newcardio_s8pos-ex1004.htm


    EXHIBIT 10.4


    NewCardio,
Inc.

     

    2004
Equity Incentive Plan

     

    Adopted:
September 25, 2004

    Approved
By Stockholders: September 25, 2004

    Amended
and Restated Effective as of December 27, 2007

    Amended
and Restated Plan Approved By Stockholders: December 21, 2007

    Termination
Date: September 25, 2014

     

    1.    Purposes.

     

    (a)    Eligible Stock Award
Recipients.  The persons eligible to receive Stock Awards are
the Employees, Directors and Consultants of the Company and its
Affiliates.

     

    (b)    Available Stock
Awards.  The purpose of the Plan is to provide a means by which
eligible recipients of Stock Awards may be given an opportunity to benefit from
increases in value of the Common Stock through the granting of the following
Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options, (iii) stock bonuses, (iv) Restricted Stock, and (v)
Restricted Stock Units.

     

    (c)    General
Purpose.  The Company, by means of the Plan, seeks to retain
the services of the group of persons eligible to receive Stock Awards, to secure
and retain the services of new members of this group and to provide incentives
for such persons to exert maximum efforts for the success of the Company and its
Affiliates.

     

    2.    Definitions.

     

    (a)    “Affiliate”
means any parent corporation or subsidiary corporation of the Company, whether
now or hereafter existing, as those terms are defined in Sections 424(e)
and (f), respectively, of the Code.

     

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

     

    (c)    “Code”
means the Internal Revenue Code of 1986, as amended.  Reference to a
specific section of the Code or regulation thereunder shall include such section
or regulation, any valid regulation promulgated under such section, and any
comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.

     

    (d)    “Committee”
means a committee of one or more members of the Board appointed by the Board in
accordance with subsection 3(c).

     

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

     

    (f)    “Company”
means NewCardio, Inc., a Delaware corporation.

     

    
      
         

      

      
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    (g)    “Consultant”
means any person, including an advisor, (i) engaged by the Company or an
Affiliate to render consulting or advisory services and who is compensated for
such services or(ii) who is a member of the Board of Directors of an
Affiliate.  However, the term “Consultant” shall not include either
Directors who are not compensated by the Company for their services as Directors
or Directors who are merely paid a director’s fee by the Company for their
services as Directors.

     

    (h)    “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.  The Participant’s Continuous Service shall not be deemed
to have terminated merely because of a change in the capacity in which the
Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director 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 Continuous Service.  For example, a change in status
from an Employee of the Company to a Consultant of an Affiliate or a Director
will not constitute an interruption of Continuous Service.  The Board
or the chief executive officer of the Company, in that party’s sole discretion,
may determine whether Continuous Service shall be considered interrupted in the
case of any leave of absence approved by that party, including sick leave,
military leave or any other personal leave.

     

    (i)    “Covered
Employee” means the chief executive officer and the four (4) other
highest compensated officers of the Company for whom total compensation is
required to be reported to stockholders under the Exchange Act, as determined
for purposes of Section 162(m) of the Code.

     

    (j)    “Director”
means a member of the Board of Directors of the Company.

     

    (k)    “Disability”
means (i) before the Listing Date, the inability of a person, in the
opinion of a qualified physician acceptable to the Company, to perform the major
duties of that person’s position with the Company or an Affiliate of the Company
because of the sickness or injury of the person and (ii) after the Listing
Date, the permanent and total disability of a person within the meaning of
Section 22(e)(3) of the Code.

     

    (l)    “Employee”
means any person employed by the Company or an Affiliate.  Mere
service as a Director or payment of a director’s fee by the Company or an
Affiliate shall not be sufficient to constitute “employment” by the Company or
an Affiliate.

     

    (m)   “Exchange
Act” means the Securities Exchange Act of 1934, as amended.

     

    (n)    “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 the Nasdaq
Global Market or the Nasdaq Capital Market, the Fair Market Value of a share of
Common Stock shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such exchange or market (or the
exchange or market with the greatest volume of trading in the Common Stock) on
the last market trading day prior to the day of determination, as reported in
The Wall Street Journal
or such other source as the Board deems reliable.

     

    
      
         

      

      
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    (ii)   In the
absence of such markets for the Common Stock, the Fair Market Value shall be
determined in good faith by the Board.

     

    (iii)         Prior to
the Listing Date, the value of the Common Stock shall be determined in a manner
consistent with applicable law.

     

    (o)    “Incentive Stock
Option” means an Option intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code and the regulations
promulgated thereunder.

     

    (p)    “Listing
Date” means the first date upon which any security of the Company is
listed (or approved for listing) upon notice of issuance on any securities
exchange or designated (or approved for designation) upon notice of issuance as
a national market security on an interdealer quotation system if such securities
exchange or interdealer quotation system has been certified in accordance with
applicable state law.

