Document:

Exhibit 10.1

CARDICA, INC.

1997 EQUITY INCENTIVE PLAN

ADOPTED NOVEMBER 7, 1997

APPROVED BY STOCKHOLDERS ON NOVEMBER 7, 1997

 

AMENDED DECEMBER 17, 1998

APPROVED BY STOCKHOLDERS ON DECEMBER 23, 1998

 

AMENDED JULY 21, 2000

APPROVED BY STOCKHOLDERS ON AUGUST 1, 2000

 

AMENDED MAY 29, 2001

APPROVED BY STOCKHOLDERS ON JUNE 14, 2001

 

AMENDED JANUARY 31, 2002

APPROVED BY STOCKHOLDERS ON FEBRUARY 28, 2002

 

AMENDED SEPTEMBER 5, 2002

AMENDED MAY 28, 2003 

APPROVED BY STOCKHOLDERS ON JULY 31, 2003

 

AMENDED FEBRUARY 2, 2005

APPROVED BY STOCKHOLDERS ON OCTOBER 26, 2005 

 

	
            1.
 	
            PURPOSES.
 

(a)          The purpose of the Plan is to provide a means by which selected Employees and Directors of and Consultants to the Company, and its Affiliates, may be given an opportunity to benefit from increases in value of the stock of the Company through the granting of (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) stock bonuses, and (iv) rights to purchase restricted stock, all as defined below.

(b)          The Company, by means of the Plan, seeks to retain the services of persons who are now Employees or Directors of or Consultants to the Company or its Affiliates, to secure and retain the services of new Employees, Directors and Consultants, and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Affiliates.

(c)          The Company intends that the Stock Awards issued under the Plan shall, in the discretion of the Board or any Committee to which responsibility for administration of the Plan has been delegated pursuant to subsection 3(c), be either (i) Options granted pursuant to Section 6 hereof, including Incentive Stock Options and Nonstatutory Stock Options, or (ii) stock bonuses or rights to purchase restricted stock granted pursuant to Section 7 hereof. All Options shall be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and in such form as issued pursuant to Section 6, and a separate certificate or certificates will be issued for shares purchased on exercise of each type of Option.

 

 

 

	
            2.
 	
            DEFINITIONS.
 

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

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

	
             
 	
            (c)
 	
            “Code” means the Internal Revenue Code of 1986, as amended.
 

(d)          “Committee” means a Committee appointed by the Board in accordance with subsection 3(c) of the Plan.

	
             
 	
            (e)
 	
            “Company” means Cardica, Inc., a Delaware corporation.
 

(f)           “Consultant” means any person, including an advisor, engaged by the Company or an Affiliate to render consulting services and who is compensated for such services, provided that the term “Consultant” shall not include Directors who are paid only a director’s fee by the Company or who are not compensated by the Company for their services as Directors.

(g)          “Continuous Status as an Employee, Director or Consultant” means that the service of an individual to the Company, whether as an Employee, Director or Consultant, is not interrupted or terminated. The Board or the chief executive officer of the Company may determine, in that party’s sole discretion, whether Continuous Status as an Employee, Director or Consultant shall be considered interrupted in the case of:  (i) any leave of absence approved by the Board or the chief executive officer of the Company, including sick leave, military leave, or any other personal leave; or (ii) transfers between the Company, Affiliates or their successors.

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

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

(j)           “Employee” means any person, including Officers and Directors, employed by the Company or any Affiliate of the Company. Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

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

(l)           “Fair Market Value” means the value of the common stock as determined in good faith by the Board and in a manner consistent with Section 260.140.50 of Title 10 of the California Code of Regulations.

 

 

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

(n)          “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.

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

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

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

	
             
 	
            (r)
 	
            “Option” means a stock option granted pursuant to the Plan.
 

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

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

(u)          “Outside Director” means a Director who either (i) is not a current employee of the Company or an “affiliated corporation” (within the meaning of the Treasury regulations promulgated under Section 162(m) of the Code), is not a former employee of the Company or an “affiliated corporation” receiving compensation for prior services (other than benefits under a tax qualified pension plan), was not an officer of the Company or an “affiliated corporation” at any time, and is not currently receiving direct or indirect remuneration from the Company or an “affiliated corporation” for services in any capacity other than as a Director, or (ii) is otherwise considered an “outside director”
for purposes of Section 162(m) of the Code.

	
             
 	
            (v)
 	
            “Plan” means this 1997 Equity Incentive Plan.
 

 

 

	
             
 	
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(w)         “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect with respect to the Company at the time discretion is being exercised regarding the Plan.

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

(y)          “Stock Award” means any right granted under the Plan, including any Option, any stock bonus, and any right to purchase restricted stock.

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

	
            3.
 	
            ADMINISTRATION.
 

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

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

 (1)         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; whether a Stock Award will be an Incentive Stock Option, a Nonstatutory Stock Option, a stock bonus, a right to purchase restricted stock, or a combination of the foregoing; 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 stock pursuant to a Stock Award; and the number of shares with respect to which a Stock Award shall be granted to each such person.

 (2)         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.

	
             
 	
            (3)
 	
            To amend the Plan or a Stock Award as provided in Section 13.
 

(c)          The Board may delegate administration of the Plan to a committee of the Board composed of not fewer than two (2) members (the “Committee”), all of the members of which Committee may be, in the discretion of the Board, Non-Employee Directors and/or Outside Directors. 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 of two (2) or more Outside Directors 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 such a 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. Additionally, prior to the Listing Date, and notwithstanding

 

	
             
 	
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anything to the contrary contained herein, the Board may delegate administration
of the Plan to any person or persons and the term “Committee” shall
apply to any person or persons to whom such authority has been delegated.
Notwithstanding anything in this Section 3 to the contrary, the Board or the
Committee may delegate to a committee of one or more members of the Board the
authority to grant Stock Awards to eligible persons who (1) are not then subject
to Section 16 of the Exchange Act and/or (2) are either (i) not then Covered
Employees and are not expected to be Covered Employees at the time of
recognition of income resulting from such Stock Award, or (ii) not persons with
respect to whom the Company wishes to comply with Section 162(m) of the
Code.

	
            4.
 	
            SHARES SUBJECT TO THE PLAN.
 

(a)          Subject to the provisions of Section 12 relating to adjustments upon changes in stock, the stock that may be issued pursuant to Stock Awards shall not exceed in the aggregate Five Million Seven Hundred Forty Five Thousand (5,745,000) shares of the Company’s common stock. 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 pursuant to a Stock Award are forfeited back to the Company because of the failure to meet a contingency or condition required to vest such shares in the Stock Award holder, the shares of Common Stock not acquired or forfeited under such Stock Award shall revert to and again become available for issuance under the Plan; provided, however, that the aggregate maximum number of shares of Common Stock that may be issued in connection with Incentive Stock Options shall be Eleven Million Four Hundred Ninety Thousand (11,490,000) shares of Common Stock. 

(b)          The stock subject to the Plan may be unissued shares or reacquired shares, bought on the market or otherwise.

	
            5.
 	
            ELIGIBILITY.
 

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

(b)          No person shall be eligible for the grant of an Option or an award to purchase restricted stock if, at the time of grant, such person 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 unless the exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market Value of such stock at the date of grant and the Option is not exercisable after the expiration of five (5) years from the date of grant, or in the case of a restricted stock purchase award, the purchase price is at least one hundred percent (100%) of the Fair Market Value of such stock at the date of grant.

(c)          Subject to the provisions of Section 13 relating to adjustments upon changes in stock, no person shall be eligible to be granted Options covering more than One Hundred Fifty Thousand (150,000) shares of the Company’s common stock in any twelve (12)-month period. This subsection 5(c) shall not apply prior to the Listing Date and, following the Listing Date, shall not apply until (i) the earliest of:  (A) the first material modification of the Plan (including any increase to the number of shares reserved for issuance under the Plan in accordance with 

 

	
             
 	
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Section 4); (B) the issuance of all of the shares of common stock reserved for issuance under the Plan; (C) the expiration of the Plan; or (D) the first meeting of stockholders at which directors are to be elected that occurs after the close of the third calendar year following the calendar year in which occurred the first registration of an equity security under section 12 of the Exchange Act; or (ii) such other date required by Section 162(m) of the Code and the rules and regulations promulgated thereunder.

	
            6.
 	
            OPTION PROVISIONS.
 

Each Option shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. 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. No Option shall be exercisable after the expiration of ten (10) years from the date it was granted.

(b)          Price. The exercise price of each Incentive Stock Option shall be not less than one hundred percent (100%) of the Fair Market Value of the stock subject to the Option on the date the Option is granted; the exercise price of each Nonstatutory Stock Option shall be not less than eighty-five percent (85%) of the Fair Market Value of the stock subject to the Option on the date the Option is granted. Notwithstanding the foregoing, an Option (whether an Incentive Stock Option or 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.

(c)          Consideration. The purchase price of 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 or the Committee, at the time of the grant of the Option, (A) by delivery to the Company of other common stock of the Company, (B) according to a deferred payment or other arrangement (which may include, without limiting the generality of the foregoing, the use of other common stock of the Company) with the person to whom the Option is granted or to whom the Option is transferred pursuant to subsection 6(d), or (C) in any other form of legal consideration that may be acceptable to the
Board. 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 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. In addition, to the extent required by applicable law, the “par value” of the stock will not be subject to any deferred payment arrangement and will be paid in cash at the time the Option is exercised.

(d)          Transferability. Prior to the Listing Date, an Option (whether an Incentive Stock Option or a Nonstatutory 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 person to whom the Option is granted only by such person. From and after the Listing Date, a Nonstatutory Stock Option may be transferable to the extent provided in the Option Agreement; provided, however, 

 

	
             
 	
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that if the Option Agreement does not specifically provide for transferability, then such Nonstatutory Stock Option shall not be transferable except by will or by the laws of descent and distribution. Notwithstanding the foregoing, the person to whom the Option is granted 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 Optionee, shall thereafter be entitled to exercise the Option.

(e)          Vesting. The total number of shares of stock subject to an Option may, but need not, be allotted in periodic installments (which may, but need not, be equal). The Option Agreement may provide that from time to time during each of such installment periods, the Option may become exercisable (“vest”) with respect to some or all of the shares allotted to that period, and may be exercised with respect to some or all of the shares allotted to such period and/or any prior period as to which the Option became vested but was not fully exercised. 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, provided, however that prior to the Listing Date, each Option will provide for vesting of at least twenty percent (20%) per year of the total number of shares subject to the Option. Notwithstanding the foregoing, an Option granted to an Officer, Director or Consultant may become fully exercisable, subject to reasonable conditions such as continued employment, at any time or during any period established by the Company or of any of its Affiliates. The provisions of this subsection 6(e) are subject to any Option provisions governing the minimum number of shares as to which an Option may be exercised.

(f)           Termination of Employment or Relationship as a Director or Consultant. In the event an Optionee’s Continuous Status as an Employee, Director or Consultant terminates (other than upon the Optionee’s death or disability), the Optionee may exercise his or her Option (to the extent that the Optionee was entitled to exercise it as of the date of termination) but only within such period of time ending on the earlier of (i) the date three (3) months following the termination of the Optionee’s Continuous Status as an Employee, Director or Consultant (or such longer or shorter period, which shall not be less than thirty (30) days, specified in the Option Agreement), or (ii) the expiration of the term of the Option as set forth in the Option
Agreement; provided however, if the Optionee is terminated for cause, then the Option shall terminate on the date Optionee’s Continuous Service ceases. If, at the date of termination, the Optionee is not entitled to exercise his or her entire Option, the shares covered by the unexercisable portion of the Option shall revert to and again become available for issuance under the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified in the Option Agreement, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan.

An Optionee’s Option Agreement may also provide that if the exercise of the Option following the termination of the Optionee’s Continuous Status as an Employee, Director, or Consultant (other than upon the Optionee’s death or disability) would result in liability under Section 16(b) of the Exchange Act, then the Option shall terminate on the earlier of (i) the expiration of the term of the Option set forth in the Option Agreement, or (ii) the tenth (10th) day after the last date on which such exercise would result in such liability under Section 16(b) of the Exchange Act. Finally, an Optionee’s Option Agreement may also provide that if the exercise of 

 

	
             
 	
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the Option following the termination of the Optionee’s Continuous Status as an Employee, Director or Consultant (other than upon the Optionee’s death or disability) would be prohibited at any time solely because the issuance of shares would violate the registration requirements under the Securities Act, then the Option shall terminate on the earlier of (i) the expiration of the term of the Option set forth in the first paragraph of this subsection 6(f), or (ii) the expiration of a period of three (3) months after the termination of the Optionee’s Continuous Status as an Employee, Director or Consultant during which the exercise of the Option would not be in violation of such registration requirements.

(g)          Disability of Optionee. In the event an Optionee’s Continuous Status as an Employee, Director or Consultant terminates as a result of the Optionee’s disability, the Optionee may exercise his or her Option (to the extent that the Optionee was entitled to exercise it as of the date of termination), but only within such period of time ending on the earlier of (i) the date twelve (12) months following such termination (or such longer or shorter period, which in no event shall be less than six (6) months, specified in the Option Agreement), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, at the date of termination, the Optionee is not entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become available for issuance under the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan.

(h)          Death of Optionee. In the event of the death of an Optionee during, or within a period specified in the Option Agreement after the termination of, the Optionee’s Continuous Status as an Employee, Director or Consultant, the Option may be exercised (to the extent the Optionee was entitled to exercise the Option as of the date of death) by the Optionee’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 Optionee’s death pursuant to subsection 6(d), but only within the period ending on the earlier of (i) the date eighteen (18) months following the date of death (or such longer or shorter period, which in no event shall be less than six (6)
months, specified in the Option Agreement), or (ii) the expiration of the term of such Option as set forth in the Option Agreement. If, at the time of death, the Optionee was not entitled to exercise his or her entire Option, the shares covered by the unexercisable portion of the Option shall revert to and again become available for issuance under the Plan. If, after death, the Option is not exercised within the time specified herein, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan.

(i)           Early Exercise. The Option may, but need not, include a provision whereby the Optionee may elect at any time while an Employee, Director or Consultant to exercise the Option as to any part or all of the shares subject to the Option prior to the full vesting of the Option. Any unvested shares so purchased shall be subject to a repurchase right in favor of the Company, with the repurchase price to be equal to the original purchase price of the stock, or to any other restriction the Board determines to be appropriate. Prior to the Listing Date, however, any unvested shares so purchased shall be subject to a repurchase right in favor of the Company, with the repurchase price to be equal to the original purchase price of the stock, or to any other
restriction the Board determines to be appropriate; provided, however, that (i) the right to repurchase at the original purchase price shall lapse at a minimum rate of twenty percent (20%) 

 

	
             
 	
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per year over five (5) years from the date the Option was granted, and (ii) such right shall be exercisable only within (A) the ninety (90)-day period following the termination of employment or the  relationship as a Director or Consultant, or (B) such longer period as may be agreed to by the Company and the Optionee (for example, for purposes of satisfying the requirements of Section 1202(c)(3) of the Code (regarding “qualified small business stock”)), and (iii) such right shall be exercisable only for cash or cancellation of purchase money indebtedness for the shares. Notwithstanding the foregoing, shares received on exercise of an Option by an Officer, Director or Consultant may be subject to additional or greater restrictions.

(j)           Right of Repurchase. The Option may, but need not, include a provision whereby the Company may elect, prior to the Listing Date, to repurchase all or any part of the vested shares exercised pursuant to the Option; provided, however, that (i) such repurchase right shall be exercisable only within (A) the ninety (90) day period following the termination of employment or the relationship as a Director or Consultant (or in the case of a post-termination exercise of the Option, the ninety (90)-day period following such post-termination exercise), or (B) such longer period as may be agreed to by the Company and the Optionee (for example, for purposes of satisfying the requirements of Section 1202(c)(3) of
the Code (regarding “qualified small business stock”)), (ii) such repurchase right shall be exercisable for less than all of the vested shares only with the Optionee’s consent, and (iii) such right shall be exercisable only for cash or cancellation of purchase money indebtedness for the shares at a repurchase price equal to the greater of (A) the stock’s Fair Market Value at the time of such termination Notwithstanding the foregoing, shares received on exercise of an Option by an Officer, Director or Consultant may be subject to additional or greater restrictions specified in the Option Agreement.

(k)          Right of First Refusal. The Option may, but need not, include a provision whereby the Company may elect, prior to the Listing Date, to exercise a right of first refusal following receipt of notice from the Optionee of the intent to transfer all or any part of the shares exercised pursuant to the Option.

	
            7.
 	
            TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.
 

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

(a)          Purchase Price. The purchase price under each
restricted stock purchase agreement shall be such amount as the Board or
Committee shall determine and designate in such Stock Award Agreement, but in no
event shall the purchase price be less than eighty-five percent (85%) of the
stock’s Fair Market Value on the date such award is made. In addition, any
Stock Award made to a 10% stockholder (as defined in Section 5(b)) shall have a
purchase price not less than one hundred and ten percent (110%) of the
stock’s Fair Market Value on the date such award is made. Notwithstanding
the foregoing, the Board or the Committee may  

 

	
             
 	
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determine that eligible participants in the Plan may be awarded stock pursuant to a stock bonus agreement in consideration for past services actually rendered to the Company or for its benefit.

(b)          Transferability. Rights under a stock bonus or restricted stock purchase agreement shall be transferable by the grantee only upon such terms and conditions as are set forth in the applicable Stock Award Agreement, as the Board or the Committee shall determine in its discretion, so long as stock awarded under such Stock Award Agreement remains subject to the terms of the agreement.

(c)          Consideration. The purchase price of stock acquired pursuant to a stock purchase agreement shall be paid either:  (i) in cash at the time of purchase; (ii) at the discretion of the Board or the Committee, according to a deferred payment or other arrangement with the person to whom the stock is sold; or (iii) in any other form of legal consideration that may be acceptable to the Board or the Committee in its discretion. Notwithstanding the foregoing, the Board or the Committee to which administration of the Plan has been delegated may award stock pursuant to a stock bonus agreement in consideration for past services actually rendered to the Company or for its benefit.

(d)          Vesting. Shares of stock sold or awarded under the Plan may, but need not, be subject to a repurchase option in favor of the Company in accordance with a vesting schedule to be determined by the Board or the Committee. The applicable agreement shall provide (i) that the right to repurchase at the original purchase price shall lapse at a minimum rate of twenty percent (20%) per year over five (5) years from the date the Stock Award was granted, and (ii) such right shall be exercisable only (A) within the ninety (90) day period following the termination of employment or the relationship as a Director or Consultant, or (B) such longer period as may be agreed to by the Company and the holder of the Stock Award (for example, for purposes of satisfying the
requirements of Section 1202(c)(3) of the Code (regarding “qualified small business stock”)), and (iii) such right shall be exercisable only for cash or cancellation of purchase money indebtedness for the shares. Should the right of repurchase be assigned by the Company, the assignee shall pay the Company cash equal to the difference between the original purchase price and the stock’s Fair Market Value if the original purchase price is less than the stock’s Fair Market Value.

(e)          Termination of Employment or Relationship as a Director or Consultant. In the event a Participant’s Continuous Status as an Employee, Director or Consultant terminates, the Company may repurchase or otherwise reacquire, subject to the limitations described in subsection 7(d), any or all of the shares of stock held by that person which have not vested as of the date of termination under the terms of the stock bonus or restricted stock purchase agreement between the Company and such person.

	
            8.
 	
            CANCELLATION AND RE-GRANT OF OPTIONS.
 

