Exhibit 10.1

 

Cardica, Inc.

 

Inducement Plan

 

Adopted by the Board of Directors: May 20, 2015

 

1.             General.

 

(a)     Eligible Stock Award Recipients. The only persons eligible to receive
grants of Stock Awards under this Plan are individuals who satisfy the standards
for inducement grants under Nasdaq Marketplace Rule 5635(c)(4) and the related
guidance under Nasdaq IM 5635-1 – that is, generally, a person not previously an
employee or director of the Company, or following a bona fide period of
non-employment, as an inducement material to the individual's entering into
employment with the Company. Such eligible individuals are referred to in this
Plan as “Eligible Employees”. These grants will be approved by either the
Company's independent compensation committee or a majority of the Company's
“Independent Directors” (as such term is defined by Nasdaq for purposes of
Nasdaq Marketplace Rule 5635(c)(4)). We refer to Nasdaq Marketplace Rule
5635(c)(4) and the related guidance under Nasdaq IM 5635-1 as the “Inducement
Award Rules”.

 

(b)     Available Stock Awards. The Plan provides for the grant of the following
Stock Awards: (i) Nonstatutory Stock Options, (ii) Stock Purchase Awards, (iii)
Restricted Stock Awards, (iv) Stock Appreciation Rights, (v) Restricted Stock
Unit Awards, and (vi) Other Stock Awards. Incentive Stock Options and Stock
Awards intended to qualify as stockholder-approved performance based
compensation for purposes of Section 162(m) of the Code may not be granted under
this Plan.

 

(c)     General Purpose. The Company, by means of the Plan, seeks to secure and
retain the services of one or more Eligible Employees, to provide incentives for
such persons to exert maximum efforts for the success of the Company and any
Affiliate and to provide a means by which such eligible recipients may be given
an opportunity to benefit from increases in value of the Common Stock through
the granting of Stock Awards.

 

2.             Administration.

 

(a)     Administration. The Board shall administer the Plan, provided, however,
that Awards may only be granted by either (i) a Committee composed solely of
Independent Directors or (ii) or at the Board level by a majority of the
Company's Independent Directors, with non-Independent Directors abstaining.
Subject to those constraints and the other constraints of the Inducement Award
Rules, the Board may delegate some of its powers of administration of the Plan
to a Committee, as provided in Section 2(c).

 

 
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(b)     Powers of Independent Directors and/or Board. The Independent Directors
and/or the Board will have the power, subject to, and within the limitations of,
the express provisions of the Plan and the Inducement Award Rules:

 

(i)     To determine (A) which Eligible Employees will be granted Stock Awards;
(B) when and how each Stock Award will be granted; (C) what type of Stock Award
will be granted; (D) the provisions of each Stock Award (which need not be
identical), including when a person will be permitted to exercise or otherwise
receive cash or Common Stock under the Stock Award; (E) the number of shares of
Common Stock subject to, or the cash value of, a Stock Award; and (F) the Fair
Market Value applicable to a Stock Award; provided, however, that Stock Awards
may only be granted by either (i) a Committee composed solely of Independent
Directors or (ii) or at the Board level by a majority of the Company's
Independent Directors, with non-Independent Directors abstaining.

 

(ii)     To require, as a condition precedent to the grant, vesting, settlement,
and/or issuance of shares of Common Stock pursuant to any Stock Award, that a
Participant execute a general release of claims (in any form that the Board may
require, in its sole discretion, which form may include any other provisions,
e.g., confidentiality and other restrictive covenants).

 

(iii)     To construe and interpret the Plan and Awards granted under it, and to
establish, amend and revoke rules and regulations for administration of the Plan
and Stock Awards. The Board, in the exercise of these powers, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it will deem necessary or expedient to make the
Plan or Stock Award fully effective.

 

(iv)     To settle all controversies regarding the Plan and Stock Awards granted
under it.

 

(v)     To accelerate, in whole or in part, the time at which a Stock Award may
be exercised or vest (or at which cash or shares of Common Stock may be issued).

 

(vi)     To suspend or terminate the Plan at any time. Except as otherwise
provided in the Plan or a Stock Award Agreement, suspension or termination of
the Plan will not materially impair a Participant’s rights under his or her
then-outstanding Stock Award without his or her written consent except as
provided in subsection (viii) below.

 

(vii)     To amend the Plan in any respect the Board deems necessary or
advisable consistent with the Inducement Award Rules, including, without
limitation, by adopting amendments relating to certain nonqualified deferred
compensation under Section 409A of the Code and/or to make the Plan or Stock
Awards granted under the Plan exempt from or compliant with the requirements for
nonqualified deferred compensation under Section 409A of the Code, subject to
the limitations, if any, of applicable law. Except as provided in the Plan
(including subsection (viii) below) or a Stock Award Agreement, no amendment of
the Plan will materially impair a Participant’s rights under an outstanding
Award without the Participant’s written consent.

 

 
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(viii)     To approve forms of Stock Award Agreements for use under the Plan and
to amend the terms of any one or more Stock Awards, including, but not limited
to, amendments to provide terms more favorable to the Participant than
previously provided in the Stock Award Agreement, subject to any specified
limits in the Plan that are not subject to Board discretion; provided, however,
that a Participant’s rights under any Stock Award will not be materially
impaired by any such amendment unless (A) the Company requests the consent of
the affected Participant, and (B) such Participant consents in writing.
Notwithstanding the foregoing, (1) a Participant’s rights will not be deemed to
have been impaired by any such amendment if the Board, in its sole discretion,
determines that the amendment, taken as a whole, does not materially impair the
Participant’s rights, and (2) subject to the limitations of applicable law, if
any, the Board may amend the terms of any one or more Stock Awards without the
affected Participant’s consent (A) to clarify the manner of exemption from, or
to bring the Stock Award into compliance with, Section 409A of the Code; or (B)
to comply with other applicable laws or listing requirements including the
Inducement Award Rules

 

(ix)     Generally, to exercise such powers and to perform such acts as the
Board deems necessary or expedient to promote the best interests of the Company
and that are not in conflict with the provisions of the Plan or Awards.

 

(x)     To adopt such procedures and sub-plans as are necessary or appropriate
to permit participation in the Plan by individuals who are foreign nationals or
employed outside the United States (provided that Board approval will not be
necessary for immaterial modifications to the Plan or any Stock Award Agreement
that are required for compliance with the laws of the relevant foreign
jurisdiction).

 

(c)     Delegation to Committee.

 

(i)     General. The Board may delegate some or all of the administration of the
Plan to a Committee or Committees, but only to the extent that such delegation
is consistent with the Inducement Award Rules. If administration is delegated to
a Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board that have been delegated
to the Committee, including the power to delegate to a subcommittee any of the
administrative powers the Committee is authorized to exercise (and references in
this Plan to the Board shall thereafter be to the Committee or subcommittee),
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. The Board may retain
the authority to concurrently administer the Plan with the Committee and may, at
any time, revest in the Board some or all of the powers previously delegated.

 

(d)     Effect of Board’s Decision. All determinations, interpretations and
constructions made by the Board in good faith will not be subject to review by
any person and will be final, binding and conclusive on all persons.