     

    (q)    “Non-Employee
Director” means a Director who either (i) is not a current Employee
or Officer of the Company or its parent or a subsidiary, does not receive
compensation (directly or indirectly) from the Company or its parent or a
subsidiary 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 as to which disclosure would be required under Item 404(a) of
Regulation S-K and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or
(ii) is otherwise considered a “non-employee director” for purposes of
Rule 16b-3.

     

    (r)    “Nonstatutory
Stock Option” means an Option not intended to qualify as an Incentive
Stock Option.

     

    (s)    “Officer”
means (i) before the Listing Date, any person designated by the Company as
an officer and (ii) on and after the Listing Date, a person who is an
officer of the Company within the meaning of Section 16 of the Exchange Act
and the rules and regulations promulgated thereunder.

     

    (t)    “Option”
means an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant
to the Plan.

     

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

     

    (v)    “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.

     

    (w)    “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” receiving compensation
for prior services (other than benefits under a tax-qualified pension plan), was
not an officer of the Company or an “affiliated corporation” at any time and is
not currently receiving direct or indirect remuneration from the Company or an
“affiliated corporation” for services 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.

     

    
      
         

      

      
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    (x)    “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.

     

    (y)    “Plan”
means this NewCardio, Inc. 2004 Equity Incentive Plan.

     

    (z)    “Restricted
Stock” means shares of Common Stock issued pursuant to a Restricted Stock
award under Section 7(b) of the Plan.

     

    (aa)   “Restricted Stock
Agreement” means a written agreement between the Company and a
Participant evidencing the terms and restrictions applying to an individual
grant of Restricted Stock.  Each Restricted Stock Agreement shall be
subject to the terms and conditions of the Plan.

     

    (bb)   “Restricted Stock
Unit” means a bookkeeping entry representing an amount equal to the Fair
Market Value of one share of Common Stock, granted pursuant to Section
7(c).  Each Restricted Stock Unit represents an unfunded and unsecured
obligation of the Company.

     

    (cc)   “Restricted Stock
Unit Agreement” means a written agreement between the Company and a
Participant evidencing the terms and restrictions applying to an individual
grant of Restricted Stock Units.  Each Restricted Stock Unit Agreement
shall be subject to the terms and conditions of the Plan.

     

    (dd)   “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.

     

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

     

    (ff)    “Stock
Award” means any right granted under the Plan, including an Option, a
Restricted Stock Unit, a stock bonus, and a grant of Restricted
Stock.

     

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

     

    (hh)   “Stock
Award
Transfer Program” means any program instituted by the Board which would
permit Participants the opportunity to transfer any outstanding Stock Awards to
a financial institution or other person or entity approved by the
Board.

     

    (ii)    “Ten Percent
Stockholder” means a person who owns (or is deemed to own pursuant to
Section 424(d) of the Code) stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or of any
of its Affiliates.

     

    
      
         

      

      
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    3.    Administration.

     

    (a)    Administration by
Board.  The Board shall administer the Plan unless and until
the Board delegates administration to a Committee, as provided in
subsection 3(c).

     

    (b)    Powers of
Board.  The Board shall have the power, subject to, and within
the limitations of, the express provisions of the Plan:

     

    (i)    To
determine the Fair Market Value;

     

    (ii)   To select
the persons to whom Stock Awards may be granted hereunder;

     

    (iii)         
To
determine the number of shares of Common Stock to be covered by each Stock Award
granted hereunder;

     

    (iv)   To
approve forms of Stock Award Agreements for use under the Plan;

     

    (v)    To
determine the terms and conditions, not inconsistent with the terms of the Plan,
of any Stock Award granted hereunder.  Such terms and conditions
include, but are not limited to, the exercise price, the time or times when
Stock Awards may be exercised (which may be based on performance criteria), any
vesting acceleration or waiver of forfeiture restrictions, and any restriction
or limitation regarding any Stock Award or the shares of Common Stock relating
thereto, based in each case on such factors as the Board will
determine;

     

    (vi)   To
determine the terms and conditions of any, and to institute any, Stock Award
Transfer Program in accordance with Section 10(b);

     

    (vii)         
To
construe and interpret the terms of the Plan and Stock Awards granted pursuant
to the Plan;

     

    (viii)        
To
prescribe, amend and rescind rules and regulations relating to the Plan,
including rules and regulations relating to sub-plans established for the
purpose of satisfying applicable foreign laws;

     

    (ix)   To modify
or amend each Stock Award (subject to Section 13(e) of the Plan), including
but not limited to the discretionary authority to extend the post-termination
exercisability period of Stock Awards and to extend the maximum term of an
Option (subject to Section 6(a) regarding Incentive Stock Options);

     

    (x)           
To allow
Participants to satisfy withholding tax obligations in such manner as prescribed
in Section 11(f);

     

    (xi)   To
authorize any person to execute on behalf of the Company any instrument required
to effect the grant of a Stock Award previously granted by the
Board;

     

    (xii)         
To allow
a Participant to defer the receipt of the payment of cash or the delivery of
shares of Common Stock that would otherwise be due to such Participant under a
Stock Award pursuant to such procedures as the Board may determine;
and

     

    
      
         

      

      
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    (xiii)        To make
all other determinations deemed necessary or advisable for administering the
Plan.

