
Registration Rights Agreement. Simultaneously with the
execution of the Note Purchase Agreement, the Issuer entered into a Registration
Rights Agreement dated as of March 31, 1998 (the "Registration Agreement"), with
DKBPEP. The Registration Agreement grants DKBPEP certain demand rights with
respect to registrations under the Securities Act of 1933 (the "Act") of Common
Stock acquired by DKBPEP upon conversion of the Note, the Additional Notes or
the Preferred Shares. The Registration Statement also grants certain
"piggy-back" rights to DKBPEP to participate in certain
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<PAGE> 8
registration statements filed by the Issuer. The Issuer has agreed to pay all
costs and expenses of all registrations under the Registration Agreement. The
Registration Agreement also contains customary terms and conditions with respect
to the hold back of shares from public sale or distribution, selection of
underwriters and indemnification.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
(1) Note Purchase Agreement dated as of March 31, 1998, between
the Issuer and DKBPEP, previously filed as an exhibit to the
Issuer's Report on Form 8-K, filed on April 17, 1998 and
incorporated herein by reference.
(2) 7% Convertible Senior Note dated as of March 31, 1998, issued
by the Issuer to DKBPEP, previously filed as an exhibit to
the Issuer's Report on Form 8-K, filed on April 17, 1998,
and incorporated herein by reference.
(3) Registration Rights Agreement dated as of March 31, 1998,
between the Issuer and DKBPEP.
(4) Amendment dated as of November 12, 1998, to Note Purchase
Agreement dated as of March 31, 1998, between the Issuer and
the DKBPEP and to Registration Rights Agreement dated as of
March 31, 1998, between the Issuer and DKBPEP, previously
filed as an exhibit to the Issuer's Quarterly Report on
Form 10-Q, filed on November 16, 1998, and incorporated
herein by reference.
(5) Certificate of Vote of Directors Establishing a Class or
Series of Stock, previously filed as an exhibit to the
Issuer's Quarterly Report on Form 10-Q, filed on November 16,
1998, and incorporated herein by reference.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Date: November 23, 1998
DRESDNER KLEINWORT BENSON PRIVATE EQUITY
PARTNERS LP
By: DRESDNER KLEINWORT BENSON PRIVATE EQUITY
MANAGERS LLC, its general partner
By: /s/ Jonathan Walker
---------------------------------
Name: Jonathan Walker
Title: Authorized Signatory
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SCHEDULE A
ITEM 1. INFORMATION FOR OFFICERS AND DIRECTORS
DKBPEM
EXECUTIVE OFFICERS
Person Title
------ -----
Christopher Wright Investment Partner and Board Member
Jonathan Walker Investment Partner and Board Member
Iain Leigh Investment Partner and Board Member
Richard H. Wolf Investment Partner
Volkert Doeksen Investment Partner
Alexander Coleman Investment Partner
Erik Linnes Board Member
George Fugelsang Board Member
All officers and advisory board members of DKBPEM have the same address: 75 Wall
Street, New York, NY 10005-2889, except for Mr. Linnes, who is located at 20
Fenchurch Street, London EC3P 3DB England.
<PAGE> 11
Schedule A
DIRECTORS & OFFICERS
KLEINWORT BENSON GENERAL INVESTMENT COMPANY LIMITED
<TABLE>
<CAPTION>
NAME EMPLOYMENT ADDRESS CITIZENSHIP POSITION
- ---- ---------- ------- ----------- --------
<S> <C> <C> <C> <C>
Michael Raymond BALIMAN Kleinwort Benson Limited 20 Fenchurch Street British Director
London EC3P 3DB
Timothy Gwynne BARKER Kleinwort Benson Limited 20 Fenchurch Street British Director
London EC3P 3DB
Peter Edwin CHURCHILL-COLEMAN Kleinwort Benson Limited 20 Fenchurch Street British Director
London EC3P 3DB
Stephen Andrew JACK Kleinwort Benson Limited 20 Fenchurch Street British Chairman
London EC3P 3DB
Andrew John WHITE Kleinwort Benson Limited 20 Fenchurch Street British Director
London EC3P 3DB
Audrey MORRISON Kleinwort Benson Limited 20 Fenchurch Street British Secretary
London EC3P 3DB
</TABLE>
<PAGE> 12
Schedule A
DIRECTORS & OFFICERS
KLEINWORT BENSON LIMITED
<TABLE>
<CAPTION>
NAME EMPLOYMENT ADDRESS CITIZENSHIP POSITION
- ---- ---------- ------- ----------- --------
<S> <C> <C> <C> <C>
Simon Peter BALL Kleinwort Benson Limited 20 Fenchurch Street British Director
London EC3P 3DB
Timothy Gwynne BARKER Kleinwort Benson Limited 20 Fenchurch Street British Director
London EC3P 3DB
Patrick Joseph DALEY Kleinwort Benson Limited 20 Fenchurch Street British Director
London EC3P 3DB
Alexander Charles DOLBEY Kleinwort Benson Limited 20 Fenchurch Street British Director
London EC3P 3DB
Robert David Charles HENDERSON Kleinwort Benson Limited 20 Fenchurch Street British Director
London EC3P 3DB
P.W. LUTHY Kleinwort Benson Limited 20 Fenchurch Street U.S.A. Director
London EC3P 3DB
Al-Noor RAMJI Kleinwort Benson Limited 20 Fenchurch Street British Director
London EC3P 3DB
Timothy Anthony SHACKLOCK Kleinwort Benson Limited 20 Fenchurch Street British Director
London EC3P 3DB
Alan Colin Drake YARROW Kleinwort Benson Limited 20 Fenchurch Street British Director
London EC3P 3DB
Peter Leonard LONGCROFT Kleinwort Benson Limited 20 Fenchurch Street British Secretary
London EC3P 3DB
</TABLE>
2
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Schedule A
DIRECTORS & OFFICERS
KLEINWORT BENSON GROUP plc
<TABLE>
<CAPTION>
NAME EMPLOYMENT ADDRESS CITIZENSHIP POSITION
- ---- ---------- ------- ----------- --------
<S> <C> <C> <C> <C>
Gerd Rolf HAEUSLER Dresdner Bank AG Juergen-Ponto-Platz 1 German Deputy Chairman
D-60301 Frankfurt am Main,
Germany
Timothy Gwynne BARKER Kleinwort Benson Limited 20 Fenchurch Street British Vice Chairman
London EC3P 3DB
Michael James Bay GREEN Kleinwort Benson Limited 20 Fenchurch Street British Vice Chairman
London EC3P 3DB
Sir Michael Romilly Heald JENKINS Kleinwort Benson Limited 20 Fenchurch Street British Vice Chairman