 

(e)     Cancellation and Re-Grant of Stock Awards. Neither the Board nor any
Committee will have the authority to: (i) reduce the exercise, purchase or
strike price of any outstanding Option or SAR under the Plan, or (ii) cancel any
outstanding Option or SAR that has an exercise price or strike price greater
than the current Fair Market Value of the Common Stock in exchange for cash or
other Stock Awards under the Plan, unless the stockholders of the Company have
approved such an action within twelve (12) months prior to such an event.

 

 
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3.            Shares Subject to the Plan.

 

(a)     Share Reserve.

 

(i)     Subject to Section 9(a) relating to Capitalization Adjustments, the
aggregate number of shares of Common Stock that may be issued pursuant to Stock
Awards from and after the Effective Date will not exceed 400,000 shares.

 

(ii)     For clarity, the Share Reserve in this Section 3(a) is a limitation on
the number of shares of Common Stock that may be issued pursuant to the Plan.
Accordingly, this Section 3(a) does not limit the granting of Stock Awards
except as provided in Section 7(a). Shares may be issued in connection with a
merger or acquisition as permitted by NASDAQ Listing Rule 5635(c) or, if
applicable, NYSE Listed Company Manual Section 303A.08, AMEX Company Guide
Section 711 or other applicable rule, and such issuance will not reduce the
number of shares available for issuance under the Plan.

 

(b)     Reversion of Shares to the Share Reserve. If a Stock Award or any
portion thereof (i) expires or otherwise terminates without all of the shares
covered by such Stock Award having been issued or (ii) is settled in cash (i.e.,
the Participant receives cash rather than stock), such expiration, termination
or settlement will not reduce (or otherwise offset) the number of shares of
Common Stock that may be available for issuance under the Plan. If any shares of
Common Stock issued pursuant to a Stock Award are forfeited back to or
repurchased by the Company because of the failure to meet a contingency or
condition required to vest such shares in the Participant, then the shares that
are forfeited or repurchased will revert to and again become available for
issuance under the Plan. Any shares reacquired by the Company in satisfaction of
tax withholding obligations on a Stock Award or as consideration for the
exercise or purchase price of a Stock Award will again become available for
issuance under the Plan.

 

(c)     Source of Shares. The stock issuable under the Plan will be shares of
authorized but unissued or reacquired Common Stock, including shares repurchased
by the Company on the open market or otherwise.

 

4.             Eligibility.

 

(a)     Eligibility for Specific Stock Awards. Stock Awards may be granted to
Eligible Employees; provided, however, that Stock Awards may not be granted to
Eligible Employees who are providing Continuous Service only to any “parent” of
the Company, as such term is defined in Rule 405, unless (i) the stock
underlying such Stock Awards is treated as “service recipient stock” under
Section 409A of the Code (for example, because the Stock Awards are granted
pursuant to a corporate transaction such as a spin off transaction) or (ii) the
Company, in consultation with its legal counsel, has determined that such Stock
Awards are otherwise exempt from or alternatively comply with the distribution
requirements of Section 409A of the Code.

 

 
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5.             Provisions Relating to Options and Stock Appreciation Rights.

 

Each Option or SAR will be in such form and will contain such terms and
conditions as the Board deems appropriate. The provisions of separate Options or
SARs need not be identical; provided, however, that each Award Agreement will
conform to (through incorporation of provisions hereof by reference in the
applicable Award Agreement or otherwise) the substance of each of the following
provisions:

 

(a)     Term. No Option or SAR will be exercisable after the expiration of ten
(10) years from the date of its grant or such shorter period specified in the
Stock Award Agreement.

 

(b)     Exercise Price. The exercise or strike price of each Option or SAR will
be not less than one hundred percent (100%) of the Fair Market Value of the
Common Stock subject to the Option or SAR on the date the Stock Award is
granted. Each SAR will be denominated in shares of Common Stock equivalents.

 

(c)     Purchase Price for Options. The purchase price of Common Stock acquired
pursuant to the exercise of an Option may be paid, to the extent permitted by
applicable law and as determined by the Board in its sole discretion, by any
combination of the methods of payment set forth below. The Board will have the
authority to grant Options that do not permit all of the following methods of
payment (or that otherwise restrict the ability to use certain methods) and to
grant Options that require the consent of the Company to use a particular method
of payment. The permitted methods of payment are as follows:

 

(i)     by cash, check, bank draft or money order payable to the Company;

 

(ii)     pursuant to a program developed under Regulation T as promulgated by
the Federal Reserve Board that, prior to the issuance of the stock subject to
the Option, results in either the receipt of cash (or check) by the Company or
the receipt of irrevocable instructions to pay the aggregate exercise price to
the Company from the sales proceeds;

 

(iii)     by delivery to the Company (either by actual delivery or attestation)
of shares of Common Stock;

 

(iv)     by a “net exercise” arrangement pursuant to which the Company will
reduce the number of shares of Common Stock issuable upon exercise by the
largest whole number of shares with a Fair Market Value that does not exceed the
aggregate exercise price; provided, however, that the Company will accept a cash
or other payment from the Participant to the extent of any remaining balance of
the aggregate exercise price not satisfied by such reduction in the number of
whole shares to be issued. Shares of Common Stock will no longer be subject to
an Option and will not be exercisable thereafter to the extent that (A) shares
issuable upon exercise are used to pay the exercise price pursuant to the “net
exercise,” (B) shares are delivered to the Participant as a result of such
exercise, and (C) shares are withheld to satisfy tax withholding obligations; or

 

(v)     in any other form of legal consideration that may be acceptable to the
Board and specified in the applicable Award Agreement.

 

 
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(d)     Exercise and Payment of a SAR. To exercise any outstanding SAR, the
Participant must provide written notice of exercise to the Company in compliance
with the provisions of the Stock Award Agreement evidencing such SAR. The
appreciation distribution payable on the exercise of a SAR will be not greater
than an amount equal to the excess of (A) the aggregate Fair Market Value (on
the date of the exercise of the SAR) of a number of shares of Common Stock equal
to the number of Common Stock equivalents in which the Participant is vested
under such SAR, and with respect to which the Participant is exercising the SAR
on such date, over (B) the aggregate strike price of the number of Common Stock
equivalents with respect to which the Participant is exercising the SAR on such
date. The appreciation distribution may be paid in Common Stock, in cash, in any
combination of the two or in any other form of consideration, as determined by
the Board and contained in the Stock Award Agreement evidencing such SAR.

 

(e)     Transferability of Options and SARs. The Board may, in its sole
discretion, impose such limitations on the transferability of Options and SARs
as the Board will determine. In the absence of such a determination by the Board
to the contrary, the following restrictions on the transferability of Options
and SARs will apply:

 

(i)     Restrictions on Transfer. An Option or SAR will not be transferable
except by will or by the laws of descent and distribution (and pursuant to
Sections 5(e)(ii) and 5(e)(iii) below), and will be exercisable during the
lifetime of the Participant only by the Participant. The Board may permit
transfer of the Option or SAR in a manner that is not prohibited by applicable
tax and securities laws. Except as explicitly provided in the Plan, neither an
Option nor a SAR may be transferred for consideration.

 

(ii)     Domestic Relations Orders. Subject to the approval of the Board or a
duly authorized Officer, an Option or SAR may be transferred pursuant to the
terms of a domestic relations order, official marital settlement agreement or
other divorce or separation instrument.

