Document:

FORM OF COMMON STOCK WARRANT

 EXHIBIT 4.01 
  

					
	 NUMBER
  
 LT-1
	 	 (SEE REVERSE SIDE FOR
LEGEND)
 (THIS WARRANT WILL BE VOID
IF NOT EXERCISED PRIOR TO
 5:00P.M. NEW
YORK CITY TIME,                     , 2010
	  	 100,000
  
 WARRANTS

  
 ENVIRONMENTAL POWER
CORPORATION 
  
 COMMON STOCK WARRANT 
  
 THIS CERTIFIES THAT, for value received is the registered holder of a Warrant expiring
                    , 2010 (the “Warrant”) to purchase from Environmental Power Corporation, a Delaware corporation (the
“Company”), upon the terms and conditions set forth herein, one-hundred thousand (100,000) fully paid and non-assessable shares of the Company’s Common Stock, par value $.01 per share (“Common Stock”), at
$             [insert 115% of the per share price to the public in the offering] per share, as adjusted from time to time as described below (the “Exercise Price”),
commencing on the date that is 180 days following the effective date of the Registration Statement on Form S-2, File No. 333-121572 (the “Registration Statement”), and terminating at 5:00 p.m., New York City time on the five-year
anniversary of the effective date of such Registration Statement (the “Exercise Period”). This Warrant is the warrant or one of the warrants (collectively, including any warrants issued upon the exercise or transfer of any such warrants in
whole or in part, the “Warrants”) issued pursuant to the Underwriting Agreement, dated February     , 2005, between Ladenburg Thalmann & Co. Inc. and the Company. The term the “Holder” as used
herein shall include any transferee to whom this Warrant has been transferred in accordance with the terms hereof and with applicable law. 
  
 The number of shares of Common Stock issuable upon exercise of the Warrants (the “Warrant Shares”) and the Exercise Price may be adjusted from
time to time as hereinafter set forth. 
  

	 	1.	This Warrant may be exercised during the Exercise Period, as to the whole or any lesser number of whole Warrant Shares, by the surrender of this Warrant (with the election at the
end hereof duly executed) to the Company at its office at One Cate Street, 4th Floor, Portsmouth, New Hampshire 03801, or at such other place as is designated in writing by the Company, together with a certified or bank cashier’s check payable
to the order of the Company in an amount equal to the Exercise Price multiplied by the number of Warrant Shares for which this Warrant is being exercised (the “Stock Purchase Price”). 

  

	 	2.	 Upon each exercise of the Holder’s rights to purchase Warrant Shares, the Holder shall be deemed to be the holder of record of the Warrant Shares issuable upon
such exercise, provided that, if such exercise occurs prior to, and the delivery of the certificates issuable upon such exercise occurs after, any date fixed for determining stockholders of record, the Holder shall be deemed to be the holder of
record of such Warrant Shares as of the close of business on the next succeeding date after such record date. As soon as practicable after each such exercise of this Warrant, the Company shall issue and deliver to the Holder a certificate or
certificates for the Warrant Shares issuable upon such exercise, registered in the name of the Holder or its designee. If this Warrant should be exercised or converted in part only, the Company shall, upon surrender of this Warrant 

  

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for cancellation, execute and deliver a new Warrant evidencing the right of the Holder to purchase the balance of the Warrant Shares (or portions thereof)
subject to purchase hereunder. 

  

	 	3.	Any Warrants issued upon the transfer or exercise in part of this Warrant shall be numbered and shall be registered in a Warrant Register as they were issued. The Company shall be
entitled to treat the registered holder of any Warrant on the Warrant Register as they are issued. The Company shall be entitled to treat the registered holder of any Warrant on the Warrant Register as the owner in fact thereof for all purposes and
shall not be bound to recognize any equitable or other claim to or interest in such Warrant on the part of any other person, and shall not be liable for any registration or transfer of Warrants which are registered or to be registered in the name of
a fiduciary or the nominee of a fiduciary unless made with the actual knowledge that a fiduciary or nominee is committing a breach of trust in requesting such registration or transfer, or with the knowledge of such facts that its participation
therein amounts to bad faith. This Warrant shall be transferable only on the books of the Company upon delivery thereof duly endorsed by the Holder or by his duly authorized attorney or representative, or accompanied by proper evidence of
succession, assignment, or authority to transfer. In all cases of transfer by an attorney, executor, administrator, guardian, or other legal representative, duly authenticated evidence of his or its authority shall be produced. Upon any registration
of transfer, the Company shall deliver a new Warrant or Warrants to the person entitled thereto. This Warrant may be exchanged, at the option of the Holder thereof, for another Warrant, or other Warrants of different denominations, of like tenor and
representing in the aggregate the right to purchase a like number of Warrant Shares (or portions thereof), upon surrender to the Company or its duly authorized agent. Notwithstanding the foregoing, the Company shall have no obligation to cause
Warrants to be transferred on its books to any person, if, in the opinion of counsel to the Company, such transfer does not comply with the provisions of the Securities Act of 1933, as amended (the “Act”), and the rules and regulations
thereunder. 

  

	 	4.	The Company shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of providing for the exercise of the rights to
purchase all Warrant Shares granted pursuant to the Warrants, such number of shares of Common Stock issuable upon exercise of this Warrant, upon receipt by the Company of the full Exercise Price therefor, shall be validly issued, full paid, and
nonassessable, without any personal liability attaching to the ownership thereof, and will not be issued in violation of any preemptive rights of stockholders, optionholders, warrantholders and any other persons, and the Holders will receive good
title to the securities purchased by them, respectively, free and clear of all liens, security interests, pledges, charges, encumbrances, stockholders’ agreements and voting trusts which might be created by acts or omissions to act of the
Company. 

  

	 	5.	(a) In case the Company shall at any time after the date the Warrants were first issued (i) declare a dividend on the outstanding Common Stock payable in shares of its capital
stock, (ii) subdivide the outstanding common stock, (iii) combine the outstanding Common Stock into a smaller number of shares, or (iv) issue any shares of its capital stock by reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), then, in each case, the Exercise Price, and the number and kind of securities issuable upon exercise of this Warrant, in effect at the
time of the record date for such dividend or of the effective date of such subdivision, combination, or reclassification, shall be proportionately adjusted so that the Holder after such time shall be entitled to receive the aggregate number and kind
of shares which, if such Warrant had been exercised immediately prior to such time, he would have owned upon such exercise and had been entitled to receive by virtue of such dividend, subdivision, combination, or reclassification. Such adjustment
shall be made successively whenever any event listed above shall occur. 