London EC3P 3DB
David Holford BENSON Kleinwort Benson Limited 20 Fenchurch Street British Director
London EC3P 3DB
Jaime CARVAJAL y URQUIJO Kleinwort Benson Limited 20 Fenchurch Street Spanish Director
London EC3P 3DB
Gerhard EBERSTADT Dresdner Bank AG Juergen-Ponto-Platz 1 German Director
D-60301 Frankfurt am Main,
Germany
Christian Jean-Marie Robert GIACOMOTTO Kleinwort Benson Limited 20 Fenchurch Street French Director
London EC3P 3DB
Michael Clifford John JACKAMAN Kleinwort Benson Limited 20 Fenchurch Street British Director
London EC3P 3DB
Jeremy LANCASTER Kleinwort Benson Limited 20 Fenchurch Street British Director
London EC3P 3DB
Horst Alred Gunter MULLER Kleinwort Benson Limited 20 Fenchurch Street German Director
London EC3P 3DB
Takeshi OHTA Kleinwort Benson Limited 20 Fenchurch Street Japanese Director
London EC3P 3DB
</TABLE>
3
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Schedule A
<TABLE>
<CAPTION>
NAME EMPLOYMENT ADDRESS CITIZENSHIP POSITION
- ---- ---------- ------- ----------- --------
<S> <C> <C> <C> <C>
The Lord ROCKLEY Kleinwort Benson Limited 20 Fenchurch Street British Director
London EC3P 3DB
Lawrence McAllister URQUHART Kleinwort Benson Limited 20 Fenchurch Street Britsh Director
London EC3P 3DB
Peter Edwin CHURCHILL-COLEMAN Kleinwort Benson Limited 20 Fenchurch Street British Secretary
London EC3P 3DB
</TABLE>
4
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Schedule A
DIRECTORS & OFFICERS
DRESDNER INVESTMENTS (UK) PLC
<TABLE>
<CAPTION>
NAME EMPLOYMENT ADDRESS CITIZENSHIP POSITION
- ---- ---------- ------- ----------- --------
<S> <C> <C> <C> <C>
Dr. Andreas LEIMBACH Kleinwort Benson Limited 20 Fenchurch Street German Director
London EC3P 3DB
</TABLE>
5
<PAGE> 16
Schedule A
DIRECTORS & OFFICERS
INVERESK STOCKHOLDERS LIMITED
<TABLE>
<CAPTION>
NAME EMPLOYMENT ADDRESS CITIZENSHIP POSITION
- ---- ---------- ------- ----------- --------
<S> <C> <C> <C> <C>
Stephen Andrew JACK Kleinwort Benson Limited 20 Fenchurch Street British Director
London EC3P 3DB
Graham Michael LANGLAY-SMITH Kleinwort Benson Limited 20 Fenchurch Street British Director
London EC3P 3DB
Pia Anne Maria BENTICK-OWENS Kleinwort Benson Limited 20 Fenchurch Street Finnish Secretary
London EC3P 3DB
</TABLE>
6
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Schedule A
DIRECTORS & OFFICERS
ZENON BETEILIGUNGSGESELLSCHAFT mbH
<TABLE>
<CAPTION>
NAME EMPLOYMENT ADDRESS CITIZENSHIP POSITION
- ---- ---------- ------- ----------- --------
<S> <C> <C> <C> <C>
Manfred SCHAUDWET Dresdner Bank AG Juergen-Ponto-Platz 1 German Director
D-60301 Frankfurt am Main
Germany
</TABLE>
7
<PAGE> 18
Schedule A
MEMBERS OF THE SUPERVISORY BOARD
DRESDNER BANK AG
AS OF MAY 15, 1998
<TABLE>
<CAPTION>
NAME EMPLOYMENT ADDRESS CITIZENSHIP POSITION
- ---- ---------- ------- ----------- --------
<S> <C> <C> <C> <C>
Dr. Alfons Titzrath Dresdner Bank AG Koenigsallee 37 German Chairman of the Supervisory
40002 Duesseldorf Board
Germany
Klaus Carlin Trade Union HBV Kanzlerstrasse 8 German Member of the Executive
40472 Duesseldorf Board
Germany
Meinhard Carstensen Dresdner Bank AG Jungfernstieg 22 German Member of the Supervisory
20349 Hamburg Board
Germany
Reinhard Droenner Federal Executive Board of Johannes-Brahms-Platz 1 German Head of Section Banks and
Trade Union DAG 20355 Hamburg Savings Banks
Germany
Claudia Eggert-Lehmann Dresdner Bank AG Postfach 41 41 German Member of the Supervisory
58041 Hagen Board
Germany
Bernhard Enseling Dresdner Bank AG Kaiserstrasse 48, German Member of the Supervisory
2. OG Board
60301 Frankfurt am Main
Germany
Dr. Martin Fruehauf Hoechst AG Postfach 80 03 20 German Chairman of the Supervisory
65926 Frankfurt am Main Board
Germany
</TABLE>
8
<PAGE> 19
Schedule A
<TABLE>
<CAPTION>
NAME EMPLOYMENT ADDRESS CITIZENSHIP POSITION
- ---- ---------- ------- ----------- --------
<S> <C> <C> <C> <C>
Peter Haimerl Dresdner Bank AG Promenadeplatz 7 German Member of the Supervisory
80273 Munich Board
Germany
Manfred Karsten Oldenburgische Landesbank AG Filiale Diepholz German Member of the Supervisory
49356 Diepholz Board
Germany
Ainis Kibermanis Dresdner Bank AG Weserstrasse 31, 1. OG German Member of the Supervisory
60329 Frankfurt am Main Board
Germany
Bernd Kriegeskorte Dresdner Bank AG Promenadeplatz 7 German Member of the Supervisory
80273 Munich Board
Germany
Dr. rer. pol. Heinz Kriwet Thyssen AG August-Thyssen-Strasse 1 German Chairman of the Supervisory
40211 Duesseldorf Board
Germany
Dr. Edward G. Krubasik Siemens AG Wittelsbacherplatz 2 German Member of the Managing
80312 Munich Board of Directors
Germany
Dr. jur. Dietmar Kuhnt RWE AG Postfach 10 30 61 German Chairman of the Managing
45030 Essen Board of Directors
Germany
Michel Pebereau Banque Nationale de Paris S.A. 16, Boulevard des Italiens French President, General Director
F-75450 Paris
France
Bernd Pischetsrieder Bayerische Motoren Werke AG Petuelring 130 German Chairman of the Board of
80809 Munich Managing Directors
Germany
</TABLE>
9
<PAGE> 20
Schedule A
<TABLE>
<CAPTION>
NAME EMPLOYMENT ADDRESS CITIZENSHIP POSITION
- ---- ---------- ------- ----------- --------
<S> <C> <C> <C> <C>
Dipl.-Kfm. Uwe Plucinski Dresdner Bank AG Jungfernstieg 22 German Deputy Chairman of the
20349 Hamburg Supervisory Board
Germany
Sultan Salam Dresdner Bank AG Gutleutstrasse 26 German Member of the Supervisory
60329 Frankfurt am Main Board
Germany
Dr. Hans-Juergen Schinzler Muenchener Koeniginstrasse 107 German Chairman of the Board of
Rueckversicherungs-Gesellschaft 80802 Munich Managing Directors
Germany
Dr. jur. Hennig Allianz AG Koeniginstrasse 28 German Chairman of the Board of
Schulte-Noelle 80802 Munich Managing Directors
Germany
</TABLE>
10
<PAGE> 21
Schedule A
MEMBERS OF THE BOARD OF MANAGING DIRECTORS
DRESDNER BANK AG
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
