Document:

exv10w25

Exhibit 10.25

Cardica, Inc.

Change in Control Severance Benefit Plan

Section 1. Introduction.

          The Cardica, Inc. Change in Control Severance Benefit Plan (the “Plan") has been established
effective February 11, 2009 (the “Effective Date"). The purpose of the Plan is to provide for
severance benefits to certain eligible employees of Cardica, Inc. (the “Company") whose employment
with the Company is involuntarily terminated in connection with a change in the control of the
Company. This Plan supersedes any previously established or maintained severance benefit
agreement, plan, policy or practice applicable to any of the Company’s eligible employees in
connection with a Qualifying Termination, whether formal or informal, written or unwritten. This
Plan also supersedes any employment agreement between the Company and an Eligible Employee
regarding such individual’s rights to severance benefits in connection with a Qualifying
Termination. This Plan document also is the Summary Plan Description for the Plan.

Section 2. Definitions.

          For purposes of the Plan, certain terms are defined as follows:

          (a) “Base Salary” means the Eligible Employee’s annual rate of base pay (excluding incentive
pay, premium pay, commissions, overtime, bonuses and other forms of variable compensation).

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

          (c) “Bonus Amount” means (1) the average annual incentive bonus paid to the Eligible Employee
in the two most recent full bonus years or (2) if the Eligible Employee has not been employed by
the Company during the entirety of the two most recent bonus years, the Eligible Employee’s target
annual incentive bonus for the year of termination.

          (d) “Cause” means any of the following events occurs (as determined in good faith by a
majority of the members of the Board who are not the Eligible Employee in question):

               (1) the Eligible Employee’s conviction of, or a plea of nolo contendere with respect to, a
felony involving moral turpitude;

               (2) willful and continued failure by the Eligible Employee to substantially perform the
Eligible Employee’s assigned duties after written notice and a reasonable opportunity to cure (if
capable of cure);

               (3) any (x) willful engagement in fraud or dishonesty in the Eligible Employee’s performance
of duties to the Company or (y) willful misconduct or gross negligence independent of the Company,
in each case under clause “y” of this Section 2(d)(3) that has a material adverse impact upon the
operations, business, affairs, reputation or valuation of the Company; or

               (4) willful noncompliance by the Eligible Employee with any material written policy of the
Company or any willful breach of any material written agreement between the Eligible Employee and
the Company, in either case, which has a material adverse impact on the operations, business
affairs, reputation or valuation of the Company.

 

 

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

               (1) any Exchange Act Person becomes the owner, directly or indirectly, of securities of the
Company representing more than thirty-five percent (35%) of the combined voting power of the
Company’s then outstanding securities other than by virtue of a merger, consolidation or similar
transaction. Notwithstanding the foregoing, a Change in Control shall not be deemed to occur (A)
on account of the acquisition of securities of the Company by an investor, any affiliate thereof or
any other Exchange Act Person from the Company in a transaction or series of related transactions
the primary purpose of which is to obtain financing for the Company through the issuance of equity
securities or (B) solely because the level of ownership held by any Exchange Act Person (the
“Subject Person") exceeds the designated percentage threshold of the outstanding voting securities
as a result of a repurchase or other acquisition of voting securities by the Company reducing the
number of shares outstanding, provided that if a Change in Control would occur (but for the
operation of this sentence) as a result of the acquisition of voting securities by the Company, and
after such share acquisition, the Subject Person becomes the owner of any additional voting
securities that, assuming the repurchase or other acquisition had not occurred, increases the
percentage of the then outstanding voting securities owned by the Subject Person over the
designated percentage threshold, then a Change in Control shall be deemed to occur;

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

               (3) the stockholders of the Company approve or the Board approves a plan of complete
dissolution or liquidation of the Company, or a complete dissolution or liquidation of the Company
shall otherwise occur;

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

               (5) such other transaction or series of transactions as may be determined by the Board in its
discretion.

     Notwithstanding the foregoing, the term Change in Control shall not include: (A) a sale of
assets, merger or other transaction effected exclusively for the purpose of changing the domicile
of the Company, (B) the sale of equity securities by the Company in a transaction consummated
principal for capital raising purposes in which cash is received by the Company, or indebtedness of
the Company converted or cancelled, or any combination thereof, in exchange for such equity
securities, or (C) a merger, consolidation or similar transaction involving (directly or
indirectly) the Company and, immediately after the consummation of such merger, consolidation or
similar transaction, the stockholders of the Company immediately prior thereto own, directly or
indirectly, either (A) outstanding voting securities representing more than fifty percent (50%) of
the combined outstanding voting power of the surviving Entity in such merger, consolidation or
similar transaction or (B) more than fifty percent (50%) of the combined outstanding voting power
of the parent of the surviving entity in such merger, consolidation or similar transaction, in each
case in substantially the same proportions as their ownership of the outstanding voting securities
of the Company immediately prior to such transaction.

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

 

 

          (g) “Director” means an Eligible Employee who is employed at the level of a director.

          (h) “Eligible Employee” means an employee of the Company serving at or above the level of
Director (i) who is notified by the Company in a writing in substantially the form attached hereto
as Exhibit A (the “Designation Form”) that he or she is eligible for participation in the
Plan and (ii) who accepts such designation by signing and returning the Designation Form within the
required period. The determination of whether an employee is an Eligible Employee shall be made by
the Board, in its sole discretion, and such determination shall be binding and conclusive on all
persons.

          (i) “Equity Awards” means all stock options, restricted stock awards, stock appreciation
rights, stock unit awards, and other equity incentive awards covering the Company’s common stock
that are held by an Eligible Employee and remain outstanding and unvested as of immediately prior
to the Qualifying Termination.

          (j) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

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

          (l) “Qualifying Termination” means an involuntary termination without Cause immediately prior
to, on, or within eighteen (18) months after, the effective date of the Change in Control, or a
Resignation for Good Reason on or within eighteen (18) months after the effective date of the
Change in Control, in either case, provided such termination of employment is a “separation from
service” for purposes of Treasury Regulation Section 1.409A-1(h).

          (m) “Resignation for Good Reason” means the Eligible Employee resigns from all positions
(including membership on the Board) he or she then holds with the Company (or any successor
thereto) if and only if:

               (1) one of the following actions has been taken:

                    (i) there is a material adverse change in duties or responsibilities of Eligible Employee,
including but not limited to demotion from current position; provided, however, that a change in
job position (including, without limitation, a change in title) shall not be deemed a “material
adverse change” unless Purchaser’s new duties or responsibilities are substantially reduced from
the prior duties;

                    (ii) there is a material reduction in the Eligible Employee’s annual base salary, except for a
reduction of not more than 10% that is applicable to all Eligible Employees;

                    (iii) the Eligible Employee is required to relocate his or her primary work location to a
facility or location that would increase the Eligible Employee’s one way commute distance by more
than fifty (50) miles from the Eligible Employee’s primary work location as of immediately prior to
such change;

                    (iv) the Company materially breaches its obligations under this Plan or any then-effective
written employment agreement with the Eligible Employee; or

                    (v) any acquirer, successor or assignee of the Company fails to assume

 

 

and perform, in all material respects, the obligations of the Company hereunder; and

               (2) the Eligible Employee provides written notice to the Company’s Secretary within the 60-day
period immediately following such action that the Eligible Employee believes one of the actions set
forth in Section 2(m)(1) has been taken; and

               (3) such action (if possible to remedy) is not remedied by the Company within thirty (30) days
following the Company’s receipt of such written notice; and

               (4) the Eligible Employee’s resignation is effective not later than sixty (60) days after the
expiration of such thirty (30) day cure period.

