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EXHIBIT 10.9




CARDIOVASCULAR SYSTEMS, INC.

2003 STOCK OPTION PLAN

(As Amended Through August 15, 2006)




SECTION 1.

DEFINITIONS




     As used herein, the following terms shall have the meanings indicated below:



     (a) “Affiliates” shall mean a Parent or Subsidiary of the Company.



     (b) “Committee” shall mean a Committee of two or more directors who shall be appointed by and
serve at the pleasure of the Board. In the event the Company’s securities are registered pursuant
to Section 12 of the Securities Exchange Act of 1934, as amended, each of the members of the
Committee shall be a “Non-Employee Director” within the meaning of Rule 16b-3, or any successor
provision, as then in effect, of the General Rules and Regulations under the Securities Exchange
Act of 1934 as amended.



     (c) The “Company” shall mean Cardiovascular Systems, Inc., a Minnesota corporation.



     (d) “Fair Market Value” as of any date shall mean (i) if such stock is listed on the Nasdaq
National Market, Nasdaq SmallCap Market or an established stock exchange, the price of such stock
at the close of the regular trading session of such market or exchange on such date, as reported by
The Wall Street Journal or a comparable reporting service, or, if no sale of such stock shall have
occurred on such date, on the next preceding day on which there was a sale of stock; (ii) if such
stock is not so listed on the Nasdaq National Market, Nasdaq SmallCap Market or an established
stock exchange, either the closing price or the average of the closing “bid” and “asked” prices,
whichever is reported, as quoted by the OTC Bulletin Board, the National Quotation Bureau, or any
comparable reporting service on such date or, if there are no quoted closing or “bid” and “asked”
prices on such date, on the next preceding date for which there are such quotes; or (iii) if such
stock is not publicly traded as of such date, the per share value as determined by the Board, or
the Committee, in its sole discretion by applying principles of valuation with respect to the
Company’s Common Stock.



     (e) The “Internal Revenue Code” is the Internal Revenue Code of 1986, as amended from time to
time.



     (f) “Option Stock” shall mean Common Stock of the Company (subject to adjustment as described
in Section 12) reserved for options pursuant to this Plan.



     (g) The “Optionee” means an employee of the Company or any Subsidiary to whom an incentive
stock option has been granted pursuant to Section 9; or a consultant or advisor, to or director,
employee or officer, of the Company or any Subsidiary to whom a nonqualified stock option has been
granted pursuant to Section 10.



 









 





     (h) “Parent” shall mean any corporation which owns, directly or indirectly in an unbroken
chain, fifty percent (50%) or more of the total voting power of the Company’s outstanding stock.



     (i) The “Plan” means the Cardiovascular Systems, Inc. 2003 Stock Option Plan, as amended
hereafter from time to time, including the form of Option Agreements as they may be modified by the
Board from time to time.



     (j) A “Subsidiary” shall mean any corporation of which fifty percent (50%) or more of the
total voting power of outstanding stock is owned, directly or indirectly in an unbroken chain, by
the Company.



SECTION 2.

PURPOSE




     The purpose of the Plan is to promote the success of the Company and its Subsidiaries by
facilitating the employment and retention of competent personnel and by furnishing incentive to
officers, directors, employees, consultants, and advisors upon whose efforts the success of the
Company and its Subsidiaries will depend to a large degree.



     It is the intention of the Company to carry out the Plan through the granting of stock options
which will qualify as “incentive stock options” under the provisions of Section 422 of the Internal
Revenue Code, or any successor provision, and through the granting of “non-qualified stock options”
pursuant to Section 10 of this Plan. Adoption of this Plan shall be and is expressly subject to
the condition of approval by the shareholders of the Company within twelve (12) months before or
after the adoption of the Plan by the Board of Directors. In no event shall any stock options be
granted prior to the date this Plan is approved by the shareholders of the Company.



SECTION 3.

EFFECTIVE DATE OF PLAN




     The Plan shall be effective as of the date of adoption by the Board of Directors, subject to
approval by the shareholders of the Company as required in Section 2.



SECTION 4.

