Document:

QuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 4.7    
    

NOVACARDIA, INC.  

 AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT  

 September 21, 2006  

	

1.	
 	

REGISTRATION RIGHTS	
 	

1
	

 	
 	

1.1	
 	

Definitions	
 	

1
	

 	
 	

1.2	
 	

Request for Registration	
 	

3
	

 	
 	

1.3	
 	

Company Registration	
 	

4
	

 	
 	

1.4	
 	

Form S-3 Registration	
 	

4
	

 	
 	

1.5	
 	

Obligations of the Company	
 	

5
	

 	
 	

1.6	
 	

Furnish Information	
 	

6
	

 	
 	

1.7	
 	

Expenses of Registration	
 	

6
	

 	
 	

1.8	
 	

Underwriting Requirements	
 	

6
	

 	
 	

1.9	
 	

Delay of Registration	
 	

7
	

 	
 	

1.10	
 	

Indemnification	
 	

7
	

 	
 	

1.11	
 	

Reports Under the Exchange Act	
 	

9
	

 	
 	

1.12	
 	

Assignment of Registration Rights	
 	

9
	

 	
 	

1.13	
 	

Limitations on Subsequent Registration Rights	
 	

10
	

 	
 	

1.14	
 	

Lock-Up Agreement	
 	

10
	

 	
 	

1.15	
 	

Termination of Registration Rights	
 	

11
	

2.	
 	

COVENANTS OF THE COMPANY	
 	

11
	

 	
 	

2.1	
 	

Delivery of Financial Statements	
 	

11
	

 	
 	

2.2	
 	

Inspection	
 	

11
	

 	
 	

2.3	
 	

Right of First Offer	
 	

11
	

 	
 	

2.4	
 	

Qualified Small Business Stock Status	
 	

13
	

 	
 	

2.5	
 	

Vesting	
 	

13
	

 	
 	

2.6	
 	

Insurance	
 	

14
	

 	
 	

2.7	
 	

Patent, Copyright and Nondisclosure Agreement	
 	

14
	

 	
 	

2.8	
 	

Non-employee Director Compensation and Expenses	
 	

14
	

 	
 	

2.9	
 	

Qualified Small Business	
 	

14
	

 	
 	

2.10	
 	

Independent Directors	
 	

14
	

 	
 	

2.11	
 	

Termination of Covenants	
 	

14
	 	 	 	 	 	 	 

	

3.	
 	

MISCELLANEOUS	
 	

14
	

 	
 	

3.1	
 	

Termination	
 	

14
	

 	
 	

3.2	
 	

Entire Agreement	
 	

15
	

 	
 	

3.3	
 	

Successors and Assigns	
 	

15
	

 	
 	

3.4	
 	

Amendments and Waivers	
 	

15
	

 	
 	

3.5	
 	

Notices	
 	

15
	

 	
 	

3.6	
 	

Severability	
 	

15
	

 	
 	

3.7	
 	

Governing Law	
 	

15
	

 	
 	

3.8	
 	

Counterparts	
 	

15
	

 	
 	

3.9	
 	

Titles and Subtitles	
 	

15
	

 	
 	

3.10	
 	

Aggregation of Stock	
 	

16

   NOVACARDIA, INC.  

AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT  

        This Amended and Restated Investors' Rights Agreement (the "Agreement") is made as of the 21st day
of September, 2006, by and among NovaCardia, Inc., a Delaware corporation (the "Company"), the Investors (as defined below) and Lighthouse (as
defined below). 

RECITALS  

        A.    On
August 18, 2003, the Company and the holders of the Company's Series A Preferred Stock (the "Series A
Preferred") listed on Exhibit A hereto (the "Series A Holders") entered into a Series A Preferred Stock
Purchase Agreement (the "Series A Purchase Agreement") pursuant to which the Company sold to the Series A Holders and the Series A
Holders purchased from the Company, shares of the Company's Series A Preferred. In connection therewith, the Company and the Series A Holders entered into the predecessor to this
Agreement, the Investors' Rights Agreement dated August 18, 2003 (the "Original Agreement"). 

        B.    On
March 21, 2005 and July 14, 2006, the Company issued warrants to purchase preferred stock of the Company (the
"Warrants") to Lighthouse Capital Partners V, L.P. ("Lighthouse") in connection with Lighthouse's
entrance into a working capital credit facility and a bridge loan, respectively, each on behalf of the Company. In connection therewith, the Company and the Series A Holders entered into an
amendment to the Original Agreement, Amendment No. 1 to the Investors' Rights Agreement pursuant to which Lighthouse became a party to the Original Agreement for certain purposes. 

        C.    The
Company and the holders of the Company's Series B Preferred Stock (the "Series B Preferred") listed on
Exhibit B hereto (the "Series B Holders" and together with the Series A Holders, the
"Investors") have entered into a Series B Preferred Stock Purchase Agreement (the "Series B Purchase
Agreement") of even date herewith pursuant to which the Company desires to sell to the Series B Holders and the Series B Holders desire to purchase from the
Company, shares of the Company's Series B Preferred. 

        D.    A
condition to the Series B Holders' obligations under the Series B Purchase Agreement is that the Company, the Investors and Lighthouse amend and restate
the Original Agreement, as amended, as set forth below. 

        E.    The
Company, the Investors and Lighthouse each desire to induce the arrangements set forth in this Agreement, and the sale and purchase of shares of Series B
Preferred pursuant to the Series B Purchase Agreement, by agreeing to the terms and conditions set forth below. 

AGREEMENT  

        The parties hereby agree as follows: 

        1.    Registration Rights.    The Company and the Holders (as defined below) covenant and
agree as follows: 

        1.1    Definitions.    For purposes of this Agreement: 

        (a)   The
term "Exchange Act" means the Securities Exchange Act of 1934, as amended (and any successor thereto) and the rules
and regulations promulgated thereunder; 

        (b)   The
term "Form S-3" means such form under the Securities Act (as defined below) as in effect on the
date hereof or any successor form under the Securities Act that permits 

1

 

significant
incorporation by reference of the Company's subsequent public filings under the Exchange Act; 

        (c)   The
term "Holder" means any person owning or having the right to acquire Registrable Securities or any assignee thereof
in accordance with Section 1.12 of this Agreement, and shall include, without limitation, Lighthouse; 

        (d)   The
term "Preferred Stock" means shares of Series A Preferred and Series B Preferred designated in the
Restated Certificate; 

        (e)   The
term "Qualified IPO" means a firm commitment underwritten public offering by the Company of shares of its Common
Stock pursuant to a registration statement on Form S-1 under the Securities Act, (i) the public offering price of which is not less than the product of (A) one and
one-half and (B) the then current Conversion Price (as defined in the Restated Certificate) of the Series B Preferred (subject to adjustment under the Restated Certificate)
and (ii) which such public offering results in aggregate cash proceeds to the Company of not less than $30,000,000 (net of underwriting discounts and commissions); 

        (f)    The
terms "register," "registered," and
"registration" refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities
Act, and the declaration or ordering of effectiveness of such registration statement or document; 

        (g)   The
term "Registrable Securities" means (i) the shares of Common Stock issuable or issued upon conversion of the
Preferred Stock (including without limitation Preferred Stock issued to Lighthouse), other than shares for which registration rights have terminated pursuant to Section 1.15 hereof,
(ii) solely for purposes of Section 1.14 below, 200,000 shares of Common Stock held by Domain Partners V, L.P. and its Affiliates, and (iii) any other shares of Common Stock of
the Company issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or
in replacement of, the shares listed in (i) and (ii); provided, however, that the foregoing definition shall exclude in all cases any Registrable
Securities sold by a person in a transaction in which his or her rights under this Agreement are not assigned. Notwithstanding the foregoing, Common Stock or other securities shall only be treated as
Registrable Securities if and so long as (A) they have not been sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction, (B) they
have not been sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act under Section 4(1) thereof so that all transfer restrictions, and
restrictive legends with respect thereto, if any, are removed upon the consummation of such sale, or (C) the Holder thereof is entitled to exercise any right provided in Section 1 in
accordance with Section 1.15 below; 

        (h)   The
number of shares of "Registrable Securities then outstanding" shall be determined by the number of shares of Common
Stock outstanding which are, and the number of shares of Common Stock issuable pursuant to then exercisable or convertible securities which are, Registrable Securities; 

        (i)    The
term "Restated Certificate" shall mean the Company's Second Amended and Restated Certificate of Incorporation; 

        (j)    The
term "SEC" means the Securities and Exchange Commission; and 

        (k)   The
term "Securities Act" means the Securities Act of 1933, as amended (and any successor thereto), and the rules and
regulations promulgated thereunder. 

2

 

        1.2    Request for Registration.    

        (a)   If
the Company shall receive at any time after the earlier of (i) August 18, 2008, or (ii) one (1) year after the effective date of the first
registration statement for a public offering of securities of the Company (other than a registration statement relating either to the sale of securities to employees of the Company pursuant to a stock
option, stock purchase or similar plan or an SEC Rule 145 transaction), a written request from the Holders of at least thirty-five percent (35%) of the Registrable Securities then
outstanding that the Company file a registration statement under the Securities Act covering the registration of at least twenty percent (20%) of the Registrable Securities then outstanding
(but not less than the number of shares of Registrable Securities, the anticipated aggregate offering price of which, net of underwriting discounts and commissions, would exceed $5,000,000), then the
Company shall, within 10 days of the receipt thereof, give written notice of such request to all Holders and shall, subject to the limitations of subsection 1.2(b), use its best efforts to file
as soon as practicable, and in any event within 90 days of the receipt of such request, a registration statement under the Securities Act covering all Registrable Securities which the Holders
request to be registered within 20 days of the mailing of such notice by the Company. 

        (b)   If
the Holders initiating the registration request hereunder ("Initiating Holders") intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to this Section 1.2 and the Company shall include such
information in the written notice referred to in subsection 1.2(a). The underwriter will be selected by the Holders of a majority of the Registrable Securities held by the Initiating Holders and shall
be reasonably acceptable to the Company. In such event, the right of any Holder to include his Registrable Securities in such registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the underwriting (unless otherwise mutually agreed by the Holders of a majority of the Registrable Securities held by the
Initiating Holders and such Holder) to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company as provided in
subsection 1.5(e)) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting. Notwithstanding any other provision of this
Section 1.2, if the underwriter advises the Initiating Holders in writing that marketing factors require a limitation of the number of shares to be underwritten, then the Initiating Holders
shall so advise all Holders of Registrable Securities which would otherwise be underwritten pursuant hereto, and the number of shares of Registrable Securities that may be included in the underwriting
shall be allocated among all participating Holders thereof, including the Initiating Holders, in proportion (as nearly as practicable) to the amount of Registrable Securities of the Company owned by
each participating Holder; provided, however, that the number of shares of Registrable Securities to be included in such underwriting shall not be
reduced unless all other securities are first entirely excluded from the underwriting. 

        (c)   Notwithstanding
the foregoing, if the Company shall furnish to Holders requesting a registration statement pursuant to this Section 1.2, a certificate signed by
the President of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its stockholders for such
registration statement to be filed, or for a filed registration statement to be amended and have been declared effective, and it is therefore essential to defer the filing of such registration
statement, the Company shall have the right to defer such filing and/or having the registration statement declared effective for a period of not more than 180 days after receipt of the request
of the Initiating Holders; provided, however, that the Company may not utilize this right more than once in any twelve-month period. 

3

 

        (d)   In
addition, the Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to this Section 1.2 after the Company has
effected two (2) registrations pursuant to this Section 1.2 and such registrations have been declared or ordered effective. 

        1.3    Company Registration.    If (but without any obligation to do so) the Company proposes
to register (including for this purpose a registration effected by the Company for stockholders other than the Holders) any of its stock under the Securities Act in connection with the public offering
of such securities solely for cash (other than a registration relating to a Qualified IPO, a registration relating solely to the sale of securities to participants in a Company stock plan or a
transaction covered by Rule 145 under the Securities Act, a registration in which the only stock being registered is Common Stock issuable upon conversion of debt securities which are also
being registered, or any registration on any form which does not include substantially the same information as would be required to be included in a registration statement covering the sale of the
Registrable Securities), the Company shall, at such time, promptly give each Holder written notice of such registration. Upon the written request of each Holder given within 20 days after
mailing of such notice by the Company in accordance with Section 3.4, the Company shall, subject to the provisions of Section 1.8, cause to be registered under the Securities Act all of
the Registrable Securities that each such Holder has requested to be registered. 

        1.4    Form S-3 Registration.    

        (a)   In
case the Company shall receive from any Holder or Holders of Registrable Securities then outstanding a written request or requests that the Company effect a
registration on Form S-3 and any related qualification or compliance with respect to all or a part of the Registrable Securities owned by such Holder or Holders, the Company will: 

        (i)    promptly
give written notice of the proposed registration, and any related qualification or compliance, to all other Holders; and 

        (ii)   as
soon as practicable, effect such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Holder's or Holders' Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other
Holder or Holders joining in such request as are specified in a written request given within 15 days after receipt of such written notice from the Company; provided,
however, that the Company shall not be obligated to effect any such registration, qualification or compliance, pursuant to this Section 1.4: (A) if
Form S-3 is not available for such offering by the Holders; (B) if the Holders, together with the holders of any other securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public (net of any underwriters' discounts or commissions) of less than $1,000,000;
(C) if the Company shall furnish to the Holders a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would
be seriously detrimental to the Company and its stockholders for such Form S-3 Registration to be effected at such time, in which event the Company shall have the right to defer the
filing of the Form S-3 registration statement and/or have the registration statement declared effective for a period of not more than 120 days after receipt of the request of
the Holder or Holders under this Section 1.4; provided, however, that the Company shall not utilize this right more than once in any
12-month period; (D) if the Company has, within the 12-month period preceding the date of such request, already effected two registrations on Form S-3
for the Holders pursuant to this Section 1.4; (E) in any particular jurisdiction in which the 

4

 

Company
would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance; or (F) during the period
ending 180 days after the effective date of a registration statement subject to Section 1.3. 

        (b)   Subject
to the foregoing, the Company shall file a registration statement covering the Registrable Securities and other securities so requested to be registered
as soon as practicable after receipt of the request or requests of the Holders. Registrations effected pursuant to this Section 1.4 shall not be counted as demands for registration or
registrations effected pursuant to Sections 1.2 or 1.3, respectively. 

        1.5    Obligations of the Company.    Whenever required under this Section 1 to effect
the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible: 

        (a)   Prepare
and file with the SEC a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to
become effective, and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for up to 120 days, or until
the distribution described in such registration statement is completed, if earlier. 

        (b)   Prepare
and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as
may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement for up to 120 days, or until the
distribution described in such registration statement is completed, if earlier. 

        (c)   Furnish
to the Holders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such
other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them. 

        (d)   Use
its best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as
shall be reasonably requested by the Holders, provided that the Company shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any such states or jurisdictions. 

        (e)   In
the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing
underwriter of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement. 

        (f)    Notify
each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the
Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, such obligation to continue for
120 days. 

        (g)   Cause
all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange on which similar securities issued by the Company are then
listed. 

5

 

        (h)   Provide
a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number for all such Registrable Securities, in each case
not later than the effective date of such registration. 

        (i)    Use
its best efforts to furnish, at the request of any Holder requesting registration of Registrable Securities pursuant to this Section 1, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection with a registration pursuant to this Section 1, if such securities are being sold through underwriters, in a firm
commitment underwriting (i) an opinion, dated such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the underwriters and (ii) a letter dated such date, from the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters. 

        1.6    Furnish Information.    It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Section 1 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding
itself, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be required to effect the registration of such Holder's Registrable Securities. The
Company shall have no obligation with respect to any registration requested pursuant to Section 1.2 or Section 1.4 of this Agreement if, as a result of the application of the preceding
sentence, the number of shares or the anticipated aggregate offering price of the Registrable Securities to be included in the registration does not equal or exceed the number of shares or the
anticipated aggregate offering price required to originally trigger the Company's obligation to initiate such registration as specified in subsection 1.2(a) or subsection 1.4(b)(ii), whichever is
applicable. 

        1.7    Expenses of Registration.    All expenses other than underwriting discounts and
commissions incurred in connection with registrations, filings or qualifications pursuant to Sections 1.2, 1.3 and 1.4, including (without limitation) all registration, filing and qualification fees,
printers' and accounting fees, fees and disbursements of counsel for the Company, and the reasonable fees and disbursements of a single counsel for the selling Holders selected by them, shall be borne
by the Company. 

        1.8    Underwriting Requirements.    In connection with any offering involving an underwriting
of shares of the Company's capital stock, the Company shall not be required under Section 1.3 to include any of the Holders' securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected by it (or by other persons entitled to select the underwriters), and then only in such quantity as the underwriters
determine in their sole discretion will not jeopardize the success of the offering by the Company. If the total amount of securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities sold other than by the Company that the underwriters determine in their sole discretion is compatible with the success of the offering, then
the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters determine in their sole discretion will not
jeopardize the success of the offering (the securities so included to be apportioned pro rata among the selling stockholders according to the total number of shares of Common Stock entitled to be
included therein owned by each selling stockholder or in such other proportions as shall mutually be agreed to by such selling stockholders) but in no event shall (i) the amount of securities
of the selling Holders included in the offering be reduced below twenty five percent (25%) of the total number of shares of Common Stock included in such offering, unless such offering is the initial
public offering of the Company's Common Stock, in which case, the selling stockholders may be excluded if the underwriters make the determination 

6

 

described
above and no other stockholder's securities are included or (ii) any securities held by any other stockholder be included if any securities held by any selling Holder are excluded.
For purposes of the preceding parenthetical concerning apportionment, for any selling stockholder which is a holder of Registrable Securities and which is a partnership or corporation, the partners,
retired partners and stockholders of such holder, or the estates and family members of any such partners and retired partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single "selling stockholder," and any pro-rata reduction with respect to such "selling stockholder" shall be based upon the
aggregate number of shares of Common Stock (including convertible Preferred Stock on an as converted basis) carrying registration rights owned by all entities and individuals included in such "selling
stockholder," as defined in this sentence. 

        1.9    Delay of Registration.    No Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 1. 

        1.10    Indemnification.    In the event any Registrable Securities are included in a
registration statement under this Section 1: 

        (a)   To
the extent permitted by law, the Company will indemnify and hold harmless each Holder, any underwriter (as defined in the Securities Act) for such Holder and each
person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which
they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of
or are based upon any of the following statements, omissions or violations (collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement, including any preliminary prospectus, statutory or final prospectus contained therein or any amendments or supplements
thereto or Company issued free writing prospectuses (but excluding any free writing prospectuses not prepared by the Company), (ii) the omission or alleged omission to state therein a material
fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange
Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law; and the Company will pay to each such Holder, underwriter or
controlling person, as incurred, any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, or action;  provided, however, that the indemnity agreement contained in this subsection 1.10(a) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable to any Holder,
underwriter or controlling person for any such loss, claim, damage, liability, or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection with such registration by any such Holder, underwriter or controlling person. 