 

(iii)     Beneficiary Designation. Subject to the approval of the Board or a
duly authorized Officer, a Participant may, by delivering written notice to the
Company, in a form approved by the Company (or the designated broker), designate
a third party who, upon the death of the Participant, will thereafter be
entitled to exercise the Option or SAR and receive the Common Stock or other
consideration resulting from such exercise. In the absence of such a
designation, upon the death of the Participant, the executor or administrator of
the Participant’s estate will be entitled to exercise the Option or SAR and
receive the Common Stock or other consideration resulting from such exercise.
However, the Company may prohibit designation of a beneficiary at any time,
including due to any conclusion by the Company that such designation would be
inconsistent with the provisions of applicable laws.

 

(f)     Vesting Generally. The total number of shares of Common Stock subject to
an Option or SAR may vest and become exercisable in periodic installments that
may or may not be equal. The Option or SAR may be subject to such other terms
and conditions on the time or times when it may or may not be exercised (which
may be based on the satisfaction of Performance Goals or other criteria) as the
Board may deem appropriate. The vesting provisions of individual Options or SARs
may vary. The provisions of this Section 5(f) are subject to any Option or SAR
provisions governing the minimum number of shares of Common Stock as to which an
Option or SAR may be exercised.

 

 
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(g)     Termination of Continuous Service. Except as otherwise provided in the
applicable Award Agreement or other agreement between the Participant and the
Company, if a Participant’s Continuous Service terminates (other than for Cause
and other than upon the Participant’s death or Disability), the Participant may
exercise his or her Option or SAR (to the extent that the Participant was
entitled to exercise such Stock Award as of the date of termination of
Continuous Service) within the period of time ending on the earlier of (i) the
date three (3) months following the termination of the Participant’s Continuous
Service (or such longer or shorter period specified in the applicable Award
Agreement), and (ii) the expiration of the term of the Option or SAR as set
forth in the Stock Award Agreement. If, after termination of Continuous Service,
the Participant does not exercise his or her Option or SAR (as applicable)
within the applicable time frame, the Option or SAR will terminate.

 

(h)     Extension of Termination Date. Except as otherwise provided in the
applicable Award Agreement or other agreement between the Participant and the
Company, if the exercise of an Option or SAR following the termination of the
Participant’s Continuous Service (other than for Cause and other than upon the
Participant’s death or Disability) would be prohibited at any time solely
because the issuance of shares of Common Stock would violate the registration
requirements under the Securities Act, then the Option or SAR will terminate on
the earlier of (i) the expiration of a total period of time (that need not be
consecutive) equal to the applicable post-termination exercise period after the
termination of the Participant’s Continuous Service during which the exercise of
the Option or SAR would not be in violation of such registration requirements,
and (ii) the expiration of the term of the Option or SAR as set forth in the
applicable Award Agreement. In addition, unless otherwise provided in a
Participant’s Award Agreement, if the sale of any Common Stock received upon
exercise of an Option or SAR following the termination of the Participant’s
Continuous Service (other than for Cause) would violate the Company’s insider
trading policy, then the Option or SAR will terminate on the earlier of (i) the
expiration of a period of time (that need not be consecutive) equal to the
applicable post-termination exercise period after the termination of the
Participant’s Continuous Service during which the sale of the Common Stock
received upon exercise of the Option or SAR would not be in violation of the
Company’s insider trading policy, or (ii) the expiration of the term of the
Option or SAR as set forth in the applicable Award Agreement.

 

(i)     Disability of Participant. Except as otherwise provided in the
applicable Award Agreement or other agreement between the Participant and the
Company, if a Participant’s Continuous Service terminates as a result of the
Participant’s Disability, the Participant may exercise his or her Option or SAR
(to the extent that the Participant was entitled to exercise such Option or SAR
as of the date of termination of Continuous Service), but only within such
period of time ending on the earlier of (i) the date twelve (12) months
following such termination of Continuous Service (or such longer or shorter
period specified in the Stock Award Agreement), and (ii) the expiration of the
term of the Option or SAR as set forth in the Stock Award Agreement. If, after
termination of Continuous Service, the Participant does not exercise his or her
Option or SAR within the applicable time frame, the Option or SAR (as
applicable) will terminate.

 

 
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(j)     Death of Participant. Except as otherwise provided in the applicable
Award Agreement or other agreement between the Participant and the Company, if
(i) a Participant’s Continuous Service terminates as a result of the
Participant’s death, or (ii) the Participant dies within the period (if any)
specified in the Stock Award Agreement for exercisability after the termination
of the Participant’s Continuous Service (for a reason other than death), then
the Option or SAR may be exercised (to the extent the Participant was entitled
to exercise such Option or SAR as of the date of death) by the Participant’s
estate, by a person who acquired the right to exercise the Option or SAR by
bequest or inheritance or by a person designated to exercise the Option or SAR
upon the Participant’s death, but only within the period ending on the earlier
of (i) the date eighteen (18) months following the date of death (or such longer
or shorter period specified in the Stock Award Agreement), and (ii) the
expiration of the term of such Option or SAR as set forth in the Stock Award
Agreement. If, after the Participant’s death, the Option or SAR is not exercised
within the applicable time frame, the Option or SAR (as applicable) will
terminate.

 

(k)     Termination for Cause. Except as explicitly provided otherwise in a
Participant’s Award Agreement or other individual written agreement between the
Company or any Affiliate and the Participant, if a Participant’s Continuous
Service is terminated for Cause, the Option or SAR will terminate immediately
upon such Participant’s termination of Continuous Service, and the Participant
will be prohibited from exercising his or her Option or SAR from and after the
time of such termination of Continuous Service.

 

(l)     Non-Exempt Employees. If an Option or SAR is granted to an Eligible
Employee who is a non-exempt employee for purposes of the Fair Labor Standards
Act of 1938, as amended, the Option or SAR will not be first exercisable for any
shares of Common Stock until at least six (6) months following the date of grant
of the Option or SAR (although the Stock Award may vest prior to such date).
Consistent with the provisions of the Worker Economic Opportunity Act, (i) if
such non-exempt employee dies or suffers a Disability, (ii) upon a Corporate
Transaction in which such Option or SAR is not assumed, continued, or
substituted, (iii) upon a Change in Control, or (iv) upon the Participant’s
retirement (as such term may be defined in the Participant’s Award Agreement, in
another agreement between the Participant and the Company, or, if no such
definition, in accordance with the Company's then current employment policies
and guidelines), the vested portion of any Options and SARs may be exercised
earlier than six (6) months following the date of grant. The foregoing provision
is intended to operate so that any income derived by a non-exempt employee in
connection with the exercise or vesting of an Option or SAR will be exempt from
his or her regular rate of pay. To the extent permitted and/or required for
compliance with the Worker Economic Opportunity Act to ensure that any income
derived by a non-exempt employee in connection with the exercise, vesting or
issuance of any shares under any other Stock Award will be exempt from the
employee’s regular rate of pay, the provisions of this Section 5(l) will apply
to all Stock Awards and are hereby incorporated by reference into such Stock
Award Agreements.