ADMINISTRATION




     The Plan shall be administered by the Board of Directors of the Company (hereinafter referred
to as the “Board”) or by a Committee which may be appointed by the Board from time to time to
administer the Plan (hereinafter the term “Board” includes any such Committee). The Board shall
have all of the powers vested in it under the provisions of the Plan, including but not limited to
exclusive authority (where applicable and within the limitations described herein) to determine, in
its sole discretion, whether an incentive stock option or nonqualified stock option shall be
granted, the individuals to whom, and the time or times at which, options shall be



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granted, the number of shares subject to each option and the option price and terms and conditions
of each option. The Board shall have full power and authority to administer and interpret the
Plan, to make and amend rules, regulations and guidelines for administering the Plan, to prescribe
the form and conditions of the respective stock option agreements (which may vary from Optionee to
Optionee) evidencing each option and to make all other determinations necessary or advisable for
the administration of the Plan. The Board’s interpretation of the Plan, and all actions taken and
determinations made by the Board pursuant to the power vested in it hereunder, shall be conclusive
and binding on all parties concerned.



     No member of the Board or the Committee shall be liable for any action taken or determination
made in good faith in connection with the administration of the Plan. In the event the Board
appoints a Committee as provided hereunder, any action of the Committee with respect to the
administration of the Plan shall be taken pursuant to a majority vote of the Committee members or
pursuant to the written resolution of all Committee members.



SECTION 5.

PARTICIPANTS




     The Board shall from time to time, at its discretion and without approval of the shareholders,
designate those employees, officers, directors, consultants, and advisors of the Company or of any
Subsidiary to whom nonqualified stock options shall be granted under this Plan; provided, however,
that consultants or advisors shall not be eligible to receive stock options hereunder unless such
consultant or advisor renders bona fide services to the Company or Subsidiary and such services are
not in connection with the offer or sale of securities in a capital raising transaction and do not
directly or indirectly promote or maintain a market for the Company’s securities. The Board shall,
from time to time, at its discretion and without approval of the shareholders, designate those
employees of the Company or any Subsidiary to whom incentive stock options shall be granted under
this Plan. The Board may grant additional incentive stock options or nonqualified stock options
under this Plan to some or all participants then holding options or may grant options solely or
partially to new participants. In designating participants, the Board shall also determine the
number of shares to be optioned to each such participant. The Board may from time to time
designate individuals as being ineligible to participate in the Plan.



SECTION 6.

STOCK




     The Stock to be optioned under this Plan shall consist of authorized but unissued shares of
Option Stock. Three Million Eight Hundred Thousand (3,800,000) shares of Option Stock shall be
reserved and available for options under the Plan; provided, however, that the total number of
shares of Option Stock reserved for options under this Plan shall be subject to adjustment as
provided in Section 12 of the Plan. In the event that any outstanding option under the Plan for
any reason expires or is terminated prior to the exercise thereof, the shares of Option Stock
allocable to the unexercised portion of such option shall continue to be reserved for options under
the Plan and may be optioned hereunder.



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SECTION 7.

DURATION OF PLAN




     Incentive stock options may be granted pursuant to the Plan from time to time during a period
of ten (10) years from the effective date as defined in Section 3. Nonqualified stock options may
be granted pursuant to the Plan from time to time after the effective date of the Plan and until
the Plan is discontinued or terminated by the Board.



SECTION 8.

PAYMENT




     Optionees may pay for shares upon exercise of options granted pursuant to this Plan with cash,
personal check, certified check or, if approved by the Board in its sole discretion,
previously-owned shares of the Company’s Common Stock valued at such stock’s then Fair Market
Value, or such other form of payment as may be authorized by the Board. The Board may, in its sole
discretion, limit the forms of payment available to the Optionee and may exercise such discretion
any time prior to the termination of the Option granted to the Optionee or upon any exercise of the
Option by the Optionee. “Previously-owned shares” means shares of the Company’s Common Stock which
the Optionee has owned for at least six (6) months prior to the exercise of the stock option, or
for such other period of time as may be required by generally accepted accounting principles.



     With respect to payment in the form of Common Stock of the Company, the Board may require
advance approval or adopt such rules as it deems necessary to assure compliance with Rule 16b-3, or
any successor provision, as then in effect, of the General Rules and Regulations under the
Securities Exchange Act of 1934, if applicable.



SECTION 9.

TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS




     Each incentive stock option granted pursuant to this Section 9 shall be evidenced by a written
stock option agreement (the “Option Agreement”). The Option Agreement shall be in such form as may
be approved from time to time by the Board and may vary from Optionee to Optionee; provided,
however, that each Optionee and each Option Agreement shall comply with and be subject to the
following terms and conditions:



     (a) Number of Shares and Option Price. The Option Agreement shall state the total
number of shares covered by the incentive stock option. To the extent required to qualify the
Option as an incentive stock option under Section 422 of the Internal Revenue Code, or any
successor provision, the option price per share shall not be less than one hundred percent (100%)
of the Fair Market Value of the Common Stock per share on the date the Board grants the option;
provided, however, that if an Optionee owns stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or of its parent or any
Subsidiary, the option price per share of an incentive stock option granted to such Optionee shall



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not be less than one hundred ten percent (110%) of the Fair Market Value of the Common Stock per
share on the date of the grant of the option. The Board shall have full authority and discretion
in establishing the option price and shall be fully protected in so doing.



     (b) Term and Exercisability of Incentive Stock Option. The term during which any
incentive stock option granted under the Plan may be exercised shall be established in each case by
the Board. To the extent required to qualify the Option as an incentive stock option under Section
422 of the Internal Revenue Code, or any successor provision, in no event shall any incentive stock
option be exercisable during a term of more than ten (10) years after the date on which it is
granted; provided, however, that if an Optionee owns stock possessing more than ten percent (10%)
of the total combined voting power of all classes of stock of the Company or of its parent or any
Subsidiary, the incentive stock option granted to such Optionee shall be exercisable during a term
of not more than five (5) years after the date on which it is granted. The Option Agreement shall
state when the incentive stock option becomes exercisable and shall also state the maximum term
during which the option may be exercised. In the event an incentive stock option is exercisable
immediately, the manner of exercise of the option in the event it is not exercised in full
immediately shall be specified in the Option Agreement. The Board may accelerate the exercise date
of any incentive stock option granted hereunder which is not immediately exercisable as of the date
of grant.



     (c) Withholding. The Company or its Subsidiary shall be entitled to withhold and
deduct from future wages of the Optionee all legally required amounts necessary to satisfy any and
all withholding and employment-related taxes attributable to the Optionee’s exercise of an
incentive stock option or a “disqualifying disposition” of shares acquired through the exercise of
an incentive stock option as defined in Code Section 421(b). In the event the Optionee is required
under the Option Agreement to pay the Company, or make arrangements satisfactory to the Company
respecting payment of, such withholding and employment-related taxes, the Board may, in its
discretion and pursuant to such rules as it may adopt, permit the Optionee to satisfy such
obligation, in whole or in part, by electing to have the Company withhold shares of Common Stock
otherwise issuable to the Optionee as a result of the option’s exercise having a Fair Market Value
equal to the minimum required tax withholding, based on the minimum statutory withholding rates for
federal and state tax purposes, including payroll taxes, that are applicable to the supplemental
income resulting from the option. In no event may the Company or any Affiliate withhold shares
having a Fair Market Value in excess of such statutory minimum required tax withholding. The
Optionee’s election to have shares withheld for this purpose shall be made on or before the date
the option is exercised or, if later, the date that the amount of tax to be withheld is determined
under applicable tax law. Such election shall be approved by the Board and otherwise comply with
such rules as the Board may adopt to assure compliance with Rule 16b-3, or any successor provision,
as then in effect, of the General Rules and Regulations under the Securities Exchange Act of 1934,
if applicable.



     (d) Other Provisions. The Option Agreement authorized under this Section 9 shall
contain such other provisions as the Board shall deem advisable. Any such Option Agreement shall
contain such limitations and restrictions upon the exercise of the option as shall be necessary to
ensure that such option will be considered an “incentive stock option” as defined in Section 422 of
the Internal Revenue Code or to conform to any change therein.



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SECTION 10.

TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTIONS




     Each nonqualified stock option granted pursuant to this Section 10 shall be evidenced by a
written Option Agreement. The Option Agreement shall be in such form as may be approved from time
to time by the Board and may vary from Optionee to Optionee; provided, however, that each Optionee
and each Option Agreement shall comply with and be subject to the following terms and conditions:



     (a) Number of Shares and Option Price. The Option Agreement shall state the total
number of shares covered by the nonqualified stock option. Unless otherwise determined by the
Board, the option price per share shall be one hundred percent (100%) of the Fair Market Value of
the Common Stock per share on the date the Board grants the option; provided, however, that the
option price may not be less than eighty-five percent (85%) of the Fair Market Value of the Common
Stock per share on the date of grant.



     (b) Term and Exercisability of Nonqualified Stock Option. The term during which any
nonqualified stock option granted under the Plan may be exercised shall be established in each case
by the Board. The Option Agreement shall state when the nonqualified stock option becomes
exercisable and shall also state the maximum term during which the option may be exercised. In the
event a nonqualified stock option is exercisable immediately, the manner of exercise of the option
in the event it is not exercised in full immediately shall be specified in the stock option
agreement. The Board may accelerate the exercise date of any nonqualified stock option granted
hereunder which is not immediately exercisable as of the date of grant.