        (b)   To
the extent permitted by law, each selling Holder will indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the
registration statement, each person, if any, who controls the Company within the meaning of the Securities Act, any underwriter, any other Holder selling securities in such registration statement and
any controlling person of any such underwriter or other Holder, against any losses, claims, damages, or liabilities (joint or several) to which any of the foregoing persons may become subject, under
the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereto) arise out of or are 

7

 

based
upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will pay, as incurred, any legal or other expenses reasonably incurred by any person intended to be indemnified pursuant to this
subsection 1.10(b), in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 1.10(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the
consent of the Holder, which consent shall not be unreasonably withheld; provided,that in no event shall any indemnity under this subsection 1.10(b)
exceed the net proceeds from the offering received by such Holder, except in the case of willful fraud by such Holder. 

        (c)   Promptly
after receipt by an indemnified party under this Section 1.10 of notice of the commencement of any action (including any governmental action), such
indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 1.10, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly
noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with
all other indemnified parties which may be represented without conflict by one counsel) shall have the right to
retain one separate counsel, with the reasonable fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party
would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this Section 1.10, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 1.10. 

        (d)   If
the indemnification provided for in this Section 1.10 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to
any loss, liability, claim, damage or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable
by such indemnified party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand
and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense as well as any other relevant equitable
considerations; provided, that in no event shall any contribution by a Holder under this Subsection 1.10(d) exceed the net proceeds from the offering
received by such Holder, except in the case of willful fraud by such Holder. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party
and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. 

        (e)   Notwithstanding
the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection
with the 

8

 

underwritten
public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control. 

        (f)    The
obligations of the Company and Holders under this Section 1.10 shall survive the completion of any offering of Registrable Securities in a registration
statement under this Section 1, and otherwise. 

        1.11    Reports Under the Exchange Act.    With a view to making available to the Holders the
benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public
without registration or pursuant to a registration on Form S-3, the Company agrees to: 

        (a)   make
and keep public information available, as those terms are understood and defined in SEC Rule 144, at all times after 90 days after the effective date
of the first registration statement filed by the Company for the offering of its securities to the general public so long as the Company remains subject to the periodic reporting requirements under
Sections 13 or 15(d) of the Exchange Act; 

        (b)   take
such action, including the voluntary registration of its Common Stock under Section 12 of the Exchange Act, as is necessary to enable the Holders to utilize
Form S-3 for the sale of their Registrable Securities, such action to be taken as soon as practicable after the end of the fiscal year in which the first registration statement
filed by the Company for the offering of its securities to the general public is declared effective; 

        (c)   file
with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and 

        (d)   furnish
to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) a written statement by the Company that it has complied
with the reporting requirements of SEC Rule 144 (at any time after 90 days after the effective date of the first registration statement filed by the Company), the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at
any time after it so qualifies), (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such
other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC which permits the selling of any such securities without registration or pursuant to such
form. 

        1.12    Assignment of Registration Rights.    The rights to cause the Company to register
Registrable Securities pursuant to this Section 1 may be assigned (but only with all related obligations) by a Holder to a transferee or assignee (i) of at least twenty five percent
(25%) of the securities then held by the Holder, (ii) that is a subsidiary, parent, partner, limited partner, retired partner, member, retired member or stockholder of a Holder,
(iii) that is an affiliated fund or entity of the Holder, which means with respect to a limited liability company or a limited liability partnership, a fund or entity managed by the same
manager or managing member or general partner or management company or by an entity controlling, controlled by, or under common control with such manager or managing member or general partner or
management company (such a fund or entity, an "Affiliated Fund"), (iv) who is a Holder's child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law (such a relation, a Holder's "Immediate Family Member", which term
shall include adoptive relationships), or (v) that is a trust for the benefit of an individual Holder or such Holder's Immediate Family Member (collectively, the persons and entities listed in
Section 1.12 subparagraphs (ii), (iii), (iv) and (v) are referred to herein as an Investor's 

9

 

"Affiliates"), provided the Company is, within a reasonable time after such transfer, furnished with
written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned; and provided,
further, that such assignment shall be effective only if the transferee agrees to be bound by this Agreement and immediately following such transfer the further disposition of
such securities by the transferee or assignee is restricted under the Securities Act. For the purposes of determining the number of shares of Registrable Securities held by a transferee or assignee,
the holdings of transferees and assignees of (x) a partnership who are partners or retired partners of such partnership or (y) a limited liability company who are members or retired
members of such limited liability company (including Immediate Family Members of such partners or members who acquire Registrable Securities by gift, will or intestate succession) shall be aggregated
together and with the partnership or limited liability company; provided that all assignees and transferees who would not qualify individually for assignment of registration rights shall have a single
attorney-in-fact for the purpose of exercising any rights, receiving notices or taking any action under Section 1. 

        1.13    Limitations on Subsequent Registration Rights.    From and after the date of this
Agreement, the Company shall not, without the prior written consent of the Holders of a majority of the outstanding Registrable Securities then outstanding, enter into any agreement with any holder or
prospective holder of any securities of the Company which would allow such holder or prospective holder to include such securities in any registration filed under Section 1.2 hereof, unless
under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of his securities will not reduce the
amount of the Registrable Securities of the Holders which is included. 

        1.14    Lock-Up Agreement.    

        (a)    Lock-Up Period; Agreement.    In connection with the initial public
offering of the Company's securities and upon request of the Company or the underwriters managing such offering of the Company's securities, each Holder agrees not to sell, make any short sale of,
loan, grant any option for the purchase of, or otherwise dispose of any securities of the Company, however or whenever acquired (other than those included in the registration) without the prior
written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed 180 days) from the effective date of such registration as may be requested by the
Company or such managing underwriters and to execute an agreement reflecting the foregoing as may be requested by the underwriters at the time of the Company's initial public offering. 

        (b)    Limitations.    The obligations described in Section 1.14(a) shall apply only if
all officers and directors of the Company and all one-percent (1%) securityholders enter into similar agreements, and shall not apply to a registration relating solely to employee benefit
plans, or to a registration relating solely to a transaction pursuant to Rule 145 under the Securities Act. 

        (c)    Stop-Transfer Instructions.    In order to enforce the foregoing covenants,
the Company may impose stop-transfer instructions with respect to the securities of each Holder (and the securities of every other person subject to the restrictions in
Section 1.14(a)). 

        (d)    Transferees Bound.    Each Holder agrees that prior to the Company's initial public
offering it will not transfer securities of the Company unless each transferee agrees in writing to be bound by all of the provisions of this Section 1.14,  provided that this Section 1.14(d)
shall not apply to transfers pursuant to a registration statement or transfers after the 12-month
anniversary of the effective date of the Company's initial registration statement subject to this Section 1.14. 

10

 

        1.15    Termination of Registration Rights.    No Holder shall be entitled to exercise any
right provided for in this Section 1 after the earlier of (i) seven (7) years following the consummation of a Qualified IPO, (ii) such time as Rule 144 or another
similar exemption under the Securities Act is available for the sale of all of such Holder's shares at the same instance in a single transaction without registration or any other restrictions, or
(iii) upon termination of the Agreement, as provided in Section 3.1. 

        2.    Covenants of the Company.    

        2.1    Delivery of Financial Statements.    The Company shall deliver to each Holder of at
least 2,000,000 shares of Registrable Securities (subject to adjustment pursuant to any stock splits, stock dividends, recapitalizations and the like): 

        (a)   as
soon as practicable, but in any event within 180 days after the end of each fiscal year of the Company, an income statement for such fiscal year, a balance
sheet of the Company and statement of stockholder's equity as of the end of such year, and a statement of cash flows for such year, such year-end financial reports to be in reasonable
detail, prepared in accordance with generally accepted accounting principles ("GAAP"), and audited and certified by an independent public accounting
firm of nationally recognized standing selected by the Company; 

        (b)   as
soon as practicable, but in any event within 45 days after the end of each of the first three quarters of each fiscal year of the Company, an unaudited profit
or loss statement, a statement of cash flows for such fiscal quarter and an unaudited balance sheet as of the end of such fiscal quarter; 

        (c)   within
30 days of the end of each month, an unaudited income statement and a statement of cash flows and balance sheet for and as of the end of such month, in
reasonable detail; 

        (d)   as
soon as practicable, but in any event 30 days prior to the end of each fiscal year, a budget and business plan for the next fiscal year, prepared on a monthly
basis, an updated list of all stockholders of the Company that includes the name of each stockholder and the number and class of shares held by each stockholder, and, as soon as prepared, any other
budgets or revised budgets prepared by the Company; and 

        (e)   with
respect to the financial statements called for in subsections (b) and (c) of this Section 2.1, an instrument executed by the Chief Financial
Officer or President of the Company and certifying that such financials were prepared in accordance with GAAP consistently applied with prior practice for earlier periods (with the exception of
footnotes that may be required by GAAP) and fairly present in all material respects the financial condition of the Company and its results of operations for the period specified, subject to
year-end audit adjustment, provided that the foregoing shall not restrict the right of the Company to change its accounting principles consistent with GAAP, if the Board of Directors
determines that it is in the best interest of the Company to do so. 

        2.2    Inspection.    The Company shall permit each Holder, at such Holder's expense, to visit
and inspect the Company's properties, to examine its books of account and records and to discuss the Company's affairs, finances and accounts with its officers, all at such reasonable times as may be
requested by the Holder; provided, however, that the Company shall not be obligated pursuant to this Section 2.2 to provide access to any
information which it reasonably considers to be a trade secret or similar confidential information. 

        2.3    Right of First Offer.    Subject to the terms and conditions specified in this
Section 2.3, the Company hereby grants to each Investor a right of first offer with respect to future sales by the 

11

 

Company
of its Shares (as hereinafter defined). For purposes of this Section 2.3, Investor includes any of its Affiliates. An Investor who chooses to exercise the right of first offer may
designate as purchasers under such right itself or any of its Affiliates, in such proportions as it deems appropriate. Each time the Company proposes to offer any shares of, or securities convertible
into or exercisable for any shares of, any class of its capital stock ("Shares"), the Company shall first make an offering of such Shares to each
Investor in accordance with the following provisions: 

        (a)   The
Company shall deliver a notice (the "RFO Notice") to the Investors stating (i) its bona fide intention to
offer such Shares, (ii) the number of such Shares to be offered, and (iii) the price and terms, if any, upon which it proposes to offer such Shares. 

        (b)   Within
15 calendar days after delivery of the RFO Notice, each Investor may elect to purchase or obtain, at the price and on the terms specified in the RFO Notice, up to
that portion of such Shares which equals the proportion that the number of shares of Common Stock issued and held, or issuable upon conversion and exercise of all convertible or exercisable securities
then held, by such Investor bears to the sum of (A) the total number of shares of Common Stock then outstanding (assuming full conversion and exercise of all convertible or exercisable
securities) and (B) shares of Common Stock issuable to employees, consultants or directors pursuant to a stock option plan, restricted stock plan, or other stock plan approved by the Board of
Directors. Such purchase shall be completed at the same closing as that of any third party purchasers or at an additional closing thereunder. The Company shall promptly, in writing, inform each
Investor that purchases all the shares available to it (each, a "Fully Exercising Investor") of any other Investor's failure to do likewise. During the
10-day period commencing after receipt of such information, each Fully Exercising Investor shall be entitled to obtain that portion of the Shares for which Investors were entitled to
subscribe but which were not subscribed for by the Investors that is equal to the proportion that the number of shares of Common Stock issued and held, or issuable upon conversion and exercise of all
convertible or exercisable securities then held, by such Fully-Exercising Investor bears to the total number of shares of Common Stock then outstanding (assuming full conversion and exercise of all
convertible or exercisable securities). 

        (c)   The
Company may, during the 45 day period following the expiration of the period provided in subsection 2.3(b) hereof, offer the remaining unsubscribed portion of
the Shares to any person or persons at a price not less than, and upon terms no more favorable to the offeree than those specified in the RFO Notice. If the Company does not enter into an agreement
for the sale of the Shares within such period, or if such agreement is not consummated within 60 days of the execution thereof, the right provided hereunder shall be deemed to be revived and
such Shares shall not be offered unless first reoffered to the Investors in accordance herewith. 

        (d)   The
right of first offer in this Section 2.3 shall not be applicable to (i) up to 7,000,000 shares of Common Stock (as adjusted for stock splits, dividends
and the like) issued or issuable to employees, consultants, advisors or directors of the Company directly or pursuant to a stock option plan or restricted stock plan approved by the Board of Directors
of the Company (or a higher number of shares provided the Company obtains the unanimous consent of the Board of Directors), including at least one of the directors appointed by the holders of
Series B Preferred and at least one of the directors appointed by the holders of Series A Preferred; (ii) up to 2,000,000 shares of capital stock (as adjusted for stock splits,
dividends and the like), or options or warrants to purchase capital stock (x) issued in connection with strategic transactions involving the Company and other entities, including
(A) joint ventures, manufacturing, marketing or distribution arrangements or (B) technology transfer or development arrangements, or (y) issued to financial institutions or
lessors in connection with commercial credit arrangements, equipment financings, commercial property 

12

 

lease
transactions or similar transactions, the issuance of which, in each case, are approved by the Board of Directors, including at least one of the directors appointed by the holders of
Series B Preferred and at least one of the directors appointed by the holders of Series A Preferred; (iii) shares of Common Stock issued or issuable for or in connection with the
acquisition of all or a substantial portion of the assets or business of another entity by the Company pursuant to an agreement or arrangement approved by the Board of Directors, including at least
one of the directors appointed by the holders of Series B Preferred and at least one of the directors appointed by the holders of Series A Preferred; (iv) shares of Common Stock
issued or issuable upon conversion of or as a dividend or distribution on the Preferred Stock; (v) Common Stock issued pursuant to stock dividends, stock splits or similar transactions; and
(vi) capital stock issued upon the conversion or exercise of convertible or exercisable securities, including options and warrants, outstanding as of the date hereof. In addition to the
foregoing, the right of first offer in this Section 2.3 shall not be applicable with respect to any Investor and any subsequent securities issuance, if (i) at the time of such subsequent
securities issuance, the Investor is not an "accredited investor," as that term is then defined in Rule 501(a) under the Securities Act, and (ii) such subsequent securities issuance is
otherwise being offered only to accredited investors. 

        2.4    Qualified Small Business Stock Status.    In the event that the Company proposes to
take an action or engage in a transaction that would reasonably be expected to result in the shares being purchased under the Series A Purchase Agreement or Series B Purchase Agreement
no longer being "qualified small business stock" within the meaning of Section 1202(c) of the Internal Revenue Code of 1986, as amended (the
"Code"), the Company shall notify the Investors and consult in good faith to devise a mutually agreeable and reasonable alternative course of action or
transaction structure that would preserve such status. In addition, the Company shall submit to the Investors and to the Internal Revenue Service any reports that may be required under
Section 1202(d)(1)(C) of the Code and any related Treasury Regulations. In addition, within ten (10) days after any Investor has delivered to the Company a written request therefor, the
Company shall deliver to such Investor a written statement informing the Investor whether, in the Company's good-faith judgment after a reasonable investigation, such Investor's interest
in the Company constitutes "qualified small business stock" as defined in Section 1202(c) of the Code, or would constitute "qualified small business stock," if determination of whether stock
constitutes "qualified small business stock" were made by taking into account the modifications set forth in Section 1045(b)(4) of the Code. The Company's obligation to furnish a written
statement pursuant to this Section 2.4 shall continue notwithstanding the fact that a class of the Company's stock may be traded on an established securities market. 

        2.5    Vesting.    With respect to any shares issued or options or rights granted to
employees, consultants, directors or other service providers after the date hereof, unless otherwise approved by the consent of the Company's Board of Directors, including at least one of the
directors appointed by the holders of Series B Preferred and at least one of the directors appointed by the holders of Series A Preferred, the Company shall cause each employee,
consultant, director or other service provider of the Company to enter into an agreement providing for vesting of such shares or options or rights over forty-eight (48) months, with no shares
or options or rights being vested for twelve (12) months from the date of commencement of services in the case of stock or option grants for new hires, or the date of issuance or grant in the
case of subsequent stock or options grants, at which time 12/48ths of the shares or options or rights shall vest and 1/48th of such shares, options or rights shall vest monthly thereafter. Any options
providing for early exercise and any grant of restricted stock shall provide for a repurchase option so that upon termination of services of the stockholder, with or without cause, the Company or its
assignee (to the extent permissible under applicable securities laws) retains the option to repurchase at cost any unvested shares held by such stockholder. Unless otherwise approved by the unanimous
consent of (i) the 

13

 

members
of the Board of Directors elected by the holders of Preferred Stock pursuant to the Restated Certificate and (ii) the compensation committee of the Board of Directors, no option grant
nor any grant of restricted stock shall provide for any acceleration of vesting. Notwithstanding anything to the contrary herein, no such consent shall be required with respect to the acceleration of
vesting of options (A) in connection with a Corporate Transaction (as defined in the Company's 2003 Equity Incentive Plan) in which the options are not assumed, or (B) for the inclusion
in an option double trigger acceleration of vesting in connection with a change of control of the Company as permitted by the Company's 2003 Equity Incentive Plan. 

        2.6    Insurance.    The Company covenants that it has procured, and will continue to maintain
during the term hereof, a director and officer insurance policy in an amount no less than $2,000,000 and otherwise acceptable to the Investors, for each director and officer of the Company. 

        2.7    Patent, Copyright and Nondisclosure Agreement.    The Company shall require all
employees, officers and consultants to execute and deliver the Company's standard form of Patent, Copyright and Nondisclosure Agreement. 

        2.8    Non-employee Director Compensation and Expenses.    The Company shall
(i) provide all non-employee members of the Board of Directors with the same amount and form of consideration and (ii) reimburse each non-employee member of the
Board of Directors for reasonable out-of-pocket expenses incurred by such directors in connection with his or her attendance at meetings of the Board of Directors. 

        2.9    Qualified Small Business.    The Company covenants that so long as any of the Preferred
Stock, or the Common Stock into which such shares are converted, are held by a Holder (in whose hands such
shares are eligible to qualify as "qualified small business stock" as defined in Section 1202(c) of the Internal Revenue Code of 1986, as amended (the
"Code") ("Qualified Small Business Stock"), it will (i) comply with any applicable filing or
reporting requirements imposed by the Code on issuers of Qualified Small Business Stock and (ii) execute and deliver to such Holder, from time to time, such forms, documents, schedules and
other instruments as may be reasonably requested thereby to cause the Preferred Stock, or the Common Stock into which such shares are converted, to qualify as Qualified Small Business Stock and in
connection therewith, execute and deliver to such Holder, from time to time, such forms, documents, schedules and other instruments as may be reasonably requested by such Holder to cause such shares
of capital stock to qualify as Qualified Small Business Stock. 

        2.10    Independent Directors.    The Company covenants that it will use best efforts to
identify possible candidates to serve as independent directors on the Board of Directors following the date hereof. 

        2.11    Termination of Covenants.    

        (a)   The
covenants set forth in Sections 2.1 through Section 2.9 shall terminate as to each Holder and be of no further force or effect immediately prior to the
consummation of a Qualified IPO. 

        (b)   The
covenants set forth in Sections 2.1 and 2.2 shall terminate as to each Holder and be of no further force or effect when the Company first becomes subject to the
periodic reporting requirements of Sections 13 or 15(d) of the Exchange Act, if this occurs earlier than the events described in Section 2.11(a) above. 

        3.    Miscellaneous.    

        3.1    Termination.    This Agreement shall terminate automatically, and have no further force
and effect, upon the effective time, closing or consummation by the Company of a transaction or 

14

 

series
of related transactions deemed to be a Liquidation Transaction, as defined in the Restated Certificate. 

        3.2    Entire Agreement.    This Agreement constitutes the entire agreement between the
parties hereto pertaining to the subject matter hereof, and any and all other written or oral agreements relating to the subject matter hereof existing between the parties hereto are expressly
canceled. 

        3.3    Successors and Assigns.    Except as otherwise provided in this Agreement, the terms
and conditions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties (including transferees of any of the Preferred Stock
or any Common Stock issued upon conversion thereof). Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors
and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. 

        3.4    Amendments and Waivers.    Any term of this Agreement may be amended or waived only
with the written consent of the Company and the holders of at least sixty-six and two-thirds percent (662/3%) of the Registrable Securities then outstanding;  provided, however,
if such amendment or waiver would adversely affect the rights of a specific series of the Preferred Stock in a manner different from
the other series of the Preferred Stock, then such amendment or waiver shall require the consent of the Investors holding at least sixty-six and two-thirds percent
(662/3%) in interest of such series of Preferred Stock. Notwithstanding the foregoing, this Agreement may be amended with only the written consent of the Company for the sole purpose of
including additional purchasers of Preferred Stock as "Investors" and "Holders." Any amendment or waiver effected in accordance with this paragraph shall be binding upon each party to the Agreement,
whether or not such party has signed such amendment or waiver, each future holder of all such Registrable Securities, and the Company. 

        3.5    Notices.    Unless otherwise provided, any notice required or permitted by this
Agreement shall be in writing and shall be deemed sufficient upon delivery, when delivered personally or by overnight courier or sent by facsimile, or 48 hours after being deposited in the U.S.
mail, as certified or registered mail, with postage prepaid, and addressed to the party to be notified at such party's address or facsimile number as set forth on the signature
pages hereto or as subsequently modified by written notice. 

        3.6    Severability.    If one or more provisions of this Agreement are held to be
unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such
provision, then (a) such provision shall be excluded from this Agreement, (b) the balance of the Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms. 

        3.7    Governing Law.    This Agreement and all acts and transactions pursuant hereto shall be
governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of laws. 

        3.8    Counterparts.    This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same instrument. 

        3.9    Titles and Subtitles.    The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this Agreement. 

15

 

        3.10    Aggregation of Stock.    All shares of the Preferred Stock held or acquired by
affiliated entities or persons shall be aggregated together for the purpose of determining the availability of any rights under this Agreement. 

[Signature
Page Follows] 

16

        The parties have executed this AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT as of the date first above written. 

	 	 	COMPANY:
	

 	
 	
NOVACARDIA, INC., a Delaware corporation
	

 	
 	

By:	
 	

/s/ Randall E. Woods
    Randall E. Woods,

    Chief Executive Officer
	

 	
 	
LIGHTHOUSE:
	

 	
 	
Lighthouse Capital Partners V, L.P.
	

 	
 	

By:	
 	

Lighthouse Management Partners V, L.L.C., its general partner
	

 	
 	

By:	
 	

/s/ Darren Haggerty

	 	 	Name:	 	Darren Haggerty

	 	 	Title:	 	Director of Portfolio Analysis
 500 Drakes Landing Road

Greenbrae, CA 94904
	

 	
 	
INVESTORS:
	

 	
 	
SKYLINE VENTURE PARTNERS QUALIFIED PURCHASER FUND IV, L.P.
	

 	
 	

By:	
 	

Skyline Venture Management IV, LLC, its General Partner
	

 	
 	

By:	
 	

/s/ John Freund

	 	 	Name:	 	John Freund

	 	 	Its:	 	Managing Director

525 University Ave., Suite 520

Palo Alto, CA 94301
	
[SIGNATURE PAGE TO AMENDED AND RESTATED

INVESTORS' RIGHTS AGREEMENT]
	 	 	 	 	 

	 	 	SKYLINE VENTURE PARTNERS III, L.P.
	

 	
 	

By:	
 	

Skyline Venture Management III, LLC, its General Partner
	

 	
 	

By:	
 	

/s/ John Freund

	 	 	Name:	 	John Freund

	 	 	Its:	 	Managing Director

525 University Ave., Suite 520

Palo Alto, CA 94301
	

 	
 	
SKYLINE VENTURE PARTNERS QUALIFIED PURCHASER FUND III, L.P.
	

 	
 	

By:	
 	

Skyline Venture Management III, LLC, its General Partner
	

 	
 	

By:	
 	

/s/ John Freund

	 	 	Name:	 	John Freund

	 	 	Its:	 	Managing Director

525 University Ave., Suite 520

Palo Alto, CA 94301
	

 	
 	
INTERWEST PARTNERS IX, LP
	

 	
 	

By:	
 	

InterWest Management Partners IX, LLC, its General Partner
	

 	
 	

By:	
 	

/s/ Nina Kjellson
 Nina Kjellson

Venture Member

2710 Sand Hill Rd.

Second Floor

Menlo Park, CA 94025
	
[SIGNATURE PAGE TO AMENDED AND RESTATED

INVESTORS' RIGHTS AGREEMENT]
	 	 	 	 	 

	 	 	The Board of Trustees of the Leland Stanford Junior University (SBST-LS)
	

 	
 	

By:	
 	

/s/ Martina Poquet
 Martina Poquet, Director—Separate Investments

Stanford Management Company

2770 Sand Hill Road

Menlo Park, CA 94025
	

 	
 	
GC&H INVESTMENTS, LLC
	

 	
 	

By:	
 	

/s/ John L. Cardoza
 John L. Cardoza

Managing Member

101 California Street, 5th Floor

San Francisco, California 94111-5800
	

 	
 	
VP COMPANY INVESTMENTS 2004, LLC
	

 	
 	

By:	
 	

/s/ Alan C. Mendelson

	 	 	Name:	 	Alan C. Mendelson

	 	 	Title:	 	Managing Member
 555 West Fifth Street, Suite 800-Los Angeles, California 90013
	

 	
 	
MENDELSON FAMILY TRUST
	

 	
 	

By:	
 	

/s/ Alan C. Mendelson
 Alan Mendelson

Trustee

76 De Bell Drive

Atherton, California 94027
	
[SIGNATURE PAGE TO AMENDED AND RESTATED

INVESTORS' RIGHTS AGREEMENT]
	 	 	 	 	 

	 	 	DOMAIN PARTNERS V, L.P.
	

 	
 	

By:	
 	

One Palmer Square Associates V, L.L.C., its General Partner
	

 	
 	

By:	
 	

/s/ Lisa A. Kraeutler
 Lisa A. Kraeutler

Attorney in Fact

One Palmer Square, Suite 515

Princeton, New Jersey 08542
	

 	
 	
DP V ASSOCIATES, L.P.
	

 	
 	

By:	
 	

One Palmer Square Associates V, L.L.C., its General Partner
	

 	
 	

By:	
 	

/s/ Lisa A. Kraeutler
 Lisa A. Kraeutler

Attorney in Fact

One Palmer Square, Suite 515

Princeton, New Jersey 08542
	

 	
 	
FORWARD VENTURES V, L.P.
	

 	
 	

By:	
 	

Forward V Associates, LLC, its General Partner
	

 	
 	

By:	
 	

/s/ Stuart Collinson
 Stuart Collinson

Key Voting Member

Forward Ventures V, L.P.

9393 Towne Centre Drive, Suite 200

San Diego, CA 92121
	
[SIGNATURE PAGE TO AMENDED AND RESTATED

INVESTORS' RIGHTS AGREEMENT]
	 	 	 	 	 

	 	 	MONTREUX EQUITY PARTNERS II SBIC, L.P.
	

 	
 	

By:	
 	

Montreux Equity Management II, LLC, its General Partner
	

 	
 	

By:	
 	

/s/ Daniel K. Turner III
 Daniel K. Turner III

Managing Member

3000 Sand Hill Road, Suite 260

Menlo Park, CA 94025-7073
	

 	
 	
MONTREUX EQUITY PARTNERS III SBIC, L.P.
	

 	
 	

By:	
 	

Montreux Equity Management III, LLC, its General Partner
	

 	
 	

By:	
 	

/s/ Daniel K. Turner III
 Daniel K. Turner III

Managing Member

3000 Sand Hill Road, Suite 260

Menlo Park, CA 94025-7073
	

 	
 	
VERSANT VENTURE CAPITAL II, L.P.
	

 	
 	

By:	
 	

Versant Ventures II, L.L.C., its General Partner
	

 	
 	

By:	
 	

/s/ Camille Samuels Pearson
 Camille Samuels Pearson

Managing Director

3000 Sand Hill Road

Building 4, Suite 210

Menlo Park, CA 94025
	
[SIGNATURE PAGE TO AMENDED AND RESTATED

INVESTORS' RIGHTS AGREEMENT]
	 	 	 	 	 

	 	 	VERSANT AFFILIATES FUND II-A, L.P.
	

 	
 	

By:	
 	

Versant Ventures II, L.L.C., its General Partner
	

 	
 	

By:	
 	

/s/ Camille Samuels Pearson
 Camille Samuels Pearson

Managing Director

3000 Sand Hill Road

Building 4, Suite 210

Menlo Park, CA 94025
	

 	
 	
VERSANT SIDE FUND II, L.P.
	

 	
 	

By:	
 	

Versant Ventures II, L.L.C., its General Partner
	

 	
 	

By:	
 	

/s/ Camille Samuels Pearson
 Camille Samuels Pearson

Managing Director

3000 Sand Hill Road

Building 4, Suite 210

Menlo Park, CA 94025
	

 	
 	
WINDAMERE II, LLC
	

 	
 	

By:	
 	

/s/ Scott Glenn
 Scott Glenn

Title: Managing Member

6402 Cardeno Drive

La Jolla, CA 92037
	
[SIGNATURE PAGE TO AMENDED AND RESTATED

INVESTORS' RIGHTS AGREEMENT]

	 	 	WINDAMERE III, LLC
	

 	
 	

By:	
 	

/s/ Scott Glenn
 Scott Glenn

Title: Managing Member

6402 Cardeno Drive

La Jolla, CA 92037

[SIGNATURE PAGE TO AMENDED AND RESTATED

INVESTORS' RIGHTS AGREEMENT]

EXHIBIT A  

Series A Holders

Domain
Partners V, L.P. 

DP
V Associates, L.P. 

Forward
Ventures V, L.P. 

Montreux
Equity Partners II SBIC, L.P. 

Montreux
Equity Partners III SBIC, L.P. 

Versant
Venture Capital II, L.P. 

Versant
Affiliates Fund II-A, L.P. 

Versant
Side Fund II, L.P. 

Windamere
II, LLC 

Windamere
III, LLC 

EXHIBIT B  

Series B Holders

Skyline
Venture Partners Qualified Purchaser Fund IV, L.P. 

Skyline
Venture Partners III, L.P. 

Skyline
Venture Partners Qualified Purchaser Fund III, L.P. 

InterWest
Partners IX, LP 

The
Board of Trustees of the Leland Stanford Junior University (SBST-LS) 

GC&H
Investments, LLC 

VP
Company Investments 2004, LLC 

Mendelson
Family Trust 

Domain
Partners V, L.P. 

DP
V Associates, L.P. 

Forward
Ventures V, L.P. 

Montreux
Equity Partners II SBIC, L.P. 

Montreux
Equity Partners III SBIC, L.P. 

Versant
Venture Capital II, L.P. 

Versant
Affiliates Fund II-A, L.P. 

Versant
Side Fund II, L.P. 

Windamere
III, LLC 

QuickLinks

Exhibit 4.7QuickLinks
 -- Click here to rapidly navigate through this document
  

 
 

Exhibit 10.2    
    

NOVACARDIA, INC.  

2003 EQUITY INCENTIVE PLAN  

ADOPTED: AUGUST 14, 2003

APPROVED BY STOCKHOLDERS: AUGUST 15, 2003  

AMENDMENT AND RESTATEMENT APPROVED BY BOARD OF DIRECTORS: JULY 12, 2005

AMENDMENT AND RESTATEMENT APPROVED BY STOCKHOLDERS: JULY 27, 2005

AMENDMENT APPROVED BY THE BOARD OF DIRECTORS AND STOCKHOLDERS: SEPTEMBER 18, 2006

AMENDMENT APPROVED BY THE BOARD OF DIRECTORS AND STOCKHOLDERS MARCH 20, 2007  

TERMINATION DATE: JULY 12, 2015  

1.    PURPOSES.    

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

        (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) Restricted Stock Awards, (iv) Stock Appreciation Rights and (v) stock bonuses. 

        (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)   "Capitalization Adjustment" has the meaning ascribed to that term in Section 11(a). 

        (d)   "Cause" means, with respect to a particular Participant, the occurrence of any of the following:
(i) such Participant's conviction of any felony or any crime involving fraud; (ii) such Participant's participation (whether by affirmative act or omission) in a fraud or 

1

 

felonious
act against the Company and/or its Affiliates; (iii) such Participant's violation of any statutory or fiduciary duty, or duty of loyalty owed to the Company and/or its Affiliates and
which has a material adverse effect on the Company and/or its Affiliates; (iv) such Participant's violation of state or federal law in connection with such Participant's performance of such
Participant's job; (v) breach of any material term of any contract between such Participant and the Company and/or its Affiliates; and (vi) such Participant's violation of any material
Company policy. Notwithstanding the foregoing, such Participant's death or Disability shall not constitute Cause as set forth herein. The determination that a termination is for Cause shall be made by
the Board or Committee, as applicable, in its sole and exclusive judgment and discretion. 

        (e)   "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 shall not be deemed to occur (A) on account of the acquisition of securities of the Company by any institutional investor, any affiliate thereof or any other Exchange Act
Person that acquires the Company's securities in a transaction or series of related transactions that are primarily a private financing transaction for the Company or (B) 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 shall be deemed to occur; 

        (ii)   there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company if,
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; 

        (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; or 

        (iv)  there is consummated a sale, lease, license or other disposition of all or substantially all of the consolidated assets
of the Company and its Subsidiaries, other than a sale, 

2

 

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 proportion as their Ownership of the Company immediately prior to such sale, lease, license or
other disposition.. 

        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. 

        Notwithstanding
the foregoing or any other provision of this Plan, 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 Stock Awards subject to such agreement (it being understood, 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). 

        (f)    "Code" means the Internal Revenue Code of 1986, as amended. 

        (g)   "Committee" means a committee of one (1) or more members of the Board appointed by the
Board in accordance with Section 3(c). 

        (h)   "Common Stock" means the common stock of the Company. 

        (i)    "Company" means NovaCardia, Inc., a Delaware corporation. 

        (j)    "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) serving as a member of the board of directors of an Affiliate who is compensated for such
services. However, the term "Consultant" shall not include Directors who are not compensated by the Company for their services as Directors, and the payment of a fee by the Company for services which
the Board determines in its sole discretion are services as a Director, shall not cause a Director to be considered a "Consultant" for purposes of the Plan. 

        (k)   "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,
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 service with the Company or
an Affiliate, shall not terminate a Participant's Continuous Service. For example, a change in status from an Employee of the Company to a Consultant of an Affiliate, or to a Director shall 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. Notwithstanding the foregoing, a leave of absence shall be
treated as Continuous Service for purposes of vesting 

3

 

in
a Stock Award only to such extent as may be provided in the Company's leave of absence policy or in the written terms of the Participant's leave of absence. 

        (l)    "Corporate Transaction" means the occurrence, 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 discretion, of the
consolidated assets of the Company and its Subsidiaries; 

        (ii)   a sale or other disposition of at least ninety percent (90%) 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. 

        (m)  "Director" means a member of the Board. 

        (n)   "Disability" means 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 because of the sickness or injury of the person. 

        (o)   "Employee" means any person employed by the Company or an Affiliate. Service as a Director, or
payment of a fee by the Company for services which the Board determines in its sole discretion are services as a Director or as a member of the Board of Directors of an Affiliate, shall not be
sufficient to constitute "employment" by the Company or such Affiliate. 

        (p)   "Entity" means a corporation, partnership or other entity. 

        (q)   "Exchange Act" means the Securities Exchange Act of 1934, as amended. 

        (r)   "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" shall not include (A) the Company or any Subsidiary of the Company, (B) 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, (C) an
underwriter temporarily holding securities pursuant to an offering of such securities, or (D) 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. 

4

 

        (s)   "Fair Market Value" means, as of any date, the value of the Common Stock determined by the Board
in good faith and in a manner consistent with Section 260.140.50 of Title 10 of the California Code of Regulations. 

        (t)    "Incentive Stock Option" means an option to purchase shares of Common Stock, which option is
intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder. 

        (u)   "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 the provisions of Section 25100(o) of the California Corporate Securities Law of 1968. 

        (v)   "Nonstatutory Stock Option" means an option to purchase shares of Common Stock, which option is
not intended to qualify as an Incentive Stock Option. 

        (w)  "Officer" means any person designated by the Company as an officer. 

        (x)   "Option" means an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant to the
Plan. 

        (y)   "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. 

        (z)   "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. 

        (aa) A person or Entity shall 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. 

        (bb) "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. 

        (cc) "Plan" means this NovaCardia, Inc. 2003 Equity Incentive Plan. 

        (dd) "Restricted Stock Award" means an award of shares of Common Stock, which is granted pursuant to
the terms and conditions of Section 7(b). 

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

5

 

        (ff)  "Stock Appreciation Right" means a right to receive the appreciation of Common Stock, which is
granted pursuant to the terms and conditions of Section 7(c). 

        (gg) "Stock Award" means any right granted under the Plan, including an Option, a Restricted Stock
Award, a Stock Appreciation Right or a stock bonus. 

        (hh) "Stock Award Agreement" means a written agreement between the Company and a Participant
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. 

        (ii)   "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 shall 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 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%). 

        (jj)  "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. 

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 Section 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 from time to time which of the persons eligible under the Plan shall be granted Stock Awards; when and how
each Stock Award shall be granted; what type or combination of types of Stock Award shall be granted; the provisions of each Stock Award granted (which need not be identical), including the time or
times when a person shall be permitted to receive Common Stock pursuant to a Stock Award; and the number of shares of Common Stock with respect to which a Stock Award shall be granted to each such
person. 

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

        (iii) To effect, at any time and from time to time, with the consent of any adversely affected Optionholders, (1) the
reduction in the exercise price of any outstanding 

6

 

Options
under the Plan, or (2) the cancellation of any outstanding Options under the Plan and the grant in substitution therefor of new Options under the Plan or another equity plan of the
Company covering the same or a different numbers of shares of Common Stock, or (3) any other action that is treated as a repricing under generally accepted accounting principles. The exercise
price per share of Common Stock shall be not less than that specified under the Plan for newly
granted Stock Awards except that the Board may grant an Option with a lower exercise price if such Option is granted as part of a transaction to which Section 424(a) of the Code applies. 

        (iv)  To amend the Plan or a Stock Award as provided in Section 12. 

        (v)   To terminate or suspend the Plan as provided in Section 13. 

        (vi)  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. 

        (c)   Delegation to Committee. 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. 

        (d)   Delegation of an Officer. The Board may delegate to one or more Officers of the Company the authority to do one or both
of the following: (i) designate Officers and Employees of the Company or any of its Subsidiaries to be recipients of Stock Awards and (ii) determine the number of shares of Common Stock
to be subject to such Stock Awards granted to such Officers and Employees of the Company; provided, however, that the Board resolutions regarding such
delegation shall specify the total number of shares of Common Stock that may be subject to the Stock Awards granted by such Officer and that such Officer may not grant a Stock Award to himself or
herself. Notwithstanding the foregoing, the Board may not delegate authority to an Officer to determine the Fair Market Value of the Common Stock. 