Section 3. Eligibility For Benefits.

          (a) General Rules. Subject to the requirements of the Plan, the Company will provide the
severance benefits described in Section 4 to Eligible Employees, provided that in order to be
eligible to receive severance benefits under the Plan:

               (1) an Eligible Employee must remain on the job and satisfactorily provide services to the
Company until the Qualifying Termination date.

               (2) an Eligible Employee must execute a general waiver and release in substantially the form
attached hereto as Exhibit B, Exhibit C or Exhibit D, as appropriate,
within the time frame set forth therein and such release must become effective in accordance with
its terms. The Company, in its sole discretion, may modify the form of the required release to
comply with applicable law and shall determine the form of the required release, which may be
incorporated into a termination agreement or other agreement with the Eligible Employee.

               (3) an Eligible Employee must remain in compliance with his or her continuing obligations to
the Company, including obligations under his or her Employee Proprietary Information and Inventions
Agreement (such agreement, or any similar agreement, the “Inventions Agreement").

               (4) in addition to any non-solicitation obligations owed by the Eligible Employee to the
Company pursuant to the Inventions Agreement, an Eligible Employee must, for the period stated
below after Qualifying Termination date, not induce any employee of the Company to leave the employ
of the Company.

	 	 	 
	Eligible Employee’s Position/Level Immediately	 	 
	Prior to Qualifying Termination	 	Non-Solicitation Period
	CEO
	 	18 months
	Vice President
	 	12 months
	Director
	 	4 months

          (b) Exceptions to Benefit Entitlement. An employee, including an employee who otherwise is an
Eligible Employee, will not receive benefits under the Plan (or will receive reduced benefits under
the Plan) in the following circumstances, as determined by the Company in its sole discretion:

               (1) The employee’s employment terminates other than as a result of a Qualifying Termination
(including, but not limited to, a termination for Cause prior to the effective date of a previously
scheduled Qualifying Termination, a termination as a result of death or disability, a termination
arising as a result of the employee failing to accept an offer of employment from the
acquirer/successor entity on terms that do not give rise to a right to a Resignation for Good
Reason, or the employee voluntarily terminates employment with the

 

 

Company other than as a Resignation for Good Reason). Voluntary terminations include, but are
not limited to, resignation, retirement, failure to return from a leave of absence on the scheduled
date and/or termination in order to accept employment with another entity (including but not
limited to any entity that is wholly or partly owned (directly or indirectly) by the Company or an
affiliate of the Company).

               (2) The employee has not signed an enforceable Inventions Agreement covering the employee’s
period of employment with the Company (and with any predecessor) and does not confirm in writing
that he or she is and shall remain subject to the terms of that Inventions Agreement in accordance
with its terms.

               (3) The employee has otherwise failed to comply with the terms of this Plan.

Section 4. Type and Amount Of Benefits.

          (a) Cash Severance Benefits. An Eligible Employee who suffers a Qualifying Termination will
receive the following cash severance benefits (the “Cash Severance") subject to the terms of the
Plan:

               (1) CEO and Vice Presidents. The Eligible Employee who is the CEO or a Vice President
immediately prior to the event giving rise to the Qualifying Termination shall be entitled to Cash
Severance equal to the product of (1) the sum of (i) the Eligible Employee’s Base Salary in effect
immediately prior to the event giving rise to the Qualifying Termination and (ii) the Eligible
Employee’s Bonus Amount (such sum, the “Cash Amount") and (2) the “Multiple” set forth in the
following table:

	 	 	 
	Eligible Employee’s Position/Level Immediately	 	 
	Prior to the Qualifying Termination Event	 	Multiple
	CEO
	 	1.5
	Vice President
	 	1.0

     The Cash Severance will be paid in a lump sum on the first regular payroll pay date following
the effective date of the general waiver and release, but in no event later than March 15 of the
year following the year in which the Qualifying Termination occurs.

               (2) Directors. Each Eligible Employee who is a Director immediately prior to the event giving
rise to the Qualifying Termination shall be entitled to receive Cash Severance equal to four (4)
months of the Eligible Employee’s Base Salary in effect immediately prior to the event giving rise
to the Qualifying Termination. The Cash Severance will be paid in a lump sum on the first regular
payroll pay date following the effective date of the general waiver and release, but in no event
later than March 15 of the year following the year in which the Qualifying Termination occurs.

          (b) COBRA Continuation Coverage. If the Eligible Employee was enrolled in a group health
(i.e., medical, dental, or vision) plan sponsored by the Company or an affiliate of the Company
immediately prior to the Qualifying Termination, the Eligible Employee may be eligible to continue
coverage under such group plan (or to convert to an individual policy) following termination under
the Consolidated Omnibus Budget Reconciliation Act of 1985 (together with any state law of similar
effect, “COBRA”). The Company (or its designated representative) will notify the Eligible Employee
of any such right to continue such coverage at the time of termination. If an Eligible Employee
makes a timely election to continue such coverage pursuant to COBRA, the Company shall pay the
applicable premiums (or shall provide coverage under any self-funded plan) on behalf of the
Eligible Employee for the Eligible Employee’s continued coverage under such plans, including
coverage for the Eligible Employee’s eligible dependents, for up to that number of months set forth
below following the Eligible Employee’s Qualifying Termination; provided, however, that no such
premium payments shall be made (and no coverage shall be provided under any self-funded group
health plan) following the date on which the Eligible Employee and his eligible dependents cease
(or would cease) to be eligible for continued coverage under COBRA, including but not limited to
the date on which the Eligible Employee becomes covered by another group health plan,

 

 

whether through a subsequent employer or otherwise. The Eligible Employee is required to
notify the Company immediately if the Eligible Employee becomes covered by another group health
plan, whether through a subsequent employer or otherwise.

	 	 	 
	Eligible Employee’s Position/Level Immediately	 	Months of Company-Paid COBRA
	Prior to Qualifying Termination	 	Coverage
	CEO
	 	18
	Vice President
	 	12
	Director
	 	4

     No provision of this Plan will affect the continuation coverage rules under COBRA, except that
the Company’s payment of applicable insurance premiums (or waiver of any cost of coverage under any
self-funded group health plan) in accordance with the foregoing will be credited as payment by the
Eligible Employee for purposes of the Eligible Employee’s payment required under COBRA (or the
self-funded plan). Therefore, the period during which an Eligible Employee may elect to continue
the Company’s health, dental, or vision plan coverage at his or her own expense under COBRA, the
length of time during which COBRA coverage will be made available to the Eligible Employee, and all
other rights and obligations of the Eligible Employee under COBRA (except the Company’s obligation
to pay applicable insurance premiums in accordance with the foregoing) will be applied in the same
manner that such rules would apply in the absence of this Plan. Upon the expiration of the period
during which the Company pays an Eligible Employee’s insurance premiums in accordance with the
foregoing, the Eligible Employee will be responsible for the entire payment of premiums for
continued coverage thereafter. For purposes of this Section 4(b), any applicable insurance
premiums that are paid by the Company shall not include any amounts payable by an Eligible Employee
under an Internal Revenue Code Section 125 health care reimbursement plan, which amounts, if any,
are the sole responsibility of the Eligible Employee.