     (c) Withholding. The Company or its Subsidiary shall be entitled to withhold and
deduct from future wages of the Optionee all legally required amounts necessary to satisfy any and
all withholding and employment-related taxes attributable to the Optionee’s exercise of a
nonqualified stock option. In the event the Optionee is required under the Option Agreement to pay
the Company, or make arrangements satisfactory to the Company respecting payment of, such
withholding and employment-related taxes, the Board may, in its discretion and pursuant to such
rules as it may adopt, permit the Optionee to satisfy such obligation, in whole or in part, by
electing to have the Company withhold shares of Common Stock otherwise issuable to the Optionee as
a result of the option’s exercise having a Fair Market Value equal to the minimum required tax
withholding, based on the minimum statutory withholding rates for federal and state tax purposes,
including payroll taxes, that are applicable to the supplemental income resulting from the option.
In no event may the Company or any Affiliate withhold shares having a Fair Market Value in excess
of such statutory minimum required tax withholding. The Optionee’s election to have shares
withheld for this purpose shall be made on or before the date the option is exercised or, if later,
the date that the amount of tax to be withheld is determined under applicable tax law. Such
election shall be approved by the Board and otherwise comply with such rules as the Board may adopt
to assure compliance with Rule 16b-3, or any successor provision, as then in effect, of the General
Rules and Regulations under the Securities Exchange Act of 1934, if applicable.



     (d) Other Provisions. The Option Agreement authorized under this Section 10 shall
contain such other provisions as the Board shall deem advisable.



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SECTION 11.

TRANSFER OF OPTION




     No incentive stock option shall be transferable, in whole or in part, by the Optionee other
than by will or by the laws of descent and distribution and, during the Optionee’s lifetime, the
option may be exercised only by the Optionee. If the Optionee shall attempt any transfer of any
incentive stock option granted under the Plan during the Optionee’s lifetime, such transfer shall
be void and the incentive stock option, to the extent not fully exercised, shall terminate.



     No nonqualified stock option shall be transferred, except that the Board may, in its sole
discretion, permit the Optionee to transfer any or all nonqualified stock options to any member of
the Optionee’s “immediate family” as such term is defined in Rule 16a-1(e) promulgated under the
Securities Exchange Act of 1934, or any successor provision, or to one or more trusts whose
beneficiaries are members of such Optionee’s “immediate family” or partnerships in which such
family members are the only partners; provided, however, that the Optionee receives no
consideration for the transfer and such transferred nonqualified stock option shall continue to be
subject to the same terms and conditions as were applicable to such nonqualified stock option
immediately prior to its transfer.



SECTION 12.

RECAPITALIZATION, SALE,

MERGER, EXCHANGE OR LIQUIDATION




     If, following adoption of this Plan, the Company effects an increase or decrease in the number
of shares of Common Stock in the form of a subdivision or consolidation of shares, or the payment
of a stock dividend, or effects any other increase or decrease in the number of shares of Common
Stock without receipt of consideration by the Company, the number of shares of Option Stock
reserved under Section 6 hereof and the number of shares of Option Stock covered by each
outstanding option and the price per share thereof shall be appropriately adjusted by the Board to
reflect such change. Additional shares which may be credited pursuant to such adjustment shall be
subject to the same restrictions as are applicable to the shares with respect to which the
adjustment relates.



     Unless otherwise provided in the Option Agreement, in the event of an acquisition of the
Company through the sale of substantially all of the Company’s assets and the consequent
discontinuance of its business or through a merger, consolidation, exchange, reorganization,
reclassification, extraordinary dividend, divestiture or liquidation of the Company (collectively
referred to as a “transaction”), the Board may provide for one or more of the following:




     (a) That all outstanding stock options shall become immediately exercisable, whether or
not such options had become exercisable prior to the transaction;




     (b) The complete termination of this Plan, the cancellation of outstanding options not
exercised prior to a date specified by the Board (which date shall give Optionees a
reasonable period of time in which to exercise the options prior to the effectiveness of
such transaction);



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     (c) That Optionees holding outstanding stock options shall receive, with respect to
each share of Stock subject to such options, as of the effective date of any such
transaction, cash in an amount equal to the excess of the Fair Market Value of such Stock on
the date immediately preceding the effective date of such transaction over the option price
per share of such options; provided that the Board may, in lieu of such cash payment,
distribute to such Optionees shares of stock of the Company or shares of stock of any
corporation succeeding the Company by reason of such transaction, such shares having a value
equal to the cash payment herein;




     (d) the continuance of the Plan with respect to the exercise of options which were
outstanding as of the date of adoption by the Board of such plan for such transaction and
provide to Optionees holding such options the right to exercise their respective options as
to an equivalent number of shares of stock of the corporation succeeding the Company by
reason of such transaction.