        (e)   Effect of Board's Decision. All determinations, interpretations and constructions made by the Board 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 11(a) relating to Capitalization Adjustments, the Common Stock
that may be issued pursuant to Stock Awards shall not exceed in the aggregate nine million five hundred thousand (9,500,000) shares of Common Stock. 

7

 

        (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, or if any shares of Common Stock issued to a Participant pursuant to a Stock Award are forfeited back to or repurchased by the Company, including,
but not limited to, any repurchase or forfeiture caused by the failure to meet a contingency or condition required for the vesting of such shares, then the shares of Common Stock not acquired under
such Stock Award shall revert to and again become available for issuance under the Plan. If any shares subject to a Stock Award are not delivered to a Participant because such shares are withheld for
the payment of taxes or the Stock Award is exercised through a reduction of shares subject to the Stock Award (i.e., "net exercised"), then the number of shares that are not delivered shall revert to
and again become available for issuance under the Plan. If the exercise price of any Stock Award is satisfied by tendering shares of Common Stock held by the Participant (either by actual delivery or
attestation), then the number of such tendered shares shall revert to and again become available for issuance under the Plan. Notwithstanding the foregoing and subject to the provisions of
Section 11(a) relating to Capitalization Adjustments, the aggregate number of shares of Common Stock that may be issued as Incentive Stock Options shall be nine million (9,000,000)
shares of Common Stock. 

        (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. 

        (d)   Share Reserve Limitation. To the extent required by Section 260.140.45 of Title 10 of the California Code
of Regulations, the total number of shares of Common Stock issuable upon exercise of all outstanding Options and the total number of shares of Common Stock provided for under any stock bonus or
similar plan of the Company shall not exceed the applicable percentage as calculated in accordance with the conditions and exclusions of Section 260.140.45 of Title 10 of the California
Code of Regulations, based on the shares of Common Stock of the Company that are outstanding at the time the calculation is made. 

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.

        (i)    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 on the date of grant and the Option is not exercisable after the expiration of five (5) years from the
date of grant. 

8

 

        (ii)   A Ten Percent Stockholder shall not be granted a Nonstatutory Stock Option or Stock Appreciation Right unless the
exercise price of such Option or the purchase price of the Common Stock issuable upon exercise of such Stock Appreciation Right is at least (i) one hundred ten percent (110%) of the Fair Market
Value of the Common Stock on the date of grant or (ii) such lower percentage of the Fair Market Value of the Common Stock on the date of grant as is permitted by Section 260.140.41 of
Title 10 of the California Code of Regulations at the time of the grant of the Option or Stock Appreciation Right. 

        (iii) A Ten Percent Stockholder shall not be granted a Restricted Stock Award or stock bonus award unless the purchase price
(or the value of the past services provided in consideration) of the Common Stock issuable upon exercise of such Stock Award is at least (i) one hundred percent (100%) of the Fair Market
Value of the Common Stock on the date of grant or (ii) such lower percentage of the Fair Market Value of the Common Stock on the date of grant as is permitted by Section 260.140.42 of
Title 10 of the California Code of Regulations at the time of the grant of the Stock Award. 

        (c)   Consultants. 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 because of some other provision of 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. 

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 shall 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 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. 

9

 

        (c)   Exercise Price of a Nonstatutory Stock Option. Subject to the provisions of Section 5(b) regarding Ten Percent
Stockholders, the exercise price of each Nonstatutory Stock Option shall be not less than eighty-five percent (85%) 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 at the time the Option is exercised, (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. 

        In
the case of any deferred payment arrangement, interest shall be compounded at least annually and shall be charged at the minimum rate of interest necessary to avoid (1) the
treatment as interest, under any applicable provisions of the Code, of any amounts other than amounts stated to be interest under the deferred payment arrangement and (2) adverse financial
accounting treatment of the Option. 

        (e)   Transferability of an Incentive Stock Option. An Incentive Stock Option shall not be transferable except by will or by
the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering
written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option. 

        (f)    Transferability of a Nonstatutory Stock Option. A Nonstatutory Stock Option shall not be transferable except by will or
by the laws of descent and distribution and, to the extent provided in the Option Agreement, to such further extent as permitted by Section 260.140.41(d) of Title 10 of the California
Code of Regulations at the time of the grant of the Option, and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. If the Nonstatutory Stock Option does not provide
for transferability, then the Nonstatutory Stock Option shall not be transferable except by will or by the laws of descent and 

10

 

distribution
and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the
Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option. 

        (g)   Vesting Generally. 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 Section 6(g) are subject to any Option
provisions governing the minimum number of shares of Common Stock as to which an Option may be exercised. 

        (h)   Minimum Vesting. Notwithstanding the foregoing Section 6(g), to the extent that the following restrictions on
vesting are required by Section 260.140.41(f) of Title 10 of the California Code of Regulations at the time of the grant of the Option, then: 

        (i)    Options granted to an Employee who is not an Officer, Director or Consultant shall provide for vesting of the total
number of shares of Common Stock at a rate of at least twenty percent (20%) per year over five (5) years from the date the Option was granted, subject to reasonable conditions such as
Continuous Service; and 

        (ii)   Options granted to Officers, Directors or Consultants may be made fully exercisable at any time or during any period
established by the Company, subject to reasonable conditions such as Continuous Service. 

        (i)    Termination of Continuous Service. In the event that an Optionholder's Continuous Service terminates (for reasons other
than Cause or 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 expiration of the term of the Option as set forth in the Option Agreement, or (ii) the date three
(3) months following the termination of the Optionholder's Continuous Service (or such longer or shorter period specified in the Option Agreement, which period shall not be less than
thirty (30) days unless such termination is for Cause). If, after termination of Continuous Service, the Optionholder does not exercise his or her Option within the time specified herein, the
Option shall terminate. 

        (j)    Extension of Termination Date. An Optionholder's Option Agreement may (but need not) provide that if the exercise of the
Option following the termination of the Optionholder's Continuous Service (for reasons other than Cause or 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 as set forth in the Option Agreement or (ii) the expiration of a period of three (3) months 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. 

11

   
        (k)   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 of Continuous
Service), but only within such period of time ending on the earlier of (i) the expiration of the term of the Option as set forth in the Option Agreement, or (ii) the date twelve
(12) months following such termination of Continuous Service (or such longer or shorter period specified in the Option Agreement, which period shall not be less than six (6) months). If,
after termination of Continuous Service, the Optionholder does not exercise his or her Option within the time specified herein or in the Option Agreement (as applicable), the Option shall terminate. 

        (l)    Death of Optionholder.    In the event that (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 pursuant to Section 6(e) or 6(f), but only
within the period ending on the earlier of (1) the date eighteen (18) months following the date of death (or such longer or shorter period specified in the Option Agreement, which period
shall not be less than six (6) months) or (2) the expiration of the term of such Option as set forth in the Option Agreement. If, after the Optionholder's death, the Option is not
exercised within the time specified herein, the Option shall terminate. 

        (m)  Termination for Cause.    In the event an Optionholder's Continuous Service is terminated for Cause, the Option
shall terminate upon the termination date of such Optionholder's Continuous Service and the Optionholder is prohibited from exercising his or her Option as of the time of such termination. 

        (n)   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 Section 10(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. The Company will not exercise its repurchase option until at least six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial
accounting purposes) have elapsed following exercise of the Option unless the Board otherwise specifically provides in the Option. 

        (o)   Right of Repurchase.    Subject to the "Repurchase Limitation" in Section 10(h), the Option may, but
need not, include a provision whereby the Company may elect to repurchase all or any part of the vested shares of Common Stock acquired by the Optionholder pursuant to the exercise of the Option.
Provided that the "Repurchase Limitation" in Section 10(h) is not violated, the Company will not exercise its repurchase option until at least six (6) months (or such longer or shorter
period of time required to avoid a charge to earnings for financial accounting purposes) have elapsed following exercise of the Option unless otherwise specifically provided in the Option. 

12

 

        (p)   Right of First Refusal.    The Option may, but need not, include a provision whereby the Company may elect 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 Section 6(p) or in the Stock Award Agreement for the Option, such right of first refusal shall otherwise comply with any applicable provisions of the Bylaws
of the Company. The Company will not exercise its right of first refusal until at least six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for
financial accounting purposes) have elapsed following exercise of the Option unless otherwise specifically provided in the Option. 

7.    PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.    

        (a)   Stock Bonus Awards.    Each Stock Award Agreement for a stock bonus shall be in such form and shall contain
such terms and conditions as the Board shall deem appropriate. The terms and conditions of such Stock Award Agreements may change from time to time, and the terms and conditions of Stock Award
Agreements for separate stock bonuses need not be identical, but each Stock Award Agreement for a stock bonus 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. 

        (ii)   Vesting.    Subject to Section 10(h), shares of Common Stock acquired under the stock bonus agreement
may, but need not, be subject to a share reacquisition 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.    In the event that a Participant's Continuous Service
terminates, the Company may reacquire, for no consideration, any or all of the shares of Common Stock held by the Participant that have not vested as of the date of termination under the terms of the
Stock Award Agreement for the stock bonus. 

        (iv)  Transferability.    Rights to acquire shares of Common Stock under the Stock Award Agreement for a stock bonus
shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Participant only by the Participant. 

        (b)   Restricted Stock Awards.    Each Stock Award Agreement for a Restricted Stock Award shall be in such form and
shall contain such terms and conditions as the Board shall deem appropriate. The terms and conditions of Stock Award Agreements for Restricted Stock Awards may change from time to time, and the terms
and conditions of Stock Award Agreements for separate Restricted Stock Awards need not be identical, but each such Stock Award Agreement 

13

 

shall
include (through incorporation of provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions: 

        (i)    Purchase Price.    At the time of grant of a Restricted Stock Award, the Board will determine the price to be
paid by the Participant for each share subject to the Restricted Stock Award. Subject to the provisions of Section 5(b) regarding Ten Percent Stockholders, the purchase price of Restricted
Stock Awards shall not be less than eighty-five percent (85%) of the Common Stock's Fair Market Value on the date such award is made or at the time the purchase is consummated. 

        (ii)   Consideration.    At the time of the grant of a Restricted Stock Award, the Board will determine the
consideration permissible for the payment of the purchase price of the Restricted Stock Award. The purchase price of Common Stock acquired pursuant to the Stock Award Agreement for the Restricted
Stock Award shall be paid either: (i) in cash at the time of purchase; (ii) at the discretion of the Board, according to a deferred payment or other similar arrangement with the
Participant; (iii) by services rendered or to be rendered to the Company; or (iii) in any other form of legal consideration that may be acceptable to the Board in its discretion;  provided, however, that at any time that the Company is incorporated in Delaware, then payment of the Common Stock's "par value," as defined in the
Delaware General Corporation Law, shall not be made by deferred payment and must be paid in a form of consideration that is permissible under the Delaware General Corporation Law. 

        (iii) Vesting.    Subject to Section 10(h), shares of Common Stock acquired under the restricted stock
purchase 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. 

        (iv)  Termination of Participant's Continuous Service.    Subject to Section 10(h), in the event that 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 that have not vested as of the date of
termination under the terms of the Stock Award Agreement for the Restricted Stock Award. The Company will not exercise its repurchase option until at least six (6) months (or such longer or
shorter period of time required to avoid a charge to earnings for financial accounting purposes) have elapsed following the purchase of the restricted stock unless otherwise determined by the Board or
provided in the Restricted Stock Award agreement. 

        (v)   Transferability.    Rights to acquire shares of Common Stock under the Stock Award Agreement for a Restricted
Stock Award shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Participant only by the Participant. 

        (c)   Stock Appreciation Rights.    Each Stock Award Agreement for a Stock Appreciation Right shall be in such form
and shall contain such terms and conditions as the Board shall deem appropriate. The terms and conditions of such Stock Award Agreements may change from time to time, and the terms and conditions of
Stock Award Agreements for separate 

14

 

Stock
Appreciation Rights need not be identical, but each such Stock Award Agreement shall include (through incorporation of the provisions hereof by reference in the agreement or otherwise) the
substance of each of the following provisions: 

        (i)    Calculation of Appreciation.    Each Stock Appreciation Right will be denominated in shares of Common Stock
equivalents. The appreciation distribution payable on the exercise of a Stock Appreciation Right 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 Stock Appreciation Right) of a number of shares of Common Stock equal to the number of share of Common Stock equivalents in which the Participant is vested under
such Stock Appreciation Right and with respect to which the Participant is exercising the Stock Appreciation Right on such date, over (B) an amount that will be determined by the Committee at
the time of grant of the Stock Appreciation Right (subject to the provisions Section 5(b) regarding Ten Percent Stockholders). 

        (ii)   Vesting.    At the time of the grant of a Stock Appreciation Right, the Board may impose such restrictions or
conditions to the vesting of such Stock Appreciation Right as it deems appropriate; provided, however, that a Stock Appreciation Right that could be settled in shares of Common Stock shall be subject
to the provision of Section 10(h). 

        (iii) Exercise.    To exercise any outstanding Stock Appreciation Right, the Participant must provide written
notice of exercise to the Company in compliance with the provisions of the Stock Award Agreement evidencing such Stock Appreciation Right. 

        (iv)  Payment.    The appreciation distribution in respect of a Stock Appreciation Right may be paid in Common
Stock, in cash, or any combination of the two, as the Board deems appropriate. 

        (v)   Termination of Continuous Service.    If a Participant's Continuous Service terminates for any reason, any
unvested Stock Appreciation Rights shall be forfeited and any vested Stock Appreciation Rights shall be automatically redeemed. 

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 

15

 

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. 

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.    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.    No Participant shall 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 such Stock Award unless and until such Participant has satisfied all requirements for exercise of the Stock Award pursuant to its terms. 

        (c)   No Employment or other Service Rights.    Nothing in the Plan or any Stock Award Agreement or other 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. 

        (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 that exceed such limit (according to the order in which they were granted) shall be treated as
Nonstatutory Stock Options, notwithstanding any contrary provision of the applicable Option Agreement(s). 

        (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 

16

 

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 representing Common Stock 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 such
lower amount as may be necessary to avoid adverse financial accounting treatment); or (iii) delivering to the Company owned and unencumbered shares of Common Stock. 

        (g)   Information Obligation.    To the extent required by Section 260.140.46 of Title 10 of the California
Code of Regulations, the Company shall deliver financial statements to Participants at least annually. This Section 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 in favor of the Company shall be specified in the
Stock Award Agreement, and the repurchase price may be either the Fair Market Value of the shares of Common Stock on the date of termination of Continuous Service or the lower of (i) the Fair
Market Value of the shares of Common Stock on the date of repurchase or (ii) their original purchase price. To the extent required by Section 260.140.41 and Section 260.140.42 of
Title 10 of the California Code of Regulations at the time a Stock Award is made, any repurchase option applicable to a Stock Award granted to a person who is not an Officer, Director or Consultant
shall be upon the terms described below: 

        (i)    Fair Market 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 Market 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 exercisable for cash or cancellation of purchase money indebtedness for the shares of Common Stock within ninety (90) days of 

17

 

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 ninety (90) days after the date of the
exercise) or such longer period as may be agreed to by the Company and the Participant (for example, for purposes of satisfying the requirements of Section 1202(c)(3) of the Code regarding
"qualified small business stock") and (ii) the right to repurchase shall terminate on the Listing Date for the Common Stock. 

        (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 (x) 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 subject to such Stock Award 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 (y) the right to repurchase shall be exercised for cash or cancellation of purchase money indebtedness for the shares of Common Stock within ninety
(90) days 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 ninety (90) days after the
date of the exercise) or such longer period as may be agreed to by the Company and the Participant (for example, for purposes of satisfying the requirements of Section 1202(c)(3) of the Code
regarding "qualified small business stock"). 

11.    ADJUSTMENTS UPON CHANGES IN STOCK.    

        (a)   Capitalization Adjustments.    If any change is made in, or other event occurs with respect to, 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 (each a "Capitalization Adjustment")), the Plan will be appropriately adjusted in the class(es) and maximum
number of securities subject to the Plan pursuant to Sections 4(a) and 4(b), 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. (Notwithstanding the foregoing, 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 the completion of such dissolution or liquidation, and shares of Common Stock subject to the Company's repurchase option may (but need
not) be repurchased by the Company notwithstanding the fact that the holder of such stock is still in Continuous Service. 

        (c)   Corporate Transaction.    In the event of a Corporate Transaction, any surviving corporation or acquiring
corporation may (but need not) assume or continue any or all Stock Awards outstanding under the Plan or may (but need not) substitute similar stock awards for Stock Awards outstanding under the Plan
(including an award to acquire the same consideration 

18

 

paid
to the stockholders or the Company, as the case may be, pursuant to the Corporate Transaction), and any reacquisition or repurchase rights held by the Company in respect of Common Stock issued
pursuant to Stock Awards may be assigned by the Company to the successor of the Company (or such successor's parent company), if any, in connection with such Corporate Transaction. In the event that
any surviving corporation or acquiring corporation does not assume or continue any or all such outstanding Stock Awards or substitute similar stock awards for such outstanding Stock Awards, then with
respect to Stock Awards that have not been assumed, continued or substituted and that are held by Participants whose Continuous Service has not terminated prior to the effective time of the Corporate
Transaction, the vesting of such Stock Awards (and, if applicable, the time at which such Stock Awards may be exercised) shall (contingent upon the effectiveness of the Corporate Transaction) be
accelerated in full 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 time of the Corporate Transaction), the Stock Awards shall terminate if not exercised (if applicable) at or prior to such effective time, and any reacquisition
or repurchase rights held by the Company with respect to such Stock Awards held by Participants whose Continuous Service has not terminated shall (contingent upon the effectiveness of the Corporate
Transaction) lapse. With respect to any other Stock Awards outstanding under the Plan that have not been assumed, continued or substituted, the vesting of such Stock Awards (and, if applicable, the
time at which such Stock Award may be exercised) shall not be accelerated, unless otherwise provided in a written agreement between the Company or any Affiliate and the holder of such Stock Award, and
such Stock Awards shall terminate if not exercised (if applicable) prior to the effective time of the Corporate Transaction. 

        (d)   Change in Control.    A Stock Award held by any Participant whose Continuous Service has not terminated prior
to the effective time of a Change in Control may be subject to additional acceleration of vesting and exercisability upon or after such event 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 shall occur. 

12.    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 11(a) relating to Capitalization Adjustments, 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. 

        (b)   Stockholder Approval.    The Board, in its sole discretion, may submit any other amendment to the Plan for
stockholder approval. 

        (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. 

19

 

        (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. 

13.    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. 

14.    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. 

15.    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. 

20

  

 
 

NOVACARDIA, INC.
  2003 EQUITY INCENTIVE PLAN    
    

STOCK OPTION AGREEMENT

(INCENTIVE STOCK OPTION OR NONSTATUTORY STOCK OPTION)  

Pursuant
to your Stock Option Grant Notice ("Grant Notice") and this Stock Option Agreement, NovaCardia, Inc. (the "Company") has granted you an option under its 2003 Equity Incentive Plan (the
"Plan") to purchase the number of shares of the Company's Common Stock indicated in your Grant Notice at the exercise price indicated in your Grant Notice. Capitalized terms not explicitly defined in
this Stock Option Agreement but defined in the Plan shall have the same definitions as in the Plan. 

