Exhibit 10.4

KYPHON Inc.
2002 STOCK PLAN

STOCK PURCHASE RIGHT GRANT NOTICE AND
RESTRICTED STOCK PURCHASE AGREEMENT

Kyphon Inc., a Delaware corporation, (the "Company"), pursuant to its 2002 Stock
Plan, as amended from time to time (the "Plan"), hereby grants to the individual
listed below ("Participant") the right to purchase the number of shares of the
Company's Common Stock set forth below (the "Shares") at the purchase price set
forth below (the "Stock Purchase Right"). This Stock Purchase Right is subject
to all of the terms and conditions set forth herein and in the Restricted Stock
Purchase Agreement attached hereto as Exhibit A (the "Restricted Stock
Agreement") (including without limitation the Restrictions on the Shares set
forth in the Restricted Stock Agreement) and the Plan, each of which are
incorporated herein by reference. Unless otherwise defined herein, the terms
defined in the Plan shall have the same defined meanings in this Grant Notice
and the Restricted Stock Agreement.

Participant:

Grant Date:

Total Number of Shares of Restricted Stock:

_______________________ shares

Purchase Price:

$_______________________________________________________

Vesting Schedule:

[To be specified in individual Grant Notices.]

By his or her signature and the Company's signature below, Participant agrees to
be bound by the terms and conditions of the Plan, the Restricted Stock Agreement
and this Grant Notice. Participant has reviewed the Restricted Stock Agreement,
the Plan and this Grant Notice in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Grant Notice and fully
understands all provisions of this Grant Notice, the Restricted Stock Agreement
and the Plan. Participant hereby agrees to accept as binding, conclusive and
final all decisions or interpretations of the Administrator of the Plan upon any
questions arising under the Plan, this Grant Notice or the Restricted Stock
Agreement. If Purchaser is married, his or her spouse has signed the Consent of
Spouse attached to this Grant Notice as Exhibit B.

Kyphon Inc.: Holder:

PARTICIPANT:

By:

___________________

By:

___________________

Print Name:

___________________

Print Name:

___________________

Title:

___________________

 

 

Address:

___________________

Address:

___________________

 

___________________

 

___________________

EXHIBIT A
TO STOCK PURCHASE RIGHT GRANT NOTICE

Kyphon Inc. RESTRICTED STOCK PURCHASE AGREEMENT

Pursuant to the Stock Purchase Right Grant Notice (the "Grant Notice") to which
this Restricted Stock Purchase Agreement (the "Agreement") is attached, Kyphon
Inc., a Delaware corporation (the "Company") has granted to Participant (as
defined in the Grant Notice) the right to purchase the number of shares of
Restricted Stock under the Company's 2002 Stock Plan, as amended from time to
time (the "Plan"), as set forth in the Grant Notice.

ARTICLE I.

GENERAL

1.1    Definitions. All capitalized terms used in this Agreement without
definition shall have the meanings ascribed in the Plan and the Grant Notice.

2.1    Incorporation of Terms of Plan. The Shares are subject to the terms and
conditions of the Plan which are incorporated herein by reference. In the event
of any inconsistency between the Plan and this Agreement, the terms of the Plan
shall control.

ARTICLE II.

RIGHT TO PURCHASE RESTRICTED STOCK

2.1    Right to Purchase Restricted Stock.

Stock Purchase Right

. In consideration of the Participant's agreement to remain in the service or
employ of the Company or one of its Subsidiaries, and for other good and
valuable consideration which the Administrator has determined exceeds the
aggregate par value of the Shares, as of the Date of Grant set forth in the
Grant Notice (the "
Grant Date
"), the Company irrevocably grants to Participant the right to purchase the
Shares,

upon the terms and conditions set forth in the Plan and this Agreement.

Purchase Price; Book Entry Form

. The purchase price of the Shares, if any, is set forth on the Grant Notice. At
the sole discretion of the Administrator, the Shares will be issued in either
(i) uncertificated form, with the Shares recorded in the name of the Participant
in the books and records of the Company's transfer agent with appropriate
notations regarding the restrictions on transfer imposed pursuant to this
Agreement, and upon vesting and the satisfaction of all conditions set forth in
Section 2.2(d), the Company shall cause certificates representing the Shares to
be issued to the Participant; or (ii) certificate form pursuant to the terms of
Sections 2.1(c) and (d).

Legend

. Certificates representing Shares issued pursuant to this Agreement shall,
until all restrictions on transfer imposed pursuant to this Agreement lapse or
shall have been removed and new certificates are issued, bear the following
legend (or such other legend as shall be determined by the Administrator):

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN VESTING
REQUIREMENTS AND MAY BE SUBJECT TO FORFEITURE UNDER THE TERMS OF THAT CERTAIN
RESTRICTED STOCK PURCHASE

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AGREEMENT, DATED [____________ __, 200_], BY AND BETWEEN Kyphon Inc. AND THE
REGISTERED OWNER OF SUCH SHARES, AND SUCH SHARES MAY NOT BE, DIRECTLY OR
INDIRECTLY, OFFERED, TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNDER ANY CIRCUMSTANCES, EXCEPT PURSUANT TO THE PROVISIONS
OF SUCH AGREEMENT."

Escrow

. The Secretary of the Company or such other escrow holder as the Administrator
may appoint may retain physical custody of the certificates representing the
Shares until all of the restrictions on transfer imposed pursuant to this
Agreement lapse or shall have been removed; in such event the Participant shall
not retain physical custody of any certificates representing unvested Shares
issued to him.

2.2    Restrictions.

Forfeiture

. Any Shares which are not vested as of the date the Participant ceases to be an
Employee, Consultant or Director of the Company or one of its Subsidiaries shall
thereupon be forfeited immediately and without any further action by the
Company. For purposes of this Agreement, "
Restrictions
" shall mean the restrictions on sale or other transfer set forth in Section 3.2
and the exposure to forfeiture set forth in this Section 2.2(a).

Vesting and Lapse of Restrictions

. Subject to Sections 2.2(a) and 2.2(c), the Shares shall vest and Restrictions
shall lapse in accordance with the vesting schedule set forth on the Grant
Notice.

Acceleration of Vesting

. Notwithstanding Sections 2.2(a) and 2.2(b), the Shares shall become fully
vested and all Restrictions applicable to such Shares shall lapse in the event
of a Change in Control, in connection with which the successor corporation does
not assume this Agreement or substitute an equivalent right for the Shares
remaining subject to this Agreement. Should the successor corporation assume
this Agreement or substitute an equivalent right, then no such acceleration
shall apply.

Tax Withholding; Conditions to Issuance of Certificates

. Notwithstanding any other provision of this Agreement (including without
limitation Section 2.1(b)):

No new certificate shall be delivered to the Participant or his legal
representative unless and until the Participant or his legal representative
shall have paid to the Company the full amount of all federal and state
withholding or other taxes applicable to the taxable income of Participant
resulting from the grant of Shares or the lapse or removal of the Restrictions.

The Company shall not be required to issue or deliver any certificate or
certificates for any Shares prior to the fulfillment of all of the following
conditions: (A) the admission of the Shares to listing on all stock exchanges on
which such Shares are then listed, (B) the completion of any registration or
other qualification of the Shares under any state or federal law or under
rulings or regulations of the Securities and Exchange Commission or other
governmental regulatory body, which the Administrator shall, in its sole and
absolute discretion, deem necessary and advisable, (C) the obtaining of any
approval or other clearance from any state or federal governmental agency that
the Administrator shall, in its absolute discretion, determine to be necessary
or advisable and (D) the lapse of any such reasonable period of time following
the date the Restrictions lapse as the Administrator may from time to time
establish for reasons of administrative convenience.

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ARTICLE III.

OTHER PROVISIONS

3.1    Section 83(b) Election. Participant understands that Section 83(a) of the
Code taxes as ordinary income the difference between the amount, if any, paid
for the Shares and the fair market value of such Shares at the time the
Restrictions on such Shares lapse. Participant understands that, notwithstanding
the preceding sentence, Participant may elect to be taxed at the time of the
Grant Date, rather that at the time the Restrictions lapse, by filing an
election under Section 83(b) of the Code (an "83(b) Election") with the Internal
Revenue Service within 30 days of the Grant Date. In the event Participant files
an 83(b) Election, Participant will recognize ordinary income in an amount equal
to the difference between the amount, if any, paid for the Shares and the fair
market value of such Shares as of the Grant Date. Participant further
understands that an additional copy of such 83(b) Election form should be filed
with his or her federal income tax return for the calendar year in which the
date of this Agreement falls. Participant acknowledges that the foregoing is
only a summary of the effect of United States federal income taxation with
respect to the Shares purchased hereunder, and does not purport to be complete.

