**Exhibit10.74**

 

**CRDENTIA CORP. 2004 STOCK INCENTIVE PLAN**

 

**NOTICE OF STOCK OPTION AWARD**

 
| Grantee’s Name  and Address: |   | James J.  TerBeest           |
|-----------------------------------|--------|------------------------------|
|                              |   | 5001 LBJ  Freeway, Suite 850 |
|                              |   | Dallas, TX 75244             |

 

You(the “Grantee”) have been granted an option to purchase shares of Common Stock,subject to the terms and conditions of this Notice of Stock Option Award (the “Notice”),the Crdentia Corp. 2004 Stock Incentive Plan, as amended from time to time (the“Plan”) and the Stock Option Award Agreement (the “Option Agreement”) attachedhereto, as follows. Unless otherwise defined herein, the terms defined in thePlan shall have the same defined meanings in this Notice.

 
| Date of Award                                                          |   | March 24, 2006   |    |
|------------------------------------------------------------------------|--------|------------------|---------|
|                                                                   |   |             |    |
| Vesting  Commencement Date                                             |   | March 24, 2006   |    |
|                                                                   |   |             |    |
| Exercise Price  per Share                                              |   | $                |    |
|                                                                   |   |             |    |
| Total Number of  Shares Subject to the Option (the “Shares”) |   | 150,000          |    |
|                                                                   |   |             |    |
| Total Exercise  Price                                                  |   | $                | 675,000 |   |
|                                                                   |   |             |    |
| Type of Option:                                                        |   |             |    |
|                                                                   |   |             |    |
| Expiration Date:                                                       |   | March 24, 2016   |    |
|                                                                   |   |             |    |
| Post-Termination  Exercise Period:                                     |   | Three (3) Months |    |
|                                                                        |        |                  |         |  |

 

Vesting Schedule:

 

Subjectto the Grantee’s Continuous Service and other limitations set forth in thisNotice and the Option Agreement, the Option may be exercised, in whole or inpart, in accordance with the following schedule:

 

Subject to thelimitations of the following paragraph, the Shares shall vest over a four-yearperiod with 25% of the Shares vesting on the 1st anniversary of theVesting Commencement Date and 1/48 of the Shares shall vest on each monthlyanniversary of the Vesting Commencement Date thereafter.

 

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INWITNESS WHEREOF, the Company and the Grantee have executed this Notice andagree that the Option is to be governed by the terms and conditions of thisNotice, the Plan, and the Option Agreement.

 
|   | Crdentia Corp.,                 |
|--------|---------------------------------|
|   | a Delaware  corporation         |
|   |                            |
|   | By:                             | /s/ James D.  Durham |   |
|   |                            |
|   | Title: Chief  Executive Officer |

 

THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARESSUBJECT TO THE OPTION SHALL VEST, IF AT ALL, ONLY DURING THE PERIOD OF THEGRANTEE’S CONTINUOUS SERVICE (NOT THROUGH THE ACT OF BEING GRANTED THE OPTIONOR ACQUIRING SHARES HEREUNDER).

 

TheGrantee acknowledges receipt of a copy of the Plan and the Option Agreement,and represents that he or she is familiar with the terms and provisions thereof,and hereby accepts the Option subject to all of the terms and provisions hereofand thereof. The Grantee has reviewed this Notice, the Plan, and the OptionAgreement in their entirety, has had an opportunity to obtain the advice ofcounsel prior to executing this Notice, and fully understands all provisions ofthis Notice, the Plan and the Option Agreement. The Grantee hereby agrees thatall questions of interpretation and administration relating to this Notice, thePlan and the Option Agreement shall be resolved by the Administrator inaccordance with Section 13 of the Option Agreement. The Grantee furtheragrees to the venue selection and waiver of a jury trial in accordance withSection 14 of the Option Agreement. The Grantee further agrees to notifythe Company upon any change in the residence address indicated in this Notice.

 
| Dated: March 24,  2006 | Signed: | /s/ James J.  TerBeest |   |
|------------------------|---------|------------------------|--------|
|                   |    | Grantee                |
|                        |         |                        |        |  |

 

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**Award Number:     **

 

**CRDENTIA CORP. 2004 STOCK INCENTIVE PLAN**

** **

**STOCK OPTION AWARD AGREEMENT**

** **

# 1.                                       Grantof Option. Crdentia Corp., a Delaware corporation (the “Company”), herebygrants to the Grantee (the “Grantee”) named in the Notice of Stock Option Award(the “Notice”), an option (the “Option”) to purchase the Total Number of Sharesof Common Stock subject to the Option (the “Shares”) set forth in the Notice,at the Exercise Price per Share set forth in the Notice (the “Exercise Price”)subject to the terms and provisions of the Notice, this Stock Option AwardAgreement (the “Option Agreement”) and the Company’s 2004****Stock****Incentive Plan, as amended from time to time (the “Plan”),which are incorporated herein by reference. Unless otherwise defined herein,the terms defined in the Plan shall have the same defined meanings in thisOption Agreement.