          (c) Equity Vesting Acceleration. All Equity Awards held by the Eligible Employee as of
immediately prior to the Qualifying Termination shall become fully vested and, as applicable,
exercisable as of the date of the Qualifying Termination.

          (d) Additional Benefits. Notwithstanding the foregoing, the Company may, in its sole
discretion, authorize benefits in an amount in addition to those benefits set forth in this Section
4 to an Eligible Employee. The provision of any such benefits to an Eligible Employee shall in no
way obligate the Company to provide such benefits to any other Eligible Employee or to any other
employee, even if similarly situated. Receipt of such additional benefits may be subject to a
covenant of confidentiality and non-disclosure and to the execution of a release.

          (e) Certain Reductions.

               (1) The Company shall reduce an Eligible Employee’s severance benefits under this Plan, in
whole or in part, by any other severance benefits, pay in lieu of notice, or other similar benefits
payable to the Eligible Employee by the Company in connection with the Eligible Employee’s
Qualifying Termination, including but not limited to any payments or benefits that are due pursuant
to (i) any other severance plan, policy or practice, or any individually negotiated employment
contract or agreement with the Company relating to severance benefits, in each case, as is in
effect on the Eligible Employee’s termination date, (ii) any applicable legal requirement,
including, without limitation, the Worker Adjustment and Retraining Notification Act or any state
or local law of similar effect, or (iii) any Company policy or practice providing for the Eligible
Employee to remain on the payroll without being in active service for a limited period of time
after being given notice of the termination of the Eligible Employee’s employment. The benefits
provided under this Plan are intended to satisfy, to the greatest extent possible, any and all
statutory obligations that may arise out of an Eligible Employee’s termination of employment, and
the Plan Administrator shall so construe and implement the terms of the Plan. In the Company’s

 

 

sole discretion, such reductions may be applied on a retroactive basis, with severance
benefits previously paid being recharacterized as payments pursuant to the Company’s statutory
obligation.

               (2) If an Eligible Employee is indebted to the Company at his or her termination date, the
Company reserves the right to offset any severance payments under the Plan by the amount of such
indebtedness.

               (3) All payments under the Plan will be subject to applicable withholding for federal, state
and local taxes.

               (4) If any payment or benefit (including payments and benefits pursuant to this Plan) that an
Eligible Employee would receive in connection with a Change in Control from the Company or
otherwise (“Payment") would (i) constitute a “parachute payment” within the meaning of Section 280G
of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999
of the Code (the “Excise Tax"), then the Company shall cause to be determined, before any amounts
of the Payment are paid to the Eligible Employee, which of the following two alternative forms of
payment shall be paid to the Eligible Employee: (A) the payment in full of the entire amount of the
Payment (a “Full Payment"), or (B) the payment of only a part of the Payment so that the Eligible
Employee receives the largest payment possible without the imposition of the Excise Tax (such
lesser amount, a “Reduced Payment"). The Company shall pay the Reduced Payment only if (x) payment
of the Full Amount would result in the imposition of the Excise Tax, (y) payment of the Reduced
Payment would not, and (z) in the case of Eligible Employees who are not Directors, the
Reduced Payment is not less than the Full Payment minus an amount of cash not exceeding the product
of (I) the Multiple — 0.5 and (II) the Cash Amount.

                    (i) If the Full Payment is made and is subject to the Excise Tax, the Company shall pay, and
the Eligible Employee shall be entitled to receive, an additional payment (a “Gross-Up Payment")
from the Company in an amount equal to (A) the Excise Tax on the Full Payment, (B) any interest or
penalties imposed on the Eligible Employee with respect to the Excise Tax on the Full Payment, and
(C) an additional amount sufficient to pay the Excise Tax and the federal and state income and
employment taxes arising from the payments made by the Company to the Eligible Employee pursuant to
(A), (B) and (C) — that is, a gross-up ad infinitim. Except as otherwise provided herein, the
Eligible Employee shall not be entitled to any additional payments or other indemnity arrangements
in connection with the Payment or the Gross-Up Payment.

                    (ii) For purposes of determining whether to make a Full Payment or a Reduced Payment, and for
purposes of determining the amount of any Gross-Up Payment, the Eligible Employee shall be deemed
to have: (A) paid federal income taxes at the highest marginal rate of federal income and
employment taxation for the applicable calendar year, and (B) paid applicable state and local
income taxes at the highest rate of taxation for the applicable calendar year, net of the maximum
reduction in federal income taxes which could be obtained from deduction of such state and local
taxes.

                    (iii) If a Reduced Payment is made, the Payment shall be paid only to the extent permitted
under the Reduced Payment alternative, and the Eligible Employee shall have no rights to any
additional payments and/or benefits constituting the Payment. The reduction in the Payments shall
occur from the Cash Severance.

                    (iv) The independent registered public accounting firm engaged by the Company for general
audit purposes as of the day prior to the effective date of the Change in Control shall make all
determinations required to be made under this Section 4(e)(4). If the independent registered
public accounting firm so engaged by the Company is serving as accountant or auditor for the
individual, entity or group effecting the Change in Control, the Company shall appoint a nationally
recognized independent registered public accounting firm to make the determinations required
hereunder. The Company shall bear all expenses with respect to the determinations by such
independent registered public accounting firm required to be made hereunder. The firm engaged to
make the determinations hereunder shall provide its calculations, together with detailed supporting
documentation, to the Company and the Eligible Employee within thirty (30) calendar days after the
date on which the Eligible Employee’s right to a Payment is triggered (if requested at that time by
the Company or the Eligible Employee) or at such other time as reasonably requested by the Company
or the Eligible Employee. If the independent registered public accounting firm determines that no
Excise Tax is payable with respect to the Payment

 

 

(either upon payment of the Full Payment or the Reduced Payment), it shall furnish the Company
and the Eligible Employee with an opinion reasonably acceptable to the Eligible Employee that no
Excise Tax will be imposed with respect to such Payment. If the firm determines that an Excise Tax
is payable with respect to the Payment and that a Gross-Up Payment is due to the Eligible Employee,
the Company shall pay the Gross-Up Payment not later than thirty (30) days after the date on which
the Eligible Employee remits the Excise Tax to the appropriate taxing authorities. Any good faith
determinations of the accounting firm made hereunder shall be final, binding and conclusive upon
the Company and the Eligible Employee.

Section 5. Other Employee Benefits.

     All other payments and benefits (such as life insurance, disability coverage, and 401(k) plan
coverage) terminate as of the Eligible Employee’s termination date or such earlier date as may be
required under the applicable plan or policy (except to the extent that a conversion privilege (at
the Eligible Employee’s expense) may be available thereunder).

Section 6. Return of Company Property.

          An Eligible Employee will not be entitled to any severance benefit under the Plan unless and
until the Eligible Employee returns all Company Property. For this purpose, “Company Property”
means all Company documents (and all copies thereof) and other Company property which the Eligible
Employee had in his or her possession at any time, including, but not limited to, Company files,
notes, drawings, records, plans, forecasts, reports, studies, analyses, proposals, agreements,
financial information, research and development information, sales and marketing information,
operational and personnel information, specifications, code, software, databases, computer-recorded
information, tangible property and equipment (including, but not limited to, computers, facsimile
machines, mobile telephones, servers), credit cards, entry cards, identification badges and keys;
and any materials of any kind which contain or embody any proprietary or confidential information
of the Company (and all reproductions thereof in whole or in part). In addition, the Eligible
Employee must provide the Company with all logins, passwords, and similar information created by
the Eligible Employee for the Company Property.

Section 7. Section 409A.

          Notwithstanding any payment schedule to the contrary contained herein, if the Company (or, if
applicable, the successor entity thereto) determines that the payments and benefits provided under
the Plan (the “Plan Payments”) constitute “deferred compensation” under Code Section 409A
(together, with any state law of similar effect, “Section 409A”) and an Executive is a “specified
employee” of the Company or any successor entity thereto, as such term is defined in Section
409A(a)(2)(B)(i) (a “Specified Employee"), then, solely to the extent necessary to avoid the
incurrence of the adverse personal tax consequences under Section 409A, the timing of the Plan
Payments shall be delayed as follows: on the earlier to occur of (i) the date that is six months
and one day after the Eligible Employee’s “separation from service” (as defined under Section 409A)
or (ii) the date of the Executive’s death (such earlier date, the “Delayed Initial Payment Date"),
the Company (or the successor entity thereto, as applicable) shall (A) pay to the Eligible Employee
a lump sum amount equal to the sum of the Plan Payments that the Eligible Employee would otherwise
have received through the Delayed Initial Payment Date if the commencement of the payment of the
Plan Payments had not been delayed pursuant to this Section 7 and (B) commence paying the balance
of the Plan Payments in accordance with the applicable payment schedules set forth in Section 4
above. For the avoidance of doubt, it is intended that the Plan Payments satisfy, to the greatest
extent possible, the exemptions from the application of Section 409A provided under Treasury
Regulations 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9). Each payment under this Plan is
intended to be a separate payment for purposes of Section 409A.

Section 8. Reemployment.

          In the event of an Eligible Employee’s reemployment by the Company during the period of time
in respect of which severance benefits pursuant to Section 4 have been paid, the Company, in its
sole and absolute discretion, may require such Eligible Employee to repay to the Company all or a
portion of such severance benefits as a condition of reemployment.

 

 

Section 9. Right To Interpret Plan; Amendment and Termination.

          (a) Exclusive Discretion. The Plan Administrator shall have the exclusive discretion and
authority to establish rules, forms, and procedures for the administration of the Plan and to
construe and interpret the Plan and to decide any and all questions of fact, interpretation,
definition, computation or administration arising in connection with the operation of the Plan,
including, but not limited to, the eligibility to participate in the Plan and amount of benefits
paid under the Plan. The rules, interpretations, computations and other actions of the Plan
Administrator shall be binding and conclusive on all persons.

          (b) Amendment or Termination.

               (1) This Plan will have an initial term of two (2) years from the Effective Date, and will
renew automatically for successive one (1) year terms thereafter unless notice of termination of
the Plan is given by the Board to all Eligible Employees at least one hundred and eighty (180) days
in advance of any such renewal date.

               (2) The Company reserves the right to amend this Plan or the benefits provided hereunder at
any time; provided, however, that no such amendment shall affect the right to any unpaid benefit of
any Eligible Employee whose Qualifying Termination date has occurred prior to the amendment of the
Plan.

               (3) Any purported adverse amendment or termination of this Plan (and the exhibits and
appendices hereto) within the time period beginning immediately prior to the effective date of the
Change in Control and ending eighteen (18) months and one (1) day after the effective date of the
Change in Control will not be effective as to any Eligible Employee who has not consented, in
writing, to such amendment or termination.

               (4) Any action amending or terminating the Plan shall be in writing and executed by a member
of the Board of Directors of the Company (or its duly authorized designee).

Section 10. No Implied Employment Contract.

          The Plan shall not be deemed (i) to give any employee or other person any right to be retained
in the employ of the Company or (ii) to interfere with the right of the Company to discharge any
employee or other person at any time, with or without cause, which right is hereby reserved.

Section 11. Legal Construction.

          This Plan is intended to be governed by and shall be construed in accordance with ERISA and,
to the extent not preempted by ERISA, the laws of the State of California.

Section 12. Claims, Inquiries And Appeals.

          (a) Applications for Benefits and Inquiries. Any application for benefits, inquiries about
the Plan or inquiries about present or future rights under the Plan must be submitted to the Plan
Administrator in writing by an applicant (or his or her authorized representative). The Plan
Administrator is:

Cardica, Inc.

Attn: Secretary

900 Saginaw Drive

Redwood City, California 94063

          (b) Denial of Claims. In the event that any application for benefits is denied in whole or in
part, the Plan Administrator must provide the applicant with written or electronic notice of the
denial of the application, and of the applicant’s right to review the denial. Any electronic
notice will comply with the regulations of the U.S. Department of Labor. The notice of denial will
be set forth in a manner designed to be understood by the applicant and will include the following:

 

 

               (1) the specific reason or reasons for the denial;

               (2) references to the specific Plan provisions upon which the denial is based;

               (3) a description of any additional information or material that the Plan Administrator needs
to complete the review and an explanation of why such information or material is necessary; and

               (4) an explanation of the Plan’s review procedures and the time limits applicable to such
procedures, including a statement of the applicant’s right to bring a civil action under Section
502(a) of ERISA following a denial on review of the claim, as described in Section 12(d) below.

          This notice of denial will be given to the applicant within ninety (90) days after the Plan
Administrator receives the application, unless special circumstances require an extension of time,
in which case, the Plan Administrator has up to an additional ninety (90) days for processing the
application. If an extension of time for processing is required, written notice of the extension
will be furnished to the applicant before the end of the initial ninety (90) day period.

          This notice of extension will describe the special circumstances necessitating the additional
time and the date by which the Plan Administrator is to render its decision on the application.

          (c) Request for a Review. Any person (or that person’s authorized representative) for whom an
application for benefits is denied, in whole or in part, may appeal the denial by submitting a
request for a review to the Plan Administrator within sixty (60) days after the application is
denied. A request for a review shall be in writing and shall be addressed to:

Cardica, Inc.

Attn: Secretary

900 Saginaw Drive

Redwood City, California 94063

          A request for review must set forth all of the grounds on which it is based, all facts in
support of the request and any other matters that the applicant feels are pertinent. The applicant
(or his or her representative) shall have the opportunity to submit (or the Plan Administrator may
require the applicant to submit) written comments, documents, records, and other information
relating to his or her claim. The applicant (or his or her representative) shall be provided, upon
request and free of charge, reasonable access to, and copies of, all documents, records and other
information relevant to his or her claim. The review shall take into account all comments,
documents, records and other information submitted by the applicant (or his or her representative)
relating to the claim, without regard to whether such information was submitted or considered in
the initial benefit determination.

          (d) Decision on Review. The Plan Administrator will act on each request for review within
sixty (60) days after receipt of the request, unless special circumstances require an extension of
time (not to exceed an additional sixty (60) days), for processing the request for a review. If an
extension for review is required, written notice of the extension will be furnished to the
applicant within the initial sixty (60) day period. This notice of extension will describe the
special circumstances necessitating the additional time and the date by which the Plan
Administrator is to render its decision on the review. The Plan Administrator will give prompt,
written or electronic notice of its decision to the applicant. Any electronic notice will comply
with the regulations of the U.S. Department of Labor. In the event that the Plan Administrator
confirms the denial of the application for benefits in whole or in part, the notice will set forth,
in a manner calculated to be understood by the applicant, the following:

               (1) the specific reason or reasons for the denial;

               (2) references to the specific Plan provisions upon which the denial is based;

 

 

               (3) a statement that the applicant is entitled to receive, upon request and free of charge,
reasonable access to, and copies of, all documents, records and other information relevant to his
or her claim; and

               (4) a statement of the applicant’s right to bring a civil action under Section 502(a) of
ERISA.

          (e) Rules and Procedures. The Plan Administrator will establish rules and procedures,
consistent with the Plan and with ERISA, as necessary and appropriate in carrying out its
responsibilities in reviewing benefit claims. The Plan Administrator may require an applicant who
wishes to submit additional information in connection with an appeal from the denial of benefits to
do so at the applicant’s own expense.

          (f) Exhaustion of Remedies. No legal action for benefits under the Plan may be brought until
the applicant (i) has submitted a written application for benefits in accordance with the
procedures described by Section 12(a) above, (ii) has been notified by the Plan Administrator that
the application is denied, (iii) has filed a written request for a review of the application in
accordance with the appeal procedure described in Section 12(c) above, and (iv) has been notified
that the Plan Administrator has denied the appeal. Notwithstanding the foregoing, if the Plan
Administrator does not respond to a Participant’s claim or appeal within the relevant time limits
specified in this Section 12, the Participant may bring legal action for benefits under the Plan
pursuant to Section 502(a) of ERISA.

Section 13. Basis Of Payments To And From Plan.

          The Plan shall be unfunded, and all benefits under the Plan shall be paid only from the
general assets of the Company. An Eligible Employee’s right to receive payments under the Plan is
no greater than that of the Company’s unsecured general creditors. Therefore, if the Company were
to become insolvent, the Eligible Employee might not receive benefits under the Plan.

Section 14. Other Plan Information.

          (a) Employer and Plan Identification Numbers. The Employer Identification Number assigned to
the Company (which is the “Plan Sponsor” as that term is used in ERISA) by the Internal Revenue
Service is 94-3287832. The Plan Number assigned to the Plan by the Plan Sponsor pursuant to the
instructions of the Internal Revenue Service is 515.

          (b) Ending Date for Plan’s Fiscal Year. The date of the end of the fiscal year for the
purpose of maintaining the Plan’s records is June 30. The Plan is a welfare benefit plan.

          (c) Agent for the Service of Legal Process. The agent for the service of legal process with
respect to the Plan is:

Cardica, Inc.

Attn: Secretary

900 Saginaw Drive

Redwood City, California 94063

          (d) Plan Sponsor and Administrator. The “Plan Sponsor” and the “Plan Administrator” of the
Plan is:

Cardica, Inc.

Attn: Secretary

900 Saginaw Drive

Redwood City, California 94063

 

 

     The Plan Sponsor’s and Plan Administrator’s telephone number is (650) 364-9975. The Plan
Administrator is the named fiduciary charged with the responsibility for administering the Plan.

Section 15. Statement Of ERISA Rights.

          Participants in this Plan are entitled to certain rights and protections under ERISA. If you
are an Eligible Employee, you are considered a participant in the Plan and, under ERISA, you are
entitled to:

          (a) Receive Information About Your Plan and Benefits

               (1) Examine, without charge, at the Plan Administrator’s office and at other specified
locations, such as worksites, all documents governing the Plan and a copy of the latest annual
report (Form 5500 Series), if applicable, filed by the Plan with the U.S. Department of Labor and
available at the Public Disclosure Room of the Employee Benefits Security Administration;

               (2) Obtain, upon written request to the Plan Administrator, copies of documents governing the
operation of the Plan and copies of the latest annual report (Form 5500 Series), if applicable, and
an updated (as necessary) Summary Plan Description. The Administrator may make a reasonable charge
for the copies; and

               (3) Receive a summary of the Plan’s annual financial report, if applicable. The Plan
Administrator is required by law to furnish each participant with a copy of this summary annual
report.

          (b) Prudent Actions by Plan Fiduciaries. In addition to creating rights for Plan
participants, ERISA imposes duties upon the people who are responsible for the operation of the
employee benefit plan. The people who operate the Plan, called “fiduciaries” of the Plan, have a
duty to do so prudently and in the interest of you and other Plan participants and beneficiaries.
No one, including your employer, your union or any other person, may fire you or otherwise
discriminate against you in any way to prevent you from obtaining a Plan benefit or exercising your
rights under ERISA.

          (c) Enforce Your Rights. If your claim for a Plan benefit is denied or ignored, in whole or
in part, you have a right to know why this was done, to obtain copies of documents relating to the
decision without charge, and to appeal any denial, all within certain time schedules.

     Under ERISA, there are steps you can take to enforce the above rights. For instance, if you
request a copy of Plan documents or the latest annual report from the Plan, if applicable, and do
not receive them within 30 days, you may file suit in a Federal court. In such a case, the court
may require the Plan Administrator to provide the materials and pay you up to $110 a day until you
receive the materials, unless the materials were not sent because of reasons beyond the control of
the Plan Administrator.

     If you have completed the claims and appeals procedure described above and have a claim for
benefits which is denied or ignored, in whole or in part, you may file suit in a state or Federal
court.

     If you are discriminated against for asserting your rights, you may seek assistance from the
U.S. Department of Labor, or you may file suit in a Federal court. The court will decide who
should pay court costs and legal fees. If you are successful, the court may order the person you
have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and
fees, for example, if it finds your claim is frivolous.

          (d) Assistance with Your Questions. If you have any questions about the Plan, you should
contact the Plan Administrator. If you have any questions about this statement or about your
rights under ERISA, or if you need assistance in obtaining documents from the Plan Administrator,
you should contact the nearest office of the Employee Benefits Security Administration, U.S.
Department of Labor, listed in your telephone directory or the Division of Technical Assistance and
Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution
Avenue N.W., Washington, D.C. 20210. You may also obtain certain publications about

 

 

your rights and responsibilities under ERISA by calling the publications hotline of the
Employee Benefits Security Administration or accessing its website at
http://www.dol.gov/ebsa/.

Section 16. Circular 230 Disclaimer.

          THE FOLLOWING DISCLAIMER IS PROVIDED IN ACCORDANCE WITH THE INTERNAL REVENUE SERVICE’S
CIRCULAR 230 (21 CFR PART 10). ANY ADVICE IN THIS PLAN IS NOT INTENDED OR WRITTEN TO BE USED, AND
IT CANNOT BE USED BY YOU FOR THE PURPOSE OF AVOIDING ANY PENALTIES THAT MAY BE IMPOSED ON YOU. ANY
ADVICE IN THIS PLAN WAS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF PARTICIPATION IN THE
COMPANY’S CHANGE IN CONTROL SEVERANCE PLAN. YOU SHOULD SEEK ADVICE BASED ON YOUR PARTICULAR
CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.

