exv10w3



 







Exhibit 10.3




ASTHMATX, INC.




2006 EQUITY INCENTIVE PLAN

Approved by Stockholders on ___, 2006




     1. PURPOSE. The purpose of the Plan is to provide incentives to attract, retain and motivate
eligible persons whose present and potential contributions are important to the success of the
Company, its Parent or Subsidiaries by offering them an opportunity to participate in the Company’s
future performance through awards of Options, Restricted Stock, Stock Bonuses Stock Appreciation
Rights (“SARs”) and Restricted Stock Units (“RSUs”). Capitalized terms not defined in the text are
defined in Section 26.



     2. SHARES SUBJECT TO THE PLAN.



          2.1 Number of Shares Available.




               (a) Shares Reserved. Subject to the provisions of Sections 2.2 and 21 below, the
number of Shares available for grant and issuance under this Plan will be the sum of (i) One
Million Five Hundred Thousand (1,500,000) Shares plus (ii) all Available Assumed Plan Shares (as
defined in Section 2.1(b) below), and such number will be subject to increase pursuant to
the Automatic Annual Increase as defined and provided in Section 2.1(c) below. Shares that are
subject to: (i) issuance upon exercise of an Option or SAR granted under this Plan but cease to be
subject to the Option or SAR for any reason other than exercise of the Option or SAR; (ii) Awards
granted under this Plan but are forfeited or are repurchased by the Company at their original issue
price; or (ii) Awards granted under this Plan that otherwise terminate without Shares being issued;
will return to the pool of Shares available for grant and issuance under this Plan. In order that
ISOs may be granted under this Plan, no more than 20,000,000 Shares shall be issued as ISOs. The
Company may issue Shares that are authorized but unissued or treasury shares pursuant to the Awards
granted under this Plan. At all times the Company will reserve and keep available a sufficient
number of Shares to satisfy the requirements of all outstanding Options and SARs granted under the
Plan and all other outstanding but unvested Awards granted under the Plan.




                (b) Available Assumed Plan Shares. “Available Assumed Plan Shares” means shares of the
Company’s Common Stock: (i) that on the Effective Date, are reserved for issuance under the
Assumed Plan (as defined below) but are not then issued and outstanding or subject to
outstanding stock options or other awards granted under the Assumed Plan; (ii) issued under the
Assumed Plan that are outstanding on the Effective Date and are thereafter forfeited or repurchased
by the Company at their original issue price pursuant to the terms of the Assumed Plan; and/or
(iii) are issuable upon exercise of stock options granted pursuant to the Assumed Plan that are
outstanding on the Effective Date and remain unissued when such options expire. In the above
definition of “Available Assumed Plan Shares,” references to options or awards granted under the
Assumed Plan include options or awards granted by Asthmatx California under the Assumed Plan prior
to the Merger (including those assumed or converted in the Merger) and
references to Shares issued under the Assumed Plan




 









 







include Shares issued upon the conversion
in the Merger of shares of Asthmatx California common stock issued under the Assumed Plan. Upon
the Effective Date, Available Assumed Plan Shares will no longer be available for grant and
issuance under the Assumed Plan but will be available for grant and issuance under this Plan. As
used herein, the “Assumed Plan” means the Asthmatx California 2003 Stock Option Plan, as assumed by
the Company in connection with the merger (the “Merger”) of Asthmatx, Inc., a California
corporation (“Asthmatx California”), with and into the Company pursuant to the Agreement and Plan
of Merger between Asthmatx California and the Company approved by the Company’s Board of Directors
and sole stockholder to effect the Merger (the “Merger Agreement”).




                (c) Automatic Annual Increase. The number of Shares available for grant and issuance
under the Plan shall automatically be increased as follows (the “Automatic Annual Increase”): (i)
on January 1, 2007 the number of Shares available for grant and issuance under this Plan shall be
automatically increased by an amount equal to the product of 4% of the number of shares of the
Company’s common stock issued and outstanding on the preceding December 31 multiplied by a
fraction, the numerator of which is the number of days between the Effective Date and December 31,
2006 and the denominator of which is 365 (rounded to the nearest whole share); (ii) on the first
day of each January from 2008 through and including 2016, the number of Shares available for grant
and issuance under this Plan shall be automatically increased by 4% of the number of shares of
the Company’s common stock issued and outstanding on the preceding December 31 (rounded to the
nearest whole share); or (iii) a lesser number of Shares as determined by the Board.




          2.2 Adjustment of Shares. If the number of outstanding shares of the Company’s common
stock is changed by a stock dividend, recapitalization, stock split, reverse stock split,
subdivision, combination, reclassification or similar change in the capital structure of the
Company, without consideration, then (a) the number of Shares reserved for issuance and future
grant under the Plan set forth in Section 2.1, (b) the Exercise Prices of and number of Shares
subject to outstanding Options and SARs, (c) the number of Shares subject to other outstanding
Awards, (d) the maximum number of shares that may be issued as ISOs set forth in Section 2.1; (e)
the maximum number of shares that may be issued to an individual in any one calendar year set forth
in Section 3; and (f) the number of Shares that are granted as Options to Non-Employee Directors as
set forth in Section 8, will be proportionately adjusted, subject to any required action by the
Board or the stockholders of the Company and compliance with applicable securities laws; provided
that fractions of a Share will not be issued but will either be replaced by a cash payment equal to
the Fair Market Value of such fraction of a Share or will be rounded up (down in the case of ISOs)
to the nearest whole Share, as determined by the Committee; and provided further that the Exercise
Price of any Option may not be decreased to below the par value of the Shares.




     3. ELIGIBILITY. ISOs may be granted only to employees (including officers and directors who
are also employees) of the Company or of a corporation that is a Parent or Subsidiary. All other
Awards may be granted to employees, officers, directors, consultants, independent contractors and
advisors of the Company or any Parent or Subsidiary; provided that such consultants, contractors
and advisors render bona fide services not in connection with the
offer and sale of securities in a capital-raising transaction. The Committee (or its designee
under Section 4.1(c)) will from time to time determine and designate among the eligible persons who



2









 







will be granted one or more Awards under the Plan. A person may be granted more than one Award
under the Plan. However, no person will be eligible to receive more than 2,000,000 Shares issuable
under Awards granted in any calendar year, other than new employees of the Company or of a Parent
or Subsidiary (including new employees who are also officers and directors of the Company or any
Parent or Subsidiary), who are eligible to receive up to a maximum of 4,000,000 Shares issuable
under Awards granted in the calendar year in which they commence their employment.



     4. ADMINISTRATION.



          4.1 Committee Authority. The Plan shall be administered by the Committee or by the
Board acting as the Committee. Except for automatic grants to Non-Employee Directors pursuant to
Section 8 hereof, and subject to the general purposes, terms and conditions of the Plan, the
Committee will have full power to implement and carry out the Plan. Without limiting the previous
sentence, the Committee will have the authority to:





	 	(a)	 	construe and interpret the Plan, any Award Agreement and any other agreement or
document executed pursuant to the Plan;
	 
	 	(b)	 	prescribe, amend and rescind rules and regulations relating to the Plan or any
Award, including determining the forms and agreements used in connection with the Plan,
provided that the Committee may delegate to the Chief Executive Officer, the Chief
Financial Officer or the officer in charge of human resources, in consultation with the
Company’s General Counsel, the authority to approve revisions to the forms and
agreements used in connection with the Plan that are designed to facilitate Plan
administration, and that are not inconsistent with the Plan or with any resolutions of
the Committee relating to the Plan;
	 
	 	(c)	 	select persons to receive Awards; provided that the Committee may delegate to
one or more Executive Officers (who would also be considered “officers” under Delaware
law) the authority to grant an Award under the Plan to Participants who are not
Insiders;
	 
	 	(d)	 	determine the terms of Awards;
	 
	 	(e)	 	determine the number of Shares or other consideration subject to Awards;
	 
	 	(f)	 	determine whether Awards will be granted singly, in combination, or in tandem
with, in replacement of, or as alternatives to, other Awards under the Plan or any
other incentive or compensation plan of the Company or any Parent or Subsidiary;
	 
	 	(g)	 	grant waivers of Plan or Award conditions;
	 
	 	(h)	 	determine the vesting, exercisability, transferability, and payment of Awards;




3









 






	 	(i)	 	correct any defect, supply any omission, or reconcile any inconsistency in the
Plan, any Award or any Award Agreement;
	 
	 	(j)	 	determine whether an Award has been earned;
	 
	 	(k)	 	amend the Plan; or
	 
	 	(l)	 	make all other determinations necessary or advisable for the administration of
the Plan.





          4.2 Committee Interpretation and Discretion. Except for automatic grants to
Non-Employee Directors pursuant to Section 8 hereof, any determination made by the Committee with
respect to any Award shall be made in its sole discretion at the time of grant of the Award or,
unless in contravention of any express term of the Plan or Award, at any later time, and such
determination shall be final and binding on the Company and all persons having an interest in any
Award under the Plan. Any dispute regarding the interpretation of the Plan or any Award shall be
submitted by the Participant or the Company to the Committee for review. The resolution of such a
dispute by the Committee shall be final and binding on the Company and the Participant. The
Committee may delegate to one or more Executive Officers, the authority to review and resolve
disputes with respect to Awards held by Participants who are not Insiders, and such resolution
shall be final and binding on the Company and the Participant.




     5. OPTIONS. The Committee may grant Options to Participants and will determine (a) whether
the Options will be ISOs or NSOs; (b) the number of Shares subject to the Option, (c) the Exercise
Price of the Option, (d) the period during which the Option may be exercised, (e) the
exercisibility of the Option and (f) all other terms and conditions of the Option, subject to the
provisions of the Plan. With respect to Options granted to Non-Employee Directors pursuant to
Section 8 in the event of a conflict between the provisions of Section 8 and this Section 5, the
provisions of Section 8 shall prevail.