NAME EMPLOYMENT ADDRESS CITIZENSHIP POSITION
- ---- ---------- ------- ----------- --------
<S> <C> <C> <C> <C>
Bernhard Walter Dresdner Bank AG Juergen-Ponto-Platz 1 German Chairman of the Board of
60301 Frankfurt am Main Managing Directors
Germany
Gerhard Eberstadt Dresdner Bank AG Juergen-Ponto-Platz 1 German Member of the Board of
60301 Frankfurt am Main Managing Directors
Germany
Dr. Bernd Fahrholz Dresdner Bank AG Juergen-Ponto-Platz 1 German Member of the Board of
60301 Frankfurt am Main Managing Directors
Germany
Leonhard H. Fischer Dresdner Bank AG Juergen-Ponto-Platz 1 German Deputy Member of the Board
60301 Frankfurt am Main of Managing Directors
Germany
Dr. Joachim v. Harbou Dresdner Bank AG Juergen-Ponto-Platz 1 German Member of the Board of
60301 Frankfurt am Main Managing Directors
Germany
Gerd Haeusler Dresdner Bank AG Juergen-Ponto-Platz 1 German Member of the Board of
60301 Frankfurt am Main Managing Directors
Germany
Prof. Dr. Ernst-Moritz Lipp Dresdner Bank AG Juergen-Ponto-Platz 1 German Member of the Board of
60301 Frankfurt am Main Managing Directors
Germany
</TABLE>
11
<PAGE> 22
Schedule A
<TABLE>
<CAPTION>
NAME EMPLOYMENT ADDRESS CITIZENSHIP POSITION
- ---- ---------- ------- ----------- --------
<S> <C> <C> <C> <C>
Dr. Horst Mueller Dresdner Bank AG Juergen-Ponto-Platz 1 German Member of the Board of
60301 Frankfurt am Main Managing Directors
Germany
Heinz-Joerg Platzek Dresdner Bank AG Juergen-Ponto-Platz 1 German Member of the Board of
60301 Frankfurt am Main Managing Directors
Germany
Dr. Bernd W. Voss Dresdner Bank AG Juergen-Ponto-Platz 1 German Member of the Board of
60301 Frankfurt am Main Managing Directors
Germany
</TABLE>
12
<PAGE> 1
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
AMONG
CARDIOTECH INTERNATIONAL, INC.
AND
THE INVESTORS
(AS DEFINED HEREIN)
DATED MARCH 31, 1998
- --------------------------------------------------------------------------------
<PAGE> 2
REGISTRATION RIGHTS
AGREEMENT dated as of March
31, 1998, between CARDIOTECH
INTERNATIONAL, INC., a
Massachusetts corporation (the
"Company"), and the INVESTORS
(as defined below).
The Investors own or have the right to purchase or otherwise acquire
Common Stock of the Company. The Company and the Investors deem it to be in
their respective best interests to enter into this Agreement to set forth the
rights of the Investors in connection with public offerings and sales of Common
Stock of the Company.
ACCORDINGLY, in consideration of the foregoing and the covenants and
agreements contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties, the parties hereto hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms have the following
meanings:
(a) "Commission" means the Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act.
(b) "Common Stock" means the Common Stock, par value $.01, of the
Company.
(c) "Exchange Act" means the Securities Exchange Act of 1934 or any
successor Federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
(d) "Investors" means any Person which holds more than 125,000
shares (as presently constituted and subject to subsequent adjustments for stock
splits, dividends, reverse stock splits and the like) of Restricted Securities
(and in the case of any person holding the Purchased Notes, on an as converted
basis) and which is a party to this Agreement and includes any successor to, or
transferee of, any such Person who or which agrees in writing with the Company
to be treated as an Investor hereunder and to be bound by the terms and comply
with all applicable provisions hereof.
(e) "Majority of the Investors" means those Investors who at the
time in question hold at least a majority of the Restricted Securities then held
by all
<PAGE> 3
Investors or if applicable, the Investors participating in a registration
hereunder.
(f) "Note Purchase Agreement" means the Note Purchase Agreement
dated as of the date hereof among the Company and the Investors, as amended or
modified from time to time.
(g) "Other Shares" means at any time those shares of Common Stock
which do not constitute Primary Shares or Registrable Shares.
(h) "Person" shall be construed broadly and shall include an
individual, a partnership, a corporation, an association, a joint stock company,
a limited liability company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.
(i) "Primary Shares" means at any time the authorized but unissued
shares of Common Stock and shares of Common Stock held by the Company in its
treasury (but shall not include Registrable Shares).
(j) "Registrable Shares" means Restricted Securities which
constitute Common Stock.
(k) "Reserved Common Shares" shall have the meaning ascribed thereto
in the Note Purchase Agreement.
(l) "Restricted Securities" means (i) the Reserved Common Shares,
(ii) the Purchased Notes, (iii) any other securities of the Company into or for
which the Reserved Common Shares or the Purchased Notes may be exchanged,
converted or reclassified or which may be issued as a dividend or distribution
on or which may be issued as a dividend or distribution on or with respect
thereto and (iv) any securities received in respect of the foregoing, in each
case in clauses (i) through (iii) which at any time are held by the Investors.
As to any particular Restricted Securities, once issued, such Restricted
Securities shall cease to be Restricted Securities when (A) they have been
registered under the Securities Act, the registration statement in connection
therewith has been declared effective and they have been disposed of pursuant to
and in the manner described in such effective registration statement, (B) they
are sold or distributed pursuant to Rule 144, (C) they can be sold (whether or
not so sold) pursuant to Rule 144(k) of the Securities Act or (D) they have
ceased to be outstanding.
