exv10w4



 







Exhibit 10.4




Replidyne, Inc.

Stock Option Grant Notice

2006 Equity Incentive Plan



Replidyne, Inc. (the “Company”), pursuant to its 2006 Equity Incentive Plan (the “Plan”),
hereby grants to Optionholder an option to purchase the number of shares of the Company’s Common
Stock set forth below. This option is subject to all of the terms and conditions as set forth
herein and in the Stock Option Agreement, the Plan and the Notice of Exercise, all of which are
attached hereto and incorporated herein in their entirety. Capitalized terms not otherwise defined
herein shall have the meanings set forth in the Plan or the Stock Option Agreement.




	 	 	 
	Optionholder:
	 	 
	 

	 	 
	Date of Grant:
	 	 
	 

	 	 
	Vesting Commencement Date:
	 	 
	 

	 	 
	Number of Shares Subject to Option:
	 	 
	 

	 	 
	Exercise Price (Per Share):
	 	 
	 

	 	 
	Total Exercise Price:
	 	 
	 

	 	 
	Expiration Date:
	 	 
	 

	 	 





	 	 	 	 
	Type of Grant:

	o Incentive Stock Option1                 o Nonstatutory Stock Option
	 
	Exercise Schedule:

	Same as Vesting Schedule
	 
	Vesting Schedule:

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

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

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

	o
	 	Cash or check
	 

	o
	 	Bank draft or money order payable to the Company
	 

	o
	 	Pursuant to a Regulation T Program (cashless exercise) if the shares are
publicly traded
	 

	o
	 	Delivery of already-owned shares if the shares are publicly traded
	 

	o
	 	Net exercise





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




	 	 	 
	Other Agreements:
	 	 
	 

	 	 
	 
	 

	 	 







 




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





 









 





	 	 	 	 	 	 	 
	Optionholder:	 	Replidyne, Inc.
	 
	 
	 
	 

	 	 	 	By:	 	 
	 	 	 	 	 
	Signature
	 	 	 	Signature
	 
	Date:

	 	 	 	Title:	 	 
	 

	 
	 	 	 	 
	 
	Residence Address:

	 	 	 	Date:	 	 
	 

	 	 
	 	 	 	 
	 
	 
	 	 	 	 	 




Attachments: Stock Option Agreement, 2006 Equity Incentive Plan and Notice of Exercise




 









 





Attachment I




Stock Option Agreement




 









 








Attachment II




2006 Equity Incentive Plan




 









 








Attachment III




Notice of Exercise





 









 







Replidyne, Inc.

Stock Option Grant Notice

2006 Equity Incentive Plan

(Nonemployee Director Annual Grant)



Replidyne, Inc. (the “Company”), pursuant to Section 7 of its 2006 Equity Incentive Plan (the
"Plan”), hereby grants to Optionholder an option to purchase the number of shares of the Company’s
Common Stock set forth below. This option constitutes an Annual Award as defined in the Plan, and
is subject to all of the terms and conditions as set forth herein and in the Stock Option
Agreement, the Plan (including, without limitation, Section 7 thereof), and the Notice of Exercise,
all of which are attached hereto and incorporated herein in their entirety. Capitalized terms not
otherwise defined herein shall have the meanings set forth in the Plan or the Stock Option
Agreement.




	 	 	 	 	 
	Optionholder:
	 	 	 	 
	 

	 	 	 	 
	Date of Grant:
	 	 	 	 
	 

	 	 	 	 
	Vesting Commencement Date:
	 	 	 	 
	 

	 	 	 	 
	Number of Shares Subject to Option:

	 	 	 	 
	 

	 	 	 	 
	Exercise Price (Per Share):
	 	 	 	 
	 

	 	 	 	 
	Total Exercise Price:
	 	 	 	 
	 

	 	 	 	 
	Expiration Date:
	 	 	 	 
	 

	 	 	 	 





	 	 	 
	Exercise Schedule:

	 	Same as Vesting Schedule
	 
	 	 
	Vesting Schedule:

	 	100% of the shares vest on the one-year anniversary of the Vesting
Commencement Date.
	 