          5.1 Form of Option Grant. Each Option granted under the Plan will be evidenced by a
Stock Option Agreement that will expressly identify the Option as an ISO or NSO. Except as
otherwise required by Section 8 regarding the terms of Options to Non-Employee Directors, the Stock
Option Agreement will be substantially in a form and contain such provisions (which need not be the
same for each Participant) that the Committee has from time to time approved, and will comply with
and be subject to the terms and conditions of the Plan.




          5.2 Date of Grant. The date of grant of an Option will be the date on which the
Committee makes the determination to grant the Option, unless a later date is otherwise specified
by the Committee. The Stock Option Agreement, and a copy of the Plan (plus any additional
documents required to be delivered under applicable laws), will be delivered to the Participant
within a reasonable time after the Option is granted. The Stock Option Agreement, Plan, and other
documents may be delivered in any manner (including electronic distribution or posting) that meets
applicable legal requirements.




4









 








          5.3 Exercise Period and Expiration Date. An Option will vest and become exercisable
within the times or upon the occurrence of events determined by the Committee and set forth in the
Stock Option Agreement governing such Option, subject to the provisions of Section 5.6, and subject
to Company policies established by the Committee from time to time. The Committee may provide for
Options to vest and become exercisable at one time or from time to time, periodically or otherwise
(including, without limitation, upon the attainment during a Performance Period of performance
goals based on Performance Factors), in such number of Shares or percentage of Shares subject to
the Option as the Committee determines. The Stock Option Agreement shall set forth the Expiration
Date; provided that no Option will be exercisable after the expiration of ten (10) years from the
date the Option is granted; and provided further that no ISO granted to a Ten Percent Stockholder
will be exercisable after the expiration of five years from the date the Option is granted.




          An Option may only be exercised by the personal representative of a Participant or an
Authorized Transferee or by the person or persons to whom a Participant’s rights under the Option
shall pass by such person’s will or by the laws of descent and distribution of the state of such
person’s domicile at the time of death, and then only as and to the extent that such person was
entitled to exercise the Option on the date of death.




          5.4 Exercise Price. The Exercise Price of an Option will be determined by the
Committee when the Option is granted and will not, in the case of an ISO, be less than the Fair
Market Value on the date of grant; provided further that the Exercise Price of any ISO granted to a
Ten Percent Stockholder will not be less than 110% of the Fair Market Value of the Shares on the
date of grant. Payment for the Shares purchased must be made in accordance with Section 11 of the
Plan and the Stock Option Agreement.




          5.5 Procedures for Exercise. A Participant or Authorized Transferee may exercise
Options by following the procedures established by the Company’s Stock Administration Department,
as communicated and made available to Participants.




          5.6 Termination. Notwithstanding the exercise periods set forth in the Stock Option
Agreement, exercise of an Option will always be subject to the following:





	 	(a)	 	If the Participant is Terminated for any reason except Cause, death
or Disability, then the Participant may exercise such Participant’s Options only
to the extent that such Options would have been exercisable upon the Termination
Date and no later than three (3) months after the Termination Date (or such
shorter or longer time period not exceeding five (5) years as may be determined
by the Committee, with any such exercise beyond three (3) months after the
Termination Date deemed to be an NSO), but in any event, no later than the
Expiration Date of the Options.
	 
	 	(b)	 	If the Participant is Terminated because of Participant’s death (or
the Participant dies within three (3) months after a Termination other than for
Cause), then Participant’s Options may be exercised only to the extent that such
Options would have been exercisable by Participant on the Termination Date
and must be exercised by Participant (or Participant’s




5









 






	 	 	 	legal representative or
authorized assignee) no later than twelve (12) months after the Termination
Date (or such shorter or longer time period not exceeding five (5) years as
may be determined by the Committee, with any such exercise beyond twelve (12)
months after the Termination Date, deemed to be an NSO), but in any event no
later than the Expiration Date of the Options.
	 
	 	(c)	 	If the Participant is Terminated because of Participant’s
Disability (or the Committee determines that the Participant experiences a
Disability within three (3) months after a Termination other than because of
Participant’s Disability or for Cause), then Participant’s Options may be
exercised only to the extent that such Options would have been exercisable by
Participant on the Termination Date and must be exercised by Participant (or
Participant’s legal representative or authorized assignee) no later than twelve
(12) months after the Termination Date (or such shorter or longer time period not
exceeding five (5) years as may be determined by the Committee, with any such
exercise beyond twelve (12) months after the Termination Date, deemed to be an
NSO), but in any event no later than the Expiration Date of the Options.
	 
	 	(d)	 	Notwithstanding the provisions in paragraph 5.6(a) above, if a
Participant is terminated for Cause, then Participant’s Options shall expire on
such Participant’s Termination Date, or at such later time and on such
conditions as determined by the Committee.





          5.7 Limitations on Exercise. The Committee may specify a reasonable minimum number of
Shares that may be purchased on any exercise of an Option; provided that the minimum number will
not prevent a Participant from exercising an Option for the full number of Shares for which it is
then exercisable.




          5.8 Limitations on ISOs. The aggregate Fair Market Value (determined as of the date
of grant) of Shares with respect to which ISOs are exercisable for the first time by a Participant
during any calendar year (under the Plan or under any other incentive stock option plan of the
Company or any Parent or Subsidiary) shall not exceed $100,000. If the Fair Market Value of Shares
on the date of grant with respect to which ISOs are exercisable for the first time by a Participant
during any calendar year exceeds $100,000, the Options for the first $100,000 worth of Shares to
become exercisable in that calendar year will be ISOs, and the Options for the Shares with a Fair
Market Value in excess of $100,000 that become exercisable in that calendar year will be NSOs. If
the Code is amended to provide for a different limit on the Fair Market Value of Shares permitted
to be subject to ISOs, such different limit shall be automatically incorporated into the Plan and
will apply to any Options granted after the effective date of the Code’s amendment.




          5.9 Notice of Disqualifying Dispositions of Shares Acquired on Exercise of an ISO. If
a Participant sells or otherwise disposes of any Shares acquired pursuant to the exercise of an ISO
on or before the later of (a) the date two years after the Date of Grant, and (b) the date one year
after the exercise of the ISO (in either case, a “Disqualifying Disposition”), the Company may




6









 







require the Participant to immediately notify the Company in writing of such Disqualifying
Disposition.




          5.10 Modification, Extension or Renewal. The Committee may modify, extend or renew
outstanding Options and authorize the grant of new Options in substitution therefor; provided that
any such action may not, without the written consent of Participant, impair any of Participant’s
rights under any Option previously granted. Any outstanding ISO that is modified, extended,
renewed or otherwise altered shall be treated in accordance with Section 424(h) of the Code. The
Committee may reduce the Exercise Price of outstanding Options without the consent of Participants
affected, by a written notice to them.




          5.11 No Disqualification. Notwithstanding any other provision in the Plan, no term of
the Plan relating to ISOs will be interpreted, amended or altered, and no discretion or authority
granted under the Plan will be exercised, so as to disqualify the Plan under Section 422 of the
Code or, without the consent of the Participant affected, to disqualify any ISO under Section 422
of the Code.




     6. RESTRICTED STOCK AWARDS.



          6.1 Awards of Restricted Stock. A Restricted Stock Award is an offer by the Company
to sell to a Participant Shares that are subject to restrictions. The Committee will determine to
whom an offer will be made, the number of Shares the person may purchase, the Purchase Price, the
restrictions under which the Shares will be subject and all other terms and conditions of the
Restricted Stock Award, subject to this Section 6.




          6.2 Restricted Stock Purchase Agreement. All purchases under a Restricted Stock Award
will be evidenced by a Restricted Stock Purchase Agreement, which will be in substantially a form
(which need not be the same for each Participant) that the Committee has from time to time
approved, and will comply with and be subject to the terms and conditions of the Plan. A
Participant accepts a Restricted Stock Award by signing and delivering to the Company a Restricted
Stock Purchase Agreement with full payment of the Purchase Price, within thirty days from the date
the Restricted Stock Purchase Agreement was delivered to the Participant. If the Participant does
not accept the Restricted Stock Award within thirty days, then the offer of the Restricted Stock
Award will terminate, unless the Committee determines otherwise. The Restricted Stock Award, Plan
and other documents may be delivered in any manner (including electronic distribution or posting)
that meets applicable legal requirements.




          6.3 Purchase Price. The Purchase Price for a Restricted Stock Award will be
determined by the Committee and, may be less than Fair Market Value (but not less than the par
value of the Shares) on the date the Restricted Stock Award is granted. Payment of the Purchase
Price must be made in accordance with Section 11 of the Plan and the Restricted Stock Purchase
Agreement, and in accordance with any procedures established by the Company’s Stock Administration
Department, as communicated and made available to Participants.




          6.4 Terms of Restricted Stock Awards. Restricted Stock Awards will be subject to such
restrictions as the Committee may impose. These restrictions may be based on
completion of a specified number of years of service with the Company or upon completion of




7









 







the
performance goals based on Performance Factors during any Performance Period as set out in advance
in the Participant’s Restricted Stock Purchase Agreement. Prior to the grant of a Restricted Stock
Award, the Committee shall: (a) determine the nature, length and starting date of any Performance
Period for the Restricted Stock Award; (b) select from among the Performance Factors to be used to
measure performance goals, if any; and (c) determine the number of Shares that may be awarded to
the Participant. Prior to the payment for Shares to be purchased under any Restricted Stock Award,
the Committee shall determine the extent to which such Restricted Stock Award has been earned.
Performance Periods may overlap and a Participant may participate simultaneously with respect to
Restricted Stock Awards that are subject to different Performance Periods and having different
performance goals and other criteria.




          6.5 Termination During Performance Period. Except as set forth in the Participant’s
Restricted Stock Award, any Restricted Stock Award vesting will cease to vest on the Participant’s
Termination Date.




     7. STOCK BONUS AWARDS.



          7.1 Awards of Stock Bonuses. A Stock Bonus Award is an award to an eligible person of
Shares (which may consist of Restricted Stock or Restricted Stock Units) for services to be
rendered or for past services already rendered to the Company or any Parent or Subsidiary. All
Stock Bonus Awards shall be made pursuant to a Stock Bonus Agreement, which shall be in
substantially a form (which need not be the same for each Participant) that the Committee has from
time to time approved, and will comply with and be subject to the terms and conditions of the Plan.
No payment will be required for Shares awarded pursuant to a Stock Bonus Award.




          7.2 Terms of Stock Bonus Awards. The Committee will determine the number of Shares to
be awarded to the Participant under a Stock Bonus Award and any restrictions thereon. These
restrictions may be based upon completion of a specified number of years of service with the
Company or upon satisfaction of performance goals based on Performance Factors during any
Performance Period as set out in advance in the Participant’s Stock Bonus Agreement. If the Stock
Bonus Award is to be earned upon the satisfaction of performance goals, the Committee shall: (a)
determine the nature, length and starting date of any Performance Period for the Stock Bonus Award;
(b) select from among the Performance Factors to be used to measure performance goals; and (c)
determine the number of Shares that may be awarded to the Participant. Prior to the issuance of
any Shares or other payment to a Participant pursuant to a Stock Bonus Award, the Committee will
determine the extent to which the Stock Bonus Award has been earned. Performance Periods may
overlap and a Participant may participate simultaneously with respect to Stock Bonus Awards that
are subject to different Performance Periods and different performance goals and other criteria.
The number of Shares may be fixed or may vary in accordance with such performance goals and
criteria as may be determined by the Committee. The Committee may adjust the performance goals
applicable to a Stock Bonus Award to take into account changes in law and accounting or tax rules
and to make such adjustments as the Committee deems necessary or appropriate to reflect the impact
of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships.




8









 








          7.3 Form of Payment to Participant. The Stock Bonus Award will be paid to the
Participant currently. Payment may be made in the form of cash, whole Shares, or a combination
thereof, based on the Fair Market Value of the Shares earned under a Stock Bonus Award on the date
of payment, either in a lump sum payment or in installments, all as the Committee determines.




          7.4 Termination of Participant. In the event of a Participant’s Termination during a
Performance Period or vesting period, for any reason, then such Participant will be entitled to
payment (whether in Shares, cash or otherwise) with respect to the Stock Bonus Award only to the
extent earned as of the date of Termination in accordance with the Stock Bonus Agreement, unless
the Committee determines otherwise.




     8. AUTOMATIC GRANTS TO NON-EMPLOYEE DIRECTORS.



          8.1 Eligibility. Non-Employee Directors are eligible for Options granted pursuant to
this Section 8. Notwithstanding the foregoing, this Section 8 does not limit the ability of the
Committee to grant discretionary Awards to Non-Employee Directors.




          8.2 Initial Grant. Each Non-Employee Director who has not received an option to
purchase Company common stock (including an option to purchase the common stock of Asthmatx
California) in the two (2) year period preceding the Effective Date and who is a member of the
Board on the Effective Date will automatically be granted an Option to purchase 50,000 Shares on
the Effective Date. Each Non-Employee Director who first becomes a member of the Board after the
Effective Date will automatically be granted an Option to purchase 50,000 Shares on the date such
Non-Employee Director first becomes a member of the Board. Each Option granted pursuant to this
Section 8.2 shall be called an “Initial Grant”.




          8.3 Succeeding Grant. On the first business day following the annual meeting of the
Company’s Stockholders, each Non-Employee Director who is a member of the Board on the first
business day following such annual meeting of stockholders will automatically be granted an Option
to purchase 20,000 Shares. Each Option granted pursuant to this Section 8.3 shall be called a
“Succeeding Grant”. Notwithstanding the foregoing, in the event a Non-Employee Director received
an Initial Grant within the twelve (12) month period preceding the annual meeting of the Company’s
stockholders, then the number of Shares subject to such Director’s first Succeeding Grant shall be
the number of Shares equal to the product of (a) 20,000 and (b) a fraction, the numerator of which
is the number of full calendar months such Non-Employee Director has been a member of the Board
prior to the Company’s annual meeting of stockholders and the denominator of which is twelve (12).




          8.4 Vesting and Exercisability.




               (a) Initial Grants. Initial Grants shall vest and become exercisable as to 1/36 of
the total Shares subject to the Initial Grant on each monthly anniversary of the date of grant,
such that Initial Grants are fully vested and exercisable on the third anniversary of the date
of grant, so long as the Non-Employee Director continuously remains a director, consultant or
employee of the Company.





9









 








               (b) Succeeding Grants. Succeeding Grants shall vest and become exercisable as to 1/12
of the total Shares subject to the Succeeding Grant on each monthly anniversary of the date of
grant, such that Succeeding Grants are fully vested and exercisable on first anniversary of the
date of grant, so long as the Non-Employee Director continuously remains a director, consultant or
employee of the Company.




                (c) In the event of a Change In Control Event, the vesting of all Options granted to
Non-Employee Directors pursuant to this Section 8 shall accelerate and such Options will become
exercisable in full immediately prior to the consummation of the Change In Control Event at such
time and on such conditions as the Committee determines, and if such Options are not exercised on
or prior to the consummation of the Change In Control Event, they shall terminate immediately
following the consummation of the Change In Control Event.




          8.5 Form of Option Grant. Each Option granted under this Section 8 shall be a NSO and
shall be evidenced by a Non-Employee Director Stock Option Grant Agreement in such form as the
Committee shall from time to time approve and which shall comply with and be subject to the terms
and conditions of this Plan.




          8.6 Exercise Price. The Exercise Price per Share of each Option granted under this
Section 8 shall be the Fair Market Value of the Share on the date the Option is granted.




          8.7 Termination of Option. Except as provided in Section 8.4(c) or this Section 8.7,
each Option granted under this Section 8 shall expire ten (10) years after its date of grant. The
date on which the Non-Employee Director ceases to be a member of the Board, a consultant or
employee of the Company shall be referred to as the “Non-Employee Director Termination Date” for
purposes of this Section 8.7. An Option may be exercised after the Non-Employee Director
Termination Date only as set forth below:




               (a) Termination Generally. If the Non-Employee Director ceases to be a member of the
Board, consultant or employee of the Company for any reason except death or Disability, each
Initial Grant and Succeeding Grant, to the extent then vested pursuant to Section 8.4 above, then
held by such Non-Employee Director may be exercised by the Non-Employee Director within three (3)
months after the Non-Employee Director Termination Date, but in no event later than the Expiration
Date.




               (b) Death. If the Non-Employee Director ceases to be a member of the Board,
consultant or employee of the Company because of his or her death, then each Initial Grant and
Succeeding Grant, to the extent then vested pursuant to Section 8.4 above, then held by such
Non-Employee Director, may be exercised by the Non-Employee Director or his or her legal
representative within twelve (12) months after the Non-Employee Director Termination Date, but in
no event later than the Expiration Date.




               (c) Disability. If the Non-Employee Director ceases to be a member of the Board,
consultant or employee of the Company because of his or her Disability, then each Initial Grant and
Succeeding Grant, to the extent then vested pursuant to Section 8.4 above, then held by such
Non-Employee Director, may be exercised by the Non-Employee Director or his or




10









 







her legal
representative within twelve (12) months after the Non-Employee Director Termination Date, but in
no event later than the Expiration Date




     9. STOCK APPRECIATION RIGHTS.  



          9.1 Awards of SARs. A Stock Appreciation Right (“SAR”) is an award to an eligible
person that may be settled in cash, or Shares (which may consist of Restricted Stock), having a
value equal to the value determined by multiplying the difference between the Fair Market Value on
the date of exercise over the Exercise Price and the number of Shares with respect to which the SAR
is being settled. The SAR may be granted for services to be rendered or for past services already
rendered to the Company, or any Parent or Subsidiary. All SARs shall be made pursuant to a SAR
Agreement, which shall be in substantially a form (which need not be the same for each Participant)
that the Committee has from time to time approved, and will comply with and be subject to the terms
and conditions of this Plan.




          9.2 Terms of SARs. The Committee will determine the terms of a SAR including, without
limitation: (a) the number of Shares deemed subject to the SAR; (b) the Exercise Price and the time
or times during which the SAR may be settled; (c) the consideration to be distributed on settlement
of the SAR; and (d) the effect on each SAR of the Participant’s Termination. The Exercise Price of
the SAR will be determined by the Committee when the SAR is granted and, may not be less than Fair
Market Value on the date of grant. A SAR may be awarded upon satisfaction of such performance
goals based on Performance Factors during any Performance Period as are set out in advance in the
Participant’s individual SAR Agreement. If the SAR is being earned upon the satisfaction of
performance goals, then the Committee will: (x) determine the nature, length and starting date of
any Performance Period for each SAR; and (y) select from among the Performance Factors to be used
to measure the performance, if any. Prior to settlement of any SAR earned upon the satisfaction of
performance goals pursuant to a SAR Agreement, the Committee shall determine the extent to which
such SAR has been earned. Performance Periods may overlap and Participants may participate
simultaneously with respect to SARs that are subject to different performance goals and other
criteria.




          9.3 Exercise Period and Expiration Date. A SAR will be exercisable within the times
or upon the occurrence of events determined by the Committee and set forth in the SAR Agreement
governing such SAR. The SAR Agreement shall set forth the Expiration Date; provided that no SAR
will be exercisable after the expiration of ten years from the date the SAR is granted. The
Committee may also provide for SARs to become exercisable at one time or from time to time,
periodically or otherwise (including, without limitation, upon the attainment during a Performance
Period of performance goals based on Performance Factors), in such number of Shares or percentage
of the Shares subject to the SAR as the Committee determines.




          9.4 Form and Timing of Settlement. The portion of a SAR being settled may be paid
currently or on a deferred basis with such interest or dividend equivalent, if any, as the
Committee determines, provided that the terms of the SAR and any deferral satisfy the
requirements of Section 409A of the Code and any regulations or rulings promulgated by the Internal
Revenue Service. Payment may be made in the form of cash or whole Shares or a combination thereof,
either in a lump sum payment or in installments, as the Committee determines.