The Board may restrict the rights of or the applicability of this Section 12 to the extent
necessary to comply with Section 16(b) of the Securities Exchange Act of 1934, the Internal Revenue
Code or any other applicable law or regulation. The grant of an option pursuant to the Plan shall
not limit in any way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge, exchange or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets.




SECTION 13.

INVESTMENT PURPOSE




     No shares of Common Stock shall be issued pursuant to the Plan unless and until there has been
compliance, in the opinion of Company’s counsel, with all applicable legal requirements, including
without limitation, those relating to securities laws and stock exchange listing requirements. As
a condition to the issuance of Option Stock to Optionee, the Board may require Optionee to (a)
represent that the shares of Option Stock are being acquired for investment and not resale and to
make such other representations as the Board shall deem necessary or appropriate to qualify the
issuance of the shares as exempt from the Securities Act of 1933 and any other applicable
securities laws, and (b) represent that Optionee shall not dispose of the shares of Option Stock in
violation of the Securities Act of 1933 or any other applicable securities laws.



     As a further condition to the grant of any stock option or the issuance of Stock to Optionee,
Optionee agrees to the following:




     (a) In the event the Company advises Optionee that it plans an underwritten public
offering of its Common Stock in compliance with the Securities Act of 1933, as amended, and
the underwriter(s) seek to impose restrictions under which certain shareholders may not sell
or contract to sell or grant any option to buy or otherwise dispose of part or all of their
stock purchase rights of the underlying Common Stock, Optionee will not, for a period not to
exceed 180 days from the prospectus, sell or contract to sell or grant an option to buy or
otherwise dispose of any stock option or restricted stock award granted



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to Optionee pursuant to the Plan or any of the underlying shares of Common Stock
without the prior written consent of the underwriter(s) or its representative(s).




     (b) In the event the Company makes any public offering of its securities and determines
in its sole discretion that it is necessary to reduce the number of issued but unexercised
stock purchase rights so as to comply with any states securities or Blue Sky law limitations
with respect thereto, the Board of Directors of the Company shall have the right (i) to
accelerate the exercisability of any stock option and the date on which such option must be
exercised, provided that the Company gives Optionee prior written notice of such
acceleration, and (ii) to cancel any options or portions thereof which Optionee does not
exercise prior to or contemporaneously with such public offering.




     (c) In the event of a transaction (as defined in Section 12 of the Plan), Optionee will
comply with Rule 145 of the Securities Act of 1933 and any other restrictions imposed under
other applicable legal or accounting principles if Optionee is an “affiliate” (as defined in
such applicable legal and accounting principles) at the time of the transaction, and
Optionee will execute any documents necessary to ensure compliance with such rules.


The Company reserves the right to place a legend on any stock certificate issued upon exercise of
an option granted or upon the grant of a restricted stock award pursuant to the Plan to assure
compliance with this Section 13.




SECTION 14.

RIGHTS AS A SHAREHOLDER




     An Optionee (or the Optionee’s successor or successors) shall have no rights as a shareholder
with respect to any shares covered by an option until the date of the issuance of a stock
certificate evidencing such shares. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property), distributions or other rights for
which the record date is prior to the date such stock certificate is actually issued (except as
otherwise provided in Section 12 of the Plan).



SECTION 15.

AMENDMENT OF THE PLAN




     The Board may from time to time, insofar as permitted by law, suspend or discontinue the Plan
or revise or amend it in any respect; provided, however, that no such revision or amendment, except
as is authorized in Section 12, shall impair the terms and conditions of any option which is
outstanding on the date of such revision or amendment to the material detriment of the Optionee
without the consent of the Optionee. Notwithstanding the foregoing, no such revision or amendment
shall (i) materially increase the number of shares subject to the Plan except as provided in
Section 12 hereof, (ii) change the designation of the class of employees eligible to receive
options, (iii) decrease the price at which options may be granted, or (iv) materially increase the
benefits accruing to Optionees under the Plan without the approval of the shareholders of the
Company if such approval is required for compliance with the requirements of any applicable law or
regulation. Furthermore, the Plan may not, without the approval of the



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shareholders, be amended in any manner that will cause incentive stock options to fail to meet the
requirements of Section 422 of the Internal Revenue Code.



SECTION 16.

NO OBLIGATION TO EXERCISE OPTION




     The granting of an option shall impose no obligation upon the Optionee to exercise such
option. Further, the granting of an option hereunder shall not impose upon the Company or any
Subsidiary any obligation to retain the Optionee in its employ for any period.




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