Exhibit
10.4


 


Option No.     


 


TRANS1 INC.


 


STOCK OPTION AGREEMENT


 


     Type of Option (check one):
o Incentive           o
Nonqualified


 


     This Stock Option Agreement (the
“Agreement”) is entered into as of                     ,
by and between TranS1 Inc., a Delaware corporation (the “Company”), and                     
(the “Optionee”) pursuant to the Company’s 2007 Stock Incentive Plan (the “Plan”).
Any capitalized term not defined herein shall have the same meaning ascribed to it in the Plan.


 


     1. Grant of Option.
The Company hereby grants to Optionee an option (the “Option”) to purchase all or any portion of a total
of                       
(          ) shares (the “Shares”) of the Common Stock
of the Company at a purchase price of                      
($         ) per share (the “Exercise Price”), subject to
the terms and conditions set forth herein and the provisions of the Plan. If the box marked “Incentive” above is checked,
then this Option is intended to qualify as an “incentive stock option” as defined in Section 422 of the Internal
Revenue Code of l986, as amended (the “Code”). If this Option fails in whole or in part to qualify as an incentive
stock option, or if the box marked “Nonqualified” is checked, then this Option shall to that extent constitute a nonqualified
stock option.


 


     2. Vesting of Option.
The right to exercise this Option shall vest in installments, and this Option shall be exercisable from time to time in whole
or in part as to any vested installment. This Option shall be vested     % on       
              , following Optionee’s completion
of                      
months of Continuous Service, and thereafter commencing on                      ,
upon Optionee’s completion of each additional month of Continuous Service, the remaining       
               shares shall vest in       
                (      )
equal monthly installments.


 


     No additional shares shall vest
after the date of termination of Optionee’s Continuous Service, but this Option shall continue to be exercisable in accordance
with Section 3 hereof with respect to that number of shares that have vested as of the date of termination of Optionee’s
Continuous Service.


 


     3. Term of Option.
The right of the Optionee to exercise this Option shall terminate upon the first to occur of the following:


 


          (a) the
expiration of ten (10) years from the date of this Agreement;


 


          (b) the
expiration of three (3) months from the date of termination of Optionee’s Continuous Service if such termination occurs
for any reason other than permanent disability, death or voluntary resignation; provided, however, that if Optionee dies during
such three-month period the provisions of Section 3(e) below shall apply;


 


         (c) the
expiration of one (1) month from the date of termination of Optionee’s Continuous Service if such termination occurs
due to voluntary resignation; provided, however, that if Optionee dies during such one-month period the provisions of Section 3(e)
below shall apply;


 


          (d) the
expiration of one (1) year from the date of termination of Optionee’s Continuous Service if such termination is due
to permanent disability of the Optionee (as defined in Section 22(e)(3) of the Code);


 


          (e) the
expiration of one (1) year from the date of termination of Optionee’s Continuous Service if such termination is due
to Optionee’s death or if death occurs during either the three-month or one-month period following termination of Optionee’s
Continuous Service pursuant to Section 3(b) or 3(c) above, as the case may be; or


 


          (f) upon
the consummation of a Change in Control, unless such Option is otherwise assumed or replaced with a new option of comparable value
or other New Incentives pursuant to Section 8 below.


 


     4. Exercise of Option.
On or after the vesting of any portion of this Option in accordance with Sections 2 or 8 hereof, and until termination
of the right to exercise this Option in accordance with Section 3 above, the portion of this Option which has vested may be
exercised in whole or in part by the Optionee (or, after his or her death, by the person designated in Section 5 below) upon
delivery of the following to the Company at its principal executive offices:


 




    	 



    	 



    

  


          (a) a
written notice of exercise which identifies this Agreement and states the number of Shares then being purchased (but no fractional
Shares may be purchased);


 


          (b) a
check or cash in the amount of the Exercise Price (or payment of the Exercise Price in such other form of lawful consideration
as the Administrator may approve from time to time under the provisions of Section 5.4 of the Plan);


 


          (c) a
check or cash in the amount reasonably requested by the Company to satisfy the Company’s withholding obligations under federal,
state or other applicable tax laws with respect to the taxable income, if any, recognized by the Optionee in connection with the
exercise of this Option (unless the Company and Optionee shall have made other arrangements for deductions or withholding from
Optionee’s wages, bonus or other compensation payable to Optionee, or by the withholding of Shares issuable upon exercise
of this Option or the delivery of Shares owned by the Optionee in accordance with Section 12.1 of the Plan, provided such
arrangements satisfy the requirements of applicable tax laws); and


 


          (d) a
letter, if requested by the Company, in such form and substance as the Company may require, setting forth the investment intent
of the Optionee, or person designated in Section 5 below, as the case may be.