11









 








     10. RESTRICTED STOCK UNITS.



          10.1 Awards of Restricted Stock Units. A Restricted Stock Unit (“RSU”) is an award
to an eligible person covering a number of Shares that may be settled in cash, or by issuance of
those Shares (which may consist of Restricted Stock) for services to be rendered or for past
services already rendered to the Company or any Parent or Subsidiary. All RSUs shall be made
pursuant to a RSU Agreement, which shall be in substantially a form (which need not be the same for
each Participant) that the Committee or an officer of the Company (pursuant to Section 4.1(b)) has
from time to time approved, and will comply with and be subject to the terms and conditions of the
Plan.




          10.2 Terms of RSUs. The Committee will determine the terms of a RSU including,
without limitation: (a) the number of Shares deemed subject to the RSU; (b) the time or times
during which the RSU may be exercised; (c) the consideration to be distributed on settlement, and
the effect on each RSU of the Participant’s Termination. A RSU may be awarded upon satisfaction of
such performance goals based on Performance Factors during any Performance Period as are set out in
advance in the Participant’s individual RSU Agreement. If the RSU is being earned upon
satisfaction of performance goals, then the Committee will: (x) determine the nature, length and
starting date of any Performance Period for the RSU; (y) select from among the Performance Factors
to be used to measure the performance, if any; and (z) determine the number of Shares deemed
subject to the RSU. Prior to settlement of any RSU earned upon the satisfaction of performance
goals pursuant to a RSU Agreement, the Committee shall determine the extent to which such RSU has
been earned. Performance Periods may overlap and participants may participate simultaneously with
respect to RSUs that are subject to different Performance Periods and different performance goals
and other criteria. The number of Shares may be fixed or may vary in accordance with such
performance goals and criteria as may be determined by the Committee. The Committee may adjust the
performance goals applicable to the RSUs to take into account changes in law and accounting and to
make such adjustments as the Committee deems necessary or appropriate to reflect the impact of
extraordinary or unusual items, events or circumstances to avoid windfalls or hardships.




          10.3 Form and Timing of Settlement. The portion of a RSU being settled shall be paid
currently. To the extent permissible under law, the Committee may also permit a Participant to
defer payment under a RSU to a date or dates after the RSU is earned provided that the terms of the
RSU and any deferral satisfy the requirements of Section 409A of the Code and any regulations or
rulings promulgated by the Internal Revenue Service. Payment may be made in the form of cash or
whole Shares or a combination thereof, either in a lump sum payment or in installments, all as the
Committee determines.




     11. PAYMENT FOR SHARE PURCHASES.




          11.1 Payment. Payment for Shares purchased pursuant to the Plan may be made by any of
the following methods (or any combination of such methods) that are described in the applicable
Award Agreement and that are permitted by law:





	 	(a)	 	in cash (by check);




12









 






	 	(b)	 	by cancellation of indebtedness of the Company to the Participant;
	 
	 	(c)	 	by surrender of Shares held by the Participant;
	 
	 	(d)	 	in the case of exercise by the Participant, Participant’s guardian or legal
representative or the authorized legal representative of Participants’ heirs or
legatees after Participant’s death, by waiver of compensation due or accrued to
Participant for services rendered to the Company or a Parent or Subsidiary of the
Company (net of any applicable withholding taxes);
	 
	 	(e)	 	with respect only to purchases upon exercise of an Option, and provided that a
public market for the Company’s stock exists:






	 	(1)	 	through a “same day sale” commitment from the Participant or
Authorized Transferee and an NASD Dealer meeting the requirements of the
Company’s “same day sale” procedures and in accordance with law;
	 
	 	(2)	 	through a “margin” commitment from Participant or Authorized
Transferee and an NASD Dealer meeting the requirements of the Company’s
“margin” procedures and in accordance with law; or






	 	(f)	 	by any other method approved by the Board.





          11.2 Issuance of Shares. Upon payment of the applicable Purchase Price or Exercise
Price (or a commitment for payment from the NASD Dealer designated by the Participant or Authorized
Transferee in the case of an exercise by means of a “same-day sale” or “margin” commitment), and
compliance with other conditions and procedures established by the Company for the purchase of
shares, the Company shall issue the Shares registered in the name of Participant or Authorized
Transferee (or in the name of the NASD Dealer designated by the Participant or Authorized
Transferee in the case of an exercise by means of a “same-day sale” or “margin” commitment) and
shall deliver certificates representing the Shares (in physical or electronic form, as
appropriate). The Shares may be subject to legends or other restrictions as described in Section
15 of the Plan.




     12. WITHHOLDING TAXES.



          12.1 Withholding Generally. Whenever Shares are to be issued in satisfaction of
Awards granted under the Plan, the Company may require the Participant to remit to the
Company an amount sufficient to satisfy applicable withholding tax requirements prior to the
delivery of any certificate(s) for the Shares. If a payment in satisfaction of an Award is to be
made in cash, the payment will be net of an amount sufficient to satisfy applicable withholding tax
requirements.




          12.2 Stock Withholding. When, under applicable tax laws, a Participant incurs tax
liability in connection with the exercise or vesting of any Award that is subject to tax




13









 







withholding and the Participant is obligated to pay the Company the amount required to be withheld,
the Committee may, in its sole discretion, allow the Participant to satisfy the minimum withholding
tax obligation by electing to have the Company withhold from the Shares to be issued that number of
whole Shares having a Fair Market Value equal to the minimum amount required to be withheld,
determined on the date that the amount of tax to be withheld is to be determined. All elections by
a Participant to have Shares withheld for this purpose shall be made in accordance with the
requirements established by the Committee and be in writing in a form acceptable to the Committee.




     13. PRIVILEGES OF STOCK OWNERSHIP. No Participant or Authorized Transferee will have any
rights as a stockholder of the Company with respect to any Shares until the Shares are issued to
the Participant or Authorized Transferee. After Shares are issued to the Participant or Authorized
Transferee, the Participant or Authorized Transferee will be a stockholder and have all the rights
of a stockholder with respect to the Shares including the right to vote and receive all dividends
or other distributions made or paid with respect to such Shares; provided, that if the Shares are
Restricted Stock, any new, additional or different securities the Participant or Authorized
Transferee may become entitled to receive with respect to the Shares by virtue of a stock dividend,
stock split or any other change in the corporate or capital structure of the Company will be
subject to the same restrictions as the Restricted Stock; provided further, that the Participant or
Authorized Transferee will have no right to retain such dividends or distributions with respect to
Shares that are repurchased at the Participant’s original Exercise Price or Purchase Price pursuant
to Section 15.



     14. TRANSFERABILITY. No Award and no interest therein, shall be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent
and distribution, and no Award may be made subject to execution, attachment or similar process;
provided, however that with the consent of the Committee a Participant may transfer an Award (other
than an ISO) to an Authorized Transferee. Transfers by the Participant for consideration are
prohibited.



     15. RESTRICTIONS ON SHARES. At the discretion of the Committee, the Company may reserve to
itself and/or its assignee(s) in the Award Agreement a right to repurchase all or a portion of a
Participant’s Shares that are not “Vested” (as defined in the Award Agreement), following the
Participant’s Termination, at any time within ninety days after the later of (a) the Participant’s
Termination Date or (b) the date the Participant purchases Shares under the Plan, for cash or
cancellation of purchase money indebtedness with respect to Shares, at the Participant’s original
Exercise Price or Purchase Price.



     16. CERTIFICATES. All certificates for Shares or other securities delivered under the Plan
(whether in physical or electronic form, as appropriate) will be subject to stock transfer orders,
legends and other restrictions that the Committee deems necessary or advisable, including without
limitation restrictions under any applicable federal, state or foreign securities law, or any
rules, regulations and other requirements of the SEC or any stock exchange or automated quotation
system on which the Shares may be listed.



     17. ESCROW. To enforce any restrictions on a Participant’s Shares, the Committee may require
the Participant to deposit all certificates representing Shares, together with stock



14









 







powers or
other transfer instruments approved by the Committee, appropriately endorsed in blank, with the
Company or an agent designated by the Company, to hold in escrow until such restrictions have
lapsed or terminated, and the Committee may cause a legend or legends referencing such restrictions
to be placed on the certificates.



     18. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award shall not be effective unless
the Award is in compliance with all applicable state, federal and foreign securities laws, rules
and regulations of any governmental body, and the requirements of any stock exchange or automated
quotation system on which the Shares may then be listed, as they are in effect on the date of grant
of the Award and also on the date of exercise or other issuance. Notwithstanding any other
provision in the Plan, the Company shall have no obligation to issue or deliver certificates for
Shares under the Plan prior to (a) obtaining any approvals from governmental agencies that the
Company determines are necessary or advisable, and/or (b) completion of any registration or other
qualification of such shares under any state, federal or foreign law or ruling of any governmental
body that the Company determines to be necessary or advisable. The Company shall be under no
obligation to register the Shares with the SEC or to effect compliance with the registration,
qualification or listing requirements of any state, federal or foreign securities laws, stock
exchange or automated quotation system, and the Company shall have no liability for any inability
or failure to do so.



     19. NO OBLIGATION TO EMPLOY. Nothing in the Plan or any Award granted under the Plan shall
confer or be deemed to confer on any Participant any right to continue in the employ of, or to
continue any other relationship with, the Company or any Parent or Subsidiary or limit in any way
the right of the Company or any Parent or Subsidiary to terminate Participant’s employment or other
relationship at any time, with or without cause.



     20. REPRICING, EXCHANGE, BUYOUT OF AWARDS. The repricing of Options or SARs is permitted
without prior stockholder approval. The Committee may, at any time or from time to time authorize
the Company, without stockholder approval, and with the consent of the respective Participants, to
issue new Awards in exchange for the surrender and cancellation of any or all outstanding Awards.
The Committee may at any time buy from a Participant an Award previously granted with payment in
cash, Shares or other consideration, based on such terms and conditions as the Committee and the
Participant shall agree.