(a)          The Board or the Committee shall have the authority to effect, at any time and from time to time, (i) the repricing of any outstanding Options under the Plan and/or (ii) with the consent of the affected holders of Options, the cancellation of any outstanding Options under the Plan and the grant in substitution therefor of new Options under the Plan covering the same or different numbers of shares of stock, but having an exercise price per share not less than eighty-

 

	
             
 	
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five percent (85%) of the Fair Market Value (one hundred percent (100%) of the Fair Market Value in the case of an Incentive Stock Option) or, in the case of a 10% stockholder (as described in subsection 5(b)), not less than one hundred ten percent (110%) of the Fair Market Value) per share of stock on the new grant date. Notwithstanding the foregoing, the Board or the Committee may grant an Option with an exercise price lower than that set forth above if such Option is granted as part of a transaction to which section 424(a) of the Code applies.

(b)          Shares subject to an Option canceled under this Section 8 shall continue to be counted against the maximum award of Options permitted to be granted pursuant to subsection 5(c) of the Plan. The repricing of an Option under this Section 8, resulting in a reduction of the exercise price, shall be deemed to be a cancellation of the original Option and the grant of a substitute Option; in the event of such repricing, both the original and the substituted Options shall be counted against the maximum awards of Options permitted to be granted pursuant to subsection 5(c) of the Plan. The provisions of this subsection 8(b) shall be applicable only to the extent required by Section 162(m) of the Code.

	
            9.
 	
            COVENANTS OF THE COMPANY.
 

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

(b)          The Company shall seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to issue and sell shares of stock upon exercise of the Stock Award; provided, however, that this undertaking shall not require the Company to register under the Securities Act either the Plan, any Stock Award or any 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 stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell stock upon exercise of such Stock Awards unless and until such
authority is obtained.

	
            10.
 	
            USE OF PROCEEDS FROM STOCK.
 

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

	
            11.
 	
            MISCELLANEOUS.
 

(a)          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 pursuant to subsection 6(e), 7(d) or 8(b), 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)          Neither an Employee, Director or Consultant nor any person to whom a Stock Award is transferred under subsection 6(d), 7(b), or 8(b) shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares subject to such Stock Award unless and until such person has satisfied all requirements for exercise of the Stock Award pursuant to its terms.

 

 

	
             
 	
            11
 

 

 

 

(c)          Throughout the term of any Stock Award, the Company shall deliver to the holder of such Stock Award, not later than one hundred twenty (120) days after the close of each of the Company’s fiscal years during the term of such Stock Award, a balance sheet and an income statement. This subsection shall not apply (i) after the Listing Date, or (ii) when issuance is limited to key employees whose duties in connection with the Company assure them access to equivalent information. 

(d)          Nothing in the Plan or any instrument executed or Stock Award granted pursuant thereto shall confer upon any Employee, Director, Consultant or other holder of Stock Awards any right to continue in the employ of the Company or any Affiliate (or to continue acting as a Director or Consultant) or shall affect the right of the Company or any Affiliate to terminate the employment of any Employee with or without cause the right of the Company’s Board of Directors and/or the Company’s stockholders to remove any Director as provided in the Company’s By-Laws and the provisions of the California Corporations Code, or the right to terminate the relationship of any Consultant subject to the terms of such Consultant’s agreement with the Company or Affiliate.

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

(f)           The Company may require any person to whom a Stock Award is granted, or any person to whom a Stock Award is transferred pursuant to subsection 6(d), 7(b) or 8(b), as a condition of exercising or acquiring stock under any Stock Award, (1) to give written assurances satisfactory to the Company as to such person’s knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters, and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Stock Award; and (2) to give written assurances satisfactory to the Company stating that such person is
acquiring the stock subject to the Stock Award for such person’s own account and not with any present intention of selling or otherwise distributing the stock. The foregoing requirements, and any assurances given pursuant to such requirements, shall be inoperative if (i) the issuance of the shares upon the exercise or acquisition of stock under the Stock Award has been registered under a then currently effective registration statement under the Securities Act, or (ii) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the stock.

(g)          To the extent provided by the terms of a Stock Award Agreement, the person to whom a Stock Award is granted may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition of stock under a Stock Award by any of the following 

 

	
             
 	
            12
 

 

 

means or by a combination of such means:  (1) tendering a cash payment; (2) authorizing the Company to withhold shares from the shares of the common stock otherwise issuable to the participant as a result of the exercise or acquisition of stock under the Stock Award; or (3) delivering to the Company owned and unencumbered shares of the common stock of the Company.

	
            12.
 	
            ADJUSTMENTS UPON CHANGES IN STOCK.
 

(a)          If any change is made in the stock subject to the Plan, or subject to any Stock Award (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company), the Plan will be appropriately adjusted in the type(s) and maximum number of securities subject to the Plan pursuant to subsection 4(a) and the maximum number of securities subject to award to any person during any twelve (12) month period pursuant to subsection 5(c), and the outstanding Stock Awards will be appropriately adjusted in the type(s) and number of securities and
price per share of stock subject to such outstanding Stock Awards. Such adjustments shall be made by the Board or the Committee, the determination of which shall be final, binding and conclusive. (The conversion of any convertible securities of the Company shall not be treated as a “transaction not involving the receipt of consideration by the Company.”)

(b)          In the event of:  (1) a merger or consolidation in which the Company is not the surviving corporation; or (2) a reverse merger in which the Company is the surviving corporation but the shares of the Company’s common stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise; then: (i) any surviving corporation or acquiring corporation shall assume any Stock Awards outstanding under the Plan or shall substitute similar stock awards (including an award to acquire the same consideration paid to the stockholders in the transaction described in this subsection 12(b)) for those outstanding under the Plan, or (ii) in the event any surviving corporation or
acquiring corporation refuses to assume such Stock Awards or to substitute similar stock awards for those outstanding under the Plan, (A) with respect to Stock Awards held by persons then performing services as Employees, Directors or Consultants, the vesting of such Stock Awards (and, if applicable, the time during which such Stock Awards may be exercised) shall be accelerated prior to such event and the Stock Awards terminated if not exercised after such acceleration and at or prior to such event, and (B) with respect to any other Stock Awards outstanding under the Plan, such Stock Awards shall be terminated if not exercised prior to such event. In the event of:  (x) a dissolution or liquidation, or (y) a sale of all or substantially all of the assets of the Company, the outstanding Options shall terminate if not exercised prior to such event; unless, in the event of such a sale of all or substantially all of the assets of the Company, the acquiring person or entity agrees to
assume the Options outstanding under the Plan.

	
            13.
 	
            AMENDMENT OF THE PLAN AND STOCK AWARDS.
 

(a)          The Board at any time, and from time to time, may amend the Plan. However, except as provided in Section 12 relating to adjustments upon changes in stock, no amendment shall be effective unless approved by the stockholders of the Company to the extent stockholder 

 

	
             
 	
            13
 

 

 

approval is necessary for the Plan to satisfy the requirements of Section 422 of the code, Rule 16b-3 under the Exchange Act or any Nasdaq or securities exchange listing requirements.§

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

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

(d)          Rights and obligations 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 person to whom the Stock Award was granted and (ii) such person consents in writing.

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

	
            14.
 	
            TERMINATION OR SUSPENSION OF THE PLAN.
 

(a)          The Board may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall terminate on November 7, 2007, which date shall be within ten (10) years from 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)          Rights and obligations under any Stock Award granted while the Plan is in effect shall not be impaired by suspension or termination of the Plan, except with the written consent of the person to whom the Stock Award was granted.

	
            15.
 	
            EFFECTIVE DATE OF PLAN.
 

The Plan shall become effective as determined by the Board, but no Stock Awards granted under the Plan shall be exercised 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, and, if required, an appropriate permit has been issued by the Commissioner of Corporations of the State of California.

 

[END OF DOCUMENT]

 

 

 

	
             
 	
            14
 

 

 

CARDICA, INC.

1997 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, Cardica, Inc. (the “Company”) has granted you an option under its 1997 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. Defined 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 

 

	
             
 	
            1.
 

 

 

options 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.

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 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.

	
             
 	
            (c)
 	
            Pursuant to the following deferred payment alternative:
 

(i)           Not less than one hundred percent (100%) of the aggregate exercise price, plus accrued interest, shall be due four (4) years from date of exercise or, at the Company’s election, upon termination of your Continuous Service.

(ii)          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) the treatment of the Option as a variable award for financial accounting purposes.

 

 

	
             
 	
            2.
 

 

 

 

(iii)        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 be made in cash and not by deferred payment.

(iv)         In order to elect the deferred payment alternative, you must, as a part of your written notice of exercise, give notice of the election of this payment alternative and, in order to secure the payment of the deferred exercise price to the Company hereunder, if the Company so requests, you must tender to the Company a promissory note and a pledge agreement covering the purchased shares of Common Stock, both in form and substance satisfactory to the Company, or such other or additional documentation as the Company may request.

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 or after the expiration of its term. The term of your option commences on the Date of Grant and expires upon the earliest of the following:

(a)          three (3) months after the termination of your Continuous Service for any reason other than your Disability or death, provided that if during any part of such three (3) month period your option is not exercisable solely because of the condition set forth in Section 6, 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;

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

(c)          eighteen (18) months after your death if you die either during your Continuous Service or within three (3) months after your Continuous Service terminates;

	
             
 	
            (d)
 	
            the Expiration Date indicated in your Grant Notice; or
 	
             

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

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 

 

	
             
 	
            3.
 

 

 

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 with the Company or an Affiliate 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 your 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 8(d) and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto.

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 

 

	
             
 	
            4.
 

 

 

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.          RIGHT OF FIRST REFUSAL. 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.
The Company’s right of first refusal shall expire on the Listing Date. For purposes of this Agreement, Listing Date shall mean 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).

12.          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.

13.          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.

	
             
 	
            14.
 	
            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 variable award accounting). If the date of determination of any tax withholding obligation is deferred to a

 

 

	
             
 	
            5.
 

 

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 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.

15.          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.

16.          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.

*  *  [NOTE:  THIS IS THE END OF THE DOCUMENT]  *  *

 

 

 

	
             
 	
            6.
 

 

 

 

 

INCENTIVE STOCK OPTION

 

«Name», Optionee:

CARDICA, INC. (the “Company”), pursuant to its 1997 Equity Incentive Plan (the “Plan”), has granted to you, the optionee named above, an option to purchase shares of the common stock of the Company (“Common Stock”). This option is intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

The grant hereunder is in connection with and in furtherance of the Company’s compensatory benefit plan for participation of the Company’s employees (including officers), directors or consultants and is intended to comply with the provisions of Rule 701 promulgated by the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Act”). Defined terms not explicitly defined in this agreement but defined in the Plan shall have the same definitions as in the Plan.

	
             
 	
            The details of your option are as follows:
 

1.          Total Number Of Shares Subject To This Option. The total number of shares of Common Stock subject to this option is «WrittenOut" («Shares").

	
             
 	
            2.
 	
            Vesting.
 

(a)          Generally. Subject to the limitations contained herein, «FirstVestShares» of the shares will vest (become exercisable) on «FirstVestDate», and «MonthlyShares" of the shares will then vest each month thereafter until either (i) you cease to provide services to the Company for any reason, or (ii) this option becomes fully vested.

(b)          Vesting on Certain Terminations Following A Change of Control. If termination of your status as an Employee is a Constructive Termination (as defined below) or is by your employer (other than for Cause (as defined below)) and such termination occurs at any time during the period one month prior to or thirteen months subsequent to a Change of Control (as defined below), then, in addition to the shares that are vested on the date of such Constructive Termination, there shall vest on such date a number of shares under this option equal to the lesser of (a) 25% of the total number of shares (vested and unvested) subject to this option or (b) 50% of the total number of the then unvested shares subject to this option.

(c)          Definition of Terms. The following terms referred to above shall have the following meanings:

(i)        “Change of Control” shall mean any consolidation or merger of the Company with or into any other corporation or other entity or person, or any other corporate reorganization, in which the stockholders of the Company immediately prior to such consolidation, merger or reorganization, own less than 50% of the Company’s voting power 

 

 

immediately after such consolidation, merger or reorganization, or any transaction or series of related transactions in which in excess of fifty percent (50%) of the Company’s voting power is transferred.

(ii)       “Cause” shall mean (A) a felony or any crime involving moral turpitude or dishonesty; (B) participation in a fraud, misappropriation, or embezzlement of funds or property or act of dishonesty against the Company and/or your employer; (C) material breach of your employer’s policies, provided your employer has given you written notification of the breach and has provided you with fifteen (15) days’ opportunity to cure the breach; (D) willful conduct or gross negligence which is materially injurious to the reputation, business or business relationships of the Company and/or your employer or results in material damage to the Company’s and/or your employer’s property; (E) your breach of the Employee Proprietary Information and Inventions Agreement; or
(F) conduct which in the good faith and reasonable determination of the Company and/or your employer demonstrates gross unfitness to serve.

(iii)      “Constructive Termination” shall include any termination of status as an Employee by your employer other than for Cause or voluntary termination, upon 30 days prior written notice to your employer of (A) any change in your duties or responsibilities which result in a material diminution or material adverse change of your position, status or responsibilities of employment, but shall not include a mere change in title or reporting relationship; (B) reduction by your employer in your base salary by greater than ten percent (10%); (C) a relocation of your place of employment with your employer, to a location more than two hundred (200) miles from the location at which you performed duties as an Employee immediately prior to the Change of Control; (D) any material breach by
your employer of any agreement between you and your employer concerning your employment; or (E) any failure by your employer to obtain the assumption of any material agreement, including the material provisions of any option grant, between you and your employer concerning your employment by any successor or assign of the Company (or related employer of same).

(d)          If the acceleration of vesting of this stock option constitutes a “parachute payment” within the meaning of Section 280G (as it may be amended or replaced) of the Code and  but for this provision, would be subject to the excise tax imposed by Section 4999 (as it may be amended or replaced) of the Code (the “Excise Tax”), then your benefits payable in connection therewith shall be either:

	
             
 	
            (i)
 	
            delivered in full, or
 

(ii)       delivered to such lesser extent as results in none of such benefits being subject to the Excise Tax, 

whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by you on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax. Unless you and the Company otherwise agree in writing, any determination required under this provision shall be made in writing in good faith by the outside accounting firm responsible for auditing the Company’s financial records (the “Accountants”). For purposes of making the calculations required by this provision, the Accountants may make 

 

	
             
 	
            2
 

 

 

reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of the Code. You and the Company shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this provision. Any benefit that is payable in cash will be reduced first and the order in reduction of other benefits will be determined so as to provide the greatest reduction in the amount subject to the Excise Tax with the least reduction in the aggregate amount of the benefits. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this provision. You shall be solely responsible for the payment of all personal tax liability that is incurred as a result of the payments and benefits received under this provision,
and the Company will not reimburse you for any such payments. The Accountant’s determination shall be final and binding upon the Company and you. Notwithstanding the foregoing, if as a result of the uncertainty in the application of Section 280G of the Code at the time of the initial determination by the Accountants, it is possible that benefits will be provided by the Company that should not have been made (“Overpayment”) or that an additional benefit will not have been provided by the Company that could have been made (“Underpayment”), in each case, consistent with the calculations required to be made hereunder. If the Accountants, based upon the assertion of a deficiency by the Internal Revenue Service against you or the Company, determine that an Overpayment has been made, any such Overpayment paid or distributed by the Company to or for the benefit of you shall be treated for all purposes as a loan ab initio
to you that you shall repay to the Company together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code; provided however, that no such loan shall be deemed to have been made and no amount shall be payable by you to the Company if and to the extent such deemed loan and payment would not either reduce the amount on which you are subject to tax under Section 1 and Section 4999 of the Code or generate a refund of such taxes. If the Accountants, based upon controlling precedent or other substantial authority, determine that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of you together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code.

	
             
 	
            3.
 	
            Exercise Price And Method Of Payment.
 

(a)         Exercise Price. The exercise price of this option is forty cents ($0.40) per share, being not less than the fair market value of the Common Stock on the date of grant of this option.

 (b)         Method of Payment. Payment of the exercise price per share is due in full upon exercise of all or any part of each installment which has accrued to you. You may elect, to the extent permitted by applicable statutes and regulations, to make payment of the exercise price under one of the following alternatives:

 (i)               Payment of the exercise price per share in cash (including check) at the time of exercise;

 

 

	
             
 	
            3
 

 

 

 

                                          
           (ii)              Payment pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board which, 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;

 (iii)              Provided that at the time of exercise the Company’s Common Stock is publicly traded and quoted regularly in the Wall Street Journal, payment by delivery of already-owned shares of Common Stock, held for the period required to avoid a charge to the Company’s reported earnings, and owned free and clear of any liens, claims, encumbrances or security interests, which Common Stock shall be valued at its fair market value on the date of exercise; or

 (iv)              Payment by a combination of the methods of payment permitted by subparagraph 3(b)(i) through 3(b)(iii) above.

	
             
 	
            4.
 	
            Exercise Prior To Vesting Permitted.
 

(a)         Conditions of Early Exercise. Subject to the provisions of this option you may elect at any time during your Continuous Status as an Employee, Director or Consultant with the Company or an Affiliate of the Company, to exercise the option as to any part or all of the shares subject to this option at any time during the term hereof, including without limitation, a time prior to the date of earliest exercise (“vesting”) stated in paragraph 2 hereof; provided, however, that:

 (i)               a partial exercise of this option shall be deemed to cover first vested shares and then the earliest vesting installment of unvested shares;

 (ii)              any shares so purchased from installments which 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 Early Exercise Stock Purchase Agreement attached hereto;

 (iii)              you shall enter into an Early Exercise Stock Purchase Agreement in the form attached hereto with a vesting schedule that will result in the same vesting as if no early exercise had occurred; and

 (iv)              the date of exercisability of any share(s) subject to this option under this paragraph 4 shall be delayed, if necessary (i.e., because the aggregate fair market value of any shares subject to incentive stock options granted you by the Company or any Affiliate of the Company (valued as of their grant date) would otherwise become exercisable for the first time during any calendar year in an amount exceeding $100,000), until the earliest date permissible in order to preserve treatment under Section 421 of the Code of each share subject to this option. 

 (b)         Expiration of Early Exercise Election. The election provided in this paragraph 4 to purchase shares upon the exercise of this option prior to the vesting dates shall cease upon termination of your Continuous Status as an Employee, Director or Consultant with the Company or an Affiliate of the Company and may not be exercised after the date thereof.

 

 

	
             
 	
            4
 

 

 

 

5.          Whole Shares. This option may not be exercised for any number of shares which would require the issuance of anything other than whole shares.

6.           Securities Law Compliance. Notwithstanding anything to the contrary contained herein, this option may not be exercised unless the shares issuable upon exercise of this option are then registered under the Act or, if such shares are not then so registered, the Company has determined that such exercise and issuance would be exempt from the registration requirements of the Act.

7.          Term. The term of this option commences on «GrantDate», the date of grant, and expires on «ExpirationDate» (the “Expiration Date,” which date shall be no more than ten (10) years from date this option is granted), unless this option expires sooner as set forth below or in the Plan. In no event may this option be exercised on or after the Expiration Date. This option shall terminate prior to the Expiration Date as follows:  three (3) months after the termination of your Continuous Status as an Employee, Director or Consultant with the Company or an Affiliate of the Company unless one of the following circumstances exists:

 (a)         Your termination of Continuous Status as an Employee, Director or Consultant is due to your disability. This option will then expire on the earlier of the Expiration Date set forth above or twelve (12) months following such termination of Continuous Status as an Employee, Director or Consultant. You should be aware that if your disability is not considered a permanent and total disability within the meaning of Section 422(c)(6) of the Code, and you exercise this option more than three (3) months following the date of your termination of employment, your exercise will be treated for tax purposes as the exercise of a “nonstatutory stock option” instead of an “incentive stock option.”

 (b)         Your termination of Continuous Status as an Employee, Director or Consultant is due to your death or your death occurs within three (3) months following your termination of Continuous Status as an Employee, Director or Consultant for any other reason. This option will then expire on the earlier of the Expiration Date set forth above or eighteen (18) months after your death. 