  
 (b) In case the Company shall distribute to all holders of Common Stock (including any such distribution made to the stockholders of the Company in connection with a consolidation or merger in which the Company is the
continuing corporation) evidences of its indebtedness, cash (other than any cash dividend which, together with any cash dividends paid within the 12 months 

  

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prior to the record date for such distribution, does not exceed, on a per share basis, 5% of the Current Market Price at the record date for such
distribution) or assets (other than distributions and dividends payable in shares of Common Stock), or rights, options, or warrants to subscribe for or purchase Common Stock, or securities convertible into or exchangeable for shares of Common Stock,
then, in each case, the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date for the determination of stockholders entitled to receive such distribution by a fraction, the numerator of
which shall be the Current Market Price per share of Common Stock on such record date, less the fair market value (as determined in good faith by the board of directors of the Company, whose determination shall be conclusive absent manifest error)
of the portion of the evidences of indebtedness or assets so to be distributed, or of such rights, options, or warrants or convertible or exchangeable securities, or the amount of such cash, applicable to one share, and the denominator of which
shall be such Current Market Price per share of Common Stock. Such adjustment shall be made whenever any such distribution is made, and shall become effective on the record date for the determination of stockholders entitled to receive such
distribution. The “Current Market Price” shall mean the average of the high and low reported sale prices per share of Common Stock on the American Stock Exchange, the Nasdaq National Market or such other nationally recognized trading
system on which the Common Stock is then traded, for the ten trading days immediately preceding the relevant date. 
  
 (c) No adjustment in the Exercise Price shall be required if such adjustment is less than $0.01; provided, however, that any adjustments which by
reason of this Section 5 are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 5 shall be made to the nearest cent or to the nearest one-thousandth of a share,
as the case may be. 
  
 (d) In any case in which Section 5 shall
require that an adjustment in the Exercise Price be made effective as of a record date for a specified event, the Company may elect to defer, until the occurrence of such event, issuing to the Holder, if the Holder exercised this Warrant after such
record date, the shares of Common Stock, if any, issuable upon such exercise over and above the shares of Common Stock, if any, issuable upon such exercise on the basis of the Exercise Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to the Holder a due bill or other appropriate instrument evidencing the Holder’s right to receive such additional shares upon the occurrence of the event requiring such adjustment. 
  
 (e) Upon each adjustment of the Exercise Price as a result of the
calculations made in this Section, this Warrant shall thereafter evidence the right to purchase, at the adjusted Exercise Price, that number of shares (calculated to the nearest thousandth) obtained by dividing (i) the product obtained by
multiplying the number of shares purchasable upon exercise of this Warrant prior to adjustment of the number of shares by the Exercise Price in effect prior to adjustment of the Exercise Price, by (ii) the Exercise Price in effect after such
adjustment of the Exercise Price. 
  
 (f) Whenever there shall be
an adjustment as provided in this Section 5, the Company shall promptly cause written notice thereof to be sent by registered mail, postage prepaid, to the Holder, at its address as it shall appear in the Warrant Register, which notice shall be
accompanied by an officer’s certificate setting forth the number of Warrant Shares purchasable upon the exercise of this Warrant and the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such
adjustment and the computation thereof, which officer’s certificate shall be conclusive evidence of the correctness of any such adjustment absent manifest error. 
  
 (g) The Company shall not be required to issue fractions of shares of Common Stock or other capital stock of the Company
upon the exercise or conversion of this Warrant. If any fraction of a share would be issuable on the exercise of this Warrant (or specified portions thereof), the Company shall purchase such fraction for an amount in cash equal to the same fraction
of the Current Market Price of such share of Common Stock on the date of exercise or conversion of this Warrant. 
  

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	 	6.	(a) In case of any consolidation with or merger of the Company with or into another corporation (other than a merger or consolidation in which the Company is the surviving or
continuing corporation), or in case of any sale, lease, or conveyance to another corporation of the property and assets of any nature of the Company as an entirety or substantially as an entirety, such successor, leasing, or purchasing corporation,
as the case may be, shall (i) execute with the Holder an agreement providing that the Holder shall have the right thereafter to receive upon exercise or conversion of this Warrant solely the kind and amount of shares of stock and other securities,
property, cash, or any combination thereof receivable upon such consolidation, merger, sale, lease, or conveyance by a holder of the number of shares of Common Stock for which this Warrant might have been exercised immediately prior to such
consolidation, merger, sale, lease, or conveyance, and (ii) make effective provision in its certificate of incorporation or otherwise, if necessary, to effect such agreement. Such agreement shall provide for adjustments which shall be as nearly
equivalent as practicable to the adjustments in Section 5. 

  
 (b) In case of any reclassification or change of the shares of Common Stock issuable upon exercise or conversion of this Warrant (other than a change in par value or from no par value to a specified par value, or as a
result of a subdivision or combination, but including any change in the shares into two or more classes or series of shares), or in case of any consolidation or merger of another corporation into the Company in which the Company is the continuing
Corporation and in which there is a reclassification or change (including a change to the right to receive cash or other property) of the shares of Common Stock (other than a change in par value, or from no par value to a specified par value, or as
a result of a subdivision or combination, but including any change in the shares into two or more classes or series of shares), the Holder shall have the right thereafter to receive upon exercise of this Warrant solely the kind and amount of shares
of stock and other securities, property, cash, or any combination thereof receivable upon such reclassification, change, consolidation, or merger by a holder of the number of shares of Common Stock for which this Warrant might have been exercised or
converted immediately prior to such reclassification, change, consolidation, or merger. Thereafter, appropriate provision shall be made for adjustments which shall be as nearly equivalent as practicable to the adjustments in Section 5. 

 
 (c) The above provisions of this Section 6 shall similarly apply to
successive reclassifications and changes of shares of Common Stock and to successive consolidations, mergers, sales, leases, or conveyances. 
  