 

6.             Provisions of Stock Awards Other than Options and SARs.

 

(a)     Restricted Stock Awards. Each Restricted Stock Award Agreement will be
in such form and will contain such terms and conditions as the Board deems
appropriate. To the extent consistent with the Company’s bylaws, at the Board’s
election, shares of Common Stock underlying a Restricted Stock Award may be (i)
held in book entry form subject to the Company’s instructions until any
restrictions relating to the Restricted Stock Award lapse; or (ii) evidenced by
a certificate, which certificate will be held in such form and manner as
determined by the Board. The terms and conditions of Restricted Stock Award
Agreements may change from time to time, and the terms and conditions of
separate Restricted Stock Award Agreements need not be identical. Each
Restricted Stock Award Agreement will conform to (through incorporation of the
provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions:

 

 
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(i)     Consideration. A Restricted Stock Award may be awarded in consideration
for (A) cash, check, bank draft or money order payable to the Company, (B) past
services to the Company or an Affiliate, or (C) any other form of legal
consideration (including future services) that may be acceptable to the Board,
in its sole discretion, and permissible under applicable law.

 

(ii)     Vesting. Shares of Common Stock awarded under the Restricted Stock
Award Agreement may be subject to forfeiture to the Company in accordance with a
vesting schedule to be determined by the Board.

 

(iii)     Termination of Participant’s Continuous Service. If a Participant’s
Continuous Service terminates, the Company may receive through a forfeiture
condition or a repurchase right any or all of the shares of Common Stock held by
the Participant as of the date of termination of Continuous Service under the
terms of the Restricted Stock Award Agreement.

 

(iv)     Transferability. Rights to acquire shares of Common Stock under the
Restricted Stock Award Agreement will be transferable by the Participant only
upon such terms and conditions as are set forth in the Restricted Stock Award
Agreement, as the Board will determine in its sole discretion, so long as Common
Stock awarded under the Restricted Stock Award Agreement remains subject to the
terms of the Restricted Stock Award Agreement.

 

(v)     Dividends. A Restricted Stock Award Agreement may provide that any
dividends paid on Restricted Stock will be subject to the same vesting and
forfeiture restrictions as apply to the shares subject to the Restricted Stock
Award to which they relate.

 

(b)     Restricted Stock Unit Awards. Each Restricted Stock Unit Award Agreement
will be in such form and will contain such terms and conditions as the Board
deems appropriate. The terms and conditions of Restricted Stock Unit Award
Agreements may change from time to time, and the terms and conditions of
separate Restricted Stock Unit Award Agreements need not be identical. Each
Restricted Stock Unit Award Agreement will conform to (through incorporation of
the provisions hereof by reference in the Agreement or otherwise) the substance
of each of the following provisions:

 

(i)     Consideration. At the time of grant of a Restricted Stock Unit Award,
the Board will determine the consideration, if any, to be paid by the
Participant upon delivery of each share of Common Stock subject to the
Restricted Stock Unit Award. The consideration to be paid (if any) by the
Participant for each share of Common Stock subject to a Restricted Stock Unit
Award may be paid in any form of legal consideration that may be acceptable to
the Board, in its sole discretion, and permissible under applicable law.

 

(ii)     Vesting. At the time of the grant of a Restricted Stock Unit Award, the
Board may impose such restrictions on or conditions to the vesting of the
Restricted Stock Unit Award as it, in its sole discretion, deems appropriate.

 

 
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(iii)     Payment. A Restricted Stock Unit Award may be settled by the delivery
of shares of Common Stock, their cash equivalent, any combination thereof or in
any other form of consideration, as determined by the Board and contained in the
Restricted Stock Unit Award Agreement.

 

(iv)     Additional Restrictions. At the time of the grant of a Restricted Stock
Unit Award, the Board, as it deems appropriate, may impose such restrictions or
conditions that delay the delivery of the shares of Common Stock (or their cash
equivalent) subject to a Restricted Stock Unit Award to a time after the vesting
of such Restricted Stock Unit Award.

 

(v)     Dividend Equivalents. Dividend equivalents may be credited in respect of
shares of Common Stock covered by a Restricted Stock Unit Award, as determined
by the Board and contained in the Restricted Stock Unit Award Agreement. At the
sole discretion of the Board, such dividend equivalents may be converted into
additional shares of Common Stock covered by the Restricted Stock Unit Award in
such manner as determined by the Board. Any additional shares covered by the
Restricted Stock Unit Award credited by reason of such dividend equivalents will
be subject to all of the same terms and conditions of the underlying Restricted
Stock Unit Award Agreement to which they relate.

 

(vi)     Termination of Participant’s Continuous Service. Except as otherwise
provided in the applicable Restricted Stock Unit Award Agreement, such portion
of the Restricted Stock Unit Award that has not vested will be forfeited upon
the Participant’s termination of Continuous Service.

 

(c)     Other Stock Awards. Other forms of Stock Awards valued in whole or in
part by reference to, or otherwise based on, Common Stock, including the
appreciation in value thereof (e.g., options or stock rights with an exercise
price or strike price less than one hundred percent (100%) of the Fair Market
Value of the Common Stock at the time of grant) may be granted either alone or
in addition to Stock Awards granted under Section 5 and this Section 6. Subject
to the provisions of the Plan, the Board will have sole and complete authority
to determine the persons to whom and the time or times at which such Other Stock
Awards will be granted, the number of shares of Common Stock (or the cash
equivalent thereof) to be granted pursuant to such Other Stock Awards and all
other terms and conditions of such Other Stock Awards.

 

(d)     Transferability of Stock Awards. Generally, a Participant may not
transfer a Stock Award other than by will or the laws of descent and
distribution or a domestic relations order with the approval of the Plan
Administrator or a duly authorized officer. Additionally, a Participant may,
with the approval of the Plan Administrator or a duly authorized officer,
designate a beneficiary who may receive the shares of Common Stock underlying a
Stock Award following the Participant’s death.

 

7.             Covenants of the Company.

 

(a)     Availability of Shares. The Company will keep available at all times the
number of shares of Common Stock reasonably required to satisfy then-outstanding
Stock Awards.

 

 
10. 

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(b)     Securities Law Compliance. The Company will seek to obtain from each
regulatory commission or agency having jurisdiction over the Plan the authority
required to grant Stock Awards and to issue and sell shares of Common Stock upon
exercise of the Stock Awards; provided, however, that this undertaking will not
require the Company to register under the Securities Act the Plan, any Stock
Award or any Common Stock issued or issuable pursuant to any such Stock Award.
If, after reasonable efforts and at a reasonable cost, the Company is unable to
obtain from any such regulatory commission or agency the authority that counsel
for the Company deems necessary for the lawful issuance and sale of Common Stock
under the Plan, the Company will be relieved from any liability for failure to
issue and sell Common Stock upon exercise of such Stock Awards unless and until
such authority is obtained. A Participant will not be eligible for the grant of
a Stock Award or the subsequent issuance of cash or Common Stock pursuant to the
Stock Award if such grant or issuance would be in violation of any applicable
securities law.

 

(c)     No Obligation to Notify or Minimize Taxes. The Company will have no duty
or obligation to any Participant to advise such holder as to the time or manner
of exercising such Stock Award. Furthermore, the Company will have no duty or
obligation to warn or otherwise advise such holder of a pending termination or
expiration of a Stock Award or a possible period in which the Stock Award may
not be exercised. The Company has no duty or obligation to minimize the tax
consequences of a Stock Award to the holder of such Stock Award.

 

8.             Miscellaneous.

 

(a)     Use of Proceeds from Sales of Common Stock. Proceeds from the sale of
shares of Common Stock issued pursuant to Stock Awards will constitute general
funds of the Company.