     

    (c)    Delegation to
Committee.

     

    (i)    General.  The Board
may delegate administration of the Plan to a Committee or Committees of one (1)
or more members of the Board, and the term “Committee” shall apply to any person
or persons to whom such authority has been delegated.  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, 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 abolish the Committee at any time and revest in the Board the administration
of the Plan.

     

    (ii)    Committee Composition when Common
Stock is Publicly Traded.  At such time as the Common Stock is
publicly traded, in the discretion of the Board, a Committee may consist solely
of two or more Outside Directors, in accordance with Section 162(m) of the
Code, and/or solely of two or more Non-Employee Directors, in accordance with
Rule 16b-3.  Within the scope of such authority, the Board or the
Committee may (1) delegate to a committee of one or more members of the
Board who are not Outside Directors the authority to grant Stock Awards to
eligible persons who are either (a) not then Covered Employees and are not
expected to be Covered Employees at the time of recognition of income resulting
from such Stock Award or (b) not persons with respect to whom the Company
wishes to comply with Section 162(m) of the Code and/or) (2) delegate
to a committee of one or more members of the Board who are not Non-Employee
Directors the authority to grant Stock Awards to eligible persons who are not
then subject to Section 16 of the Exchange Act.

     

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

     

    4.    Shares
Subject To The Plan.

     

    (a)    Share
Reserve.  Subject to the provisions of Section 12 relating
to adjustments upon changes in Common Stock, the Common Stock that may be issued
pursuant to Stock Awards shall not exceed in the aggregate ten million three
hundred thousand one hundred and six (10,300,106) shares of Common
Stock.

     

    (b)    Reversion of Shares to the Share
Reserve.  If any Stock Award shall for any reason expire or
otherwise terminate, in whole or in part, without having been exercised in
full.  the shares of Common Stock not acquired under such Stock Award
shall revert to and again become available for issuance under the
Plan.

     

    (c)    Source of
Shares.  The shares of Common Stock subject to the Plan may be
unissued shares or reacquired shares, bought on the market or
otherwise.

     

    
      
         

      

      
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    5.    Eligibility.

     

    (a)    Eligibility for Specific Stock
Awards.  Incentive Stock Options may be granted only to
Employees.  Stock Awards other than Incentive Stock Options may be
granted to Employees, Directors and Consultants.

     

    (b)    Ten Percent
Stockholders.  A Ten Percent Stockholder shall not be granted
an Incentive Stock Option unless the exercise price of such Option is at least
one hundred ten percent (110%) of the Fair Market Value of the Common Stock at
the date of grant and the Option is not exercisable after the expiration of five
(5) years from the date of grant.

     

    (c)    Section 162(m)
Limitation.  Subject to the provisions of Section 12
relating to adjustments upon changes in the shares of Common Stock, no Employee
shall be eligible to be granted Options covering more than five hundred thousand
(500,000) shares of Common Stock during any calendar year, and no Employee shall
be eligible to be granted, in the aggregate, Restricted Stock and Restricted
Stock Units covering more than two hundred fifty thousand (250,000) shares of
Common Stock, during any calendar year.  This subsection 5(c)
shall not apply prior to the Listing Date and, following the Listing Date, this
subsection 5(c) shall not apply until (i) the earliest of:
(1) the first material modification of the Plan (including any increase in
the number of shares of Common Stock reserved for issuance under the Plan in
accordance with Section 4); (2) the issuance of all of the shares of
Common Stock reserved for issuance under the Plan; (3) the expiration of
the Plan; or (4) the first meeting of stockholders at which Directors are
to be elected that occurs after the close of the first calendar year following
the calendar year in which occurred the first registration of an equity security
under Section 12 of the Exchange Act or the date the Company becomes
publicly held in accordance with Section 162(m) of the Code and the rules and
regulations promulgated thereunder; or (ii) such other date required by
Section 162(m) of the Code and the rules and regulations promulgated
thereunder.

     

    (d)    Consultants.

     

    (i)    Prior to
the Listing Date, a Consultant shall not be eligible for the grant of a Stock
Award if, at the time of grant, either the offer or the sale of the Company’s
securities to such Consultant is not exempt under Rule 701 of the
Securities Act (“Rule 701”) because of the nature of the services that the
Consultant is providing to the Company, or because the Consultant is not a
natural person, or as otherwise provided by Rule 701, unless the Company
determines that such grant need not comply with the requirements of
Rule 701 and will satisfy another exemption under the Securities Act as
well as comply with the securities laws of all other relevant
jurisdictions.