#  

## TheOption is intended to qualify as a Non-Qualified Stock Option and not as anIncentive Stock Option as defined in Section 422 of the Code.

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# 2.                                       Exerciseof Option.

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## (a)                                  Rightto Exercise. The Option shall be exercisable during its term in accordancewith the Vesting Schedule set out in the Notice and with the applicableprovisions of the Plan and this Option Agreement. The Option shall be subjectto the provisions of Section** **11 of thePlan and Section 2(d) of this Option Agreement relating to theexercisability or termination of the Option in the event of a CorporateTransaction or Change in Control. The Grantee shall be subject to reasonablelimitations on the number of requested exercises during any monthly or weeklyperiod as determined by the Administrator. In no event shall the Company issuefractional Shares.

##  

## (b)                                 Methodof Exercise. The Option shall be exercisable by delivery of an exercisenotice (a form of which is attached as Exhibit A) or by such other procedure asspecified from time to time by the Administrator which shall state the electionto exercise the Option, the whole number of Shares in respect of which theOption is being exercised, and such other provisions as may be required by theAdministrator. The exercise notice shall be delivered in person, by certifiedmail, or by such other method (including electronic transmission) as determinedfrom time to time by the Administrator to the Company accompanied by payment ofthe Exercise Price. The Option shall be deemed to be exercised upon receipt bythe Company of such notice accompanied by the Exercise Price, which, to theextent selected, shall be deemed to be satisfied by use of the broker-dealersale and remittance procedure to pay the Exercise Price provided inSection 3(d), below.

##  

## (c)                                  Taxes.No Shares will be delivered to the Grantee or other person pursuant to theexercise of the Option until the Grantee or other person has made arrangementsacceptable to the Administrator for the satisfaction of applicable income taxand employment tax withholding obligations, including, without limitation, suchother tax obligations of the Grantee incident to the receipt of Shares. Uponexercise of the Option, the Company or the Grantee’s

 

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## employer may offset orwithhold (from any amount owed by the Company or the Grantee’s employer to theGrantee) or collect from the Grantee or other person an amount sufficient tosatisfy such tax withholding obligations.

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## (d)                                 Accelerationof Option Upon Corporate Transaction or Change in Control.

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(i)                                     CorporateTransaction. In the event of a Corporate Transaction and irrespective ofwhether the Option is Assumed or Replaced, the Option automatically shallbecome fully vested and exercisable immediately prior to the specifiedeffective date of such Corporate Transaction, for all of the Shares at the timerepresented by the Option, provided that the Grantee’s Continuous Service hasnot terminated prior to such date.

 

(ii)                                  Changein Control. In the event of a Change in Control (other than a Change inControl which also is a Corporate Transaction), the Option shall become fullyvested and exercisable immediately prior to the specified effective date ofsuch Change in Control, for all of the Shares at the time represented by theOption, provided that the Grantee’s Continuous Service has not terminated priorto such date.

 

# 3.                                       Methodof Payment. Payment of the Exercise Price shall be made by any of thefollowing, or a combination thereof, at the election of the Grantee; provided,however, that such exercise method does not then violate any Applicable Lawand, provided further, that the portion of the Exercise Price equal to the parvalue of the Shares must be paid in cash or other legal consideration permittedby the Delaware General Corporation Law:

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## (a)                                  cash;

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## (b)                                 check;

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## (c)                                  surrenderof Shares or delivery of a properly executed form of attestation of ownershipof Shares as the Administrator may require which have a Fair Market Value onthe date of surrender or attestation equal to the aggregate Exercise Price ofthe Shares as to which the Option is being exercised, provided, however, that Shares acquired under the Plan or any otherequity compensation plan or agreement of the Company must have been held by theGrantee for a period of more than six (6) months (and not used foranother Award exercise by attestation during such period); or

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## (d)                                 paymentthrough a broker-dealer sale and remittance procedure pursuant to which theGrantee (i) shall provide written instructions to a Company-designatedbrokerage firm to effect the immediate sale of some or all of the purchasedShares and remit to the Company sufficient funds to cover the aggregateexercise price payable for the purchased Shares and (ii) shall provide writtendirectives to the Company to deliver the certificates for the purchased Sharesdirectly to such brokerage firm in order to complete the sale transaction.