The
details of your option are as follows: 

        1.    VESTING.    Subject to the limitations contained herein, your
option will vest as provided in your Grant Notice, provided that vesting will cease upon the termination of your Continuous Service. 

        2.    NUMBER OF SHARES AND EXERCISE PRICE.    The number of shares of
Common Stock subject to your option and your exercise price per share referenced in your Grant Notice may be adjusted from time to time for Capitalization Adjustments. 

        3.    EXERCISE PRIOR TO VESTING ("EARLY EXERCISE").    If permitted in
your Grant Notice (i.e., the "Exercise Schedule" indicates that "Early Exercise" of your option is permitted) and subject to the provisions of your option, you may elect at any time that is both
(i) during the period of your Continuous Service and (ii) during the term of your option, to exercise all or part of your option, including the nonvested portion of your option;  provided, however, that: 

        a.     a partial exercise of your option shall be deemed to cover first vested shares of Common Stock and then the earliest
vesting installment of unvested shares of Common Stock; 

        b.     any shares of Common Stock so purchased from installments that have not vested as of the date of exercise shall be subject
to the purchase option in favor of the Company as described in the Company's form of Early Exercise Stock Purchase Agreement; and 

        c.     you shall enter into the Company's form of Early Exercise Stock Purchase Agreement with a vesting schedule that will
result in the same vesting as if no early exercise had occurred. 

        4.    ISO EXERCISE LIMITATION.    

        a.     The aggregate Fair Market Value of the shares of Common Stock with respect to which you may exercise your option for the
first time during any calendar year, when added to the aggregate Fair Market Value of the shares of Common Stock subject to any other options 

1

 

designated
as Incentive Stock Options and granted to you under any stock option plan of the Company or an Affiliate prior to the Date of Grant with respect to which such options are exercisable for
the first time during the same calendar year, shall not exceed $100,000 (the "ISO Exercise Limitation") unless applicable law requires that your option be exercisable sooner. For purposes of this
Section 4, your options designated as Incentive Stock Options shall be taken into account in the order in which they were granted to you, and the Fair Market Value of shares of Common Stock
shall be determined as of the time the option with respect to such shares of Common Stock is granted. If Section 422 of the Code is amended to provide for a different limitation from that set
forth in this provision, the ISO Exercise Limitation shall be deemed amended effective as of the date required or permitted by such amendment to the Code. 

        b.     Notwithstanding the provisions of Section 4(a), if the ISO Exercise Limitation would prevent you from exercising
your option as to vested shares, then the ISO Exercise Limitation shall terminate as to such vested shares as such shares vest, and you may exercise your option as to such vested shares. Upon such
termination of the ISO Exercise Limitation, your option shall be deemed a Nonstatutory Stock Option to the extent of the number of vested shares of Common Stock subject to your option that exceed the
ISO Exercise Limitation. 

        c.     The ISO Exercise Limitation shall terminate, and you may fully exercise your option, as to all vested shares of Common
Stock subject to your option, upon the earlier of the following events: 

        1)    the date of termination of your Continuous Service; 

        2)    the day immediately prior to the effective date of a Corporate Transaction; or 

        3)    the day that is ten (10) days prior to the Expiration Date of your option. 

Upon
such termination of the ISO Exercise Limitation, your option shall be deemed a Nonstatutory Stock Option to the extent of the number of shares of Common Stock subject to your option that exceed
the ISO Exercise Limitation. 

        5.    METHOD OF PAYMENT.    Payment of the exercise price is due in
full upon exercise of all or any part of your option. You may elect to make payment of the exercise price in cash or by check or in any other manner permitted by your Grant
Notice, which may include one or more of the following: 

        a.     In the Company's sole discretion at the time your option is exercised and provided that at the time of exercise the Common
Stock is publicly traded and quoted regularly in The Wall Street Journal, pursuant to a program developed under Regulation T as promulgated by
the Federal Reserve Board that, prior to the issuance of Common Stock, 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. 

        b.     Provided that at the time of exercise the Common Stock is publicly traded and quoted regularly in  The Wall Street Journal, by delivery
of already-owned shares of Common 

2

 

Stock
either that you have held for the period required to avoid a charge to the Company's reported earnings (generally six (6) months) or that you did not acquire, directly or indirectly from
the Company, that are owned free and clear of any liens, claims, encumbrances or security interests, and that are valued at Fair Market Value on the date of exercise. "Delivery" for these purposes, in
the sole discretion of the Company at the time you exercise your option, shall include delivery to the Company of your attestation of ownership of such shares of Common Stock in a form approved by the
Company. Notwithstanding the foregoing, you may not exercise your option by tender to the Company of Common Stock to the extent such tender would violate the provisions of any law, regulation or
agreement restricting the redemption of the Company's stock. 

        6.    WHOLE SHARES.    You may exercise your option only for whole
shares of Common Stock. 

        7.    SECURITIES LAW COMPLIANCE.    Notwithstanding anything to the
contrary contained herein, you may not exercise your option unless the shares of Common Stock issuable upon such exercise are then registered under the Securities Act or, if such shares of Common
Stock are not then so registered, the Company has determined that such exercise and issuance would be exempt from the registration requirements of the Securities Act. The exercise of your option also
must comply with other applicable laws and regulations governing your option, and you may not exercise your option if the Company determines that such exercise would not be in material compliance with
such laws and regulations. 

        8.    TERM.    You may not exercise your option before the
commencement of its term or after its term expires. The term of your option commences on the Date of Grant and expires upon the earliest of the following: 

        a.     immediately upon the termination of your Continuous Service for Cause; 

        b.     three (3) months after the termination of your Continuous Service for any reason other than Cause, Disability or
death, provided that if during any part of such three- (3-) month period you may not exercise your option solely because of the condition set forth in the preceding paragraph relating to
"Securities Law Compliance," your option shall not expire until the earlier of the Expiration Date or until it shall have been exercisable for an aggregate period of three (3) months after the
termination of your Continuous Service; 

        c.     twelve (12) months after the termination of your Continuous Service due to your Disability; 

        d.     eighteen (18) months after your death if you die either during your Continuous Service or within three
(3) months after your Continuous Service terminates for any reason other than Cause; 

        e.     the Expiration Date indicated in your Grant Notice; or 

	f.
	the day before the tenth (10th) anniversary of the Date of Grant. 

3

 

If
your option is an Incentive Stock Option, note that, to obtain the federal income tax advantages associated with an Incentive Stock Option, the Code requires that at all times beginning on the date
of grant of your option and ending on the day three (3) months before the date of your option's exercise, you must be an employee of the Company or an Affiliate, except in the event of your
death or Disability. The Company has provided for extended exercisability of your option under certain circumstances for your benefit but cannot guarantee that your option will necessarily be treated
as an Incentive Stock Option if you continue to provide services to the Company or an Affiliate as a Consultant or Director after your employment terminates or if you otherwise exercise your option
more than three (3) months after the date your employment terminates. 

        9.    EXERCISE.    

        a.     You may exercise the vested portion of your option (and the unvested portion of your option if your Grant Notice so
permits) during its term by delivering a Notice of Exercise (in a form designated by the Company) together with the exercise price to the Secretary of the Company, or to such other person as the
Company may designate, during regular business hours, together with such additional documents as the Company may then require. 

        b.     By exercising your option you agree that, as a condition to any exercise of your option, the Company may require you to
enter into an arrangement providing for the payment by you to the Company of any tax withholding obligation of the Company arising by reason of (1) the exercise of your option, (2) the
lapse of any substantial risk of forfeiture to which the shares of Common Stock are subject at the time of exercise, or (3) the disposition of shares of Common Stock acquired upon such
exercise. 

        c.     If your option is an Incentive Stock Option, by exercising your option you agree that you will notify the Company in
writing within fifteen (15) days after the date of any disposition of any of the shares of the Common Stock issued upon exercise of your option that occurs within two (2) years after the
date of your option grant or within one (1) year after such shares of Common Stock are transferred upon exercise of your option. 

        d.     By exercising your option you agree that you shall not sell, dispose of, transfer, make any short sale of, grant any
option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any shares of Common Stock or other securities of the Company held by you, for a
period of time specified by the managing underwriter(s) (not to exceed one hundred eighty (180) days) following the effective date of a registration statement of the Company filed under the
Securities Act (the "Lock Up Period"); provided, however, that nothing contained in this section shall prevent the exercise of a repurchase option, if
any, in favor of the Company during the Lock Up Period. You further agree to execute and deliver such other agreements as may be reasonably requested by the Company and/or the underwriter(s) that are
consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with
respect to your shares of Common Stock until the end of such period. The underwriters of the Company's stock are intended third party beneficiaries of this Section 9(d) and shall have the
right, power and authority to enforce the provisions hereof as though they were a party hereto. 

4

 

        10.    TRANSFERABILITY.    Your option is not transferable, except by
will or by the laws of descent and distribution, and is exercisable during your life only by you. Notwithstanding the foregoing, by delivering written notice to the Company, in a form satisfactory to
the Company, you may designate a third party who, in the event of your death, shall thereafter be entitled to exercise your option. 

        11.    CHANGE IN CONTROL.    [NOTE: INCLUDE
SECTION 11 FOR EXECUTIVE OFFICERS AND DIRECTORS ONLY] 

        a.     [FOR EXECUTIVE OFFICERS] If a Change in Control
occurs and as of, or within thirteen (13) months after, the effective time of such Change in Control your Continuous Service terminates due to an involuntary termination (not including death or
Disability) without Cause or due to a voluntary termination with Good Reason, then, as of the date of termination of Continuous Service, the vesting and exercisability of your option shall be
accelerated in full. [OR] 

        (a)   [FOR DIRECTORS] If a Change in Control occurs and
your Continuous Service with the Company has not terminated as of, or immediately prior to, the effective time of the Change in Control, then, as of the effective time of such Change in Control, the
vesting and exercisability of your option shall be accelerated in full. 

        b.     [FOR EXECUTIVE OFFICERS] "Good Reason" means that
one or more of the following are undertaken by the Company without your express written consent: (i) the assignment to you of any duties or responsibilities that results in a material
diminution in your function as in effect immediately prior to the effective date of the Change in Control; provided, however, that a change in your
title or reporting relationships shall not provide the basis for a voluntary termination with Good Reason; (ii) a material reduction by the Company in your annual base salary, as in effect on
the effective date of the Change in Control or as increased thereafter; provided, however, that Good Reason shall not be deemed to have occurred in the
event of a reduction in your annual base salary that is pursuant to a salary reduction program affecting substantially all of the employees of the Company and that does not adversely affect you to a
greater extent than other similarly situated employees; (iii) any failure by the Company to continue in effect any benefit plan or program, including incentive plans or plans with respect to
the receipt of securities of the Company, in which you were participating immediately prior to the effective date of the Change in Control (hereinafter referred to as "Benefit Plans"), or the taking
of any action by the Company that would adversely affect your participation in or reduce your benefits under the Benefit Plans or deprive you of any fringe benefit that you enjoyed immediately prior
to the effective date of the Change in Control; provided, however, that Good Reason shall not be deemed to have occurred if the Company provides for
your participation in benefit plans and programs that, taken as a whole, are comparable to the Benefit Plans; (iv) a relocation of your business office to a location more than fifty
(50) miles from the location at which you performed your duties as of the effective date of the Change in Control, except for required travel by you on the Company's business to an extent
substantially consistent with your business travel obligations prior to the effective date of the Change in Control; or (v) a material breach by the Company of any provision of the Plan or the
Option Agreement or any other material agreement between you and the Company concerning the terms and conditions of your employment. 

5

 

        c.     If any payment or benefit you would receive pursuant to a Change in Control from the Company or otherwise ("Payment")
would (i) constitute a "parachute payment" within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by
Section 4999 of the Code (the "Excise Tax"), then such Payment shall be equal to the Reduced Amount. The "Reduced Amount" shall be either (x) the largest portion of the Payment that
would result in no portion of the Payment being subject to the Excise Tax or (y) the largest portion, up to and including the total, of the Payment, whichever amount, after taking into account
all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in your receipt, on an after-tax
basis, of the greater amount of the Payment notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in payments or benefits constituting "parachute
payments" is necessary so that the Payment equals the Reduced Amount, reduction shall occur in the following order unless you elect in writing a different order (provided,
however, that such election shall be subject to Company approval if made on or after the effective date of the event that triggers the Payment): reduction of cash payments;
cancellation of accelerated vesting of Stock Awards; reduction of employee benefits. In the event that acceleration of vesting of Stock Award compensation is to be reduced, such acceleration of
vesting shall be cancelled in the reverse order of the date of grant of your Stock Awards (i.e., earliest granted Stock Award cancelled last) unless you elect in writing a different order for
cancellation. 

        d.     The accounting firm engaged by the Company for general audit purposes as of the day prior to the effective date of the
Change in Control shall perform the foregoing calculations. If the accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group effecting the
Change in Control, the Company shall appoint a nationally recognized accounting firm to make the determinations required hereunder. The Company shall bear all expenses with respect to the
determinations by such accounting firm required to be made hereunder. 

        e.     The accounting firm engaged to make the determinations hereunder shall provide its calculations, together with detailed
supporting documentation, to you and the Company within fifteen (15) calendar days after the date on which your right to a Payment is triggered (if requested at that time by you or the Company)
or such other time as requested by you or the Company. If the accounting firm determines that no Excise Tax is payable with respect to a Payment, either before or after the application of the Reduced
Amount, it shall furnish you and the Company with an opinion reasonably acceptable to you that no Excise Tax will be imposed with respect to such Payment. Any good faith determinations of the
accounting firm made hereunder shall be final, binding and conclusive upon you and the Company, except as specified below. 

        f.      If, notwithstanding any reduction described in this Section 11, the IRS determines that you are liable for the
Excise Tax as a result of the receipt of the payment of benefits as described above, then you shall be obligated to pay back to the Company, within thirty (30) days after a final IRS
determination or in the event that you challenge the final IRS determination, a final judicial determination, a portion of the payment equal to the "Repayment Amount." The Repayment Amount with
respect to the payment of benefits shall be the smallest such amount, if any, as shall be required to be paid to the Company so that your net after-tax 

6

 

proceeds
with respect to any payment of benefits (after taking into account the payment of the Excise Tax and all other applicable taxes imposed on such payment) shall be maximized. The Repayment
Amount with respect to the payment of benefits shall be zero if a Repayment Amount of more than zero would not result in your net after-tax proceeds with respect to the payment of such
benefits being maximized. If the Excise Tax is not eliminated pursuant to this paragraph, you shall pay the Excise Tax. 

        g.     Notwithstanding any other provision of this Section 11, if (i) there is a reduction in the payment of
benefits as described in this section, (ii) the IRS later determines that you are liable for the Excise Tax, the payment of which would result in the maximization of your net
after-tax proceeds (calculated as if your benefits had not previously been reduced), and (iii) you pay the Excise Tax, then the Company shall pay to you those benefits which were
reduced pursuant to this section contemporaneously or as soon as administratively possible after you pay the Excise Tax so that your net after-tax proceeds with respect to the payment of
benefits is maximized. 

        12.    RIGHT OF FIRST REFUSAL.    

        a.     Shares of Common Stock that you acquire upon exercise of your option are subject to any right of first refusal that may be
described in the Company's bylaws in effect at such time the Company elects to exercise its right; provided, however, that if your option is an
Incentive Stock Option and the right of first refusal described in the Company's bylaws in effect at the time the Company elects to exercise its right is more beneficial to you than the right of first
refusal described in the Company's bylaws on the Date of Grant, then the right of first refusal described in the Company's bylaws on the Date of Grant shall apply. 

        b.     If there is no right of first refusal described in the Company's bylaws in effect at such time the Company elects to
exercise its right, then you may not validly transfer (as hereinafter defined) any of the shares of Common Stock that you acquire upon exercise of your option, or any interest in such shares, unless
such transfer is solely for cash consideration and is made in compliance with the following provisions (the Company's "Right of First Refusal"): 

        1)    Before there can be a valid transfer of any shares or any interest therein, the record holder of the shares to be
transferred (the "Offered Shares") shall give written notice (by registered or certified mail) to the Company. Such notice shall specify the identity of the proposed transferee, the cash price offered
for the Offered Shares by the proposed transferee and the other terms and conditions of the proposed transfer. The date such notice is mailed shall be hereinafter referred to as the "notice date," and
the record holder of the Offered Shares shall be hereinafter referred to as the "Offeror." 

        2)    For a period of thirty (30) calendar days after the notice date, the Company shall have the option, but not the
obligation, to purchase all (or any part) of the Offered Shares at the purchase price and on the terms set forth in subsection 12(b)(iii). The Company may exercise its Right of First Refusal by
mailing (by registered or certified mail) written notice of exercise of its Right of First Refusal to the Offeror prior to the end of said thirty (30) days. 

7

 

        3)    The price at which the Company may purchase the Offered Shares pursuant to the exercise of its Right of First Refusal
shall be the cash price offered for the Offered Shares by the proposed transferee (as set forth in the notice required under subsection 12(b)(i)). The Company's notice of exercise of its Right of
First Refusal shall be accompanied by full payment for the Offered Shares and, upon such payment by the Company, the Company shall acquire full right, title and interest to all of the Offered Shares. 

        4)    If, and only if, the option given pursuant to subsection 12(b)(ii) is not exercised, the transfer proposed in the
notice given pursuant to subsection 12(b)(i) may take place; provided, however, that such transfer must, in all respects, be exactly as proposed in said notice except that such transfer may not
take place either before the tenth (10th) calendar day after the expiration of said 30-day option exercise period or after the ninetieth (90th) calendar day after the expiration of said
30-day option exercise period, and if such transfer has not taken place prior to said ninetieth (90th) day, such transfer may not take place without once again complying with this
subsection 12(b). 

        5)    As used in this subsection 12(b), the term "transfer" means any sale, encumbrance, pledge, gift or other form of
disposition or transfer of shares of the Company's stock or any legal or equitable interest therein; provided, however, that the term "transfer" does not include a transfer of such shares or interests
by will or by the applicable laws of descent and distribution or a bona fide gift of such shares if the donee agrees to be bound by the provisions of this Stock Option Agreement. 

        6)    None of the shares of the Company's stock purchased upon exercise of your option shall be transferred on the Company's
books nor shall the Company recognize any such transfer of any such shares or any interest therein unless and until all applicable provisions of this subsection 12(b) have been complied with in all
respects. The certificates of stock evidencing shares of stock purchased upon exercise of your option shall bear an appropriate legend referring to the transfer restrictions imposed by this subsection
12(b). 

        7)    If, from time to time, there is any stock dividend, stock split or other change in the character or amount of any of the
outstanding stock of the corporation the stock of which is subject to the provisions of your option, then in such event any and all new, substituted or additional securities to which you are entitled
by reason of your ownership of the shares acquired under your option shall be immediately subject to the Company's Right of First Refusal with the same force and effect as the shares you acquired
pursuant to the exercise of your option. 