     

    (ii)   From and
after the Listing Date, a Consultant shall not be eligible for the grant of a
Stock Award if, at the time of grant, a Form S-8 Registration Statement under
the Securities Act (“Form S-8”) is not available to register either the offer or
the sale of the Company’s securities to such Consultant because of the nature of
the services that the Consultant is providing to the Company, or because the
Consultant is not a natural person, or as otherwise provided by the rules
governing the use of Form S-8, unless the Company determines both (i) that
such grant (A) shall be registered in another manner under the Securities
Act (e.g., on a Form S-3 Registration Statement) or (B) does not require
registration under the Securities Act in order to comply with the requirements
of the Securities Act, if applicable, and (ii) that such grant complies
with the securities laws of all other relevant jurisdictions.

     

    
      
         

      

      
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    (iii)         
Rule 701
and Form S-8 generally are available to consultants and advisors only if
(i) they are natural persons; (ii) they provide bona fide services to
the issuer, its parents, its majority-owned subsidiaries or majority-owned
subsidiaries of the issuer’s parent; and (iii) the services are not in
connection with the offer or sale of securities in a capital-raising
transaction, and do not directly or indirectly promote or maintain a market for
the issuer’s securities.

     

    6.    Option
Provisions.

     

    Each
Option shall be in such form and shall contain such terms and conditions as the
Board shall deem appropriate.  All Options shall be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of
grant, and, if certificates are issued, a separate certificate or certificates
will be issued for shares of Common Stock purchased on exercise of each type of
Option.  The provisions of separate Options need not be identical, but
each Option shall include (through incorporation of provisions hereof by
reference in the Option or otherwise) the substance of each of the following
provisions:

     

    (a)    Term.  Subject to
the provisions of Section 5(b) regarding Ten Percent Stockholders, no
Option granted prior to the Listing Date shall be exercisable after the
expiration of ten (10) years from the date it was granted, and no Incentive
Stock Option granted on or after the Listing Date shall be exercisable after the
expiration of ten (10) years from the date it was granted.

     

    (b)    Exercise Price of an Incentive Stock
Option.  Subject to the provisions of Section 5(b)
regarding Ten Percent Stockholders, the exercise price of each Incentive Stock
Option shall be not less than one hundred percent (100%) of the Fair Market
Value of the Common Stock subject to the Option on the date the Option is
granted.  Notwithstanding the foregoing, an Incentive Stock Option may
be granted with an exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of
the Code.

     

    (c)    Exercise Price of a Nonstatutory
Stock Option.  The exercise price of each Nonstatutory Stock
Option shall be not less than one hundred percent (100%) of the Fair Market
Value of the Common Stock subject to the Option on the date the Option is
granted.  Notwithstanding the foregoing, a Nonstatutory Stock Option
may be granted with an exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of
the Code.

     

    (d)    Consideration.  The
purchase price of Common Stock acquired pursuant to an Option shall be paid, to
the extent permitted by applicable statutes and regulations, either (i) in
cash at the time the Option is exercised or (ii) at the discretion of the
Board at the time of the grant of the Option (or subsequently in the case of a
Nonstatutory Stock Option) (1) by delivery to the Company of other Common
Stock, (2) according to a deferred payment or other similar arrangement
with the Optionholder or (3) in any other form of legal consideration that
may be acceptable to the Board.  Unless otherwise specifically
provided in the Option, the purchase price of Common Stock acquired pursuant to
an Option that is paid by delivery to the Company of other Common Stock
acquired, directly or indirectly from the Company, shall be paid only by shares
of the Common Stock of the Company that have been held for more than six (6)
months (or such longer or shorter period of time required to avoid a charge to
earnings for financial accounting purposes).  At any time that the
Company is incorporated in Delaware, payment of the Common Stock’s “par value,”
as defined in the Delaware General Corporation Law, shall not be made by
deferred payment.

     

    
      
         

      

      
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    In the
case of any deferred payment arrangement, interest shall be compounded at least
annually and shall be charged at the market rate of interest necessary to avoid
a charge to earnings for financial accounting purposes.

     

    (e)    Vesting.  The total
number of shares of Common Stock subject to an Option may, but need not, vest
and therefore become exercisable in periodic installments that may, but need
not, be equal.  The Option may be subject to such other terms and
conditions on the time or times when it may be exercised (which may be based on
performance or other criteria) as the Board may deem appropriate.  The
vesting provisions of individual Options may vary.  The provisions of
this subsection 6(e) are subject to any Option provisions governing the
minimum number of shares of Common Stock as to which an Option may be
exercised.

     

    (f)    Termination of Continuous
Service.  In the event an Optionholder’s Continuous Service
terminates (other than upon the Optionholder’s death or Disability), the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination) but only
within such period of time ending on the earlier of (i) the date thirty
(30) days following the termination of the Optionholder’s Continuous Service (or
such longer period specified in the Option Agreement), or (ii) the
expiration of the term of the Option as set forth in the Option
Agreement.  If, after termination, the Optionholder does not exercise
his or her Option within the time specified in the Option Agreement, the Option
shall terminate.