	 	 
	Payment:

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

	 	o         Cash or check
	 

	 	o         Bank draft or money order payable to the Company
	 

	 	o         Pursuant to a Regulation T Program (cashless exercise) if the shares are publicly traded
	 

	 	o         Delivery of already-owned shares if the shares are publicly traded
	 

	 	o         Net exercise





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




	 	 	 
	Other Agreements:
	 	 
	 

	 	 
	 
	 	 
	 

	 	 





 









 




	 	 	 	 	 	 	 
	Optionholder:	 	Replidyne, Inc.
	 
	 
	 
	 

	 	 	 	By:	 	 
	 	 	 	 	 
	Signature
	 	 	 	Signature
	 
	Date:

	 	 	 	Title:	 	 
	 

	 
	 	 	 	 
	 
	Residence Address:

	 	 	 	Date:	 	 
	 

	 	 
	 	 	 	 
	 
	 
	 	 	 	 	 




Attachments: Stock Option Agreement, 2006 Equity Incentive Plan and Notice of Exercise




 









 





Attachment I




Stock Option Agreement




(Nonemployee Director Annual Grant)




 









 








Attachment II




2006 Equity Incentive Plan




 









 








Attachment III




Notice of Exercise





 










 







Replidyne, Inc.

2006 Equity Incentive Plan




Stock Option Agreement

(Incentive Stock Option or Nonstatutory Stock Option)




     Pursuant to your Stock Option Grant Notice (“Grant Notice”) and this Stock Option Agreement,
Replidyne, Inc. (the “Company”) has granted you an option under its 2006 Equity Incentive Plan (the
"Plan”) to purchase the number of shares of the Company’s Common Stock indicated in your Grant
Notice at the exercise price indicated in your Grant Notice. Defined terms not explicitly defined
in this Stock Option Agreement but defined in the Plan shall have the same definitions as in the
Plan.



     The details of your option are as follows:



     1. Vesting. Subject to the limitations contained herein, your option will vest as
provided in your Grant Notice, provided that vesting will cease upon the termination of your
Continuous Service.



     2. Number of Shares and Exercise Price. The number of shares of Common Stock subject
to your option and your exercise price per share referenced in your Grant Notice may be adjusted
from time to time for Capitalization Adjustments.



     3. Exercise Restriction for Non-Exempt Employees. If you are an Employee eligible
for overtime compensation under the Fair Labor Standards Act of 1938, as amended (i.e., a
"Non-Exempt Employee”), you may not exercise your option until you have completed at least six (6)
months of Continuous Service measured from the Date of Grant specified in your Grant Notice,
notwithstanding any other provision of your option.



     4. Method of Payment. Payment of the exercise price is due in full upon exercise of
all or any part of your option. You may elect to make payment of the exercise price in cash or by
check or in any other manner permitted by your Grant Notice, which may include one or more of the
following:



            (a) Bank draft or money order payable to the Company.



            (b) In the Company’s sole discretion at the time your option is exercised and provided that at
the time of exercise the Common Stock is publicly traded and quoted regularly in The Wall Street
Journal, pursuant to a program developed under Regulation T as promulgated by the Federal Reserve
Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check)
by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to
the Company from the sales proceeds.



            (c) In the Company’s sole discretion at the time your option is exercised and provided that at
the time of exercise the Common Stock is publicly traded and quoted regularly in The Wall Street
Journal, by delivery to the Company (either by actual delivery or attestation)



1.









 







of already-owned shares of Common Stock either that you have held for the period required to
avoid a charge to the Company’s reported earnings (generally six (6) months) or that you did not
acquire, directly or indirectly from the Company, that are owned free and clear of any liens,
claims, encumbrances or security interests, and that are valued at Fair Market Value on the date of
exercise. “Delivery” for these purposes, in the sole discretion of the Company at the time you
exercise your option, shall include delivery to the Company of your attestation of ownership of
such shares of Common Stock in a form approved by the Company. Notwithstanding the foregoing, you
may not exercise your option by tender to the Company of Common Stock to the extent such tender
would violate the provisions of any law, regulation or agreement restricting the redemption of the
Company’s stock.