     21. CORPORATE TRANSACTIONS.



          21.1 Assumption or Replacement of Awards by Successor. In the event of a Corporate
Transaction any or all outstanding Awards may be assumed or replaced by the successor corporation,
which assumption or replacement shall be binding on all Participants. In the alternative, the
successor corporation may substitute equivalent Awards or provide substantially similar
consideration to Participants as was provided to stockholders (after taking into account the
existing provisions of the Awards). The successor corporation may also issue, in place of
outstanding Shares of the Company held by the Participant, substantially similar shares or other
property subject to repurchase restrictions no less favorable to the Participant. In the event
such successor corporation, if any, refuses to assume or replace the Awards, as provided above,
pursuant to a Corporate Transaction or if there is no successor corporation due to a dissolution or
liquidation of the Company, such Awards shall expire on such transaction at




15









 







such time and on such
conditions as the Board determines (including, without limitation, full or partial vesting and
exercisability of any or all outstanding Awards).




          21.2 Other Treatment of Awards. Subject to any greater rights granted to Participants
under Section 21.1, in the event of a Corporate Transaction, any outstanding Awards shall be
treated as provided in the applicable agreement or plan of merger, consolidation, dissolution,
liquidation or sale of assets.




          21.3 Assumption of Awards by the Company. The Company, from time to time, also may
substitute or assume outstanding awards granted by another company, whether in connection with an
acquisition of such other company or otherwise, by either (a) granting an Award under the Plan in
substitution of such other company’s award, or (b) assuming such award as if it had been granted
under the Plan if the terms of such assumed award could be applied to an Award granted under the
Plan. Such substitution or assumption shall be permissible if the holder of the substituted or
assumed award would have been eligible to be granted an Award under the Plan if the other company
had applied the rules of the Plan to such grant. In the event the Company assumes an award granted
by another company, the terms and conditions of such award shall remain unchanged (except that the
exercise price and the number and nature of Shares issuable upon exercise of any such option will
be adjusted appropriately pursuant to Section 424(a) of the Code). In the event the Company elects
to grant a new Option rather than assuming an existing option, such new Option may be granted with
a similarly adjusted Exercise Price.




     22. ADOPTION AND STOCKHOLDER APPROVAL. The Plan was adopted by the Board on July 20, 2006.
The Plan shall become effective upon the Effective Date. The stockholders of the Company must
approve the Plan in a manner consistent with applicable law within twelve (12) months of its
approval by the Board.



     23. TERM OF PLAN. The Plan will terminate ten years following the earlier of (i) its adoption
by the Board or (ii) its approval by the Company’s stockholders.



     24. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate or amend the Plan
in any respect, including without limitation grants to Non-Employee Directors pursuant to Section 8
of the Plan, and amend any form of Award Agreement or
instrument to be executed pursuant to the Plan. Notwithstanding the foregoing, neither the Board
nor the Committee shall, without the approval of the stockholders of the Company, amend the Plan in
any manner that requires such stockholder approval pursuant to the Code or the regulations
promulgated thereunder as such provisions apply to ISO plans, or pursuant to the Exchange Act or
any rule promulgated thereunder. In addition, no amendment that is detrimental to a Participant
may be made to any outstanding Award without the consent of the Participant.



     25. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan by the Board, the submission
of the Plan to the stockholders of the Company for approval, nor any provision of the Plan shall be
construed as creating any limitations on the power of the Board to adopt such additional
compensation arrangements as it may deem desirable, including, without limitation, the granting of
stock options and bonuses otherwise than under the Plan, and such arrangements may be either
generally applicable or applicable only in specific cases.



16









 





     26. DEFINITIONS. As used in the Plan, the following terms shall have the following meanings:



     (a) “Authorized Transferee” means the permissible recipient, as authorized by this
Plan and the Committee, of an Award that is transferred during the Participant’s lifetime by the
Participant by gift or domestic relations order.



     (b) “Award” means any award under the Plan, including any Option, Restricted Stock,
Stock Bonus, Stock Appreciation Right or Restricted Stock Unit.



     (c) “Award Agreement” means the written or electronic agreement setting forth the
terms and provisions applicable to each Award granted under the Plan. The Award Agreement is
subject to the terms and conditions of the Plan.



     (d) “Board” means the Board of Directors of the Company.



     (e) “Cause” means termination of the Participant’s employment on the basis of any of
the following: (i) Participant’s conviction for, or guilty plea to, a felony involving moral
turpitude; (ii) a willful refusal by Participant to comply with the lawful and reasonable
instructions of the Company, or to otherwise perform Participant’s duties as lawfully and
reasonably determined by the Company, in each case that is not cured by Participant (if such
refusal is of a type that is capable of being cured) within 15 days of written notice being given
to Participant of such refusal; (iii) any willful act or acts of dishonesty undertaken by
Participant and intended to result in Participant’s (or any other person’s) substantial gain or
personal enrichment at the expense of the Company or any of its customers, partners, affiliates, or
employees; or (iv) any willful act of gross misconduct by Participant which is materially injurious
to the Company.



     (f) “Change In Control Event” means (a) a merger or consolidation of the Company
or a subsidiary with another corporation or other entity, other than a merger or consolidation
which results in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or its parent) at least a majority of the total voting power of
the Company or such surviving entity or its parent outstanding immediately after such merger or
consolidation, (b) a dissolution or liquidation of the Company, or (c) the sale of
substantially all of the assets of the Company.



     (g) “Code” means the Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder.



     (h) “Committee” means the Compensation Committee of the Board or such other committee
appointed by the Board to administer the Plan, or if no committee is appointed, the Board. Each
member of the Committee shall be (i) a “non-employee director” for purposes of Section 16 and Rule
16b-3 of the Exchange Act, and (ii) an “outside director” for purposes of Section 162(m) of the
Code, unless the Board has fewer than two such outside directors.



     (i) “Common Stock” means the common stock of the Company.



17









 





     (j) “Company” means Asthmatx, Inc., a corporation organized under the laws of the
State of Delaware, or any successor corporation.



     (k) “Corporate Transaction” means (a) a merger or consolidation in which the Company
is not the surviving corporation, (b) a dissolution or liquidation of the Company, (c) the sale of
substantially all of the assets of the Company, (d) a merger in which the Company is the surviving
corporation but after which the stockholders of the Company immediately prior to such merger (other
than any stockholder that merges, or which owns or controls another corporation that merges, with
the Company in such merger) cease to own their shares or other equity interest in the Company; or
(e) any other transaction which qualifies as a “corporate transaction” under Section 424(a) of the
Code wherein the stockholders of the Company give up all of their equity interest in the Company
(except for the acquisition, sale or transfer of all or substantially all of the outstanding shares
of the Company).



     (l) “Disability” means a disability within the meaning of Section 22(e)(3) of the
Code, as determined by the Committee.



     (m) “Effective Date” means the date on which the Registration Statement covering the
initial public offering of shares of the Company’s Common Stock is declared effective by the SEC.



     (n) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
regulations promulgated thereunder.



     (o) “Executive Officer” means a person who is an “executive officer” of the Company as
defined in Rule 3b-7 promulgated under the Exchange Act.



     (p) “Exercise Price” means the price at which a Participant who holds an Option or SAR
may purchase the Shares issuable upon exercise of the Option or SAR.



     (q) “Expiration Date” means the last date on which an Option or SAR may be exercised
as determined by the Committee.



     (r) “Fair Market Value” means, as of any date, the value of a share of the Company’s
Common Stock determined as follows:




	 	(1)	 	if such Common Stock is then quoted on the Nasdaq Global Select
Market, the Nasdaq Global Market or the Nasdaq Capital Market (collectively,
the “Nasdaq Market”), its closing price on the Nasdaq Market on the date of
determination, or if there are no sales for such date, then the last preceding
business day on which there were sales, as reported in The Wall Street Journal
or such other source as the Board or the Committee deems reliable;
	 
	 	(2)	 	if such Common Stock is publicly traded and is then listed on a national securities
exchange, its closing price on the date of determination on the principal national securities
exchange on which the Common Stock is




18









 






	 	 	 	listed or admitted to trading as reported in The Wall Street
Journal or such other source as the Board or the Committee deems reliable;
	 
	 	(3)	 	if such Common Stock is publicly traded but is neither quoted on the Nasdaq
Market nor listed or admitted to trading on a national securities exchange, the
average of the closing bid and asked prices on the date of determination as reported
in The Wall Street Journal or such other source as the Board or the Committee deems
reliable;
	 
	 	(4)	 	in the case of an Option or SAR made on the Effective Date, the price per share at which
shares of the Company’s Common Stock are initially offered for sale to the public by the Company’s
underwriters in the initial public offering of the Company’s Common Stock pursuant to a
registration statement filed with the SEC under the Securities Act; or
	 
	 	(5)	 	if none of the foregoing is applicable, by the Board or the Committee in good faith.





     (s) “Insider” means an officer or director of the Company or any other person whose
transactions in the Company’s Common Stock are subject to Section 16 of the Exchange Act.



     (t) “ISO” means an Incentive Stock Option within the meaning of Section 422 of the
Code.



     (u) “NASD Dealer” means broker-dealer that is a member of the National Association of
Securities Dealers, Inc.



     (v) “NSO” means a nonqualified stock option that does not qualify as an
ISO.



     (w) “Option” means an Award pursuant to Section 5 or Section 8 of the Plan.



     (x) “Non-Employee Director” means a member of the Company’s Board of Directors who is
not a current employee of the Company or any Parent or Subsidiary.



     (y) “Parent” means any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, if at the time of the granting of an Award under the Plan,
each of such corporations other than the Company owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other corporations in such chain or
such lesser percentage as determined by the Committee.



     (z) “Participant” means a person who receives an Award under the Plan.



     (aa) “Performance Factors” means the factors selected by the Committee from among the
following measures (whether or not in comparison to other peer companies) to determine whether the
performance goals established by the Committee and applicable to Awards have been satisfied:



19









 






	 	(1)	 	Net revenue and/or net revenue growth;
	 
	 	(2)	 	Earnings per share and/or earnings per share growth;
	 
	 	(3)	 	Earnings before income taxes and amortization and/or earnings
before income taxes and amortization growth;
	 
	 	(4)	 	Operating income and/or operating income growth;
	 
	 	(5)	 	Net income and/or net income growth;
	 
	 	(6)	 	Total stockholder return and/or total stockholder return
growth;
	 
	 	(7)	 	Return on equity;
	 
	 	(8)	 	Operating cash flow return on income;
	 
	 	(9)	 	Adjusted operating cash flow return on income;
	 
	 	(10)	 	Economic value added;
	 
	 	(11)	 	Individual business objectives; and
	 
	 	(12)	 	Company specific operational metrics.