     

    (g)    Extension of Termination
Date.  An Optionholder’s Option Agreement may also provide that
if the exercise of the Option following the termination of the Optionholder’s
Continuous Service (other than upon the Optionholder’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 shall terminate on the earlier of (i) the expiration of the term
of the Option set forth in Section 6(a) or (ii) the expiration of a
period of thirty (30) days after the termination of the Optionholder’s
Continuous Service during which the exercise of the Option would not be in
violation of such registration requirements.

     

    (h)    Disability of
Optionholder.  In the event that an Optionholder’s Continuous
Service terminates as a result of the Optionholder’s Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination), but only
within such period of time ending on the earlier of (i) the date six (6)
months following such termination (or such longer period specified in the Option
Agreement) or (ii) the expiration of the term of the Option as set forth in
the Option Agreement.  If, after termination, the Optionholder does
not exercise his or her Option within the time specified herein, the Option
shall terminate.

     

    
      
         

      

      
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    (i)    Death of
Optionholder.  In the event (i) an Optionholder’s
Continuous Service terminates as a result of the Optionholder’ s death or
(ii) the Optionholder dies within the period (if any) specified in the
Option Agreement after the termination of the Optionholder’s Continuous Service
for a reason other than death, then the Option may be exercised (to the extent
the Optionholder was entitled to exercise such Option as of the date of death)
by the Optionholder’s estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
option upon the Optionholder’s death, but only within the period ending on the
earlier of (i) the date six (6) months following the date of death (or such
longer period specified in the Option Agreement) or (ii) the expiration of
the term of such Option as set forth in the Option Agreement.  If,
after death, the Option is not exercised within the time specified herein, the
Option shall terminate.

     

    (j)    Early Exercise.  The
Option may, but need not, include a provision whereby the Optionholder may elect
at any time before the Optionholder’s Continuous Service terminates to exercise
the Option as to any part or all of the shares of Common Stock subject to the
Option prior to the full vesting of the Option.  Subject to the
“Repurchase Limitation” in Section 11(h), any unvested shares of Common
Stock so purchased may be subject to a repurchase option in favor of the Company
or to any other restriction the Board determines to be appropriate.

     

    (k)    Right of
Repurchase.  Subject to the “Repurchase Limitation” in
Section 11(h), the Option may, but need not, include a provision whereby
the Company may elect, prior to the Listing Date, to repurchase all or any part
of the vested shares of Common Stock acquired by the Optionholder pursuant to
the exercise of the Option.

     

    (l)    Right of First
Refusal.  The Option may, but need not, include a provision
whereby the Company may elect, prior to the Listing Date, to exercise a right of
first refusal following receipt of notice from the Optionholder of the intent to
transfer all or any part of the shares of Common Stock received upon the
exercise of the Option.  Except as expressly provided in this
subsection 6(l), such right of first refusal shall otherwise comply with
any applicable provisions of the Bylaws of the Company.

     

    7.    Provisions
of Stock Awards other than Options.

     

    (a)    Stock Bonus
Awards.  Each stock bonus agreement shall be in such form and
shall contain such terms and conditions as the Board shall deem
appropriate.  The terms and conditions of stock bonus agreements may
change from time to time, and the terms and conditions of separate stock bonus
agreements need not be identical, but each stock bonus agreement shall include
(through incorporation of provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions:

     

    (i)    Consideration.  A
stock bonus may be awarded in consideration for past services actually rendered
to the Company or an Affiliate for its benefit.

     

    
      
         

      

      
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    (ii)   Vesting.  Subject to
the “Repurchase Limitation” in Section 11(h), shares of Common Stock
awarded under the stock bonus agreement may, but need not, be subject to a share
repurchase option in favor of the Company in accordance with a vesting schedule
to be determined by the Board.

     

    (iii)          Termination of Participant’s
Continuous Service.  Subject to the “Repurchase Limitation” in
Section 10(h), in the event a Participant’s Continuous Service terminates,
the Company may reacquire any or all of the shares of Common Stock held by the
Participant which have not vested as of the date of termination under the terms
of the stock bonus agreement.

     

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

     

    (i)    Vesting.  Subject to
the “Repurchase Limitation” in Section 11(h), shares of Common Stock
acquired under the Restricted Stock Agreement may, but need not, be subject to a
share repurchase option in favor of the Company in accordance with a vesting
schedule to be determined by the Board.

     

    (ii)   Transferability.  Except
as provided in this Section 7(b) or Section 10, shares of Restricted Stock may
not be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated until such time as the shares of Restricted Stock have
vested.

     

    (iii)         Other
Restrictions.  The Board, in its sole discretion, may impose
such other restrictions on shares of Restricted Stock as it may deem advisable
or appropriate.

     

    (iv)   Removal of
Restrictions.  Except as otherwise provided in this Section
7(b), shares of Restricted Stock covered by each Restricted Stock grant made
under the Plan will be released from escrow as soon as practicable after the
date the shares of Restricted Stock vest or at such other time as the Board may
determine.  The Board, in its discretion, may accelerate the time at
which any restrictions will lapse or be removed.

     

    (v)    Voting
Rights.  During the period in which the shares of Restricted
Stock are not transferable, Participants holding shares of Restricted Stock
granted hereunder may exercise full voting rights with respect to those Shares,
unless the Board determines otherwise.

     

    (vi)   Dividends and Other
Distributions.  During the period in which the shares of
Restricted Stock are not transferable, Participants holding shares of Restricted
Stock will be entitled to receive all dividends and other distributions paid
with respect to such shares, unless the Board provides otherwise.  If
any such dividends or distributions are paid in shares, the shares will be
subject to the same restrictions on transferability and forfeitability as the
shares of Restricted Stock with respect to which they were paid.

     

    
      
         

      

      
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    (vii)   Return of Restricted Stock to
Company.  On the date set forth in the Restricted Stock
Agreement, the Restricted Stock for which restrictions have not lapsed will
revert to the Company and again will become available for grant under the
Plan.

     

    (viii)        
Termination of Participant’s
Continuous Service.  Subject to the “Repurchase Limitation” in
Section 11(h), in the event a Participant’s Continuous Service terminates,
the Company may repurchase or otherwise reacquire any or all of the shares of
Common Stock held by the Participant which have not vested as of the date of
termination under the terms of the Restricted Stock Agreement.

     

    (c)    Restricted Stock
Units.  Restricted Stock Units may be granted at any time and
from time to time as determined by the Board.  After the Board
determines that it will grant Restricted Stock Units under the Plan, it shall
advise the Participant in a Restricted Stock Unit Agreement of the terms,
conditions, and restrictions related to the grant, including the number of
Restricted Stock Units.

     

    (i)    Vesting Criteria and Other
Terms.  The Board shall set vesting criteria in its discretion,
which, depending on the extent to which the criteria are met, will determine the
number of Restricted Stock Units that will be paid out to the
Participant.  The Board may set vesting criteria based upon the
achievement of Company-wide, business unit, or individual goals (including, but
not limited to, continued employment), or any other basis determined by the
Board in its discretion.

     

    (ii)   Earning Restricted Stock
Units.  Upon meeting the applicable vesting criteria, the
Participant shall be entitled to receive a payout as determined by the
Board.  Notwithstanding the foregoing, at any time after the grant of
Restricted Stock Units, the Board, in its sole discretion, may reduce or waive
any vesting criteria that must be met to receive a payout.

     

    (iii)         
Form and Timing of
Payment.  Payment of earned Restricted Stock Units shall be
made as soon as practicable after the date(s) determined by the Board and set
forth in the Restricted Stock Unit Agreement.  The Board, in its sole
discretion, may only settle earned Restricted Stock Units in cash, shares of
Common Stock, or a combination of both.

     

    (iv)   Cancellation.  On
the date set forth in the Restricted Stock Unit Agreement, all unearned
Restricted Stock Units shall be forfeited to the Company.

     

    8.    Covenants
of the Company.

     

    (a)    Availability of
Shares.  During the terms of the Stock Awards, the Company
shall keep available at all times the number of shares of Common Stock required
to satisfy such Stock Awards.

     

    (b)    Securities Law
Compliance.  The Company shall seek to obtain from each
regulatory commission or agency having jurisdiction over the Plan such authority
as may be 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 shall 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, the Company is unable
to obtain from any such regulatory commission or agency the authority which
counsel for the Company deems necessary for the lawful issuance and sale of
Common Stock under the Plan, the Company shall 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.

     

    
      
         

      

      
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    9.    Use
of Proceeds from Stock

     

    Proceeds
from the sale of Common Stock pursuant to Stock Awards shall constitute general
funds of the Company.

     

    10.   Transferability
of Awards.

     

    (a)    General.  Unless
determined otherwise by the Board, a Stock Award may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will, by the laws of descent or distribution, to a revocable trust, or as
permitted by Rule 701, and may be exercised, during the lifetime of the
Participant, only by the Participant.  If the Board makes a Stock
Award transferable, such Stock Award will contain such additional terms and
conditions as the Board deems appropriate.

