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EXHIBIT 10.18    
    

 
 

DIGIRAD CORPORATION    
    
    2004 STOCK INCENTIVE PLAN    
    

        1.    Purposes of the Plan.    The purposes of this Plan are to attract and retain the best available personnel, to
provide additional incentives to Employees, Directors and Consultants and to promote the success of the Company's business. 

        2.    Definitions.    The following definitions shall apply as used herein and in the individual Award Agreements
except as defined otherwise in an individual Award Agreement. In the event a term is separately defined in an individual Award Agreement, such definition shall supercede the definition contained in
this Section 2. 

        (a)   "Administrator" means the Board or any of the Committees appointed to administer the Plan. 

        (b)   "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 promulgated under the Exchange Act. 

        (c)   "Applicable Laws" means the legal requirements relating to the Plan and the Awards under applicable provisions of federal
securities laws, state corporate and securities laws, the Code, the rules
of any applicable stock exchange or national market system, and the rules of any non-U.S. jurisdiction applicable to Awards granted to residents therein. 

        (d)   "Assumed" means that pursuant to a Corporate Transaction either (i) the Award is expressly affirmed by the Company
or (ii) the contractual obligations represented by the Award are expressly assumed (and not simply by operation of law) by the successor entity or its Parent in connection with the Corporate
Transaction with appropriate adjustments to the number and type of securities of the successor entity or its Parent subject to the Award and the exercise or purchase price thereof which at least
preserves the compensation element of the Award existing at the time of the Corporate Transaction as determined in accordance with the instruments evidencing the agreement to assume the Award. 

        (e)   "Award" means the grant of an Option, SAR, Dividend Equivalent Right, Restricted Stock, Restricted Stock Unit or other
right or benefit under the Plan. 

        (f)    "Award Agreement" means the written agreement evidencing the grant of an Award executed by the Company and the Grantee,
including any amendments thereto. 

        (g)   "Board" means the Board of Directors of the Company. 

        (h)   "Cause" means, with respect to the termination by the Company or a Related Entity of the Grantee's Continuous Service,
that such termination is for "Cause" as such term is expressly defined in a then-effective written agreement between the Grantee and the Company or such Related Entity, or in the absence
of such then-effective written agreement and definition, is based on, in the determination of the Administrator, the Grantee's: (i) performance of any act or failure to perform any
act in bad faith and to the detriment of the Company or a Related Entity; (ii) dishonesty, intentional misconduct or material breach of any agreement with the Company or a Related Entity; or
(iii) commission of a crime involving dishonesty, breach of trust, or physical or emotional harm to any person. 

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        (i)    "Change in Control" means a change in ownership or control of the Company after the Registration Date effected through
either of the following transactions: 

        (i)    the
direct or indirect acquisition by any person or related group of persons (other than an acquisition from or by the Company or by a Company-sponsored employee benefit
plan or by a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) of
beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the
Company's outstanding securities pursuant to a tender or exchange offer made directly to the Company's stockholders which a majority of the Continuing Directors who are not Affiliates or Associates of
the offeror do not recommend such stockholders accept, or 

        (ii)   a
change in the composition of the Board over a period of thirty-six (36) months or less such that a majority of the Board members (rounded up to the
next whole number) ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who are Continuing Directors. 

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

        (k)   "Committee" means any committee composed of members of the Board appointed by the Board to administer the Plan. 

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

        (m)  "Company" means Digirad Corporation, a Delaware corporation. 

        (n)   "Consultant" means any person (other than an Employee or a Director, solely with respect to rendering services in such
person's capacity as a Director) who is engaged by the Company or any Related Entity to render consulting or advisory services to the Company or such Related Entity. 

        (o)   "Continuing Directors" means members of the Board who either (i) have been Board members continuously for a period
of at least thirty-six (36) months or (ii) have been Board members for less than thirty-six (36) months and were elected or nominated for election as Board
members by at least a majority of the Board members described in clause (i) who were still in office at the time such election or nomination was approved by the Board. 

        (p)   "Continuous Service" means that the provision of services to the Company or a Related Entity in any capacity of Employee,
Director or Consultant is not interrupted or terminated. In jurisdictions requiring notice in advance of an effective termination as an Employee, Director or Consultant, Continuous Service shall be
deemed terminated upon the actual cessation of providing services to the Company or a Related Entity notwithstanding any required notice period that must be fulfilled before a termination as an
Employee, Director or Consultant can be effective under Applicable Laws. A Grantee's Continuous Service shall be deemed to have terminated either upon an actual termination of Continuous Service or
upon the entity for which the Grantee provides services ceasing to be a Related Entity. Continuous Service shall not be considered interrupted in the case of (i) any approved leave of absence,
(ii) transfers among the Company, any Related Entity, or any successor, in any capacity of Employee, Director or Consultant, or (iii) any change in status as long as the individual
remains in the service of the Company or a Related Entity in any capacity of Employee, Director or Consultant (except as otherwise provided in the Award Agreement). An approved leave of absence shall
include sick leave, military leave, or any other authorized personal leave. For purposes of each Incentive Stock Option granted under the Plan, if such leave exceeds ninety (90) days, and
reemployment upon expiration of such leave is not guaranteed by statute or contract, then the Incentive Stock Option shall be treated as a 

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Non-Qualified
Stock Option on the day three (3) months and one (1) day following the expiration of such ninety (90) day period. 

        (q)   "Corporate Transaction" means any of the following transactions, provided, however, that the Administrator shall
determine under parts (iv) and (v) whether multiple transactions are related, and its determination shall be final, binding and conclusive: 

        (i)    a
merger or consolidation in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the state in which the
Company is incorporated; 

        (ii)   the
sale, transfer or other disposition of all or substantially all of the assets of the Company; 

        (iii)  the
complete liquidation or dissolution of the Company; 

        (iv)  any
reverse merger or series of related transactions culminating in a reverse merger (including, but not limited to, a tender offer followed by a reverse merger) in
which the Company is the surviving entity but (A) the shares of Common Stock outstanding immediately prior to such merger are converted or exchanged by virtue of the merger into other property,
whether in the form of securities, cash or otherwise, or (B) in which securities possessing more than forty percent (40%) of the total combined voting power of the Company's outstanding
securities are transferred to a person or persons different from those who held such securities immediately prior to such merger or the initial transaction
culminating in such merger, but excluding any such transaction or series of related transactions that the Administrator determines shall not be a Corporate Transaction; or 

        (v)   acquisition
in a single or series of related transactions by any person or related group of persons (other than the Company or by a Company-sponsored employee benefit
plan) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the
Company's outstanding securities but excluding any such transaction or series of related transactions that the Administrator determines shall not be a Corporate Transaction. 

        (r)   "Covered Employee" means an Employee who is a "covered employee" under Section 162(m)(3) of the Code. 

        (s)   "Director" means a member of the Board or the board of directors of any Related Entity. 

        (t)    "Disability" means as defined under the long-term disability policy of the Company or the Related Entity to
which the Grantee provides services regardless of whether the Grantee is covered by such policy. If the Company or the Related Entity to which the Grantee provides service does not have a
long-term disability plan in place, "Disability" means that a Grantee is unable to carry out the responsibilities and functions of the position held by the Grantee by reason of any
medically determinable physical or mental impairment for a period of not less than ninety (90) consecutive days. A Grantee will not be considered to have incurred a Disability unless he or she
furnishes proof of such impairment sufficient to satisfy the Administrator in its discretion. 

        (u)   "Dividend Equivalent Right" means a right entitling the Grantee to compensation measured by dividends paid with respect
to Common Stock. 

        (v)   "Employee" means any person, including an Officer or Director, who is in the employ of the Company or any Related Entity,
subject to the control and direction of the Company or any Related Entity as to both the work to be performed and the manner and method of performance. The payment of a director's fee by the Company
or a Related Entity shall not be sufficient to constitute "employment" by the Company. 

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

        (x)   "Fair Market Value" means, as of any date, the value of Common Stock determined as follows: 

        (i)    If
the Common Stock is listed on one or more established stock exchanges or national market systems, including without limitation The Nasdaq National Market or The
Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on the principal
exchange or system on which the Common Stock is listed (as determined by the Administrator) on the date of determination (or, if no closing sales price or closing bid was reported on that date, as
applicable, on the last trading date such closing sales price or closing bid was reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable; 

        (ii)   If
the Common Stock is regularly quoted on an automated quotation system (including the OTC Bulletin Board) or by a recognized securities dealer, its Fair Market Value
shall be the closing sales price for such stock as quoted on such system on the date of determination, but if selling prices are not reported, the Fair Market Value of a share of Common Stock shall be
the mean between the high bid and low asked prices for the Common Stock on the date of determination (or, if no such prices were reported on that date, on the last date such prices were reported), as
reported in The Wall Street Journal or such other source as the Administrator deems reliable; or 

        (iii)  In
the absence of an established market for the Common Stock of the type described in (i) and (ii), above, the Fair Market Value thereof shall be determined by
the Administrator in good faith. 

        (y)   "Grantee" means an Employee, Director or Consultant who receives an Award under the Plan. 

        (z)   "Incentive Stock Option" means an Option intended to qualify as an incentive stock option within the meaning of
Section 422 of the Code 

        (aa) "Non-Qualified Stock Option" means an Option not intended to qualify as an Incentive Stock Option. 

        (bb) "Officer" means a person who is an officer of the Company or a Related Entity within the meaning of Section 16 of
the Exchange Act and the rules and regulations promulgated thereunder. 

        (cc) "Option" means an option to purchase Shares pursuant to an Award Agreement granted under the Plan. 

        (dd) "Parent" means a "parent corporation", whether now or hereafter existing, as defined in Section 424(e) of the
Code. 

        (ee) "Performance-Based Compensation" means compensation qualifying as "performance-based compensation" under
Section 162(m) of the Code. 

        (ff)  "Plan" means this 2004 Stock Incentive Plan. 

        (gg) "Registration Date" means the first to occur of (i) the closing of the first sale to the general public pursuant
to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended, of (A) the Common Stock or (B) the
same class of securities of a successor corporation (or its Parent) issued pursuant to a Corporate Transaction in exchange for or in substitution of the Common Stock; and (ii) in the event of a
Corporate Transaction, the date of the consummation of the Corporate 

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Transaction
if the same class of securities of the successor corporation (or its Parent) issuable in such Corporate Transaction shall have been sold to the general public pursuant to a registration
statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended, on or prior to the date of consummation of such Corporate
Transaction. 

        (hh) "Related Entity" means any Parent or Subsidiary of the Company and any business, corporation, partnership, limited
liability company or other entity in which the Company or a Parent or a Subsidiary of the Company holds a substantial ownership interest, directly or indirectly. 

        (ii)   "Replaced" means that pursuant to a Corporate Transaction the Award is replaced with a comparable stock award or a cash
incentive program of the Company, the successor entity (if applicable) or Parent of either of them which preserves the compensation element of such Award existing at the time of the Corporate
Transaction and provides for subsequent payout in accordance with the same (or a more favorable) vesting schedule applicable to such Award. The determination of Award comparability shall be made by
the Administrator and its determination shall be final, binding and conclusive. 

        (jj)   "Restricted Stock" means Shares issued under the Plan to the Grantee for such consideration, if any, and subject to such
restrictions on transfer, rights of first refusal, repurchase provisions, forfeiture provisions, and other terms and conditions as established by the Administrator. 

        (kk) "Restricted Stock Units" means an Award which may be earned in whole or in part upon the passage of time or the
attainment of performance criteria established by the Administrator and which may be settled for cash, Shares or other securities or a combination of cash, Shares or other securities as established by
the Administrator. 

        (ll)   "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act or any successor
thereto. 

        (mm) "SAR" means a stock appreciation right entitling the Grantee to Shares or cash compensation, as established by the
Administrator, measured by appreciation in the value of Common Stock. 

        (nn) "Share" means a share of the Common Stock. 

        (oo) "Subsidiary" means a "subsidiary corporation", whether now or hereafter existing, as defined in Section 424(f) of
the Code. 

        3.    Stock Subject to the Plan.    

        (a)   Subject
to the provisions of Section 10, below, the maximum aggregate number of Shares which may be issued pursuant to all Awards (including Incentive Stock
Options) is 1,400,000 Shares. In addition, the maximum aggregate number of Shares which may be issued pursuant to all Awards (including Incentive Stock Options) shall be increased by any Shares
(up to a maximum of 1,500,000 Shares) that are represented by awards under the Company's 1998 Stock Option/Stock Issuance Plan, that are forfeited, expire or are cancelled without delivery of
the Shares or which result in forfeiture of the Shares back to the Company on or after the Registration Date. The Shares to be issued pursuant to Awards may be authorized, but unissued, or reacquired
Common Stock. 

        (b)   Any
Shares covered by an Award (or portion of an Award) which is forfeited, canceled or expires (whether voluntarily or involuntarily) shall be deemed not to have been
issued for purposes of determining the maximum aggregate number of Shares which may be issued under the Plan. Shares that actually have been issued under the Plan pursuant to an Award shall not be
returned to the Plan and shall not become available for future issuance under the Plan, except that if 

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unvested
Shares are forfeited, or repurchased by the Company at the lower of their original purchase price or their Fair Market Value at the time of repurchase, such Shares shall become available for
future grant under the Plan. To the extent not prohibited by Section 422(b)(1) of the Code (and the corresponding regulations thereunder), the listing requirements of The Nasdaq National Market
(or other established stock exchange or national market system on which the Common Stock is traded) and Applicable Law, any Shares covered by an Award which are surrendered (i) in payment of
the Award exercise or purchase price or (ii) in satisfaction of tax withholding obligations incident to the exercise of an Award shall be deemed not to have been issued for purposes of
determining the maximum number of Shares which may be issued pursuant to all Awards under the Plan, unless otherwise determined by the Administrator. 

        4.    Administration of the Plan.    

        (a)    Plan Administrator.    

        (i)    Administration with Respect to Directors and Officers.    With respect to grants of Awards to Directors or
Employees who are also Officers or Directors of the Company, the Plan shall be administered by (A) the Board or (B) a Committee designated by the Board, which Committee shall be
constituted in such a manner as to satisfy the Applicable Laws and to permit such grants and related transactions under the Plan to be exempt from Section 16(b) of the Exchange Act in
accordance with Rule 16b-3. Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board. 

        (ii)    Administration With Respect to Consultants and Other Employees.    With respect to grants of Awards to
Employees or Consultants who are neither Directors nor Officers of the Company, the Plan shall be administered by (A) the Board or (B) a Committee designated by the Board, which
Committee shall be constituted in such a manner as to satisfy the Applicable Laws. Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the
Board. The Board may authorize one or more Officers to grant such Awards and may limit such authority as the Board determines from time to time. 

        (iii)    Administration With Respect to Covered Employees.    Notwithstanding the foregoing, as of and after the date
that the exemption for the Plan under Section 162(m) of the Code expires, as set forth in Section 18 below, grants of Awards to any Covered Employee intended to qualify as
Performance-Based
Compensation shall be made only by a Committee (or subcommittee of a Committee) which is comprised solely of two or more Directors eligible to serve on a committee making Awards qualifying as
Performance-Based Compensation. In the case of such Awards granted to Covered Employees, references to the "Administrator" or to a "Committee" shall be deemed to be references to such Committee or
subcommittee. 

        (iv)    Administration Errors.    In the event an Award is granted in a manner inconsistent with the provisions of
this subsection (a), such Award shall be presumptively valid as of its grant date to the extent permitted by the Applicable Laws. 

        (b)    Powers of the Administrator.    Subject to Applicable Laws and the provisions of the Plan (including any other
powers given to the Administrator hereunder), and except as otherwise provided by the Board, the Administrator shall have the authority, in its discretion: 

        (i)    to
select the Employees, Directors and Consultants to whom Awards may be granted from time to time hereunder; 

        (ii)   to
determine whether and to what extent Awards are granted hereunder; 

        (iii)  to
determine the number of Shares or the amount of other consideration to be covered by each Award granted hereunder; 

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

        (v)   to
determine the terms and conditions of any Award granted hereunder; 

        (vi)  to
amend the terms of any outstanding Award granted under the Plan, provided that (A) any amendment that would adversely affect the Grantee's rights under an
outstanding Award shall not be made without the Grantee's written consent, (B) the reduction of the exercise price of any Option awarded under the Plan shall be subject to stockholder approval and
(C) canceling an Option at a time when its exercise price exceeds the Fair Market Value of the underlying Shares, in exchange for another Option, Restricted Stock, or other Award shall be
subject to stockholder approval, unless the cancellation and exchange occurs in connection with a Corporate Transaction; 

        (vii) to
construe and interpret the terms of the Plan and Awards, including without limitation, any notice of award or Award Agreement, granted pursuant to the Plan; 

        (viii) to
grant Awards to Employees, Directors and Consultants employed outside the United States on such terms and conditions different from those specified in the Plan as
may, in the judgment of the Administrator, be necessary or desirable to further the purpose of the Plan; 

        (ix)  to
take such other action, not inconsistent with the terms of the Plan, as the Administrator deems appropriate. 

        (c)    Indemnification.    In addition to such other rights of indemnification as they may have as members of the
Board or as Officers or Employees of the Company or a Related Entity, members of the Board and any Officers or Employees of the Company or a Related Entity to whom authority to act for the Board, the
Administrator or the Company is delegated shall be defended and indemnified by the Company to the extent permitted by law on an after-tax basis against all reasonable expenses, including
attorneys' fees, actually and necessarily incurred in connection with the defense of any claim, investigation, action, suit or proceeding, or in connection with any appeal therein, to which they or
any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any Award granted hereunder, and against all amounts paid by them in settlement
thereof (provided such settlement is approved by the Company) or paid by them in satisfaction of a judgment in any such claim, investigation, action, suit or proceeding, except in relation to matters
as to which it shall be adjudged in such claim, investigation, action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct; provided, however, that
within thirty (30) days after the institution of such claim, investigation, action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at the Company's
expense to defend the same. 

        5.    Eligibility.    Awards other than Incentive Stock Options may be granted to Employees, Directors and
Consultants. Incentive Stock Options may be granted only to Employees of the Company or a Parent or a Subsidiary of the Company. An Employee, Director or Consultant who has been granted an Award may,
if otherwise eligible, be granted additional Awards. Awards may be granted to such Employees, Directors or Consultants who are residing in non-U.S. jurisdictions as the Administrator may
determine from time to time. 

        6.    Terms and Conditions of Awards.    

        (a)    Types of Awards.    The Administrator is authorized under the Plan to award any type of arrangement to an
Employee, Director or Consultant that is not inconsistent with the provisions of the Plan and that by its terms involves or might involve the issuance of (i) Shares, (ii) cash or
(iii) an Option, a SAR, or similar right with a fixed or variable price related to the Fair Market Value of the Shares and with an exercise or conversion privilege related to the passage of
time, the 

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occurrence
of one or more events, or the satisfaction of performance criteria or other conditions. Such awards include, without limitation, Options, SARs, sales or bonuses of Restricted Stock,
Restricted Stock Units or Dividend Equivalent Rights, and an Award may consist of one such security or benefit, or two (2) or more of them in any combination or alternative. 

        (b)    Designation of Award.    Each Award shall be designated in the Award Agreement. In the case of an Option, the
Option shall be designated as either an Incentive Stock Option or a Non-Qualified Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market
Value of Shares subject to Options designated as Incentive Stock Options which become exercisable for the first time by a Grantee during any calendar year (under all plans of the Company or any Parent
or Subsidiary of the Company) exceeds $100,000, such excess Options, to the extent of the Shares covered thereby in excess of the foregoing limitation, shall be treated as Non-Qualified
Stock Options. For this purpose, Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be determined as of the
grant date of the relevant Option. 

        (c)    Conditions of Award.    Subject to the terms of the Plan, the Administrator shall determine the provisions,
terms, and conditions of each Award including, but not limited to, the Award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, form of payment (cash, Shares, or
other consideration) upon settlement of the Award, payment contingencies, and satisfaction of any performance criteria. The performance criteria established by the Administrator may be based on any
one of, or combination of, the following: (i) increase in share price, (ii) earnings per share, (iii) total stockholder return, (iv) operating margin, (v) gross
margin, (vi) return on equity, (vii) return on assets, (viii) return on investment, (ix) operating income, (x) net operating income, (xi) pre-tax
profit, (xii) cash flow, (xiii) revenue, (xiv) expenses, (xv) earnings before interest, taxes and depreciation, (xvi) economic value added, (xvii) market
share and (xviii) personal management objectives. The performance criteria may be applicable to the Company, Related Entities and/or any individual business units of the Company or any Related
Entity. Partial achievement of the specified criteria may result in a payment or vesting corresponding to the degree of achievement as specified in the Award Agreement. 

        (d)    Acquisitions and Other Transactions.    The Administrator may issue Awards under the Plan in settlement,
assumption or substitution for, outstanding awards or obligations to grant future awards in connection with the Company or a Related Entity acquiring another entity, an interest in another entity or
an additional interest in a Related Entity whether by merger, stock purchase, asset purchase or other form of transaction. 