 


     5. Death of Optionee;
No Assignment. The rights of the Optionee under this Agreement may not be assigned or transferred except by will or by
the laws of descent and distribution, and may be exercised during the lifetime of the Optionee only by such Optionee. Any attempt
to sell, pledge, assign, hypothecate, transfer or dispose of this Option in contravention of this Agreement or the Plan shall be
void and shall have no effect. If the Optionee’s Continuous Service terminates as a result of his or her death, and provided
Optionee’s rights hereunder shall have vested pursuant to Section 2 hereof, Optionee’s legal representative, his
or her legatee, or the person who acquired the right to exercise this Option by reason of the death of the Optionee (individually,
a “Successor”) shall succeed to the Optionee’s rights and obligations under this Agreement. After the
death of the Optionee, only a Successor may exercise this Option.


 


     6. Representation of
Optionee. Optionee acknowledges receipt of a copy of the Plan and understands that all rights and obligations connected
with this Option are set forth in this Agreement and the Plan.


 


     7. Adjustments Upon
Changes in Capital Structure. In the event that the outstanding shares of Common Stock of the Company are hereafter increased
or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company by reason
of a recapitalization, stock split, reverse stock split, reclassification, stock dividend or other change in the capital structure
of the Company, then appropriate adjustment shall be made by the Administrator to the aggregate number and kind of Shares subject
to the unexercised portion of this Option and to the Exercise Price per share, in order to preserve, as nearly as practical, but
not to increase, the benefits of the Optionee under this Option, in accordance with the provisions of Section 4.2 of the Plan.


 


     8. Change in Control.
In the event of a Change in Control:


 


          (a) The
vesting of this Option shall accelerate automatically effective as of immediately prior to the consummation of the Change in Control
unless the Options are to be assumed by the acquiring or successor entity (or parent thereof) or new options under a new
stock incentive program (“New Incentives”) are to be issued in exchange therefor, as provided in subsection (b) below.
If vesting of outstanding Options will accelerate pursuant to this subsection (a), the Administrator in its discretion may provide,
in connection with the Change in Control transaction, for the purchase or exchange of each Option for an amount of cash or other
property having a value equal to the difference (or “spread”) between: (x) the value of the cash or other property
that the Optionee would have received pursuant to the Change in Control transaction in exchange for the shares issuable upon exercise
of the Option had the Option been exercised immediately prior to the Change in Control, and (y) the Exercise Price of the
Option.


 


          (b) The
vesting of this Option shall not accelerate if and to the extent that: (i) this Option (including the unvested portion thereof)
is to be assumed by the acquiring or successor entity (or parent thereof) or a new option of comparable value is to be issued in
exchange therefor pursuant to the terms of the Change in Control transaction, or (ii) in the event the consideration to be
received by the stockholders of the Company in connection with the Change in Control does not consist of securities, this Option
(including the unvested portion thereof) is to be replaced by the acquiring or successor entity (or parent thereof) with other
incentives of comparable value containing such terms and provisions as the Administrator in its discretion may consider equitable.
If this Option is assumed, or if a new option of comparable value is issued in exchange therefor, then this Option or the new option
shall be appropriately adjusted, concurrently with the Change in Control, to apply to the number and class of securities or other
property that the Optionee would have received pursuant to the Change in Control transaction in exchange for the Shares issuable
upon exercise of this Option had this Option been exercised immediately prior to the Change in Control, and appropriate adjustment
also shall be made to the Exercise Price such that the aggregate Exercise Price of this Option or the new option shall remain the
same as nearly as practicable.


 




    	 



    	 



    

 


          (c) If
this Option is assumed by an acquiring or successor entity (or parent thereof) or a New Incentive is issued in exchange therefor
pursuant to the terms of a Change in Control transaction, the vesting of the Option or the New Incentive shall accelerate if and
at such time as the Optionee’s service as an employee, director, officer, consultant or other service provider to the acquiring
or successor entity (or a parent or subsidiary thereof) is Terminated Without Cause within twelve (12) months following consummation
of the Change in Control.


 


     9. No Employment Contract
Created. Neither the granting of this Option nor the exercise hereof shall be construed as granting to the Optionee any
right with respect to continuance of employment by the Company or any of its subsidiaries. The right of the Company or any of its
subsidiaries to terminate at will the Optionee’s employment at any time (whether by dismissal, discharge or otherwise), with
or without cause, is specifically reserved.