        8)    To ensure that shares subject to the Company's Right of First Refusal will be available for repurchase by the Company, the
Company may require you to deposit the certificate(s) evidencing the shares that you purchase upon exercise of your option with an escrow agent designated by the Company under the terms and conditions
of an escrow agreement approved by the Company. If the Company does not require such deposit as a condition of exercise of your option, the Company reserves the right at any time to require you to so
deposit the certificate(s) in escrow. As soon as practicable after the expiration of the Company's Right of First Refusal, the agent shall deliver to you the shares and any other property no longer
subject to such restriction. In the event the shares and any other property held in escrow are subject to the Company's exercise of its Right of First Refusal, the notices required to be given to you
shall 

8

 

be
given to the escrow agent, and any payment required to be given to you shall be given to the escrow agent. Within thirty (30) days after payment by the Company for the Offered Shares, the
escrow agent shall deliver the Offered Shares that the Company has repurchased to the Company and shall deliver the payment received from the Company to you. 

        c.     The Company's right of first refusal shall expire on the first date upon which any security of the Company is listed (or
approved for listing) upon notice of issuance on a national securities exchange or on the National Market System of the Nasdaq Stock Market (or any successor to that entity). 

        13.    RIGHT OF REPURCHASE.    To the extent provided in the Company's
bylaws in effect at such time the Company elects to exercise its right, the Company shall have the right to repurchase all or any part of the shares of Common Stock you acquire pursuant to the
exercise of your option. 

        14.    OPTION NOT A SERVICE CONTRACT.    Your option is not an
employment or service contract, and nothing in your option shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company or an Affiliate, or of
the Company or an Affiliate to continue your employment. In addition, nothing in your option shall obligate the Company or an Affiliate, their respective stockholders, Boards of Directors, Officers or
Employees to continue any relationship that you might have as a Director or Consultant for the Company or an Affiliate. 

        15.    WITHHOLDING OBLIGATIONS.    

        a.     At the time you exercise your option, in whole or in part, or at any time thereafter as requested by the Company, you
hereby authorize withholding from payroll and any other amounts payable to you, and otherwise agree to make adequate provision for (including by means of a "cashless exercise" pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve Board to the extent permitted by the Company), any sums required to satisfy the federal, state, local and foreign tax
withholding obligations of the Company or an Affiliate, if any, which arise in connection with the exercise of your option. 

        b.     Upon your request and subject to approval by the Company, in its sole discretion, and compliance with any applicable legal
conditions or restrictions, the Company may withhold from fully vested shares of Common Stock otherwise issuable to you upon the exercise of your option a number of whole shares of Common Stock having
a Fair Market Value, determined by the Company as of the date of exercise, not in excess of the minimum amount of tax required to be withheld by law (or such lower amount as may be necessary to avoid
adverse accounting consequences). If the date of determination of any tax withholding obligation is deferred to a date later than the date of exercise of your option, share withholding pursuant to the
preceding sentence shall not be permitted unless you make a proper and timely election under Section 83(b) of the Code, covering the aggregate number of shares of Common Stock acquired upon
such exercise with respect to which such determination is otherwise deferred, to accelerate the determination of such tax withholding obligation to the date of exercise of your option. Notwithstanding
the filing of such election, shares of Common Stock shall be withheld solely from fully vested shares of Common Stock determined as of the date of exercise of your option 

9

 

that
are otherwise issuable to you upon such exercise. Any adverse consequences to you arising in connection with such share withholding procedure shall be your sole responsibility. 

        c.     You may not exercise your option unless the tax withholding obligations of the Company and/or any Affiliate are satisfied.
Accordingly, you may not be able to exercise your option when desired even though your option is vested, and the Company shall have no obligation to issue a certificate for such shares of Common Stock
or release such shares of Common Stock from any escrow provided for herein unless such obligations are satisfied. 

        16.    NOTICES.    Any notices provided for in your option or the Plan
shall be given in writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by mail by the Company to you, five (5) days after deposit in the United States
mail, postage prepaid, addressed to you at the last address you provided to the Company. 

        17.    GOVERNING PLAN DOCUMENT.    Your option is subject to all the
provisions of the Plan, the provisions of which are hereby made a part of your option, and is further subject to all interpretations, amendments, rules and regulations, which may from time to time be
promulgated and adopted pursuant to the Plan. In the event of any conflict between the provisions of your option and those of the Plan, the provisions of the Plan shall control. 

10

 
 

NOVACARDIA, INC.    
    
    2003 STOCK PLAN    
    
    NOTICE OF STOCK OPTION GRANT    
    

«Optionee» 

        You
have been granted an option to purchase Common Stock of NovaCardia, Inc. (the "Company") as follows: 

	Board Approval Date:	 	«BoardApprovalDate»
	

Date of Grant (Later of Board Approval Date or Commencement of Employment/Consulting):	
 	

«GrantDate»
	

Exercise Price per Share:	
 	

$«ExercisePrice»
	

Total Number of Shares Granted:	
 	

«NoofShares»
	

Total Exercise Price:	
 	

$«TotalExercisePrice»
	

Type of Option:	
 	

«ISO» Shares Incentive Stock Option

 

«NSO» Shares Nonstatutory Stock Option
	

Expiration Date:	
 	

«Term»/«ExpirDate»
	

Vesting Commencement Date:	
 	

«VestingCommencementDate»
	

Vesting/Exercise Schedule:	
 	

This Option may be exercised, in whole or in part, at any time after the Date of Grant. So long as your Continuous Service Status with the Company continues, the Shares underlying this Option shall vest in accordance with the following
schedule:                                        
        of the total number of Shares subject to the Option shall vest on
the                        month anniversary of the Vesting Commencement Date
and                        of the total number of Shares subject to the Option shall vest on the same day of each month
thereafter.
	

 	
 	

 

 

	

Termination Period:	
 	

This Option may be exercised for ninety (90) days after termination of Optionee's Continuous Service Status except as set out in Section 5 of the Stock Option Agreement (but in no event later than the Expiration Date). Optionee is
responsible for keeping track of these exercise periods following termination for any reason of his or her service relationship with the Company. The Company will not provide further notice of such periods.
	

Transferability:	
 	

This Option may not be transferred.

        By
your signature and the signature of the Company's representative below, you and the Company agree that this option is granted under and governed by the terms and conditions of the
NovaCardia, Inc. 2003 Stock Plan and the Stock Option Agreement, both of which are attached and made a part of this document. 

        In
addition, you agree and acknowledge that your rights to any Shares underlying the Option will be earned only as you provide services to the Company over time, that the grant of the
Option is not as consideration for services you rendered to the Company prior to your Vesting Commencement Date, and that nothing in this Notice or the attached documents confers upon you any right to
continue your employment or consulting relationship with the Company for any period of time, nor does it interfere in any way with your right or the Company's right to terminate that relationship at
any time, for any reason, with or without cause. 

	

 	
 	

NOVACARDIA, INC.
	

    
	
 	

By:	
 	

    

	«Optionee»	 	Name:	 	    

	 	 	Title:	 	    

2

 
 

NOVACARDIA, INC.    
    
    2003 STOCK PLAN    
    
    STOCK OPTION AGREEMENT    
    

        1.    Grant of Option.    NovaCardia, Inc., a Delaware
corporation (the "Company"), hereby grants to «Optionee» ("Optionee"), an option
(the "Option") to purchase the total number of shares of Common Stock (the "Shares") set forth in the
Notice of Stock Option Grant (the "Notice"), at the exercise price per Share set forth in the Notice (the "Exercise
Price") subject to the terms, definitions and provisions of the NovaCardia, Inc. 2003 Stock Plan (the "Plan") adopted by
the Company, which is incorporated in this Agreement by reference. Unless otherwise defined in this Agreement, the terms used in this Agreement shall have the meanings defined in the Plan. 

        2.    Designation of Option.    This Option is intended to be an
Incentive Stock Option as defined in Section 422 of the Code only to the extent so designated in the Notice, and to the extent it is not so designated or to the extent the Option does not
qualify as an Incentive Stock Option, it is intended to be a Nonstatutory Stock Option. 

        Notwithstanding
the above, if designated as an Incentive Stock Option, in the event that the Shares subject to this Option (and all other Incentive Stock Options granted to Optionee by
the Company or any Parent or Subsidiary, including under other plans of the Company) that first become exercisable in any calendar year have an aggregate fair market value (determined for each Share
as of the date of grant of the option covering such Share) in excess of $100,000, the Shares in excess of $100,000 shall be treated as subject to a Nonstatutory Stock Option, in accordance with
Section 5(c) of the Plan. 

        3.    Exercise of Option.    This Option shall be exercisable during
its term in accordance with the Vesting/Exercise Schedule set out in the Notice and with the provisions of Section 10 of the Plan as follows: 

        a.     Right to Exercise.  

         1)    This Option may not be exercised for a fraction of a share. 

        2)    In the event of Optionee's death, disability or other termination of employment, the exercisability of the Option is
governed by Section 5 below, subject to the limitations contained in this Section 3. 

        3)    In no event may this Option be exercised after the Expiration Date of the Option as set forth in the Notice. 

        b.     Method of Exercise.  

 

        1)    This Option shall be exercisable by execution and delivery of the Early Exercise Notice and Restricted Stock Purchase Agreement
attached hereto as  Exhibit A, the Exercise Notice and Restricted Stock Purchase Agreement attached hereto as  Exhibit B, or any other form of
written notice approved for such purpose by the Company which shall state Optionee's election to exercise the
Option, the number of Shares in respect of which the Option is being exercised, and such other representations and agreements as to the holder's investment intent with respect to such Shares as may be
required by the Company pursuant to the provisions of the Plan. Such written notice shall be signed by Optionee and shall be delivered to the Company by such means as are determined by the Plan
Administrator in its discretion to constitute adequate delivery. The written notice shall be accompanied by payment of the Exercise Price. This Option shall be deemed to be exercised upon receipt by
the Company of such written notice accompanied by the Exercise Price. 

        2)    As a condition to the exercise of this Option and as further set forth in Section 12 of the Plan, Optionee agrees
to make adequate provision for federal, state or other tax withholding obligations, if any, which arise upon the vesting or exercise of the Option, or disposition of Shares, whether by withholding,
direct payment to the Company, or otherwise. 

        3)    The Company is not obligated, and will have no liability for failure, to issue or deliver any Shares upon exercise of the
Option unless such issuance or delivery would comply with the Applicable Laws, with such compliance determined by the Company in consultation with its legal counsel. This Option may not be exercised
until such time as the Plan has been approved by the stockholders of the Company, or if the issuance of such Shares upon such exercise or the method of payment of consideration for such shares would
constitute a violation of any applicable federal or state securities or other law or regulation, including any rule under Part 221 of Title 12 of the Code of Federal Regulations as promulgated
by the Federal Reserve Board. As a condition to the exercise of this Option, the Company may require Optionee to make any representation and warranty to the Company as may be required by the
Applicable Laws. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to Optionee on the date on which the Option is exercised with respect to such Shares. 

        4.    Method of Payment.    Payment of the Exercise Price shall be by
any of the following, or a combination of the following, at the election of Optionee: 

        a.     cash or check; 

        b.     cancellation of indebtedness; 

        c.     prior to the date, if any, upon which the Common Stock becomes a Listed Security, by surrender of other shares of Common
Stock of the Company that have an aggregate Fair Market Value on the date of surrender equal to the Exercise Price of the Shares as to which the Option is being exercised. In the case of shares
acquired directly or indirectly from the Company, such shares must have been owned by Optionee for more than six (6) months on the date of surrender (or such other period of time as is
necessary to avoid the Company's incurring adverse accounting charges); or 

2

 

        d.     following the date, if any, upon which the Common Stock is a Listed Security, and if the Company is at such time
permitting "same day sale" cashless brokered exercises, delivery of a properly executed exercise notice together with irrevocable instructions to a broker participating in such cashless brokered
exercise program to deliver promptly to the Company the amount required to pay the exercise price (and applicable withholding taxes). 

        5.    Termination of Relationship.    Following the date of
termination of Optionee's Continuous Service Status for any reason (the "Termination Date"), Optionee may exercise the Option only as set forth in the
Notice and this Section 5. To the extent that Optionee is not entitled to exercise this Option as of the Termination Date, or if Optionee does not exercise this Option within the Termination
Period set forth in the Notice or the termination periods set forth below, the Option shall terminate in its entirety. In no event may any Option be exercised after the Expiration Date of the Option
as set forth in the Notice. 

        a.    Termination.    In the event of termination of Optionee's
Continuous Service Status other than as a result of Optionee's disability or death, Optionee may, to the extent Optionee is vested in the Option Shares at the date of such termination (the
"Termination Date"), exercise this Option during the Termination Period set forth in the Notice. 

        b.    Other Terminations.    In connection with any termination other
than a termination covered by Section 5(a), Optionee may exercise the Option only as described below: 

        1)    Termination upon Disability of Optionee.    In the event of
termination of Optionee's Continuous Service Status as a result of Optionee's disability, Optionee may, but only within six (6) months from the Termination Date, exercise this Option to the
extent Optionee was vested in the Option Shares as of such Termination Date. 

        2)    Death of Optionee.    In the event of the death of Optionee
(a) during the term of this Option and while an Employee or Consultant of the Company and having been in Continuous Service Status since the date of grant of the Option, or (b) within
thirty (30) days after Optionee's Termination Date, the Option may be exercised at any time within six (6) months following the date of death by Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to the extent Optionee was vested in the Option as of the Termination Date. 

        6.    Non-Transferability of Option.    Except as
otherwise set forth in the Notice, this Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of
Optionee only by him or her. The terms of this Option shall be binding upon the executors, administrators, heirs, successors and assigns of Optionee. 

        7.    Tax Consequences.    Below is a brief summary as of the date of
this Option of certain of the federal tax consequences of exercise of this Option and disposition of the Shares under the laws in effect as of the Date of Grant. THIS SUMMARY IS INCOMPLETE, AND THE
TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES. 

3

 

        a.    Incentive Stock Option.    

        1)    Tax Treatment upon Exercise and Sale of Shares.    If this
Option qualifies as an Incentive Stock Option, there will be no regular federal income tax liability upon the exercise of the Option, although the excess, if any, of the fair market value of the
Shares on the date of exercise over the Exercise Price will be treated as an adjustment to the alternative minimum tax for federal tax purposes and may subject Optionee to the alternative minimum tax
in the year of exercise. If Shares issued upon exercise of an Incentive Stock Option are held for at least one (1) year after exercise and are disposed of at least two (2) years after
the Option grant date, any gain realized on disposition of the Shares will also be treated as long-term capital gain for federal income tax purposes. If Shares issued upon exercise of an
Incentive Stock Option are disposed of within such one (1)-year period or within two (2) years after the Option grant date, any gain realized on such disposition will be treated as
compensation income (taxable at ordinary income rates) to the extent of the difference between the Exercise Price and the lesser of (i) the Fair Market Value of the Shares on the date of
exercise, or (ii) the sale price of the Shares. 

        2)    Notice of Disqualifying Dispositions.    With respect to any
Shares issued upon exercise of an Incentive Stock Option, if Optionee sells or otherwise disposes of such Shares on or before the later of (i) the date two (2) years after the Option
grant date, or (ii) the date one (1) year after the date of exercise, Optionee shall immediately notify the Company in writing of such disposition. Optionee acknowledges and agrees that
he or she may be subject to income tax withholding by the Company on the compensation income recognized by Optionee from the early disposition by payment in cash or out of the current earnings paid to
Optionee. 

        b.    Nonstatutory Stock Option.    If this Option does not qualify as
an Incentive Stock Option, there may be a regular federal (and state) income tax liability upon the exercise of the Option. Optionee will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. If Optionee is an Employee, the Company will be required
to withhold from Optionee's compensation or collect from Optionee and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income at the time of exercise. If
Shares issued upon exercise of a Nonstatutory Stock Option are held for at least one (1) year, any gain realized on disposition of the Shares will be treated as long-term capital
gain for federal income tax purposes. 

        8.    Lock-Up Agreement.    In connection with the initial
public offering of the Company's securities and upon request of the Company or the underwriters managing any underwritten offering of the Company's securities, Optionee hereby agrees not to sell, make
any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any securities of the Company however and whenever acquired (other than those included in the registration)
without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed one hundred eighty (180) days) from the effective date of such
registration as may be requested by the Company or such managing underwriters and to execute an agreement reflecting the foregoing as may be requested by the underwriters at the time of the public
offering. 

4

 

        9.    Effect of Agreement.    Optionee acknowledges receipt of a copy
of the Plan and represents that he or she is familiar with the terms and provisions thereof (and has had an opportunity to consult counsel regarding the Option terms), and hereby accepts this Option
and agrees to be bound by its contractual terms as set forth herein and in the Plan. Optionee hereby agrees to accept as binding, conclusive and final all decisions and interpretations of the Plan
Administrator regarding any questions relating to the Option. In the event of a conflict between the terms and provisions of the Plan and the terms and provisions of the Notice and this Agreement, the
Plan terms and provisions shall prevail. The Option, including the Plan, constitutes the entire agreement between Optionee and the Company on the subject matter hereof and supersedes all proposals,
written or oral, and all other communications between the parties relating to such subject matter. 

[Signature Page Follows]

5

 

        This
Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original and all of which together shall constitute one document. 

	«Optionee»	 	NOVACARDIA, INC.
	 	 	 	 	 
	

	
 	

By:	

	 	 	 	Name:	

	Dated:	
	 	Title:	

6

EXHIBIT A

 NOVACARDIA, INC.  

 2003 STOCK PLAN  

EARLY EXERCISE NOTICE AND RESTRICTED STOCK PURCHASE AGREEMENT  

        This Agreement ("Agreement") is made as of            , by and between
NovaCardia, Inc., a Delaware
corporation (the "Company"), and «Optionee» ("Purchaser"). To the extent any
capitalized terms used in this Agreement are not defined, they shall have the meaning ascribed to them in the Company's 2003 Stock Plan (the "Plan"). 

        1.    Exercise of Option.    Subject to the terms and conditions
hereof, Purchaser hereby elects to exercise his or her option to purchase «NoofShares» shares of the Common Stock (the "Shares")
of the Company under and pursuant to the Plan and the Stock Option Agreement granted «GrantDate» (the "Option Agreement"). Of
these Shares, Purchaser has elected to purchase                        of those Shares which have become vested as of the date
hereof under the Vesting/Exercise Schedule set forth in the Notice of Stock
Option Grant (the "Vested Shares") and                        Shares which have not
yet vested under such Vesting/Exercise Schedule (the
"Unvested Shares"). The purchase price for the Shares shall be $«ExercisePrice» per Share for a total purchase price of
$                        . The term "Shares" refers to the purchased Shares and all
securities received in replacement of the Shares or as stock dividends or
splits, all securities received in replacement of the Shares in a recapitalization, merger, reorganization, exchange or the like, and all new, substituted or additional securities or other properties
to which Purchaser is entitled by reason of Purchaser's ownership of the Shares. 

        2.    Time and Place of Exercise.    The purchase and sale of the
Shares under this Agreement shall occur at the principal office of the Company simultaneously with the execution and delivery of this Agreement in accordance with the provisions of Section 3(b)
of the Option Agreement. On such date, the Company will deliver to Purchaser a certificate representing the Shares to be purchased by Purchaser (which shall be issued in Purchaser's name) against
payment of the exercise price therefor by Purchaser by any method listed in Section 4 of the Option Agreement. 

        3.    Limitations on Transfer.    In addition to any other limitation
on transfer created by applicable securities laws, Purchaser shall not assign, encumber or dispose of any interest in the Shares while the Shares are subject to the Company's Repurchase Option (as
defined below). After any Shares have been released from such Repurchase Option, Purchaser shall not assign, encumber or dispose of any interest in such Shares except in compliance with the provisions
below and applicable securities laws. 

        a.     Repurchase Option.

