LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

A.

Cardica is developing a medical device known as the X-Port for use in femoral access closure procedures, among other applications.

C.

Cook is amenable to funding certain development work to be performed by Cardica in exchange for receiving a license under the terms and conditions set forth herein to continue to develop and to commercialize the X-Port device worldwide for femoral access closure procedures, as further described in this Agreement.

1.1

“ Affiliates ” with respect to a party means any entity, existing now or in the future, domestic or foreign, that directly or indirectly controls, is controlled by or is under common control with such party; provided that such entity will be considered an Affiliate only for the time during which such control exists.

1.3

“ Cardica Know-How ” means Information that (a) is necessary or useful for the research, development or commercialization of Products, and (b) is Controlled by Cardica. Cardica Know-How shall exclude Cardica Patents.

1.6

“ Control ” means, with respect to any Information or intellectual property right, the right and power of the relevant party to grant the right to make, use, sell, offer to sell, and import, or to grant a license or a sublicense to, such Information or intellectual property right as provided for herein and without violating the terms of any agreement or other arrangement with any Third Party.

1.8

“ Cook Patents ” means a Patent that (a) covers the Product or any component thereof, or any other method, apparatus, material or article of manufacture useful in the development, manufacture, use or sale of Product, (b) claiming an invention conceived by employees or agents or independent contractors of Cook that have access to the Confidential Information of Cardica related to the Product, and (c) is Controlled by Cook.

1.10

“ Invention ” means any article, material, process or technology, whether or not patentable, made or conceived in the course of developing and commercializing Products pursuant to this Agreement, in whole or in part by a party, its employees, agents, or independent contractors, that have access to the Confidential Information of the other party .

1.12

“ Net Sales ” means the gross revenue actually received by Cook, its Affiliates or sublicensees from the commercial sale of the Products during a given period of time, minus, to the extent billed to the purchaser, the costs of (i) sales, value added and/or use taxes, (ii) duties and similar governmental assessments paid, (iii) transportation, packing, shipping, and insurances, (iv) discounts allowed and taken (not to exceed two percent (2%) of the gross revenue actually received), and (v) amounts allowed or credited due to rejections and/or returns. If the Products are sold as part of a kit, then royalties due with respect to Net Sales of Products will be determined using the formula set forth in

Sections 5.4(C) and (D). Net Sales shall be determined in accordance with generally accepted accounting principles, consistently applied.

1.14

“Other Cook IP” shall mean shall mean any intellectual property rights that are necessary or useful for the research, development or commercialization of Products, and developed by Cook employees having access to the Confidential Information of Cardica related to the Product and Controlled by Cook, other than the Cook Patents and Cook Know-How.

1.16

“ Product ” means the product designated by Cardica as of the Effective Date of this Agreement as the X-Port device, size [*] as illustrated in Exhibit C of this Agreement, and any improvements thereto relating to vascular access closure developed under this Agreement, including without limitation X-Port devices in formats other than size [*], expressly excluding any devices not relating to vascular access closure, such as any device used in the closure of holes made in the performance of an anastomosis.

1.18

“ Territory ” means worldwide.

1.20

” Unexpectedly Low Sales ” means sales in three consecutive quarters of a number of Products less than [*] of the number forecast under Section 2.4.

2.1

Development Committee . Each party will appoint two (2) representatives to form a development committee that will be responsible for making day to day decisions regarding the strategy for the development of prototypes of Products in accordance with this Agreement (“ Development Committee ”). Such decisions will be made by unanimous consent of the Development Committee. In the event unanimous consent regarding a development issue can not be reached by the Development Committee during any meeting of the Development Committee, then a cooling off period of at least two (2) but no more than seven (7) calendar days will follow such meeting after which period all of the members of the Development Committee will meet again. In the event that the Development Committee is unable to achieve unanimous consent after the cooling off period, a senior executive from each party will meet to resolve the issue.