            (d) By a “net exercise” arrangement pursuant to which the Company will reduce the number of
shares of Common Stock issued upon exercise of your option by the largest whole number of shares
with a Fair Market Value that does not exceed the aggregate exercise price; provided, however, that
the Company shall accept a cash or other payment from you to the extent of any remaining balance of
the aggregate exercise price not satisfied by such reduction in the number of whole shares to be
isued; provided further, however, that shares of Common Stock will no longer be outstanding under
your option and will not be exercisable thereafter to the extent that (1) shares are used to pay
the exercise price pursuant to the “net exercise,” (2) shares are delivered to you as a result of
such exercise, and (3) shares are withheld to satisfy tax withholding obligations.



     5. Whole Shares. You may exercise your option only for whole shares of Common Stock.



     6. Securities Law Compliance. Notwithstanding anything to the contrary contained
herein, you may not exercise your option unless the shares of Common Stock issuable upon such
exercise are then registered under the Securities Act or, if such shares of Common Stock are not
then so registered, the Company has determined that such exercise and issuance would be exempt from
the registration requirements of the Securities Act. The exercise of your option also must comply
with other applicable laws and regulations governing your option, and you may not exercise your
option if the Company determines that such exercise would not be in material compliance with such
laws and regulations.



     7. Term. You may not exercise your option before the commencement or after the
expiration of its term. The term of your option commences on the Date of Grant and expires upon
the earliest of the following:



            (a) three (3) months after the termination of your Continuous Service for any reason other
than your Disability or death, provided, however, that (i) if during any part of such three (3)
month period your option is not exercisable solely because of the condition set forth in Section 6,
your option shall not expire until the earlier of the Expiration Date or until it shall have been
exercisable for an aggregate period of three (3) months after the termination of your Continuous
Service and (ii) if (x) you are a Non-Exempt Employee, (y) you terminate your Continuous Service
within six (6) months after the Date of Grant specified in your Grant Notice, and (z) you have
vested in a portion of your option at the time of your termination of Continuous Service, your
option shall not expire until the earlier of (A) the later of the date that is seven (7)



2.









 







months after the Date of Grant specified in your Grant Notice or the date that is three (3)
months after the termination of your Continuous Service or (B) the Expiration Date;



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



            (c) twelve (12) months after the termination of your Continuous Service due to your death;



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



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



     If your option is an Incentive Stock Option, note that to obtain the federal income tax
advantages associated with an Incentive Stock Option, the Code requires that at all times beginning
on the date of grant of your option and ending on the day three (3) months before the date of your
option’s exercise, you must be an employee of the Company or an Affiliate, except in the event of
your death or your permanent and total disability, as defined in Section 22(e) of the Code. (The
definition of disability in Section 22(e) of the Code is different from the definition of the
Disability under the Plan). The Company has provided for extended exercisability of your option
under certain circumstances for your benefit but cannot guarantee that your option will necessarily
be treated as an Incentive Stock Option if you continue to provide services to the Company or an
Affiliate as a Consultant or Director after your employment terminates or if you otherwise exercise
your option more than three (3) months after the date your employment with the Company or an
Affiliate terminates.



     8. Exercise.



            (a) You may exercise the vested portion of your option during its term by delivering a Notice
of Exercise (in a form designated by the Company) together with the exercise price to the Secretary
of the Company, or to such other person as the Company may designate, during regular business
hours, together with such additional documents as the Company may then require.



            (b) By exercising your option you agree that, as a condition to any exercise of your option,
the Company may require you to enter into an arrangement providing for the payment by you to the
Company of any tax withholding obligation of the Company arising by reason of (1) the exercise of
your option, (2) the lapse of any substantial risk of forfeiture to which the shares of Common
Stock are subject at the time of exercise, or (3) the disposition of shares of Common Stock
acquired upon such exercise.



            (c) If your option is an Incentive Stock Option, by exercising your option you agree that you
will notify the Company in writing within fifteen (15) days after the date of any disposition of
any of the shares of the Common Stock issued upon exercise of your option that occurs within two
(2) years after the date of your option grant or within one (1) year after such shares of Common
Stock are transferred upon exercise of your option.



3.