Section 17. Execution.

          To record the adoption of the Plan as set forth herein, effective as of February 11, 2009,
Cardica, Inc. has caused its duly authorized officer to execute the same on February 11, 2009.

	 	 	 	 	 	 	 
	 	 	Cardica, Inc.	 	 
	 
	 	 	 	 	 	 
	 
	 	By:	 	/s/ Robert Y. Newell	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	Title:	 	Chief Financial Officer	 	 
	 
	 	 	 	 	 	 

 

 

Exhibit A

DESIGNATION FORM

On                      ___, 2009, the Compensation Committee of the Board of Directors of Cardica, Inc.
(the “Company") designated you as an employee eligible for participation in the Company’s Change in
Control Severance Benefit Plan (the “Plan"). In order to be eligible to receive payments and
benefits under the Plan, you must sign and return this Designation Form to the Company within
thirty (30) days of your receipt of this Designation Form and a copy of the Plan. By signing this
Designation Form, you acknowledge that you have reviewed the Plan and you understand and agree to
all of the terms and conditions thereof. You understand and agree that by accepting the
designation as an Eligible Employee (as defined in the Plan), your rights under the Plan supersede
and replace any rights you have to severance benefits under any other plan, policy or practice of
the Company, or under any written or unwritten agreement with the Company with respect to a
termination that constitutes a Qualifying Termination. You further understand that nothing in this
Designation Form or the terms of the Plan modifies the at-will nature of your employment with the
Company or the Company’s ability to terminate your participation in the Plan as provided in the
Plan.

	 	 	 	 	 
	 	Sincerely,	 
	 	 	 
	 
	 	[Name],

[Title]	 

	 	 	 
	Acknowledged and Agreed:

	 	 
	 
	 	 
	 

[Name]

	 	 
	 
	 	 
	 

Date

	 	 

A-1.

 

 

Exhibit B

RELEASE AGREEMENT

     I understand and agree completely to the terms set forth in the Cardica, Inc. Change in
Control Severance Benefit Plan (the “Plan").

     I understand that this Release Agreement (“Release"), together with the Plan, constitutes the
complete, final and exclusive embodiment of the entire agreement between Cardica, Inc. (the
“Company") and me with regard to the subject matter hereof. I am not relying on any promise or
representation by the Company that is not expressly stated therein. Certain capitalized terms used
in this Release are defined in the Plan.

     I hereby acknowledge and reaffirm my continuing obligations under the Company’s Proprietary
Information and Inventions Agreement that I signed in connection with my employment. In addition,
I hereby represent that I have been paid all compensation owed and for all hours worked, have
received all the leave and leave benefits and protections for which I am eligible, pursuant to the
Family and Medical Leave Act or otherwise, and have not suffered any on-the-job injury for which I
have not already filed a workers’ compensation claim.

     Except as otherwise set forth in this Release, in exchange for the benefits I will receive
pursuant to the Plan which I am not otherwise entitled to receive, and as required by the Plan, I
hereby generally and completely release, acquit and forever discharge the Company and its parent,
subsidiary, and affiliated entities, along with its and their predecessors and successors and their
respective directors, officers, employees, shareholders, stockholders, partners, agents, attorneys,
insurers, affiliates and assigns (collectively, the “Released Parties"), of and from any and all
claims, liabilities and obligations, both known and unknown, that arise from or are in any way
related to events, acts, conduct, or omissions occurring at any time prior to and including the
date that I sign this Release (collectively, the “Released Claims"). The Released Claims include,
but are not limited to: (a) all claims arising out of or in any way related to my employment with
the Company, or the termination of that employment; (b) all claims related to my compensation or
benefits from the Company, including salary, bonuses, commissions, other incentive compensation,
vacation pay and the redemption thereof, expense reimbursements, severance payments, fringe
benefits, stock, stock options, or any other ownership or equity interests in the Company; (c) all
claims for breach of contract, wrongful termination, and breach of the implied covenant of good
faith and fair dealing; (d) all tort claims, including but not limited to claims for fraud,
defamation, emotional distress, and discharge in violation of public policy; and (e) all federal,
state, and local statutory claims, including but not limited to claims for discrimination,
harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights
Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990 (as amended), the
federal Age Discrimination in Employment Act of 1967 (as amended) (the “ADEA”), and the California
Fair Employment and Housing Act (as amended). Notwithstanding the foregoing, the following are not
included in the Released Claims (the “Excluded Claims"): (a) any rights or claims for
indemnification I may have pursuant to any written indemnification agreement with the Company to
which I am a party, the charter, bylaws, or under applicable law; (b) any rights which are not
waivable as a matter of law; or (c) any claims for breach of the Plan arising after the date that I
sign the Release. In addition, nothing in this Release prevents me from filing, cooperating with,
or participating in any investigation or proceeding before the Equal Employment Opportunity
Commission, the Department of Labor, the California Department of Fair Employment and Housing, or
any other government agency, except that I hereby waive my right to any monetary benefits in
connection with any such claim, charge, investigation or proceeding. I hereby represent and
warrant that, other than the Excluded Claims, I am not aware of any claims I have or might have
against any of the Released Parties that are not included in the Released Claims.

     I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have
under the ADEA, that the consideration given for the Release is in addition to anything of value to
which I was already entitled, and that I have been advised by this writing, as required by the
ADEA, that: (a) my release of claims does not apply to any rights or claims that arise after the
date I sign this Release; (b) I should consult with an attorney prior to signing this Release
(although I may choose voluntarily not to do so); (c) I have twenty-one (21) days to consider this
Release (although I may choose voluntarily to sign it sooner); (d) I have seven (7) days following
the date I sign this Release to revoke it by providing written notice of my revocation to the
Company’s Chief Executive

B-2.

 

Officer; and (e) this Release will not be effective until the date upon which the revocation period
has expired unexercised, which will be the eighth day after I sign this Release (the “Effective
Date").

     I acknowledge that I have read and understand Section 1542 of the California Civil Code which
reads as follows: “A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which if known by him or
her must have materially affected his or her settlement with the debtor.” I hereby expressly waive
and relinquish all rights and benefits under that section and any law of any jurisdiction of
similar effect with respect to my release of any claims, including but not limited to my release of
unknown and unsuspected claims.

     In addition to the above: (a) I agree not to disparage the Company or any of the other
Released Parties in any manner likely to be harmful to its or their business, business reputations,
or personal reputations; (b) I agree to return, no later than my employment termination date, all
Company property, documents, information, and materials, including but not limited to any and all
embodiments (e.g., notes, computer-recorded information) of the Company’s proprietary or
confidential information (and all reproductions thereof, in whole or in part) in my possession or
control; and (c) I will not voluntarily provide assistance, information or advice, directly or
indirectly (including through agents or attorneys), to any person or entity in connection with any
claim or cause of action of any kind brought against the Company or its officers, directors, or
affiliated entities, nor induce or encourage any person or entity to bring such claims; provided
that it shall not violate this covenant if I testify truthfully when required to do so by a valid
subpoena or under similar compulsion of law.