2.3

Production Product Development . After the development of a prototype of a Product that the Development Committee considers suitable and feasible for successful commercialization (“ Feasible Prototype ”), Cook will use commercially reasonable efforts to develop a production version of the Product for sale in the Field and in the Territory, at its expense, within a specified time period to be agreed upon by the parties. Without limiting the foregoing, Cook will use commercially reasonable efforts to apply for a CE Mark and FDA Approval within a reasonable period of time after the development of a Feasible Prototype. It is understood that commercially reasonable efforts to develop a production version of the Product may be unsuccessful, and that neither party guarantees or can guarantee that commercially reasonable efforts to implement the Development Plan will result in a production version of the Product or in a saleable Product.

2.5

Development Costs . Except as otherwise expressly provided in this Agreement, each party will make its resources available that it reasonably deems necessary to fulfill its obligations under this Agreement and shall bear its own costs incurred with respect thereto.

3.1

Ownership of Inventions . Ownership by the parties of Inventions will be determined in accordance with the rules of inventorship and ownership under US law.

3.3

Prosecution . The parties will cooperate in good faith to decide whether to seek patent protection for any Inventions that are owned jointly by the parties. The party solely owning an Invention will be responsible, but not obligated, for filing and prosecuting patent applications on such Inventions, and maintaining patents issued thereon, at such party’s sole expense. If a party responsible for filing patent applications on Inventions solely owned by such party decides not to proceed with the filing, prosecution or maintenance of patent applications and patents on such Invention (without first filing a continuation or continuation in part of any such application), such party shall notify the other party in writing in advance of relevant deadlines, and the other party shall have the right, but not the obligation, to assume responsibility for such activities, on behalf of the sole owner but at the assuming party’s sole expense. The parties will meet to discuss whether or not to pursue patent protection for Inventions jointly owned by the parties. If the parties agree to pursue such protection for such Inventions, they shall designate one party to be responsible for filing and prosecuting patent applications on such Inventions, and for maintaining patents issuing thereon. Unless otherwise agreed by the parties, the parties will share equally all expenses of pursuing and maintaining patent protection on jointly owned Inventions that they agree to pursue under this Section 3.3. Each party will have the right to review and comment on the other party’s correspondence with any patent office with regard to patent applications and patents on Inventions that are necessary or useful for the development and commercialization of Products in the Field.

3.4

Enforcement .

B.

Each party will cooperate with the other party when asserting patents against Third Parties in accordance with this Section 3.4. A party enforcing a patent against a Third Party will give the other party notice prior to bringing any enforcement action (including, but not limited to, injunctions or restraining orders). The other party will have the right to participate or not participate in such enforcement, at its sole discretion. If the other party chooses to participate, it will bear its own expenses and/or share expenses, as the parties jointly determine to be appropriate. If the other party chooses not to participate in an enforcement action brought in accordance with this Section 3.4, it nonetheless agrees to be named in the enforcement action, and upon request and at the cost of the enforcing party, will make available all relevant information in its possession or under its control.

D.

If the sales volume of the Product in a calendar year is less than $[*], Cook may offset against any payment due under Sections 5.4 or 5.5 of this Agreement up to [*] percent ([*]) of any monies expended by Cook in defending Products against assertions of intellectual property rights by third parties. If the sales volume of the Product in a calendar year is at least $[*], then Cook may offset against any payment due under Sections 5.4 or 5.5 of this Agreement an amount that is the lesser of (i) [*] percent ([*]) of any monies expended by Cook in defending Products against assertions of intellectual property rights by third parties or (ii) [*] percent ([*]) of the total payment due to Cardica under Sections 5.4 and 5.5.

4.1

By Cardica. Subject to the terms and conditions of this Agreement, Cardica hereby grants to Cook and its Affiliates an exclusive license in the Territory, bearing royalties as set forth in this Agreement, with the right to grant sublicenses, under the Cardica Patents, Cardica Know-How and Other Cardica IP, to make, have made, use, sell, offer for sale and import Products for use solely in the Field and in the Territory. For clarity, Cardica grants the foregoing exclusive license to the fullest extent possible under the Cardica Patents, Cardica Know-How and Other Cardica IP in the Field and in the Territory with respect to Products, retaining only rights to the extent necessary or useful for Cardica to perform its responsibilities under the Development Plan with respect to Product in the Field and in the Territory.

4.3

By Cook. Cook agrees not to sue Cardica under any Cook Patents, Cook Know-How, or Other Cook IP solely to the extent necessary or useful for Cardica to perform its responsibilities under the Development Plan with respect to Product in the Field and in the Territory. Subject to the terms and conditions of this Agreement, and upon request by Cardica, the parties shall negotiate in good faith the terms of a non-exclusive, royalty-bearing license for use by Cardica in developing and commercializing products other than the Products under all Cook Patents, Cook Know-How and Other Cook IP covering Inventions as defined in Section 1.10, which license Cook in its sole discretion may elect, but is not obligated, to execute with Cardica.

Agreement is not inconsistent with any obligation owed to a third party; (c) to its knowledge, Cardica’s practice of the covenant not to sue granted to Cardica pursuant to Section 4.3 of this Agreement under the Cook Know-How, Cook Patents and Other Cook IP will not infringe any Patents owned or controlled by a Third Party; and (d) its employees and/or agents assigned to perform work under a Development Plan have executed agreements that enable Cook to grant the rights it grants to Cardica under this Agreement. Additionally, Cook covenants that it shall not employ, contract with or retain any person or entity in connection with the development, manufacture and commercialization of Products in the Field pursuant to this Agreement who has been or is debarred by the FDA under 21 U.S.C. § 335(a) or disqualified as described in 21 C.F.R. §812.119.

5.1

Signing Fee . Cook will pay Cardica a one-time payment of Five Hundred Thousand Dollars ($500,000) due after execution of this Agreement by both parties and payable within ten (10) days after Cardica’s completion, to Cook’s satisfaction, of the tasks identified in the paragraph entitled “Animal Testing” of the section identified as “Phase 1” of the Development Plan attached to this Agreement as Exhibit A.

A.

[*] upon the date the Development Committee determines that the results of the acute animal testing of Products in [*] Format in the Field as provided in the Development Plan support the commencement of pre-production tooling efforts by Cardica.

C.

[*] upon the delivery of [*] ([*]) Pilot Products in [*] Format to Cook for use in the first Clinical Feasibility Trial of such Products in the Field, as provided in the Development Plan.

5.3

Reimbursement for Products in Other Formats . Cook will reimburse Cardica for additional reasonable research, development and tooling costs actually incurred by Cardica for the development of Feasible Prototypes and the production of Pilot Product in formats other than [*] as requested by Cook and completed by Cardica in accordance with a research plan and budget approved in advance and in writing by each member of the Development Committee. Such reimbursements will be calculated using full time equivalent rates for engineering services and labor and will include Cardica’s reasonable and actual out of pocket expenses for fabrication of the pre-production tooling, fixtures and prototypes. Cardica shall add an overhead charge of [*] percent ([*]) of the amounts to be so reimbursed, and Cook shall pay such additional amounts, to compensate Cardica for overhead expenses. The agreed upon research plan and budget will establish the milestones and timing to be met by Cardica in order for such reimbursement payments to be made by Cook to Cardica.

A.

 i) Cook will pay to Cardica (on a quarterly basis) during the Term of this Agreement a royalty based on Net Sales by Cook, its
    Affiliates or sublicensees (“ Earned Royalty ”) of Product units in the calendar year in which such quarter occurs, as follows:

Royalty Due (% of Net Sales of

Portion of Aggregate Number of

Product Units)

Product Units Sold in Calendar Year

[*]

[*]

[*]

ii) In the event that Cook sells more than [*] units of Product per calendar year for [*] consecutive ca