 





     9. Change In Control. 



            (a) If your Continuous Service terminates within thirteen (13) months following the effective
date of a Change in Control due to (i) an Involuntary Termination Without Cause, or (ii) a
voluntary termination by you for Good Reason, the vesting and exercisability of your option shall
be accelerated as to that number of shares as to which the option would have otherwise been
exercisable (without regard to such termination) on the date that is one year after the date of the
termination.



            (b) "Good Reason” means that one or more of the following is undertaken without your express
written consent: (i) a reduction in your Base Salary, bonus (if any) or benefits that would
substantially diminish the aggregate value of your compensation and benefits without your consent;
or (ii) the assignment to you of duties that are substantially and materially inconsistent with the
position held by you prior to the Change in Control and that are not a reasonable advancement of
your position within the Company.



            (c) "Involuntary Termination Without Cause” means the involuntary termination of your
Continuous Service for reasons other than death, Disability, or Cause. For this purpose, “Cause”
means (i) the Optionee’s incompetence or failure or refusal to perform satisfactorily any duties
reasonably required of the Optionee by the Company (other than by reason of Disability); (ii) the
Optionee’s violation of any law, rule or regulation (other than traffic violations, misdemeanors or
similar offenses) or cease-and-desist order, court order, judgment, regulatory directive or
agreement; (iii) the commission or omission of or engaging in any act or practice which constitutes
a material breach of the Optionee’s fiduciary duty to the Company, involves personal dishonesty on
the part of the Optionee or demonstrates a willful or continuing disregard for the best interests
of the Company; or (iv) the Optionee’s engaging in dishonorable or disruptive behavior, practices
or acts which would be reasonably expected to harm or bring disrepute to the Company, its business
or any of its customers, employees or vendors.



            (d) "Base Salary” means the greater of (i) your annual base salary (excluding incentive pay,
premium pay, commissions, overtime, bonuses, and other forms of variable compensation) as in effect
on the date of your termination of Continuous Service, or (ii) your annual base salary (excluding
incentive pay, premium pay, commissions, overtime, bonuses, and other forms of variable
compensation) as in effect on the date of a Change in Control.



     10. Parachute Tax Treatment. Anything in this Agreement to the contrary
notwithstanding, if any payment or benefit you would receive from the Company or otherwise pursuant
to this Agreement, including, without limitation, the acceleration of vesting pursuant to Section 9
hereof (a “Benefit”), 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 such Benefit shall be equal to the Reduced Amount (as defined
below). The “Reduced Amount” shall be either (i) the largest portion of the Benefit that would
result in no portion of the Benefit being subject to the Excise Tax, or (ii) the Benefit or a
portion thereof after payment of the applicable Excise Tax, whichever amount after taking into
account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax
(all computed at the highest applicable marginal rate), results in your receipt, on



4.









 







an after-tax basis, of the greatest amount of the Benefit. In the event that the acceleration
of vesting of the option is to be reduced pursuant to this Section, such acceleration of vesting
shall be cancelled in the reverse order of the date of grant of the option unless you elect in
writing a different order for cancellation.



     The Company shall engage an advisor to perform the foregoing calculations, and shall bear all
expenses with respect to the determinations by such advisor required to be made hereunder. If the
Company determines that a Benefit hereunder shall be reduced pursuant to this Section 10, the
advisor engaged to make the determinations hereunder shall provide its calculations to you within
fifteen (15) calendar days after the date on which your right to a Benefit is triggered (if
requested at that time by the Company or you) or such other time as mutually agreed by you and the
Company.



     11. Transferability.



            (a) Restrictions on Transfer. Your option shall not be transferable except by will or by the
laws of descent and distribution and shall be exercisable during your lifetime only by you;
provided, however, that the Board may, in its sole discretion, permit you to transfer your option
in a manner consistent with applicable tax and securities laws upon your request.



            (b) Domestic Relations Orders. Notwithstanding the foregoing, your option may be transferred
pursuant to a domestic relations order; provided, however, that if your option is an Incentive
Stock Option, your option shall be deemed to be a Nonstatutory Stock Option as a result of such
transfer.



            (c) Beneficiary Designation. Notwithstanding the foregoing, you may, by delivering written
notice to the Company, in a form provided by or otherwise satisfactory to the Company, designate a
third party who, in the event of your death, shall thereafter be entitled to exercise your option.