(m) "Rule 144" means Rule 144 promulgated under the Securities Act
or any successor rule thereto.
-2-
<PAGE> 4
(n) "Securities" shall have the meaning ascribed thereto in the
Note Purchase Agreement.
(o) "Securities Act" means the Securities Act of 1933 or any
successor Federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
2. REQUIRED REGISTRATION.
(a) If at any time after the date of this Agreement, the Company
shall be requested by a Majority of the Investors to effect the registration
under the Securities Act of Registrable Shares that constitute at least 50% of
the Restricted Securities, then the Company shall (i) notify each Investor of
such request and shall provide each Investor the right (exercisable by notice to
the Company delivered within 15 days of notice of such registration) to
participate in such registration and (ii) use its best efforts to effect the
registration under the Securities Act of the Registrable Shares which the
Company is requested to register by the Investors initiating such registration
and Investors delivering notices under clause (i) of this Section 2(a).
(b) Anything contained in Section s 2(a) to the contrary
notwithstanding, the Company shall not be obligated to effect any registration
under the Securities Act pursuant to Section s 2(a) in accordance with the
following provisions:
(i) subject to Section 2(c), the Company shall not be
obligated to use its best efforts to file and cause to become effective
more than two registration statements initiated pursuant to Section 2(a);
(ii) the Company shall not be obligated to use its best
efforts to file and cause to become effective any registration statement
during any period in which any other registration statement (other than on
Form S-4 or Form S-8 promulgated under the Securities Act or any successor
forms) pursuant to which Primary Shares, Other Shares or Registrable
Shares are to be or were sold has been filed and not withdrawn or has been
declared effective within the prior 120 days;
(iii) if, at the time of a request for registration pursuant
to this Section 2, the Company reasonably determines that such
registration and offering (1) would interfere with any material
transaction involving the Company or (2) would materially and adversely
affect the Company and its stockholders, in the case of either clause (1)
or (2),
-3-
<PAGE> 5
as reasonably determined in good faith by the Board of Directors, then the
Company may delay the filing or effectiveness of any registration
statement for a period of up to 120 days after the date of a request for
registration pursuant to this Section 2; provided that the Company may
only so delay the filing or effectiveness of a registration statement with
respect to a request for registration pursuant to Section 2(b)(iii) or
2(b)(iv) on one occasion during any twelve month period;
(iv) if, at the time of a request for registration pursuant to
this Section 2, the Company is engaged, or intends to engage within 60
days of the time of such request, in an underwritten public offering of
Primary Shares or Other Shares in which the holders of Registrable Shares
may include Registrable Shares pursuant to Section 3 (an "Planned Public
Offering") and such plans or intentions have been approved by the Board of
Directors of the Company, then the Company may delay the filing or
effectiveness of any registration statement with respect to a request for
registration pursuant to this Section 2 for a period of up to 120 days
after the date of effectiveness of the registration statement with respect
such Planned Public Offering; provided that the Company may only so delay
the filing or effectiveness of a registration statement with respect to a
request for registration pursuant to Section 2(b)(iii) or 2(b)(iv) on one
occasion during any twelve month period;
(v) with respect to any registration pursuant to this Section
2, the Company may include in such registration any Primary Shares,
Registrable Shares or Other Shares; provided that if the managing
underwriter advises the Company that the inclusion of all Registrable
Shares, Primary Shares and/or Other Shares proposed to be included in such
registration would interfere with the successful marketing (including
pricing) of the Registrable Shares proposed to be included in such
registration, then the number of Registrable Shares, Primary Shares and/or
Other Shares proposed to be included in such registration shall be
included according to the following priority:
first, the Registrable Shares requested to be included
in such registration (reduced pro rata if necessary);
second, the Other Shares(reduced pro rata on the basis
of the number of Other Shares that had been requested to be included in
the registration); and
-4-
<PAGE> 6
(vi) at any time before the registration statement covering
Registrable Shares becomes effective, the Investors which requested such
registration may request the Company to withdraw or not to file the
registration statement. In that event, if such request of withdrawal shall
not have been caused by, or made in response to, a material adverse change
in the business, properties, condition, financial or otherwise, or
operations of the Company, the Investors shall have used one demand
registration right under Section 2(a) unless such Investors initiating
such request shall pay to the Company the reasonable out-of-pocket
expenses incurred by the Company through the date of such request.
(c) A registration requested pursuant to this Section 2 shall not be
deemed to have been effected and a registration statement shall not be deemed to
have become effective with respect thereto (i) unless such registration
statement has been kept continuously effective for a period of at least 60 days
(or such shorter period which will terminate when all the Registrable Shares
covered by such registration statement have been sold pursuant thereto), (ii) if
such registration is interfered with by any stop order, injunction or other
order or requirement of the Commission or other governmental agency or court for
any reason not attributable to any Investor (or agent or representative thereof)
and has not thereafter become effective, or (iii) if the conditions to closing
specified in the underwriting agreement, if any, entered into in connection with
such registration are not satisfied or waived, other than by reason of a failure
on the part of any Investor (or agent or representative thereof).
3. PIGGYBACK REGISTRATION.
If the Company at any time proposes for any reason to register Primary
Shares or Other Shares under the Securities Act (other than on Form S-4 or Form
S-8 promulgated under the Securities Act or any successor forms thereto), it
shall promptly give written notice to the Investors of its intention to so
register such shares and, upon the written request, delivered to the Company
within 30 days after delivery of any such notice by the Company, of any of the
Investors to include in such registration Registrable Shares held by such
Investor (which request shall specify the number of Registrable Shares requested
to be included in such registration), the Company shall use its best efforts to
cause all such Registrable Shares to be included in such registration on the
same terms and conditions as the securities otherwise being sold in such
registration; provided, however, that if the managing underwriter advises
-5-
<PAGE> 7
the Company that the inclusion of all Registrable Shares requested to be
included in such registration would interfere with the successful marketing
(including pricing) of the shares proposed to be registered, then the number of
Primary Shares, Registrable Shares and Other Shares proposed to be included in
such registration shall be included in the order set forth below:
(a) if such registration was initiated by one or more holders of
Other Shares pursuant to a registration rights agreement with the Company:
first, all Other Shares required to be included in such
registration by the holders who are parties to such registration
rights agreement;
second, the Other Shares (held by holders who are not
parties to such registration rights agreement) and the Registrable
Shares requested to be included in such registration pro rata among the
holders thereof, subject to underwriter cut-backs on a pro rata basis
(based on the number of Other Shares and Registrable Shares requested
to be including in the registration) among the participating holders of
such Other Shares and Registrable Shares; and
third, the Primary Shares proposed to be registered by
the Company.
