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EXHIBIT 10.3



NONQUALIFIED STOCK OPTION AGREEMENT




CARDIOVASCULAR SYSTEMS, INC.

2007 EQUITY INCENTIVE PLAN




     THIS AGREEMENT, made effective as of this                      day of                                    
     ,                     , by and
between Cardiovascular Systems, Inc., a Minnesota corporation (the “Company”), and
                                         (“Participant”).



W I T N E S S E T H:




     WHEREAS, Participant on the date hereof is a key employee, officer, director of or consultant
or advisor to the Company or one of its Subsidiaries; and



     WHEREAS, the Company wishes to grant a nonqualified stock option to Participant to purchase
shares of the Company’s Common Stock pursuant to the Company’s 2007 Equity Incentive Plan (the
“Plan”); and



     WHEREAS, the Administrator of the Plan has authorized the grant of a nonqualified stock option
to Participant and has determined that, as of the effective date of this Agreement, the fair market
value of the Company’s Common Stock is $  per share;



     NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained,
the parties hereto agree as follows:



     1. Grant of Option. The Company hereby grants to Participant on the date set forth
above (the “Date of Grant”), the right and option (the “Option”) to purchase all or portions of an
aggregate of                                         (                    )shares of Common Stock at a per share price of $       
              on
the terms and conditions set forth herein, and subject to adjustment pursuant to Section 14 of the Plan. This Option is a
nonqualified stock option and will not be treated as an incentive stock option, as defined under
Section 422, or any successor provision, of the Internal Revenue Code of 1986, as amended (the
“Code”), and the regulations thereunder.



     2. Duration and Exercisability.



          a. General. The term during which this Option may be exercised shall terminate on
                                        ,                     , except as otherwise provided in Paragraphs
2(b) through 2(d) below. This Option shall become exercisable according to the following schedule:




 









 








	 	 	 
	 	 	Cumulative Percentage
	Vesting Date	 	of Shares
	 
	 	 





Once the Option becomes exercisable to the extent of one hundred percent (100%) of the aggregate
number of shares specified in Paragraph 1, Participant may continue to exercise this Option under
the terms and conditions of this Agreement until the termination of the Option as provided herein.
If Participant does not purchase upon an exercise of this Option the full number of shares which
Participant is then entitled to purchase, Participant may purchase upon any subsequent exercise
prior to this Option’s termination such previously unpurchased shares in addition to those
Participant is otherwise entitled to purchase.




          b. Termination of Relationship (other than Disability or Death). If Participant
ceases to be [an employee] [a consultant] [a nonemployee director] of the Company or any Subsidiary
for any reason other than disability or death, this Option shall completely terminate on the
earlier of (i) the close of business on the three-month anniversary of the date of termination of
Participant’s relationship, and (ii) the expiration date of this Option stated in Paragraph 2(a)
above. In such period following such termination of Participant’s relationship, this Option shall
be exercisable only to the extent the Option was exercisable on the vesting date immediately
preceding the date on which Participant’s relationship with the Company or Subsidiary has
terminated, but had not previously been exercised. To the extent this Option was not exercisable
upon the termination of such relationship, or if Participant does not exercise the Option within
the time specified in this Paragraph 2(b), all rights of Participant under this Option shall be
forfeited.




          c. Disability. If Participant ceases to be [an employee] [a consultant] [a
nonemployee director] of the Company or any Subsidiary because of disability (as defined in Code
Section 22(e), or any successor provision), this Option shall completely terminate on the earlier
of (i) the close of business on the twelve-month anniversary of the date of termination of
Participant’s relationship, and (ii) the expiration date of this Option stated in Paragraph 2(a)
above. In such period following such termination of Participant’s relationship, this Option shall
be exercisable only to the extent the Option was exercisable on the vesting date immediately
preceding the date on which Participant’s relationship with the Company or Subsidiary has
terminated, but had not previously been exercised. To the extent this Option was not exercisable
upon the termination of such relationship, or if Participant does not exercise the Option within
the time specified in this Paragraph 2(c), all rights of Participant under this Option shall be
forfeited.




          d. Death. In the event of Participant’s death, this Option shall terminate on the
earlier of (i) the close of business on the twelve-month anniversary of the date of


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Participant’s death, and (ii) the expiration date of this Option stated in Paragraph 2(a) above.
In such period following Participant’s death, this Option may be exercised by the person or persons
to whom Participant’s rights under this Option shall have passed by Participant’s will or by the
laws of descent and distribution only to the extent the Option was exercisable on the vesting date
immediately preceding the date of Participant’s death, but had not previously been exercised. To
the extent this Option was not exercisable upon the date of Participant’s death, or if such person
or persons fail to exercise this Option within the time specified in this Paragraph 2(d), all
rights under this Option shall be forfeited.




     3. Manner of Exercise.



          a. General. The Option may be exercised only by Participant (or other proper party in
the event of death or incapacity), subject to the conditions of the Plan and subject to such other
administrative rules as the Administrator may deem advisable, by delivering within the option
period written notice of exercise to the Company at its principal office. The notice shall state
the number of shares as to which the Option is being exercised and shall be accompanied by payment
in full of the option price for all shares designated in the notice. The exercise of the Option
shall be deemed effective upon receipt of such notice by the Company and upon payment that complies
with the terms of the Plan and this Agreement. The Option may be exercised with respect to any
number or all of the shares as to which it can then be so exercised and, if partially exercised,
may be exercised as to the unexercised shares any number of times during the option period as
provided herein.




          b. Form of Payment. Subject to the approval of the Administrator, payment of the
option price by Participant shall be in the form of cash, personal check, certified check or
previously acquired shares of Common Stock of the Company, or any combination thereof. Any stock
so tendered as part of such payment shall be valued at its Fair Market Value as provided in the
Plan. For purposes of this Agreement, “previously acquired shares of Common Stock” shall include
shares of Common Stock that are already owned by Participant at the time of exercise.




          c. Stock Transfer Records. As soon as practicable after the effective exercise of all
or any part of the Option, Participant shall be recorded on the stock transfer books of the Company
as the owner of the shares purchased, and the Company shall deliver to Participant one or more duly
issued stock certificates evidencing such ownership. All requisite original issue or transfer
documentary stamp taxes shall be paid by the Company.




     4. Miscellaneous.



          a. Employment or Other Relationship; Rights as Shareholder. This Agreement shall not
confer on Participant any right with respect to the continuance of employment or any other
relationship with the Company or any of its Subsidiaries, nor will it interfere in any way with the
right of the Company to terminate such employment or relationship. Participant shall have no
rights as a shareholder with respect to shares subject to this Option until such shares have been
issued to Participant upon exercise of this Option. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or


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other property), distributions or other rights for which the record date is prior to the date such
shares are issued, except as provided in Section 14 of the Plan.




          b. Securities Law Compliance. The exercise of all or any parts of this Option shall
only be effective at such time as counsel to the Company shall have determined that the issuance
and delivery of Common Stock pursuant to such exercise will not violate any state or federal
securities or other laws. Participant may be required by the Company, as a condition of the
effectiveness of any exercise of this Option, to agree in writing that all Common Stock to be
acquired pursuant to such exercise shall be held, until such time that such Common Stock is
registered and freely tradable under applicable state and federal securities laws, for
Participant’s own account without a view to any further distribution thereof, that the certificates
for such shares shall bear an appropriate legend to that effect and that such shares will be not
transferred or disposed of except in compliance with applicable state and federal securities laws.




          c. Mergers, Recapitalizations, Stock Splits, Etc. Except as otherwise specifically
provided in any employment, change of control, severance or similar agreement executed by the
Participant and the Company, pursuant and subject to Section 14 of the Plan, certain changes in the
number or character of the Common Stock of the Company (through sale, merger, consolidation,
exchange, reorganization, divestiture (including a spin-off), liquidation, recapitalization, stock
split, stock dividend or otherwise) shall result in an adjustment, reduction or enlargement, as
appropriate, in Participant’s rights with respect to any unexercised portion of the Option
(i.e., Participant shall have such “anti-dilution” rights under the Option with respect to
such events, but shall not have “preemptive” rights).




          d. Shares Reserved. The Company shall at all times during the option period reserve
and keep available such number of shares as will be sufficient to satisfy the requirements of this
Agreement.




          e. Withholding Taxes. To permit the Company to comply with all applicable federal and
state income tax laws or regulations, the Company may take such action as it deems appropriate to
ensure that, if necessary, all applicable federal and state payroll, income or other taxes are
withheld from any amounts payable by the Company to Participant. If the Company is unable to
withhold such federal and state taxes, for whatever reason, Participant hereby agrees to pay to the
Company an amount equal to the amount the Company would otherwise be required to withhold under
federal or state law. Subject to such rules as the Administrator may adopt, the Administrator may,
in its sole discretion, permit Participant to satisfy such withholding tax obligations, in whole or
in part (i) by delivering shares of Common Stock, or (ii) by electing to have the Company withhold
shares of Common Stock otherwise issuable to Participant, in either case having a Fair Market
Value, as of the date the amount of tax to be withheld is determined under applicable tax law,
equal to the minimum amount required to be withheld for tax purposes. Participant’s request to
deliver shares or to have shares withheld for purposes of such withholding tax obligations shall be
made on or before the date that triggers such obligations or, if later, the date that the amount of
tax to be withheld is determined under applicable tax law. Participant’s request shall be approved
by the Administrator and otherwise comply with such rules as the Administrator may adopt to assure
compliance with Rule 16b-3 or


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any successor provision, as then in effect, of the General Rules and Regulations under the
Securities and Exchange Act of 1934, if applicable.




          f. Nontransferability. During the lifetime of Participant, the accrued Option shall
be exercisable only by Participant or by the Participant’s guardian or other legal representative,
and shall not be assignable or transferable by Participant, in whole or in part, other than by will
or by the laws of descent and distribution.




          g. 2007 Equity Incentive Plan. The Option evidenced by this Agreement is granted
pursuant to the Plan, a copy of which Plan has been made available to Participant and is hereby
incorporated into this Agreement. This Agreement is subject to and in all respects limited and
conditioned as provided in the Plan. All defined terms of the Plan shall have the same meaning when
used in this Agreement. The Plan governs this Option and, in the event of any questions as to the
construction of this Agreement or in the event of a conflict between the Plan and this Agreement,
the Plan shall govern, except as the Plan otherwise provides.




          h. Lockup Period Limitation. Participant agrees that in the event the Company advises
Participant that it plans an underwritten public offering of its Common Stock in compliance with
the Securities Act of 1933, as amended, and that 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,
Participant hereby agrees that for a period not to exceed 180 days from the prospectus, Participant
will not sell or contract to sell or grant an option to buy or otherwise dispose of this Option or
any of the underlying shares of Common Stock without the prior written consent of the
underwriter(s) or its representative(s).




          i. Blue Sky Limitation. Notwithstanding anything in this Agreement to the contrary, in
the event the Company makes any public offering of its securities and it is determined that it is
necessary to reduce the number of issued but unexercised stock purchase rights so as to comply with
any state securities or Blue Sky law limitations with respect thereto, and such determination is
affirmed by the Board of Directors, unless the Board of Directors determines otherwise, (i) the
exercisability of this Option and the date on which this Option must be exercised shall be
accelerated, provided that the Company agrees to give Participant 15 days’ prior written notice of
such acceleration, and (ii) any portion of this Option or any other option granted to Participant
pursuant to the Plan which is not exercised prior to or contemporaneously with such public offering
shall be canceled. Notice shall be deemed given when delivered personally or when deposited in the
United States mail, first class postage prepaid and addressed to Participant at the address of
Participant on file with the Company.




          j. Accounting Compliance. Participant agrees that, if a merger, reorganization,
liquidation or other “transaction” as defined in Section 14 of the Plan occurs and Participant is
an “affiliate” of the Company or any Affiliate (as defined in applicable legal and accounting
principles) at the time of such transaction, Participant will comply with all requirements of Rule
145 of the Securities Act of 1933, as amended, and the requirements of such other legal or
accounting principles, and will execute any documents necessary to ensure such compliance.




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          k. Stock Legend. The Administrator may require that the certificates for any shares
of Common Stock purchased by Participant (or, in the case of death, Participant’s successors) shall
bear an appropriate legend to reflect the restrictions of Paragraph 4(b) and Paragraphs 4(g)
through 4(i) of this Agreement; provided, however, that failure to so endorse any of such
certificates shall not render invalid or inapplicable Paragraph 4(b) or Paragraphs 4(g) through
4(i).




          l. Scope of Agreement. This Agreement shall bind and inure to the benefit of the
Company and its successors and assigns and Participant and any successor or successors of
Participant permitted by Paragraph 2 or Paragraph 4(e) above.




          m. Arbitration. Any dispute arising out of or relating to this Agreement or the
alleged breach of it, or the making of this Agreement, including claims of fraud in the inducement,
shall be discussed between the disputing parties in a good faith effort to arrive at a mutual
settlement of any such controversy. If, notwithstanding, such dispute cannot be resolved, such
dispute shall be settled by binding arbitration. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. The arbitrator shall be a
retired state or federal judge or an attorney who has practiced securities or business litigation
for at least 10 years. If the parties cannot agree on an arbitrator within 20 days, any party may
request that the chief judge of the District Court for Hennepin County, Minnesota, select an
arbitrator. Arbitration will be conducted pursuant to the provisions of this Agreement, and the
commercial arbitration rules of the American Arbitration Association, unless such rules are
inconsistent with the provisions of this Agreement. Limited civil discovery shall be permitted for
the production of documents and taking of depositions. Unresolved discovery disputes may be
brought to the attention of the arbitrator who may dispose of such dispute. The arbitrator shall
have the authority to award any remedy or relief that a court of this state could order or grant;
provided, however, that punitive or exemplary damages shall not be awarded. The arbitrator may
award to the prevailing party, if any, as determined by the arbitrator, all of its costs and fees,
including the arbitrator’s fees, administrative fees, travel expenses, out-of-pocket expenses and
reasonable attorneys’ fees. Unless otherwise agreed by the parties, the place of any arbitration
proceedings shall be Hennepin County, Minnesota.




     ACCORDINGLY, the parties hereto have caused this Agreement to be executed on the day and year
first above written.



	 	 	 	 	 	 	 
	 	 	CARDIOVASCULAR SYSTEMS, INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Its:	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 
	 	 	Participant







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