     (bb) “Performance Period” means the period of service determined by the Committee, not
to exceed five years, during which years of service or performance is to be measured for the Award.



     (cc) “Plan” means this Asthmatx, Inc. 2006 Equity Incentive Plan, as may be amended
from time to time.



     (dd) “Purchase Price” means the price to be paid for Shares acquired under the Plan,
other than Shares acquired upon exercise of an Option or SAR.



     (ee) “Restricted Stock Award” means an award of Shares pursuant to Section 6 of the
Plan.



     (ff) “Restricted Stock Purchase Agreement” means an agreement evidencing a Restricted
Stock Award granted pursuant to Section 6 of the Plan.



     (gg) “Restricted Stock Unit” means an Award granted pursuant to Section 10 of the
Plan.



     (hh) “RSU Agreement” means an agreement evidencing a Restricted Stock Unit Award
granted pursuant to Section 10 of the Plan.



20









 





     (ii) “SAR Agreement” means an agreement evidencing a Stock Appreciation Right granted
pursuant to Section 9 of the Plan.



     (jj) “SEC” means the United States Securities and Exchange Commission.



     (kk) “Securities Act” means the Securities Act of 1933, as amended, and the
regulations promulgated thereunder.



     (ll) “Shares” means shares of the Company’s Common Stock reserved for issuance under
the Plan, as adjusted pursuant to Sections 2 and 21, and any successor security.



     (mm) “Stock Appreciation Right” means an Award granted pursuant to Section 9 of the
Plan.



     (nn) “Stock Bonus” means an Award granted pursuant to Section 7 of the Plan.



     (oo) “Stock Bonus Agreement” means an agreement evidencing a Stock Bonus Award granted
pursuant to Section 7 of the Plan.



     (pp) “Stock Option Agreement” means the agreement which evidences a Stock Option,
granted pursuant to Sections 5 or 8 of the Plan.



     (qq) “Subsidiary” means any entity directly or indirectly controlled by the Company,
as determined by the Committee.



     (rr) “Ten Percent Stockholder” means any person who directly or by attribution owns
more than ten percent of the total combined voting power of all classes of stock of the Company or
any Parent or Subsidiary.



     (ss) “Termination” or “Terminated” means, for purposes of the Plan with
respect to a Participant, that the Participant has ceased to provide services as an employee,
director,
consultant, independent contractor or adviser, to the Company or a Parent or Subsidiary;
provided that a Participant shall not be deemed to be Terminated if the Participant is on a leave
of absence approved by the Committee or by an officer of the Company designated by the Committee;
and provided further, that during any approved leave of absence, vesting of Awards shall be
suspended or continue in accordance with guidelines established from time to time by the Committee.
Subject to the foregoing, the Committee shall have sole discretion to determine whether a
Participant has ceased to provide services and the effective date on which the Participant ceased
to provide services (the “Termination Date”).




21










 







Grant No.:                    



ASTHMATX, INC.


2006 EQUITY INCENTIVE PLAN


STOCK OPTION AGREEMENT



     This Stock Option Agreement (the “Agreement”) is made and entered into as of the date of grant
set forth below (the “Date of Grant”) by and between Asthmatx, Inc., a Delaware corporation (the
“Company”), and the participant named below (the “Participant”). Capitalized terms not defined
herein shall have the meaning ascribed to them in the Company’s 2006 Equity Incentive Plan (the
“Plan”).



	 	 	 	 	 
	 

	 	 	 	 
	Participant:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Social Security Number:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Address:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Total Option Shares:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Exercise Price Per Share:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Date of Grant:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Vesting Commencement Date:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Expiration Date:
	 	 	 	 
	 

	 	 	 	 
	 

	 	(unless earlier terminated as provided for below in Section 2.3)	 	 
	 
	 	 	 	 
	Classification of Optionee

	 	o Exempt Employee	 	 
	 
	 

	 	o Nonexempt Employee	 	 
	 
	 	 	 	 
	Type of Stock Option
(Check one):

	 	o Incentive Stock Option	 	 
	 
	 

	 	o Nonqualified Stock Option	 	 







	1.	 	GRANT OF OPTION. The Company hereby grants to Participant an option (this “Option”)
to purchase the total number of shares of Common Stock of the Company set forth above as Total
Option Shares (the “Shares”) at the Exercise Price Per Share set forth above (the “Exercise
Price”), subject to all of the terms and conditions of this Agreement and the Plan. If
designated as an Incentive Stock Option above, the Option is intended to qualify as an
“incentive stock option” (the “ISO”) within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the “Code”).
	 
	2.	 	EXERCISE PERIOD.






	 	2.1	 	Vesting and Exercise Period of Option. Provided Participant continues
to provide services to the Company or any Subsidiary or Parent of the Company, the
Option will become vested and exercisable as follows:
	 
	 	 	 	[INSERT VESTING SCHEDULE]





 









 











	 	 	 	If application of the above vesting schedule would cause vesting of a fractional
share, such fractional share shall be rounded down to the nearest whole share for
each month except for the last month in such vesting period, at the end of which
last month this Option shall become exercisable for the full remainder of the
Shares.
	 
	 	2.2	 	Vesting of Shares. Shares that are vested pursuant to the schedule set
forth above under Vesting Schedule are “Vested Shares.” Shares that are not vested
pursuant to such schedule are “Unvested Shares.”
	 
	 	2.3	 	Expiration. The Option shall expire on the Expiration Date set forth
above or earlier as provided in Section 3 below or pursuant to Sections 5.6 or 21 of
the Plan.






	3.	 	TERMINATION.






	 	3.1	 	Termination for Any Reason Except Death, Disability or Cause. If
Participant is Terminated for any reason, except death, Disability or for Cause, the
Option, to the extent (and only to the extent) that it would have been exercisable by
Participant on the Termination Date, may be exercised by Participant no later than
three (3) months after the Termination Date, but in any event no later than the
Expiration Date. Any exercise of an ISO beyond (i) three (3) months after the
Termination Date when Termination is for any reason other than Participant’s death or
“permanent and total disability” (within the meaning of Section 22(e)(3) of the Code)
is deemed to be the exercise of an NSO.
	 
	 	3.2	 	Termination Because of Disability or Death. If Participant is
Terminated because of death (or Participant dies within three (3) months of Termination
when Termination is for any reason other than Cause), the Option, to the extent that it
is exercisable by Participant on the Termination Date, may be exercised by Participant
(or Participant’s legal representative) no later than twelve (12) months after the
Termination Date, but in any event no later than the Expiration Date.
	 
	 	3.3	 	Termination for Cause. If the Participant is terminated for Cause, the
Option shall immediately cease to be exercisable as to Vested Shares upon the
Termination Date and the Option shall expire on the Termination Date.
	 
	 	3.4	 	No Obligation to Employ. Nothing in the Plan or this Agreement shall
confer on Participant any right to continue in the employ of, or other relationship
with, the Company or any Parent or Subsidiary, or limit in any way the right of the
Company or any Parent or Subsidiary to terminate Participant’s employment or other
relationship at any time, with or without Cause.






	4.	 	MANNER OF EXERCISE.






	 	4.1	 	Stock Option Exercise Agreement. To exercise this Option, Participant
(or in the case of exercise after Participant’s death or incapacity, Participant’s
executor, administrator, heir or legatee, as the case may be) must deliver to the
Company an executed stock option exercise agreement in the form attached hereto as
Exhibit A, or in such other form as may be approved by the Committee from time
to time (the “Exercise Agreement”), which shall set forth: (i) Participant’s election
to




2









 






	 	 	 	exercise the Option, (ii) the number of Shares being purchased, (iii) any
restrictions imposed on the Shares and (iv) any representations, warranties and
agreements regarding Participant’s investment intent and access to information as
may be required by the Company to comply with applicable securities laws. If
someone other than Participant exercises the Option, then such person must submit
documentation reasonably acceptable to the Company verifying that such person has
the legal right to exercise the Option and such person shall be subject to all of
the restrictions contained herein as if such person were the Participant.
	 
	 	4.2	 	Limitations on Exercise. The Option may not be exercised unless such
exercise is in compliance with all applicable foreign, federal and state securities
laws, as they are in effect on the date of exercise. The Option may not be exercised
as to fewer than one Share unless it is exercised as to all Shares as to which the
Option is then exercisable.
	 
	 	4.3	 	Payment. The Exercise Agreement shall be accompanied by full payment
of the Exercise Price for the shares being purchased in cash (including by check) or
where permitted by law:






	 	(a)	 	by surrender of shares of the Company’s Common Stock that are
clear of all liens, claims, encumbrances or security interests;
	 
	 	(b)	 	provided that a public market for the Company’s stock exists:
(i) through a “same day sale” commitment from Participant and a broker-dealer
that is a member of the National Association of Securities Dealers (an “NASD
Dealer”) whereby Participant irrevocably elects to exercise the Option and to
sell a portion of the Shares so purchased sufficient to pay for the total
Exercise Price and whereby the NASD Dealer irrevocably commits upon receipt of
such Shares to forward the total Exercise Price directly to the Company, or
(ii) through a “margin” commitment from Participant and an NASD Dealer whereby
Participant irrevocably elects to exercise the Option and to pledge the Shares
so purchased to the NASD Dealer in a margin account as security for a loan from
the NASD Dealer in the amount of the total Exercise Price, and whereby the NASD
Dealer irrevocably commits upon receipt of such Shares to forward the total
Exercise Price directly to the Company; or
	 
	 	(c)	 	by any combination of the foregoing.