 (c)         If during any part of such three (3) month period you may not exercise your option solely because of the condition set forth in paragraph 6 above, then your option will not expire until the earlier of the Expiration Date set forth above or until this option shall have been exercisable for an aggregate period of three (3) months after your termination of Continuous Status as an Employee, Director or Consultant. 

 (d)         If your exercise of the option within three (3) months after termination of your Continuous Status as an Employee, Director or Consultant with the Company or with an Affiliate of the Company would result in liability under section 16(b) of the Securities Exchange Act of 1934, then your option will expire on the earlier of (i) the Expiration Date set forth above, (ii) the tenth (10th) day after the last date upon which exercise would result in such liability or (iii) six (6) months and ten (10) days after the termination of your Continuous Status as an Employee, Director or Consultant with the Company or an Affiliate of the Company.

 

 

	
             
 	
            5
 

 

 

 

However, this option may be exercised following termination of Continuous Status as an Employee, Director or Consultant only as to that number of shares as to which it was exercisable on the date of termination of Continuous Status as an Employee, Director or Consultant under the provisions of paragraph 2 of this option.

In order 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 the option and ending on the day three (3) months before the date of the option’s exercise, you must be an employee of the Company or an Affiliate of the Company, except in the event of your death or permanent and total disability. The Company has provided for continued vesting or 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 provide services to the Company or an Affiliate of the Company as a consultant or exercise your option more than three (3) months after the date your employment with the Company and all Affiliates of the Company terminates.

	
             
 	
            8.
 	
            Exercise.
 

(a)         This option may be exercised, to the extent specified above, 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 pursuant to subsection 11(f) of the Plan.

	
             
 	
            (b)
 	
            By exercising this option you agree that:
 

(i)               as a precondition to the completion of any exercise of this option, the Company may require you to enter 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 this option; (2) the lapse of any substantial risk of forfeiture to which the shares are subject at the time of exercise; or (3) the disposition of shares acquired upon such exercise;

 (ii)              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 this option that occurs within two (2) years after the date of this option grant or within one (1) year after such shares of Common Stock are transferred upon exercise of this option; and

 (iii)              the Company (or a representative of the underwriter(s)) may, in connection with the first underwritten registration of the offering of any securities of the Company under the Securities Act, require that you 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 underwriter(s) (not to exceed one hundred eighty (180) days) following the effective date of the registration statement of the Company filed under the Securities Act. 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 

 

	
             
 	
            6
 

 

 

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.

9.          Transferability. This 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 this option.

10.        Option Not a Service Contract. This option is not an employment contract and nothing in this option shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company, or of the Company to continue your employment with the Company. In addition, nothing in this option shall obligate the Company or any Affiliate of the Company, or their respective stockholders, Board of Directors, officers or employees to continue any relationship which you might have as a Director or Consultant for the Company or Affiliate of the Company.

11.        Notices. Any notices provided for in this 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 the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at the address specified below or at such other address as you hereafter designate by written notice to the Company.

12.        Governing Plan Document. This option is subject to all the provisions of the Plan, a copy of which is attached hereto and its provisions are hereby made a part of this option, including without limitation the provisions of Section 6 of the Plan relating to option provisions, 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 this option and those of the Plan, the provisions of the Plan shall control.

	  
	 Dated
        the «Day» day of «Month», «Year».
	  

	  
	 Very
        truly yours,

	  
	 CARDICA,
        INC.

        

        

        By _____________________________

              Duly authorized on behalf

              of the Board of Directors
	  
      
 
      
 

					
					

 

ATTACHMENTS:

	
             
 	
            1997 Equity Incentive Plan
 
	
             
 	
            Notice of Exercise
 	
             

 

 

	
             
 	
            7
 

 

 

 

The undersigned:  

 (a)         Acknowledges receipt of the foregoing option and the attachments referenced therein and understands that all rights and liabilities with respect to this option are set forth in the option and the Plan; and  

 (b)        Acknowledges that as of the date of grant of this option, it sets forth the entire understanding between the undersigned optionee and the Company and its Affiliates regarding the acquisition of stock in the Company and supersedes all prior oral and written agreements on that subject with the exception of (i) the options previously granted and delivered to the undersigned under stock option plans of the Company, and (ii) the following agreements only:  

	  
	 NONE
	                           

       ________________

	  
	 (Initial)
	  

	  
	 OTHER
	 ______________________________                                          
                                        

	  
	 ______________________________                                          
                                        

	  
	 ______________________________                                          
                                        

					

 

 

 

	  
	 _________________________________

        «NAME», OPTIONEE

        

        Address:__________________________

        _________________________________ 

 

 

	
             
 	
            8
 

 

 

NONSTATUTORY STOCK OPTION

 

«Optionholder», Optionee:

CARDICA, INC. (the “Company”), pursuant to its 1997 Equity Incentive Plan (the “Plan”), has granted to you, the optionee named above, an option to purchase shares of the common stock of the Company (“Common Stock”). This option is not intended to qualify as and will not be treated as an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

The grant hereunder is in connection with and in furtherance of the Company’s compensatory benefit plan for participation of the Company’s employees (including officers), directors or consultants and is intended to comply with the provisions of Rule 701 promulgated by the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Act”). Defined terms not explicitly defined in this agreement but defined in the Plan shall have the same definitions as in the Plan.

	
             
 	
            The details of your option are as follows:
 

1.          Total Number of Shares Subject to this Option. The total number of shares of Common Stock subject to this option is «Written" («Shares").

	
             
 	
            2.
 	
            Vesting.
 

(a)          Generally. Subject to the limitations contained herein, «FirstVestShares" of the shares will vest (become exercisable) on «FirstVestDate», and «MonthlyShares" of the shares will then vest each month thereafter until either (i) you cease to provide services to the Company for any reason, or (ii) this option becomes fully vested.

(b)          Vesting on Certain Terminations Following A Change of Control. If termination of your status as an Employee is a Constructive Termination (as defined below) or is by your employer (other than for Cause (as defined below)) and such termination occurs at any time during the period one month prior to or thirteen months subsequent to a Change of Control (as defined below), then, in addition to the shares that are vested on the date of such Constructive Termination, there shall vest on such date a number of shares under this option equal to the lesser of (a) 25% of the total number of shares (vested and unvested) subject to this option or (b) 50% of the total number of the then unvested shares subject to this option.

(c)          Definition of Terms. The following terms referred to above shall have the following meanings:

(i)        “Change of Control” shall mean any consolidation or merger of the Company with or into any other corporation or other entity or person, or any other corporate reorganization, in which the stockholders of the Company immediately prior to such consolidation, merger or reorganization, own less than 50% of the Company’s voting power 

 

 

1

 

 

immediately after such consolidation, merger or reorganization, or any transaction or series of related transactions in which in excess of fifty percent (50%) of the Company’s voting power is transferred.

(ii)       “Cause” shall mean (A) a felony or any crime involving moral turpitude or dishonesty; (B) participation in a fraud, misappropriation, or embezzlement of funds or property or act of dishonesty against the Company and/or your employer; (C) material breach of your employer’s policies, provided your employer has given you written notification of the breach and has provided you with fifteen (15) days’ opportunity to cure the breach; (D) willful conduct or gross negligence which is materially injurious to the reputation, business or business relationships of the Company and/or your employer or results in material damage to the Company’s and/or your employer’s property; (E) your breach of the Employee Proprietary Information and Inventions Agreement; or
(F) conduct which in the good faith and reasonable determination of the Company and/or your employer demonstrates gross unfitness to serve.

(iii)      “Constructive Termination” shall include any termination of status as an Employee by your employer other than for Cause or voluntary termination, upon 30 days prior written notice to your employer of (A) any change in your duties or responsibilities which result in a material diminution or material adverse change of your position, status or responsibilities of employment, but shall not include a mere change in title or reporting relationship; (B) reduction by your employer in your base salary by greater than ten percent (10%); (C) a relocation of your place of employment with your employer, to a location more than two hundred (200) miles from the location at which you performed duties as an Employee immediately prior to the Change of Control; (D) any material breach by
your employer of any agreement between you and your employer concerning your employment; or (E) any failure by your employer to obtain the assumption of any material agreement, including the material provisions of any option grant, between you and your employer concerning your employment by any successor or assign of the Company (or related employer of same).

(d)          If the acceleration of vesting of this stock option constitutes a “parachute payment” within the meaning of Section 280G (as it may be amended or replaced) of the Code and  but for this provision, would be subject to the excise tax imposed by Section 4999 (as it may be amended or replaced) of the Code (the “Excise Tax”), then your benefits payable in connection therewith shall be either:

	
             
 	
            (i)
 	
            delivered in full, or
 

(ii)       delivered to such lesser extent as results in none of such benefits being subject to the Excise Tax, 

whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by you on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax. Unless you and the Company otherwise agree in writing, any determination required under this provision shall be made in writing in good faith by the outside accounting firm responsible for auditing the Company’s financial records (the “Accountants”). For purposes of making the calculations required by this provision, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on

 

 

2

 

 

 

reasonable, good faith interpretations concerning the application of the Code. You and the Company shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this provision. Any benefit that is payable in cash will be reduced first and the order in reduction of other benefits will be determined so as to provide the greatest reduction in the amount subject to the Excise Tax with the least reduction in the aggregate amount of the benefits. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this provision. You shall be solely responsible for the payment of all personal tax liability that is incurred as a result of the payments and benefits received under this provision, and the Company will not reimburse you for any such payments. The Accountant’s
determination shall be final and binding upon the Company and you. Notwithstanding the foregoing, if as a result of the uncertainty in the application of Section 280G of the Code at the time of the initial determination by the Accountants, it is possible that benefits will be provided by the Company that should not have been made (“Overpayment”) or that an additional benefit will not have been provided by the Company that could have been made (“Underpayment”), in each case, consistent with the calculations required to be made hereunder. If the Accountants, based upon the assertion of a deficiency by the Internal Revenue Service against you or the Company, determine that an Overpayment has been made, any such Overpayment paid or distributed by the Company to or for the benefit of you shall be treated for all purposes as a loan ab initio to you that you shall repay to the Company together with interest at the applicable
federal rate provided for in Section 7872(f)(2) of the Code; provided however, that no such loan shall be deemed to have been made and no amount shall be payable by you to the Company if and to the extent such deemed loan and payment would not either reduce the amount on which you are subject to tax under Section 1 and Section 4999 of the Code or generate a refund of such taxes. If the Accountants, based upon controlling precedent or other substantial authority, determine that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of you together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code.

 

	
             
 	
            3.
 	
            Exercise Price and Method of Payment.
 

(a)         Exercise Price. The exercise price of this option is forty cents ($0.40) per share, being not less than 85% of the fair market value of the Common Stock on the date of grant of this option.

 (b)         Method of Payment. Payment of the exercise price per share is due in full upon exercise of all or any part of each installment which has accrued to you. You may elect, to the extent permitted by applicable statutes and regulations, to make payment of the exercise price under one of the following alternatives:

 (i)              Payment of the exercise price per share in cash (including check) at the time of exercise;

 

3

 

 

 

 (ii)               Payment pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board which, 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;

 (iii)               Provided that at the time of exercise the Company’s Common Stock is publicly traded and quoted regularly in the Wall Street Journal, payment by delivery of already-owned shares of Common Stock, held for the period required to avoid a charge to the Company’s reported earnings, and owned free and clear of any liens, claims, encumbrances or security interests, which Common Stock shall be valued at its fair market value on the date of exercise; or

 (iv)              Payment by a combination of the methods of payment permitted by subparagraph 3(b)(i) through 3(b)(iii) above.

	
             
 	
            4.
 	
            Exercise Prior to Vesting Permitted.
 

(a)         Conditions of Early Exercise. Subject to the provisions of this option you may elect at any time during your Continuous Status as an Employee, Director or Consultant with the Company or an Affiliate of the Company, to exercise the option as to any part or all of the shares subject to this option at any time during the term hereof, including without limitation, a time prior to the date of earliest exercise (“vesting”) stated in paragraph 2 hereof; provided, however, that:

 (i)              a partial exercise of this option shall be deemed to cover first vested shares and then the earliest vesting installment of unvested shares;

 (ii)              any shares so purchased from installments which 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 Early Exercise Stock Purchase Agreement to be provided; and

 (iii)              you shall enter into an Early Exercise Stock Purchase Agreement in the form to be provided with a vesting schedule that will result in the same vesting as if no early exercise had occurred.

 (b)         Expiration of Early Exercise Election. The election provided in this paragraph 4 to purchase shares upon the exercise of this option prior to the vesting dates shall cease upon termination of your Continuous Status as an Employee, Director or Consultant with the Company or an Affiliate of the Company and may not be exercised after the date thereof.

5.          Whole Shares. This option may not be exercised for any number of shares which would require the issuance of anything other than whole shares.

 

4

 

 

 

6.          Securities Law Compliance. Notwithstanding
anything to the contrary contained herein, this option may not be exercised
unless the shares issuable upon exercise of this option are then registered
under the Act or, if such Shares are not then so registered, the Company has
determined that such exercise and issuance would be exempt from the registration
requirements of the Act.

7.          Term. The term of this option commences on
«Grant», the date of grant and expires on «Expiry» (the
“Expiration Date,” which date shall be no more than ten (10) years
from the date this option is granted), unless this option expires sooner as set
forth below or in the Plan. In no event may this option be exercised on or after
the Expiration Date. This option shall terminate prior to the Expiration Date as
follows: three (3) months after the termination of your Continuous Status as an
Employee, Director or Consultant with the Company or an Affiliate of the Company
for any reason or for no reason unless:

 (a)         such termination of Continuous Status as an Employee, Director or Consultant is due to your disability, in which event the option shall expire on the earlier of the Expiration Date set forth above or twelve (12) months following such termination of Continuous Status as an Employee, Director or Consultant; or

 (b)         such termination of Continuous Status as an Employee, Director or Consultant is due to your death or your death occurs within three (3) months following your termination for any other reason, in which event the option shall expire on the earlier of the Expiration Date set forth above or eighteen (18) months after your death; or 

 (c)         during any part of such three (3) month period the option is not exercisable solely because of the condition set forth in paragraph 6 above, in which event the option shall not expire until the earlier of the Expiration Date set forth above or until it shall have been exercisable for an aggregate period of three (3) months after the termination of Continuous Status as an Employee, Director or Consultant; or

 (d)         exercise of the option within three (3) months after termination of your Continuous Status as an Employee, Director or Consultant with the Company or with an Affiliate of the Company would result in liability under section 16(b) of the Securities Exchange Act of 1934 (the “Exchange Act), in which case the option will expire on the earlier of (i) the Expiration Date set forth above, (ii) the tenth (10th) day after the last date upon which exercise would result in such liability or (iii) six (6) months and ten (10) days after the termination of your Continuous Status as an Employee, Director or Consultant with the Company or an Affiliate of the Company.

However, this option may be exercised following termination of Continuous Status as an Employee, Director or Consultant only as to that number of shares as to which it was exercisable on the date of termination of Continuous Status as an Employee, Director or Consultant under the provisions of paragraph 2 of this option.

 

5

 

 

 

8.
          Exercise.

 (a)          This option may be exercised, to the extent specified above, 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 pursuant to subsection 11(f) of the Plan.

	
             
 	
            (b)
 	
            By exercising this option you agree that:
 

(i)              as a precondition to the completion of any exercise of this option, the Company may require you to enter an arrangement providing for the cash payment by you to the Company of any tax withholding obligation of the Company arising by reason of: (1) the exercise of this option; (2) the lapse of any substantial risk of forfeiture to which the shares are subject at the time of exercise; or (3) the disposition of shares acquired upon such exercise. You also agree that any exercise of this option has not been completed and that the Company is under no obligation to issue any Common Stock to you until such an arrangement is established or the Company’s tax withholding obligations are satisfied, as determined by the Company; and 

 (ii)               the Company (or a representative of the underwriter(s)) may, in connection with the first underwritten registration of the offering of any securities of the Company under the Securities Act, require that you 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 underwriter(s) (not to exceed one hundred eighty (180) days) following the effective date of the registration statement of the Company filed under the Securities Act. 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.

9.          Transferability. This 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 this option.

10.        Option Not a Service Contract. This option is not an employment contract and nothing in this option shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company, or of the Company to continue your employment with the Company. In addition, nothing in this option shall obligate the Company or any Affiliate of the Company, or their respective stockholders, Board of Directors, officers, or employees to continue any relationship which you might have as a Director or Consultant for the Company or Affiliate of the Company.

 

6

 

 

 

11.        Notices.
Any notices provided for in this 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 the Company to you, five (5)
days after deposit in the United States mail, postage prepaid, addressed to you
at the address specified below or at such other address as you hereafter
designate by written notice to the Company.

12.        Governing Plan Document. This option is subject
to all the provisions of the Plan, a copy of which is attached hereto and its
provisions are hereby made a part of this option, including without limitation
the provisions of Section 6 of the Plan relating to option provisions, 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 this option and those of the
Plan, the provisions of the Plan shall control.

	  
	 Dated
        the «Day» day of «Month», «Year».

       
	 
	  
	 	
      Very
        truly yours,

	  
	 	 CARDICA,
        INC.

        

        

        By _______________________________

                    Duly
        authorized on behalf

                    of
        the Board of Directors 

      
					

 

 

ATTACHMENTS:

	
             
 	
            1997 Equity Incentive Plan
 
	
             
 	
            Notice of Exercise
 	
             

 

 

7

 

 

 

The undersigned:  

 (a)         Acknowledges receipt of the foregoing option and the attachments referenced therein and understands that all rights and liabilities with respect to this option are set forth in the option and the Plan; and  

 (b)        Acknowledges that as of the date of grant of this option, it sets forth the entire understanding between the undersigned optionee and the Company and its Affiliates regarding the acquisition of stock in the Company and supersedes all prior oral and written agreements on that subject with the exception of (i) the options previously granted and delivered to the undersigned under stock option plans of the Company, and (ii) the following agreements only:  

	  
	 NONE
	                           

       ________________

	  
	 (Initial)
	  

	  
	 OTHER
	 ______________________________                                          
                                        

	  
	 ______________________________                                          
                                        

	  
	 ______________________________                                          
                                        

					

 

 

	  
	 _________________________________

        «OPTIONHOLDER»,
        OPTIONEE

        

        Address:__________________________

        _________________________________ 

 

 

8

 

 

CARDICA, INC.

STOCK OPTION GRANT NOTICE

1997 EQUITY INCENTIVE PLAN

Cardica, Inc. (the “Company”), pursuant to its 1997 Equity Incentive Plan (the “Plan”), hereby grants to Optionholder an option to purchase the number of shares of the Company’s Common Stock set forth below. This option is subject to all of the terms and conditions as set forth herein and in the Stock Option Agreement, the Plan and the Notice of Exercise, all of which are attached hereto and incorporated herein in their entirety.

	 	 	 
	 	
      
        Optionholder:
	
      
         

      

	 	 Date
        of Grant:
	 
         

      

	 	 Vesting
        Commencement Date:
	 
         

      

	 	 Number
        of Shares Subject to Option:
	 
         

      

	 	 Exercise
        Price (Per Share):
	 
         

      

	 	 Total
        Exercise Price:
	 
         

      

	 	 Expiration
        Date:
	 
         

      

	 Type
        of Grant:
	 |_|
         Incentive Stock Option1
	 |_| 
        Nonstatutory Stock Option
	  

	 Exercise
        Schedule:
	 |_|
         Same as Vesting Schedule 
	 |_|
         Early Exercise Permitted
	  

	 Vesting
        Schedule:
	 1/4th
        of the shares vest one year after the Vesting Commencement Date.
	  

	  
	 1/48th
        of the shares vest monthly thereafter over the next three years.
	  