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# 4.                                       Restrictionson Exercise. The Option may not be exercised if the issuance of the Sharessubject to the Option upon such****exercise wouldconstitute a violation of any Applicable Laws. If the exercise of the Optionwithin the applicable time periods set forth in Section 6, 7 and 8 of thisOption Agreement is prevented by the provisions of this Section 5, theOption shall remain exercisable until one (1) month after the date the Granteeis notified by the Company that

 

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# the Option isexercisable, but in any event no later than the Expiration Date set forth inthe Notice.

#  

# 5.                                       Terminationor Change of Continuous Service. In the event the Grantee’s ContinuousService terminates, the Grantee may, but only during the Post-TerminationExercise Period, exercise the portion of the Option that was vested at the dateof such termination (the “Termination Date”). The Post-Termination ExercisePeriod shall commence on the Termination Date. In no event, however, shall theOption be exercised later than the Expiration Date set forth in the Notice. Inthe event of the Grantee’s change in status from Employee, Director orConsultant to any other status of Employee, Director or Consultant, the Optionshall remain in effect and vesting of the Option shall continue only to theextent determined by the Administrator as of such change in status. Except asprovided in Sections 6 and 7 below, to the extent that the Option wasunvested on the Termination Date, or if the Grantee does not exercise thevested portion of the Option within the Post-Termination Exercise Period,****the Option shall terminate.

#  

# 6.                                       Disabilityof Grantee. In the event the Grantee’s Continuous Service terminates as aresult of his or her Disability, the Grantee may, but only within twelve (12)months commencing on the Termination Date (but in no event later than theExpiration Date), exercise the portion of the Option that was vested on theTermination Date. To the extent that the Option was unvested on the TerminationDate, or if the Grantee does not exercise the vested portion of the Optionwithin the time specified herein, the Option shall terminate.

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# 7.                                       Deathof Grantee. In the event of the termination of the Grantee’s ContinuousService as a result of his or her death, or in the event of the Grantee’s deathduring the Post-Termination Exercise Period or during the twelve (12)month period following the Grantee’s termination of Continuous Service as aresult of his or her Disability, the person who acquired the right to exercisethe Option pursuant to Section 8 may exercise the portion of the Optionthat was vested at the date of termination within twelve (12) months commencingon the date of death (but in no event later than the Expiration Date). To theextent that the Option was unvested on the date of death, or if the vestedportion of the Option is not exercised within the time specified herein, theOption shall terminate.

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# 8.                                       Transferabilityof Option. The Option may not be transferred in any manner other than bywill or by the laws of descent and distribution, provided, however, that the Optionmay be transferred during the lifetime of the Grantee to the extent and in themanner authorized by the Administrator. Notwithstanding the foregoing, theGrantee may designate one or more beneficiaries of the Grantee’s Option in theevent of the Grantee’s death on a beneficiary designation form provided by theAdministrator. Following the death of the Grantee, the Option, to the extentprovided in Section 7, may be exercised (a) by the person or personsdesignated under the deceased Grantee’s beneficiary designation or (b) inthe absence of an effectively designated beneficiary, by the Grantee’s legalrepresentative or by any person empowered to do so under the deceased Grantee’swill or under the then applicable laws of descent and distribution. The termsof the Option shall be binding upon the executors, administrators, heirs,successors and transferees of the Grantee.

 

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# 9.                                       Termof Option. The Option must be exercised no later than the Expiration Dateset forth in the Notice or such earlier date as otherwise provided herein. Afterthe Expiration Date or such earlier date, the Option shall be of no furtherforce or effect and may not be exercised.

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# 10.                                 TaxConsequences. Set forth below is a brief summary as of the date of thisOption Agreement of some of the federal tax consequences of exercise of theOption and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE GRANTEE SHOULDCONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.

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## (a)                                  Exerciseof Non-Qualified Stock Option. On exercise of a Non-Qualified Stock Option,the Grantee will be treated as having received compensation income (taxable atordinary income tax rates) equal to the excess, if any, of the Fair MarketValue of the Shares on the date of exercise over the Exercise Price. If theGrantee is an Employee or a former Employee, the Company will be required towithhold from the Grantee’s compensation or collect from the Grantee and pay tothe applicable taxing authorities an amount in cash equal to a percentage ofthis compensation income at the time of exercise, and may refuse to honor theexercise and refuse to deliver Shares if such withholding amounts are notdelivered at the time of exercise.