     12. Option not a Service Contract. Your option is not an employment or service
contract, and nothing in your option shall be deemed to create in any way whatsoever any obligation
on your part to continue in the employ of the Company or an Affiliate, or of the Company or an
Affiliate to continue your employment. In addition, nothing in your option shall obligate the
Company or an Affiliate, their respective stockholders, Boards of Directors, Officers or Employees
to continue any relationship that you might have as a Director or Consultant for the Company or an
Affiliate.



     13. Withholding Obligations.



            (a) At the time you exercise your option, in whole or in part, or at any time thereafter as
requested by the Company, you hereby authorize withholding from payroll and any other amounts
payable to you, and otherwise agree to make adequate provision for (including by means of a
“cashless exercise” pursuant to a program developed under Regulation T as promulgated by the
Federal Reserve Board to the extent permitted by the Company), any sums required to satisfy the
federal, state, local and foreign tax withholding obligations of the Company or an Affiliate, if
any, which arise in connection with the exercise of your option.



5.









 





            (b) Upon your request and subject to approval by the Company, in its sole discretion, and
compliance with any applicable legal conditions or restrictions, the Company may withhold from
fully vested shares of Common Stock otherwise issuable to you upon the exercise of your option a
number of whole shares of Common Stock having a Fair Market Value, determined by the Company as of
the date of exercise, not in excess of the minimum amount of tax required to be withheld by law (or
such lower amount as may be necessary to avoid variable award accounting). If the date of
determination of any tax withholding obligation is deferred to a date later than the date of
exercise of your option, share withholding pursuant to the preceding sentence shall not be
permitted unless you make a proper and timely election under Section 83(b) of the Code, covering
the aggregate number of shares of Common Stock acquired upon such exercise with respect to which
such determination is otherwise deferred, to accelerate the determination of such tax withholding
obligation to the date of exercise of your option. Notwithstanding the filing of such election,
shares of Common Stock shall be withheld solely from fully vested shares of Common Stock determined
as of the date of exercise of your option that are otherwise issuable to you upon such exercise.
Any adverse consequences to you arising in connection with such share withholding procedure shall
be your sole responsibility.



            (c) You may not exercise your option unless the tax withholding obligations of the Company
and/or any Affiliate are satisfied. Accordingly, you may not be able to exercise your option when
desired even though your option is vested, and the Company shall have no obligation to issue a
certificate for such shares of Common Stock or release such shares of Common Stock from any escrow
provided for herein unless such obligations are satisfied.



     14. Notices. Any notices provided for in your option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by
mail by the Company to you, five (5) days after deposit in the United States mail, postage prepaid,
addressed to you at the last address you provided to the Company.



     15. Governing Plan Document. Your option is subject to all the provisions of the
Plan, the provisions of which are hereby made a part of your option, and is further subject to all
interpretations, amendments, rules and regulations, which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the provisions of your option
and those of the Plan, the provisions of the Plan shall control.




6.










 







Replidyne, Inc.

2006 Equity Incentive Plan




Stock Option Agreement

(Nonemployee Director Annual Grant or Initial Grant)




     Pursuant to your Stock Option Grant Notice (“Grant Notice”), this Stock Option Agreement,
Replidyne, Inc. (the “Company”) has granted you an option under Section 7 of its 2006 Equity
Incentive Plan (the “Plan”) to purchase the number of shares of the Company’s Common Stock
indicated in your Grant Notice at the exercise price indicated in your Grant Notice. This option
constitutes an Annual Award, as defined in the Plan, and is subject to all the terms and conditions
to which Annual Awards are subject under the Plan, including, without limitation, Section 7
thereof. Defined terms not explicitly defined in this Stock Option Agreement but defined in the
Plan shall have the same definitions as in the Plan.



     The details of your option are as follows:



     1. Vesting. Subject to the limitations contained herein, your option will vest as
provided in your Grant Notice, provided that vesting will cease upon the termination of your
Continuous Service.



     2. Number of Shares and Exercise Price. The number of shares of Common Stock subject
to your option and your exercise price per share referenced in your Grant Notice may be adjusted
from time to time for Capitalization Adjustments.



     3. Method of Payment. Payment of the exercise price is due in full upon exercise of
all or any part of your option. You may elect to make payment of the exercise price in cash or by
check or in any other manner permitted by your Grant Notice, which may include one or more of the
following:



            (a) Bank draft or money order payable to the Company.



            (b) In the Company’s sole discretion at the time your option is exercised and provided that at
the time of exercise the Common Stock is publicly traded and quoted regularly in The Wall Street
Journal, pursuant to a program developed under Regulation T as promulgated by the Federal Reserve
Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check)
by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to
the Company from the sales proceeds.



            (c) In the Company’s sole discretion at the time your option is exercised and provided that at
the time of exercise the Common Stock is publicly traded and quoted regularly in The Wall Street
Journal, by delivery to the Company (either by actual delivery or attestation) of already-owned
shares of Common Stock either that you have held for the period required to avoid a charge to the
Company’s reported earnings (generally six (6) months) or that you did not acquire, directly or
indirectly from the Company, that are owned free and clear of any liens, claims, encumbrances or
security interests, and that are valued at Fair Market Value on the date



1.









 







of exercise. “Delivery” for these purposes, in the sole discretion of the Company at the time
you exercise your option, shall include delivery to the Company of your attestation of ownership of
such shares of Common Stock in a form approved by the Company. Notwithstanding the foregoing, you
may not exercise your option by tender to the Company of Common Stock to the extent such tender
would violate the provisions of any law, regulation or agreement restricting the redemption of the
Company’s stock.



            (d) By a “net exercise” arrangement pursuant to which the Company will reduce the number of
shares of Common Stock issued upon exercise of your option by the largest whole number of shares
with a Fair Market Value that does not exceed the aggregate exercise price; provided, however, that
the Company shall accept a cash or other payment from you to the extent of any remaining balance of
the aggregate exercise price not satisfied by such reduction in the number of whole shares to be
isued; provided further, however, that shares of Common Stock will no longer be outstanding under
your option and will not be exercisable thereafter to the extent that (1) shares are used to pay
the exercise price pursuant to the “net exercise,” (2) shares are delivered to you as a result of
such exercise, and (3) shares are withheld to satisfy tax withholding obligations.



     4. Whole Shares. You may exercise your option only for whole shares of Common Stock.



     5. Securities Law Compliance. Notwithstanding anything to the contrary contained
herein, you may not exercise your option unless the shares of Common Stock issuable upon such
exercise are then registered under the Securities Act or, if such shares of Common Stock are not
then so registered, the Company has determined that such exercise and issuance would be exempt from
the registration requirements of the Securities Act. The exercise of your option also must comply
with other applicable laws and regulations governing your option, and you may not exercise your
option if the Company determines that such exercise would not be in material compliance with such
laws and regulations.



     6. Term. You may not exercise your option before the commencement or after the
expiration of its term. The term of your option commences on the Date of Grant and expires upon
the earliest of the following:



            (a) three (3) months after the termination of your Continuous Service for any reason other
than your Disability or death, provided, however, that (i) if during any part of such three (3)
month period your option is not exercisable solely because of the condition set forth in Section 6,
your option shall not expire until the earlier of the Expiration Date or until it shall have been
exercisable for an aggregate period of three (3) months after the termination of your Continuous
Service and (ii) if (x) you are a Non-Exempt Employee, (y) you terminate your Continuous Service
within six (6) months after the Date of Grant specified in your Grant Notice, and (z) you have
vested in a portion of your option at the time of your termination of Continuous Service, your
option shall not expire until the earlier of (A) the later of the date that is seven (7) months
after the Date of Grant specified in your Grant Notice or the date that is three (3) months after
the termination of your Continuous Service or (B) the Expiration Date;



2.









 





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



            (c) twelve (12) months after the termination of your Continuous Service due to your death;



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



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



     7. Exercise.



            (a) You may exercise the vested portion of your option during its term by delivering a Notice
of Exercise (in a form designated by the Company) together with the exercise price to the Secretary
of the Company, or to such other person as the Company may designate, during regular business
hours, together with such additional documents as the Company may then require.