     

    (b)    Stock Award Transfer
Program.  Notwithstanding any contrary provision of the Plan,
the Board shall have all discretion and authority to determine and implement the
terms and conditions of any Stock Award Transfer Program instituted pursuant to
this Section 10(b) and shall have the authority to amend the terms of any Stock
Award participating, or otherwise eligible to participate in, the Stock Award
Transfer Program, including (but not limited to) the authority to (i) amend
(including to extend) the expiration date, post-termination exercise period
and/or forfeiture conditions of any such Stock Award, (ii) amend or remove any
provisions of the Stock Award relating to the Stock Award holder’s continued
service to the Company, (iii) amend the permissible payment methods with respect
to the exercise or purchase of any such Stock Award, (iv) amend the adjustments
to be implemented in the event of changes in the capitalization and other
similar events with respect to such Stock Award, and (v) make such other changes
to the terms of such Stock Award as the Board deems necessary or appropriate in
its sole discretion.

     

    11.   Miscellaneous.

     

    (a)    Acceleration of Exercisability and
Vesting.  The Board shall have the power to accelerate the time
at which a Stock Award may first be exercised or the time during which a Stock
Award or any part thereof will vest in accordance with the Plan, notwithstanding
the provisions in the Stock Award stating the time at which it may first be
exercised or the time during which it will vest.

     

    (b)    Stockholder
Rights.  Except to the limited extent provided in Section 7(b),
no Participant (nor any beneficiary) shall have any of the rights or privileges
of a stockholder of the Company with respect to any shares of Common Stock
issuable pursuant to a Stock Award (or exercise thereof), unless and until
certificates representing such shares shall have been issued, recorded on the
records of the Company or its transfer agents or registrars, and delivered to
the Participant (or beneficiary).

     

    (c)    No Employment or other Service
Rights.  Nothing in the Plan or any instrument executed or
Stock Award granted pursuant thereto shall 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 shall 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.

     

    
      
         

      

      
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    (d)    Incentive Stock Option $100,000
Limitation.  To the extent that the aggregate Fair Market Value
(determined at the time of grant) of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by any Optionholder
during any calendar year (under all plans of the Company and its Affiliates)
exceeds one hundred thousand dollars ($100,000), the Options or portions thereof
which exceed such limit (according to the order in which they were granted)
shall be treated as Nonstatutory Stock Options.

     

    (e)    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, shall be inoperative if
(1) the issuance of the shares of Common Stock 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
(2) 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.

     

    (f)    Withholding
Obligations.  To the extent provided by the terms of a Stock
Award Agreement, the Participant may satisfy any federal, state or local tax
withholding obligation relating to the exercise or acquisition of Common Stock
under a Stock Award by any of the following means (in addition to the Company’s
right to withhold from any compensation paid to the Participant by the Company)
or by a combination of such means: (i) tendering a cash payment;
(ii) authorizing the Company to withhold shares of Common Stock from the
shares of Common Stock otherwise issuable to the Participant as a result of the
exercise or acquisition of Common Stock under 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 (iii) delivering
to the Company owned and unencumbered shares of Common Stock.

     

    (g)    Information
Obligation.  To the extent required by applicable state law,
the Company shall deliver financial statements to Participants at least
annually.  This subsection 10(g) shall not apply to key Employees
whose duties in connection with the Company assure them access to equivalent
information.

     

    (h)    Repurchase
Limitation.  The terms of any repurchase option shall be
specified in the Stock Award and may be either at the fair value at the time of
repurchase or at not less than the original purchase price.  To the
extent required by applicable state law at the time a Stock Award is made, any
repurchase option contained in a Stock Award to a person who is not an Officer,
Director or Consultant shall be upon the terms described below:

     

    
      
         

      

      
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    (i)    Fair Value.  If the
repurchase option gives the Company the right to repurchase the shares of Common
Stock upon termination of employment at not less than the fair value of the
shares of Common Stock to be purchased on the date of termination of Continuous
Service, then (i) the right to repurchase shall be exercised for cash or
cancellation of purchase money indebtedness for the shares of Common Stock
within six (6) months of termination of Continuous Service (or in the case of
shares of Common Stock issued upon exercise of Stock Awards after such date of
termination, within six (6) months after the date of the exercise) and
(ii) the right terminates when the shares of Common Stock become publicly
traded.

     

    (ii)   Original Purchase
Price.  If the repurchase option gives the Company the right to
repurchase the shares of Common Stock upon termination of Continuous Service at
the original purchase price, then (i) the right to repurchase at the
original purchase price shall lapse at the rate of at least twenty percent (20%)
of the shares of Common Stock per year over five (5) years from the date the
Stock Award is granted (without respect to the date the Stock Award was
exercised or became exercisable) and (ii) the right to repurchase shall be
exercised for cash or cancellation of purchase money indebtedness for the shares
of Common Stock within six (6) months of termination of Continuous Service (or
in the case of shares of Common Stock issued upon exercise of Options after such
date of termination, within six (6) months after the date of the
exercise).