        1)    In the event of the voluntary or involuntary termination of Purchaser's Continuous Service Status with the Company for any
reason (including death or disability), with or without cause, the Company shall upon the date of such termination (the "Termination Date") have an
irrevocable, exclusive option (the "Repurchase Option") for a period of ninety (90) days 

 

from
such date to repurchase all or any portion of the Shares held by Purchaser as of the Termination Date which have not yet been released from the Company's Repurchase Option at the original
purchase price per Share specified in Section 1 (adjusted for any stock splits, stock dividends and the like). 

        2)    Unless the Company notifies Purchaser within ninety (90) days from the date of termination of Purchaser's
Continuous Service Status that it does not intend to exercise its Repurchase Option with respect to some or all of the Shares, the Repurchase Option shall be deemed automatically exercised by the
Company as of the ninetieth (90th) day following such termination, provided that the Company may notify Purchaser that it is exercising its Repurchase Option as of a date prior to such
ninetieth (90th) day. Unless Purchaser is otherwise notified by the Company pursuant to the preceding sentence that the Company does not intend to exercise its Repurchase Option as to
some or all of the Shares to which it applies at the time of termination, execution of this Agreement by Purchaser constitutes written notice to Purchaser of the Company's intention to exercise its
Repurchase Option with respect to all Shares to which such Repurchase Option applies. The Company, at its choice, may satisfy its payment obligation to Purchaser with respect to exercise of the
Repurchase Option by either (A) delivering a check to Purchaser in the amount of the purchase price for the Shares being repurchased, or (B) in the event Purchaser is indebted to the
Company, canceling an amount of such indebtedness equal to the purchase price for the Shares being repurchased, or (C) by a combination of (A) and (B) so that the combined payment
and cancellation of indebtedness equals such purchase price. In the event of any deemed automatic exercise of the Repurchase Option pursuant to this Section 3(a)(ii) in which Purchaser
is indebted to the Company, such indebtedness equal to the purchase price of the Shares being repurchased shall be deemed automatically canceled as of the ninetieth (90th) day following
termination of Purchaser's Continuous Service Status unless the Company otherwise satisfies its payment obligations. As a result of any repurchase of Shares pursuant to this Section 3(a), the
Company shall become the legal and beneficial owner of the Shares being repurchased and shall have all rights and interest therein or related thereto, and the Company shall have the right to transfer
to its own name the number of Shares being repurchased by the Company, without further action by Purchaser. 

        3)    One hundred percent (100%) of the Shares shall initially be subject to the Repurchase Option. The Unvested Shares shall be
released from the Repurchase Option in accordance with the Vesting/Exercise Schedule set forth in the Notice of Stock Option Grant until all Shares are released from the Repurchase Option. Fractional
shares shall be rounded to the nearest whole share. 

        b.    Right of First Refusal.    Before any Shares held by Purchaser
or any transferee of Purchaser (either being sometimes referred to herein as the "Holder") may be sold or otherwise transferred (including transfer by
gift or operation of law), the Company or its assignee(s) shall have a right of first refusal to purchase the Shares on the terms and conditions set forth in this Section 3(b) (the
"Right of First Refusal"). 

        1)    Notice of Proposed Transfer.    The Holder of the Shares shall
deliver to the Company a written notice (the "Notice") stating: (i) the Holder's bona fide intention to sell or otherwise transfer such Shares;
(ii) the name of each proposed purchaser or other 

2

 

transferee
("Proposed Transferee"); (iii) the number of Shares to be transferred to each Proposed Transferee; and (iv) the terms and
conditions of each proposed sale or transfer. The Holder shall offer the Shares at the same price (the "Offered Price") and upon the same terms (or
terms as similar as reasonably possible) to the Company or its assignee(s). 

        2)    Exercise of Right of First Refusal.    At any time within thirty
(30) days after receipt of the Notice, the Company and/or its assignee(s) may, by giving written notice to the Holder, elect to purchase all, but not less than all, of the Shares proposed to be
transferred to any one or more of the Proposed Transferees, at the purchase price determined in accordance with subsection (iii) below. 

        3)    Purchase Price.    The purchase price
("Purchase Price") for the Shares purchased by the Company or its assignee(s) under this Section 3(b) shall be the Offered Price. If the Offered
Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be determined by the Board of Directors of the Company in good faith. 

        4)    Payment.    Payment of the Purchase Price shall be made, at the
option of the Company or its assignee(s), in cash (by check), by cancellation of all or a portion of any outstanding indebtedness, or by any combination thereof within thirty (30) days after
receipt of the Notice or in the manner and at the times set forth in the Notice. 

        5)    Holder's Right to Transfer.    If all of the Shares proposed in
the Notice to be transferred to a given Proposed Transferee are not purchased by the Company and/or its assignee(s) as provided in this Section 3(b), then the Holder may sell or otherwise
transfer such Shares to that Proposed Transferee at the Offered Price or at a higher price, provided that such sale or other transfer is consummated within sixty (60) days after the date of the
Notice and provided further that any such sale or other transfer is effected in accordance with any applicable securities laws and the Proposed Transferee agrees in writing that the provisions of this
Section 3 shall continue to apply to the Shares in the hands of such Proposed Transferee. If the Shares described in the Notice are not transferred to the Proposed Transferee within such
period, or if the Holder proposes to change the price or other terms to make them more favorable to the Proposed Transferee, a new Notice shall be given to the Company, and the Company and/or its
assignees shall again be offered the Right of First Refusal before any Shares held by the Holder may be sold or otherwise transferred. 

        6)    Exception for Certain Family Transfers.    Anything to the
contrary contained in this Section 3(b) notwithstanding, the transfer of any or all of the Shares during Purchaser's lifetime or on Purchaser's death by will or intestacy to Purchaser's
Immediate Family or a trust for the benefit of Purchaser's Immediate Family shall be exempt from the provisions of this Section 3(b). "Immediate
Family" as used herein shall mean any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law (including adoptive relationships). In such case, the transferee or other recipient shall receive and hold the Shares so transferred subject to the provisions of
this Section, and there shall be no further transfer of such Shares except in accordance with the terms of this Section 3. 

3

 

        c.     Involuntary Transfer.  

        1)    Company's Right to Purchase upon Involuntary
Transfer.    In the event, at any time after the date of this Agreement, of any transfer by operation of law or other involuntary transfer (including death or
divorce, but excluding a transfer to Immediate Family as set forth in Section 3(b)(vi) above) of all or a portion of the Shares by the record holder thereof, the Company shall have an
option to purchase all of the Shares transferred. Upon such a transfer, the person acquiring the Shares shall promptly notify the Secretary of the Company of such transfer. The right to purchase such
Shares shall be provided to the Company for a period of thirty (30) days following receipt by the Company of written notice by the person acquiring the Shares. 

        2)    Price for Involuntary Transfer.    With respect to any stock to
be transferred pursuant to Section 3(c)(i), the price per Share shall be a price set by the Board of Directors of the Company that will reflect the current value of the stock in terms of
present earnings and future prospects of the Company. The Company shall notify Purchaser or his or her executor of the price so determined within thirty (30) days after receipt by it of written
notice of the transfer or proposed transfer of Shares. However, if the Purchaser or his or her executor does not agree with the valuation as determined by the Board of Directors of the Company, the
Purchaser or the executor shall be entitled to have the valuation determined by an independent appraiser to be mutually agreed upon by the Company and the Purchaser or the executor and whose fees
shall be borne equally by the Company and the Purchaser or the Purchaser's estate. 

        d.    Assignment.    The right of the Company to purchase any part of
the Shares may be assigned in whole or in part to any stockholder or stockholders of the Company or other persons or organizations. 

        e.    Restrictions Binding on Transferees.    All transferees of
Shares or any interest therein will receive and hold such Shares or interest subject to the provisions of this Agreement, including, insofar as applicable, the Repurchase Option. In the event of any
purchase by the Company hereunder where the Shares or interest are held by a transferee, the transferee shall be obligated, if requested by the Company, to transfer the Shares or interest to the
Purchaser for consideration equal to the amount to be paid by the Company hereunder. In the event the Repurchase Option is deemed exercised by the Company pursuant to
Section 3(a)(ii) hereof, the Company may deem any transferee to have transferred the Shares or interest to Purchaser prior to their purchase by the Company, and payment of the purchase
price by the Company to such transferee shall be deemed to satisfy Purchaser's obligation to pay such transferee for such Shares or interest, and also to satisfy the Company's obligation to pay
Purchaser for such Shares or interest. Any sale or transfer of the Shares shall be void unless the provisions of this Agreement are satisfied. 

        f.    Termination of Rights.    The right of first refusal granted the
Company by Section 3(b) above and the option to repurchase the Shares in the event of an involuntary transfer granted the Company by Section 3(c) above shall terminate upon the first
sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "Securities Act"). Upon termination of the right of first refusal described in 

4

 

Section 3(b)
above, a new certificate or certificates representing the Shares not repurchased shall be issued, on request, without the legend referred to in
Section 6(a)(ii) herein and delivered to Purchaser. 

        4.    Escrow of Unvested Shares.    For purposes of facilitating the
enforcement of the provisions of Section 3 above, Purchaser agrees, immediately upon receipt of the certificate(s) for the Shares subject to the Repurchase Option, to deliver such
certificate(s), together with an Assignment Separate from Certificate in the form attached to this Agreement as Attachment A executed by Purchaser and
by Purchaser's spouse (if required for transfer), in blank, to the Secretary of the Company, or the Secretary's designee, to hold such certificate(s) and Assignment Separate from Certificate in escrow
and to take all such actions and to effectuate all such transfers and/or releases as are in accordance with the terms of this Agreement. Purchaser hereby acknowledges that the Secretary of the
Company, or the Secretary's designee, is so appointed as the escrow holder with the foregoing authorities as a material inducement to make this Agreement and that said appointment is coupled with an
interest and is accordingly irrevocable. Purchaser agrees that said escrow holder shall not be liable to any party hereof (or to any other party). The escrow holder may rely upon any letter, notice or
other document executed by any signature purported to be genuine and may resign at any time. Purchaser agrees that if the Secretary of the Company, or the Secretary's designee, resigns as escrow
holder for any or no reason, the Board of Directors of the Company shall have the power to appoint a successor to serve as escrow holder pursuant to the terms of this Agreement. 

        5.    Investment and Taxation Representations.    In connection with
the purchase of the Shares, Purchaser represents to the Company the following: 

        a.     Purchaser is aware of the Company's business affairs and financial condition and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision to acquire the Shares. Purchaser is purchasing these securities for investment for his or her own account only and not with a view to, or
for resale in connection with, any "distribution" thereof within the meaning of the Securities Act or under any applicable provision of state law. Purchaser does not have any present intention to
transfer the Shares to any person or entity. 

        b.     Purchaser understands that the Shares have not been registered under the Securities Act by reason of a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide nature of Purchaser's investment intent as expressed herein. 

        c.     Purchaser further acknowledges and understands that the securities must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration is available. Purchaser further acknowledges and understands that the Company is under no obligation to register the
securities. Purchaser understands that the certificate(s) evidencing the securities will be imprinted with a legend which prohibits the transfer of the securities unless they are registered or such
registration is not required in the opinion of counsel for the Company. 

        d.     Purchaser is familiar with the provisions of Rules 144 and 701, each promulgated under the Securities Act, which,
in substance, permit limited public resale of 

5

 

"restricted
securities" acquired, directly or indirectly, from the issuer of the securities (or from an affiliate of such issuer), in a non-public offering subject to the satisfaction of
certain conditions. Purchaser understands that the Company provides no assurances as to whether he or she will be able to resell any or all of the Shares pursuant to Rule 144 or
Rule 701, which rules require, among other things, that the Company be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, that resales of securities take
place only after the holder of the Shares has held the Shares for certain specified time periods, and under certain circumstances, that resales of securities be limited in volume and take place only
pursuant to brokered transactions. Notwithstanding this paragraph (d), Purchaser acknowledges and agrees to the restrictions set forth in paragraph (e) below. 

        e.     Purchaser further understands that in the event all of the applicable requirements of Rule 144 or 701 are not
satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering
and otherwise than pursuant to Rule 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so at their own risk. 

        f.      Purchaser understands that Purchaser may suffer adverse tax consequences as a result of Purchaser's purchase or
disposition of the Shares. Purchaser represents that Purchaser has consulted any tax consultants Purchaser deems advisable in connection with the purchase or disposition of the Shares and that
Purchaser is not relying on the Company for any tax advice 

        6.    Restrictive Legends and Stop-Transfer Orders.    

        a.    Legends.    The certificate or certificates representing the
Shares shall bear the following legends (as well as any legends required by applicable state and federal corporate and securities laws): 

1)    THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR
AN OPINION OF COUNSEL FOR THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933. 

2)    THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND
THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY. 

6

 

        b.    Stop-Transfer Notices.    Purchaser agrees that, in
order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate "stop transfer" instructions to its transfer agent, if any, and that, if the Company transfers
its own securities, it may make appropriate notations to the same effect in its own records. 

        c.    Refusal to Transfer.    The Company shall not be required
(i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Agreement or (ii) to treat as owner of such Shares or
to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred. 

        7.    No Employment Rights.    Nothing in this Agreement shall affect
in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary of the Company, to terminate Purchaser's employment or consulting relationship, for any reason, with or without
cause. 

        8.    Section 83(b) Election.    Purchaser understands that
Section 83(a) of the Internal Revenue Code of 1986, as amended (the "Code"), taxes as ordinary income for a Nonstatutory Stock Option and as
alternative minimum taxable income for an Incentive Stock Option the difference between the amount paid for the Shares and the Fair Market Value of the Shares as of the date any restrictions on the
Shares lapse. In this context, "restriction" means the right of the Company to buy back the Shares pursuant to the Repurchase Option set forth in
Section 3(a) of this Agreement. Purchaser understands that Purchaser may elect to be taxed at the time the Shares are purchased, rather than when and as the Repurchase Option expires, by filing
an election under Section 83(b) (an "83(b) Election") of the Code with the Internal Revenue Service within thirty (30) days from the date
of purchase. Even if the Fair Market Value of the Shares at the time of the execution of this Agreement equals the amount paid for the Shares, the election must be made to avoid income and alternative
minimum tax treatment under Section 83(a) in the future. Purchaser understands that failure to file such an election in a timely manner may result in adverse tax consequences for Purchaser.
Purchaser further understands that an additional copy of such election form should be filed with his or her federal income tax return for the calendar year in which the date of this Agreement falls.
Purchaser acknowledges that the foregoing is only a summary of the effect of United States federal income taxation with respect to purchase of the Shares hereunder, and does not purport to be
complete. Purchaser further acknowledges that the Company has directed Purchaser to seek independent advice regarding the applicable provisions of the Code, the income tax laws of any municipality,
state or foreign country in which Purchaser may reside, and the tax consequences of Purchaser's death. 

        Purchaser
agrees that he or she will execute and deliver to the Company with this executed Agreement a copy of the Acknowledgment and Statement of Decision Regarding Section 83(b)
Election (the "Acknowledgment") attached hereto as Attachment B. Purchaser further agrees that he or she
will execute and submit with the Acknowledgment a copy of the 83(b) Election attached hereto as Attachment C (for tax purposes in connection with the
early exercise of an option) if Purchaser has indicated in the Acknowledgment his or her decision to make such an election. 

7

 

        9.    Lock-Up Agreement.    In connection with the initial
public offering of the Company's securities and upon request of the Company or the underwriters managing any underwritten offering of the Company's securities, Purchaser agrees not to sell, make any
short sale of, loan, grant any option for the purchase of, or otherwise dispose of any securities of the Company however or whenever acquired (other than those included in the registration) without
the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed one hundred eighty (180) days) from the effective date of such
registration as may be requested by the Company or such managing underwriters and to execute an agreement reflecting the foregoing as may be requested by the underwriters at the time of the public
offering. 

        10.    Miscellaneous.    

        a.    Governing Law.    This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to
principles of conflicts of law. 

        b.    Entire Agreement; Enforcement of Rights.    This Agreement sets
forth the entire agreement and understanding of the parties relating to the subject matter herein and merges all prior discussions between them. No modification of or amendment to this Agreement, nor
any waiver of any rights under this Agreement, shall be effective unless in writing signed by the parties to this Agreement. The failure by either party to enforce any rights under this Agreement
shall not be construed as a waiver of any rights of such party. 

        c.    Severability.    If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable
replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so
excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms. 

        d.    Construction.    This Agreement is the result of negotiations
between and has been reviewed by each of the parties hereto and their respective counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no
ambiguity shall be construed in favor of or against any one of the parties hereto. 

        e.    Notices.    Any notice required or permitted by this Agreement
shall be in writing and shall be deemed sufficient when delivered personally or sent by telegram or fax or forty-eight (48) hours after being deposited in the U.S. mail, as certified or
registered mail, with postage prepaid, and addressed to the party to be notified at such party's address as set forth below or as subsequently modified by written notice. 

        f.    Counterparts.    This Agreement may be executed in two
(2) or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument. 

8

 

        g.    Successors and Assigns.    The rights and benefits of this
Agreement shall inure to the benefit of, and be enforceable by the Company's successors and assigns. The rights and obligations of Purchaser under this Agreement may only be assigned with the prior
written consent of the Company. 

        h.    California Corporate Securities Law.    THE SALE OF THE
SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE SECURITIES OR THE PAYMENT OR RECEIPT
OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT. 

[Signature Page Follows] 

9

 

        The
parties have executed this Early Exercise Notice and Restricted Stock Purchase Agreement as of the date first set forth above. 

	 	 	COMPANY:
	

 	
 	

NOVACARDIA, INC.
	

 	
 	

By:	

	

 	
 	

Name:	

	

 	
 	

Title:	

	 	 	 	 
	

 	
 	
PURCHASER:
	

 	
 	

«Optionee»

	 	 	 	 
	 	 	 	 
	 	 	

	 	 	(Signature)
	

 	
 	

Address:	

	 	 	 	

        I,                        ,
spouse of «Optionee», have read and hereby approve the foregoing Agreement. In consideration of the Company's granting my spouse the right to
purchase the Shares as set forth in the Agreement, I hereby agree to be bound irrevocably by the Agreement and further agree that any community property or other such interest that I may have in the
Shares shall hereby be similarly bound by the Agreement. I hereby appoint my spouse as my attorney-in-fact with respect to any amendment or exercise of any rights under the
Agreement. 

	 	

	 	Spouse of «Optionee»

10

ATTACHMENT A  

ASSIGNMENT SEPARATE FROM CERTIFICATE  

        FOR VALUE RECEIVED and pursuant to that certain Early Exercise Notice and Restricted Stock Purchase Agreement between the undersigned
("Purchaser") and NovaCardia, Inc. (the "Company")
dated                        ,            (the
"Agreement"), Purchaser hereby sells, assigns and transfers unto the
Company                        (            ) shares of the Common
Stock of the
Company, standing in Purchaser's name on the books of the Company and represented by Certificate No.            , and does hereby irrevocably constitute and
appoint                        to transfer
said stock on the books of the Company with full power of substitution in the premises. THIS ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT AND THE ATTACHMENTS THERETO. 