     I acknowledge that to become effective, I must sign and return this Release to the Company so
that it is received not later than twenty-one (21) days following the date it is provided to me.

	 	 	 	 	 	 	 
	 	 	Employee	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 	 	 

B-3.

 

For Employees Age 40 or Older

Group Termination

Exhibit C

RELEASE AGREEMENT

     I understand and agree completely to the terms set forth in the Cardica, Inc. Change in
Control Severance Benefit Plan (the “Plan").

     I understand that this Release Agreement (“Release"), together with the Plan, constitutes the
complete, final and exclusive embodiment of the entire agreement between Cardica, Inc. (the
“Company") and me with regard to the subject matter hereof. I am not relying on any promise or
representation by the Company that is not expressly stated therein. Certain capitalized terms used
in this Release are defined in the Plan.

     I hereby acknowledge and reaffirm my continuing obligations under the Company’s Proprietary
Information and Inventions Agreement that I signed in connection with my employment. In addition,
I hereby represent that I have been paid all compensation owed and for all hours worked, have
received all the leave and leave benefits and protections for which I am eligible, pursuant to the
Family and Medical Leave Act or otherwise, and have not suffered any on-the-job injury for which I
have not already filed a workers’ compensation claim.

     Except as otherwise set forth in this Release, in exchange for the benefits I will receive
pursuant to the Plan which I am not otherwise entitled to receive, and as required by the Plan, I
hereby generally and completely release, acquit and forever discharge the Company and its parent,
subsidiary, and affiliated entities, along with its and their predecessors and successors and their
respective directors, officers, employees, shareholders, stockholders, partners, agents, attorneys,
insurers, affiliates and assigns (collectively, the “Released Parties"), of and from any and all
claims, liabilities and obligations, both known and unknown, that arise from or are in any way
related to events, acts, conduct, or omissions occurring at any time prior to and including the
date that I sign this Release (collectively, the “Released Claims"). The Released Claims include,
but are not limited to: (a) all claims arising out of or in any way related to my employment with
the Company, or the termination of that employment; (b) all claims related to my compensation or
benefits from the Company, including salary, bonuses, commissions, other incentive compensation,
vacation pay and the redemption thereof, expense reimbursements, severance payments, fringe
benefits, stock, stock options, or any other ownership or equity interests in the Company; (c) all
claims for breach of contract, wrongful termination, and breach of the implied covenant of good
faith and fair dealing; (d) all tort claims, including but not limited to claims for fraud,
defamation, emotional distress, and discharge in violation of public policy; and (e) all federal,
state, and local statutory claims, including but not limited to claims for discrimination,
harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights
Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990 (as amended), the
federal Age Discrimination in Employment Act of 1967 (as amended) (the “ADEA”), and the California
Fair Employment and Housing Act (as amended). Notwithstanding the foregoing, the following are not
included in the Released Claims (the “Excluded Claims"): (a) any rights or claims for
indemnification I may have pursuant to any written indemnification agreement with the Company to
which I am a party, the charter, bylaws, or under applicable law; (b) any rights which are not
waivable as a matter of law; or (c) any claims for breach of the Plan arising after the date that I
sign the Release. In addition, nothing in this Release prevents me from filing, cooperating with,
or participating in any investigation or proceeding before the Equal Employment Opportunity
Commission, the Department of Labor, the California Department of Fair Employment and Housing, or
any other government agency, except that I hereby waive my right to any monetary benefits in
connection with any such claim, charge, investigation or proceeding. I hereby represent and
warrant that, other than the Excluded Claims, I am not aware of any claims I have or might have
against any of the Released Parties that are not included in the Released Claims.

     I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have
under the ADEA, that the consideration given for the Release is in addition to anything of value to
which I was already entitled, and that I have been advised by this writing, as required by the
ADEA, that: (a) my release of claims does not apply to any rights or claims that arise after the
date I sign this Release; (b) I should consult with an attorney prior to signing this Release
(although I may choose voluntarily not to do so); (c) I have forty-five (45) days to consider this
Release (although I may choose voluntarily to sign it sooner); (d) I have seven (7) days following
the date I sign this Release to revoke it by providing written notice of my revocation to the
Company’s Chief Executive

C-1.

 

For Employees Age 40 or Older

Group Termination

Officer; and (e) this Release will not be effective until the date upon which the revocation period
has expired unexercised, which will be the eighth day after I sign this Release (the “Effective
Date").

     I acknowledge that I have read and understand Section 1542 of the California Civil Code which
reads as follows: “A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which if known by him or
her must have materially affected his or her settlement with the debtor.” I hereby expressly waive
and relinquish all rights and benefits under that section and any law of any jurisdiction of
similar effect with respect to my release of any claims, including but not limited to my release of
unknown and unsuspected claims.

     I hereby acknowledge that I have received with this Release a written disclosure of all of the
information required by the ADEA for group terminations, including without limitation a detailed
list of the job titles and ages of all employees who were terminated in this group termination and
the ages of all employees of the Company in the same job classification or organizational unit who
were not terminated, along with information on the eligibility factors used to select employees for
the group termination.

     In addition to the above: (a) I agree not to disparage the Company or any of the other
Released Parties in any manner likely to be harmful to its or their business, business reputations,
or personal reputations; (b) I agree to return, no later than my employment termination date, all
Company property, documents, information, and materials, including but not limited to any and all
embodiments (e.g., notes, computer-recorded information) of the Company’s proprietary or
confidential information (and all reproductions thereof, in whole or in part) in my possession or
control; and (c) I will not voluntarily provide assistance, information or advice, directly or
indirectly (including through agents or attorneys), to any person or entity in connection with any
claim or cause of action of any kind brought against the Company or its officers, directors, or
affiliated entities, nor induce or encourage any person or entity to bring such claims; provided
that it shall not violate this covenant if I testify truthfully when required to do so by a valid
subpoena or under similar compulsion of law.

     I acknowledge that to become effective, I must sign and return this Release to the Company so
that it is received not later than forty-five (45) days following the date this Release and the
ADEA disclosure form is provided to me.

	 	 	 	 	 	 	 
	 	 	Employee	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 	 	 

C-2.

 

Exhibit D

RELEASE AGREEMENT

     I understand and agree completely to the terms set forth in the Cardica, Inc. Change in
Control Severance Benefit Plan (the “Plan").

     I understand that this Release Agreement (“Release"), together with the Plan, constitutes the
complete, final and exclusive embodiment of the entire agreement between Cardica, Inc. (the
“Company") and me with regard to the subject matter hereof. I am not relying on any promise or
representation by the Company that is not expressly stated therein. Certain capitalized terms used
in this Release are defined in the Plan.

     I hereby acknowledge and reaffirm my continuing obligations under the Company’s Proprietary
Information and Inventions Agreement that I signed in connection with my employment. In addition,
I hereby represent that I have been paid all compensation owed and for all hours worked, have
received all the leave and leave benefits and protections for which I am eligible, pursuant to the
Family and Medical Leave Act or otherwise, and have not suffered any on-the-job injury for which I
have not already filed a workers’ compensation claim.

     Except as otherwise set forth in this Release, in exchange for the benefits I will receive
pursuant to the Plan which I am not otherwise entitled to receive, and as required by the Plan, I
hereby generally and completely release, acquit and forever discharge the Company and its parent,
subsidiary, and affiliated entities, along with its and their predecessors and successors and their
respective directors, officers, employees, shareholders, stockholders, partners, agents, attorneys,
insurers, affiliates and assigns (collectively, the “Released Parties"), of and from any and all
claims, liabilities and obligations, both known and unknown, that arise from or are in any way
related to events, acts, conduct, or omissions occurring at any time prior to and including the
date that I sign this Release (collectively, the “Released Claims"). The Released Claims include,
but are not limited to: (a) all claims arising out of or in any way related to my employment with
the Company, or the termination of that employment; (b) all claims related to my compensation or
benefits from the Company, including salary, bonuses, commissions, other incentive compensation,
vacation pay and the redemption thereof, expense reimbursements, severance payments, fringe
benefits, stock, stock options, or any other ownership or equity interests in the Company; (c) all
claims for breach of contract, wrongful termination, and breach of the implied covenant of good
faith and fair dealing; (d) all tort claims, including but not limited to claims for fraud,
defamation, emotional distress, and discharge in violation of public policy; and (e) all federal,
state, and local statutory claims, including but not limited to claims for discrimination,
harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights
Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990 (as amended), and the
California Fair Employment and Housing Act (as amended). Notwithstanding the foregoing, the
following are not included in the Released Claims (the “Excluded Claims"): (a) any rights or claims
for indemnification I may have pursuant to any written indemnification agreement with the Company
to which I am a party, the charter, bylaws, or under applicable law; (b) any rights which are not
waivable as a matter of law; or (c) any claims for breach of the Plan arising after the date that I
sign the Release. In addition, nothing in this Release prevents me from filing, cooperating with,
or participating in any investigation or proceeding before the Equal Employment Opportunity
Commission, the Department of Labor, the California Department of Fair Employment and Housing, or
any other government agency, except that I hereby waive my right to any monetary benefits in
connection with any such claim, charge, investigation or proceeding. I hereby represent and
warrant that, other than the Excluded Claims, I am not aware of any claims I have or might have
against any of the Released Parties that are not included in the Released Claims.

     I acknowledge that I have read and understand Section 1542 of the California Civil Code which
reads as follows: “A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which if known by him or
her must have materially affected his or her settlement with the debtor.” I hereby expressly waive
and relinquish all rights and benefits under that section and any law of any jurisdiction of
similar effect with respect to my release of any claims, including but not limited to my release of
unknown and unsuspected claims.

D-1

 

     In addition to the above: (a) I agree not to disparage the Company or any of the other
Released Parties in any manner likely to be harmful to its or their business, business reputations,
or personal reputations; (b) I agree to return, no later than my employment termination date, all
Company property, documents, information, and materials, including but not limited to any and all
embodiments (e.g., notes, computer-recorded information) of the Company’s proprietary or
confidential information (and all reproductions thereof, in whole or in part) in my possession or
control; and (c) I will not voluntarily provide assistance, information or advice, directly or
indirectly (including through agents or attorneys), to any person or entity in connection with any
claim or cause of action of any kind brought against the Company or its officers, directors, or
affiliated entities, nor induce or encourage any person or entity to bring such claims; provided
that it shall not violate this covenant if I testify truthfully when required to do so by a valid
subpoena or under similar compulsion of law.

     I acknowledge that to become effective, I must sign and return this Release to the Company so
that it is received not later than fourteen (14) days following the date it is provided to me.

	 	 	 	 	 	 	 
	 	 	Employee	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 	 	 

D-2exv10w1

Exhibit 10.1

PROMISSORY NOTE

			
	 
	 	February 11, 2009
	 	 	 
	$1,000,000
	 	Hopkinton, Massachusetts

     FOR VALUE RECEIVED, Neurobiologics, Inc. (the “Maker”), in keeping with a resolution of its
Board of Directors adopted on even date herewith and approving the making of this Promissory Note,
promises to pay to Robert L Gipson, or order, at the offices of Robert L. Gipson, c/o Ingalls &
Snyder LLC, 61 Broadway, New York, New York 10006 or at such other place as the holder of this Note
may designate, the principal sum of $1,000,000, together with interest on the unpaid principal
balance of this Note from time to time outstanding at the rate of 7% per year until paid in full.
All principal and accrued interest shall be due and payable on demand of the Holder.

Interest on this Note shall be computed on the basis of a year of 365 days for the actual number of
days elapsed. All payments by the Maker under this Note shall be in immediately available funds.

Every amount overdue under this Note shall bear interest from and after the date on which such
amount first became overdue at an annual rate which is two (2) percentage points above the rate per
year specified in the first paragraph of this Note. Such interest on overdue amounts under this
Note shall be payable on demand and shall accrue and be compounded monthly until the obligation of
the Maker with respect to the payment of such interest has been discharged (whether before or after
judgment).

In no event shall any interest charged, collected or reserved under this Note exceed the maximum
rate then permitted by applicable law and if any such payment is paid by the Maker, then such
excess sum shall be credited by the holder as a payment of principal.

All payments by the Maker under this Note shall be made without set-off or counterclaim and be free
and clear and without any deduction or withholding for any taxes or fees of any nature whatever,
unless the obligation to make such deduction or withholding is imposed by law. The Maker shall pay
and save the holder harmless from all liabilities with respect to or resulting from any delay or
omission to make any such deduction or withholding required by law.

Whenever any amount is paid under this Note, all or part of the amount paid may be applied to
principal, premium or interest in such order and manner as shall be determined by the holder in its
discretion.

No reference in this Note to any guaranty or other document shall impair the obligation of the
Maker, which is absolute and unconditional, to pay all amounts under this Note strictly in
accordance with the terms of this Note.

 

 

The Maker agrees to pay on demand all costs of collection, including reasonable attorneys’ fees,
incurred by the holder in enforcing the obligations of the Maker under this Note.

No delay or omission on the part of the holder in exercising any right under this Note shall
operate as a waiver of such right or of any other right of such holder, nor shall any delay,
omission or waiver on any one occasion be deemed a bar to or waiver of the same or any other right
on any future occasion. The Maker and every endorser or guarantor of this Note regardless of the
time, order or place of signing waives presentment, demand, protest and notices of every kind and
assents to any extension or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral, and to the addition or release of any other party
or person primarily or secondarily liable.

This Note may be prepaid in whole or in part at any time or from time to time upon five days’ prior
written notice with the consent of the holder, with the giving of such consent to be in the sole
discretion of the holder. Any such prepayment shall be without penalty or premium.

None of the terms or provisions of this Note may be excluded, modified or amended except by a
written instrument duly executed on behalf of the holder expressly referring to this Note and
setting forth the provision so excluded, modified or amended.

All rights and obligations hereunder shall be governed by the laws of the Commonwealth of
Massachusetts and this Note is executed as an instrument under seal.

	 	 	 	 	 
	 	Neurobiologics, Inc.

 	 
	 	By:  	/s/ Kenneth L. Rice
 	 
	 	Title: Chief Financial Officer

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