 

(b)     Corporate Action Constituting Grant of Awards. Corporate action
constituting a grant by the Company of a Stock Award to any Participant will be
deemed completed as of the date of such corporate action, unless otherwise
determined by the Board, regardless of when the instrument, certificate, or
letter evidencing the Stock Award is communicated to, or actually received or
accepted by, the Participant. In the event that the corporate records (e.g.,
Board consents, resolutions or minutes) documenting the corporate action
constituting the grant contain terms (e.g., exercise price, vesting schedule or
number of shares) that are inconsistent with those in the Stock Award Agreement
or related grant documents as a result of a clerical error in the papering of
the Stock Award Agreement or related grant documents, the corporate records will
control and the Participant will have no legally binding right to the incorrect
term in the Stock Award Agreement or related grant documents.

 

(c)     Stockholder Rights. No Participant will be deemed to be the holder of,
or to have any of the rights of a holder with respect to, any shares of Common
Stock subject to a Stock Award unless and until (i) such Participant has
satisfied all requirements for exercise of, or the issuance of shares of Common
Stock under, the Stock Award pursuant to its terms, and (ii) the issuance of the
Common Stock subject to such Stock Award has been entered into the books and
records of the Company.

 

 
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(d)     No Employment or Other Service Rights. Nothing in the Plan, any Stock
Award Agreement or any other instrument executed thereunder or in connection
with any Stock Award granted pursuant thereto will confer upon any Participant
any right to continue to serve the Company or an Affiliate in the capacity in
effect at the time the Stock Award was granted or will affect the right of the
Company or an Affiliate to terminate (i) the employment of an Employee with or
without notice and with or without cause, (ii) the service of a Consultant
pursuant to the terms of such Consultant’s agreement with the Company or an
Affiliate, or (iii) the service of a Director pursuant to the bylaws of the
Company or an Affiliate, and any applicable provisions of the corporate law of
the state in which the Company or the Affiliate is incorporated, as the case may
be.

 

(e)     Change in Time Commitment. In the event a Participant’s regular level of
time commitment in the performance of his or her services for the Company and
any Affiliates is reduced (for example, and without limitation, if the
Participant is an Employee of the Company and the Employee has a change in
status from a full-time Employee to a part-time Employee or takes an extended
leave of absence) after the date of grant of any Stock Award to the Participant,
the Board has the right in its sole discretion to (x) make a corresponding
reduction in the number of shares or cash amount subject to any portion of such
Stock Award that is scheduled to vest or become payable after the date of such
change in time commitment, and (y) in lieu of or in combination with such a
reduction, extend the vesting or payment schedule applicable to such Stock
Award. In the event of any such reduction, the Participant will have no right
with respect to any portion of the Stock Award that is so reduced or extended.

 

(f)     Investment Assurances. The Company may require a Participant, as a
condition of exercising or acquiring Common Stock under any Stock Award, (i) to
give written assurances satisfactory to the Company as to the Participant’s
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii) to
give written assurances satisfactory to the Company stating that the Participant
is acquiring Common Stock subject to the Stock Award for the Participant’s own
account and not with any present intention of selling or otherwise distributing
the Common Stock. The foregoing requirements, and any assurances given pursuant
to such requirements, will be inoperative if (A) the issuance of the shares upon
the exercise or acquisition of Common Stock under the Stock Award has been
registered under a then currently effective registration statement under the
Securities Act, or (B) as to any particular requirement, a determination is made
by counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws. The Company may, upon
advice of counsel to the Company, place legends on stock certificates issued
under the Plan as such counsel deems necessary or appropriate in order to comply
with applicable securities laws, including, but not limited to, legends
restricting the transfer of the Common Stock.

 

(g)     Withholding Obligations. Unless prohibited by the terms of a Stock Award
Agreement, the Company may, in its sole discretion, satisfy any federal, state
or local tax withholding obligation relating to a Stock Award by any of the
following means or by a combination of such means: (i) causing the Participant
to tender a cash payment; (ii) withholding shares of Common Stock from the
shares of Common Stock issued or otherwise issuable to the Participant in
connection with the Stock Award; provided, however, that no shares of Common
Stock are withheld with a value exceeding the minimum amount of tax required to
be withheld by law (or such lesser amount as may be necessary to avoid
classification of the Stock Award as a liability for financial accounting
purposes); (iii) withholding payment from any amounts otherwise payable to the
Participant; or (iv) by such other method as may be set forth in the Stock Award
Agreement.

 

 
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(h)     Electronic Delivery. Any reference herein to a “written” agreement or
document will include any agreement or document delivered electronically, filed
publicly at www.sec.gov (or any successor website thereto) or posted on the
Company’s intranet (or other shared electronic medium controlled by the Company
to which the Participant has access).

 

(i)     Deferrals. To the extent permitted by applicable law, the Board, in its
sole discretion, may determine that the delivery of Common Stock or the payment
of cash, upon the exercise, vesting or settlement of all or a portion of any
Stock Award may be deferred and may establish programs and procedures for
deferral elections to be made by Participants. Deferrals by Participants will be
made in accordance with Section 409A of the Code. Consistent with Section 409A
of the Code, the Board may provide for distributions while a Participant is
still an employee or otherwise providing services to the Company. The Board is
authorized to make deferrals of Awards and determine when, and in what annual
percentages, Participants may receive payments, including lump sum payments,
following the Participant’s termination of Continuous Service, and implement
such other terms and conditions consistent with the provisions of the Plan and
in accordance with applicable law.

 

(j)     Compliance with Section 409A of the Code. Unless otherwise expressly
provided for in an Award Agreement, the Plan and Award Agreements will be
interpreted to the greatest extent possible in a manner that makes the Plan and
the Awards granted hereunder exempt from Section 409A of the Code, and, to the
extent not so exempt, in compliance with Section 409A of the Code. If the Board
determines that any Award granted hereunder is not exempt from and is therefore
subject to Section 409A of the Code, the Award Agreement evidencing such Award
will incorporate the terms and conditions necessary to avoid the consequences
specified in Section 409A(a)(1) of the Code, and to the extent an Award
Agreement is silent on terms necessary for compliance, such terms are hereby
incorporated by reference into the Award Agreement. Notwithstanding anything to
the contrary in this Plan (and unless the Award Agreement specifically provides
otherwise), if the shares of Common Stock are publicly traded, and if a
Participant holding an Award that constitutes “deferred compensation” under
Section 409A of the Code is a “specified employee” for purposes of Section 409A
of the Code, no distribution or payment of any amount that is due because of a
“separation from service” (as defined in Section 409A of the Code without regard
to alternative definitions thereunder) will be issued or paid before the date
that is six months and one day following the date of such Participant’s
“separation from service” (as defined in Section 409A of the Code without regard
to alternative definitions thereunder) or, if earlier, the date of the
Participant’s death, unless such distribution or payment can be made in a manner
that complies with Section 409A of the Code, and any amounts so deferred will be
paid in a lump sum on the day after such six month and one day period elapses,
with the balance paid thereafter on the original schedule.

 

 
13. 

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(k)     Clawback/Recovery. All Awards granted under the Plan will be subject to
recoupment in accordance with any clawback policy that the Company is required
to adopt pursuant to the listing standards of any national securities exchange
or association on which the Company’s securities are listed or as is otherwise
required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or
other applicable law. In addition, the Board may impose such other clawback,
recovery or recoupment provisions in a Stock Award Agreement as the Board
determines necessary or appropriate, including but not limited to a
reacquisition right in respect of previously acquired shares of Common Stock or
other cash or property upon the occurrence of Cause. No recovery of compensation
under such a clawback policy will be an event giving rise to a right to resign
for “good reason” or “constructive termination” (or similar term) under any
agreement with the Company.

 

9.             Adjustments upon Changes in Common Stock; Other Corporate Events.

 

(a)     Capitalization Adjustments. In the event of a Capitalization Adjustment,
the Board will appropriately and proportionately adjust: (i) the class(es) and
maximum number of securities subject to the Plan pursuant to Section 3(a), and
(ii) the class(es) and number of securities and price per share of stock subject
to outstanding Stock Awards. The Board will make such adjustments, and its
determination will be final, binding and conclusive.

 

(b)     Dissolution or Liquidation. Except as otherwise provided in the Stock
Award Agreement, in the event of a dissolution or liquidation of the Company,
all outstanding Stock Awards (other than Stock Awards consisting of vested and
outstanding shares of Common Stock not subject to a forfeiture condition or the
Company’s right of repurchase) will terminate immediately prior to the
completion of such dissolution or liquidation, and the shares of Common Stock
subject to the Company’s repurchase rights or subject to a forfeiture condition
may be repurchased or reacquired by the Company notwithstanding the fact that
the holder of such Stock Award is providing Continuous Service; provided,
however, that the Board may, in its sole discretion, cause some or all Stock
Awards to become fully vested, exercisable and/or no longer subject to
repurchase or forfeiture (to the extent such Stock Awards have not previously
expired or terminated) before the dissolution or liquidation is completed but
contingent on its completion.

 

(c)     Corporate Transaction. The following provisions shall apply to Stock
Awards in the event of a Corporate Transaction unless otherwise provided in the
instrument evidencing the Stock Award or any other written agreement between the
Company or any Affiliate and the Participant or unless otherwise expressly
provided by the Board at the time of grant of a Stock Award. In the event of a
Corporate Transaction, then, notwithstanding any other provision of the Plan,
the Board shall take one or more of the following actions with respect to Stock
Awards, contingent upon the closing or completion of the Corporate Transaction:

 

(i)     arrange for the surviving corporation or acquiring corporation (or the
surviving or acquiring corporation’s parent company) to assume or continue the
Stock Award or to substitute a similar stock award for the Stock Award
(including, but not limited to, an award to acquire the same consideration paid
to the stockholders of the Company pursuant to the Corporate Transaction);

 

 
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(ii)     arrange for the assignment of any reacquisition or repurchase rights
held by the Company in respect of Common Stock issued pursuant to the Stock
Award to the surviving corporation or acquiring corporation (or the surviving or
acquiring corporation’s parent company);

 

(iii)     accelerate the vesting, in whole or in part, of the Stock Award (and,
if applicable, the time at which the Stock Award may be exercised) to a date
prior to the effective time of such Corporate Transaction as the Board shall
determine (or, if the Board shall not determine such a date, to the date that is
five (5) days prior to the effective date of the Corporate Transaction), with
such Stock Award terminating if not exercised (if applicable) at or prior to the
effective time of the Corporate Transaction;

 

(iv)     arrange for the lapse of any reacquisition or repurchase rights held by
the Company with respect to the Stock Award;

 

(v)     cancel or arrange for the cancellation of the Stock Award, to the extent
not vested or not exercised prior to the effective time of the Corporate
Transaction, in exchange for such cash consideration, if any, as the Board, in
its sole discretion, may consider appropriate; or

 

(vi)     make a payment, in such form as may be determined by the Board equal to
the excess, if any, of (A) the value of the property the Participant would have
received upon the exercise of the Stock Award, over (B) any exercise price
payable by such holder in connection with such exercise.

 

(vii)     The Board need not take the same action or actions with respect to all
Stock Awards or portions thereof or with respect to all Participants.

 

(d)     Change in Control. A Stock Award may be subject to additional
acceleration of vesting and exercisability upon or after a Change in Control as
may be provided in the Stock Award Agreement for such Stock Award or as may be
provided in any other written agreement between the Company or any Affiliate and
the Participant, but in the absence of such provision, no such acceleration will
occur.

 

10.          Termination or Suspension of the Plan.

 

The Board may suspend or terminate the Plan at any time. No Awards may be
granted under the Plan while the Plan is suspended or after it is terminated. 

 

11.          Effective Date of Plan.

 

The Plan will become effective on the Effective Date.

 

12.          Choice of Law.

 

The laws of the State of California will govern all questions concerning the
construction, validity and interpretation of this Plan, without regard to that
state’s conflict of laws rules.

 

 
15. 

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13.          Definitions. As used in the Plan, the following definitions will
apply to the capitalized terms indicated below:

 

(a)     “Affiliate” means, at the time of determination, any “parent” or
“subsidiary” of the Company as such terms are defined in Rule 405. The Board
will have the authority to determine the time or times at which “parent” or
“subsidiary” status is determined within the foregoing definition.

 

(b)     “Award” is a synonym for Stock Award.

 

(c)      “Award Agreement” is a synonym for Stock Award Agreement.

 

(d)     “Board” means the Board of Directors of the Company.

 

(e)     “Capitalization Adjustment” means any change that is made in, or other
events that occur with respect to, the Common Stock subject to the Plan or
subject to any Stock Award after the Effective Date without the receipt of
consideration by the Company through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, large nonrecurring cash dividend, stock split, reverse stock split,
liquidating dividend, combination of shares, exchange of shares, change in
corporate structure or any similar equity restructuring transaction, as that
term is used in Statement of Financial Accounting Standards Board Accounting
Standards Codification Topic 718 (or any successor thereto). Notwithstanding the
foregoing, the conversion of any convertible securities of the Company will not
be treated as a Capitalization Adjustment.

 

(f)     “Cause” will have the meaning ascribed to such term in any written
agreement between the Participant and the Company defining such term and, in the
absence of such agreement, such term means, with respect to a Participant, the
occurrence of any of the following events: (i) such Participant’s commission of
any felony or any crime involving fraud, dishonesty or moral turpitude under the
laws of the United States or any state thereof; (ii) such Participant’s
attempted commission of, or participation in, a fraud or act of dishonesty
against the Company; (iii) such Participant’s intentional, material violation of
any contract or agreement between the Participant and the Company or of any
statutory duty owed to the Company; (iv) such Participant’s unauthorized use or
disclosure of the Company’s confidential or proprietary information or trade
secrets or the confidential or proprietary information or trade secrets of any
other party to whom the Participant owes an obligation of nondisclosure as a
result of his or her relationship with the Company; or (v) such Participant’s
gross misconduct. The determination that a termination of the Participant’s
Continuous Service is either for Cause or without Cause will be made by the
Company, in its sole discretion. Any determination by the Company that the
Continuous Service of a Participant was terminated with or without Cause for the
purposes of outstanding Awards held by such Participant will have no effect upon
any determination of the rights or obligations of the Company or such
Participant for any other purpose. The foregoing definition does not in any way
limit the Company’s ability to terminate a Participant’s Continuous Service at
any time, and the term “Company” will be interpreted herein to include any
Affiliate or successor thereto, if appropriate.

 

 
16. 

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(g)     “Change in Control” means the occurrence, in a single transaction or in
a series of related transactions, of any one or more of the following events:

 

(i)     any Exchange Act Person becomes the Owner, directly or indirectly, of
securities of the Company representing more than fifty percent (50%) of the
combined voting power of the Company’s then outstanding securities other than by
virtue of a merger, consolidation or similar transaction. Notwithstanding the
foregoing, a Change in Control will not be deemed to occur (A) on account of the
acquisition of securities of the Company directly from the Company, (B) on
account of the acquisition of securities of the Company by an investor, any
affiliate thereof or any other Exchange Act Person that acquires the Company’s
securities in a transaction or series of related transactions the primary
purpose of which is to obtain financing for the Company through the issuance of
equity securities, or (C) solely because the level of Ownership held by any
Exchange Act Person (the “Subject Person”) exceeds the designated percentage
threshold of the outstanding voting securities as a result of a repurchase or
other acquisition of voting securities by the Company reducing the number of
shares outstanding, provided that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of voting
securities by the Company, and after such share acquisition, the Subject Person
becomes the Owner of any additional voting securities that, assuming the
repurchase or other acquisition had not occurred, increases the percentage of
the then outstanding voting securities Owned by the Subject Person over the
designated percentage threshold, then a Change in Control will be deemed to
occur;

 

(ii)     there is consummated a merger, consolidation or similar transaction
involving (directly or indirectly) the Company and, immediately after the
consummation of such merger, consolidation or similar transaction, the
stockholders of the Company immediately prior thereto do not Own, directly or
indirectly, either (A) outstanding voting securities representing more than
fifty percent (50%) of the combined outstanding voting power of the surviving
Entity in such merger, consolidation or similar transaction or (B) more than
fifty percent (50%) of the combined outstanding voting power of the parent of
the surviving Entity in such merger, consolidation or similar transaction, in
each case in substantially the same proportions as their Ownership of the
outstanding voting securities of the Company immediately prior to such
transaction;

 

(iii)     the stockholders of the Company approve or the Board approves a plan
of complete dissolution or liquidation of the Company, or a complete dissolution
or liquidation of the Company shall otherwise occur, except for a liquidation
into a parent corporation;

 

(iv)     there is consummated a sale, lease, exclusive license or other
disposition of all or substantially all of the consolidated assets of the
Company and its Subsidiaries, other than a sale, lease, license or other
disposition of all or substantially all of the consolidated assets of the
Company and its Subsidiaries to an Entity, more than fifty percent (50%) of the
combined voting power of the voting securities of which are Owned by
stockholders of the Company in substantially the same proportions as their
Ownership of the outstanding voting securities of the Company immediately prior
to such sale, lease, license or other disposition; or

 

 
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(v)     individuals who, on the date the Plan is adopted by the Board, are
members of the Board (the “Incumbent Board”) cease for any reason to constitute
at least a majority of the members of the Board; provided, however, that if the
appointment or election (or nomination for election) of any new Board member was
approved or recommended by a majority vote of the members of the Incumbent Board
then still in office, such new member will, for purposes of this Plan, be
considered as a member of the Incumbent Board.

 

Notwithstanding the foregoing or any other provision of this Plan, (A) the term
Change in Control shall not include a sale of assets, merger or other
transaction effected exclusively for the purpose of changing the domicile of the
Company, and (B) the definition of Change in Control (or any analogous term) in
an individual written agreement between the Company or any Affiliate and the
Participant shall supersede the foregoing definition with respect to Awards
subject to such agreement; provided, however, that if no definition of Change in
Control or any analogous term is set forth in such an individual written
agreement, the foregoing definition shall apply.

 

(h)     “Code” means the Internal Revenue Code of 1986, as amended, including
any applicable regulations and guidance thereunder.

 

(i)     “Committee” means a committee of one (1) or more Independent Directors
to whom authority has been delegated by the Board in accordance with Section
2(c).

 

(j)     “Common Stock” means the common stock of the Company.

 

(k)     “Company” means Cardica, Inc., a Delaware corporation; provided, that in
the event the Company reincorporates to another jurisdiction, all references to
the term “Company” shall refer to the Company in such new jurisdiction.

 

(l)     “Consultant” means any person, including an advisor, who is (i) engaged
by the Company or an Affiliate to render consulting or advisory services and is
compensated for such services, or (ii) serving as a member of the board of
directors of an Affiliate and is compensated for such services. However, service
solely as a Director, or payment of a fee for such service, will not cause a
Director to be considered a “Consultant” for purposes of the Plan.
Notwithstanding the foregoing, a person is treated as a Consultant under this
Plan only if a Form S-8 Registration Statement under the Securities Act is
available to register either the offer or the sale of the Company’s securities
to such person.

 

(m)     “Continuous Service” means that the Participant’s service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. A change in the capacity in which the Participant
renders service to the Company or an Affiliate as an Employee, Director or
Consultant or a change in the Entity for which the Participant renders such
service, provided that there is no interruption or termination of the
Participant’s service with the Company or an Affiliate, will not terminate a
Participant’s Continuous Service; provided, however, that if the Entity for
which a Participant is rendering services ceases to qualify as an Affiliate, as
determined by the Board, in its sole discretion, such Participant’s Continuous
Service will be considered to have terminated on the date such Entity ceases to
qualify as an Affiliate. For example, a change in status from an Employee of the
Company to a Consultant of an Affiliate or to a Director will not constitute an
interruption of Continuous Service. To the extent permitted by law, the Board or
the chief executive officer of the Company, in that party’s sole discretion, may
determine whether Continuous Service will be considered interrupted in the case
of (i) any leave of absence approved by the Board or chief executive officer,
including sick leave, military leave or any other personal leave, or (ii)
transfers between the Company, an Affiliate, or their successors.
Notwithstanding the foregoing, a leave of absence will be treated as Continuous
Service for purposes of vesting in a Stock Award only to such extent as may be
provided in the Company’s leave of absence policy, in the written terms of any
leave of absence agreement or policy applicable to the Participant, or as
otherwise required by law.

 

 
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(n)     “Corporate Transaction” means the consummation, in a single transaction
or in a series of related transactions, of any one or more of the following
events:

 

(i)     a sale or other disposition of all or substantially all, as determined
by the Board, in its sole discretion, of the consolidated assets of the Company
and its Subsidiaries;

 

(ii)     a sale or other disposition of at least fifty percent (50%) of the
outstanding securities of the Company;

 

(iii)     a merger, consolidation or similar transaction following which the
Company is not the surviving corporation; or

 

(iv)     a merger, consolidation or similar transaction following which the
Company is the surviving corporation but the shares of Common Stock outstanding
immediately preceding the merger, consolidation or similar transaction are
converted or exchanged by virtue of the merger, consolidation or similar
transaction into other property, whether in the form of securities, cash or
otherwise.

 

(o)      “Director” means a member of the Board.

 

(p)     “Disability” means, with respect to a Participant, the inability of such
Participant to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be expected to
result in death or that has lasted or can be expected to last for a continuous
period of not less than twelve (12) months, as provided in Sections 22(e)(3) and
409A(a)(2)(c)(i) of the Code, and will be determined by the Board on the basis
of such medical evidence as the Board deems warranted under the circumstances.