(b) if such registration was initiated by the Company:
first, the Primary Shares proposed to be registered by
the Company;
second, the Other Shares and the Registrable Shares
requested to be registered in such registration pro rata among the
holders thereof, subject to underwriter cut-backs on a pro rata basis
(based on the number of Other Shares and Registrable Shares requested
to be included in the registration) among the participating holders of
Other Shares and Registrable Shares.
The Company shall have the right to postpone or withdraw any
registration effectuated under this Section 3 prior to the effective
date of any registration statement with respect thereto without
obligation to any Investor (other than the Company's obligation to pay
the Investors' expenses in accordance in with Section 6 hereof).
-6-
<PAGE> 8
4. REGISTRATIONS ON FORM S-3.
In addition to the rights contained in Section 2, at such time as the
Company shall have qualified for the use of Form S-3 promulgated under the
Securities Act or any successor form thereto, each of the Investors shall have
the right to request in writing an unlimited number of registrations of
Registrable Shares on Form S-3 or such successor form thereto, which request or
requests shall (i) specify the number of Registrable Shares intended to be sold
or disposed of and the holders thereof, (ii) state the intended method of
disposition of such Registrable Shares and (iii) relate to Registrable Shares
having an anticipated aggregate gross offering price (before underwriting
discounts and commissions) of at least $1,000,000. A requested registration on
Form S-3 or any such successor form in compliance with this Section 4 shall not
count as a registration statement initiated pursuant to Section 2. If a request
complying with the requirements of this Section 4 is delivered to the Company,
the provisions of Section 2(b)(ii) through (iv) shall apply. If the registration
is for an underwritten offering, the provisions of Section 2(b)(v) shall apply.
5. HOLDBACK AGREEMENT.
If the Company at any time shall register shares of Common Stock under the
Securities Act (including any registration pursuant to Section s 2, 3 or 4) for
sale to the public in an underwritten public offering, the Investors shall not
sell publicly, make any short sale of, grant any option for the purchase of, or
otherwise dispose publicly of, any Common Stock (other than those shares of
Common Stock included in such registration pursuant to Section s 2, 3 or 4)
without the prior written consent of the Company, for a period designated by the
Company in writing to the Investors, which period shall begin not more than 10
days prior to the effectiveness of the registration statement pursuant to which
such public offering shall be made and shall not last more than the lesser of
(i) 180 days after the closing of sale of shares pursuant to such registration
statement and (ii) such period of time as the officers, directors and principal
stockholders of the Company (other than John Hancock Mutual Life Insurance
Company) are similarly restricted from disposing of their Common Stock pursuant
to an agreement with the managing underwriter for such public offering (such
lesser period, the "Lock-Up Period"). The Company shall obtain the agreement of
any person permitted to sell shares of Common Stock in a registration to be
bound by and to comply with this Section 5 as if such person was an Investor
hereunder. The Company will agree to customary restrictions on its ability to
offer or sell shares during the Lock-Up Period in connection with
-7-
<PAGE> 9
any underwritten public offering by the Stockholders in which the Company elects
not to participate.
6. PREPARATION AND FILING.
(a) If and whenever the Company is under an obligation pursuant to
the provisions of this Agreement to use its best efforts to effect the
registration of any Registrable Shares, the Company shall, as expeditiously as
practicable:
(i) use its best efforts to cause a registration statement
that registers such Registrable Shares to become and remain effective for
a period of 60 days (extended by any period during which such registration
statement or related prospectus is not available for sales) or until all
of such Registrable Shares have been disposed of (if earlier);
(ii) furnish, at least five business days before filing a
registration statement that registers such Registrable Shares, a
prospectus relating thereto or any amendments or supplements relating to
such a registration statement or prospectus, to one counsel selected by a
Majority of the Investors initiating such registration (counsel in each
case referred to herein as the "Investors' Counsel"), copies of all such
documents proposed to be filed (it being understood that such
five-business-day period need not apply to successive drafts of the same
document proposed to be filed so long as such successive drafts are
supplied to the Investors' Counsel in advance of the proposed filing by a
period of time that is customary and reasonable under the circumstances);
(iii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for at least a period of 60 days (extended by any
period during which such registration statement or related prospectus is
not available for sales) or until all of such Registrable Shares have been
disposed of (if earlier) and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of such
Registrable Shares;
(iv) notify in writing the Investors' Counsel promptly of (A)
the receipt by the Company of any notification with respect to any
comments by the Commission with respect to such registration statement or
prospectus or any amendment or supplement thereto or any request by the
Commission for the amending or
-8-
<PAGE> 10
supplementing thereof or for additional information with respect thereto,
(B) the receipt by the Company of any notification with respect to the
issuance by the Commission of any stop order suspending the effectiveness
of such registration statement or prospectus or any amendment or
supplement thereto or the initiation or threatening of any proceeding for
that purpose and (C) the receipt by the Company of any notification with
respect to the suspension of the qualification of such Registrable Shares
for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purposes;
(v) use its best efforts to register or qualify such
Registrable Shares under such other securities or blue sky laws of such
United States jurisdictions as the Investors who are holders of
Registrable Shares included in such registration statement reasonably
request and do any and all other acts and things which may be reasonably
necessary or advisable to enable the Investors who are holders of
Registrable Shares included in such registration statement to consummate
the disposition in such United States jurisdictions of the Registrable
Shares owned by them; provided, however, that the Company will not be
required to qualify generally to do business, subject itself to general
taxation or consent to general service of process in any jurisdiction
where it would not otherwise be required to do so but for this clause (v)
or to make any changes in its By-laws or Certificate of Incorporation;
(vi) furnish to the Investors holding such Registrable Shares
such number of copies of a summary prospectus, if any, or other
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as such
Investors may reasonably request in order to facilitate the public sale or
other disposition of such Registrable Shares;
(vii) use its best efforts to cause such Registrable Shares to
be registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the business and operations
of the Company to enable the Investors holding such Registrable Shares to
consummate the disposition of such Registrable Shares;
(viii) notify the Investors holding such Registrable Shares on
a timely basis at any time when a prospectus relating to such Registrable
Shares is required to be delivered under the Securities Act
-9-
<PAGE> 11
within the appropriate period mentioned in clause (iii) of this Section
6(a), 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 light of the circumstances then existing. The Investors
shall suspend any further sales of Registrable Shares until the Company
advises them that the Registration Statement has been amended. The number
of days during which the registration statement shall be effective shall
be extended for an additional number of days equal to the number of days
during which the Investors' right to sell the Registrable Shares was
suspended pursuant to the preceding sentence. Thereafter, at the request
of such Investors, the Company shall prepare and furnish to such Investors
a reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
offerees of such shares, such prospectus shall not include an 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 light of the circumstances then existing;
(ix) subject to the execution of customary confidentiality