            (b) By exercising your option you agree that, as a condition to any exercise of your option,
the Company may require you to enter into an arrangement providing for the payment by you to the
Company of any tax withholding obligation of the Company arising by reason of (1) the exercise of
your option, (2) the lapse of any substantial risk of forfeiture to which the shares of Common
Stock are subject at the time of exercise, or (3) the disposition of shares of Common Stock
acquired upon such exercise.



     8. Change In Control. 



     In connection with a Change in Control, if this option has not terminated prior to such Change
in Control, the vesting of this option will accelerate in the manner, at the time, and subject to
the conditions, set forth in Section 7(d)(ii) of the Plan.



     9. Transferability.



            (a) Restrictions on Transfer. Your option shall not be transferable except by will or by the
laws of descent and distribution and shall be exercisable during your lifetime only by you;
provided, however, that the Board may, in its sole discretion, permit you to transfer your option
in a manner consistent with applicable tax and securities laws upon your request.



            (b) Domestic Relations Orders. Notwithstanding the foregoing, your option may be transferred
pursuant to a domestic relations order; provided, however, that if your option is an Incentive
Stock Option, your option shall be deemed to be a Nonstatutory Stock Option as a result of such
transfer.



            (c) Beneficiary Designation. Notwithstanding the foregoing, you may, by delivering written
notice to the Company, in a form provided by or otherwise satisfactory to the Company, designate a
third party who, in the event of your death, shall thereafter be entitled to exercise your option.



3.









 





     10. Option not a Service Contract. Your option is not an employment or service
contract, and nothing in your option shall be deemed to create in any way whatsoever any obligation
on your part to continue in the employ of the Company or an Affiliate, or of the Company or an
Affiliate to continue your employment. In addition, nothing in your option shall obligate the
Company or an Affiliate, their respective stockholders, Boards of Directors, Officers or Employees
to continue any relationship that you might have as a Director or Consultant for the Company or an
Affiliate.



     11. Withholding Obligations.



            (a) At the time you exercise your option, in whole or in part, or at any time thereafter as
requested by the Company, you hereby authorize withholding from any amounts payable to you, and
otherwise agree to make adequate provision for (including by means of a “cashless exercise”
pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board to
the extent permitted by the Company), any sums required to satisfy the federal, state, local and
foreign tax withholding obligations of the Company or an Affiliate, if any, which arise in
connection with the exercise of your option.



            (b) Upon your request and subject to approval by the Company, in its sole discretion, and
compliance with any applicable legal conditions or restrictions, the Company may withhold from
fully vested shares of Common Stock otherwise issuable to you upon the exercise of your option a
number of whole shares of Common Stock having a Fair Market Value, determined by the Company as of
the date of exercise, not in excess of the minimum amount of tax required to be withheld by law (or
such lower amount as may be necessary to avoid variable award accounting). If the date of
determination of any tax withholding obligation is deferred to a date later than the date of
exercise of your option, share withholding pursuant to the preceding sentence shall not be
permitted unless you make a proper and timely election under Section 83(b) of the Code, covering
the aggregate number of shares of Common Stock acquired upon such exercise with respect to which
such determination is otherwise deferred, to accelerate the determination of such tax withholding
obligation to the date of exercise of your option. Notwithstanding the filing of such election,
shares of Common Stock shall be withheld solely from fully vested shares of Common Stock determined
as of the date of exercise of your option that are otherwise issuable to you upon such exercise.
Any adverse consequences to you arising in connection with such share withholding procedure shall
be your sole responsibility.



            (c) You may not exercise your option unless the tax withholding obligations of the Company
and/or any Affiliate are satisfied. Accordingly, you may not be able to exercise your option when
desired even though your option is vested, and the Company shall have no obligation to issue a
certificate for such shares of Common Stock or release such shares of Common Stock from any escrow
provided for herein unless such obligations are satisfied.



     12. Notices. Any notices provided for in your option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by
mail by the Company to you, five (5) days after deposit in the United States mail, postage prepaid,
addressed to you at the last address you provided to the Company.



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     13. Governing Plan Document. Your option is subject to all the provisions of the
Plan, the provisions of which are hereby made a part of your option, and is further subject to all
interpretations, amendments, rules and regulations, which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the provisions of your option
and those of the Plan, the provisions of the Plan shall control.




5.