	 	4.4	 	Tax Withholding. Prior to the issuance of the Shares upon exercise of
the Option, Participant must pay or provide for any applicable foreign, federal, state
and local withholding obligations of the Company. If the Committee permits,
Participant may provide for payment of withholding taxes upon exercise of the Option by
requesting that the Company retain the minimum number of Shares with a Fair Market
Value equal to the minimum amount of taxes required to be withheld; but in no event
will the Company withhold Shares if such withholding would result in adverse accounting
consequences to the Company. In such case, the Company shall issue the net number of
Shares to the Participant by deducting the Shares retained from the Shares issuable
upon exercise.




3









 












	 	4.5	 	Issuance of Shares. Provided that the Exercise Agreement and payment
are in form and substance satisfactory to the Company, the Company shall issue the
Shares (in physical or electronic form) registered in the name of Participant,
Participant’s authorized assignee, or Participant’s legal representative, and shall
deliver such Shares with the appropriate legends affixed thereto.






	5.	 	NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the Option is an ISO, and if
Participant sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on
or before the later of (i) the date two (2) years after the Date of Grant, and (ii) the date
one (1) year after transfer of such Shares to Participant upon exercise of the Option,
Participant shall immediately notify the Company in writing of such disqualifying disposition.
Participant understands and agrees that a disqualifying disposition may require the Company
to withhold applicable taxes on the compensation income recognized by Participant from the
disqualifying disposition by payment from the wages or other compensation then payable to
Participant (Participant may be permitted to make a cash payment to the Company in lieu of
such withholding).
	 
	6.	 	COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of the Option and the issuance
and transfer of Shares shall be subject to compliance by the Company and Participant with all
applicable requirements of federal and state securities laws and with all applicable
requirements of any stock exchange on which the Company’s Common Stock may be listed at the
time of such issuance or transfer. Participant understands that the Company is under no
obligation to register or qualify the Shares with the SEC, any state securities commission or
any stock exchange to effect such compliance.
	 
	7.	 	NONTRANSFERABILITY OF OPTION. The Option may not be transferred in any manner other
than by will or by the laws of descent and distribution, and may be exercised during the
lifetime of Participant only by Participant or in the event of Participant’s incapacity, by
Participant’s legal representative. The terms of the Option shall be binding upon the
executors, administrators, successors and assigns of Participant.
	 
	8.	 	TAX CONSEQUENCES. Set forth below is a brief summary as of the Effective Date of the
Plan of some of the United States federal tax consequences of exercise of the Option and
disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. PARTICIPANT SHOULD CONSULT THE PROSPECTUS AND
PARTICIPANT’S PERSONAL TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.






	 	8.1	 	Exercise of ISO. If the Option qualifies as an ISO, there will be no
regular federal income tax liability upon the exercise of the Option, although the
excess, if any, of the Fair Market Value of the Shares on the date of exercise over the
Exercise Price will be treated as a tax preference item for federal alternative minimum
tax purposes and may subject the Participant to the alternative minimum tax in the year
of exercise.
	 
	 	8.2	 	Exercise of Nonqualified Stock Option. If the Option does not qualify
as an ISO, there may be a regular federal income tax liability upon the exercise of the
Option. Participant will be treated as having received compensation income




4









 






	 	 	 	(taxable at ordinary income tax rates) equal to the excess, if any, of the Fair
Market Value of the Shares on the date of exercise over the Exercise Price. If
Participant is a current or former employee of the Company, the Company may be
required to withhold from Participant’s compensation or collect from Participant and
pay to the applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.
	 
	 	8.3	 	Disposition of Shares. The following tax consequences may apply upon
disposition of the Shares.






	 	(a)	 	 Incentive Stock Options. If the Shares are held for
more than twelve (12) months after the date of the transfer of the Shares
pursuant to the exercise of an ISO and are disposed of more than two (2) years
after the Date of Grant, any gain realized on disposition of the Shares will be
treated as long term capital gain for federal income tax purposes. If Shares
purchased under an ISO are disposed of within the applicable one (1) year or
two (2) year period, any gain realized on such disposition will be treated as
compensation income (taxable at ordinary income rates) to the extent of the
excess, if any, of the Fair Market Value of the Shares on the date of exercise
over the Exercise Price.
	 
	 	(b)	 	 Nonqualified Stock Options. If the Shares are held
for more than twelve (12) months after the date of the transfer of the Shares
pursuant to the exercise of an NSO, any gain realized on disposition of the
Shares will be treated as long-term capital gain.
	 
	 	(c)	 	Withholding. The Company may be required to withhold
from the Participant’s compensation or collect from the Participant and pay to
the applicable taxing authorities an amount equal to a percentage of this
compensation income.






	9.	 	PRIVILEGES OF STOCK OWNERSHIP. Participant shall not have any of the rights of a
stockholder with respect to any Shares until the Shares are issued to Participant.
	 
	10.	 	INTERPRETATION. Any dispute regarding the interpretation of this Agreement shall be
submitted by Participant or the Company to the Committee for review. The resolution of such a
dispute by the Committee shall be final and binding on the Company and Participant.
	 
	11.	 	ENTIRE AGREEMENT. The Plan, the Stock Option Agreement and this Exercise Agreement,
together with all Exhibits thereto, constitute the entire agreement and understanding of the
parties with respect to the subject matter of this Exercise Agreement, and supersede all prior
understandings and agreements, whether oral or written, between or among the parties hereto
with respect to the specific subject matter hereof.
	 
	12.	 	NOTICES. Any and all notices required or permitted to be given to a party pursuant
to the provisions of this Agreement will be in writing and will be effective and deemed to
provide such party sufficient notice under this Agreement on the earliest of the following:
(i) at the time of personal delivery, if delivery is in person; (ii) one (1) business day
after deposit with an express overnight courier for United States deliveries, or two (2)
business




5









 






	 	 	days after such deposit for deliveries outside of the United States, with proof of delivery
from the courier requested; or (iii) three (3) business days after deposit in the United
States mail by certified mail (return receipt requested) for United States deliveries. All
notices for delivery outside the United States will be sent by express courier. All notices
not delivered personally will be sent with postage and/or other charges prepaid and properly
addressed to the party to be notified, and in the case of the Participant at the last know
known address by the Company of Participant, or at such other address as such other party
may designate by one of the indicated means of notice herein to the other parties hereto.
Notices to the Company will be marked “Attention: Stock Plan Administration”.
	 
	13.	 	SUCCESSORS AND ASSIGNS. The Company may assign any of its rights under this
Agreement. No other party to this Agreement may assign, whether voluntarily or by operation
of law, any of its rights and obligations under this Agreement, except with the prior written
consent of the Company. This Agreement shall be binding upon and inure to the benefit of the
successors and assigns of the Company. Subject to the restrictions on transfer set forth
herein, this Agreement shall be binding upon Participant and Participant’s heirs, executors,
administrators, legal representatives, successors and assigns.
	 
	14.	 	GOVERNING LAW. This Agreement shall be governed by and construed in accordance with
the laws of the State of California, without giving effect to that body of laws pertaining to
conflict of laws.
	 
	15.	 	ACCEPTANCE. Participant hereby acknowledges receipt of a copy of the Plan and this
Agreement. Participant has read and understands the terms and provisions thereof, and accepts
the Option subject to all the terms and conditions of the Plan and this Agreement.
Participant acknowledges that there may be adverse tax consequences upon exercise of the
Option or disposition of the Shares and that Participant should consult a tax adviser prior to
such exercise or disposition.
	 
	16.	 	FURTHER ASSURANCES. The parties agree to execute such further documents and
instruments and to take such further actions as may be reasonably necessary to carry out the
purposes and intent of this Agreement.
	 
	17.	 	TITLES AND HEADINGS. The titles, captions and headings of this Agreement are
included for ease of reference only and will be disregarded in interpreting or construing this
Agreement. Unless otherwise specifically stated, all references herein to “sections” and
“exhibits” will mean “sections” and “exhibits” to this Agreement.
	 
	18.	 	COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of
which when so executed and delivered will be deemed an original, and all of which together
shall constitute one and the same agreement.





[Signature Page to Stock Option Agreement Follows]




6









 









	19.	 	SEVERABILITY. If any provision of this Agreement is determined by any court or
arbitrator of competent jurisdiction to be invalid, illegal or unenforceable in any respect,
such provision will be enforced to the maximum extent possible given the intent of the parties
hereto. If such clause or provision cannot be so enforced, such provision shall be stricken
from this Agreement and the remainder of this Agreement shall be enforced as if such invalid,
illegal or unenforceable clause or provision had (to the extent not enforceable) never been
contained in this Agreement.





          IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized representative and Participant has executed this Agreement, effective as of the Date of
Grant.




	 	 	 	 	 	 	 	 	 
	ASTHMATX, INC.	 	 	 	PURCHASER
	 
	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	(Signature)
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	(Please print name)	 	 	 	(Please print name)
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	(Please print title)	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Address:	 	 	 	Address:
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Fax No.:

	 	 	 	 	Fax No.:	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Phone No.:

	 	 	 	 	Phone No.:	 	 
	 

	 	 
	 	 	 	 	 	 





[Signature Page to Stock Option Agreement]




7









 








EXHIBIT A




FORM OF STOCK OPTION EXERCISE AGREEMENT





8









 








No.                    



ASTHMATX, INC.


2006 EQUITY INCENTIVE PLAN


STOCK OPTION EXERCISE AGREEMENT



     This Stock Option Exercise Agreement (the “Exercise Agreement”) is made and entered into as of
                     ,___(the “Effective Date”) by and between Asthmatx, Inc., a Delaware
corporation (the “Company”), and the purchaser named below (the “Purchaser”). Capitalized terms
not defined herein shall have the meanings ascribed to them in the Company’s 2006 Equity Incentive
Plan (the “Plan”).