agreements in form and substance reasonably satisfactory to the Company,
make available upon reasonable notice and during normal business hours,
for inspection by the Investors holding such Registrable Shares, any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by such
Investors or underwriter (collectively, the "Inspectors"), all pertinent
financial and other records, pertinent corporate documents and properties
of the Company (collectively, the "Records"), as shall be reasonably
necessary to enable them to exercise their due diligence responsibility,
and cause the Company's officers, directors and employees to supply all
information (together with the Records, the "Information") reasonably
requested by any such Inspector in connection with such registration
statement. Any of the Information which the Company determines in good
faith to be confidential, and of which determination the Inspectors are so
notified, shall not be disclosed by the Inspectors unless (A) the
disclosure of such Information is necessary to avoid or correct a
misstatement or omission in the registration statement, (B) the release of
such Information is ordered pursuant to a subpoena or other order from a
-10-
<PAGE> 12
court of competent jurisdiction or (C) such Information has been made
generally available to the public (through no violation of the terms of
this clause (ix) by the Investors or the Inspectors); the Investors
holding such Registrable Shares agree that they will, upon learning that
disclosure of such Information is sought in a court of competent
jurisdiction, give prompt notice to the Company and allow the Company, at
the Company's expense, to undertake appropriate action to prevent
disclosure of the Information deemed confidential;
(x) use its best efforts to obtain from its independent
certified public accountants "cold comfort" letters in customary form and
at customary times and covering matters of the type customarily covered by
cold comfort letters;
(xi) use its best efforts to obtain from its counsel an
opinion or opinions in customary form naming the Investors holding such
Registrable Shares as additional addressees or parties who may rely
thereon;
(xii) provide a transfer agent and registrar (which may be
the same entity and which may be the Company) for such Registrable
Shares;
(xiii) issue to any underwriter to which the Investors holding
such Registrable Shares may sell shares in such offering certificates
evidencing such Registrable Shares;
(xiv) list such Registrable Shares on any national securities
exchange or automated quotation system on which any shares of the Common
Stock are listed; or, if the Common Stock is not listed on a national
securities exchange, use its best efforts to qualify such Registrable
Shares for inclusion on the automated quotation system of the National
Association of Securities Dealers, Inc. (the "NASD"), or any national
securities exchange;
(xv) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission and make available to
its securityholders, as soon as reasonably practicable, earnings
statements (which need not be audited) covering a period of 12 months
beginning within three months after the effective date of the registration
statement, which earnings statements shall satisfy the provisions of
Section 11(a) of the Securities Act;
-11-
<PAGE> 13
(xvi) in connection with any underwritten public offering
initiated pursuant to Section 2 cooperate and participate in the
marketing of such offering as if such registration was an underwritten
primary registration (including participating in an appropriate "road
show" but only if requested by the underwriter); and
(xvii) use its best efforts to take all other steps necessary
to effect the registration of such Registrable Shares contemplated hereby.
(b) Each holder of the Registrable Shares included in any
registration statement, upon receipt of any notice from the Company of any event
of the kind described in Section 6(a)(viii) hereof, shall forthwith discontinue
disposition of the Registrable Shares pursuant to the registration statement
covering such Registrable Shares until such holder's receipt of the copies of
the supplemented or amended prospectus contemplated by Section 6(a)(viii)
hereof, and, if so directed by the Company, such holder shall deliver to the
Company all copies, other than permanent file copies then in such holder's
possession, of the prospectus covering such Registrable Shares at the time of
receipt of such notice.
7. EXPENSES.
All expenses (other than discounts, fees and commissions of underwriters,
selling brokers, dealer managers, sales agents and similar securities industry
professionals, which shall be borne as provided in the following proviso and
applicable transfer taxes, if any) incurred by the Company in complying with
Section 6, including, without limitation, all registration and filing fees
(including all expenses incident to filing with the AMEX and the NASD), fees and
expenses of complying with securities and blue sky laws, printing expenses, fees
and expenses of the Company's counsel and accountants, and reasonable fees and
expenses of the Investors' Counsel, shall be paid by the Company; provided,
however, that all of the foregoing discounts, fees and commissions applicable to
the Registrable Shares shall be borne by the holders selling such Registrable
Share, in proportion to the number of Registrable Shares sold by each such
holder.
8. INDEMNIFICATION.
(a) In connection with any registration of any Registrable Shares
under the Securities Act pursuant to this Agreement, the Company shall indemnify
and hold harmless the holders of such Registrable Shares, each underwriter,
broker or any other Person acting on behalf of the holders of such
-12-
<PAGE> 14
Registrable Shares and each other Person, if any, who controls any of the
foregoing Persons within the meaning of the Securities Act against any losses,
claims, damages or liabilities, joint or several (or actions in respect
thereof), to which any of the foregoing Persons may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or allegedly untrue statement of a material fact contained in
the registration statement under which such Registrable Shares were registered
under the Securities Act, any preliminary prospectus or final prospectus
contained therein or otherwise filed with the Commission, any amendment or
supplement thereto or any document incident to registration or qualification of
such Registrable Shares, or arise out of or are based upon 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, with respect to
any prospectus, necessary to make the statements therein in light of the
circumstances under which they were made not misleading, or any violation by the
Company of the Securities Act or state securities or blue sky laws applicable to
the Company and relating to action or inaction required of the Company in
connection with such registration or qualification under the Securities Act or
such state securities or blue sky laws; and shall reimburse the holders of such
Registrable Shares, such underwriter, such broker or such other Person acting on
behalf of the holders of such Registrable Shares and each such controlling
Person for any legal or other expenses reasonably incurred by any of them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage, liability or
action (including any legal or other expenses incurred) arises out of or is
based upon an untrue statement or allegedly untrue statement or omission or
alleged omission made in said registration statement, preliminary prospectus,
final prospectus, amendment, supplement or document incident to registration or
qualification of any Registrable Shares in reliance upon and in conformity with
written information furnished to the Company by such holder of Registrable
Shares or such underwriter, or an agent or representative thereof, specifically
for use in the preparation thereof; provided further, however, that the
foregoing indemnity agreement is subject to the condition that, insofar as it
relates to any untrue statement, allegedly untrue statement, omission or alleged
omission made in any preliminary prospectus but eliminated or remedied in the
final prospectus (filed pursuant to Rule 424 of the Securities Act), such
indemnity agreement shall not inure to the benefit of any Investor, underwriter,
broker or other Person acting on behalf of
-13-
<PAGE> 15
holders of the Registrable Shares from whom the Person asserting any loss,
claim, damage, liability or expense purchased the Registrable Shares which are
the subject thereof, if a copy of such final prospectus had been made available
to such Person and such Investor, underwriter, broker or other Person acting on
behalf of holders of the Registrable Shares and such final prospectus was not
delivered to such Person with or prior to the written confirmation of the sale
of such Registrable Shares to such Person.