	 	7.	In case at any time the Company shall propose 

  
 (a) to pay any dividend or make any distribution on shares of Common Stock in shares of Common Stock or make any other distribution (other than regularly
scheduled cash dividends which are not in a greater amount per share than the most recent such cash dividend) to all holders of Common Stock; or 
  
 (b) to issue any rights, warrants, or other securities to all holders of Common Stock entitling them to purchase any additional shares of Common Stock or
any other rights, warrants, or other securities; or 
  
 (c) to
effect any reclassification or change of outstanding shares of Common Stock, or any consolidation, merger, sale, lease, or conveyance of property, described in Section 6; or 
  
 (d) to effect any liquidation, dissolution, or winding-up of the Company; or 
  
 (e) to take any other action which would cause an adjustment to the Exercise
Price; 
  
 then, and in any one or more of such cases, the
Company shall give written notice thereof, by registered mail, postage prepaid, to the Holder at the Holder’s address as it shall appear in the Warrant Register, mailed at least 15 days prior to (i) the date as of which the holders of record of

  

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shares of Common Stock to be entitled to receive any such dividend, distribution, rights, warrants, or other securities are to be determined, (ii) the date
on which any such reclassification, change of outstanding shares of Common Stock, consolidation, merger, sale, lease, conveyance of property, liquidation, dissolution, or winding-up is expected to become effective, and the date as of which it is
expected that holders of record of shares of Common Stock shall be entitled to exchange their shares for securities or other property, if any, deliverable upon such reclassification, change of outstanding shares, consolidation, merger, sale, lease,
conveyance of property, liquidation, dissolution, or winding-up, or (iii) the date of such action which would require an adjustment to the Exercise Price. 
  

	 	8.	The issuance of any shares or other securities upon the exercise or conversion of this Warrant, and the delivery of certificates or other instruments representing such shares or
other securities, shall be made without charge to the Holder for any tax or other charge in respect of such issuance. The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issue
and delivery of any certificate in a name other than that of the Holder and the Company shall not be required to issue or deliver any such certificate unless and until the person or persons requesting the issue thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. 

  

	 	9.	(a) The Company has filed with the Securities and Exchange Commission (the “Commission”) a Registration Statement on Form S-2 (file no. 333-121572) (as declared effective
on February     , 2005, the “Registration Statement”), which registered under the Securities Act of 1933 (the “Act”) the Warrant and the shares of Common Stock underlying the Warrant (the “Warrant
Shares”). The Company shall use its best efforts to keep effective the Registration Statement or qualification contemplated by this Section 9 and shall from time to time amend or supplement the Registration Statement, preliminary prospectus,
final prospectus, application, document and communication for such period of time as shall be required to permit all Holders to complete the offer and sale of the Warrant Shares covered thereby. The Company shall in no event be required to keep any
such registration or qualification in effect for a period in excess of five years from February     , 2005, or such earlier date as all Warrant Shares may be disposed of in accordance with paragraph (k) of Rule 144
under the Act. Notwithstanding the foregoing, (i) if the Company has delivered a prospectus to the Holder and, after having done so the prospectus is amended or supplemented to comply with the requirements of the Act, the Company shall promptly
notify the Holder and, if requested, the Holder shall immediately cease making offers of Warrant Shares, and the Company shall promptly provide the Holder with a revised prospectus or a prospectus supplement and, following receipt of the revised
prospectus or prospectus supplement, the Holder shall be free to resume making offers of the Warrant Shares, and (ii) in the event that, in the judgment of the Company, it is advisable to suspend use of a prospectus included in the Registration
Statement due to pending material developments or other events that have not yet been publicly disclosed, the Company shall notify all Holders to such effect, and, upon receipt of such notice, each such Holder shall immediately discontinue any sales
of Warrant Shares pursuant to such Registration Statement until such Holder has received copies of a supplemented or amended prospectus or until such Holder is advised in writing by the Company that the then current prospectus may be used and has
received copies of any additional or supplemental filings that are incorporated or deemed incorporated by reference in such prospectus. Notwithstanding anything to the contrary herein, the Company shall not exercise its rights to suspend sales of
Warrant Shares for a period in excess of 30 days consecutively or 60 days in any 365-day period. 

  
 (b) The Company shall use its best efforts to cause the Warrant Shares so registered to be registered or qualified for sale under the securities or blue
sky laws of such jurisdictions as the Holder or such holders may reasonably request; provided, however, that the Company shall not for any such purpose be required to (A) qualify generally to do business as a foreign corporation in any jurisdiction
wherein it is not otherwise required to be so qualified, (B) subject itself to taxation in any jurisdiction wherein it is not so subject or (C) consent to general service of process in any such jurisdiction or otherwise take action that would
subject it to the general jurisdiction of the courts of any jurisdiction to which it is not so subject. 
  

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 (c) The Company shall furnish to each Holder such number of copies of the Registration Statement and of
each amendment and supplement thereto (in each case, including all exhibits), such reasonable number of copies of each prospectus contained in such Registration Statement and each supplement or amendment thereto (including each preliminary
prospectus), all of which shall conform to the requirements of the Act and the rules and regulations thereunder, and such other documents, as any Holder may reasonably request to facilitate the disposition of the Warrant Shares included in such
registration. 
  
 (d) The Company agrees that until all the
Warrant Shares have been sold under the Registration Statement, it shall keep current in filing all reports, statements and other materials required to be filed with the Commission to permit all Holders of the Warrant Shares to sell such securities
under the Registration Statement. 
  

	 	10.	(a) Subject to the conditions set forth below, the Company agrees to indemnify and hold harmless each Holder, its officers, directors, partners, employees, agents, and counsel, and
each person, if any, who controls any such person within the meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), from and against any and all loss, liability, charge,
claim, damage, and expense whatsoever (which shall include, for all purposes of this Section 10, but not be limited to, reasonable attorneys’ fees and any and all reasonable expense whatsoever incurred in investigating, preparing, or defending
against any litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation), as and when incurred, arising out of, based upon, or in connection with (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in the Registration Statement, preliminary prospectus, or final prospectus (as from time to time amended and supplemented), or any amendment or supplement thereto, relating to the sale of any
of the Warrant Shares, or (B) in any application or other document or communication (in this Section 10 collectively called an “application”) executed by or on behalf of the Company or based upon written information furnished by or on
behalf of the Company filed in any jurisdiction in order to register or qualify any of the Warrant Shares under the securities or blue sky laws thereof or filed with the Commission or any securities exchange; or any omission or alleged omission to
state a material fact required to be stated therein or necessary to make the statements therein not misleading, unless such statement or omission was made in reliance upon and in conformity with written information furnished to the Company with
respect to such Holder by or on behalf of such person expressly for inclusion in the Registration Statement, preliminary prospectus, or final prospectus, or any amendment or supplement thereto, or in any application, as the case may be, or (ii) any
breach of any representation, warranty, covenant, or agreement of the Company contained in this Warrant. The foregoing agreement to indemnify shall be in addition to any liability the Company may otherwise have, including liabilities arising under
this Warrant. 