	 Payment:
	 By
        one or a combination of the following items (described in the Stock Option
        Agreement):

	  
	 |_|
	 By
        cash or check
	  

								

Additional Terms/Acknowledgements: The undersigned Optionholder acknowledges receipt of, and understands and agrees to, this Stock Option Grant Notice, the Stock Option Agreement and the Plan. Optionholder further acknowledges that as of the Date of Grant, this Stock Option Grant Notice, the Stock Option Agreement and the Plan set forth the entire understanding between Optionholder and the Company regarding the acquisition of stock in the Company and supersede all prior oral and written agreements on that subject with the exception of (i) options previously granted and delivered to Optionholder under the Plan, and (ii) the following agreements only:

 

 

	 CARDICA,
        INC.

      By:_______________________________

      Signature

      Title:______________________________

      Date:__________________________________     
	 OPTIONHOLDER:

       ___________________________________________

                                                   
        Signature

      Date:_______________________________________
      

      Address:
        _______________________________ 

       ___________________________________________

      
        ____________________________________________

      
      

ATTACHMENTS:  Stock Option Agreement, 1997 Equity Incentive Plan and Notice of Exercise

_________________________

 

1             If this is an Incentive Stock Option, it (plus other outstanding Incentive Stock Options) cannot be first exercisable for more than $100,000 in value (measured by exercise price) in any calendar year.  Any excess over $100,000 is a Nonstatutory Stock Option.

 

	
             
 	
            1.
 

 

 

 

Attachment I

STOCK OPTION AGREEMENT

 

2.

 

 

 

Attachment II

1997  EQUITY INCENTIVE
PLAN 

 

 

 

 

Attachment III

NOTICE OF EXERCISE

 

 

 

CARDICA, INC.

STOCK OPTION GRANT NOTICE

1997 EQUITY INCENTIVE PLAN 
WITH ACCELERATED VESTING

Cardica, Inc. (the “Company”), pursuant to its 1997 Equity Incentive Plan (the “Plan”), hereby grants to Optionholder an option to purchase the number of shares of the Company’s Common Stock set forth below. This option is subject to all of the terms and conditions as set forth herein and in the Stock Option Agreement, the Plan and the Notice of Exercise, all of which are attached hereto and incorporated herein in their entirety.

	 	 	 
	 	
      
        Optionholder:
	
      
         

      

	 	 Date
        of Grant:
	 
         

      

	 	 Vesting
        Commencement Date:
	 
         

      

	 	 Number
        of Shares Subject to Option:
	 
         

      

	 	 Exercise
        Price (Per Share):
	 
         

      

	 	 Total
        Exercise Price:
	 
         

      

	 	 Expiration
        Date:
	 
         

      

	 Type
        of Grant:
	 |_|
         Incentive Stock Option1
	 |_| 
        Nonstatutory Stock Option

       

	 Exercise
        Schedule:
	 |_|
         Same as Vesting Schedule 
	 |_|
         Early Exercise Permitted 

      
	 Vesting
        Schedule:
	 1/4th
        of the shares vest one year after the Vesting Commencement Date. 

	  
	 1/48th
        of the shares vest monthly thereafter over the next three years.

        Acceleration of vesting under circumstances described below under caption
        “Acceleration of Vesting”;  

	 Payment:
	 By
        one or a combination of the following items (described in the Stock Option
        Agreement):

	  
	 |_|
	 By
        cash or check
	  

								

Additional Terms/Acknowledgements: The undersigned Optionholder acknowledges receipt of, and understands and agrees to, this Stock Option Grant Notice, the Stock Option Agreement and the Plan. Optionholder further acknowledges that as of the Date of Grant, this Stock Option Grant Notice, the Stock Option Agreement and the Plan set forth the entire understanding between Optionholder and the Company regarding the acquisition of stock in the Company and supersede all prior oral and written agreements on that subject with the exception of (i) options previously granted and delivered to Optionholder under the Plan, and (ii) the following agreements only:

	
            Acceleration of Vesting:
 

 

	
            •
 	
            If your status as an employee is terminated and such termination is a Constructive Termination (as defined below) or is by your employer (other than for Cause (as defined below)) and provided further, that such termination occurs at any time during the period one month prior to or thirteen months subsequent to a Change of Control (as defined below), then, in addition to the shares that are vested on the date of such Constructive Termination, there shall vest on such date a number of shares under this option equal to the lesser of (a) 25% of the total number of shares (vested and unvested) subject to this option or (b) 50% of the total number of the then unvested shares subject to this option. 
 

 

	
            •
 	
            Definition of Terms. The following terms referred to above shall have the following meanings:
 

_________________________

 

1             If this is an Incentive Stock Option, it (plus other outstanding Incentive Stock Options) cannot be first exercisable for more than $100,000 in value (measured by exercise price) in any calendar year.  Any excess over $100,000 is a Nonstatutory Stock Option.

 

 

	
             
 	
            1.
 

 

 

 

	
             
 	
            •
 	
            “Change of Control” shall mean any consolidation or merger of the Company with or into any other corporation or other entity or person, or any other corporate reorganization, in which the stockholders of the Company immediately prior to such consolidation, merger or reorganization, own less than 50% of the Company’s voting power immediately after such consolidation, merger or reorganization, or any transaction or series of related transactions in which in excess of fifty percent (50%) of the Company’s voting power is transferred.
 

 

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

 

	
             
 	
            •
 	
            “Constructive Termination” shall include any termination of status as an employee by Company other than for Cause or voluntary termination, upon 30 days prior written notice to Company of (a) any change in Optionholder’s duties or responsibilities which result in a material diminution or material adverse change of Optionholder’s position, status or responsibilities of employment, but shall not include a mere change in title or reporting relationship; (b) reduction by Company in Optionholder’s base salary by greater than ten percent (10%); (c) a relocation of Optionholder’s place of employment with Company, to a location more than two hundred (200) miles from the location at which Optionholder performed duties as an employee immediately prior to the Change of Control; (d) any material breach by Company of
any agreement between Optionholder and Company concerning Optionholder’s employment; or (e) any failure by Company to obtain the assumption of any material agreement, including the material provisions of any option grant, between Optionholder and Company concerning Optionholder’s employment by any successor or assign of the Company (or related employer of same).
 

 

Parachute Payments: If the acceleration of vesting of this stock option constitutes a “parachute payment” within the meaning of Section 280G (as it may be amended or replaced) of the Code and  but for this provision, would be subject to the excise tax imposed by Section 4999 (as it may be amended or replaced) of the Code (the “Excise Tax”), then Optionholder’s benefits payable in connection therewith shall be either:

 

	
             
 	
            (a)  
 	
            delivered in full, or
 

	
             
 	
            (b)
 	
            delivered to such lesser extent as results in none of such benefits being subject to the Excise Tax, 
 

whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by Optionholder on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax. Unless Optionholder and the Company otherwise agree in writing, any determination required under this provision shall be made in writing in good faith by the outside accounting firm responsible for auditing the Company’s financial records (the “Accountants”). For purposes of making the calculations required by this provision, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of the Code. Optionholder and the Company shall furnish to the Accountants
such information and documents as the Accountants may reasonably request in order to make a determination under this provision. Any benefit that is payable in cash will be reduced first and the order in reduction of other benefits will be determined so as to provide the greatest reduction in the amount subject to the Excise Tax with the least reduction in the aggregate amount of the benefits. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this provision. Optionholder shall be solely responsible for the payment of all personal tax liability that is incurred as a result of the payments and benefits received under this provision, and the Company will not reimburse Optionholder for any such payments. The Accountant’s determination shall be final and binding upon the Company and Optionholder. Notwithstanding the foregoing, if as a result of the uncertainty in the application of Section 280G of the Code at the
time of the initial determination by the Accountants, it is possible that benefits will be provided by the Company that should not have 

 

	
             
 	
            2.
 

 

 

been made (“Overpayment”) or that an additional benefit will not have been provided by the Company that could have been made (“Underpayment”), in each case, consistent with the calculations required to be made hereunder. If the Accountants, based upon the assertion of a deficiency by the Internal Revenue Service against Optionholder or the Company, determine that an Overpayment has been made, any such Overpayment paid or distributed by the Company to or for the benefit of Optionholder shall be treated for all purposes as a loan ab initio to Optionholder that Optionholder shall repay to the Company together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code; provided however, that no such loan shall be deemed to have been made and no amount shall be payable by Optionholder to the Company if and to the
extent such deemed loan and payment would not either reduce the amount on which Optionholder is subject to tax under Section 1 and Section 4999 of the Code or generate a refund of such taxes. If the Accountants, based upon controlling precedent or other substantial authority, determine that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of Optionholder  together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code.

 

 

	 CARDICA,
        INC.

      By:_______________________________

      Signature

      Title:______________________________

      Date:__________________________________     
	 OPTIONHOLDER:

       ___________________________________________

                                                   
        Signature

      Date:_______________________________________
      

      Address:
        _______________________________ 

       ___________________________________________

      
        ____________________________________________

      
      

 

ATTACHMENTS:  Stock Option Agreement, 1997 Equity Incentive Plan and Notice of Exercise

 

 

 

	
             
 	
            3.
 

 

 

 

Attachment I

STOCK OPTION AGREEMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attachment II

1997 EQUITY INCENTIVE PLAN

 

 

 

 

Attachment III

NOTICE OF EXERCISE

 

 

 

 

 

 

NOTICE OF EXERCISE

Cardica, Inc.

171 Jefferson Drive

Menlo Park, CA 94025

	
             
 	
            Date of Exercise: _______________
 

Ladies and Gentlemen:

This constitutes notice under my stock option that I elect to purchase the number of shares for the price set forth below.

	
            Type of option (check one):
 	
            Incentive  o
 	
            Nonstatutory  o
 
	
             
 	
             o
 	
             o
 
	
            Stock option dated:
 	
            _______________
 	
             
 
	
             
 	
             o
 	
             o
 
	
            Number of shares as
 to which option is
 exercised:
 	
            _______________
 	
             
 
	
            Certificates to be
 issued in name of:
 	
            _______________
 	
             
 
	
             
 	
             o
 	
             o
 
	
            Total exercise price:
 	
            $______________
 	
             
 
	
             
 	
             o
 	
             o
 
	
            Cash payment delivered
 herewith:
 	
            $______________
 	
             
 

By this exercise, I agree (i) to provide such additional documents as you may require pursuant to the terms of the 1997 Equity Incentive Plan, (ii) to provide for the payment by me to you (in the manner designated by you) of your withholding obligation, if any, relating to the exercise of this option, and (iii) if this exercise relates to an incentive stock option, to notify you in writing within fifteen (15) days after the date of any disposition of any of the shares of Common Stock issued upon exercise of this option that occurs within two (2) years after the date of grant of this option or within one (1) year after such shares of Common Stock are issued upon exercise of this option.

I hereby make the following certifications and representations with respect to the number of shares of Common Stock of the Company listed above (the “Shares”), which are being acquired by me for my own account upon exercise of the Option as set forth above:

I acknowledge that the Shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and are deemed to constitute “restricted securities” under Rule 701 and “control securities” under Rule 144 promulgated under the Securities Act.  I 

 

	
             
 	
            1.
 

 

 

warrant and represent to the Company that I have no present intention of distributing or selling said Shares, except as permitted under the Securities Act and any applicable state securities laws.

I further acknowledge that I will not be able to resell the Shares for at least ninety days (90) after the stock of the Company becomes publicly traded (i.e., subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934) under Rule 701 and that more restrictive conditions apply to affiliates of the Company under Rule 144.

I further acknowledge that all certificates representing any of the Shares subject to the provisions of the Option shall have endorsed thereon appropriate legends reflecting the foregoing limitations, as well as any legends reflecting restrictions pursuant to the Company’s Articles of Incorporation, Bylaws and/or applicable securities laws.

I further acknowledge that if the acceleration of vesting of this stock option constitutes a “parachute payment” within the meaning of Section 280G (as it may be amended or replaced) of the Code and  but for this provision, would be subject to the excise tax imposed by Section 4999 (as it may be amended or replaced) of the Code (the “Excise Tax”), then my benefits payable in connection therewith shall be either:

 

	
             
 	
            (a)  
 	
            delivered in full, or
 

	
             
 	
            (b)
 	
            delivered to such lesser extent as results in none of such benefits being subject to the Excise Tax, 
 

whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by me on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax.  Unless I and the Company otherwise agree in writing, any determination required under this provision shall be made in writing in good faith by the outside accounting firm responsible for auditing the Company’s financial records (the “Accountants”). For purposes of making the calculations required by this provision, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of the Code.  I and the Company shall furnish to the Accountants such information and documents
as the Accountants may reasonably request in order to make a determination under this provision.  Any benefit that is payable in cash will be reduced first and the order in reduction of other benefits will be determined so as to provide the greatest reduction in the amount subject to the Excise Tax with the least reduction in the aggregate amount of the benefits. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this provision. I shall be solely responsible for the payment of all personal tax liability that is incurred as a result of the payments and benefits received under this provision, and the Company will not reimburse me for any such payments.  The Accountant’s determination shall be final and binding upon the Company and me.  Notwithstanding the foregoing, if as a result of the uncertainty in the application of Section 280G of the Code at the time of the initial determination by the Accountants, it is
possible that benefits will be provided by the Company that should not have been made (“Overpayment”) or that an additional benefit will not have been provided by the Company that could have been made (“Underpayment”), in each case, consistent with the 

 

	
             
 	
            2.
 

 

 

calculations required to be made hereunder.  If the Accountants, based upon the assertion of a deficiency by the Internal Revenue Service against me or the Company, determine that an Overpayment has been made, any such Overpayment paid or distributed by the Company to or for the benefit of me shall be treated for all purposes as a loan ab initio to me that I shall repay to the Company together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code; provided however, that no such loan shall be deemed to have been made and no amount shall be payable by me to the Company if and to the extent such deemed loan and payment would not either reduce the amount on which I am subject to tax under Section 1 and Section 4999 of the Code or generate a refund of such taxes.  If the Accountants, based upon controlling precedent or other
substantial authority, determine that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of me together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code.

I further agree that, if required, the Company (or a representative of the underwriter(s)) may, in connection with the first underwritten registration of the offering of any securities of the Company under the Securities Act, require that I 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 me, for a period of time specified by the underwriter(s) (not to exceed one hundred eighty (180) days) following the effective date of the registration statement of the Company filed under the Securities Act.  I 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 my shares of Common Stock until the end of such period.

 

Very truly yours,

                                          
                    

 

 

 

 

	
             
 	
            3.Exhibit 10.3

                                          
                                          
          

 

CARDICA, INC.

 

AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

 

August 19, 2003

 

 

	
             
 	
            TABLE OF CONTENTS
 

 

	
             
 	
            PAGE
 

 

 

 

	
            SECTION 1.
 	
            GENERAL.
 	
            1
 
	
             
 	
            1.1
 	
            Definitions.
 	
            1
 
	
            SECTION 2.
 	
            REGISTRATION; RESTRICTIONS ON TRANSFER.
 	
            3
 
	
             
 	
            2.1
 	
            Restrictions on Transfer.
 	
            3
 
	
             
 	
            2.2
 	
            Demand Registration.
 	
            4
 
	
             
 	
            2.3
 	
            Piggyback Registrations.
 	
            5
 
	
             
 	
            2.4
 	
            Form S-3 Registration.
 	
            7
 
	
             
 	
            2.5
 	
            Expenses of Registration.
 	
            8
 
	
             
 	
            2.6
 	
            Obligations of the Company.
 	
            8
 
	
             
 	
            2.7
 	
            Termination of Registration Rights.
 	
            9
 
	
             
 	
            2.8
 	
            Delay of Registration; Furnishing Information.
 	
            9
 
	
             
 	
            2.9
 	
            Indemnification.
 	
            10
 
	
             
 	
            2.10
 	
            Assignment of Registration Rights.
 	
            12
 
	
             
 	
            2.11
 	
            Amendment of Registration Rights.
 	
            12
 
	
             
 	
            2.12
 	
            Limitation on Subsequent Registration Rights.
 	
            12
 
	
             
 	
            2.13
 	
            “Market Stand-Off” Agreement; Agreement to Furnish Information.
 	
            12
 
	
             
 	
            2.14
 	
            Rule 144 Reporting.
 	
            13
 
	
            SECTION 3.
 	
            COVENANTS OF THE COMPANY.
 	
            14
 
	
             
 	
            3.1
 	
            Basic Financial Information and Reporting.
 	
            14
 
	
             
 	
            3.2
 	
            Inspection Rights.
 	
            14
 
	
             
 	
            3.3
 	
            Confidentiality of Records.
 	
            14
 
	
             
 	
            3.4
 	
            Reservation of Common Stock.
 	
            15
 
	
             
 	
            3.5
 	
            Proprietary Information and Inventions Agreement.
 	
            15
 
	
             
 	
            3.6
 	
            Approval.
 	
            15
 
	
             
 	
            3.7
 	
            Notification and Negotiation of Material Transaction.
 	
            15
 
	
             
 	
            3.8
 	
            Termination of Covenants.
 	
            16
 
	
             
 	
            3.9
 	
            Visitation Rights.
 	
            16
 
	
            SECTION 4.
 	
            RIGHTS OF FIRST REFUSAL.
 	
            17
 
	
             
 	
            4.1
 	
            Subsequent Offerings.
 	
            17
 
	
             
 	
            4.2
 	
            Exercise of Rights.
 	
            17
 
							

 

 

i. 

 

 

	
             
 	
            TABLE OF CONTENTS
 	
             

	
             
 	
            (CONTINUED)
 	
             

	
             
 	
            PAGE
 
						

 

 

 

	
             
 	
            4.3
 	
            Issuance of Equity Securities to Other Persons.
 	
            17
 
	
             
 	
            4.4
 	
            Termination and Waiver of Rights of First Refusal.
 	
            18
 
	
             
 	
            4.5
 	
            Transfer of Rights of First Refusal.
 	
            18
 
	
             
 	
            4.6
 	
            Excluded Securities.
 	
            18
 
	
            SECTION 5.
 	
            MISCELLANEOUS.
 	
            19
 
	
             
 	
            5.1
 	
            Governing Law.
 	
            19
 
	
             
 	
            5.2
 	
            Survival.
 	
            19
 
	
             
 	
            5.3
 	
            Successors and Assigns.
 	
            19
 
	
             
 	
            5.4
 	
            Entire Agreement.
 	
            19
 
	
             
 	
            5.5
 	
            Severability.
 	
            19
 
	
             
 	
            5.6
 	
            Amendment and Waiver.
 	
            19
 
	
             
 	
            5.7
 	
            Delays or Omissions.
 	
            20
 
	
             
 	
            5.8
 	
            Notices.
 	
            20
 
	
             
 	
            5.9
 	
            Attorneys’ Fees.
 	
            20
 
	
             
 	
            5.10
 	
            Titles and Subtitles.
 	
            20
 
	
             
 	
            5.11
 	
            Additional Investors.
 	
            20
 
	
             
 	
            5.12
 	
            Counterparts.
 	
            21
 
	
             
 	
            5.13
 	
            Amendment of Prior Agreement.
 	
            21
 
					

 

ii. 

 

 

 

 

CARDICA, INC. 

 

AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

THIS AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (the “Agreement”) is entered into as of the 19th day of August, 2003, by and among CARDICA, INC., a Delaware corporation (the “Company”) and the investors listed on EXHIBIT A hereto, referred to hereinafter as the “Investors” and each individually as an “Investor.”

RECITALS

WHEREAS, Guidant Investment Corporation is purchasing shares of the Company’s Series E Preferred Stock (the “Series E Stock”), pursuant to that certain Series E Preferred Stock Purchase Agreement (the “Purchase Agreement”) of even date herewith (the “Financing”);

WHEREAS, the obligations in the Purchase Agreement are conditioned upon the execution and delivery of this Agreement;

WHEREAS, certain of the Investors (the “Prior Investors”) are holders of the Company’s Series A Preferred Stock (the “Series A Stock”), Series B Preferred Stock (the “Series B Stock”),  Series C Preferred Stock (the “Series C Stock”) and Series D Preferred Stock (the “Series D Stock,” and collectively with the Series A Stock, Series B Stock, Series C Stock, and the Series E Stock the “Preferred Stock”);

WHEREAS, the Company and the Prior Investors are parties to a Restated Investor Rights Agreement dated June 13, 2002, as amended on June 17, 2003 (the “Prior Agreement”);

WHEREAS, the parties to the Prior Agreement desire to amend and restate the Prior Agreement in its entirety and to accept the rights and covenants hereof in lieu of their rights and covenants under the Prior Agreement; and

WHEREAS, in connection with the consummation of the Financing, the Company and the Investors have agreed to the registration rights, information rights, and other rights as set forth below.