     

    12.   Adjustments
upon Changes in Stock.

     

    (a)    Capitalization
Adjustments.  If any change is made in the Common Stock subject
to the Plan, or subject to any Stock Award, without the receipt of consideration
by the Company (through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan will be appropriately adjusted in the
class(es) and maximum number of securities subject to the Plan pursuant to
Section 4(a) and the maximum number of securities subject to award to any
person pursuant to Section 5(c), and the outstanding Stock Awards will be
appropriately adjusted in the class(es) and number of securities and price per
share of Common Stock subject to such outstanding Stock Awards.  The
Board shall make such adjustments, and its determination shall be final, binding
and conclusive.  (The conversion of any convertible securities of the
Company shall not be treated as a transaction “without receipt of consideration”
by the Company.)

     

    (b)    Dissolution or
Liquidation.  In the event of a dissolution or liquidation of
the Company, then all outstanding Stock Awards shall terminate immediately prior
to such event.

     

    (c)    Asset Sale, Merger, Consolidation or
Reverse Merger.  In the event of (i) a sale, lease or
other disposition of all or substantially all of the assets of the Company,
(ii) a merger or consolidation in which the Company is not the surviving
corporation or (iii) a reverse merger in which the Company is the surviving
corporation but the shares of Common Stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash or otherwise (individually, a “Corporate Transaction”),
then any surviving corporation or acquiring corporation shall assume any Stock
Awards outstanding under the Plan or shall substitute similar stock awards
(including an award to acquire the same consideration paid to the stockholders
in the Corporate Transaction) for those outstanding under the
Plan.  In the event any surviving corporation or acquiring corporation
refuses to assume such Stock Awards or to substitute similar stock awards for
those outstanding under the Plan, then with respect to Stock Awards held by
Participants whose Continuous Service has not terminated, the vesting of such
Stock Awards (and, if applicable, the time during which such Stock Awards may be
exercised) shall be accelerated in full, and the Stock Awards shall terminate if
not exercised (if applicable) at or prior to the Corporate
Transaction.  With respect to any other Stock Awards outstanding under
the Plan, such Stock Awards shall terminate if not exercised (if applicable)
prior to the Corporate Transaction.

     

    
      
         

      

      
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    13.   Amendment
of the Plan and Stock Awards.

     

    (a)    Amendment of
Plan.  The Board at any time, and from time to time, may amend
the Plan.  However, except as provided in Section 12 relating to
adjustments upon changes in Common Stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder approval
is necessary to satisfy the requirements of Section 422 of the Code,
Rule 16b-3 or any Nasdaq or securities exchange listing
requirements.

     

    (b)    Stockholder
Approval.  The Board may, in its sole discretion, submit any
other amendment to the Plan for stockholder approval, including, but not limited
to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive officers.

     

    (c)    Contemplated
Amendments.  It is expressly contemplated that the Board may
amend the Plan in any respect the Board deems necessary or advisable to provide
eligible Employees with the maximum benefits provided or to be provided under
the provisions of the Code and the regulations promulgated thereunder relating
to Incentive Stock Options and/or to bring the Plan and/or Incentive Stock
Options granted under it into compliance therewith.

     

    (d)    No Impairment of
Rights.  Rights under any Stock Award granted before amendment
of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the Participant and (ii) the
Participant consents in writing.

     

    (e)    Amendment of Stock
Awards.  The Board at any time, and from time to time, may
amend the terms of any one or more Stock Awards; provided, however, that the
rights under any Stock Award shall not be impaired by any such amendment unless
(i) the Company requests the consent of the Participant and (ii) the
Participant consents in writing.

     

    14.   Termination
or Suspension of the Plan.

     

    (a)    Plan Term.  The
Board may suspend or terminate the Plan at any time.  Unless sooner
terminated, the Plan shall terminate on the day before the tenth (10th)
anniversary of the date the Plan is adopted by the Board or approved by the
stockholders of the Company, whichever is earlier.  No Stock Awards
may be granted under the Plan while the Plan is suspended or after it is
terminated.

     

    (b)    No Impairment of
Rights.  Suspension or termination of the Plan shall not impair
rights and obligations under any Stock Award granted while the Plan is in effect
except with the written consent of the Participant.

     

    
      
         

      

      
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    15.   Effective
Date of Plan.

     

    The Plan
shall become effective as determined by the Board, but no Stock Award shall be
exercised (or, in the case of a stock bonus, shall be granted) unless and until
the Plan has been approved by the stockholders of the Company, which approval
shall be within twelve (12) months before or after the date the Plan is adopted
by the Board.

     

    16.   Choice
of Law.

     

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

     

    
      
         

      

      
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    IN
WITNESS WHEREOF, the Company, by its duly authorized officer, has executed this
Plan on the date indicated below.

     

    
      	 	NEWCARDIO,
      INC. 
	 	 
	Dated: December 27,
      2007 	/s/ Branislav
      Vajdic                                               
       
	 	Signature 
	 	 
	 	By: Branislav
      Vajdic                                              
       
	 	 
	 	Title: President and Chief
      Executive Officer      
     


    

     

     

     

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