	Dated:	 	    
	 	 
	

 	
 	

 	
 	

Signature:
	

 	
 	

 	
 	

    
 «Optionee»
	

 	
 	

 	
 	

    
 Spouse of «Optionee» (if applicable)

Instruction: Please do not fill in any blanks other than the signature line. The purpose of this assignment is to enable the Company to exercise its Repurchase Option set forth
in the Agreement without requiring additional signatures on the part of Purchaser.

 
 

ATTACHMENT B    
    
    ACKNOWLEDGMENT AND STATEMENT OF DECISION
  REGARDING SECTION 83(b) ELECTION    
    

        The undersigned (which term includes the undersigned's spouse), a purchaser
of                        shares of Common Stock of NovaCardia, Inc., a Delaware
corporation (the "Company") by exercise of an option (the "Option") granted pursuant to the Company's
2003 Stock Plan (the "Plan"), hereby states as follows: 

        1.     The undersigned acknowledges receipt of a copy of the Plan relating to the offering of such shares. The undersigned has
carefully reviewed the Plan and the option agreement pursuant to which the Option was granted. 

        2.     The undersigned either [check and complete as applicable]: 

        a.     o has consulted, and has been fully advised by, the undersigned's own tax
advisor,                        , whose business address
is                        , regarding the federal, state and local tax consequences of purchasing shares under the Plan, and
particularly regarding the
advisability of making elections pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended (the "Code") and pursuant to the
corresponding provisions, if any, of applicable state law; or 

        b.     o has knowingly chosen not to consult such a tax advisor. 

        3.     The undersigned hereby states that the undersigned has decided [check as applicable]: 

        a.     o to make an election pursuant to Section 83(b) of the Code, and is
submitting to the Company, together with the undersigned's executed Early Exercise Notice and Restricted Stock Purchase Agreement, an executed form entitled "Election Under Section 83(b) of the
Internal Revenue Code of 1986;" or 

        b.     o not to make an election pursuant to Section 83(b) of the Code. 

        4.     Neither the Company nor any subsidiary or representative of the Company has made any warranty or representation to the
undersigned with respect to the tax consequences of the undersigned's purchase of shares under the Plan or of the making or failure to make an election pursuant to Section 83(b) of the Code or
the corresponding provisions, if any, of applicable state law. 

	Date:	 	 	 	    
 «Optionee»
	

Date:	
 	

 	
 	

    
 Spouse of «Optionee»

ATTACHMENT C  

ELECTION UNDER SECTION 83(b)

OF THE INTERNAL REVENUE CODE OF 1986  

        The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code, to include in taxpayer's gross income or alternative
minimum taxable income, as applicable, for the current taxable year, the amount of any income that may be taxable to taxpayer in connection with taxpayer's receipt of the property described below: 

	1.
	The
name, address, taxpayer identification number and taxable year of the undersigned are as follows:

        NAME
OF TAXPAYER: «Optionee» 

        NAME
OF SPOUSE: 

        ADDRESS:

        IDENTIFICATION
NO. OF TAXPAYER: 

        IDENTIFICATION
NO. OF SPOUSE: 

        TAXABLE
YEAR: 

	2.
	The
property with respect to which the election is made is described as follows: 

                                shares
of the Common Stock of NovaCardia, Inc., a Delaware corporation (the "Company"). 

	3.
	The
date on which the property was transferred is:            

	4.
	The
property is subject to the following restrictions: 

Repurchase
option at cost in favor of the Company upon termination of taxpayer's employment or consulting relationship. 

	5.
	The
Fair Market Value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of such property is:
$                  

	6.
	The
amount (if any) paid for such property: $                  

The
undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned's receipt of the above-described property. The transferee
of such property is the person performing the services in connection with the transfer of said property. 

The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner.  

	Dated:	 	 	 	 
	 	 	 	 	

	 	 	 	 	«Optionee»
	

Dated:	
 	

 	
 	

 
	 	 	 	 	

	 	 	 	 	Spouse of «Optionee»

 
 

RECEIPT AND CONSENT    
    

        The undersigned hereby acknowledges receipt of a photocopy of Certificate
No.            for            shares of Common Stock of
NovaCardia, Inc. (the "Company"). 

        The
undersigned further acknowledges that the Secretary of the Company, or his or her designee, is acting as escrow holder pursuant to the Early Exercise Notice and Restricted Stock
Purchase Agreement Purchaser has previously entered into with the Company. As escrow holder, the Secretary of the Company, or his or her designee, holds the original of the aforementioned certificate
issued in the undersigned's name. 

	Dated:	 	 	 	 
	

 	
 	

 	
 	

	 	 	 	 	«Optionee»

EXHIBIT B  

NOVACARDIA, INC.  

 2003 STOCK PLAN  

EXERCISE NOTICE AND RESTRICTED STOCK PURCHASE AGREEMENT  

        This Agreement ("Agreement") is made as of            , by and between
NovaCardia, Inc., a Delaware
corporation (the "Company"), and «Optionee» ("Purchaser"). To the extent any
capitalized terms used in this Agreement are not defined, they shall have the meaning ascribed to them in the Company's 2003 Stock Plan (the "Plan"). 

        1.    Exercise of Option.    Subject to the terms and conditions hereof, Purchaser hereby
elects to exercise his or her option to purchase «NoofShares» shares of the Common Stock (the "Shares") of the Company under and
pursuant to the Plan and the Stock Option Agreement granted «GrantDate», (the "Option Agreement"). The purchase price for the
Shares shall be $«ExercisePrice» per Share for a total purchase price of $                        . The term
"Shares" refers to the
purchased Shares and all securities received in replacement of the Shares or as stock dividends or splits, all securities received in replacement of the Shares in a recapitalization, merger,
reorganization, exchange or the like, and all new, substituted or additional securities or other properties to which Purchaser is entitled by reason of Purchaser's ownership of the Shares. 

        2.    Time and Place of Exercise.    The purchase and sale of the Shares under this Agreement
shall occur at the principal office of the Company simultaneously with the execution and delivery of this Agreement in accordance with the provisions of Section 3(b) of the Option Agreement. On
such date, the Company will deliver to Purchaser a certificate representing the Shares to be purchased by Purchaser (which shall be issued in Purchaser's name) against payment of the exercise price
therefor by Purchaser by any method listed in Section 4 of the Option Agreement. 

        3.    Limitations on Transfer.    In addition to any other limitation on transfer created by
applicable securities laws, Purchaser shall not assign, encumber or dispose of any interest in the Shares except in compliance with the provisions below and applicable securities laws. 

        a.    Right of First Refusal.    Before any Shares held by Purchaser
or any transferee of Purchaser (either being sometimes referred to herein as the "Holder") may be sold or otherwise transferred (including transfer by
gift or operation of law),
the Company or its assignee(s) shall have a right of first refusal to purchase the Shares on the terms and conditions set forth in this Section 3(a) (the "Right of First
Refusal"). 

        1)    Notice of Proposed Transfer.    The Holder of the Shares shall
deliver to the Company a written notice (the "Notice") stating: (i) the Holder's bona fide intention to sell or otherwise transfer such Shares;
(ii) the name of each proposed purchaser or other transferee ("Proposed Transferee"); (iii) the number of Shares to be transferred to 

 

each
Proposed Transferee; and (iv) the terms and conditions of each proposed sale or transfer. The Holder shall offer the Shares at the same price (the "Offered
Price") and upon the same terms (or terms as similar as reasonably possible) to the Company or its assignee(s). 

        2)    Exercise of Right of First Refusal.    At any time within thirty
(30) days after receipt of the Notice, the Company and/or its assignee(s) may, by giving written notice to the Holder, elect to purchase all, but not less than all, of the Shares proposed to be
transferred to any one or more of the Proposed Transferees, at the purchase price determined in accordance with subsection (iii) below. 

        3)    Purchase Price.    The purchase price
("Purchase Price") for the Shares purchased by the Company or its assignee(s) under this Section 3(a) shall be the Offered Price. If the Offered
Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be determined by the Board of Directors of the Company in good faith. 

        4)    Payment.    Payment of the Purchase Price shall be made, at the
option of the Company or its assignee(s), in cash (by check), by cancellation of all or a portion of any outstanding indebtedness, or by any combination thereof within thirty (30) days after
receipt of the Notice or in the manner and at the times set forth in the Notice. 

        5)    Holder's Right to Transfer.    If all of the Shares proposed in
the Notice to be transferred to a given Proposed Transferee are not purchased by the Company and/or its assignee(s) as provided in this Section 3(a), then the Holder may sell or otherwise
transfer such Shares to that Proposed Transferee at the Offered Price or at a higher price, provided that such sale or other transfer is consummated within sixty (60) days after the date of the
Notice and provided further that any such sale or other transfer is effected in accordance with any applicable securities laws and the Proposed Transferee agrees in writing that the provisions of this
Section 3 shall continue to apply to the Shares in the hands of such Proposed Transferee. If the Shares described in the Notice are not transferred to the Proposed Transferee within such
period, or if the Holder proposes to change the price or other terms to make them more favorable to the Proposed Transferee, a new Notice shall be given to the Company, and the Company and/or its
assignees shall again be offered the Right of First Refusal before any Shares held by the Holder may be sold or otherwise transferred. 

        6)    Exception for Certain Family Transfers.    Anything to the
contrary contained in this Section 3(a) notwithstanding, the transfer of any or all of the Shares during Purchaser's lifetime or on Purchaser's death by will or intestacy to Purchaser's
Immediate Family or a trust for the benefit of Purchaser's Immediate Family shall be exempt from the provisions of this Section 3(a). "Immediate
Family" as used herein shall mean any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law (including adoptive relationships). In such case, the transferee or other recipient shall receive and hold the Shares so transferred subject to the provisions of
this Section, and there shall be no further transfer of such Shares except in accordance with the terms of this Section 3. 

2

 

        b.    Involuntary Transfer.    

        1)    Company's Right to Purchase upon Involuntary Transfer.    In the
event, at any time after the date of this Agreement, of any transfer by operation of law or other involuntary transfer (including death or divorce, but excluding a transfer to Immediate Family as set
forth in Section 3(a)(vi) above) of all or a portion of the Shares by the record holder thereof, the Company shall have an option to purchase all of the Shares transferred. Upon such a
transfer, the person acquiring the Shares shall promptly notify the Secretary of the Company of such transfer. The right to purchase such Shares shall be provided to the Company for a period of thirty
(30) days following receipt by the Company of written notice by the person acquiring the Shares. 

        2)    Price for Involuntary Transfer.    With respect to any stock to
be transferred pursuant to Section 3(b)(i), the price per Share shall be a price set by the Board of Directors of the Company that will reflect the current value of the stock in terms of
present earnings and future prospects of the Company. The Company shall notify Purchaser or his or her executor of the price so determined within thirty (30) days after receipt by it of written
notice of the transfer or proposed transfer of Shares. However, if the Purchaser or his or her executor does not agree with the valuation as determined by the Board of Directors of the Company, the
Purchaser or the executor shall be entitled to have the valuation determined by an independent appraiser to be mutually agreed upon by the Company and the Purchaser or the executor and whose fees
shall be borne equally by the Company and the Purchaser or the Purchaser's estate. 

        c.    Assignment.    The right of the Company to purchase any part of
the Shares may be assigned in whole or in part to any stockholder or stockholders of the Company or other persons or organizations. 

        d.    Restrictions Binding on Transferees.    All transferees of
Shares or any interest therein will receive and hold such Shares or interest subject to the provisions of this Agreement. Any sale or transfer of the Company's Shares shall be void unless the
provisions of this Agreement are satisfied. 

        e.    Termination of Rights.    The right of first refusal granted the
Company by Section 3(a) above and the option to repurchase the Shares in the event of an involuntary transfer granted the Company by Section 3(b) above shall terminate upon the first
sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "Securities Act"). Upon termination of the right of first refusal described in Section 3(a) above, a new certificate or
certificates representing the Shares not repurchased shall be issued, on request, without the legend referred to in Section 5(a)(ii) herein and delivered to Purchaser. 

        4.    Investment and Taxation Representations.    In connection with
the purchase of the Shares, Purchaser represents to the Company the following: 

3

 

        a.     Purchaser is aware of the Company's business affairs and financial condition and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision to acquire the Shares. Purchaser is purchasing these securities for investment for his or her own account only and not with a view to, or
for resale in connection with, any "distribution" thereof within the meaning of the Securities Act or under any applicable provision of state law. Purchaser does not have any present intention to
transfer the Shares to any person or entity. 

        b.     Purchaser understands that the Shares have not been registered under the Securities Act by reason of a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide nature of Purchaser's investment intent as expressed herein. 

        c.     Purchaser further acknowledges and understands that the securities must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration is available. Purchaser further acknowledges and understands that the Company is under no obligation to register the
securities. Purchaser understands that the certificate(s) evidencing the securities will be imprinted with a legend which prohibits the transfer of the securities unless they are registered or such
registration is not required in the opinion of counsel for the Company. 

        d.     Purchaser is familiar with the provisions of Rules 144 and 701, each promulgated under the Securities Act, which,
in substance, permit limited public resale of "restricted securities" acquired, directly or indirectly, from the issuer of the securities (or from an affiliate of such issuer), in a
non-public offering subject to the satisfaction of certain conditions. Purchaser understands that the Company provides no assurances as to whether he or she will be able to resell any or
all of the Shares pursuant to Rule 144 or Rule 701, which rules require, among other things, that the Company be subject to the reporting requirements of the Securities Exchange Act of
1934, as amended, that resales of securities take place only after the holder of the Shares has held the Shares for certain specified time periods, and under certain circumstances, that resales of
securities be limited in volume and take place only pursuant to brokered transactions. Notwithstanding this paragraph (d), Purchaser acknowledges and agrees to the restrictions set forth in
paragraph (e) below. 

        e.     Purchaser further understands that in the event all of the applicable requirements of Rule 144 or 701 are not
satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering
and otherwise than pursuant to Rule 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so at their own risk. 

        f.      Purchaser understands that Purchaser may suffer adverse tax consequences as a result of Purchaser's purchase or
disposition of the Shares. Purchaser represents that Purchaser has consulted any tax consultants Purchaser deems advisable in connection with 

4

 

the
purchase or disposition of the Shares and that Purchaser is not relying on the Company for any tax advice. 

        5.    Restrictive Legends and Stop-Transfer Orders.    

        a.    Legends.    The certificate or certificates representing the
Shares shall bear the following legends (as well as any legends required by applicable state and federal corporate and securities laws): 

1)    THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR
AN OPINION OF COUNSEL FOR THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933. 

2)    THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND
THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY. 

        b.    Stop-Transfer Notices.    Purchaser agrees that, in
order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate "stop transfer" instructions to its transfer agent, if any, and that, if the Company transfers
its own securities, it may make appropriate notations to the same effect in its own records. 

        c.    Refusal to Transfer.    The Company shall not be required
(i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Agreement or (ii) to treat as owner of such Shares or
to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred. 

        6.    No Employment Rights.    Nothing in this Agreement shall affect
in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary of the Company, to terminate Purchaser's employment or consulting relationship, for any reason, with or without
cause. 

        7.    Lock-Up Agreement.    In connection with the initial
public offering of the Company's securities and upon request of the Company or the underwriters managing any underwritten offering of the Company's securities, Purchaser agrees not to sell, make any
short sale of, loan, grant any option for the purchase of, or otherwise dispose of any securities of the Company however or whenever acquired (other than those included in the registration) 

5

 

without
the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed one hundred eighty (180) days) from the effective date of such
registration as may be requested by the Company or such managing underwriters and to execute an agreement reflecting the foregoing as may be requested by the underwriters at the time of the public
offering. 

        8.    Miscellaneous.    

        a.    Governing Law.    This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to
principles of conflicts of law. 

        b.    Entire Agreement; Enforcement of Rights.    This Agreement sets
forth the entire agreement and understanding of the parties relating to the subject matter herein and merges all prior discussions between them. No modification of or amendment to this Agreement, nor
any waiver of any rights under this Agreement, shall be effective unless in writing signed by the parties to this Agreement. The failure by either party to enforce any rights under this Agreement
shall not be construed as a waiver of any rights of such party. 

        c.    Severability.    If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable
replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so
excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms. 

        d.    Construction.    This Agreement is the result of negotiations
between and has been reviewed by each of the parties hereto and their respective counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no
ambiguity shall be construed in favor of or against any one of the parties hereto. 

        e.    Notices.    Any notice required or permitted by this Agreement
shall be in writing and shall be deemed sufficient when delivered personally or sent by telegram or fax or forty-eight (48) hours after being deposited in the U.S. mail, as certified or
registered mail, with postage prepaid, and addressed to the party to be notified at such party's address as set forth below or as subsequently modified by written notice. 

        f.    Counterparts.    This Agreement may be executed in two
(2) or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument. 

        g.    Successors and Assigns.    The rights and benefits of this
Agreement shall inure to the benefit of, and be enforceable by the Company's successors and assigns. The rights and obligations of Purchaser under this Agreement may only be assigned with the prior
written consent of the Company. 

6

 

        h.    California Corporate Securities Law.    THE SALE OF THE
SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE SECURITIES OR THE PAYMENT OR RECEIPT
OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT. 

[Signature
Page Follows] 

7

 

        The
parties have executed this Exercise Notice and Restricted Stock Purchase Agreement as of the date first set forth above. 

	 	 	COMPANY:
	
 	
 	
NOVACARDIA, INC.
	

 	
 	

By:	

 
	 	 	 	

	 	 	Name:	 
	 	 	 	

	 	 	Title:	 
	 	 	 	

	

 	
 	
PURCHASER:
	

 	
 	

«Optionee»
	

 	
 	

 (Signature)
	

 	
 	

Address:	

 
	 	 	 	

	

 	
 	

 	

I,                        ,
spouse of «Optionee», have read and hereby approve the foregoing Agreement. In consideration of the Company's granting my spouse the right to purchase the
Shares as set forth in the Agreement, I hereby agree to be irrevocably bound by the Agreement and further agree that any community property or other such interest shall hereby by similarly bound by
the Agreement. I hereby appoint my spouse as my attorney-in-fact with respect to any amendment or exercise of any rights under the Agreement. 

	

 	
 	

 	
 	

 Spouse of «Optionee»

8

 
 

RECEIPT    
    

        The undersigned hereby acknowledges receipt of Certificate
No.            for                        shares of Common Stock of
NovaCardia, Inc.
 

	Dated:	 	 	 	 
	

 	
 	

 	
 	

 «Optionee»

 
 

RECEIPT    
    

        NovaCardia, Inc. (the "Company") hereby acknowledges receipt of a check in the amount of
$                        given by «Optionee»as
consideration for Certificate
No.            for                        shares of Common Stock of
the Company. 

	Dated:	 	 	 
	 	 	NOVACARDIA, INC.
	

 	
 	
By:	

 
	 	 	 	

	

 	
 	

Name:	

 
	 	 	 	
 (print)
	

 	
 	

Title:	

 
	 	 	 	

QuickLinks

Exhibit 10.2

NOVACARDIA, INC. 2003 EQUITY INCENTIVE PLAN

NOVACARDIA, INC. 2003 STOCK PLAN NOTICE OF STOCK OPTION GRANT

NOVACARDIA, INC. 2003 STOCK PLAN STOCK OPTION AGREEMENT

ATTACHMENT B ACKNOWLEDGMENT AND STATEMENT OF DECISION REGARDING SECTION 83(b) ELECTION

RECEIPT AND CONSENT

RECEIPT

RECEIPT

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00120-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00120-of-00352.parquet"}]]