NOW, THEREFORE, in consideration of the mutual promises, representations, warrants, covenants and conditions set forth in this Agreement and in the Purchase Agreement, the parties mutually agree as follows:

SECTION 1.   GENERAL. 

1.1          Definitions.  As used in this Agreement the following terms shall have the following respective meanings:

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

 

 

	
             
 	
            1.
 

 

 

 

“Form S-3” means such form under the Securities Act as in effect on the date hereof or any successor or similar registration form under the Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.

“Holder” means any person owning of record Registrable Securities that have not been sold to the public or any assignee of record of such Registrable Securities in accordance with Section 2.10 hereof.

“Initial Offering” means the Company’s first firm commitment underwritten public offering of its Common Stock registered under the Securities Act.

“Note” shall mean that certain subordinated convertible promissory note dated June 17, 2003, issued by the Company in favor of Century Medical, Inc., a Japan corporation, pursuant to that certain Subordinated Convertible Note Agreement dated June 17, 2003, which is convertible in certain circumstances into shares of the Company’s Common Stock.

“Register,” “registered,” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of effectiveness of such registration statement or document.

“Registrable Securities” means (a) Common Stock of the Company issued or issuable upon conversion of the Shares; and (b) any 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, such above-described securities. Notwithstanding the foregoing, Registrable Securities shall not include any securities (i) sold by a person to the public either pursuant to a registration statement, (ii) sold in a private transaction in which the transferor’s rights under Section 2 of this Agreement are not assigned or (iii) held by a Holder (together with its affiliates) if, as reflected on the
Company’s list of stockholders, such Holder (together with its affiliates) holds less than 1% of the Company’s outstanding Common Stock (treating all shares of Preferred Stock on an as converted basis), the Company has completed its Initial Offering and all shares of Common Stock of the Company issuable or issued upon conversion of the Shares held by and issuable to such Holder (and its affiliates) may be sold pursuant to Rule 144 during any ninety (90) day period. For the purposes of this Agreement, the term “affiliate” shall include, in the case of Guidant Investment Corporation (“Guidant”), The Guidant Foundation (“Foundation”) so long as Foundation is an “accredited investor” within the meaning such term is given in the Securities Act, as hereinafter defined.

“Registrable Securities then outstanding” shall be the number of shares determined by calculating the total number of shares of the Company’s Common Stock that are Registrable Securities and either (a) are then issued and outstanding or (b) are issuable pursuant to then exercisable or convertible securities.

“Registration Expenses” shall mean all expenses incurred by the Company in complying with Sections 2.2, 2.3 and 2.4 hereof, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel for the Company, 

 

 

	
             
 	
            2.
 

 

 

reasonable fees and disbursements not to exceed ten thousand dollars ($10,000) of a single special counsel for the Holders, blue sky fees and expenses and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company).

“SEC” or “Commission” means the Securities and Exchange Commission.

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Selling Expenses” shall mean all underwriting discounts and selling commissions applicable to the sale.

“Shares” shall mean (a) shares of the Company’s Preferred Stock held by the Investors and their permitted assigns, and (b) shares of the Company’s Common Stock issued or issuable upon conversion of the Note.

“Special Registration Statement” shall mean a registration statement relating to any employee benefit plan under Form S-8 or similar form or with respect to any corporate reorganization or other transaction under Rule 145 of the Securities Act.

SECTION 2.   REGISTRATION;
RESTRICTIONS ON TRANSFER. 

	
             
 	
            2.1
 	
            Restrictions on Transfer.
 

(a)          Each Holder agrees not to make any disposition of all or any portion of the Shares or Registrable Securities unless and until:

(i)           There is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or

(ii)          (A) The transferee has agreed in writing to be bound by the terms of this Agreement, (B) such Holder shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and (C) if reasonably requested by the Company, such Holder shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration of such shares under the Securities Act. It is agreed that the Company will not require opinions of counsel for transactions made pursuant to Rule 144 except in unusual circumstances.

(iii)         Notwithstanding the provisions of paragraphs (i) and (ii) above, no such registration statement or opinion of counsel shall be necessary for a transfer by a Holder which is (A) a partnership to its partners or former partners in accordance with partnership interests, (B) a corporation to its shareholders in accordance with their interest in the corporation, (C) a limited liability company to its members or former members in accordance with their interest in the limited liability company, (D) to the Holder’s family member or trust for the benefit of an individual Holder, or (E) any entity to any of its affiliates; provided that in each 

 

 

	
             
 	
            3.
 

 

 

case the transferee will be subject to the terms of this Agreement to the same extent as if he were an original Holder hereunder.

(b)          Each certificate representing Shares or Registrable Securities shall (unless otherwise permitted by the provisions of the Agreement) be stamped or otherwise imprinted with a legend substantially similar to the following (in addition to any legend required under applicable state securities laws):

	 	
       “THE
        SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
        ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
        TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED
        UNDER THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
        SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS
        NOT REQUIRED.” 

(c)          The Company shall be obligated to reissue promptly unlegended certificates at the request of any holder thereof if the holder shall have obtained an opinion of counsel (which counsel may be counsel to the Company) reasonably acceptable to the Company to the effect that the securities proposed to be disposed of may lawfully be so disposed of without registration, qualification or legend.

(d)          Any legend endorsed on an instrument pursuant to applicable state securities laws and the stop-transfer instructions with respect to such securities shall be removed upon receipt by the Company of an order of the appropriate blue sky authority authorizing such removal.

	
             
 	
            2.2
 	
            Demand Registration.
 

(a)          Subject to the conditions of this Section 2.2, if the Company shall receive a written request from the Holders of a majority of the Registrable Securities (the “Initiating Holders”) that the Company file a registration statement under the Securities Act covering the registration of at least a majority of the Registrable Securities then outstanding  (or a lesser percent if the anticipated aggregate offering price, net of underwriting discounts and commissions, would exceed $5,000,000 (a “Qualified Public Offering”), then the Company shall, within thirty (30) days of the receipt thereof, give written notice
of such request to all Holders, and subject to the limitations of this Section 2.2, effect, as expeditiously as reasonably possible, the registration under the Securities Act of all Registrable Securities that the Holders request to be registered.

(b)          If the 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 2.2 or any request pursuant to Section 2.4 and the Company shall include such information in the written notice referred to in Section 2.2(a) or Section 2.4(a), as applicable. In such event, the right of any Holder to include its Registrable 

 

 

	
             
 	
            4.
 

 

 

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 to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by a majority in interest of the Initiating Holders (which underwriter or underwriters shall be reasonably acceptable to the Company). Notwithstanding any other provision of this Section 2.2 or Section 2.4, if the underwriter advises the Company that marketing factors require a limitation of the number of securities to be underwritten (including Registrable Securities) then the Company shall so advise all Holders of Registrable Securities which would otherwise be
underwritten pursuant hereto, and the number of shares that may be included in the underwriting shall be allocated to the Holders of such Registrable Securities on a pro rata basis based on the number of Registrable Securities held by all such Holders (including the Initiating Holders). Any Registrable Securities excluded or withdrawn from such underwriting shall be withdrawn from the registration.

(c)          The Company shall not be required to effect a registration pursuant to this Section 2.2:

(i)           prior to the earlier of (A) July 15, 2006 or (B) six (6) months following the effective date of the registration statement pertaining to the Initial Offering; 

(ii)          after the Company has effected three (3) registrations pursuant to this Section 2.2, and such registrations have been declared or ordered effective; 

(iii)         during the period starting with the date of filing of, and ending on the date one hundred eighty (180) days following the effective date of the registration statement pertaining to the Initial Offering; provided that the Company makes reasonable good faith efforts to cause such registration statement to become effective;

(iv)         if within thirty (30) days of receipt of a written request from Initiating Holders pursuant to Section 2.2(a), the Company gives notice to the Holders of the Company’s intention to make its Initial Offering within ninety (90) days;

(v)          if the Company shall furnish to Holders requesting a registration statement pursuant to this Section 2.2, a certificate signed by the Chairman of the Board 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 shareholders for such registration statement to be effected at such time, in which event the Company shall have the right to defer such filing for a period of not more than ninety (90) days after receipt of the request of the Initiating Holders; provided that such right to delay a request shall be exercised by the Company not more than twice in any twelve (12) month period; or

(vi)         if the Initiating Holders propose to dispose of shares of Registrable Securities that may be immediately registered on Form S-3 pursuant to a request made pursuant to Section 2.4 below.

2.3          Piggyback Registrations.  The Company shall notify all Holders of Registrable Securities in writing at least twenty (20) days prior to the filing of any registration statement 

 

 

	
             
 	
            5.
 

 

 

under the Securities Act for purposes of a public offering of securities of the Company (including, but not limited to, registration statements relating to secondary offerings of securities of the Company, but excluding Special Registration Statements) and will afford each such Holder an opportunity to include in such registration statement all or part of such Registrable Securities held by such Holder. Each Holder desiring to include in any such registration statement all or any part of the Registrable Securities held by it shall, within fifteen (15) days after the above-described notice from the Company, so notify the Company in writing. Such notice shall state the intended method of disposition of the Registrable Securities by such Holder. If a Holder decides not to include all of its Registrable Securities in any registration statement thereafter filed by the Company, such Holder shall nevertheless
continue to have the right to include any Registrable Securities in any subsequent registration statement or registration statements as may be filed by the Company with respect to offerings of its securities, all upon the terms and conditions set forth herein.

(a)          Underwriting. If the registration statement under which the Company gives notice under this Section 2.3 is for an underwritten offering, the Company shall so advise the Holders of Registrable Securities. In such event, the right of any such Holder to be included in a registration pursuant to this Section 2.3 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their Registrable Securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding
any other provision of the Agreement, if the underwriter determines in good faith that marketing factors require a limitation of the number of shares to be underwritten, the number of shares that may be included in the underwriting shall be allocated, first, to the Company; second, to the Holders on a pro rata basis based on the total number of Registrable Securities held by the Holders; and third, to any shareholder of the Company (other than a Holder) on a pro rata basis. No such reduction shall (i) reduce the securities being offered by the Company for its own account to be included in the registration and underwriting, or (ii) reduce the amount of securities of the selling Holders included in the registration below twenty percent (20%) of the total amount of securities included in such registration, unless such offering is the Initial Offering, in which event any or all of the
Registrable Securities of the Holders may be excluded in accordance with the immediately preceding sentence. In no event will shares of any other selling shareholder be included in such registration which would reduce the number of shares which may be included by Holders without the written consent of Holders of not less than a majority of the Registrable Securities proposed to be sold in the offering. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the underwriter, delivered at least ten (10) business days prior to the effective date of the registration statement. Any Registrable Securities excluded or withdrawn from such underwriting shall be excluded and withdrawn from the registration. For any Holder which is a partnership or corporation, the partners, retired partners and shareholders 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 person shall be deemed to be a single “Holder,” and any pro rata reduction with respect to such “Holder” shall be based upon the aggregate amount of shares carrying registration rights owned by all entities and individuals included in such “Holder,” as defined in this sentence.

 

 

	
             
 	
            6.
 

 

 

 

(b)          Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.3 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration. The Registration Expenses of such withdrawn registration shall be borne by the Company in accordance with Section 2.5 hereof.

2.4          Form S-3 Registration.  In case the Company shall receive from any Holder or Holders of Registrable Securities a written request or requests that the Company effect a registration on Form S-3 (or any successor to Form S-3) or any similar short-form registration statement 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:

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

(b)          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 fifteen (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 2.4:

	
             
 	
            (i)
 	
            if Form S-3 is not available for such offering by the Holders, or
 

(ii)          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 of less than one million dollars ($1,000,000), or

(iii)        if within thirty (30) days of receipt of a written request from  any Holder or Holders pursuant to this Section 2.4, the Company gives notice to such Holder or Holders of the Company’s intention to make a public offering within ninety (90) days, other than pursuant to a Special Registration Statement;

(iv)         if the Company shall furnish to the Holders a certificate signed by the Chairman of the Board of Directors 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 shareholders 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 for a period of not more than ninety (90) days after receipt of the request of the Holder or Holders under this Section 2.4; provided, that such right to delay a request shall be exercised by the Company not more than once in any twelve (12) month period, or

(v)          if the Company has already received three demand registrations on Form S-3, or

 

 

	
             
 	
            7.
 

 

 

 

(vi)         in any particular jurisdiction in which the 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.

(c)          Subject to the foregoing, the Company shall file a Form S-3 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 2.4 shall not be counted as demands for registration or registrations effected pursuant to Sections 2.2 or 2.3, respectively.

2.5          Expenses of Registration.  Except as specifically provided herein, all Registration Expenses incurred in connection with any registration, qualification or compliance pursuant to Section 2.2 or any registration under Section 2.3 or Section 2.4 herein shall be borne by the Company. All Selling Expenses incurred in connection with any registrations hereunder, shall be borne by the holders of the securities so registered pro rata on the basis of the number of shares so registered. The Company shall not, however, be required to pay for expenses of any registration proceeding begun pursuant to Section 2.2 or 2.4, the request of which has been subsequently withdrawn by the Initiating Holders
unless (a) the withdrawal is based upon material adverse information concerning the Company of which the Initiating Holders were not aware at the time of such request or (b) the Holders of a majority of Registrable Securities agree to forfeit their right to one requested registration pursuant to Section 2.2 or Section 2.4, as applicable, in which event such right shall be forfeited by all Holders). If the Holders are required to pay the Registration Expenses, such expenses shall be borne by the holders of securities (including Registrable Securities) requesting such registration in proportion to the number of shares for which registration was requested. If the Company is required to pay the Registration Expenses of a withdrawn offering pursuant to clause (a) above, then the Holders shall not forfeit their rights pursuant to Section 2.2 or Section 2.4 to a demand registration.

2.6          Obligations of the Company.  Whenever required 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 all reasonable 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 thirty (30) days or, if earlier, until the Holder or Holders have completed the distribution related thereto. The Company shall not be required to file, cause to become effective or maintain the effectiveness of any registration statement that contemplates a distribution of securities on a delayed or continuous basis pursuant to Rule 415 under the Securities Act.

(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 the period set forth in paragraph (a) above.

 

 

	
             
 	
            8.
 

 

 

 

(c)          Furnish to the Holders such number 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 reasonable 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(s) 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. The Company will use reasonable efforts to amend or supplement such prospectus in order to cause such prospectus not to include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then existing.

(g)          Use its reasonable efforts to furnish, on the date that such Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through underwriters, (i) an opinion, dated as of 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, if any, and (ii) a letter dated as of 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.

2.7          Termination of Registration Rights.  All registration rights granted under this Section 2 shall terminate and be of no further force and effect three (3) years after the date of the Company’s Initial Offering.

	
             
 	
            2.8
 	
            Delay of Registration; Furnishing Information.
 

(a)          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 2.

(b)          It shall be a condition precedent to the obligations of the Company to take any action pursuant to Section 2.2, 2.3 or 2.4 that the selling Holders shall furnish to the 

 

 

	
             
 	
            9.
 

 

 

Company such information regarding themselves, the Registrable Securities held by them and the intended method of disposition of such securities as shall be required to effect the registration of their Registrable Securities.

(c)          The Company shall have no obligation with respect to any registration requested pursuant to Section 2.2 or Section 2.4 if, due to the operation of subsection 2.2(b), 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 Section 2.2 or Section 2.4, whichever is applicable.

2.9          Indemnification.  In the event any Registrable Securities are included in a registration statement under Sections 2.2, 2.3 or 2.4:

(a)          To the extent permitted by law, the Company will indemnify and hold harmless each Holder, the partners, officers and directors of 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”) by the
Company: (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (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 in connection with the offering covered by such registration statement; and the Company will pay as incurred to each such Holder, partner, officer, director, underwriter or controlling person for 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 Section 2.9(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 in any such case 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 such Holder, partner, officer, director, underwriter or controlling person of such Holder.

(b)          To the extent permitted by law, each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration qualifications or compliance is being effected, indemnify and hold harmless the Company, each of its directors, its officers and each person, if any, who controls the Company within the meaning of the Securities Act, any underwriter and any other Holder selling securities under such registration statement or any of such other Holder’s partners, directors or officers or any person who controls 

 

 

	
             
 	
            10.
 

 

 

such Holder, against any losses, claims, damages or liabilities (joint or several) to which the Company or any such director, officer, controlling person, underwriter or other such Holder, or partner, director, officer or controlling person of such other Holder 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 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 under an instrument duly executed by such Holder and stated to be specifically for use in connection with such registration; and each such Holder will pay as incurred any legal or other expenses reasonably incurred by the Company or any such director, officer,
controlling person, underwriter or other Holder, or partner, officer, director or controlling person of such other Holder in connection with investigating or defending any such loss, claim, damage, liability or action if it is judicially determined that there was such a Violation; provided, however, that the indemnity agreement contained in this Section 2.9(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 further, that in no event shall any indemnity under this Section 2.9 exceed the net proceeds from the offering received by such Holder.

(c)          Promptly after receipt by an indemnified party under this Section 2.9 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 2.9, 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 shall have the right to retain its own counsel, with the 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 materially prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.9, 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 2.9.

(d)          If the indemnification provided for in this Section 2.9 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any losses, claims, damages or liabilities referred to herein, the indemnifying party, in lieu of indemnifying such indemnified party thereunder, shall to the extent permitted by applicable law contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability 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 Violation(s) that resulted in such loss, claim, damage or liability, as well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined by a court of law by reference to, among other things, whether the untrue or alleged 

 

 

	
             
 	
            11.
 

 

 

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; provided, that in no event shall any contribution by a Holder hereunder exceed the net proceeds from the offering received by such Holder.

(e)          The obligations of the Company and Holders under this Section 2.9 shall survive completion of any offering of Registrable Securities in a registration statement and the termination of this agreement. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.

2.10       Assignment of Registration Rights.  The rights to cause the Company to register Registrable Securities pursuant to this Section 2 may be assigned by a Holder to a transferee or assignee of Registrable Securities which (a) is a subsidiary, parent, general partner, limited partner, retired partner, member or retired member, or an affiliate of a Holder, (b) is a Holder’s family member or trust for the benefit of an individual Holder, or (c) acquires at least fifty thousand (50,000) shares of Registrable Securities (as adjusted for stock splits and combinations); provided, however, (i) the transferor shall, within ten (10) days after such transfer, furnish to the Company
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 (ii) such transferee shall agree to be subject to all restrictions set forth in this Agreement.

2.11       Amendment of Registration Rights.  Any provision of this Section 2 may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Holders of at least a majority of the Registrable Securities then outstanding. Any amendment or waiver effected in accordance with this Section 2.11 shall be binding upon each Holder and the Company. By acceptance of any benefits under this Section 2, Holders of Registrable Securities hereby agree to be bound by the provisions hereunder.

2.12       Limitation on Subsequent Registration Rights.  Other than as provided in Section 5.11, after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of at least a majority of the Registrable Securities then outstanding, enter into any agreement with any holder or prospective holder of any securities of the Company that would grant such holder registration rights pari passu or senior to those granted to the Holders hereunder.

2.13       “Market Stand-Off” Agreement; Agreement to Furnish Information.  Each Holder hereby agrees that such Holder shall not sell, 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 Common Stock (or other securities) of the Company held by such Holder (other than those included in the registration) for a period specified by the representative of the underwriters of Common Stock (or other securities) of the Company not to exceed one 

 

 

	
             
 	
            12.
 

 

 

hundred eighty (180) days following the effective date of a registration statement of the Company filed under the Securities Act; provided that:

(i)           such agreement shall apply only to the Company’s Initial Offering; and

(ii)          all officers and directors of the Company and holders of at least five percent (5%) of the Company’s voting securities enter into similar agreements.

Each Holder agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriter which are consistent with the foregoing or which are necessary to give further effect thereto. In addition, if requested by the Company or the representative of the underwriters of Common Stock (or other securities) of the Company, each Holder shall provide, within ten (10) days of such request, such information as may be required by the Company or such representative in connection with the completion of any public offering of the Company’s securities pursuant to a registration statement filed under the Securities Act. The obligations described in this Section 2.13 shall not apply to a registration relating solely to employee benefit plans on Form S-1 or Form S-8 or similar forms that may be promulgated in the future, or a registration
relating solely to a Commission Rule 145 transaction on Form S-4 or similar forms that may be promulgated in the future. The Company may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction until the end of said one hundred eighty (180) day period. Each Holder agrees that any transferee of any shares of Registrable Securities shall be bound by  Section 2.13. The underwriters of the Company’s stock are intended third party beneficiaries of Section 2.13 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto.

2.14       Rule 144 Reporting.  With a view to making available to the Holders the benefits of certain rules and regulations of the SEC which may permit the sale of the Registrable Securities to the public without registration, the Company agrees to use its best efforts to:

(a)          Make and keep public information available, as those terms are understood and defined in SEC Rule 144 or any similar or analogous rule promulgated under the Securities Act, at all times after the effective date of the first registration filed by the Company for an offering of its securities to the general public;

(b)          File with the SEC, in a timely manner, all reports and other documents required of the Company under the Exchange Act; and

(c)          So long as a Holder owns any Registrable Securities, furnish to such Holder forthwith upon request:  a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 of the Securities Act, and of the Exchange Act (at any time after it has become subject to such reporting requirements); a copy of the most recent annual or quarterly report of the Company; and such other reports and documents as a Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing it to sell any such securities without registration.

 

 

	
             
 	
            13.
 

 

 

 

SECTION 3.  COVENANTS OF
THE COMPANY. 

	
             
 	
            3.1
 	
            Basic Financial Information and Reporting.
 

(a)          The Company will maintain true books and records of account in which full and correct entries will be made of all its business transactions pursuant to a system of accounting established and administered in accordance with generally accepted accounting principles consistently applied, and will set aside on its books all such proper accruals and reserves as shall be required under generally accepted accounting principles consistently applied.

(b)          So long as a holder (together with its affiliates) shall own not less than two hundred fifty thousand (250,000) shares of Registrable Securities (as adjusted for stock splits, combinations and like) (a “Major Investor”), the Company as soon as practicable after the end of such fiscal year and in any event within one hundred twenty (120) days furnish each Major Investor a balance sheet of the Company, a statement of income and a statement of cash flows of the Company, all prepared in accordance with generally accepted accounting principles consistently applied and setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail. Such financial statements shall be
accompanied by a report and opinion thereon by independent public accountants of national standing selected by the Company’s Board of Directors.

(c)          The Company will furnish each Major Investor, as soon as practicable after the end of the first, second and third quarterly accounting periods in each fiscal year of the Company, and in any event within forty-five (45) days thereafter, a balance sheet of the Company as of the end of each such quarterly period, and a statement of income and a statement of cash flows of the Company for such period and for the current fiscal year to date, prepared in accordance with generally accepted accounting principles, with the exception that no notes need be attached to such statements and year-end audit adjustments may not have been made.

3.2          Inspection Rights.  Each Major Investor shall have the right to visit and inspect any of the properties of the Company or any of its subsidiaries, and to discuss the affairs, finances and accounts of the Company or any of its subsidiaries with its officers, and to review such information as is reasonably requested all at such reasonable times and as often as may be reasonably requested; provided, however, that the Company shall not be obligated under this Section 3.2 with respect to a competitor of the Company or with respect to information which the Board of Directors determines in good faith is confidential and should not, therefore, be disclosed. 

3.3          Confidentiality of Records.  Each Investor agrees to use, and to use its best efforts to insure that its authorized representatives use, the same degree of care as such Investor uses to protect its own confidential information to keep confidential any information furnished to it which the Company identifies as being confidential or proprietary (so long as such information is not in the public domain), except that such Investor may disclose such proprietary or confidential information to any partner, subsidiary or parent of such Investor for the purpose of evaluating its investment in the Company as long as such partner, subsidiary or parent is advised of the confidentiality provisions of this Section 3.3.

 

 

	
             
 	
            14.
 

 

 

 

3.4          Reservation of Common Stock.  The Company will at all times reserve and keep available, solely for issuance and delivery upon the conversion of the Preferred Stock, all Common Stock issuable from time to time upon such conversion.

3.5          Proprietary Information and Inventions Agreement.  The Company shall require all employees and consultants to execute and deliver a Proprietary Information and Inventions Agreement in the form attached to the Purchase Agreement.

3.6           Approval.  The Company shall not without the approval of a majority of the Board of Directors, with all non-interested Directors voting, authorize or enter into any transactions with any director or officer, or such director’s or officer’s immediate family.

	
             
 	
            3.7
 	
            Notification and Negotiation of Material Transaction.
 

(a)          Notification Obligations. In the event the Company receives from any person or entity (the “Third Party”) a written indication (a “Notice of Interest”) that such person or entity desires to enter into a transaction whereby (i) all or substantially all of the Company’s distal or proximal anastomosis technology, which includes applications of such technology to cardiac bypass surgery, vascular surgery, neurosurgery and reconstructive surgery, is to be sold or any of the intellectual property related to the Company’s distal or proximal anastomosis technology is to be sold, licensed or otherwise transferred, (ii) the
Company is to be merged with or into another entity or all or substantially all of its assets are to be sold, or (iii) the Company will enter into a distribution agreement for the Company’s products for the United States, Japan or any country in Europe (any of “i,” “ii” or “iii” shall hereinafter be referred to as a “Material Transaction”), and the Company desires to continue discussions with such Third Party, then the Company shall provide to Guidant, within three (3) business days of receipt of the Notice of Interest or the Company’s decision to pursue such Material Transaction, whichever is later, written notice (the “Guidant Notification”) of receipt of the Notice of Interest and shall set forth in such Guidant Notification the nature of the Material Transaction set forth in the Notice of Interest. The Guidant
Notification need not set forth the terms of such Material Transaction such as the identity of the Third Party, pricing and timing.

(b)          Negotiation Right. Within ten (10) business days of the date on which the Guidant Notification was delivered to Guidant, Guidant shall provide the Company with written notice (the “Guidant Interest Notice”) of Guidant’s intention to negotiate a Material Transaction (a “Guidant Transaction”). In the event Guidant delivers the Guidant Interest Notice within the ten (10) day period, the Company and Guidant shall use reasonable best efforts to negotiate definitive documentation regarding such Guidant Transaction within twenty (20) business days following the Company’s Receipt of the Guidant Interest Notice (the
“Guidant Negotiation Period”). During the Guidant Negotiation Period, the Company may simultaneously negotiate a Material Transaction with a Third Party. If a Guidant Transaction is not successfully negotiated and documented during the Guidant Negotiation Period, the Company may continue to pursue the Material Transaction with a Third Party.

(c)          Time Frame. If the Company has not entered into a Material Transaction within one hundred eighty (180) days of the expiration of the Guidant Negotiation Period (such expiration to be deemed to occur upon the earlier of (x) the lapsing of the requisite number of 

 

 

	
             
 	
            15.
 

 

 

days, or (y) the date on which Guidant waives such rights in writing), the Company shall not thereafter enter into such Material Transaction without first complying with the notice and negotiation rights provided Guidant in Sections 3.7(a) and 3.7(b) above.

(d)          Termination and Waiver of Notification and Negotiation Rights. The rights of notification and negotiation established by this Section 3.7 shall terminate upon the earlier of (i) effective date of the registration statement pertaining to the Company’s Initial Offering or (ii) a Material Transaction of the type described in Section 3.7(a)(ii) consummated in compliance with this Section 3.7. The notification and negotiation rights established by this Section 3.7 may be amended, or any provision waived, only with the written consent of the Company and Guidant. 

(e)          Transfer of Notification and Negotiation Rights. The rights provided Guidant pursuant to this Section 3.7 may not be transferred except that Guidant may assign the negotiation rights contemplated hereunder to an affiliate of Guidant with respect to a Material Transaction; provided, however, that in no event shall more than one (1) entity, whether Guidant or an affiliate of Guidant, be permitted to exercise the negotiation rights provided pursuant to this Section 3.7 with respect to any particular Material Transaction. For purposes of this Section 3.7(e), The Guidant Foundation shall not be deemed an “affiliate.”

3.8          Termination of Covenants.  Except as otherwise set forth in Section 3.7 or 3.9 of this Agreement, all covenants of the Company contained in Section 3 of this Agreement shall expire and terminate as to each Investor upon the earlier of (a) the effective date of the registration statement pertaining to the Initial Offering, which results in the Preferred Stock being converted into Common Stock or (b) upon (i) the sale, lease or other disposition of all or substantially all of the assets of the Company or (ii) an acquisition of the Company by another corporation or entity by consolidation, merger or other reorganization in which the holders of the Company’s outstanding voting stock immediately prior to such transaction own,
immediately after such transaction, securities representing less than fifty percent (50%) of the voting power of the corporation or other entity surviving such transaction, provided that this Section 3.8(b)(ii) shall not apply to a merger effected exclusively for the purpose of changing the domicile of the Company (a “Change in Control”).

3.9          Visitation Rights.  The Company shall allow one representative designated by the Guidant to attend all meetings of the Company’s Board of Directors in a nonvoting capacity, and in connection therewith, the Company shall give such representative copies of all notices, minutes, consents and other materials, financial or otherwise, which the Company provides to its Board of Directors; provided, however, that Guidant agrees to sign a confidentiality agreement in a form acceptable to the Company to maintain the confidentiality of such information, including, but not limited to, the intellectual property of the Company and restrictions on the use of such information, and shall cause the Guidant
representative to comply with the terms and conditions thereof; and provided, further, that the Guidant representative shall abide by the Company’s policies applicable to the Company’s officers and directors; and provided, further, that the Company reserves the right to exclude such representative from access to any material or meeting or portion thereof if the Company believes upon advice of counsel that such exclusion is reasonably necessary to preserve the attorney-client privilege, to protect highly confidential information or for other similar reasons. The decision of the Board with respect to the privileged 

 

 

	
             
 	
            16.
 

 

 

or confidential nature of such information shall be final and binding. These visitation rights shall terminate upon the earlier to occur of (a) a Change in Control, or (b) the Company’s election to terminate these visitation rights following the sale or transfer by Guidant of Registrable Securities held by Guidant other than any transfers to any affiliate of Guidant.

SECTION 4.  RIGHTS OF FIRST REFUSAL.

4.1          Subsequent Offerings.  Each Major Investor shall have a right of first refusal to purchase its pro rata share of all Equity Securities, as defined below, that the Company may, from time to time, propose to sell and issue after the date of this Agreement, other than the Equity Securities excluded by Section 4.6 hereof. Each Investor’s pro rata share is equal to the ratio of (a) the number of shares of the Company’s Common Stock (including all shares of Common Stock issued or issuable upon conversion of the Shares) which such Investor is deemed to be a holder immediately prior to the issuance of such Equity Securities to (b) the total number
of shares of the Company’s outstanding Common Stock (including all shares of Common Stock issued or issuable upon conversion of the Shares or upon the exercise of any outstanding warrants or options or other rights to acquire capital stock of the Company) immediately prior to the issuance of the Equity Securities. The term “Equity Securities” shall mean (i) any Common Stock, Preferred Stock or other security of the Company, (ii) any security convertible, with or without consideration, into any Common Stock, Preferred Stock or other security (including any option to purchase such a convertible security), (iii) any security carrying any warrant or right to subscribe to or purchase any Common Stock, Preferred Stock or other security or (iv) any such warrant or right.

4.2          Exercise of Rights.  If the Company proposes to issue any Equity Securities, it shall give each Major Investor written notice of its intention, describing the Equity Securities, the price and the terms and conditions upon which the Company proposes to issue the same. Each Major Investor shall have fifteen (15) days from the giving of such notice to agree to purchase its pro rata share of the Equity Securities for the price and upon the terms and conditions specified in the notice by giving written notice to the Company and stating therein the quantity of Equity Securities to be purchased. Notwithstanding the
foregoing, the Company shall not be required to offer or sell such Equity Securities to any Major Investor who would cause the Company to be in violation of applicable federal securities laws by virtue of such offer or sale.

4.3          Issuance of Equity Securities to Other Persons.  If not all of the Major Investors elect to purchase their pro rata share of the Equity Securities, then the Company shall promptly notify in writing the Major Investors who do so elect and shall offer such Major Investors the right to acquire such unsubscribed shares. The Major Investors shall have five (5) days after receipt of such notice to notify the Company of its election to purchase all or a portion thereof of the unsubscribed shares. If the Major Investors fail to exercise in full the rights of first refusal, the Company shall have ninety (90) days thereafter to sell the Equity Securities in respect of which the Major Investor’s rights were not
exercised, at a price and upon general terms and conditions materially no more favorable to the purchasers thereof than specified in the Company’s notice to the Major Investors pursuant to Section 4.2 hereof. If the Company has not sold such Equity Securities within ninety (90) days of the notice provided pursuant to Section 4.2, the Company shall not thereafter issue or sell any Equity Securities, without first offering such securities to the Major Investors in the manner provided above.

 

 

	
             
 	
            17.
 

 

 

 

4.4          Termination and Waiver of Rights of First Refusal.  The rights of first refusal established by this Section 4 shall not apply to the Company’s Initial Offering, and shall terminate upon the earlier of (i) effective date of the registration statement pertaining to the Company’s Initial Offering or (ii) a Change in Control. The rights of first refusal established by this Section 4 may be amended, or any provision waived with the written consent of Major Investors holding a majority of the Registrable Securities held by all Major Investors, or as permitted by Section 5.6.

4.5          Transfer of Rights of First Refusal.  The rights of first refusal of each Major Investor under this Section 4 may be transferred to the same parties, subject to the same restrictions as any transfer of registration rights pursuant to Section 2.10.

4.6          Excluded Securities.  The rights of first refusal established by this Section 4 shall have no application to any of the following Equity Securities:

(a)          shares of Common Stock (and/or options, warrants or other Common Stock purchase rights issued pursuant to such options, warrants or other rights) issued or to be issued to employees, officers, directors of, or consultants or advisors to the Company or any subsidiary, pursuant to stock purchase or stock option plans or other arrangements that are approved by the Board of Directors;

(b)          stock issued pursuant to any rights or agreements outstanding as of the date of this Agreement, options and warrants outstanding as of the date of this Agreement; and stock issued pursuant to any such rights or agreements granted after the date of this Agreement; provided that the rights of first refusal established by this Section 4 applied with respect to the initial sale or grant by the Company of such rights or agreements;

(c)          any Equity Securities issued for consideration other than cash pursuant to a merger, consolidation, acquisition or similar business combination;

(d)          shares of Common Stock issued in connection with any stock split, stock dividend or recapitalization by the Company;

	
             
 	
            (e)
 	
            shares of Common Stock issued upon conversion of the Shares;
 

(f)           any Equity Securities issued pursuant to any equipment leasing or loan arrangement, or debt financing from a bank or similar financial or lending institution approved by the Board of Directors;

(g)          any Equity Securities that are issued by the Company pursuant to a registration statement filed under the Securities Act; 

(h)          any Equity Securities issued in connection with strategic transactions involving the Company and other entities, including (i) joint ventures, manufacturing, marketing or distribution arrangements or (ii) technology transfer or development arrangements; provided that such strategic transactions and the issuance of shares therein, has been approved by the Company’s Board of Directors; and

 

 

	
             
 	
            18.
 

 

 

 

(i)           up to an aggregate of 100,000 shares of stock of the Company issued to any charitable organization described in Section 170(c) of the Internal Revenue Code.

SECTION 5.  MISCELLANEOUS.  

5.1          Governing Law.  This Agreement shall be governed by and construed under the laws of the State of California as applied to agreements among California residents entered into and to be performed entirely within California.

5.2          Survival.  The representations, warranties, covenants, and agreements made herein shall survive any investigation made by any Holder and the closing of the transactions contemplated hereby. All statements as to factual matters contained in any certificate or other instrument delivered by or on behalf of the Company pursuant hereto in connection with the transactions contemplated hereby shall be deemed to be representations and warranties by the Company hereunder solely as of the date of such certificate or instrument.

5.3          Successors and Assigns.  Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the parties hereto and shall inure to the benefit of and be enforceable by each person who shall be a holder of Registrable Securities from time to time; provided, however, that prior to the receipt by the Company of adequate written notice of the transfer of any Registrable Securities specifying the full name and address of the transferee, the Company may deem and treat the person listed as the holder of such shares in its records as the absolute owner and holder of such shares for all purposes,
including the payment of dividends or any redemption price.

5.4          Entire Agreement.  This Agreement, the Exhibits and Schedules hereto, the Purchase Agreement and the other documents delivered pursuant thereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and no party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein.

5.5          Severability.  In the event one or more of the provisions of this Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.

	
             
 	
            5.6
 	
            Amendment and Waiver.  
 

(a)          Except as otherwise expressly provided in this Agreement, this Agreement may be amended or modified only upon the written consent of the Company and the holders of at least a majority of the Registrable Securities.

(b)          Except as otherwise expressly provided in this Agreement, the obligations of the Company and the rights of the Holders under this Agreement may be waived only with the written consent of the holders of at least a majority of the Registrable Securities.

 

 

	
             
 	
            19.
 

 

 

 

(c)          Notwithstanding the foregoing, this Agreement may be amended with only the written consent of the Company to include additional purchasers of Series E Stock pursuant to Section 2.3 of the Purchase Agreement as “Investors,” “Holders” and parties hereto.

(d)          For the purposes of determining the number of Holder or Investors entitled to vote or exercise any rights hereunder, the Company shall be entitled to rely solely on the list of record holders of its stock as maintained by or on behalf of the Company.

5.7          Delays or Omissions.  It is agreed that no delay or omission to exercise any right, power, or remedy accruing to any Holder, upon any breach, default or noncompliance of the Company under this Agreement shall impair any such right, power, or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent, or approval of any kind or character on any Holder’s part of any breach, default or noncompliance under the Agreement or any waiver on such Holder’s part of any provisions or conditions of this Agreement must be in writing and shall be effective only to the
extent specifically set forth in such writing. All remedies, either under this Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not alternative.

5.8          Notices.  All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient; if not, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the party to be notified at the address as set forth on the signature pages hereof or Exhibit A hereto or at such other
address as such party may designate by ten (10) days advance written notice to the other parties hereto.

5.9          Attorneys’ Fees.  In the event that any suit or action is instituted to enforce any provision in this Agreement, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Agreement, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals.

5.10       Titles and Subtitles.  The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

5.11       Additional Investors.  Notwithstanding anything to the contrary contained herein, if the Company shall issue Equity Securities pursuant to and in accordance with Section 4.6(c), (f), or (h) hereof, then any purchaser or transferee of such shares of Preferred Stock or Equity Securities, as the case may be, may upon the approval of the Company’s Board of Directors, become a party to this Agreement by executing and delivering an additional counterpart signature page to this Agreement and shall be deemed an “Investor” hereunder.

 

 

	
             
 	
            20.
 

 

 

 

(a)          Notwithstanding anything to the contrary contained herein, if the Company shall issue Equity Securities in accordance with Section 4.6 (c), (f) or (h) of this Agreement, upon the approval of the Company’s Board of Directors, any purchaser of such Equity Securities may become a party to this Agreement by executing and delivering an additional counterpart signature page to this Agreement and shall be deemed an “Investor” hereunder.