  
 If any action is
brought against any Holder or any of its officers, directors, partners, employees, agents, or counsel, or any controlling persons of such person (an “indemnified party”) in respect of which indemnity may be sought against the Company
pursuant to the foregoing paragraph, such indemnified party or parties shall promptly notify the Company in writing of the institution of such action (but the failure so to notify shall not relieve the Company from any liability pursuant to this
Section 10(a) except to the extent that the Company is materially prejudiced thereby, and the Company shall promptly assume the defense of such action, including the employment of counsel (which counsel shall be reasonably satisfactory to such
indemnified party or parties and will not exceed one law firm) and payment of expenses. Such indemnified party or parties shall have the right to employ its or their own counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless the employment of such counsel shall have been authorized in writing by the Company in connection with the defense of such action or the Company shall not have promptly employed counsel
reasonably satisfactory to such indemnified party or parties to have charge of the defense of such action or such indemnified party or parties shall have reasonably concluded that there may be a conflict of interest between the indemnified party or
parties and the Company in the conduct of the defense of such action in any of which events such fees and expenses shall be borne by the 

  

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Company and the Company shall not have the right to direct the defense of such action on behalf of the indemnified party or parties. Anything in this Section
10 to the contrary notwithstanding, the Company shall not be liable for any settlement of any such claim or action effected without its written consent, which shall not be unreasonably withheld. The Company shall not, without the prior written
consent of each indemnified party that is not released as described in this sentence, settle or compromise any action, or permit a default or consent to the entry of judgment in or otherwise seek to terminate any pending or threatened action, in
respect of which indemnity may be sought hereunder (whether or not any indemnified party is a party thereto), unless such settlement, compromise, consent, or termination includes an unconditional release of each indemnified party from all liability
in respect of such action. The Company agrees promptly to notify the Holders of the commencement of any litigation or proceedings against the Company or any of its officers or directors in connection with the sale of any Warrant Shares or any
preliminary prospectus, prospectus, registration statement, or amendment or supplement thereto, or any application relating to any sale of any Warrant Shares. 
  

(b) The Holder agrees to indemnify and hold harmless the Company, each director of the Company, each officer of the Company who shall have signed any
registration statement covering Warrant Shares held by the Holder, each other person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, and its or their respective counsel, to the same
extent as the foregoing indemnity from the Company to the Holder in Section 10(a), but only with respect to statements or omissions, if any, made in any registration statement, preliminary prospectus, or final prospectus (as from time to time
amended and supplemented), or any amendment or supplement thereto, or in any application, in reliance upon and in conformity with written information furnished to the Company with respect to the Holder by or on behalf of the Holder expressly for
inclusion in any such registration statement, preliminary prospectus. or final prospectus, or any amendment or supplement thereto, or in any application, as the case may be. If any action shall be brought against the Company or any other person so
indemnified based on any such registration statement, preliminary prospectus, or final prospectus, or any amendment or supplement thereto. or in any application, and in respect of which indemnity may be sought against the Holder pursuant to this
Section 10(b), the Holder shall have the rights and duties given to the Company, and the Company and each other person so indemnified shall have the rights and duties given to the indemnified parties, by the provisions of Section 10(a). 

 
 To provide for just and equitable contribution, if (i) an indemnified
party makes a claim for indemnification pursuant to Section 10(a) or 10(b) (subject to the limitations thereof) but it is found in a final judicial determination, not subject to further appeal, that such indemnification may not be enforced in such
case, even though this Agreement expressly provides for indemnification in such case, or (ii) any indemnified or indemnifying party seeks contribution under the Act, the Exchange Act or otherwise, then the Company (including for this purpose any
contribution required to be made by or on behalf of any director of the Company, any officer of the Company who signed any such registration statement, any controlling person of the Company, and its or their respective counsel), as one entity, and
the Holders of the Warrant Shares included in such registration in the aggregate (including for this purpose any contribution by or on behalf of an indemnified party), as a second entity, shall contribute to the losses, liabilities, claims, damages,
and expenses whatsoever to which any of them may be subject, on the basis of relevant equitable considerations such as the relative fault of the Company and such Holders in connection with the facts which resulted in such losses, liabilities,
claims, damages, and expenses. The relative fault, in the case of an untrue statement, alleged untrue statement, omission, or alleged omission, shall be determined by, among other things, whether such statement, alleged statement, omission, or
alleged omission relates to information supplied by the Company or by such Holders, and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement, alleged statement, omission, or
alleged omission. The Company and the Holder agree that it would be unjust and inequitable if the respective obligations of the Company and the Holders for contribution were determined by pro rata or per capita allocation of the aggregate losses,
liabilities, claims, damages, and expenses (even if the Holder and the other indemnified 

  

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parties were treated as one entity for such purpose) or by any other method of allocation that does not reflect the equitable considerations referred to in
this Section 10(c). In no case shall any Holder be responsible for a portion of the contribution obligation imposed on all Holders in excess of its pro rata share based on the number of shares of Common Stock owned (or which would be owned upon
exercise of all Warrant Shares) by it and included in such registration statement as compared to the number of shares of Common Stock owned (or which would be owned upon exercise of all Warrant Shares) by all Holders and included in such
registration statement. No person guilty of a fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who is not guilty of such fraudulent misrepresentation. For purposes of
this Section 10(c), each person, if any, who controls any Holder within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and each officer, director, partner, employee, agent, and counsel of each such Holder or control person
shall have the same rights to contribution as such Holder or control person and each person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, each officer of the Company who shall
have signed any such registration statement, each director of the Company, and its or their respective counsel shall have the same rights to contribution as the Company, subject in each case to the provisions of this Section 10(c). Anything in this
Section 10(c) to the contrary notwithstanding, no party shall be liable for contribution with respect to the settlement of any claim or action effected without its written consent. This Section 10(c) is intended to supersede any right to
contribution under the Act, the Exchange Act or otherwise. 
  

	 	11.	Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction, or mutilation of any Warrant (and upon surrender of any Warrant if mutilated), and upon
reimbursement of the Company’s reasonable incidental expenses, the Company shall execute and deliver to the Holder thereof a new Warrant of like date, tenor, and denomination. 

  

	 	12.	The Holder of any Warrant shall not have, solely on account of such status, any rights of a stockholder of the Company, either at law or in equity, or to any notice of meetings of
stockholders or of any other proceedings of the Company, except as provided in this Warrant. 

  

	 	13.	This Warrant shall be construed in accordance with the laws of the State of New York applicable to contracts made and performed within such State, without regard to principles of
conflicts of law. 

  
 Dated: February
    , 2005 
  

									
	 	 	 	 	 ENVIRONMENTAL POWER CORPORATION

					
	By:	 	 	 	 	 	 By:
	 	 
	 	 	Secretary	 	 	 	 Name:
	 	 

  

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 LEGEND 
  
 THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED 
 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. 
 THESE SECURITIES MAY NOT BE
SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR 
 SUCH SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND IN 
 COMPLIANCE WITH OTHER APPLICABLE SECURITIES LAWS OR EVIDENCE REASONABLY 
 SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER 
 APPLICABLE SECURITIES LAWS. 
  

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 FORM OF ASSIGNMENT 
  
 (To be executed by the registered holder if such holder desires to transfer the attached Warrant) 
  
 FOR VALUE RECEIVED,
                             hereby sells, assigns, and transfers unto
                                 a Warrant to purchase
                     shares of Common Stock, par value $0.01 per share, of Environmental Power Corporation (the “Company”), together
with all right, title, and interest therein, and does hereby irrevocably constitute and appoint
                             attorney to transfer such Warrant on the books of the Company, with full
power of substitution. 
  
 Dated:
                     
  

	
	
	 
	 Signature

  
 NOTICE

  
 The signature on the foregoing Assignment must correspond to
the name as written upon the face of this Warrant in every particular, without alteration or enlargement or any change whatsoever. 
  

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	To:	Environmental Power Corporation 

	    	One Cate Street, 4th Floor 

	    	Portsmouth, New Hampshire 03801 

  
 ELECTION TO EXERCISE 
  
 The undersigned hereby exercises his or its rights to purchase                      Warrant Shares covered by
the within Warrant and tenders payment herewith in the amount of $                     in accordance with the terms thereof, and requests that
certificates for such securities be issued in the name of, and delivered to: 
  
 __________________________________________________________________________________________________________________________ 
  
 __________________________________________________________________________________________________________________________ 
  
 __________________________________________________________________________________________________________________________ 
  
 (Print Name, Address and Social Security or Tax Identification Number) 
  
 and, if such number of Warrant Shares shall not be all the Warrant Shares covered by the within Warrant, that a new Warrant for the balance
of the Warrant Shares covered by the within Warrant be registered in the name of, and delivered to, the undersigned at the address stated below. 
  
 Dated:                      
  

			
		
	Name:	 	 
	 	 	 (Print)

	
	 Address:

	
	 
	
	 
	
	 
	
	 
	 (Signature)

  

 11Form of Severance Agreement

 Exhibit 10.1 
  
 SEVERANCE AGREEMENT 
  
 This Agreement, effective as of January     , 2005 (“Effective Date”), is entered into by and between Kyphon Inc., a
corporation organized under the laws of the State of Delaware (the “Company”), and
                             (the “Executive”). 
  
 WHEREAS, the Board of Directors of the Company (the “Board”)
recognizes that the possibility of a Change in Control (as hereinafter defined) exists and that the threat or the occurrence of a Change in Control can result in significant distractions to its key management personnel because of the uncertainties
inherent in such a situation; 
  
 WHEREAS, the Board has
determined that it is essential and in the best Interests of the Company and its stockholders to retain the services of the Executive in the event of a threat or occurrence of a Change in Control and to ensure that the Executive is able to remain
focused and dedicated to the Company’s operations without undue concern for the Executive’s personal, financial and employment security; and 
  
 WHEREAS, in order to induce the Executive to remain in the employ of the Company, particularly in the event of a threat or the occurrence of a Change in
Control, the Company desires to enter into this Agreement with the Executive to provide the Executive with certain benefits in the event that the Executive’s employment is terminated as a result of, or in connection with, a Change in Control.

  
 NOW, THEREFORE, in consideration of the respective agreements
of the Parties contained herein, it is agreed as follows: 
  
 1.
Term of Agreement. This Agreement shall commence on January 1, 2005 and shall continue in effect until the expiration of twelve (12) months after a Change-in-Control. 
  
 2. Definitions. 
  
 2.1 Accrued Compensation. For purposes of this Agreement, “Accrued Compensation” shall mean an amount which shall include all amounts
earned or accrued through the “Termination Date” (as hereinafter defined) but not paid as of the Termination Date, including (i) base salary, (ii) reimbursement for reasonable and necessary expenses incurred by the Executive on behalf of
the Company during the period ending on the Termination Date, (iii) vacation pay and (iv) bonuses and incentive compensation (other than the “Pro Rata Bonus” (as hereinafter defined)). 
  
 2.2 Base Amount. For purposes of this Agreement, “Base
Amount” shall mean the greater of the Executive’s annual base salary (a) at the rate in effect on the Termination Date or (b) at the highest rate in effect at any time during the ninety (90) day period prior to the Change in Control, and
shall include all amounts of base salary that are deferred under the employee benefit plans of the Company or any other agreement or arrangement. 
  
 2.3 Bonus Amount. For purposes of this Agreement, “Bonus Amount” shall mean the greatest of: (a) 100% of the annual bonus payable to the
Executive under the Company’s cash bonus incentive plan for the fiscal year in which the Termination Date occurs; 

 
(b) the annual bonus paid or payable to the Executive under the Company’s cash bonus incentive plan for the full fiscal year ended prior to the fiscal
year during which the Termination Date occurred; or (c) the annual bonus paid or payable to the Executive under the Company’s cash bonus incentive plan for the full fiscal year ended prior to the fiscal year during which a Change in Control
occurred. 
  
 2.4 Cause. For purposes of this Agreement, a
termination of employment is for “Cause” if the basis of the termination is fraud, misappropriation, embezzlement or willful engagement by the Executive in misconduct which is demonstrably injurious to the Company and its subsidiaries
taken as a whole (no act, or failure to act, on the part of the Executive shall be considered “willful” unless done, or omitted to be done, by the Executive not in good faith and without a reasonable belief that the action or omission was
in the best interests of the Company and its subsidiaries); provided, however, that the Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to the Executive a Notice of Termination (as
hereinafter defined) and copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of those members of the Company’s Board of Directors who are not then employees of the Company at a meeting of the Board called
and held for the purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive’s counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive
was guilty of the conduct set forth in the first sentence of this Section 2.4 and specifying the particulars thereof in detail. 
  
 2.5 Change in Control. For purposes of this Agreement, a “Change in Control” shall mean any of the following events: 
  
 (a) An acquisition (other than directly from the Company) of any voting
securities of the Company (the “Voting Securities”) by any “Person” (as the term is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”)) immediately after
which such Person has “Beneficial Ownership” (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of greater than fifty percent (50%) of the combined voting power of the Company’s then outstanding Voting Securities;
provided, however, that in determining whether a Change in Control has occurred, Voting Securities which are acquired in a “Non-Control Acquisition” (as hereinafter defined) shall not constitute an acquisition which would cause a Change in
Control. A “Non-Control Acquisition” shall mean an acquisition by (1) an employee benefit plan (or a trust forming a part thereof) maintained by (A) the Company or (B) any corporation or other Person of which a majority of its voting power
or its equity securities or equity interest is owned directly or indirectly by the Company (a “Subsidiary”), (2) the Company or any Subsidiary in which the Company and its shareholders immediately before the acquisition retain beneficial
ownership after the acquisition of at least 51% of the combined voting power of the Company’s then outstanding Voting Securities; or (3) any Person in connection with a “Non-Control Transaction” (as hereinafter defined); or

  
 (b) Approval by stockholders of the Company of a merger,
consolidation or reorganization involving the Company, unless the stockholders of the Company immediately before such merger, consolidation or reorganization, own immediately following such merger, consolidation or reorganization, directly or
indirectly, at least fifty-one percent (51%) of the combined voting power of the outstanding voting securities of the corporation resulting from 

  

 2 

 
such merger or consolidation or reorganization (the “Surviving Corporation”) in substantially the same proportion as their ownership of the Voting
Securities immediately before such merger, consolidation or reorganization (a “Non-Control Transaction”); 
  
 (c) An agreement for the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a
Subsidiary). 
  
 Notwithstanding the foregoing, a Change in
Control shall not be deemed to occur solely because any Person (the “Subject Person”) acquired Beneficial Ownership of more than the permitted amount of the outstanding Voting Securities as a result of the acquisition of Voting Securities
by the Company which, by reducing the number of Voting Securities outstanding, increases the proportional number of shares Beneficially Owned by the Subject Person, provided, however, that, if a Change in Control would occur (but for the operation
of this sentence) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition by the Company the Subject Person becomes the Beneficial Owner of any additional voting Securities which increases the percentage
of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur. 
  
 2.6 Company. For purposes of this Agreement, the “Company” shall mean Kyphon Inc. and its Subsidiaries and shall include Kyphon’s
“Successors and Assigns” (as hereinafter defined). 
  
 2.7 Disability. For purposes of this Agreement, “Disability” shall mean a physical or mental infirmity which impairs the Executive’s ability to substantially perform the Executive’s duties with the Company, with
or without reasonable accommodation, for a period of one hundred eighty (180) consecutive days and the Executive has not returned to full time employment prior to the Termination Date as stated in the “Notice of Termination”. 

 
 2.8 Good Reason. 
  
 (a) For purposes of this Agreement, “Good Reason” shall mean the
occurrence, (i) within ninety (90) days before a Change in Control or (ii) during the twelve (12) month period following a Change in Control, of any of the events or conditions described in subsections (1) through (7) hereof, which conditions remain
in effect 10 days after written notice from the Executive to the Board of Directors of such conditions: 
  
 (i) without the Executive’s express written consent, a material reduction by the Company of the impact and nature of the Executive’s duties,
scope of responsibilities or authority, relative to the impact and nature of the Executive’s duties, scope of responsibilities or authority as in effect at any time within ninety (90) days preceding the date of a Change of Control. The impact
and nature of the Executive’s duties, scope of responsibilities or authority shall be determined based on objective metrics such as revenue and/or budget responsibility, size of organization managed, breadth of responsibility, and the like. A
change in title or a change which results in not reporting to the CEO shall not in and of themselves automatically be construed as a material reduction in the Executive’s duties, scope of responsibilities or authority. 
  

 3 

 (ii) A reduction in the Executive’s base salary or target bonus opportunity, or any failure to pay
the Executive any compensation or benefits to which the Executive is entitled within five (5) days of the date due; 
  
 (iii) the Company’s requiring the Executive to be based at any place outside a 40-mile radius from Sunnyvale, California, except for reasonably
required travel on the Company’s business which is not materially greater than such travel requirements prior to the Change in Control; 
  
 (iv) the failure by the Company to (A) continue in effect (without material reduction in benefit level and/or reward opportunities) any material
compensation or employee benefit plan in which the Executive was participating at any time within ninety (90) days preceding the date of a Change in Control or at any time thereafter, unless such plan is replaced with a plan that provides
substantially equivalent compensation or benefits to the Executive, or (B) provides the Executive with compensation and benefits, in the aggregate, at least equal (in terms of benefit levels and/or reward opportunities) to those provided for under
each other employee benefit plan, program and practice in which the Executive was participating at any time within ninety (90) days preceding the date of a Change in Control or at any time thereafter; 
  
 (v) any material breach by the Company of any provision of this Agreement;

  
 (vi) the insolvency or the filing (by any party, including
the Company) of a petition for bankruptcy of the Company, which petition is not dismissed within 60 days. 
  
 (vii) any purported termination of the Executive’s employment for Cause by the Company which does not comply with the terms of Section 2.4; or

  
 (b) The Executive’s right to terminate the
Executive’s employment pursuant to this Section 2.8 shall not be affected by the Executive’s incapacity due to physical or mental illness. 
  
 2.9 Notice of Termination. For purposes of this Agreement, “Notice of Termination” shall mean a written notice of termination of the
Executive’s employment from the Company, which notice shall indicate the specific termination provision in this Agreement relied upon and which sets forth in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision so indicated. 
  
 2.10 Pro Rata Bonus. For purposes of this Agreement, “Pro Rata Bonus” shall mean an amount equal to the Bonus Amount multiplied by a fraction, the numerator of which is the number of days in the
fiscal year through the Termination Date and the denominator of which is 365. 
  
 2.11 Successors and Assigns. For purposes of this Agreement, “Successors and Assigns” shall mean a corporation or other entity acquiring all or substantially all of the assets and business of the
Company (including this Agreement), whether by operation of law or otherwise. 
  

 4 

 2.12 Termination Date. For purposes of this Agreement, “Termination Date” shall mean in,
the case of the Executive’s death, the Executive’s date of death, in the case of Good Reason, the last day of the Executive’s employment and, in all other cases, the date specified in the Notice of Termination; provided, however, that
if the Executive’s employment is terminated by the Company due to Disability, the date specified in the Notice of Termination shall be at least 30 days from the date the Notice of Termination is given to the Executive, provided that the
Executive shall not have returned to the full-time performance of the Executive’s duties during such period of at least 30 days. 
  
 3. Termination of Employment. 
  
 3.1 If, during the term of this Agreement, the Executive’s employment with the Company shall be terminated (i) within ninety (90) days preceding a
Change in Control, or (ii) twelve (12) months following a Change in Control, the Executive shall be entitled to the following compensation and benefits: 
  
 (a) If the Executive’s employment with the Company shall be terminated (1) by the Company for Cause or Disability, (2) by reason of the
Executive’s death, or (3) by the Executive other than for Good Reason, the Company shall pay to the Executive the Accrued Compensation. 
  
 (b) If the Executive’s employment with the Company shall be terminated for any reason other than as specified in Section 3.1(a), whether by the
Company or the Executive, the Executive shall be entitled to the following: 
  
 (i) the Company shall pay the Executive all Accrued Compensation; 
  
 (ii) the Company shall pay the Executive as severance pay and in lieu of any further compensation for periods subsequent to the Termination Date, in a
single payment, an amount in cash equal to the sum of (A) 50% of the Base Amount and (B) 50% of the Bonus Amount; 
  
 (iii) for a number of months equal to six (6) (the “Continuation Period”), the Company shall, at its expense, continue on behalf of the
Executive and the Executive’s dependents and beneficiaries the same life insurance, disability, medical, dental, and hospitalization benefits provided (A) to the Executive and the Executive’s dependents at any time during the 90-day period
prior to the Change in Control or at any time thereafter or (B) to other similarly situated executives who continue in the employ of the Company during the Continuation Period. The coverage and benefits (including deductibles and costs) provided in
this Section 3.1(b)(iii) during the Continuation Period shall be no less favorable to the Executive and the Executive’s dependents and beneficiaries, than the most favorable of such coverages and benefits during any of the periods referred to
in clauses (A) and (B) above. The Company’s obligation hereunder with respect to the foregoing benefits shall be limited to the extent that the Executive obtains any such benefits pursuant to a subsequent employer’s benefit plans, in which
case the Company may reduce the coverage of any benefits it is required to provide the Executive hereunder as long as the aggregate coverages and benefits of the combined benefit plans are no less favorable to the Executive than the coverages and
benefits required to be 
  

 5 

 provided hereunder. This subsection (iii) shall not be interpreted so as to limit any benefits to which the Executive or
the Executive’s dependents or beneficiaries may be entitled under any of the Company’s employee benefit plans, programs or practices following the Executive’s termination of employment, including without limitation, retiree medical
and life insurance benefits; 
  
 (iv) the restrictions on any
outstanding equity incentive awards, including stock options and restricted stock, granted to the Executive under the Company’s stock option plans or any other incentive plan or arrangement shall lapse and such incentive award shall become one
hundred percent (100%) vested and, in the case of stock options, immediately exercisable; 
  
 (v) for the duration of the Continuation Period, the Company shall, at its expense, provide the Executive with outplacement and career counseling services of the Executive’s choice, provided, however, that the
Company’s obligation to pay for such services shall in no event exceed an aggregate amount equal to 10% of the Base Amount. 
  
 (c) The amounts provided for in Sections 3.1 (a) and 3.1(b)(i) and (ii) shall be paid in a single lump sum cash payment within forty five (45) days after
the Executive’s Termination Date (or earlier, if required by applicable law). 
  
 (d) The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, and no such payment shall be offset or reduced by the amount of
any compensation or benefits provided to the Executive in any subsequent employment except as provided in Section 3.1 (b)(iii). 
  
 3.2 (a) The severance pay and benefits provided for in this Section 3 shall be in lieu of any other severance or termination pay to which the Executive
may be entitled under any Company severance or termination plan, program, practice, agreement or arrangement. 
  
 (b) The Executive’s entitlement to any other compensation or benefits shall be determined in accordance with the Company’s employee benefit
plans and other applicable programs, policies and practices then in effect, 
  
 4. Notice of Termination. Any purported termination of the Executive’s employment by any Party, including Executive, that would be governed by this Agreement shall be communicated by Notice of Termination
to the Executive. For purposes of this Agreement, no such purported termination shall be effective without such Notice of Termination. 
  
 5. Excise Tax Limitation. 
  
 (a) Notwithstanding anything contained in this Agreement, in the event that any payment or benefit (within the meaning of Section 280G(b)(2) of the
Internal Revenue Code of 1986, as amended (the “Code”)), to the Executive or for the Executive’s benefit paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise in connection with, or
arising out of, the Executive’s employment with the Company or a Change in Control (a “Payment” or “Payments”) would be subject to the excise tax imposed by Section 
  

 6 

 4999 of the Code (the “Excise Tax”), the Payments shall be reduced (but not below zero) if and to the extent
necessary so that no Payment to be made or benefit to be provided to the Executive shall be subject to the Excise Tax (such reduced Payments being hereinafter referred to as the “Limited Payment Amount”). Unless the Executive shall have
given prior written notice specifying a different order to the Company to effectuate the Limited Payment Amount, the Company shall reduce or eliminate the Payments by first reducing or eliminating cash payments and then by reducing those payments or
benefits which are not payable in cash, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Determination (as hereinafter defined). Any notice given by the Executive pursuant to the
preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing the Executive’s rights and entitlements to any benefits or compensation, 
  
 (b) An initial determination as to whether the Payments shall be reduced to
the Limited Payment Amount and the amount of such Limited Payment Amount shall be made, at the Company’s expense, by the accounting firm that is the Company’s independent accounting firm as of the date of the Change in Control (the
“Accounting Firm”). The Accounting Firm shall provide its determination (the “Determination,), together with detailed supporting calculations and documentation, to the Company and the Executive within twenty (20) days of the
Termination Date if applicable, or such other time as requested by the Company or by the Executive (provided the Executive reasonably believes that any of the Payments may be subject to the Excise Tax), and if the Accounting Firm determines that
there is substantial authority (within the meaning of Section 6662 of the Code) that no Excise Tax is payable by the Executive with respect to a Payment or Payments, it shall furnish the Executive with an opinion reasonably acceptable to the
Executive that no Excise Tax will be imposed with respect to any such Payment or Payments. Within ten (10) days of the delivery of the Determination to the Executive, the Executive shall have the right to dispute the Determination (the
“Dispute”). If there is no Dispute, the Determination shall be binding, final and conclusive upon the Company and the Executive subject to the application of Section 5(c) below. 
  
 (c) As a result of the uncertainty in the application of Sections 4999 and 280G of the Code, it is possible that the
Payments to be made to, or provided for the benefit of, the Executive either will be greater (an “Excess Payment”) or less (an “Underpayment”) than the amounts provided for by the limitations contained in Section 5(a). If it is
established pursuant to a final determination of a court or an Internal Revenue Service (the “IRS”) proceeding which has been finally and conclusively resolved that an Excess Payment has been made, such Excess Payment shall be deemed for
all purposes to be a loan to the Executive made on the date the Executive received the Excess Payment and the Executive shall repay the Excess Payment to the Company on demand (but not less than ten (10) days after written notice is received by the
Executive) together with interest on the Excess Payment at the “Applicable Federal Rate” (as defined in Section 1274(d) of the Code) from the date of the Executive’s receipt of such Excess Payment until the date of such repayment. In
the event that it is determined by (i) the Accounting Firm, the Company (which shall include the position taken by the Company, or together with its consolidated group, on its federal income tax return) or the IRS, (ii) pursuant to a determination
by a court, or (iii) upon the resolution to the Executive’s satisfaction of the Dispute that an Underpayment has occurred, the Company shall pay an amount equal to the Underpayment to the Executive within ten (10) days of such determination or
resolution, together with interest on such amount at the Applicable Federal Rate from the date such amount would have been paid to the Executive until the date of payment. 
  

 7 

 6. Successors: Binding Agreement. 
  
 (a) This Agreement shall be binding upon and shall inure to the benefit of the Company, its Successors and Assigns and the
Company shall require any Successors and Assigns to expressly assume and agree to perform this Agreement in connection with any Change in Control and in the same manner and to the same extent that the Company would be required to perform it if no
such succession or assignment had taken place. 
  
 (b) Neither
this Agreement nor any right or interest hereunder shall be assignable or transferable by the Executive or the Executive’s beneficiaries or legal representatives, except by will or by the laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Executive’s legal personal representative. 
  
 7. Fees and Expenses. The Company shall pay all legal fees and related expenses (including the costs of experts, evidence and counsel) incurred by
the Executive as they become due as a result of (a) the Executive’s termination of employment (i) within ninety (90) days preceding a Change in Control, or (ii) during the twelve (12) month period following a Change in Control (including all
such fees and expenses, if any, incurred in contesting or disputing any such termination of employment), (b) the Executive seeking to obtain or enforce any right or benefit provided by this Agreement (i) within ninety (90) days preceding a Change in
Control, or (ii) following a Change in Control (including, but not limited to, any such fees and expenses incurred in connection with the Dispute whether as a result of any applicable government taxing authority proceeding, audit or otherwise) or by
any other plan or arrangement maintained by the Company under which the Executive is or may be entitled to receive benefits, and (c) the Executive’s hearing before the Board as contemplated in Section 2.4 of this Agreement. 
  
 8. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of Termination) shall be in writing and shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage prepaid,
addressed to the respective addresses last given by each party to the other, provided that all notices to the Company shall be directed to the attention of the Board with a copy to the Secretary of the Company. All notices and communications shall
be deemed to have been received on the date of delivery thereof or on the third business day after the mailing thereof, except that notice of change of address shall be effective only upon receipt. 
  
 9. Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Executive’s continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company (except for any severance or termination policies, plans, programs or practices) and for which the
Executive may qualify, nor shall anything herein limit or reduce such rights as the Executive may have under any other agreements with the Company (except for any severance or termination agreement). Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan or program of the Company shall be payable in accordance with such plan or program, except as explicitly modified by this Agreement. 
  

 8 

 10. Settlement of Claims. The Company’s obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against an Executive or
others. 
  
 11. Miscellaneous. No provision of this
Agreement may be modified, waived or discharged, unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and the Company. No waiver by either party hereto at any time of any breach by the other party hereto,
or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreement or
representation, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. 
  
 12. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the
State of California without giving effect to the conflict of laws principles thereof. Any action brought by any party to this Agreement shall be brought and maintained in a court of competent jurisdiction in Santa Clara County in the State of
California. 
  
 13. Severability. The provisions of this
Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. 
  
 14. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto and supersedes all
prior agreements, if any, understandings and arrangements, oral or written, between the parties hereto with respect to the subject matter hereof. 
  
 IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and the Executive has executed this Agreement as
of the Effective Date. 
  

							
	KYPHON INC.	 	EXECUTIVE
				
	 By:
	 	  

	 	 	 	

	 Its:
	 	  

	 	 Date:
	 	

	 Date:
	 	  

	 	 	 	 

  

 9

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