(b) In connection with any registration of Registrable Shares under
the Securities Act pursuant to this Agreement, each holder of Registrable Shares
included in such registration statement shall severally and not jointly
indemnify and hold harmless the Company, each director of the Company, each
officer of the Company who shall sign such registration statement, each
underwriter, broker or other Person acting on behalf of the holders of
Registrable Shares and each Person who controls any of the foregoing Persons
within the meaning of the Securities Act against any losses, claims, damages or
liabilities, joint or several (or actions in respect thereof), to which any of
the foregoing Persons may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or based upon any untrue statement of a material fact
contained in such registration statement, any preliminary prospectus or final
prospectus contained therein or otherwise filed with the Commission, any
amendment or supplement thereto or any document incident to registration or
qualification of any Registrable Shares, or arise out of or are based upon 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,
with respect to any prospectus, necessary to make the statements therein in
light of the circumstances under which they were made not misleading, in each
case if such statement or omission was made in reliance upon and in conformity
with written information furnished to the Company or such underwriter by such
holder of Registrable Shares, or an agent or representative thereof,
specifically for use in connection with the preparation of such registration
statement, preliminary prospectus, final prospectus, amendment, supplement or
document; provided, however, that the maximum amount of liability in respect of
such indemnification shall be limited, in the case of each seller of Registrable
Shares, to an amount equal to the net proceeds actually received by such holder
of Registrable Shares from the sale of Registrable Shares effected pursuant to
such registration; provided further, however, that the foregoing indemnity
agreement is subject to the condition that, insofar as it relates to any untrue
statement, allegedly
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<PAGE> 16
untrue statement, omission or alleged omission made in any preliminary
prospectus but eliminated or remedied in the final prospectus (filed pursuant to
Rule 424 of the Securities Act), such indemnity agreement shall not inure to the
benefit of the Company, any officer or director thereof, any underwriter, broker
or other Person acting on behalf of holders of the Registrable Shares from whom
the Person asserting any loss, claim, damage, liability or expense purchased the
Registrable Shares which are the subject thereof, or any Person who controls any
of the foregoing, if a copy of such final prospectus had been made available and
such final prospectus was not delivered to such Person with or prior to the
written confirmation of the sale of such Registrable Shares to such Person.
(c) Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in the preceding
paragraphs of this Section 8, such indemnified party will, if a claim in respect
thereof is made against an indemnifying party, give written notice to the latter
of the commencement of such action. In case any such action is brought against
an indemnified party, the indemnifying party will be entitled to participate in
and to assume the defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be responsible for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof; provided, however, that if any indemnified party shall have
reasonably concluded that there may be one or more legal or equitable defenses
available to such indemnified party which are additional to or conflict with
those available to the indemnifying party, or that such claim or litigation
involves or could have an effect upon matters beyond the scope of the indemnity
agreement provided in this Section 8, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party
and such indemnifying party shall reimburse such indemnified party and any
Person controlling such indemnified party for that portion of the fees and
expenses of any counsel retained by the indemnified party which is reasonably
related to the matters covered by the indemnity agreement provided in this
Section 8. No indemnified party shall consent to the entry of any judgment or
settle such claim or litigation without the prior written consent of the
indemnifying party, which consent shall not be unreasonably withheld. Any such
consent or settlement shall include, as an unconditional term thereof, the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability in
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<PAGE> 17
respect to such claim or litigation. Each indemnified party shall furnish such
information regarding itself or the claim in question as an indemnifying party
may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom
(subject to the indemnifying party's reimbursement of the indemnified party for
any expenses associated with furnishing such information).
(d) If the indemnification provided for in this Section 8 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, claim, damage, liability or action referred to herein, then
the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amounts paid or payable by such indemnified
party as a result of such loss, claim, damage, liability or action 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 statements or omissions which resulted in such loss, claim, damage,
liability or action as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged 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 omission.
Notwithstanding the provisions of this Section 8(d), no Investor shall be
required to contribute an amount greater than the dollar amount by which the net
proceeds received by such Investor with respect to the sale of any Registrable
Shares under the registration statement exceeds the amount of damages which such
Investor has otherwise been required to pay by reason of any statements in or
omissions from such registration statement. For purposes of the immediately
preceding sentence, the amount which a Investor has otherwise been required to
pay shall be deemed to include any legal or other fees or expenses incurred by
such Investor in connection with investigating or defending any action or claim
in respect of such registration statement.
9. UNDERWRITING AGREEMENT.
Notwithstanding the provisions of Section s 5, 6, 7 and 8 to the extent
that one or more of the Investors shall enter into an underwriting or similar
agreement, which agreement contains provisions covering one or more issues
addressed in such Section s, the provisions contained in such agreement
addressing such issue or issues shall control with
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<PAGE> 18
respect to such Investors and the other parties to such agreement; provided,
however, that any such agreement to which the Company is not a party shall not
be binding upon the Company. No such underwriting or similar agreement shall
contain indemnification provisions which are more onerous with respect to one
Investor than to any other Investor.
10. UNDERWRITTEN REGISTRATIONS.
If any of the Registrable Shares covered by any Registration Statement are
to be sold in an underwritten offering pursuant to Section s 2 or 4 hereof, the
investment banker or bankers and manager or managers that will manage the
offering will be selected by Investors holding a majority of the Registrable
Shares to be registered pursuant to such Registration Statement and be
reasonably acceptable to the Company. If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
right to registration hereunder for any Investor shall be conditioned upon such
Investor's participation in such underwriting, the inclusion of such Investor's
Registrable Shares in the underwriting to the extent provided herein and such
Investor entering into an underwriting agreement in customary form with the
representations of the underwriter.
11. INFORMATION BY HOLDER.
As soon as practicable but in no event later than five business days
following receipt of a written request from the Company, the Investors
requesting inclusion of Registrable Shares in a registration statement shall
furnish to the Company such written information regarding such Investors and the
distribution proposed by such Investors as the Company may reasonably request in
writing and as shall be reasonably required in connection with any registration,
qualification or compliance referred to in this Agreement. The Company shall not
be obligated to register the Registrable Shares of any Investor that fails to
promptly provide to the Company such information as the Company may reasonably
request at the time to enable the Company to comply with applicable laws or
regulations to facilitate any registration, qualification or compliance referred
to in this Agreement. Each Investor shall notify the Company within five (5)
business days of completion of its disposition of its Registrable Shares.