5.12       Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.

5.13       Amendment of Prior Agreement.  The Prior Agreement is hereby amended in its entirety as restated herein. Such amendment and restatement is effective upon the execution of this Agreement by the Company, the holders of a majority in interest of the Preferred Stock held by the Prior Investors outstanding as of the date of this Agreement. Upon such execution, all provisions of, rights granted and covenants made in the Prior Agreement are hereby waived, released and terminated in their entirety and shall have no further force and effect.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

	
             
 	
            21.
 

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed the AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

	COMPANY:

        

        CARDICA, INC.

        

        

        By:  /s/ Bernard Hausen               

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

              President and Chief Executive Officer

        

        Address:   171 Jefferson Drive

                            Menlo
        Park, CA 94025
	INVESTORS:
      

      

      GUIDANT INVESTMENT CORPORATION

      

      

      By: /s/ Ronald W. Dollens                    

      

      Print Name: Ronald W. Dollens         

      

      Print Title: President                            

 

 

 

	
             
 	
            RESTATED INVESTOR RIGHTS AGREEMENT
 
	
             
 	
            SIGNATURE PAGE
 	
             

				

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed the AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

	  
	 INVESTORS:

	 	 
	  
	 ALLEN
        AND COMPANY INCORPORATED

      By:
        /s/ John Simon                                         

      Print
        Name:   John Simon                   
                  

      Print
        Title:  Manager Director        
                      

	 	 
	  
	 ALAD
        TECHNOLOGIES, N.V.

      By:
                                                              
                      

      Print
        Name:                                            
                  

      Print
        Title:                                          
                      

	 	 
	  
	 ROBERT
        AND RUTH HALPERIN TRUST 

      By:
          /s/ Robert Halperin           
                                

                Robert M. Halperin
        

	 	 
	  
	 CENTURY
        MEDICAL, INC.

      By:
                                                  
                                

      Print
        Name:                                           
                  

      Print
        Title:                                          
                      

	 	 

 

 

 

	
             
 	
            RESTATED INVESTOR RIGHTS AGREEMENT
 
	
             
 	
            SIGNATURE PAGE
 	
             

				

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed the AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

	  
	 INVESTORS:

	 	 
	  
	 SUTTER
        HILL VENTURES, A CALIFORNIA LIMITED PARTNERSHIP

      By:
          /s/ William H. Younger, Jr.     
                         

      Print
        Name:   William H. Younger, Jr.              
        

      Print
        Title:  Managing Director of the General 
                    Partner                                             
        

	 	 
	  
	 SUTTER
        HILL ENTREPRENEURS’ FUND (AI), L.P.

      By:
          /s/ William H. Younger, Jr.     
                         

      Print
        Name:   William H. Younger, Jr.              
        

      Print
        Title:   Managing Director of the General 
                    Partner                                             
        

	 	 
	  
	 SUTTER
        HILL ENTREPRENEURS’ FUND (QP), L.P.

      By:
          /s/ William H. Younger, Jr.     
                         

      Print
        Name:   William H. Younger, Jr.              
        

      Print
        Title:   Managing Director of the General 
                    Partner                                             
        

	 	 

 

 

 

	
             
 	
            RESTATED INVESTOR RIGHTS AGREEMENT
 
	
             
 	
            SIGNATURE PAGE
 	
             

				

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed the AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

	  
	 INVESTORS:

	 	 
	  
	 THE
        ANDERSON LIVING TRUST, U/A/D 1/22/98

      By:
         /s/ David L. Anderson  
                                

      Print
        Name:     David L. Anderson               

      Print
        Title: Trustee                                          
        

	 	 
	  
	 ANVEST,
        L.P.

      By:
         /s/ David L. Anderson  
                                

      Print
        Name:     David L. Anderson               

      Print
        Title:  General Partner            
                      

	 	 
	  
	 G.
        LEONARD BAKER, JR.

      By:
          /s/ David L. Anderson, under power  

       of attorney                                               

	 	 
	  
	 
JAMES C. GAITHER

      By:
          /s/ James C. Gaither                           
         

	 	 
	  
	 
LYNNE M. BROWN

      By:
          /s/ Lynne M. Brown                           
         

	 	 

 

 

 

	
             
 	
            RESTATED INVESTOR RIGHTS AGREEMENT
 
	
             
 	
            SIGNATURE PAGE
 	
             

				

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed the AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

 

	  
	 INVESTORS:

	 	 
	  
	 THE
        JEFFREY W. BIRD AND CHRISTINA R. BIRD TRUST DATED 10/31/2000

      By:
         /s/ Jeffrey W. Bird        
                                

      Print
        Name:  Jeffrey W. Bird                         

      Print
        Title:  Trustee                                       

	 	 
	  
	 YIN
        FAMILY TRUST DATED MARCH 1, 1997

      By:
         /s/ Robert Yin                
                                

      Print
        Name:   Robert Yin                                

      Print
        Title:  Trustee                                       
        

	 	 
	  
	 THE
        YOUNGER LIVING TRUST, U/A/D 1/20/95

      By:
         /s/ William H. Younger, Jr.                  

      Print
        Name:  William H. Younger, Jr.          

      Print
        Title:  Trustee                                       
        

	 	 
	  
	 THE
        COXE/OTUS REVOCABLE TRUST, U/A/D 4/23/98

      By:
         /s/ Tench Coxe                                        

      Print
        Name:  Tench Coxe                               

      Print
        Title:  Trustee                                       
         

	 	 
	  
	 THE
        TAMERLANE CHARITABLE REMAINDER UNITRUST

      By:
         /s/ Tench Coxe                                        

      Print
        Name:  Tench Coxe                               

      Print
        Title:  Trustee                                       
         

	 	 

 

 

 

	
             
 	
            RESTATED INVESTOR RIGHTS AGREEMENT
 
	
             
 	
            SIGNATURE PAGE
 	
             

				

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed the AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

 

	  
	 INVESTORS:

	 	 
	  
	 WELLS
        FARGO BANK, TRUSTEE SHV M/P/T FBO PATRICIA TOM ROLLOVER

      By:
         /s/ Evan Hodgens/Roger Parodi           

      Print
        Name:  Evan Hodgens/Roger Parodi  

      Print
        Title:  Vice Presidents                          
         

	 	 
	  
	 WELLS
        FARGO BANK, TRUSTEE SHV M/P/T FBO SHERRYL W. HOSSACK

      By:
         /s/ Evan Hodgens/Roger Parodi           

      Print
        Name:  Evan Hodgens/Roger Parodi  

      Print
        Title:  Vice Presidents                          
         

	 	 
	  
	 WELLS
        FARGO BANK, TRUSTEE SHV M/P/T FBO WILLIAM H. YOUNGER, JR.

      By:
         /s/ Evan Hodgens/Roger Parodi           

      Print
        Name:  Evan Hodgens/Roger Parodi  

      Print
        Title:  Vice Presidents                          
         

	 	 
	  
	 WELLS
        FARGO BANK, TRUSTEE SHV M/P/T FBO JAMES N. WHITE (ROLLOVER)

      By:
         /s/ Evan Hodgens/Roger Parodi           

      Print
        Name:  Evan Hodgens/Roger Parodi  

      Print
        Title:  Vice Presidents                          
         

	 	 

 

 

 

	
             
 	
            RESTATED INVESTOR RIGHTS AGREEMENT
 
	
             
 	
            SIGNATURE PAGE
 	
             

				

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed the AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

 

	  
	 INVESTORS:

	 	 
	  
	 WELLS
        FARGO BANK, TRUSTEE SHV M/P/T FBO DAVID S. SWEET (ROLLOVER)

      By:
         /s/ Evan Hodgens/Roger Parodi           

      Print
        Name:  Evan Hodgens/Roger Parodi  

      Print
        Title:  Vice Presidents                          
         

	 	 
	  
	 WELLS
        FARGO BANK, TRUSTEE SHV M/P/T FBO GREGORY P. SANDS

      By:
         /s/ Evan Hodgens/Roger Parodi           

      Print
        Name:  Evan Hodgens/Roger Parodi  

      Print
        Title:  Vice Presidents                          
         

	 	 

 

 

 

	
             
 	
            RESTATED INVESTOR RIGHTS AGREEMENT
 
	
             
 	
            SIGNATURE PAGE
 	
             

				

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date first written above.

 

	  
	 INVESTORS:

	 	 
	  
	  

         /s/ Stephen A. Yencho                                         

        STEPHEN A. YENCHO, PH.D.

	 	 
	  
	  

       

       

                                                                                           

        PHILIP E. OYER

	 	 
	  
	  

      SHEEHAN
        VENTURES

       

       

      By:                                                                             

      Timothy
        G. Sheehan

       

      Print
        Title:                                                                 

       

	 	 
	  
	 SIPPL
        INVESTMENTS LLC

       

       

       

      By:
                                                                                   

      Roger
        Sippl

       

      Print
        Title:                                                                 

       

	 	 

 

 

	
             
 	
            RESTATED INVESTOR RIGHTS AGREEMENT
 
	
             
 	
            SIGNATURE PAGE
 	
             

				

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

	  
	 INVESTORS:

	 	 
	  
	 
        THE GEOFFREY O. HARTZLER REVOCABLE TRUST, DATED 01/08/97

       

       

      By:
                                                                                       

      Geoffrey
        O. Hartzler, Trustee 

       

	  
	  

       

                                                                                            

      LARRY
        W. CROCKER

       

       

                                                                                            

      MARY
        K. CROCKER

	 	 
	  
	  

      REDMOND
        VENTURES, A CALIFORNIA LIMITED PARTNERSHIP

       

       

      By:
                                                                                       

      Albert
        F. Knorp, Jr., General Partner

       

	 	 

 

 

	
             
 	
            RESTATED INVESTOR RIGHTS AGREEMENT
 
	
             
 	
            SIGNATURE PAGE
 	
             

				

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

	  
	 INVESTORS:

	  
	  

      PHILIP
        W. HALPERIN

       

       

                                                                                  

	  
	  

      PEGGY
        ANNE HALPERIN DOW

       

       

                                                                                  

	  
	  

      JEFFREY WALTER

       

       

        /s/ Jeffrey Walter                                           

	  
	  

      ALICE B. JACK

       

       

                                                                                   

	  
	  

      RICHARD
        W. JACK

       

       

                                                                                 

 

 

	
             
 	
            RESTATED INVESTOR RIGHTS AGREEMENT
 
	
             
 	
            SIGNATURE PAGE
 	
             

				

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

 

	  
	 INVESTORS:

	 	 
	  
	 CARDIOVASCULAR
        MEDICINE AND CORONARY INTERVENTIONS 401K SAVINGS PLAN FBO DENNIS J. SHEEHAN,
        M.D.

       

       

      By:
                                                                                    

           Gregory
        C. Robertson

       

      Print
        Title:                                                                 

	  
	  

      BUNDY
        ASSOCIATES

       

       

      By:
                                                                                     

      FRED
        CARROLL, GENERAL PARTNER

	  
	  

      ROMEO
        A. PAVLIC TTEE INLAND CARDIORAPLOGY ASSOC

       

       

      By:
                                                                                      

            Romeo
        A. Pavlic, Trustee

	  
	  

      DENNIS
        J. SHEEHAN, M.D.

       

       

                                                                                           

	  
	  

      FRANK
        FISCHER

       

       

                                                                                            

	  
	  

      JOHN
        DE BENEDETTI

       

       

                                                                                            

	 	 

 

 

	
             
 	
            RESTATED INVESTOR RIGHTS AGREEMENT
 
	
             
 	
            SIGNATURE PAGE
 	
             

				

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

	  
	 INVESTORS:

	  
	  

      WILLIAM
        L. CLAUSON

       

       

                                                                                       

	  
	  

      THE
        DOW FAMILY TRUST

       

       

      By:
                                                                                  

      Stephen
        M. Dow, Trustee

	  
	  

      SHARON
        A. SHEEHAN

       

       

                                                                                         

	  
	  

      ATKINSON
        CHARITABLE LEAD TRUST

       

       

      By:
                                                                                   

      Sharon
        A. Sheehan, Trustee

       

	  
	 KENNETH
        W. KIZER, M. D.

       

       

                                                                                         

 

 

	
             
 	
            RESTATED INVESTOR RIGHTS AGREEMENT
 
	
             
 	
            SIGNATURE PAGE
 	
             

				

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

	  
	 INVESTORS:

	  
	 

        GC&H INVESTMENTS

       

       

      By:
                                                                                  

       

      Print
        Name:                                                             

       

      Print
        Title:                                                               
        

       

	  
	 KEVIN
        LARKIN

       

       

                                                                                        

	  
	  

      DAN
        R. LIGHTFOOT

       

       

                                                                                        

	  
	  

      VERNON
        F. LIGHTFOOT & DAN R. LIGHTFOOT M.D’S., INC. MONEY PURCHASE PENSION
        FUND

       

       

      By:
                                                                                  

       

      Name:                                                                      

       

      Title:                                                                        
        

       

	  
	 THE
        GLENN C. MYERS FAMILY TRUST DATED JANUARY 20, 1986

       

       

      By:
                                                                                   

      Glenn
        C. Myers, Trustee

       

 

 

	
             
 	
            RESTATED INVESTOR RIGHTS AGREEMENT
 
	
             
 	
            SIGNATURE PAGE
 	
             

				

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

	  
	 INVESTORS:

	  
	 
DONALD
        J. SANTEL

       

       

                                                                                            

	  
	  

      MICHAEL
        B. SWEENEY

       

       

                                                                                            

	  
	  

      MARK
        MELTZER

       

       

                                                                                             

	  
	  

      ANNETTE
        CAMPBELL-WHITE

       

       

                                                                                            

	  
	  

      ROBERT
        MOMSEN LIVING TRUST

       

       

      By:
                                                                                       

      Robert
        Momsen, Trustee

       

	  
	  

      GLYNN
        INVESTMENT CO. LLC

       

       

      By:
                                                                                       

      John
        W. Glynn Jr.

       

      Print
        Title:                                                                    

       

 

 

	
             
 	
            RESTATED INVESTOR RIGHTS AGREEMENT
 
	
             
 	
            SIGNATURE PAGE
 	
             

				

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

	  
	 INVESTORS:

	  
	 
THE
        STEVEN P. CARROLL AND JESSICA L. CARROLL 1998 TRUST, U/T/A DATED JUNE
        5, 1998

       

       

      By:
                                                                                 

      Steven
        P. Carroll, Co-Trustee

       

       

      By:
                                                                                 

      Jessica
        L. Carroll, Co-Trustee

       

	  
	 SECURITY
        TRUST CO. FBO FRANK R. RUDERMAN IRA

       

       

      By:
                                                                                 

      Gene
        Luntz, Vice President

       

	  
	  

      CHRISTOPHER
        J. DUNN, M. D.

       

       

                                                                                      

	  
	  

      GEORGE
        STEFANIK, M.D.

       

       

                                                                                      

	  
	  

      GARY
        BANG

       

       

                                                                                      

 

 

	
             
 	
            RESTATED INVESTOR RIGHTS AGREEMENT
 
	
             
 	
            SIGNATURE PAGE
 	
             

				

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

	  
	 INVESTORS:

	  
	 ALLAN
        W. MAY IRREVOCABLE TRUST U/A DTD 05/04/91

       

       

      By:
                                                                                 

      Allan
        W. May 

       

	  
	  

      PAUL
        COGHLAN

       

       

                                                                                      

	  
	  

      DAVID
        P. KAUFMAN

       

       

                                                                                      

	  
	  

      J.
        MICHAEL EGAN

       

       

                                                                                      

	  
	  

      COOLEY
        GODWARD LLP

       

       

      By:
                                                                                 

      Richard
        Bradshaw, Executive Director

       

	  
	  

      MARTIN
        C. SPAKE

       

       

                                                                                      

 

 

	
             
 	
            RESTATED INVESTOR RIGHTS AGREEMENT
 
	
             
 	
            SIGNATURE PAGE
 	
             

				

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

	  
	 INVESTORS:

	  
	 
H.
        GABE WHELAN

       

       

                                                                                   

	  
	  

      ENCINAL
        PARTNERS, L.P.

       

       

      By:
                                                                             

      Harry
        G. Whelan, Partner

       

	  

       
	  

      KEMAJO
        FAMILY, L.P.

       

       

      By:
                                                                             

      Harry
        G. Whelan

       

      Print
        Title:                                                          

       

	  
	 GARY
        GRATNY

       

       

       

                                                                                   

	  
	  

      WHELAN
        & GRATNY PROFIT SHARING PLAN

       

       

      By:
                                                                             

      Harry
        G. Whelan

       

      Print
        Title                                                           

       

 

 

	
             
 	
            RESTATED INVESTOR RIGHTS AGREEMENT
 
	
             
 	
            SIGNATURE PAGE
 	
             

				

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

	  
	 INVESTORS:

	  
	 
ROBERT
        JOSHUA HALPERIN TRUST DATED DECEMBER 19, 1997

       

       

      By:
                                                                               

      David
        Levison, Trustee

       

	  
	 MARIAH
        SHORES HALPERIN TRUST DATED DECEMBER 19, 1997

       

       

      By:
                                                                               

      David
        Levison, Trustee

       

	  
	  

      SARAH
        RUTH HALPERIN TRUST DATED DECEMBER 19, 1997

       

       

      By:
                                                                               

      David
        Levison, Trustee

	  
	  

      STEFANOS
        DEMERTZIS

       

       

                                                                                      

	  
	  

      ROBERT Y. NEWELL

       

       

        /s/ Robert Y. Newell                                           

 

 

	
             
 	
            RESTATED INVESTOR RIGHTS AGREEMENT
 
	
             
 	
            SIGNATURE PAGE
 	
             

				

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

	  
	 INVESTORS:

	  
	  

      VENTURE
        LENDING & LEASING II, INC.

       

       

      By:
                                                               
                                

       

      Print
        Name:                                                        
                  

       

      Print
        Title:                                                                     
         

	  
	 

        VENTURE LENDING & LEASING III, LLC

       

       

      By:
                                                               
                                

       

      Print
        Name:                                                        
                  

       

      Print
        Title:                                                                     
        

	  
	  

      

        STANFORD UNIVERSITY

       

       

      By:
                                                               
                                

       

      Print
        Name:                                                        
                  

       

      Print
        Title:                                                                    
        

       
      

	  
	  

      SBV
        INVESTMENTS, LLC

       

       

      By:
                                                                                        

      Brian
        Short, Managing Member

       

 

 

	
             
 	
            RESTATED INVESTOR RIGHTS AGREEMENT
 
	
             
 	
            SIGNATURE PAGE
 	
             

				

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

	  
	 INVESTORS:

	  
	 
WARREN
        A. AMBROSE

       

       

                                                                                    

	  
	  

      WARREN
        KOCMOND, JR.

       

       

                                                                                    

	  
	  

      TOWER
        SNOW, JR.

       

       

                                                                                    

	  
	  

      SHAUN
        DOHERTY

       

       

                                                                                    

	  
	  

      ROBERT
        L. LEWIS

       

       

                                                                                    

	  
	  

      MARK
        R. HALPERIN

       

       

      By:
          /s/ Robert M. Halperin                              

      c/o
        Robert M. Halperin

	  
	 
SUNSHINE
        ANESTHESIA PENSION PROFIT SHARING PLAN

       

       

       

      By:
                                                                               

      William
        Clauson, President & Trustee

       

 

 

	
             
 	
            RESTATED INVESTOR RIGHTS AGREEMENT
 
	
             
 	
            SIGNATURE PAGE
 	
             

				

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

 

	  
	 INVESTORS:

	  
	 
WILLIAM
        CLAUSON FAMILY TRUST

       

       

       

      By:
                                                                              

      William Clauson, Trustee

       

	  
	 

        ROBERT ARTEMENKO

       

                                                                                   

	  
	 

        JAMES LAPLANTE

       

                                                                                   

 

 

	
             
 	
            RESTATED INVESTOR RIGHTS AGREEMENT
 
	
             
 	
            SIGNATURE PAGE
 	
             

				

 

 

 

EXHIBIT A

SCHEDULE OF INVESTORS

	
            SHAREHOLDER NAME & ADDRESS
 
	
            Alad Technologies, N.V.

Attn: Allen & Company Incorporated

711 Fifth Avenue

New York, NY 10022
 
	
             
 
	
            Allen & Company Incorporated

711 Fifth Avenue

New York, NY 10022
 
	
             
 
	
            Warren A. Ambrose

Berkeley HeartLab, Inc

1875 South Grant Street, Suite 700

San Mateo, CA 94402
 
	
             
 
	
            David L. Anderson, Trustee, The Anderson Living Trust, U/A/D 1/22/98

755 Page Mill Road

Suite A-200

Palo Alto, CA 94304-1005

Attn: Michele Y. Phua
 
	
             
 
	
            Anvest, L.P.

755 Page Mill Road

Suite A-200

Palo Alto, CA 94304-1005

Attn: Michele Y. Phua
 
	
             
 
	
            Robert Artemenko

755 Page Mill Road

Suite A-200

Palo Alto, CA 94304-1005

Attn: Michele Y. Phua
 
	
             
 
	
            Atkinson Charitable Lead Trust

70 Ridgeview Drive

Atherton, CA 94027

Attn: Sharon A. Sheehan
 
	
             
 
	
            G. Leonard Baker, Jr.

755 Page Mill Road

Suite A-200

Palo Alto, CA 94304-1005
 

 

 

 

	
             
 	
            SCHEDULE OF INVESTORS
 

 

 

 

 

 

 

	
       

	
      Gary
        Bang

      875-A
        Island Drive, #370

      Alameda,
        CA 94502

	
       

	
      The
        Jeffrey W. Bird and Christina R. Bird Trust Dated 10/31/2000

      755
        Page Mill Road

      Suite
        A-200

      Palo
        Alto, CA 94304-1005

      Attn:
        David Sweet

	
       

	
      Lynne
        M. Brown

      755
        Page Mill Road

      Suite
        A-200

      Palo
        Alto, CA 94304-1005

      Attn:
        Michele Y. Phua

	
       

	
      Bundy
        Associates

      650
        California Street, Suite 2530

      San
        Francisco, CA 94108

      Attn:
        Fred Carroll

	
       

	
      Annette
        Campbell-White

      12985
        Skyline Boulevard

      Oakland,
        CA 94619

	
       

	
      Cardiovascular
        Medicine and Coronary Interventions 401k Savings Plan FBO Dennis J. Sheehan,
        M.D.

      2900
        Whipple Avenue, Suite 230

      Redwood
        City, CA 94062

      Attn:
        Bruce J. McAuley/Gregory C. Robertson

	
       

	
      Steven
        P. Carroll and Jessica L. Carroll, Trustees of the Steven P. Carroll and
        Jessica L. Carroll 1998 Trust, U/T/A dated June 5, 1998

      Hambrecht
        & Quist, LLC

      One
        Bush Street

      San
        Francisco, CA 94014

	
       

	
      Century
        Medical, Inc.

      1-6-4,
        Osaki, Shinagawa-Ku

      Tokyo
        141-8588, Japan

	
       

	William
        L. Clauson

      47
        Manzanita Road

      Atherton,
        CA 94027-2214

 

 

 

	
             
 	
            SCHEDULE OF INVESTORS
 

 

 

 

 

 

 

	
      William
        Clauson Family Trust

      47
        Manzanita Road

      Atherton,
        CA 94027-2214

      Attn:
        William Clauson, Trustee

	
       

	
      Paul
        Coghlan

      Linear
        Technology, Inc.

      1630
        McCarthy Boulevard

      Milpitas,
        CA 95035

	
       

	
      Cooley
        Godward LLP

      One
        Maritime Plaza, 20th Floor

      San
        Francisco, CA 94111

      Attn:
        Jim Kindler

	
       

	
      Tench
        Coxe, Trustee, The Coxe/Otus Revocable Trust, U/A/D 4/23/98

      755
        Page Mill Road

      Suite
        A-200

      Palo
        Alto, CA 94304-1005

      Attn:
        Michele Y. Phua

	
       

	
      Larry
        W. Crocker and Mary K. Crocker

      5347
        Richland Wood Drive

      Alton,
        IL 62002-6971

	
       

	
      John
        de Benedetti

      944
        Market Street, Suite 203

      San
        Francisco, CA 94102

	
       

	
      Steven
        P. Carroll and Jessica L. Carroll 1998 Trust

      40
        Evergreen Dr.

      Kentfield,
        CA 94904

      Attention:
        S.P. Carroll

	
       

	
      Steven
        Chu

      755
        Page Mill Road

      Suite
        A-200

      Palo
        Alto, CA 94304-1005

      Attn:
        Michele Y. Phua

	
       

	Day,
        Casebeer, Madrid & Batchelder LLP

      20400
        Stevens Creek Boulevard

        Suite 750

        Cupertino, CA 95014

 

 

 

	
             
 	
            SCHEDULE OF INVESTORS
 

 

 

 

 

 

 

	
      Stefanos
        Demertzis

      Via
        Massagno 9

      CH-6900
        Lugano

      SWITZERLAND

	
       

	
      Shaun
        Doherty

      ShoppingList.com

      205
        Town & Country Village

      Sunnyvale,
        CA 94086

	
       

	
      The
        Dow Family Trust

      80
        Valley Court

      Atherton,
        CA 94027

      Attn:
        Stephen M. Dow/Peggy Halperin Dow

	
       

	
      Peggy
        Anne Halperin Dow

      80
        Reservoir Road

      Atherton,
        CA 94027

	
       

	
      Christopher
        J. Dunn, M. D.

      Pulmonary
        Medicine

      2900
        Whipple Avenue, Suite 115

      Redwood
        City, CA 94062

	
       

	
      Lawrence
        Ebringer

      755
        Page Mill Road

      Suite
        A-200

      Palo
        Alto, CA 94304-1005

      Attn:
        Michele Y. Phua

	
       

	
      J.
        Michael Egan

      Bluebird
        Development

      350
        Second Street, Suite 8

      Los
        Altos, CA 94022

	
       

	
      Encinal
        Partners, L.P.

      Whelan
        & Gratny Capital Management

      611
        Santa Cruz Avenue

      Second
        Floor, Suite C

      Menlo
        Park, CA 94025

	
       

	Encinal
        Crossover Fund

      611
        Santa Cruz Avenue Suite C

      Menlo
        Park, CA 94025

      Attention:
        Gabe Whelan

 

 

 

	
             
 	
            SCHEDULE OF INVESTORS
 

 

 

 

 

 

 

	
      Frank
        Fischer

      86
        Faxon Lane

      Atherton,
        CA 94027

	
      Daniel
        Freifeld

      Visicon
        Inspection Technologies, LLC

      870
        Napa Valley Corporate Way, Suite H, Napa, CA 94558

	
       

	
      James
        C. Gaither

      755
        Page Mill Road

      Suite
        A-200

      Palo
        Alto, CA 94304-1005

      Attn:
        Michele Y. Phua

	
       

	
      James
        C. Gaither, custodian FBO Mark William Younger under CUTMA until age 21

      755
        Page Mill Road

      Suite
        A-200

      Palo
        Alto, CA 94304-1005

      Attn:
        Michele Y. Phua

	
       

	
      James
        C. Gaither, custodian FBO Julie Ann Younger

      under
        CUTMA until age 21

      755
        Page Mill Road

      Suite
        A-200

      Palo
        Alto, CA 94304-1005

      Attn:
        Michele Y. Phua

	
       

	
      James
        C. Gaither, custodian FBO Kelly Lauren Younger under CUTMA until age 21

      755
        Page Mill Road

      Suite
        A-200

      Palo
        Alto, CA 94304-1005

      Attn:
        Michele Y. Phua

	
       

	
      GC&H
        Investments

      One
        Maritime Plaza, 20th Floor

      San
        Francisco, CA 94111

      Attn:
        Jim Kindler

	
       

	Glynn
        Investment Co., LLC

      Glynn
        Capital Management

      3000
        Sand Hill Road

      Building
        4, Suite 235

      Menlo
        Park, CA 94025

 

 

 

	
             
 	
            SCHEDULE OF INVESTORS
 

 

 

 

 

 

 

	
      Gary
        Gratny

      611
        Santa Cruz Avenue

      Second
        Floor, Suite C

      Menlo
        Park, CA 94025

	
       

	
      Guidant
        Investment Corporation

      3200
        Lakeside Drive

      Santa
        Clara, CA 95054

	
       

	
      Mariah
        Shores Halperin Trust dated December 19, 1997

      c/o
        Philip W. Halperin

      3653
        Jackson St. 

      Atherton,
        CA 94027

      Attn:
        David L. Levison, Trustee

	
       

	
      Mark
        R. Halperin

      c/o
        Robert M. Halperin

      80
        Reservoir Road

      Atherton,
        CA 94027

	
       

	
      Philip
        W. Halperin

      80
        Reservoir Road

      Atherton,
        CA 94027

	
       

	
      Robert
        Joshua Halperin Trust dated December 19, 1997

      c/o
        Philip W. Halperin

      3653
        Jackson St. 

      Atherton,
        CA 94027

      Attn:
        David L. Levison, Trustee

	
       

	
      Robert
        M. Halperin

      80
        Reservoir Road

      Atherton,
        CA 94027

	  

	 The
        Robert and Ruth Halperin Trust

        80 Reservoir Road

        Atherton, CA 94027

      Attn:
        Robert M. Halperin, Trustee

	  

	Sarah Ruth
      Halperin Trust dated December 19, 1997

      c/o Philip W. Halperin

      3653 Jackson St. 

      Atherton, CA 94027

      Attn: David L. Levison, Trustee

 

 

 

	
             
 	
            SCHEDULE OF INVESTORS
 

 

 

 

 

 

 

	
      Geoffrey
        O. Hartzler, Trustee of the Geoffrey O. Hartzler Revocable Trust, dated
        01/08/97

      2600
        Verona Road

      Mission
        Hills, KS 66208

	
       

	
      Alice
        B. Jack and Richard W. Jack

      1049
        San Raymundo

      Hillsborough,
        CA 94010

	
       

	
      David
        P. Kaufman

      Berkeley
        HeartLab, Inc.

      1875
        South Grant Street, Suite 700

      San
        Mateo, CA 94402

	
       

	
      Kemajo
        Family, L.P.

      Whelan
        & Gratny Capital Management

      611
        Santa Cruz Avenue

      Second
        Floor, Suite C

      Menlo
        Park, CA 94025

	
       

	
      Kenneth
        W. Kizer, M. D.

      207
        C Street, SE

      Washington,
        D.C. 2003

	
       

	
      Warren
        Kocmond, Jr.

      1545
        Arbor Avenue

      Los
        Altos, CA 94024

	
       

	
      James
        LaPlante

      755
        Page Mill Road

      Suite
        A-200

      Palo
        Alto, CA 94304-1005

      Attn:
        Michele Y. Phua

	
       

	
      Kevin
        Larkin

      9
        Shasta Lane

      Menlo
        Park, CA 94025

	
       

	
      Robert
        L. Lewis

      1553
        Arbor Avenue

      Los
        Altos, CA 94024

	 
	Dan
      R. Lightfoot

      5421 Wilshire Drive

      Santa Rosa, CA 95404

 

 

 

	
             
 	
            SCHEDULE OF INVESTORS
 

 

 

 

 

 

 

	
       

	
      Vernon
        F. Lightfoot & Dan R. Lightfoot M.D.’s., Inc. Money Purchase
        Pensinon Fund

      5421
        Wilshire Drive

      Santa
        Rosa, CA 95404

	
       

	
      Allan
        W. May Irrevocable Trust U/A DTD 05/04/91

      Intella
        Interventional, Inc.

      870
        Hermosa Drive

      Sunnyvale,
        CA 94086

	
       

	
      Mark
        Meltzer

      228
        Byron

      Palo
        Alto, CA 94301

	
       

	
      Robert
        Momsen Living Trust

      3000
        Sand Hill Road

      Building
        3, Suite 225

      Menlo
        Park, CA 94025

	  

	
      The
        Glenn C. Myers Family Trust dated January 20, 1986

      1422
        El Camino Real

      Menlo
        Park, CA 94025

	
       

	
      Robert
        Y. Newell

      950
        La Mesa Drive

      Portola
        Valley, CA 94028

	
       

	
      Philip
        E. Oyer, M.D.

      15975
        Skyline Boulevard

      Woodside,
        CA 94062

	
       

	
      Romeo
        A. Pavlic, TTEE INLAND CARDIOLOGY ASSOC.

      3839
        South Trainor Road

      Spokane
        WA 99224

	
       

	
      Redmond
        Ventures, a California limited partnership

      499
        Seaport Court, Suite 302

      Redwood
        City, CA 94063

      Attn:
        Albert F. Knorp, Jr.

	 
	Gregory
      P. and Sarah J.D. Sands, Trustees, The Gregory P. and Sarah J.D. Sands Trust
      Agreement dated 2/24/99

      755 Page Mill Road

      Suite A-200

      Palo Alto, CA 94304-1005

 

 

 

	
             
 	
            SCHEDULE OF INVESTORS
 

 

 

 

 

 

 

	
       

	
      Donald
        J. Santel

      345
        Sheridan Avenue, #212

      Palo
        Alto, CA 94306

	
       

	
      Saunders
        Holdings, L.P.

      755
        Page Mill Road

      Suite
        A-200

      Palo
        Alto, CA 94304-1005

	
       

	
      SBV
        Investments, LLC 

      1612
        Duvall Dr.

      San
        Jose, CA 95130

      Attn:
        Brian Short, Managing Member

	
       

	
      Security
        Trust Co. FBO Frank R. Ruderman IRA

      1875
        South Grant Street, Suite 700

      San
        Mateo, CA 94402 

	
       

	
      Dennis
        J. Sheehan, M.D.

      70
        Ridgeview Drive

      Atherton,
        CA 94027

	
       

	
      Sharon
        A. Sheehan

      70
        Ridgeview Drive

      Atherton,
        CA 94027

	
       

	
      Sheehan
        Ventures

      10
        Deep Well Lane

      Los
        Altos, CA

      Attn:
        Timothy G. Sheehan

	
       

	
      Sippl
        Investments LLC

      1422
        El Camino Real

      Menlo
        Park, CA 94025

      Attn:
        Glenn C. Myers

	
       

	Tower
      Snow, Jr. 

      Brobeck Phleger & Harrison, LLP

      Spear Street Tower

      One Market 

      San Francisco, CA 94105
	 
	Martin
      C. Spake

      23 E. Green Gables Circle

      The Woodlands, TX 77382 

 

 

 

	
             
 	
            SCHEDULE OF INVESTORS
 

 

 

 

 

 

 

	
       

	
      Leland
        Stanford Junior University

      Stanford
        Management Co.

      2770
        Sand Hill Road

      Menlo
        Park, CA 94025

      Attn:
        Gift Administrator, Stanford Management Co. On Behalf of the Board of
        Trustees Of the Leland Stanford Junior University

	
       

	
      George
        Stefanik, M.D.

      P.O.
        Box 5009

      San
        Pedro, CA 90733

	
       

	
      Sunshine
        Anesthesia Pension Profit Sharing Plan

      47
        Manzanita Road

      Atherton,
        CA 94027-2214

      Attn:
        William Clauson, President & Trustee

	
       

	
      Sutter
        Hill Entrepreneurs Fund (AI), L.P.

      755
        Page Mill Road

      Suite
        A-200

      Palo
        Alto, CA 94304-1005

      Attn:
        Dave Sweet

	
       

	
      Sutter
        Hill Entrepreneurs Fund (QP), L.P.

      755
        Page Mill Road

      Suite
        A-200

      Palo
        Alto, CA 94304-1005

      Attn:
        Dave Sweet

	
       

	
      Sutter
        Hill Ventures, A California Limited Partnership

      755
        Page Mill Road

      Suite
        A-200

      Palo
        Alto, CA 94304-1005

      Attn:
        Dave Sweet

	
       

	Michael
      B. Sweeney

      1484 Hamilton Avenue

      Palo Alto, CA 94301
	 
	 Tamerlane
        Charitable Remainder Unitrust, Tench Coxe, Trustee 

        755 Page Mill Road

        Suite A-200

        Palo Alto, CA 94304-1005

        

 

 

 

	
             
 	
            SCHEDULE OF INVESTORS
 

 

 

 

 

 

 

	
       

	
      Venture
        Lending & Leasing II, Inc

      2010
        North First Street, Suite 310

      San
        Jose, CA 85131

      Attn:
        Ronald Swenson

	
       

	
      Venture
        Lending & Leasing III, LLC 

      2010
        North First Street, Suite 310

      San
        Jose, CA 85131

      Attn:
        Ronald Swenson

	
       

	
      Jeffrey
        Walter

      34000
        E. Carmel Valley Road

      Carmel
        Valley, CA 93924

	
       

	
      Wells
        Fargo Bank, Trustee, SHV M/P/T FBO Sherryl W. Hossack 

      l420
        Montgomery Street, 2nd Floor 

      San
        Francisco, CA 94104 

      Attention:
        Vicki Bandel

	
       

	
      Wells
        Fargo Bank, Trustee, SHV M/P/T FBO Michele Y. Phua

      l420
        Montgomery Street, 2nd Floor 

      San
        Francisco, CA 94104 

      Attention:
        Vicki Bandel

	
       

	
      Wells
        Fargo Bank, Trustee, SHV M/P/T FBO Lynne M. Brown

      l420
        Montgomery Street, 2nd Floor 

      San
        Francisco, CA 94104 

      Attention:
        Vicki Bandel

	
       

	
      Wells
        Fargo Bank, Trustee, SHV M/P/T FBO Patricia Tom

      l420
        Montgomery Street, 2nd Floor 

      San
        Francisco, CA 94104 

      Attention:
        Vicki Bandel

	
       

	Wells
      Fargo Bank, Trustee, SHV M/P/T FBO William H. Younger, Jr.

      l420 Montgomery Street, 2nd Floor 

      San Francisco, CA 94104 

      Attention: Vicki Bandel 
	 
	Wells
      Fargo Bank, Trustee, SHV M/P/T FBO Gregory P. Sands

      l420 Montgomery Street, 2nd Floor 

      San Francisco, CA 94104 

      Attention: Vicki Bandel

      

 

 

 

	
             
 	
            SCHEDULE OF INVESTORS
 

 

 

 

 

 

 

	
       

	
      H.
        Gabe Whelan

      Whelan
        & Gratny Capital Management

      611
        Santa Cruz Avenue

      Second
        Floor, Suite C

      Menlo
        Park, CA 94025

	
       

	
      Whelan
        & Gratny Profit Sharing Plan

      611
        Santa Cruz Avenue

      Second
        Floor, Suite C

      Menlo
        Park, CA 94025

	  

	
      James
        N. White and Patricia A. O’Brien as trustee

      of
        the White Family Trust Dated 4/3/97

	  

	
      Stephen
        A. Yencho, Ph.D.

      Vascular
        Innovations, Inc.

      81
        Encina Avenue

      Palo
        Alto, CA 94301

	  

	
      William
        H. Younger, Jr., Trustee of the Younger Living Trust

      755
        Page Mill Road, Suite A-200

      Palo
        Alto, CA 94304-1005

	  

	
      William
        H. Younger, Jr. Trustee, The Younger Living Trust, U/A/D 1/20/95

      755
        Page Mill Road

      Suite
        A-200

      Palo
        Alto, CA 94304-1005

 

 

	
             
 	
            SCHEDULE OF INVESTORS

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