 

(q)     “Effective Date” means May 20, 2015.

 

(r)     “Eligible Employee” has the meaning set forth in Section 1(a) above.

 

(s)     “Employee” means any person employed by the Company or an Affiliate.
However, service solely as a Director, or payment of a fee for such services,
will not cause a Director to be considered an “Employee” for purposes of the
Plan.

 

(t)     “Entity” means a corporation, partnership, limited liability company or
other entity.

 

 
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(u)     “Exchange Act” means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.

 

(v)     “Exchange Act Person” means any natural person, Entity or “group”
(within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that
“Exchange Act Person” will not include (i) the Company or any Subsidiary of the
Company, (ii) any employee benefit plan of the Company or any Subsidiary of the
Company or any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any Subsidiary of the Company, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, (iv) an Entity Owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their Ownership of stock of
the Company; or (v) any natural person, Entity or “group” (within the meaning of
Section 13(d) or 14(d) of the Exchange Act) that, as of the Effective Date, is
the Owner, directly or indirectly, of securities of the Company representing
more than fifty percent (50%) of the combined voting power of the Company’s then
outstanding securities.

 

(w)     “Fair Market Value” means, as of any date, the value of the Common Stock
determined as follows:

 

(i)     If the Common Stock is listed on any established stock exchange or
traded on any established market, the Fair Market Value of a share of Common
Stock will be, unless otherwise determined by the Board, the closing sales price
for such stock as quoted on such exchange or market (or the exchange or market
with the greatest volume of trading in the Common Stock) on the date of
determination, as reported in a source the Board deems reliable.

 

(ii)     Unless otherwise provided by the Board, if there is no closing sales
price for the Common Stock on the date of determination, then the Fair Market
Value will be the closing selling price on the last preceding date for which
such quotation exists.

 

(iii)     In the absence of such markets for the Common Stock, the Fair Market
Value will be determined by the Board in good faith and in a manner that
complies with Sections 409A and 422 of the Code.

 

(x)     “Incentive Stock Option” means an option that is intended to be, and
that qualifies as, an “incentive stock option” within the meaning of Section 422
of the Code.

 

(y)     “Independent Director” has the meaning set forth in Section 1(a) above.

 

(z)     “Non-Employee Director” means a Director who either (i) is not a current
employee or officer of the Company or an Affiliate, does not receive
compensation, either directly or indirectly, from the Company or an Affiliate
for services rendered as a consultant or in any capacity other than as a
Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
(“Regulation S-K”)), does not possess an interest in any other transaction for
which disclosure would be required under Item 404(a) of Regulation S-K, and is
not engaged in a business relationship for which disclosure would be required
pursuant to Item 404(b) of Regulation S-K; or (ii) is otherwise considered a
“non-employee director” for purposes of Rule 16b-3.

 

 
20. 

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(aa)     “Nonstatutory Stock Option” means any option that does not qualify as
an Incentive Stock Option.

 

(bb)     “Officer” means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act.

 

(cc)     “Option” means a Nonstatutory Stock Option to purchase shares of Common
Stock granted pursuant to the Plan.

 

(dd)     “Option Agreement” means a written agreement between the Company and an
Optionholder evidencing the terms and conditions of an Option grant. Each Option
Agreement will be subject to the terms and conditions of the Plan.

 

(ee)     “Optionholder” means a person to whom an Option is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Option.

 

(ff)     “Other Stock Award” means an award based in whole or in part by
reference to the Common Stock which is granted pursuant to the terms and
conditions of Section 6(c).

 

(gg)     “Other Stock Award Agreement” means a written agreement between the
Company and a holder of an Other Stock Award evidencing the terms and conditions
of an Other Stock Award grant. Each Other Stock Award Agreement will be subject
to the terms and conditions of the Plan.

 

(hh)     “Outside Director” means a Director who either (i) is not a current
employee of the Company or an “affiliated corporation” (within the meaning of
Treasury Regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an “affiliated corporation” who receives
compensation for prior services (other than benefits under a tax-qualified
retirement plan) during the taxable year, has not been an officer of the Company
or an “affiliated corporation,” and does not receive remuneration from the
Company or an “affiliated corporation,” either directly or indirectly, in any
capacity other than as a Director, or (ii) is otherwise considered an “outside
director” for purposes of Section 162(m) of the Code.

 

(ii)     “Own,” “Owned,” “Owner,” “Ownership” A person or Entity will be deemed
to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership”
of securities if such person or Entity, directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise, has or shares
voting power, which includes the power to vote or to direct the voting, with
respect to such securities.

 

(jj)     “Participant” means a person to whom a Stock Award is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding Stock
Award.

 

(kk)     “Plan” means this Cardica, Inc. Inducement Plan.

 

(ll)     “Restricted Stock Award” means an award of shares of Common Stock which
is granted pursuant to the terms and conditions of Section 6(a).

 

 
21. 

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(mm)     “Restricted Stock Award Agreement” means a written agreement between
the Company and a holder of a Restricted Stock Award evidencing the terms and
conditions of a Restricted Stock Award grant. Each Restricted Stock Award
Agreement will be subject to the terms and conditions of the Plan.

 

(nn)     “Restricted Stock Unit Award” means a right to receive shares of Common
Stock which is granted pursuant to the terms and conditions of Section 6(b).

 

(oo)     “Restricted Stock Unit Award Agreement” means a written agreement
between the Company and a holder of a Restricted Stock Unit Award evidencing the
terms and conditions of a Restricted Stock Unit Award grant. Each Restricted
Stock Unit Award Agreement will be subject to the terms and conditions of the
Plan.

 

(pp)     “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any
successor to Rule 16b-3, as in effect from time to time.

 

(qq)     “Rule 405” means Rule 405 promulgated under the Securities Act.

 

(rr)     “Securities Act” means the Securities Act of 1933, as amended.

 

(ss)     “Stock Appreciation Right” or “SAR” means a right to receive the
appreciation on Common Stock that is granted pursuant to the terms and
conditions of Section 5.

 

(tt)     “Stock Appreciation Right Agreement” means a written agreement between
the Company and a holder of a Stock Appreciation Right evidencing the terms and
conditions of a Stock Appreciation Right grant. Each Stock Appreciation Right
Agreement will be subject to the terms and conditions of the Plan.

 

(uu)     “Stock Award” means any right to receive Common Stock granted under the
Plan, including a Nonstatutory Stock Option, a Restricted Stock Award, a
Restricted Stock Unit Award, a Stock Appreciation Right, or any Other Stock
Award.

 

(vv)     “Stock Award Agreement” means a written agreement between the Company
and a Participant evidencing the terms and conditions of a Stock Award grant.
Each Stock Award Agreement will be subject to the terms and conditions of the
Plan.

 

(ww)     “Subsidiary” means, with respect to the Company, (i) any corporation of
which more than fifty percent (50%) of the outstanding capital stock having
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether, at the time, stock of any other class or
classes of such corporation will have or might have voting power by reason of
the happening of any contingency) is at the time, directly or indirectly, Owned
by the Company, and (ii) any partnership, limited liability company or other
entity in which the Company has a direct or indirect interest (whether in the
form of voting or participation in profits or capital contribution) of more than
fifty percent (50%).

 

22.