12. AGREEMENT OF HOLDER.
Each Investor agrees that a request by such Investor pursuant to Section
2, 3 or 4 of this Agreement for
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<PAGE> 19
inclusion of Registrable Shares in a registration statement shall be deemed to
be a commitment to convert any Restricted Securities which are convertible into
such Registrable Shares upon sale thereof under such registration statement.
13. EXCHANGE ACT COMPLIANCE.
The Company shall comply with all of the reporting requirements of the
Exchange Act required to be complied with by it and shall comply with all other
public information reporting requirements of the Commission required to be
complied with by it which are conditions to the availability of Rule 144 for the
sale of the Common Stock. The Company shall cooperate with the Investors in
supplying such information as may be necessary for the Investors to complete and
file any information reporting forms presently or hereafter required by the
Commission as a condition to the availability of Rule 144.
14. MERGERS, ETC.
The Company shall not, directly or indirectly, enter into any merger,
consolidation or reorganization in which the corporation shall not be the
surviving corporation unless the surviving corporation shall, prior to such
merger, consolidation or reorganization, agree in writing to assume the
obligations of the Company under this Agreement, and for that purpose references
hereunder to "Registrable Shares" shall be deemed to include the shares of
common stock, if any, which the Investors would be entitled to receive in
exchange for Common Stock under any such merger, consolidation or
reorganization, provided that, to the extent the Investors receive securities
that are by their terms convertible into shares of common stock of the issuer
thereof, then any such shares of common stock as are issued or issuable upon
conversion of said convertible securities shall be included within the
definition of "Registrable Shares."
15. NO CONFLICT OF RIGHTS.
The Company shall not, after the date hereof, grant any registration
rights which conflict with the registration rights granted hereby.
16. TERMINATION.
This Agreement shall terminate and be of no further force or effect when
there shall no longer be any securities outstanding that meet the definition of
"Registrable Shares"; provided, however, that Section s 1, 8, 25 and this
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<PAGE> 20
Section 16 shall not be so terminated but shall survive without limitation.
17. SUCCESSORS AND ASSIGNS.
This Agreement shall bind and inure to the benefit of the Company and the
Investors and, subject to Section 16, the respective successors and assigns of
the Company and the Investors.
18. ASSIGNMENT.
Each Investor may assign its rights hereunder to any transferee of
Restricted Securities; provided, however, that such transferee shall, as a
condition to the effectiveness of such assignment, be required to execute a
counterpart to this Agreement agreeing to be treated as an Investor, whereupon
such transferee shall have the benefits of and shall be subject to the
restrictions contained in this Agreement as if such transferee was originally
included in the definition of an Investor and had originally been a party
hereto.
19. SEVERABILITY.
It is the desire and intent of the parties hereto that the provisions of
this Agreement be enforced to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular provision of this Agreement shall be adjudicated
by a court of competent jurisdiction to be invalid, prohibited or unenforceable
for any reason, such provision, as to such jurisdiction, shall be ineffective,
without invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
20. ENTIRE AGREEMENT.
This Agreement and the Note Purchase Agreement, and the other writings
referred to herein or delivered pursuant hereto, contain the entire agreement
among the parties with respect to the subject matter thereof and supersede all
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<PAGE> 21
prior and contemporaneous arrangements or understandings with respect thereto.
21. NOTICES.
All communications hereunder to any party shall be deemed to be sufficient
if contained in a written instrument delivered in person or sent by telecopy
(with receipt confirmed), nationally-recognized overnight courier or first class
registered or certified mail, return receipt requested, postage prepaid,
addressed to such party at its address below or such other address as such party
may hereafter designate in writing:
(a) if to the Company, to:
CardioTech International, Inc.
11 State Street
Woburn, Massachusetts 01801
Telephone: (781) 933-4772
Telecopier: (781) 933-3933
Attention: John Mattern, Chief Financial Officer;
(b) with a copy to:
Mintz Levin Cohn Ferris Glovsky and Popeo PC
One Financial Center
Boston, Massachusetts 02111
Telephone: (617) 542-6000
Telecopier: (617) 542-2241
Attention: Michael Fantozzi;
(c) if to any Investor, to it at its address set forth on
Schedule I, with a copy to:
Dresdner Kleinwort Benson Private Equity Partners LP
75 Wall Street, 24th Floor
New York, NY 10005
Telephone: (212) 429-3200
Telecopier: (212) 429-3139
Attention: Christopher Hammond
and with a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Attention: Harvey M. Eisenberg, Esq.
Telephone: (212) 408-2400
Telecopy: (212) 408-2420; and
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<PAGE> 22
All such notices, requests, consents and other communications shall be
deemed to have been delivered (i) in the case of personal delivery, on the date
of such delivery, (ii) in the case of delivery by telecopy, on the date of
confirmation of receipt, (iii) in the case of dispatch by nationally-recognized
overnight courier, on the next business day following such dispatch and (iv) in
the case of mailing, on the third business day after the posting thereof.
22. MODIFICATIONS; AMENDMENTS; WAIVERS.
The terms and provisions of this Agreement may not be modified or amended,
nor may any provision be waived, except pursuant to a writing signed by the
Company and a Majority of the Investors.
23. COUNTERPARTS; FACSIMILE SIGNATURES.
This Agreement may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one agreement. Facsimile
counterpart signatures to this Agreement shall be acceptable at the Closing (as
defined in the Note Purchase Agreement) if the originally executed counterpart
is delivered within a reasonable period thereafter.
24. HEADINGS.
The headings of the various sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed to be a part of this
Agreement.
25. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and to be performed
wholly therein.
* * * * *
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<PAGE> 23
IN WITNESS WHEREOF, the undersigned have duly executed this Registration
Rights Agreement as of the date first written above.
CARDIOTECH INTERNATIONAL, INC.
By: /s/ Michael Szycher
-----------------------------------------
Name:
Title:
DRESDNER KLEINWORT BENSON PRIVATE EQUITY
PARTNERS LP
By: Dresdner Kleinwort Benson
Private Equity Managers LLC, its general
partner
By: /s/ Jonathan Walker
-----------------------------------------
Name: Jonathan Walker
Title: Authorized Signatory
<PAGE> 24
SCHEDULE I
Dresdner Kleinwort Benson Private Equity Partners LP
75 Wall Street, 24th Floor
New York, NY 10005
Telephone: (212) 429-3200
Telecopier: (212) 429-3139
Attention: Jonathan S. Walker