Participant further acknowledges that the Company is not responsible for filing
the Participant's 83(b) Election, and the Company has directed Participant to
seek independent advice regarding the applicable provisions of the INTERNAL
REVENUE Code, the income tax laws of any municipality, state or foreign country
in which Participant may reside, and the tax consequences of Participant's
death.

3.2    Restricted Stock Not Transferable. No Shares or any interest or right
therein or part thereof shall be liable for the debts, contracts or engagements
of the Participant or his successors in interest or shall be subject to
disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment or
any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect; provided,
however, that this Section 3.2 notwithstanding, with the consent of the
Administrator, the Shares may be transferred to certain persons or entities
related to Participant, including but not limited to members of Participant's
family, charitable institutions or trusts or other entities whose beneficiaries
or beneficial owners are members of Participant's family or to such other
persons or entities as may be expressly approved by the Administrator, pursuant
to any such conditions and procedures the Administrator may require.

3.3    Rights as Stockholder. Except as otherwise provided herein, upon the
Grant Date the Participant shall have all the rights of a stockholder with
respect to the Shares, subject to the Restrictions herein, including the right
to vote the Shares and the right to receive any cash or stock dividends paid to
or made with respect to the Shares.

3.4    Adjustment for Stock Split. All references to the number of Shares and
the purchase price of the Shares in this Agreement shall be appropriately
adjusted to reflect any stock split, stock dividend or other change in the
Shares which may be made by the Company after the date of this Agreement.

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3.5    Not a Contract of Employment. Nothing in this Agreement or in the Plan
shall confer upon the Participant any right to continue to serve as an employee
or other service provider of the Company or any of its Subsidiaries.

3.6    Governing Law. The laws of the State of California shall govern the
interpretation, validity, administration, enforcement and performance of the
terms of this Agreement regardless of the law that might be applied under
principles of conflicts of laws.

3.7    Conformity to Securities Laws. The Participant acknowledges that the Plan
and this Agreement are intended to conform to the extent necessary with all
provisions of the Securities Act of 1933, as amended, and the Exchange Act, and
any and all regulations and rules promulgated thereunder by the Securities and
Exchange Commission, including without limitation Rule 16b-3 under the Exchange
Act. Notwithstanding anything herein to the contrary, the Plan shall be
administered, and the Shares are granted, only in such a manner as to conform to
such laws, rules and regulations. To the extent permitted by applicable law, the
Plan and this Agreement shall be deemed amended to the extent necessary to
conform to such laws, rules and regulations.

3.8    Amendment, Suspension and Termination. To the extent permitted by the
Plan, this Agreement may be wholly or partially amended or otherwise modified,
suspended or terminated at any time or from time to time by the Administrator or
the Board, provided, that, except as may otherwise be provided by the Plan, no
amendment, modification, suspension or termination of this Agreement shall
adversely effect the Shares in any material way without the prior written
consent of the Participant.

3.9    Notices. Notices required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the Participant to his address shown in the Company
records, and to the Company at its principal executive office.

3.10    Successors and Assigns. The Company may assign any of its rights under
this Agreement to single or multiple assignees, and this Agreement shall inure
to the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth, this Agreement shall be binding upon
Participant and his or her heirs, executors, administrators, successors and
assigns.

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EXHIBIT B
TO STOCK PURCHASE RIGHT GRANT NOTICE

CONSENT OF SPOUSE

I, ____________________, spouse of _______________, have read and approve the
foregoing Agreement. In consideration of issuing to my spouse the shares of the
common stock of Kyphon Inc. set forth in the Agreement, I hereby appoint my
spouse as my attorney-in-fact in respect to the exercise of any rights under the
Agreement and agree to be bound by the provisions of the Agreement insofar as I
may have any rights in said Agreement or any shares of the common stock of
Kyphon Inc. issued pursuant thereto under the community property laws or similar
laws relating to marital property in effect in the state of our residence as of
the date of the signing of the foregoing Agreement.

Dated: _______________, _____

____________________________
Signature of Spouse

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