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## (b)                                 Dispositionof Shares. In the case of a Non-Qualified Stock Option, if Shares are heldfor more than one year, any gain realized on disposition of the Shares will betreated as long-term capital gain for federal income tax purposes.

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# 11.                                 EntireAgreement: Governing Law. The Notice, the Plan and this Option Agreementconstitute the entire agreement of the parties with respect to the subjectmatter hereof and supersede in their entirety all prior undertakings andagreements of the Company and the Grantee with respect to the subject matterhereof, and may not be modified adversely to the Grantee’s interest except bymeans of a writing signed by the Company and the Grantee. Nothing in theNotice, the Plan and this Option Agreement (except as expressly providedtherein) is intended to confer any rights or remedies on any persons other thanthe parties. The Notice, the Plan and this Option Agreement are to be construedin accordance with and governed by the internal laws of the****Stateof Texas without giving effect to any choice of law rule that would cause theapplication of the laws of any jurisdiction other than the internal laws of theState of Texas to the rights and duties of the parties. Should any provision ofthe Notice, the Plan or this Option Agreement be determined to be illegal orunenforceable, such provision shall be enforced to the fullest extent allowedby law and the other provisions shall nevertheless remain effective and shallremain enforceable.

#  

# 12.                                 Construction.The captions used in the Notice and this Option Agreement are inserted forconvenience and shall not be deemed a part of the Option for construction orinterpretation. Except when otherwise indicated by the context, the singular shallinclude the plural and the plural shall include the singular. Use of the term “or”is not intended to be exclusive, unless the context clearly requires otherwise.

 

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# 13.                                 Administrationand Interpretation. Any question or dispute regarding the administration orinterpretation of the Notice, the Plan or this Option Agreement shall besubmitted by the Grantee or by the Company to the Administrator. The resolutionof such question or dispute by the Administrator shall be final and binding onall persons.

#  

# 14.                                 Venueand Waiver of Jury Trial. The Company, the Grantee, and the Grantee’sassignees pursuant to Section 8 (the “parties”) agree that any suit,action, or proceeding arising out of or relating to the Notice, the Plan orthis Option Agreement shall be brought in the United States District Court forthe Northern District of Texas (or should such court lack jurisdiction to hearsuch action, suit or proceeding, in a Texas state court in the County of Dallas)and that the parties shall submit to the jurisdiction of such court. Theparties irrevocably waive, to the fullest extent permitted by law, anyobjection the party may have to the laying of venue for any such suit, actionor proceeding brought in such court. THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHTTHEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. Ifany one or more provisions of this Section 14 shall for any reason be heldinvalid or unenforceable, it is the specific intent of the parties that suchprovisions shall be modified to the minimum extent necessary to make it or itsapplication valid and enforceable.

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# 15.                                 Notices.Any notice required or permitted hereunder shall be given in writing and shallbe deemed effectively given upon personal delivery, upon deposit for deliveryby an internationally recognized express mail courier service or upon depositin the United States mail by certified mail (if the parties are within theUnited States), with postage and fees prepaid, addressed to the other party atits address as shown in these instruments, or to such other address as suchparty may designate in writing from time to time to the other party.

#  

**END OFAGREEMENT**

 

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**EXHIBIT A**

** **

**CRDENTIA CORP. 2004 STOCK INCENTIVE PLAN**

** **

**EXERCISE NOTICE**

** **

Crdentia Corp.

 

5001 LBJ Freeway, Suite 850Dallas, Texas 75244

 

Attention:Secretary

 

1.                                       Exerciseof Option. Effective as of today,                       ,              the undersigned (the “Grantee”) hereby elects to exercise the Grantee’s optionto purchase                   shares of the Common Stock (the “Shares”) of Crdentia Corp. (the “Company”)under and pursuant to the Company’s 2004 Stock Incentive Plan, as amended fromtime to time (the “Plan”) and the Non-Qualified Stock Option Award Agreement(the “Option Agreement”) and Notice of Stock Option Award (the “Notice”) dated           ,200  . Unless otherwise defined herein, the terms defined in the Planshall have the same defined meanings in this Exercise Notice.

 

2.                                       Representationsof the Grantee. The Grantee acknowledges that the Grantee has received,read and understood the Notice, the Plan and the Option Agreement and agrees toabide by and be bound by their terms and conditions.

 

3.                                       Rightsas Stockholder. Until the stock certificate evidencing such Shares isissued (as evidenced by the appropriate entry on the books of the Company or ofa duly authorized transfer agent of the Company), no right to vote or receivedividends or any other rights as a stockholder shall exist with respect to theShares, notwithstanding the exercise of the Option. The Company shall issue (orcause to be issued) such stock certificate promptly after the Option isexercised. No adjustment will be made for a dividend or other right for whichthe record date is prior to the date the stock certificate is issued, except asprovided in Section 10 of the Plan.

 

4.                                       Deliveryof Payment. The Grantee herewith delivers to the Company the full ExercisePrice for the Shares, which, to the extent selected, shall be deemed to besatisfied by use of the broker-dealer sale and remittance procedure to pay theExercise Price provided in Section 3(d) of the Option Agreement.

 

5.                                       TaxConsultation. The Grantee understands that the Grantee may suffer adversetax consequences as a result of the Grantee’s purchase or disposition of theShares. The Grantee represents that the Grantee has consulted with any taxconsultants the Grantee deems advisable in connection with the purchase or dispositionof the Shares and that the Grantee is not relying on the Company for any taxadvice.

 

6.                                       Taxes.The Grantee agrees to satisfy all applicable foreign, federal, state and localincome and employment tax withholding obligations and herewith delivers to theCompany the full amount of such obligations or has made arrangements acceptableto the Company to satisfy such obligations.

 

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7.                                       Successorsand Assigns. The Company may assign any of its rights under this ExerciseNotice to single or multiple assignees, and this agreement shall inure to thebenefit of the successors and assigns of the Company. This Exercise Noticeshall be binding upon the Grantee and his or her heirs, executors,administrators, successors and assigns.

 

8.                                       Construction.The captions used in this Exercise Notice are inserted for convenience andshall not be deemed a part of this agreement for construction or interpretation.Except when otherwise indicated by the context, the singular shall include theplural and the plural shall include the singular. Use of the term “or” is notintended to be exclusive, unless the context clearly requires otherwise.

 

9.                                       Administrationand Interpretation. The Grantee hereby agrees that any question or disputeregarding the administration or interpretation of this Exercise Notice shall besubmitted by the Grantee or by the Company to the Administrator. The resolutionof such question or dispute by the Administrator shall be final and binding onall persons.

 

10.                                 GoverningLaw; Severability. This Exercise Notice is to be construed in accordancewith and governed by the internal laws of the State of Texas without givingeffect to any choice of law rule that would cause the application of the lawsof any jurisdiction other than the internal laws of the State of Texas to therights and duties of the parties. Should any provision of this Exercise Noticebe determined by a court of law to be illegal or unenforceable, such provisionshall be enforced to the fullest extent allowed by law and the other provisionsshall nevertheless remain effective and shall remain enforceable.

 

11.                                 Notices.Any notice required or permitted hereunder shall be given in writing and shallbe deemed effectively given upon personal delivery, upon deposit for deliveryby an internationally recognized express mail courier service or upon depositin the United States mail by certified mail (if the parties are within theUnited States), with postage and fees prepaid, addressed to the other party atits address as shown below beneath its signature, or to such other address assuch party may designate in writing from time to time to the other party.

 

12.                                 FurtherInstruments. The parties agree to execute such further instruments and totake such further action as may be reasonably necessary to carry out thepurposes and intent of this agreement.

 

13.                                 EntireAgreement. The Notice, the Plan and the Option Agreement are incorporatedherein by reference and together with this Exercise Notice constitute theentire agreement of the parties with respect to the subject matter hereof andsupersede in their entirety all prior undertakings and agreements of theCompany and the Grantee with respect to the subject matter hereof, and may notbe modified adversely to the Grantee’s interest except by means of a writingsigned by the Company and the Grantee. Nothing in the Notice, the Plan, theOption Agreement and this Exercise Notice (except as expressly providedtherein) is intended to confer any rights or remedies on any persons other thanthe parties. 

 

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| Submitted by: | Accepted by:   |
|---------------|----------------|
|          |           |
| GRANTEE:      | CRDENTIA CORP. |
|          |           |
|          | By:            |   |   |
|          |           |   |   |
|          |           | Title: |   |   |
| (Signature)   |           |   |   |   |
|          |           |   |   |
| Address:      | Address:       |
|          |           |   |   |
|          |           | 5001 LBJ  Freeway, Suite 850 |
|          |           | Dallas, Texas  75244 |
|               |                |  |  |  |  |  |  |  |

 

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