	 	 	 
	Purchaser:
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	Social Security Number:
	 	 
	 

	 	 
	 
	 	 
	Address:
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	Total Number of Shares:
	 	 
	 

	 	 
	 
	 	 
	Exercise Price Per Share:
	 	 
	 

	 	 
	 
	 	 
	Type of Stock Option
	 	 
	 
	 	 
	(Check one):

	 	o Incentive Stock Option
	 

	 	o Nonqualified Stock Option






     1. EXERCISE OF OPTION.



          1.1 Exercise. Pursuant to exercise of that certain option (the “Option”) granted to
Purchaser under the Plan and subject to the terms and conditions of this Exercise Agreement,
Purchaser hereby purchases from the Company, and the Company hereby sells to Purchaser, the Total
Number of Shares set forth above (the “Shares”) of the Company’s Common Stock, at the Exercise
Price Per Share set forth above (the “Exercise Price”). As used in this Exercise Agreement, the
term “Shares” refers to the Shares purchased under this Exercise Agreement and includes all
securities received (i) in replacement of the Shares, (ii) as a result of stock dividends or stock
splits with respect to the Shares, and (iii) all securities received in replacement of the Shares
in a merger, recapitalization, reorganization or similar corporate transaction.




          1.2 Payment. Purchaser hereby delivers payment of the Exercise Price in the manner
permitted in the Stock Option Agreement as follows (check and complete as appropriate):




 









 








	 	 	 	 	 
	 

	 	 ̈
	 	in cash (by check) in the amount of $                    , receipt of which
is acknowledged by the Company;
	 
	 	 	 	 
	 

	 	 ̈
	 	by delivery of                      fully-paid, nonassessable and vested shares
of the Common Stock of the Company owned by Purchaser and owned free
and clear of all liens, claims, encumbrances or security interests,
valued at the current Fair Market Value of $                     per share;
	 
	 	 	 	 
	 

	 	 ̈
	 	through a “same day sale” commitment from Participant and a
broker-dealer that is a member of the National Association of
Securities Dealers (an “NASD Dealer”) whereby Participant irrevocably
elects to exercise the Option and to sell a portion of the Shares so
purchased sufficient to pay for the total Exercise Price and whereby
the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the total Exercise Price directly to the Company; or
	 
	 	 	 	 
	 

	 	 ̈
	 	through a “margin” commitment from Participant and an NASD Dealer
whereby Participant irrevocably elects to exercise the Option and to
pledge the Shares so purchased to the NASD Dealer in a margin account
as security for a loan from the NASD Dealer in the amount of the total
Exercise Price, and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the total Exercise Price directly to
the Company.






     2. DELIVERY.



          2.1 Deliveries by Purchaser. Purchaser hereby delivers to the Company (i) this
Exercise Agreement and (ii) the Exercise Price.




          2.2 Deliveries by the Company. Upon its receipt of the Exercise Price, payment or
other provision for any applicable tax obligations and all the documents to be executed and
delivered by Purchaser to the Company under Section 2.1, the Company will issue a duly executed
stock certificate (in physical or electronic form) evidencing the Shares in the name of Purchaser.




     3. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and warrants to
the Company that:



          3.1 Agrees to Terms of the Plan. Purchaser has received a copy of the Plan and the
Stock Option Agreement, has read and understands the terms of the Plan, the Stock Option Agreement
and this Exercise Agreement, and agrees to be bound by their terms and conditions. Purchaser
acknowledges that there may be adverse tax consequences upon exercise of the Option or disposition
of the Shares, and that Purchaser should consult a tax adviser prior to such exercise or
disposition.




          3.2 Understanding of Risks. Purchaser acknowledges that the Form S-8 prospectus for
the Plan and Shares has been made available and is fully aware of: (i) the

 









 








speculative nature of the investment in the Share, and (ii) the financial issues involved with
such purchase.




     4. COMPLIANCE WITH SECURITIES LAWS. Purchaser understands and acknowledges that the
exercise of any rights to purchase any Shares is expressly conditioned upon compliance with the
Securities Act and all applicable state securities laws. Purchaser agrees to cooperate with the
Company to ensure compliance with such laws.



     5. NO TRANSFER UNLESS REGISTERED OR EXEMPT. Purchaser understands that Purchaser may
not transfer any Shares except when such Shares are registered under the Securities Act or
qualified under applicable state securities laws or unless, in the opinion of counsel to the
Company, exemptions from such registration and qualification requirements are available. Purchaser
understands that only the Company may file a registration statement with the SEC and that the
Company is under no obligation to do so with respect to the Shares, and may withdraw any such
registration statement at any time after filing. Purchaser has also been advised that exemptions
from registration and qualification may not be available or may not permit Purchaser to transfer
all or any of the Shares in the amounts or at the times proposed by Purchaser.



     6. RIGHTS AS A STOCKHOLDER. Subject to the terms and conditions of this Exercise
Agreement, Purchaser will have all of the rights of a stockholder of the Company with respect to
the Shares from and after the date that Shares are issued to Purchaser until such time as Purchaser
disposes of the Shares.



     7. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.



          7.1 Legends. Purchaser understands and agrees that the Company will place any legends
that may be required by state or U.S. Federal securities laws, the Company’s Certificate of
Incorporation or Bylaws, any other agreement between Purchaser and the Company or, subject to the
assent of the Company, any agreement between Purchaser and any third party.




          7.2 Stop-Transfer Instructions. Purchaser agrees that, to ensure compliance with any
restrictions imposed by this Exercise Agreement, the Company may issue appropriate “stop-transfer”
instructions to its transfer agent, if any, and if the Company transfers its own securities, it may
make appropriate notations to the same effect in its own records.




          7.3 Refusal to Transfer. The Company will not be required (i) to transfer on its
books any Shares that have been sold or otherwise transferred in violation of any of the provisions
of this Exercise Agreement or (ii) to treat as owner of such Shares, or to accord the right to vote
or pay dividends to any purchaser or other transferee to whom such Shares have been so transferred.




     8. TAX CONSEQUENCES. PURCHASER UNDERSTANDS AND REPRESENTS: (i) THAT PURCHASER HAS
CONSULTED OR HAS HAD THE OPPORTUNITY TO CONSULT WITH PURCHASER’S PERSONAL TAX ADVISER IN CONNECTION
WITH THE PURCHASE OR DISPOSITION OF THE SHARES AND (ii) THAT PURCHASER IS NOT RELYING ON THE
COMPANY FOR ANY TAX ADVICE.



 









 





     9. COMPLIANCE WITH LAWS AND REGULATIONS. The issuance and transfer of the Shares will
be subject to and conditioned upon compliance by the Company and Purchaser with all applicable
state and federal laws and regulations and with all applicable requirements of any stock exchange
or automated quotation system on which the Company’s Common Stock may be listed or quoted at the
time of such issuance or transfer.



     10. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights under this
Exercise Agreement. No other party to this Exercise Agreement may assign, whether voluntarily or
by operation of law, any of its rights and obligations under this Exercise Agreement, except with
the prior written consent of the Company. This Exercise Agreement shall be binding upon and inure
to the benefit of the successors and assigns of the Company. Subject to the restrictions on
transfer herein set forth, this Exercise Agreement will be binding upon Purchaser and Purchaser’s
heirs, executors, administrators, legal representatives, successors and assigns.



     11. GOVERNING LAW. This Exercise Agreement shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to that body of laws
pertaining to conflict of laws.



     12. NOTICES. Any and all notices required or permitted to be given to a party
pursuant to the provisions of this Exercise Agreement will be in writing and will be effective and
deemed to provide such party sufficient notice under this Exercise Agreement on the earliest of the
following: (i) at the time of personal delivery, if delivery is in person; (ii) one (1) business
day after deposit with an express overnight courier for United States deliveries, or two (2)
business days after such deposit for deliveries outside of the United States, with proof of
delivery from the courier requested; or (iii) three (3) business days after deposit in the United
States mail by certified mail (return receipt requested) for United States deliveries. All notices
for delivery outside the United States will be sent by express courier. All notices not delivered
personally will be sent with postage and/or other charges prepaid and properly addressed to the
party to be notified, and in the case of the Participant at the last know known address by the
Company of Participant, or at such other address as such other party may designate by one of the
indicated means of notice herein to the other parties hereto. Notices to the Company will be
marked “Attention: Stock Plan Administration”.



     13. FURTHER ASSURANCES. The parties agree to execute such further documents and
instruments and to take such further actions as may be reasonably necessary to carry out the
purposes and intent of this Exercise Agreement.



     14. TITLES AND HEADINGS. The titles, captions and headings of this Exercise Agreement
are included for ease of reference only and will be disregarded in interpreting or construing this
Exercise Agreement. Unless otherwise specifically stated, all references herein to “sections” and
“exhibits” will mean “sections” of and “exhibits” to this Exercise Agreement.



     15. ENTIRE AGREEMENT. The Plan, the Stock Option Agreement and this Exercise
Agreement, together with all Exhibits thereto, constitute the entire agreement and understanding of
the parties with respect to the subject matter of this Exercise Agreement, and



 









 







supersede all prior understandings and agreements, whether oral or written, between or among
the parties hereto with respect to the specific subject matter hereof.



     16. COUNTERPARTS. This Exercise Agreement may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an original, and all of
which together shall constitute one and the same agreement.



     17. SEVERABILITY. If any provision of this Exercise Agreement is determined by any
court or arbitrator of competent jurisdiction to be invalid, illegal or unenforceable in any
respect, such provision will be enforced to the maximum extent possible given the intent of the
parties hereto. If such clause or provision cannot be so enforced, such provision shall be
stricken from this Exercise Agreement and the remainder of this Exercise Agreement shall be
enforced as if such invalid, illegal or unenforceable clause or provision had (to the extent not
enforceable) never been contained in this Exercise Agreement.



[Signature Page to Stock Option Exercise Agreement Follows]




 









 








     IN WITNESS WHEREOF, the Company has caused this Exercise Agreement to be executed by its duly
authorized representative, and Purchaser has executed this Exercise Agreement as of the Effective
Date, indicated above.



	 	 	 	 	 	 	 	 	 
	ASTHMATX, INC.	 	 	 	PURCHASER
	 
	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	(Signature)
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	(Please print name)	 	 	 	(Please print name)
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	(Please print title)	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Address:	 	 	 	Address:
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Fax No.:

	 	 	 	 	Fax No.	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Phone No.:

	 	 	 	 	Phone No.:	 	 
	 

	 	 
	 	 	 	 	 	 





[Signature page to Stock Option Exercise Agreement]