        (e)    Deferral of Award Payment.    The Administrator may establish one or more programs under the Plan to permit
selected Grantees the opportunity to elect to defer receipt of consideration upon exercise of an Award, satisfaction of performance criteria, or other event that absent the election would entitle the
Grantee to payment or receipt of Shares or other consideration under an Award. The Administrator may establish the election procedures, the timing of such elections, the mechanisms for payments of,
and accrual of interest or other earnings, if any, on amounts, Shares or other consideration so deferred, and such other terms, conditions, rules and procedures that the Administrator deems advisable
for the administration of any such deferral program. 

        (f)    Separate Programs.    The Administrator may establish one or more separate programs under the Plan for the
purpose of issuing particular forms of Awards to one or more classes of Grantees on such terms and conditions as determined by the Administrator from time to time. 

        (g)    Individual Limitations on Awards.    Following the date that the exemption from application of
Section 162(m) of the Code described in Section 18 (or any exemption having similar effect) ceases to apply to Awards, the following limitations shall apply. 

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        (i)    Individual Limit for Options and SARs.    The maximum number of Shares with respect to which Options and SARs
may be granted to any Grantee in any fiscal year of the Company shall be 1,000,000 Shares. In connection with a Grantee's commencement of Continuous Service, a Grantee may be granted Options or
SARs for up to an additional 750,000 Shares which shall not count against the limit set forth in the previous sentence. The foregoing limitations shall be adjusted proportionately in connection
with any change in the Company's capitalization pursuant to Section 10, below. To the extent required by Section 162(m) of the Code or the regulations thereunder, in applying the
foregoing limitations with respect to a Grantee, if any Option or SAR is canceled, the canceled Option or SAR shall continue to count against the maximum number of Shares with respect to which Options
and SARs may be granted to the Grantee. For this purpose, the repricing of an Option (or in the case of a SAR, the base amount on which the stock appreciation is calculated is reduced to reflect a
reduction in the Fair Market Value of the Common Stock) shall be treated as the cancellation of the existing Option or SAR and the grant of a new Option or SAR. 

        (ii)    Individual Limit for Restricted Stock and Restricted Stock Units.    For awards of Restricted Stock and
Restricted Stock Units that are intended to be Performance-Based Compensation, the maximum number of Shares with respect to which such Awards may be granted to any Grantee in any fiscal year of the
Company shall be 750,000 Shares. The foregoing limitation shall be adjusted proportionately in connection with any change in the Company's capitalization pursuant to Section 10, below. 

        (iii)    Deferral.    If the vesting or receipt of Shares under an Award is deferred to a later date, any amount
(whether denominated in Shares or cash) paid in addition to the original number of Shares subject to such Award will not be treated as an increase in the number of Shares subject to the Award if the
additional amount is based either on a reasonable rate of interest or on one or more predetermined actual investments such that the amount payable by the Company at the later date will be based on the
actual rate of return of a specific investment (including any decrease as well as any increase in the value of an investment). 

        (h)    Early Exercise.    The Award Agreement may, but need not, include a provision whereby the Grantee may elect at
any time while an Employee, Director or Consultant to exercise any part or all of the Award prior to full vesting of the Award. Any unvested Shares received pursuant to such exercise may be subject to
a repurchase right in favor of the Company or a Related Entity or to any other restriction the Administrator determines to be appropriate. 

        (i)    Term of Award.    The term of each Award shall be the term stated in the Award Agreement, provided, however,
that the term of an Incentive Stock Option shall be no more than ten (10) years from the date of grant thereof. However, in the case of an Incentive Stock Option granted to a Grantee who, at
the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary of the Company, the term of
the Incentive Stock Option shall be five (5) years from the date of grant thereof or such shorter term as may be provided in the Award Agreement. Notwithstanding the foregoing, the specified
term of any Award shall not include any period for which the Grantee has elected to defer the receipt of the Shares or cash issuable pursuant to the Award. 

        (j)    Transferability of Awards.    Incentive Stock Options may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Grantee, only by the Grantee. Other Awards shall
be transferable (i) by will and by the laws of descent and distribution and (ii) during the lifetime of the Grantee, to the extent and in the manner authorized by the 

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Administrator.
Notwithstanding the foregoing, the Grantee may designate one or more beneficiaries of the Grantee's Award in the event of the Grantee's death on a beneficiary designation form provided
by the Administrator. 

        (k)    Time of Granting Awards.    The date of grant of an Award shall for all purposes be the date on which the
Administrator makes the determination to grant such Award, or such other date as is determined by the Administrator. 

        7.    Award Exercise or Purchase Price, Consideration and Taxes.    

        (a)    Exercise or Purchase Price.    The exercise or purchase price, if any, for an Award shall be as follows: 

        (i)    In
the case of an Incentive Stock Option: 

        (A)  granted
to an Employee who, at the time of the grant of such Incentive Stock Option owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary of the Company, the per Share exercise price shall be not less than one hundred ten percent (110%) of the Fair Market Value per Share on the
date of grant; or 

        (B)  granted
to any Employee other than an Employee described in the preceding paragraph, the per Share exercise price shall be not less than one hundred percent (100%) of
the Fair Market Value per Share on the date of grant. 

        (ii)   In
the case of a Non-Qualified Stock Option, the per Share exercise price shall be not less than eighty-five percent (85%) of the Fair Market
Value per Share on the date of grant unless otherwise determined by the Administrator. 

        (iii)  In
the case of Options or SARs intended to qualify as Performance-Based Compensation, the exercise or base appreciation amount shall be not less than one hundred
percent (100%) of the Fair Market Value per Share on the date of grant. 

        (iv)  In
the case of other Awards, such price as is determined by the Administrator. 

        (v)   Notwithstanding
the foregoing provisions of this Section 7(a), in the case of an Award issued pursuant to Section 6(d), above, the exercise or purchase
price for the Award shall be determined in accordance with the provisions of the relevant instrument evidencing the agreement to issue such Award. 

        (b)    Consideration.    Subject to Applicable Laws, the consideration to be paid for the Shares to be issued upon
exercise or purchase of an Award including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant). In
addition to any other types of consideration the Administrator may determine, the Administrator is authorized to accept as consideration for Shares issued under the Plan the following, provided that
the portion of the consideration equal to the par value of the Shares must be paid in cash or other legal consideration permitted by the Delaware General Corporation Law: 

        (i)    cash;

        (ii)   check;

        (iii)  if
the exercise or purchase occurs on or after the Registration Date, surrender of Shares or delivery of a properly executed form of attestation of ownership of Shares
as the Administrator may require which have a Fair Market Value on the date of surrender or attestation equal to the aggregate exercise price of the Shares as to which said Award shall be exercised,
provided, however, that Shares acquired under the Plan or any other equity 

10

 

compensation
plan or agreement of the Company must have been held by the Grantee for a period of more than six (6) months (and not used for another Award exercise by attestation during such
period); 

        (iv)  with
respect to Options, if the exercise occurs on or after the Registration Date, payment through a broker-dealer sale and remittance procedure pursuant to which the
Grantee (A) shall provide written instructions to a Company designated brokerage firm to effect the immediate sale of some or all of the purchased Shares and remit to the Company sufficient
funds to cover the aggregate exercise price payable for the purchased Shares and (B) shall provide written directives to the Company to deliver the certificates for the purchased Shares
directly to such brokerage firm in order to complete the sale transaction; or 

        (v)   any
combination of the foregoing methods of payment. 

The
Administrator may at any time or from time to time, by adoption of or by amendment to the standard forms of Award Agreement described in Section 4(b)(iv), or by other means, grant Awards
which do not permit all of the foregoing forms of consideration to be used in payment for the Shares or which otherwise restrict one or more forms of consideration. 

        (c)    Taxes.    No Shares shall be delivered under the Plan to any Grantee or other person until such Grantee or
other person has made arrangements acceptable to the Administrator for the satisfaction of any non-U.S., federal, state, or local income and employment tax withholding obligations,
including, without limitation, obligations incident to the receipt of Shares or the disqualifying disposition of Shares received on exercise of an Incentive Stock Option. Upon exercise of an Award the
Company shall withhold or collect from Grantee an amount sufficient to satisfy such tax obligations. 

        8.    Exercise of Award.    

        (a)    Procedure for Exercise; Rights as a Stockholder.    

        (i)    Any
Award granted hereunder shall be exercisable at such times and under such conditions as determined by the Administrator under the terms of the Plan and specified in
the Award Agreement. 

        (ii)   An
Award shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Award by the person
entitled to exercise the Award and full payment for the Shares with respect to which the Award is exercised, including, to the extent selected, use of the broker-dealer sale and remittance procedure
to pay the purchase price as provided in Section 7(b)(iv). 

        (b)    Exercise of Award Following Termination of Continuous Service.    

        (i)    An
Award may not be exercised after the termination date of such Award set forth in the Award Agreement and may be exercised following the termination of a Grantee's
Continuous Service only to the extent provided in the Award Agreement. 

        (ii)   Where
the Award Agreement permits a Grantee to exercise an Award following the termination of the Grantee's Continuous Service for a specified period, the Award shall
terminate to the extent not exercised on the last day of the specified period or the last day of the original term of the Award, whichever occurs first. 

        (iii)  Any
Award designated as an Incentive Stock Option to the extent not exercised within the time permitted by law for the exercise of Incentive Stock Options following
the termination of a Grantee's Continuous Service shall convert automatically to a Non-Qualified Stock Option and thereafter shall be exercisable as such to the extent exercisable by its
terms for the period specified in the Award Agreement. 

11

 

        9.    Conditions Upon Issuance of Shares.    

        (a)   Shares
shall not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares pursuant thereto shall
comply with all Applicable Laws, and shall be further subject to the approval of counsel for the Company with respect to such compliance. 

        (b)   As
a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the
Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by
any Applicable Laws. 

        10.    Adjustments Upon Changes in Capitalization.    Subject to any required action by the stockholders of the
Company, the number of Shares covered by each outstanding Award, and the number of Shares which have been authorized for issuance under the Plan but as to which no Awards have yet been granted or
which have been returned to the Plan, the exercise or purchase price of each such outstanding Award, the maximum number of Shares with respect to which Awards may be granted to any Grantee in any
fiscal year of the Company, as well as any other terms that the Administrator determines require adjustment shall be proportionately adjusted for (i) any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Shares, or similar transaction affecting the Shares, (ii) any other
increase or decrease in the number of issued Shares effected without receipt of consideration by the Company, or (iii) as the Administrator may determine in its discretion, any other
transaction with respect to Common Stock including a corporate merger, consolidation, acquisition of property or stock, separation (including a spin-off or other distribution of stock or
property), reorganization, liquidation (whether partial or complete) or any similar transaction; provided, however that conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such adjustment shall be made by the Administrator and its determination shall be final, binding and conclusive. Except as the Administrator
determines, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason hereof shall be made with
respect to, the number or price of Shares subject to an Award. 

        11.    Corporate Transactions and Changes in Control.    

        (a)    Termination of Award to Extent Not Assumed in Corporate Transaction.    Effective upon the consummation of a
Corporate Transaction, all outstanding Awards under the Plan shall terminate. However, all such Awards shall not terminate to the extent they are Assumed in connection with the Corporate Transaction. 

        (b)    Acceleration of Award Upon Corporate Transaction or Change in Control.    

        (i)    Corporate Transaction.    Except as provided otherwise in an individual Award Agreement, in the event of a
Corporate Transaction and: 

        (A)  for
the portion of each Award that is Assumed or Replaced, then such Award (if Assumed), the replacement Award (if Replaced), or the cash incentive (if Replaced) program
automatically shall become fully vested, exercisable and payable and be released from any repurchase or forfeiture rights (other than repurchase rights exercisable at fair market value) for all of the
Shares at the time represented by such Assumed or Replaced portion of the Award, immediately upon termination of the Grantee's Continuous Service if such Continuous Service is terminated by the
successor company or the Company without Cause within twelve (12) after the Corporate Transaction; and 

12

 

        (ii)   for
the portion of each Award that is neither Assumed nor Replaced, such portion of the Award shall automatically become fully vested and exercisable and be released
from any repurchase or forfeiture rights (other than repurchase rights exercisable at fair market value) for all of the Shares at the time represented by such portion of the Award, immediately prior
to the specified effective date of such Corporate Transaction. 

        (b)    Change in Control.    Except as provided otherwise in an individual Award Agreement, in the event of a Change
in Control (other than a Change in Control which also is a Corporate Transaction), each Award which is at the time outstanding under the Plan automatically shall become fully vested and exercisable
and be released from any repurchase or forfeiture rights (other than repurchase rights exercisable at Fair Market Value), immediately prior to the specified effective date of such Change in Control,
for all of the Shares at the time represented by such Award, provided that the Grantee's Continuous Service has not terminated prior to such date. 

        (c)    Effect of Acceleration on Incentive Stock Options.    Any Incentive Stock Option accelerated under this
Section 11 in connection with a Corporate Transaction or Change in Control shall remain exercisable as an Incentive Stock Option under the Code only to the extent the $100,000 dollar limitation
of Section 422(d) of the Code is not exceeded. To the extent such dollar limitation is exceeded, the excess Options shall be treated as Non-Qualified Stock Options. 

        12.    Effective Date and Term of Plan.    The Plan shall become effective upon the earlier to occur of its adoption
by the Board or its approval by the stockholders of the Company. It shall continue in effect for a term of ten (10) years unless sooner terminated. Subject to Section 17, below, and
Applicable Laws, Awards may be granted under the Plan upon its becoming effective. 

        13.    Amendment, Suspension or Termination of the Plan.    

        (a)   The
Board may at any time amend, suspend or terminate the Plan; provided, however, that no such amendment shall be made without the approval of the Company's
stockholders to the extent such approval is required by Applicable Laws, or if such amendment would change any of the provisions of Section 4(b)(vi) or this Section 13(a). 

        (b)   No
Award may be granted during any suspension of the Plan or after termination of the Plan. 

        (c)   No
suspension or termination of the Plan (including termination of the Plan under Section 12, above) shall adversely affect any rights under Awards already
granted to a Grantee. 

        14.    Reservation of Shares.    

        (a)   The
Company, during the term of the Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the
Plan. 

        (b)   The
inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the
lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have
been obtained. 

        15.    No Effect on Terms of Employment/Consulting Relationship.    The Plan shall not confer upon any Grantee any
right with respect to the Grantee's Continuous Service, nor shall it interfere in any way with his or her right or the right of the Company or any Related Entity to terminate the Grantee's Continuous
Service at any time, with or without Cause, and with or without notice. The ability of the Company or any Related Entity to terminate the employment of a Grantee who is employed at will is in no way
affected by its determination that the Grantee's Continuous Service has been terminated for Cause for the purposes of this Plan. 

13

 

        16.    No Effect on Retirement and Other Benefit Plans.    Except as specifically provided in a retirement or other
benefit plan of the Company or a Related Entity, Awards shall not be deemed compensation for purposes of computing benefits or contributions under any retirement plan of the Company or a
Related Entity, and shall not affect any benefits under any other benefit plan of any kind or any benefit plan subsequently instituted under which the availability or amount of benefits is related to
level of compensation. The Plan is not a "Retirement Plan" or "Welfare Plan" under the Employee Retirement Income Security Act of 1974, as amended. 

        17.    Stockholder Approval.    The grant of Incentive Stock Options under the Plan shall be subject to approval by
the stockholders of the Company within twelve (12) months before or after the date the Plan is adopted excluding Incentive Stock Options issued in substitution for outstanding Incentive Stock
Options pursuant to Section 424(a) of the Code. Such stockholder approval shall be obtained in the degree and manner required under Applicable Laws. The Administrator may grant Incentive Stock
Options under the Plan prior to approval by the stockholders, but until such approval is obtained, no such Incentive Stock Option shall be exercisable. In the event that stockholder approval is not
obtained within the twelve (12) month period provided above, all Incentive Stock Options previously granted under the Plan shall be exercisable as Non-Qualified Stock Options. 

        18.    Effect of Section 162(m) of the Code.    Section 162(m) of the Code does not apply to the Plan
prior to the Registration Date. Following the Registration Date, the Plan, and all Awards issued thereunder, are intended to be exempt from the application of Section 162(m) of the Code, which
restricts under certain circumstances the Federal income tax deduction for compensation paid by a public company to named executives in excess of $1 million per year. The exemption is based on
Treasury Regulation Section 1.162-27(f), in the form existing on the effective date of the Plan, with the understanding that such regulation generally exempts from the application
of Section 162(m) of the Code compensation paid pursuant to a plan that existed before a company becomes publicly held. Under such Treasury Regulation, this exemption is available to the Plan
for the duration of the period that lasts until the earlier of (i) the expiration of the Plan, (ii) the material modification of the Plan, (iii) the exhaustion of the maximum
number of shares of Common Stock available for Awards under the Plan, as set forth in Section 3(a), (iv) the first meeting of shareholders at which directors are to be elected that
occurs after the close of the third calendar year following the calendar year in which the Company first becomes subject to the reporting obligations of Section 12 of the Exchange Act, or
(v) such other date required by Section 162(m) of the Code and the rules and regulations promulgated thereunder. To the extent that the Administrator determines as of the date of grant
of an Award that (i) the Award is intended to qualify as Performance-Based Compensation and (ii) the exemption described above is no longer available with respect to such Award, such
Award shall not be effective until any stockholder approval required under Section 162(m) of the Code has been obtained. 

        19.    Unfunded Obligation.    Grantees shall have the status of general unsecured creditors of the Company. Any
amounts payable to Grantees pursuant to the Plan shall be unfunded and unsecured obligations for all purposes, including, without limitation, Title I of the Employee Retirement Income Security Act of
1974, as amended. Neither the Company nor any Related Entity shall be required to segregate any monies from its general funds, or to create any trusts, or establish any special accounts with respect
to such obligations. The Company shall retain at all times beneficial ownership of any investments, including trust investments, which the Company may make to fulfill its payment obligations
hereunder. Any investments or the creation or maintenance of any trust or any Grantee account shall not create or constitute a trust or fiduciary relationship between the Administrator, the Company or
any Related Entity and a Grantee, or otherwise create any vested or beneficial interest in any Grantee or the Grantee's creditors in any assets of the Company or a Related Entity. The Grantees shall
have no claim against the Company or any Related Entity for any changes in the value of any assets that may be invested or reinvested by the Company with respect to the Plan. 

14

 

        20.    Construction.    Captions and titles contained herein are for convenience only and shall not affect the meaning
or interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term "or" is
not intended to be exclusive, unless the context clearly requires otherwise. 

15

QuickLinks

EXHIBIT 10.18

DIGIRAD CORPORATION 2004 STOCK INCENTIVE PLANEXHIBIT 10.19

 

DIGIRAD
CORPORATION

 

2004
NON-EMPLOYEE DIRECTOR OPTION PROGRAM

 

 

ARTICLE I

ESTABLISHMENT AND PURPOSE OF THE PROGRAM

 

1.01        Establishment of Program

 

The Digirad Corporation 2004 Non-Employee Director
Option Program (the “Program”) is adopted pursuant to the Digirad Corporation
2004 Stock Incentive Plan (the “Plan”) and, in addition to the terms and
conditions set forth below, is subject to the provisions of the Plan.

 

1.02        Purpose of Program

 

The purpose of the Program is to enhance the ability
of the Company to attract and retain directors who are not Employees
(“Non-Employee Directors”) through a program of automatic Option grants.

 

1.03        Effective Date of the
Program

 

The Program is effective as of the Registration Date.

 

ARTICLE II

DEFINITIONS

 

Capitalized terms in this Program, unless otherwise
defined herein, have the meaning given to them in the Plan.

 

ARTICLE III

OPTION TERMS

 

3.01        Date of Grant and Number
of Shares

 

A Non-Qualified Stock Option to purchase 10,000 shares
of Common Stock shall be granted (the “Initial Grant”) to each Non-Employee
Director elected or appointed to the Board after the Registration Date on the
first business day after each such Non-Employee Director first becomes a
Non-Employee Director.  In addition, on
the first business day after each annual meeting of the Company’s stockholders
commencing with the annual meeting of the Company’s stockholders in 2005, each
Non-Employee Director who continues as a Non-Employee Director following such
annual meeting shall be granted a Non-Qualified Stock Option to purchase 5,000
shares of Common Stock (a “Subsequent Grant”); provided that no Subsequent
Grant shall be made to any Non-Employee Director who has not served as a
director of the Company, as of the time of such annual meeting, for at least
six (6) months.  Each such Subsequent
Grant shall be made on the first business day after the annual stockholders’
meeting in question.

 

 

3.02        Vesting

 

Each Initial Grant and Subsequent Grant shall be fully
vested and exercisable on the date of grant.

 

3.03        Exercise Price

 

The exercise price per share of Common Stock of each
Initial Grant and Subsequent Grant shall be one hundred percent (100%) of the
Fair Market Value per Share on the date of grant.

 

3.04        Corporate Transaction

 

Effective upon the consummation of a Corporate
Transaction, all outstanding Options under the Program shall terminate.  However, all such Options shall not
terminate to the extent they are Assumed in connection with the Corporate
Transaction.

 

3.05        Other Terms

 

The Administrator shall determine the remaining terms
and conditions of the Options awarded under the Program.

 

3.06        Amendment, Suspension or Termination of
the Program

 

The Board may at any time amend, suspend or terminate
the Program without the approval of the
Company’s stockholders.

 

2

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