 


     10. Rights as Stockholder.
The Optionee shall have no rights as a stockholder with respect to any Shares covered by this Option until such person has
duly exercised this Option, paid the Exercise Price and become a holder of record of the Shares purchased.


 


     11. “Market Stand-Off”
Agreement. Optionee agrees that, if requested by the Company or the managing underwriter of any proposed public offering
of the Company’s securities, Optionee will not sell or otherwise transfer or dispose of any Shares held by Optionee without
the prior written consent of the Company or such underwriter, as the case may be, during such period of time, not to exceed 180 days
following the effective date of the registration statement filed by the Company with respect to such offering, as the Company or
the underwriter may specify, but only if all directors, officers and affiliates of the Company are similarly restricted.


 


     12. Interpretation.
This Option is granted pursuant to the terms of the Plan, and shall in all respects be interpreted in accordance therewith.
The Administrator shall interpret and construe this Option and the Plan, and any action, decision, interpretation or determination
made in good faith by the Administrator shall be final and binding on the Company and the Optionee.


 


     13. Limitation of Liability
for Nonissuance. During the term of the Plan, the Company agrees at all times to reserve and keep available, and to use
its reasonable best efforts to obtain from any regulatory body having jurisdiction any requisite authority in order to issue and
sell, such number of shares of its Common Stock as shall be sufficient to satisfy its obligations hereunder and the requirements
of the Plan. Inability of the Company to obtain, from any regulatory body having jurisdiction, authority deemed by the Company’s
counsel to be necessary for the lawful issuance and sale of any shares of its Common Stock hereunder and under the Plan shall relieve
the Company of any liability in respect of the nonissuance or sale of such shares as to which such requisite authority shall not
have been obtained.


 


     14. Notices. Any
notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemed given
when delivered personally or three (3) days after being deposited in the United States mail, as certified or registered mail, with
postage prepaid, (or by such other method as the Administrator may from time to time deem appropriate), and addressed, if to the
Company, at its principal place of business, Attention: the Chief Financial Officer, and if to the Optionee, at his or her most
recent address as shown in the employment or stock records of the Company.


 


     15. Governing Law.
The validity, construction, interpretation, and effect of this Option shall be governed by and determined in accordance with
the laws of the State of Delaware.


 


     16.  Severability.
Should any provision or portion of this Agreement be held to be unenforceable or invalid for any reason, the remaining provisions
and portions of this Agreement shall be unaffected by such holding.


 


     17. Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together
shall be deemed one instrument.


 


     18. Tax Consequences
and Reporting Obligation Upon Sale of Shares. If this Option is an “incentive stock option,” the tax benefits
afforded to incentive stock options will be obtained by the Optionee only if the Shares received upon exercise of this Option are
held for at least one year after the date of exercise of this Option and two years after the date this Option was granted to the
Optionee. If the Optionee sells or otherwise transfers the Shares before the expiration of either of these one- or two-year periods,
the sale or transfer will be treated for tax purposes as a “disqualifying disposition,” resulting in the following
tax consequences: (a) the Optionee will not obtain the tax benefits afforded to incentive stock options, (b) the “spread”
as of the date of exercise will be taxed to the Optionee at ordinary income tax rates, and (c) the amount of ordinary income
resulting from the disqualifying disposition will be included in the Optionee’s W-2. These tax consequences are described
in more detail in the prospectus that relates to the Company’s 2007 Stock Incentive Plan, as amended, a copy of which was
delivered to the Optionee with this Option. To assure that the Company has the information necessary to comply with its tax reporting
obligations, Optionee agrees to promptly notify the Company if any Shares are sold or transferred less than one year after the
date of exercise or less than two years after the date this Option was granted, and report information regarding the disqualifying
disposition in accordance with procedures established by the Company for this purpose.


 


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     IN WITNESS WHEREOF, the parties
have executed this Agreement as of the date first above written. 


	 	 	 	 	 	 	 
	TRANS1 INC.,	 	 	 	OPTIONEE
	a Delaware corporation	 	 	 	 
	 	 	 	 	 	 	 
	By: 	 	 	 	 	 	 
	 	 	 	 	 	 	(Signature)
	 	 	 	 	 	 	 
	Name:	 	 	 	 	 	 
	 	 	 	 	 	 	(Type or print name)
	 	 	 	 	 	 	 
	Its: 	 	 	 	 	 	Address: