Document:

exv10w2

 

Exhibit 10.2

VOLCANO CORPORATION

AMENDED AND RESTATED 2000 LONG TERM INCENTIVE PLAN

     1. Objectives.
This Volcano Corporation 2000 Long Term Incentive Plan, as amended
and restated effective July 13, 2005 (the “Plan”) is
intended as an incentive to retain and attract
persons of training, experience and ability to serve as employees,
consultants, independent
contractors and directors of Volcano Corporation, a Delaware
corporation (the “Company”), to
encourage the sense of proprietorship of such persons and to
stimulate the active interest of such
persons in the development and financial success of the Company and
its Subsidiaries.

     2. Definitions. As used herein, the terms set forth below shall have the
following respective meanings:

          “Administrator” means the Board or any person or persons appointed by the Board to administer
the Plan.

          “Award” means any Option, Restricted Stock, Phantom Stock, Cash Award, Stock Award or Stock
Appreciation Right, whether granted singly, in combination or in tandem, granted to a Participant
pursuant to any applicable terms, conditions and limitations as the Administrator may establish in
order to fulfill the objectives of the Plan.

          “Award Agreement” means a written agreement between the Company and a Participant that sets
forth the terms, conditions and limitations applicable to an Award.

          “Board” means the Board of Directors of the Company.

          “Cash
Award” means an award payable in cash.

          “Code” means the United States Internal Revenue Code of 1986, as amended from time to time.

          “Common Stock” means the common stock, par value $.001 per share, of the Company.

          “Company” means Volcano Corporation, a Delaware corporation.

          “Director” means a non-employee member of the Board.

          “Disability” means the inability to perform the duties of an Employee’s position for a
continuous period of more than three months by reason of any medically determinable physical or
mental impairment.

          “Effective Date” means October 23, 2000.

 

 

          “Employee” means an individual employed by the Company or a Subsidiary. For purposes of this
Plan, an Employee also includes a consultant or independent contractor providing services to the
Company or a Subsidiary or a director of the Company or a Subsidiary.

          “Exercise Price” means the price at which the Option Shares may be purchased under the terms
of the Award Agreement.

          “Fair Market Value” means, as of a particular date, such amount as may be determined by the
Board, in good faith, to be the fair market value per share of Common Stock.

          “Grant Date” means the date on which an Award is granted by the Administrator.

          “ISO” means an incentive stock option within the meaning of Code Section 422.

          “Option” means a right to purchase a particular number of shares of Common Stock at a
particular Exercise Price, subject to certain terms and conditions as provided in the Plan and
Award Agreement. An Option may be in the form of an ISO or a nonqualified stock option within the
meaning of Code Section 83.

          “Option Shares” means the shares of Common Stock covered by a particular Option.

          “Participant” means an Employee or a Director to whom an Award has been granted under this
Plan.

          “Phantom Stock” means a right to receive the value of a specified number of shares of Common
Stock.

          “Plan” means the Volcano Corporation 2000 Long Term Incentive Plan, as amended from time to
time.

          “Restricted Stock” means shares of Common Stock that are restricted or subject to forfeiture
provisions.

          “Stock Appreciation Rights” or “SARs” means the right to receive an amount in cash or Common
Stock equal to the appreciation in value of a specified number of shares of Common Stock over a
particular period of time.

          “Stock Award” means an award payable in shares of Common Stock, which may be Restricted
Stock.

          “Subsidiary” means any corporation, limited liability company or similar entity of which the
Company directly or indirectly owns shares representing more than 50% of the voting power of all
classes or capital stock of such corporation which have the right to vote generally on matters
submitted to a vote of the shareholders of such entity;
provided, however, that with
respect to Options intended to qualify as incentive stock options within the meaning of

-2-

 

Section 422 of the Code, “Subsidiary” shall have the meaning set forth in Section 424(f) of the
Code or any successor provision.

     3. Plan
Administration and Designation of Participants. All Employees of the Company
and its Subsidiaries and all Directors are eligible for Awards under
this Plan. The Administrator
shall select the Participants from time to time by the grant of
Awards under the Plan and, subject
to the terms and conditions of the Plan, shall determine all terms
and conditions of the Award. The
Plan shall be administered by the Administrator, which shall have
full and exclusive power to
interpret this Plan and to adopt such rules, regulations and
guidelines for carrying out this Plan
as it may deem necessary or appropriate. The Administrator may
delegate its duties hereunder to the
President or other senior officers of the Company subject to such
rules and regulations as the
Administrator establishes. The Administrator may, in its discretion, provide for the extension of
the exercisability of an Award, accelerate the vesting or exercisability of an Award, eliminate or
make less restrictive any restrictions contained in an Award Agreement, waive any restriction or
other provision of this Plan or an Award Agreement or otherwise amend or modify an Award in any
manner that is allowed by applicable law and either (i) not adverse to the Participant holding the
Award or (ii) consented to by such Participant. Notwithstanding the foregoing, in no event may the
Administrator (i) amend or modify an Option in a manner that would reduce the exercise price of such
Option; (ii) substitute an Option for another Option with a lower exercise price; (iii) cancel an
Option and issue a new Option with a lower exercise price to the holder of the cancelled Option
within six (6) months following the date of the cancellation of the cancelled Option; or (iv) cancel
an outstanding Option that is under water (i.e., for which the Fair Market Value, as defined below,
of the underlying Shares is less than the Option’s Exercise Price) for the purpose of granting
a replacement Award of a different type.

     4. Award
Agreement. Each Award granted hereunder shall be described in an Award
Agreement, which shall be subject to the terms and conditions of the
Plan and shall be signed by the
Participant and by the appropriate officer for and on behalf of the Company.

     5. Shares
of Common Stock Reserved for the Plan. Subject to adjustment as provided in
Section 11 hereof, a total of 6,478,814 shares of Common Stock
shall be reserved for issuance upon
the exercise or payment of Awards granted pursuant to this Plan. The Administrator and the
appropriate officers of the Company shall from time to time take whatever actions are necessary to
execute, acknowledge, file and deliver any documents required to be filed with or delivered to any
governmental authority or any stock exchange or transaction reporting system on which shares of
Common Stock are listed or quoted in order to make shares of Common Stock available for issuance
pursuant to this Plan. Awards that are forfeited or terminated or expire unexercised in such a
manner that all or some of the shares of Common Stock subject thereto are not issued to a
Participant shall immediately become available for the granting of Awards. Notwithstanding the
foregoing, at any such time as the offer and sale of securities pursuant to the Plan is subject to
compliance with Section 260.140.45 of Title 10 of the California Code of Regulations (“Section
260.140.45”), the total number of shares of Common Stock issuable upon the exercise of all
outstanding Options (together with options outstanding under any other stock option plan of the
Company) and the total number of shares provided for under any stock bonus or similar plan of the
Company shall not exceed thirty percent (30%) (or such other higher percentage limitation as may be
approved by the stockholders of the Company

-3-

 

pursuant to Section 260.140.45) of the then outstanding shares of the Company as calculated in
accordance with the conditions and exclusions of Section 260.140.45.

     6. Types of Awards.

          (a)
Incentive Stock Options. Options granted to Employees (other than consultants and
independent contractors) hereunder may be incentive stock options
within the meaning of Section 422
of the Code (an “ISO”). An ISO shall consist of a right to
purchase a specified number of shares of
Common Stock at a price specified by the Administrator in the Award Agreement or otherwise, which
shall not be less than the Fair Market Value of the Common Stock on the grant date. Any ISO granted
shall expire not later than ten years after the grant date, with the expiration date to be specified
by the Administrator in the Award Agreement. Any ISO granted must, in addition to being subject to
applicable terms, conditions and limitations established by the Administrator, comply with Section
422 of the Code. Pursuant to the ISO requirements of Code Section 422, notwithstanding anything
herein to the contrary, (a) no ISO can be granted under the Plan on or after the tenth anniversary
of the Effective Date of the Plan (or the fifth anniversary of the Effective Date of the Plan if the
ISO is awarded to any person who, at the time of grant, owns stock representing more than 10% of the
combined voting power of all classes of stock of the Company or any Subsidiary), (b) no Optionee may
be granted an ISO to the extent that, upon the grant of the ISO, the aggregate Fair
Market Value (determined as of the date the Option is granted) of the Common Stock with respect to
which ISOs (including Options hereunder) are exercisable for the first time by the Optionee during
any calendar year (under all plans of the Company and any Subsidiary)
would exceed $100,000, (c) the
exercise price of the ISO may not be less than 100% of the Fair
Market Value of the Common Stock at
the time of grant (or not less than 110% of such of the Fair Market
Value if the ISO is awarded to
any person who, at the time of grant, owns stock representing more
than 10% of the combined voting
power of all classes of stock of the Company or any Subsidiary), and (d) no person may be granted an
ISO to the extent that, upon the grant of the ISO, the aggregate Fair Market Value (determined as of
the date the ISO is granted) of the Common Stock with respect to which ISOs (including ISOs granted
under this Plan) are exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company or any Subsidiary) would exceed $100,000. All other terms, conditions and
limitations applicable to ISOs shall be determined by the Administrator.

          (b)
Nonqualified Options. Options granted to
Employees (including consultants
and independent contractors) may be nonqualified options within the
meaning of Section 83 of the
Code. A nonqualified option shall consist of a right to purchase a
specified number of shares of
Common Stock at a price specified by the Administrator in the Award Agreement or otherwise;
provided, however, that in the case of a nonqualified option granted prior to the date, if any, on
which the Common Stock covered by this Plan have been registered under the Securities Act of 1933,
as amended, the per share exercise price shall be no less than 100% of the Fair Market Value per
share on the date of grant. Any nonqualified option granted shall expire not later than ten years
after the grant date, with the expiration date to be specified by the Administrator in the Award
Agreement. All other terms, conditions and limitations applicable to nonqualified options shall be
determined by the Administrator.

-4-

 

          (c)
Stock Award (including Restricted Stock). An Award may consist of Common Stock or
may be denominated in units of Common Stock. All or part of any Stock Award may be subject to
conditions established by the Administrator and set forth in the
Award Agreement, which conditions
may include, but are not limited to, continuous service with the Company and its Subsidiaries,
achievement of specific business objectives, increases in specified indices, attaining specified
growth rates and other comparable measurements of performance. In the case of Awards issued prior to
the date, if any, on which the Common Stock covered by this Plan have been registered under the
Securities Act of 1933, as amended, the per share valuation or purchase price shall be no less than
100% of the Fair Market Value per share on the date of grant. The certificates evidencing shares of
Common Stock issued in connection with a Stock Award shall contain appropriate legends and
restrictions describing the terms and conditions of the restrictions applicable thereto. The terms,
conditions, and limitations applicable to any Stock Award pursuant to this Plan shall be determined
by the Administrator.

          (d)
Phantom Stock. An Award may be in the form
of Phantom Stock, or other bookkeeping
account tied to the value of shares of Common Stock. The terms,
conditions, and limitations
applicable to any Awards of Phantom Stock shall be determined by the Administrator.

          (e)
Stock Appreciation Rights. An Award may be in the form of SARs. The terms,
conditions, and limitations applicable to any Awards of SARs shall be
determined by the
Administrator. SARs to be settled in shares of stock shall be counted
in full against the number
of shares of stock available for award under the Plan, regardless of
the number of exercise gain
shares issued upon the settlement of the SAR.

          (f)
Cash Awards. An Award may be in the form of a Cash Award. The terms, conditions,
and limitations applicable to any Cash Awards shall be determined by
the Administrator.

          (g)
Director Options. Options granted to Directors shall be nonqualified options
within the meaning of Section 83 of the Code and shall have such
terms, conditions and limitations
as shall be determined by the Administrator.

     7. Payment of Awards.

          (a)
General. Payment of Awards may be made in the form of cash or Common Stock
or combinations thereof and may include such restrictions as the
Administrator shall determine
including, in the case of Common Stock, restrictions on transfer and
forfeiture provisions.

          (b)
Deferral. The Administrator may, in its discretion, (i) permit
selected Participants to elect to defer payments of some or all types of Awards in accordance
with procedures established by the Administrator or (ii) provide for the deferral of an Award in
an Award Agreement or otherwise. Any such deferral may be in the form
of installment payments or a
future lump sum payment. Any deferred payment, whether elected by the
Participant or specified by
the Award Agreement or by the Administrator, may be forfeited if and to the extent

-5-

 

that the Award Agreement so provides. Procedures governing any such deferral shall comply in all
respects with Section 409A of the Code.

          (c)
Dividends and Interest. Dividends or dividend equivalent rights may be extended
to and made part of any Award denominated in Common Stock or units of Common Stock, subject to
such terms, conditions and restrictions as the Administrator may establish. The Administrator may
also establish rules and procedures for the crediting of interest on deferred cash payments and
dividend equivalents for deferred payment denominated in Common Stock or units of Common Stock.

     8. Stock
Option Exercise. The price at which shares of Common Stock may be purchased
under an Option shall be paid in full at the time of exercise in cash
or, if permitted by the
Administrator, by means of tendering Common Stock or surrendering all
or part of that or any other
Award, including Restricted Stock, valued at Fair Market Value on the
date of exercise, or any
combination thereof. The Administrator shall determine acceptable
methods for tendering Common Stock
or Awards to exercise an Option as it deems appropriate. The Administrator may provide for
procedures to permit the exercise or purchase of Awards by use of the proceeds to be received from
the sale of Common Stock issuable pursuant to an Award. Unless otherwise provided in the applicable
Award Agreement, in the event shares of Restricted Stock are tendered as consideration for the
exercise of an Option, a number of the shares issued upon the exercise of the Option, equal to the
number of shares of Restricted Stock used as consideration therefor, shall be subject to the same
restrictions as the Restricted Stock so submitted as well as any additional restrictions that may be
imposed by the Administrator.

     9. Termination
of Employment. Upon the termination of employment by a Participant,
any unexercised, deferred or unpaid Awards shall be treated as
provided in the specific Award
Agreement evidencing the Award. Unless otherwise specifically
provided in the Award Agreement and to
the extent permissible under applicable law, each Award granted pursuant to this Plan which is an
Option shall immediately terminate to the extent the Option is not vested (or does not become
vested as a result of such termination of employment) on the date the Participant terminates
employment with the Company or its Subsidiaries, or terminates service as a Director or independent
contractor or consultant.

     10. Assignability. Except as otherwise provided herein, no Award granted under
this Plan shall be sold, transferred, pledged, assigned or otherwise alienated or hypothecated by
a Participant other than by will or the laws of descent and distribution, and during the lifetime of
a Participant, any Award shall be exercisable only by him, or, in the case of a Participant who
is mentally incapacitated, the Award shall be exercisable by his guardian or legal
representative. The Administrator may prescribe and include in applicable Award Agreements other
restrictions on transfer. Any attempted assignment or transfer in violation of this Section shall be
null and void. Upon the Participant’s death, the personal representative or other person entitled
to succeed to the rights of the Participant (the ‘Successor Participant’) may exercise such rights.
A Successor Participant must furnish proof satisfactory to the Company of his or her right
to exercise the Award under the Participant’s will or under the applicable laws of descent
and distribution.

-6-

 

          Subject to approval by the Administrator in its sole discretion, all or a portion of the
Awards granted to a Participant under the Plan may be transferable by the Participant, to the
extent and only to the extent specified in such approval, to (i) the children or grandchildren of
the Participant (‘Immediate Family Members’), (ii) a trust or trusts for the exclusive benefit of
such Immediate Family Members (‘Immediate Family Member Trusts’), or (iii) a partnership or
partnerships in which such Immediate Family Members have at least ninety-nine percent (99%) of the
equity, profit and loss interests (‘Immediate Family Member Partnerships’); provided that the
Award Agreement pursuant to which such Awards are granted (or an amendment thereto) must expressly
provide for transferability in a manner consistent with this Section. Subsequent transfers of
transferred Awards shall be prohibited except by will or the laws of descent and distribution,
unless such transfers are made to the original Participant or a person to whom the original
Participant could have made a transfer in the manner described herein. No transfer shall be
effective unless and until written notice of such transfer is provided to the Administrator, in
the form and manner prescribed by the Administrator. Following transfer, any such Awards shall
continue to be subject to the same terms and conditions as were applicable immediately prior to
transfer, and, except as otherwise provided herein, the term ‘Participant’ shall be deemed to
refer to the transferee. The consequences of termination of employment shall continue to be
applied with respect to the original Participant, following which the Awards shall be exercisable
by the transferee only to the extent and for the periods specified in this Plan and the Award
Agreement.

     11. Adjustments Upon Changes in Capitalization, Merger or Certain Other
Transactions.

          (a)
Changes in Capitalization. Subject to any action required under applicable
laws by the stockholders of the Company, the number of shares of
Common Stock covered by each
outstanding Award and the number of shares of Common Stock that have
been authorized for issuance
under the Plan but as to which no awards have yet been granted or
that have been returned to the
Plan upon cancellation or expiration of an award, as well as the
price per share of Common Stock
covered by each such outstanding Award, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination, recapitalization or reclassification of the Common Stock, or any
other increase or decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any convertible securities of
the Company shall not be deemed to have been “effected without receipt of consideration.” Such
adjustment shall be made by the Administrator, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class, shall affect, and
no adjustment by reason thereof shall be made with respect to, the number or price of shares of
Common Stock subject to an award.

          (b)
Dissolution or Liquidation. In the event of the dissolution or liquidation of the
Company, each Option, Phantom Stock and Stock Appreciation Right will
terminate immediately prior to
the consummation of such action, unless otherwise determined by the Administrator.

-7-

 

          (c) Corporate Transaction. In the event of a Corporate Transaction (as defined
below), each outstanding Option, Phantom Stock or Stock Appreciation Right shall he assumed or an
equivalent option or right shall be substituted by such successor corporation or a parent or
subsidiary of such successor corporation (the “Successor Corporation”), unless the Successor
Corporation does not agree to assume the award or to substitute an equivalent option or right, in
which case such Option, Phantom Stock or Stock Appreciation Right shall terminate upon the
consummation of the transaction.

               For purposes of this Section 11(c), an Option, Phantom Stock or a Stock Appreciation Right
shall be considered assumed, without limitation, if, at the time of issuance of the stock or other
consideration upon a Corporate Transaction, each holder of an Option, Phantom Stock or Stock
Appreciation Right would be entitled to receive upon exercise of the award the same number and
kind of shares of stock or the same amount of property, cash or securities as such holder would
have been entitled to receive upon the occurrence of the transaction if the holder had been,
immediately prior to such transaction, the holder of the number of shares of Common Stock covered
by the award at such time (after giving effect to any adjustments in the number of shares covered
by the Option, Phantom Stock or Stock Appreciation Right as provided for in this Section 11);
provided that if such consideration received in the transaction is not solely common stock of the
Successor Corporation, the Administrator may, with the consent of the Successor Corporation,
provide for the consideration to be received upon exercise of the award to be solely common stock
of the Successor Corporation equal to the Fair Market Value of the per share consideration
received by holders of Common Stock in the transaction.

               For purposes of this Section 11(c), a “Corporate Transaction” shall mean (1) a sale of all or
substantially all of the Company’s assets, or (2) any merger, consolidation or other business
combination transaction of the Company with or into another corporation, entity or person, other
than a transaction in which the holders of at least a majority of the shares of voting capital
stock of the Company outstanding immediately prior to such transaction continue to hold (either by
such shares remaining outstanding or by their being converted into shares of voting capital stock
of the surviving entity) a majority of the total voting power represented by the shares of voting
capital stock of the Company (or the surviving entity) outstanding immediately after such
transaction, or (3) the direct or indirect acquisition (including by way of a tender or exchange
offer) by any person, or persons acting as a group, of beneficial ownership or a right to acquire
beneficial ownership of shares representing a majority of the voting power of the then outstanding
shares of capital stock of the Company.

     12. Purchase
for Investment. Unless the Awards and shares of Common Stock covered by
this Plan have been registered under the Securities Act of 1933, as
amended, each person receiving
shares of Common Stock pursuant to an Award under this Plan may be
required by the Company to give a
representation in writing in form and substance satisfactory to the Company to the effect that he is
acquiring such shares for his own account for investment and not with a view to, or for sale in
connection with, the distribution of such shares or any part thereof.

     13. Tax
Withholding. The Company shall have the right to deduct applicable taxes from
any Award payment and withhold, at the time of delivery or vesting of cash or shares of

-8-

 

Common Stock under this Plan, an appropriate amount of cash or number of shares of Common
Stock or a combination thereof for payment of taxes required by law or to take such other action
as may be necessary in the opinion of the Company to satisfy all obligations for withholding of
such taxes. The Administrator may also permit withholding to be satisfied by the transfer to the
Company of shares of Common Stock theretofore owned by the holder of the Award with respect to
which withholding is required. If shares of Common Stock are used to satisfy tax withholding, such
shares shall be valued based on the Fair Market Value when the tax withholding is required to be
made. Except as otherwise required by law, the Participant shall be solely responsible for payment
of any such taxes payable to governmental entities outside of the United States.

     14. Amendments
or Termination. The Company may amend, alter or discontinue this Plan,
except that no amendment or alteration that would impair the rights
of any Participant under any
Award that he has been granted shall be made without his consent, and
no amendment or alteration
shall be effective prior to approval by the Company’s
shareholders to the extent such approval is
determined by the Board to be required by applicable laws,
regulations or exchange requirements.

     15. Restrictions.
No shares of Common Stock or other form of payment shall be issued
with respect to any Award unless the Company shall be satisfied based
on the advice of its counsel
that such issuance will be in compliance with applicable federal and
state securities laws. The
Award Agreement may include provisions for the repurchase by the
Company of Common Stock acquired
pursuant to an Award and repurchase of the Participant’s Option rights.

     16. Unfunded
Plan. Insofar as it provides for Awards of cash, Common Stock or rights
thereto, this Plan shall be unfunded. Although bookkeeping accounts
may be established with respect
to Participants who are entitled to cash, Common Stock or rights
thereto under this Plan, any such
accounts shall be used merely as a bookkeeping convenience. The
Company shall not be required to
segregate any assets that may at any time be represented by cash, Common Stock or rights thereto,
nor shall this Plan be construed as providing for such segregation, nor shall the Company, the Board
or the Administrator be deemed to be a trustee of any cash, Common Stock or rights thereto to be
granted under this Plan. Any liability or obligation of the Company to any Participant with
respect to a grant of cash, Common Stock or rights thereto under this Plan shall be based solely
upon any contractual obligations that may be created by this Plan and any Award Agreement, and no
such liability or obligation of the Company shall be deemed to be secured by any pledge or other
encumbrance on any property of the Company. None of the Company, the Board or the Administrator
shall be required to give any security or bond for the performance of any obligation that may be
created by this Plan.

     17. Miscellaneous.
The granting of any Award shall not impose upon the Company any
obligation to maintain any Participant as an Employee or Director and
shall not diminish the power
of the Company to discharge any Participant at any time.

     18. Governing
Law. This Plan and all determinations made and actions taken pursuant
hereto, to the extent not otherwise governed by mandatory provisions
of the Code or the securities
laws of the United States, shall be governed by and construed in
accordance with the laws of the
State of California.

-9-

 

     19. Effective Date of Plan. This Plan shall be effective as of the Effective Date.
It shall continue in effect for a term of ten (10) years from the date it was adopted unless
sooner terminated as hereinafter provided.

     20. Stockholder
Approval. If required by applicable law, continuance of the Plan shall
be subject to approval by the stockholders of the Company within
twelve (12) months before or after
the date the Plan is adopted. Such stockholder approval shall be
obtained in the manner and to the
degree required under the applicable law.

     21. Information
and Documents to Participants. Prior to the date, if any, upon which
the Common Stock covered by this Plan becomes registered under the
Securities Act of 1933, as
amended, and if required by the applicable laws, the Company shall
provide financial statements at
least annually to each Participant and to each individual who
acquired Awards pursuant to the Plan,
during the period such Participant has one or more Options or Stock Appreciation Rights (or SARs)
outstanding, and in the case of an individual who acquired shares of Common Stock pursuant to the
Plan, during the period such individual owns such shares. The Company shall not be required to
provide such information if the issuance of Awards under the Plan is limited to key employees whose
duties in connection with the Company assure their access to equivalent information.

	 	 	 
	 

	 	Executed by Scott Huennekens, President of
	 

	 	Volcano Corporation, as effective on the
	 

	 	13th day of July, 2005.

 

-10-

 

NEITHER THIS OPTION NOR THE UNDERLYING COMMON SHARES HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 NOR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS. THE CORPORATION WILL NOT
TRANSFER THIS OPTION OR THE UNDERLYING COMMON SHARES UNLESS (i) THERE IS AN EFFECTIVE REGISTRATION
COVERING SUCH OPTION OR SUCH SHARES, AS THE CASE MAY BE, UNDER THE SECURITIES ACT OF 1933 AND
APPLICABLE STATE SECURITIES LAWS, (ii) IT FIRST RECEIVES A LETTER FROM AN ATTORNEY, ACCEPTABLE TO
THE BOARD OF DIRECTORS OR ITS AGENTS STATING THAT IN THE OPINION OF THE ATTORNEY THE PROPOSED
TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND UNDER ALL APPLICABLE
STATE SECURITIES LAWS, OR (iii) THE TRANSFER IS MADE PURSUANT TO RULE 144 UNDER THE SECURITIES ACT
OF 1933.

VOLCANO CORPORATION LONG TERM INCENTIVE PLAN

EMPLOYEE INCENTIVE STOCK OPTION AWARD AGREEMENT

     THIS
AWARD AGREEMENT (the “Award Agreement”), made as of this 1 (the “Grant Date”) by and
between Volcano Corporation, a Delaware corporation (the
“Company”), and        (the “Optionee”), is made
with reference to the following facts:

     A. The Company is desirous of providing additional incentives to the Optionee in rendering
services to and on behalf of the Company and its parent and subsidiary corporations and, in order
to accomplish this result, has determined to grant the Optionee the right and option to purchase
shares of Common Stock of the Company (the “Common Stock”) pursuant to the Company’s Long Term
Incentive Plan (the “Plan”) on the terms and conditions set forth herein. Capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the Plan.

     B. The Optionee is desirous of accepting said stock option on the terms and conditions set
forth herein.

     NOW, THEREFORE, it is agreed as follows:

     1. Grant. The Company grants to the Optionee the right and option to purchase, on the
terms and conditions hereinafter set forth (the “Option”), all or any part of an aggregate of
shares of the Common Stock at the purchase price
of          per share (the “Exercise Price”), exercisable
from time to time in accordance with the provisions of this Award Agreement and the Plan pursuant
to which this Award Agreement is being executed.

     2. Relationship to Plan. This Option is intended to be an “incentive stock option”
within the meaning of Section 422 of the Code and the regulations promulgated thereunder. This
Option is subject to all of the terms, conditions and provisions of the Plan and administrative
interpretations thereunder, if any, which have been adopted by the Administrator thereunder and are
in effect on the date hereof. Except as defined herein, capitalized terms shall have the same
meanings ascribed to them under the Plan. For purposes of this Award Agreement:

     (a) “Act” shall mean the Securities Act of 1933, as amended from time to time.

 

 

     (b) “Cause” shall mean cause as defined in any employment agreement between the
Optionee and the Company or any Subsidiary in effect at the time of the Optionee’s
termination of employment or, in the absence of any such employment agreement, any of the
following: (i) conviction of the Optionee by a court of competent jurisdiction of any
felony or a crime involving moral turpitude; (ii) the Optionee’s knowing failure or refusal
to follow reasonable instructions of the Board or reasonable policies, standards and
regulations of the Company or any Subsidiary; (iii) the Optionee’s continued failure or
refusal to faithfully and diligently perform the usual, customary duties of his employment
with the Company or any Subsidiary; (iv) the Optionee’s continuously conducting himself in
an unprofessional, unethical, immoral or fraudulent manner; or (v) the Optionee’s conduct
discredits the Company or any Subsidiary or is detrimental to the reputation, character and
standing of the Company or any Subsidiary.

     (c) “Employment” shall mean employment with the Company or any of its Subsidiaries.

     (d) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time
to time.

     3. Exercise Schedule. This Option shall be immediately exercisable in full as to all
of the Option Shares.

     4. Termination of Option. The Option hereby granted shall terminate and be of no
force and effect with respect to any shares of Common Stock not previously purchased by the
Optionee upon the first to occur of:

     (a) The tenth anniversary of the Grant Date;

     (b) The expiration of ninety (90) days from the date of termination of the Optionee’s
employment with the Company or its parent or subsidiary corporations (other than a
termination described in subparagraph (d) or (e) below or on account of death); provided
that if the Optionee shall die during such ninety (90) day period, the provisions of
subparagraph (c) below shall apply;

     (c) The expiration of one (1) year following the date of the Optionee’s death, if such
death occurs during the Optionee’s employment with the Company or its parent or subsidiary
corporations;

     (d) The expiration of one (1) year from the date of termination of the Optionee’s
employment with the Company or its parent or subsidiary corporations if such termination is
attributable to a disability of the Optionee within the meaning of Section 22(e)(3) of the
Code. The Board shall have the right to determine whether the Optionee’s termination is
attributable to a disability of the Optionee within the meaning of Section 22(e)(3) of the
Code, such determination of the Board to be final and conclusive.

     (e) Immediately upon the termination of the Optionee’s employment with the Company or
its parent or subsidiary corporations if such termination constitutes or is attributable to
a breach by the Optionee of his or her employment agreement, if any, with

-2-

 

the Company or its parent or subsidiaries or if the Optionee is discharged for Cause.
The Board shall have the right to determine whether the Optionee has been discharged for
Cause and the date of such discharge; such determination of the Board to be final and
conclusive.

     Nothing contained herein or in the Plan shall obligate the Company or its parent or subsidiary
corporations to continue to employ the Optionee as an employee or in any other capacity with the
Company, nor confer upon the Optionee any right to continue in the employ or in any other capacity
with the Company or its parent or subsidiary corporations, nor limit in any way the right of the
Company or its parent or subsidiary corporations to amend, modify or terminate his or her
compensation or employment at any time.

     5. Exercise of Option. The Optionee may exercise this Option by (i) delivering or
mailing to the Company, Attention: Corporate Secretary, a notice of exercise, in the form
specified by the Company, specifying therein the number of shares of Common Stock he or she has
elected to purchase, accompanied by (A) payment in cash or by check payable to the order of the
Company for the purchase price per share multiplied by the number of shares to be purchased and (B)
if required, the letter described in Section 9 and (ii) executing and delivering to the Company the
Acknowledgment and Statement of Decision Regarding Election Pursuant to 83(b) and a copy of the
executed Election Pursuant to Section 83(b), if applicable, in accordance with Section 5 of the
Optionee Restriction Agreement attached hereto as Exhibit “A” and being executed concurrently
herewith. Notwithstanding the foregoing, the aggregate purchase price to be paid upon any exercise
of this Option may, if permissible under applicable state law and in the discretion of the Board of
Directors of the Company (the “Board”), be paid (1) in installments or in whole or in part by a
promissory note of the Optionee (in a form reasonably satisfactory to the Company) and secured by a
security interest in the shares issued upon such exercise and/or (2) in whole or in part by
delivery to the Company of shares of Common Stock previously acquired by the Optionee having a Fair
Market Value (determined as of the date of exercise of this Option and in the manner set forth in
the Plan) equal to the portion of the aggregate purchase price being paid by delivery of such
shares and, in the case of (1) or (2), if and to the extent applicable, cash or a check (or, in the
case of (2) only, a note) made payable to the Company for any remaining portion of the aggregate
purchase price. If so requested by the Board, prior to the acceptance of shares of Common Stock in
satisfaction (in whole or in part) of the purchase price and/or the withholding taxes upon such
exercise of this Option, the Optionee shall supply the Board with written representations and
warranties, including without limitation a representation and warranty that the Optionee has good
and marketable title to such shares, free and clear of liens and encumbrances. The exercise of
this Option shall not be deemed effective unless and until the Optionee has complied with all of
the provisions of this Section. No partial exercise of this Option
may be for less than        shares
and, in no event, shall the Company be required to issue fractional shares.

     If any law or regulation requires the Company to take any action with respect to the shares
specified in such notice, the time for delivery thereof, which would otherwise be as promptly as
possible, shall be postponed for the period of time necessary to take such action.

     6. Notices. Notice of exercise of the Option must be made in the following manner,
using such forms as the Company may from time to time provide:

-3-

 

     (a) by registered or certified United States mail, postage prepaid, to Volcano
Corporation, Attn: Corporate Secretary, 2870 Kilgore Road, Rancho Cordova, California,
95670, in which case the date of exercise shall be two (2) days after deposit in the U.S.
mail; or

     (b) by hand delivery or otherwise to Volcano Corporation, Attn: Corporate Secretary,
2870 Kilgore Road, Rancho Cordova, California, 95670, in which case the date of exercise
shall be the date when receipt is acknowledged by the Company.

     Notwithstanding the foregoing, in the event that the address of the Company is changed prior
to the date of any exercise of this Option, notice of exercise shall instead be made pursuant to
the foregoing provisions at the Company’s current address.

     Any other notices provided for in this Award Agreement or in the Plan shall be given in
writing and shall be deemed effectively delivered or given upon receipt or, in the case of notices
delivered by the Company to the Optionee, five (5) days after deposit in the United States mail,
postage prepaid, addressed to the Optionee at the address specified at the end of this Award
Agreement or at such other address as the Optionee hereafter designates by written notice to the
Company.

     7. Assignment of Option. This Option and the rights and privileges granted hereby
shall not be transferred other than by will or by the laws of descent and distribution. This
Option and the rights and privileges granted hereby may be transferred by the Optionee (a) by will
or the laws of descent and distribution or (b) subject to the following sentence, during the
Optionee’s lifetime to (1) the Optionee’s children or grandchildren, including those by adoption
(“Immediate Family Members”), (2) the trustee of a trust for the exclusive benefit of the
Optionee’s Immediate Family Members, or (3) to a partnership or partnerships in which such
Immediate Family Members have at least ninety-nine percent (99%) of the equity, profit and loss
interests. Any such assignment of this Option shall be permitted only if the Optionee receives no
consideration therefor, the transferee becomes, immediately upon such transfer, subject to all of
the conditions of this Option prior to its transfer and such assignment is made in compliance with
all of the terms of the Plan and all applicable federal and state securities laws. Upon any
attempt to transfer this Option or any right or privilege granted hereby other than by will or by
the laws of descent and distribution and contrary to the provisions hereof, this Option and said
rights and privileges shall immediately become null and void.

     8. Anti-Dilution. In the event that the shares of Common Stock subject to this Option
shall be changed into or exchanged for a different number or kind of shares of stock or other
securities of the Company or of another corporation (whether by reason of merger, consolidation,
recapitalization, reclassification, split-up, combination of shares, or otherwise) or if the number
of such shares of Common Stock shall be increased solely through the payment of a stock dividend,
then there shall be substituted for or added to each share of stock of the Company theretofore
appropriated or thereafter subject to this Option the number and kind of shares of stock or other
securities into which each outstanding share of stock of the Company shall be so changed, or for
which each such share shall be exchanged, or to which each such share shall be entitled, as the
case may be. This Option shall also be appropriately amended as to price and other terms as may be
necessary to reflect the foregoing events. In the event there shall

-4-

 

be any other change in the number or kind of the outstanding shares of stock of the Company
subject to this Option, or of any stock or other securities into which such stock shall have been
changed, or for which it shall have been exchanged, then if the Board, in its sole discretion,
determines that such change equitably requires an adjustment in this Option, such adjustments shall
be made in accordance with such determination. The Optionee understands that if, subsequent to the
date of this Award Agreement, the Company issues additional shares of the Company’s securities, the
percentage ownership of the Company represented by the number of shares of Common Stock subject to
this Option will be proportionately reduced by each such issuance and that the number of shares
covered hereby and the Exercise Price shall not be adjusted except as otherwise set forth in this
Award Agreement.

     Fractional shares resulting from any adjustment in this Option pursuant to this Section 8
shall be eliminated. Notice of any adjustment shall be given by the Company to the Optionee, such
adjustment (whether or not such notice is given) to be final and conclusive for all purposes
hereof.

     9. Securities Law. The shares of Common Stock subject to this Option have not been
registered under the Securities Act of 1933, as amended (the “Act”). Accordingly, the Optionee
agrees that he or she will take any shares of Common Stock acquired pursuant to the exercise hereof
in good faith for purposes of investment and without a view to any distribution thereof in
violation of the Act and the rules and regulations promulgated thereunder. The Optionee
understands that the Company will be relying upon the truth and accuracy of this representation in
issuing the Common Stock without first registering the issuance thereof under the Act. The
Optionee acknowledges that he or she is aware that the Common Stock issuable upon exercise hereof
has not been registered (and there is no obligation on behalf of the Company to register such
shares) under the Act and that such Common Stock will not be freely tradeable and must be held by
him or her indefinitely or until such time, if any, as herein provided and until such Common Stock
is either registered under the Act or transfers may be made pursuant to an exemption from such
registration as is accorded by the Act or the rules and regulations promulgated thereunder. In
this regard, the Optionee acknowledges that he or she is also aware that, if the exemption under
Rule 144 of the rules and regulations promulgated under the Act becomes applicable to the Common
Stock, shares of the Common Stock may be sold pursuant to said Rule only (i) following the filing
of any required reports by the Company under the Securities and Exchange Act of 1934, (ii) after
the minimum holding period specified in said Rule has been satisfied, and (iii) thereafter, only in
limited amounts in the manner prescribed in said Rule.

     The Optionee agrees that at the time of any exercise hereunder, he or she will provide the
Company with a letter embodying the aforementioned expressions of understanding and intent and
agrees that any shares issued to him or her following the exercise of any option arising hereunder
may bear such restrictive legend as the Company may deem necessary to reflect the status of such
shares under the Act. Before consenting to the removal of such legend and the transfer of any such
shares, the Company may insist upon the delivery to it of an opinion from counsel, satisfactory to
it, that the contemplated transfer does not constitute a violation of the Act.

-5-

 

     Notwithstanding the foregoing, the provisions of this Section 9 shall be suspended and be of
no force or effect during any period during which the shares of Common Stock subject to this Award
Agreement are registered under the Act.

     10. Withholding. No certificates representing shares of Common Stock purchased
hereunder shall be delivered to or in respect of an Optionee unless the amount of all federal,
state and other governmental withholding tax requirements imposed upon the Company with respect to
the issuance of such shares of Common Stock has been remitted to the Company or unless provisions
to pay such withholding requirements have been made to the satisfaction of the Administrator
pursuant to Section 13 of the Plan. The Administrator may make such provisions as it may deem
appropriate for the withholding of any taxes which it determines is required in connection with
this Option.

     11. Stockholder Rights. Neither the Optionee nor any other person legally entitled to
exercise this Option shall be entitled to any of the rights or privileges of a stockholder of the
Company in respect to any shares issuable upon any exercise of this Option unless and until a
certificate or certificates representing such shares shall have been actually issued and delivered
to him.

     12. Successors and Assigns. This Award Agreement shall bind and inure to the benefit
of and be enforceable by the Optionee, the Company and their respective permitted successors and
assigns (including personal representatives, heirs and legatees), except that the Optionee may not
assign any rights or obligations under this Award Agreement except to the extent and in the manner
expressly permitted herein.

     13. Governing Law. This Award Agreement shall be governed by, construed and enforced
in accordance with the laws of the State of California.

     14. Entire Agreement. This Award Agreement, the Plan and the Optionee Restriction
Agreement (as defined below) together represent the entire agreement between the parties hereto
regarding the options on the Company’s Common Stock granted hereunder and supersede any and all
previous written or oral agreements or discussions between the parties and any other person or
legal entity concerning the transactions contemplated herein or therein. Except as otherwise
expressly provided herein, this Award Agreement cannot be amended or modified except by a written
instrument executed by the parties hereto.

     15. Construction. The headings of the Sections are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Award Agreement. If any of the
provisions of this Award Agreement shall be unlawful, void or for any reason unenforceable, they
shall be deemed separable from, and shall in no way affect the validity or enforceability of, the
remaining provisions of this Award Agreement.

     16. Interpretation. In interpreting any provision of this Award Agreement, the
masculine shall include the feminine and neuter, and vice versa and the singular shall include the
plural, and vice versa.

     17. Further Acts. The parties hereto agree to execute and deliver such further
instruments as may be reasonably necessary to carry out the intent of this Award Agreement.

-6-

 

     18. Optionee Restriction Agreement. Concurrently herewith, the Optionee has executed
and delivered to the Company an Optionee Restriction Agreement in substantially the form of Exhibit
“A” to this Award Agreement (the “Optionee Restriction Agreement”).

     IN WITNESS WHEREOF, the parties have executed this Award Agreement on the date first above
written.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	VOLCANO CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Dated:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Scott Huennekens,	 	 
	 

	 	 	 	 	 	 	 	President and Chief Executive Officer	 	 

-7-

 

     The Optionee hereby accepts the foregoing Award Agreement, subject to the terms and provisions
of the Plan and administrative interpretations thereof referred to above.

	 	 	 
	 

	 	Date:                                                            
	 

	 	 
	Optionee’s Address:
	 	 

-8-

 

CONSENT OF SPOUSE

     The undersigned, the spouse of the Optionee under the foregoing Award Agreement (“Agreement”),
does hereby consent to and approve of each of the terms and conditions of the Agreement and agrees
that the undersigned’s interest in the Agreement and the shares of Common Stock issuable upon
exercise of the option granted thereunder are subject to such terms and conditions.

Dated:                                                            

                                                                                                                        

-9-

 

EXHIBIT A

VOLCANO CORPORATION

OPTIONEE RESTRICTION AGREEMENT

     THIS
OPTIONEE RESTRICTION AGREEMENT (the “Agreement”) is made
and entered into as
of           between
VOLCANO CORPORATION, a Delaware corporation (the
“Company”),
and           (“Optionee”).

R E C I T A L S:

     A. Optionee owns as of the date hereof an option granted by the Company to purchase all or any
part of an aggregate
of           shares (the “Shares”) of the Common Stock of the Company at a price of
per           Share. The term “Shares” refers to all shares acquired or which could be acquired pursuant to
such option and to all securities received in addition thereto or in replacement thereof, pursuant
to or in consequence of any stock dividend, stock split, recapitalization, merger, reorganization,
exchange of shares or other similar event.

     B. In order to provide assurance to certain present and future holders (collectively, the
“Investors”) of the Preferred Stock of the Company (the “Preferred Shares”) and thereby to assist
in future equity financings of the Company, Optionee is willing to enter into this Agreement for
the benefit of the Company, the Investors and any other person or entity who holds stock of the
Company from time to time.

     THE PARTIES AGREE AS FOLLOWS:

     1. Company’s Right of First Refusal Respecting Shares.

          1.1 Right of First Refusal. Subject to Section 1.5, in the event that the Optionee
proposes to sell, pledge, or otherwise transfer any Shares, the Company shall have a right of first
refusal (the “Right of First Refusal”) with respect to such Shares. Optionee shall give a written
notice (the “Transfer Notice”) to the Company describing fully any proposed transfer of Shares,
including the number of Shares proposed to be transferred, the proposed transfer price, and the
name and address of the proposed transferee. The Transfer Notice shall be signed both by the
Optionee and by the proposed transferee. The Company shall have the right to purchase all, but not
less than all, of the Shares subject to the Transfer Notice at a price per share equal to the lower
of (i) the proposed per share transfer price, or (ii) the fair market value of a share of Common
Stock of the Company, as most recently determined by the Board of Directors of the Company (the
“Board”) prior to delivery of the Transfer Notice, by delivery of a notice of exercise of the
Company’s Right of First Refusal within thirty (30) days after the date the Transfer Notice is
delivered to the Company. The Company’s rights under this Section 1.1 shall be freely assignable,
in whole or in part.

          1.2 Transfer of Shares. If the Company fails to exercise the Right of First Refusal
within thirty (30) days from the date the Transfer Notice is delivered to the Company, the Optionee
may, not later than ninety (90) days following delivery to the Company of the

 

 

Transfer Notice, conclude a transfer of the Shares subject to the Transfer Notice on the terms
and conditions described in the Transfer Notice. Any proposed transfer on terms and conditions
different from those described in the Transfer Notice, as well as any subsequent proposed transfer
by the Optionee, shall again be subject to the Right of First Refusal and shall require compliance
by the Optionee with the procedure described in Section 1.1 of this Agreement. If the Company
exercises the Right of First Refusal, the parties shall consummate the sale of Shares on the terms
set forth in the Transfer Notice; provided, however, in the event the Transfer Notice provides for
payment for the Shares other than in cash, the Company shall have the option of paying for the
Shares by the discounted cash equivalent of the consideration described in the Transfer Notice.

          1.3 Binding Effect of Right of First Refusal. The Company’s Right of First Refusal
shall inure to the benefit of the successors and assigns of the Company and shall be binding upon
any transferee of Shares other than a transferee acquiring Shares in a transaction where the
Company failed to exercise the Right of First Refusal (a “Free Transferee”) or a transferee of a
Free Transferee.

          1.4 Termination of the Company’s Right of First Refusal. Notwithstanding anything in
this Section 1, the Company shall have no Right of First Refusal, and Optionee shall have no
obligation to comply with the procedures in Sections 1.1 through 1.3 after the earlier of (i) the
Company’s initial registered public offering of Common Stock to the public generally, or (ii) the
date ten (10) years after the date of this Agreement.

          1.5 Limitations to Rights. Without regard and not subject to the provisions of
Sections 1.1 and 2.1;

               (i) The Optionee may sell or otherwise assign Shares to any or all of his ancestors,
descendants, spouse, or members of his immediate family, or to a custodian, trustee (including a
trustee of a voting trust), executor, or other fiduciary for the account of his ancestors,
descendants, spouse, or members of his immediate family, provided that each such transferee or
assignee, prior to the completion of the sale, transfer, or assignment, shall have executed
documents assuming the obligations of the Optionee under this Agreement with respect to the
transferred securities.

               (ii) To the extent permitted by the Company, the Optionee may sell or transfer Shares in the
first firmly underwritten public offering of securities of the Company registered under the
Securities Act of 1933, as amended (the “Act”).

     2. Rights of Co-Sale.

          2.1 The Rights of Investors. If at any time Optionee proposes to sell any Shares to
parties other than the Investors or their assignees or transferees (the “Eligible Holders”) in a
transaction (the “Transaction”) not registered under the Act in reliance upon a claimed exemption
thereunder, then to the extent the Company has not exercised its Right of First Refusal as to any
Shares being sold, any Eligible Holder (a “Selling Holder”) which notifies the Company in writing,
within thirty (30) days after receipt of the notification from the Optionee referred to in Section
2.2, shall have the opportunity to sell a pro rata portion of Shares which the

-2-

 

Optionee proposes to sell to such third party in the Transaction; whereupon the Optionee shall
assign so much of his interest in the agreement of sale as the Selling Holder shall be entitled to
and shall request hereunder, and the Selling Holder shall assume such part of the obligations of
the Optionee under such agreement as shall relate to the sale of the Shares by the Selling Holder.
For the purposes of this Section 2, the “pro rata portion” which the Selling Holder shall be
entitled to sell shall be an amount of shares equal to the total amount of Shares proposed to be
sold multiplied by a fraction, the numerator of which is the number of shares of Common Stock
issuable upon conversion of the Preferred Shares and shares of Common Stock owned by a Selling
Holder, and the denominator of which is the total number of such shares owned by all participating
Selling Holders and the Optionee. Each Selling Holder shall notify the Optionee whether it elects
to sell an amount equal to, more than or less than its pro rata portion of the Shares so offered.
Each Selling Holder shall be entitled to apportion Shares to be sold among its partners and
affiliates, provided that such Selling Holder notifies the Company of such allocation.

          2.2 Notice. Prior to any sale by the Optionee of any Shares, the Optionee shall
notify each Eligible Holder and the Company, in writing, of his intention to sell and issue such
securities, setting forth the general terms under which he proposes to make such sale. Such notice
shall be signed by the third parties, or a representative of such third parties, or shall be
accompanied by a letter of intent signed by the third parties or representatives of such third
parties, to whom the sale, assignment or transfer is proposed and shall indicate the third parties’
concurrence with the description of the terms.

          2.3 Failure to Notify. If within thirty (30) days after the Optionee gives his notice
to the Eligible Holders, the Eligible Holders do not notify the Company that they desire to sell
all of their pro rata portion of the Shares described in such notice at the price and on the terms
and conditions set forth therein, then the Optionee may, not later than ninety (90) days following
delivery of the notice under Section 2.2, as to the Shares to which the Eligible Holders do not
indicate a desire to sell, conclude a transfer on the terms and conditions described in the notice.
In the event the Optionee has not sold the Shares or entered into an agreement to sell the Shares
within such ninety (90) days, the Optionee shall not thereafter sell any Shares without first
notifying the Eligible Holders and the Company in the manner provided above. The exercise or
non-exercise of the right to participate in one or more sales of Shares made by the Optionee shall
not adversely affect an Eligible Holder’s right to participate in subsequent sales of Shares by the
Optionee pursuant to Section 2.1 hereof.

          2.4 Termination. The obligations of the Optionee under this Section 2 shall terminate
and be of no further force and effect upon the occurrence of either event described in subsection
1.4 of this Agreement.

     3. Market Standoff. Optionee hereby agrees that if so requested by the Company or any
representative of the underwriters in connection with any registration of the offering of any
securities of the Company under the Act, Optionee shall not sell or otherwise transfer any Shares
for a period of one hundred eighty (180) days following the effective date of a registration
statement filed under the Act; provided, however, that such restriction shall apply only to the
first two registration statements of the Company to become effective under the Act which include
securities to be sold on behalf of the Company to the public in an underwritten public

-3-

 

offering under the Act. The Company may impose stop-transfer instructions with respect to
securities subject to the foregoing restrictions until the end of such one hundred eighty (180) day
period.

     4. Company’s Right to Repurchase Upon Termination of Employment.

          4.1 Repurchase Right. The Shares shall be subject to a right (but not obligation) of
repurchase in favor of the Company (the “Right of Repurchase”). If the Optionee’s employment with
the Company or an affiliate terminates for any reason whatsoever other than an approved leave of
absence as described in Schedule 1 hereto (the “Employment Termination”) before the Right of
Repurchase expires in accordance with Schedule 1 hereto, the Company may purchase Shares subject to
the Right of Repurchase at a purchase price per share equal to the purchase price per share paid by
the Optionee for the Shares (exclusive of any taxes paid upon acquisition of the stock). The
Optionee may not dispose of or transfer any Shares while such Shares are subject to the Right of
Repurchase and any such attempted transfer shall be null and void. The Company’s rights under this
Section 4.1 shall be freely assignable, in whole or in part.

          4.2 Repurchase Procedure. The Company’s Right of Repurchase shall terminate if not
exercised by written notice from the Company to the Optionee within ninety (90) days from the date
on which the Company learns of the Employment Termination. If the Company exercises its Right of
Repurchase, the Optionee shall promptly endorse and deliver to the Company the stock certificates
representing the Shares being repurchased, and the Company shall then pay promptly (but in no event
later than ninety (90) days after the date of Employment Termination), pursuant to the provisions
of Section 4.3 of this Agreement, the total repurchase price to the Optionee.

          4.3 Repurchase Payment. If, at the time of repurchase, any notes are outstanding
which represent any portion of the total purchase price for Shares being so repurchased, the
repurchase price shall be paid first by cancellation of any obligation for accrued but unpaid
interest under such notes, next by cancellation of principal under such notes, and finally by
payment of cash or check.

          4.4 Binding Effect. The Company’s Right of Repurchase shall inure to the benefit of
the successors and assigns of the Company and shall be binding upon any representative, executor,
administrator, heir, or legatee of the Optionee.

     5. Taxes. Concurrently with the exercise of the Option to which this Agreement is an
exhibit, the Optionee shall execute and deliver to the Company a copy of the Acknowledgment and
Statement of Decision Regarding Election Pursuant to Section 83(b) of the Internal Revenue Code
(the “Acknowledgement”) attached hereto as Exhibit 5A. The Optionee shall execute and submit with
the Acknowledgement a copy of the Election Pursuant to Section 83(b) of the Code, attached hereto
as Exhibit 5B, if the Optionee has indicated in the Acknowledgment his or her decision to make such
an election. The Optionee should consult his or her own tax advisor to determine if there is a
comparable election to file in the state of his or her residence and whether such filing is
desirable under the circumstances. The Company may withhold from the Optionee’s wages, or require
the Optionee to pay to the Company, any

-4-

 

applicable withholding or employment taxes resulting from the lapse of any restrictions
imposed on the Shares.

     6. Involuntary Transfers. In the event, at any time after the date of this Agreement,
of any transfer by operation of law or other involuntary transfer (excluding upon death but
including upon divorce or as a result of bankruptcy, attachment, levy execution, sequestration or
garnishment) of all or any portion of the Shares by the record holder thereof, the Company shall
have a right (but not an obligation) to acquire all or any of the Shares, and any such transferee
shall be subject to and bound by the terms of this Section 5. Upon any such transfer, the
transferee thereof shall immediately notify the Company in writing of such transfer. The right of
the Company under this Section 5 to acquire any or all of the Shares so transferred shall terminate
ninety (90) days following receipt of such notice from the transferee. If the Company elects to
exercise such right as to any or all of the Shares, the Company shall notify the transferee in
writing thereof within such ninety (90) day period, specifying therein the number of Shares to be
so acquired (and, if less than all of the Shares so transferred, the specific Shares to be so
acquired), accompanied by payment, in cash or by check, for the Shares being so acquired. The
purchase price to be paid by the Company for the Shares to be so acquired shall be the sum of the
fair market value per share thereof as of such date, as determined in good faith by the Board
(which determination shall be final, binding and conclusive on the Company and the transferee).
Upon receipt of the foregoing, the transferee shall promptly endorse and deliver to the Company the
stock certificates representing the Shares being acquired by the Company pursuant hereto. The
Company’s rights under this Section 5 shall be freely assignable, in whole or in part.

     7. Stock Certificate Restrictive Legends. Stock certificates evidencing Shares may
bear such restrictive legends as the Company and the Company’s counsel deem necessary or advisable
under applicable law or pursuant to this Agreement, including, without limitation, the following
legends:

“THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO A RIGHT OF FIRST
REFUSAL BY THE COMPANY AND A RIGHT OF CO-SALE ON THE PART OF CERTAIN
STOCKHOLDERS PURSUANT TO THE PROVISIONS OF AN AGREEMENT BETWEEN THE
COMPANY AND THE ORIGINAL PURCHASER OF SUCH SECURITIES RELATING TO
SUCH SECURITIES, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT
IN COMPLIANCE WITH THE TERMS OF SUCH AGREEMENT.”

“THE SECURITIES REPRESENTED HEREBY MAY BE SUBJECT TO A RIGHT OF
REPURCHASE BY THE COMPANY, PURSUANT TO THE PROVISIONS OF AN
AGREEMENT BETWEEN THE COMPANY AND THE ORIGINAL PURCHASER OF SUCH
SECURITIES RELATING TO SUCH SECURITIES.”

-5-

 

“THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO RESTRICTIONS ON
TRANSFER FOR A PERIOD OF 180 DAYS FOLLOWING THE EFFECTIVE DATE OF A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR AN OFFERING OF THE COMPANY’S SECURITIES AS MORE FULLY PROVIDED
IN THE AGREEMENT RELATING TO THE OPTION TO PURCHASE SUCH SECURITIES
BETWEEN THE COMPANY AND THE ORIGINAL PURCHASER OF SUCH SECURITIES.”

     8. Binding Effect. Subject to the limitations set forth in this Agreement, this
Agreement shall be binding upon, and inure to the benefit of, the executors, administrators, heirs,
legal representatives, successors, and assigns of the parties hereto.

     9. Damages. Optionee shall be liable to the Company for all costs and damages,
including incidental and consequential damages, resulting from a disposition of Shares which is not
in conformity with the provisions of this Agreement.

     10. Governing Law and Forum Selection. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to contracts entered
into and wholly to be performed within the State of California by California residents. The
parties agree that the exclusive jurisdiction and venue of any action with respect to this
Agreement shall be in the Superior Court of California for the County of Sacramento or the United
States District Court for the Eastern District of California, and each of the parties hereby
submits itself to the exclusive jurisdiction and venue of such courts for the purpose of such
action. The parties agree that service of process in any such action may be effected by delivery
of the summons to the parties in the manner provided for delivery of notices set forth in Section
11.

     11. Notices. All notices and other communications under this Agreement shall be in
writing. Unless and until Optionee is notified in writing to the contrary, all notices,
communications and documents directed to the Company and related to the Agreement, if not delivered
by hand, shall be mailed, addressed as follows:

VOLCANO CORPORATION

2870 Kilgore Road

Rancho Cordova, California 95670

Attention: President

Unless and until the Company is notified in writing to the contrary, all notices, communications
and documents intended for Optionee and related to this Agreement, if not delivered by hand, shall
be mailed to Optionee’s last known address as shown on the Company’s books. Notices and
communications shall be mailed by registered or certified mail, return receipt requested, postage
prepaid. All notices related to this Agreement shall be deemed received upon delivery or, if
mailed, within five (5) days after mailing in accordance with this Section 11.

-6-

 

     12. Attorneys’ Fees. If any action or proceeding is brought by any party with respect
to this Agreement or with respect to the interpretation, enforcement or breach hereof, the
prevailing party in such action shall be entitled to an award of all reasonable costs of
litigation, including without limitation attorneys’ fees, court costs and expert witness fees, to
be paid by the losing party, in such amount as may be determined by the court having jurisdiction
of such action.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	VOLCANO CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Dated:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Scott Huennekens,	 	 
	 

	 	 	 	 	 	 	 	President and Chief Executive Officer	 	 

     Optionee hereby accepts and agrees to be bound by all of the terms and conditions of this
Agreement.

	 	 	 
	 

	 	Optionee:                                                                                                    

     Optionee’s spouse indicates by the execution of this Agreement her/his consent to be bound by
the terms herein as to her/his interests, whether as community property or otherwise, if any, in
the Shares.

	 	 	 
	 

	 	Optionee’s Spouse:
                                                                                                    

-7-

 

EXHIBIT 5A

ACKNOWLEDGMENT AND STATEMENT

OF DECISION REGARDING ELECTION

PURSUANT TO SECTION 83(b) OF

THE INTERNAL REVENUE CODE

     The undersigned (which term includes the undersigned’s spouse), a holder of shares of common
stock of VOLCANO CORPORATION, a Delaware corporation (the “Company”), hereby states as follows:

     1. The undersigned acknowledges receipt of a copy of the Company’s Optionee Restriction
Agreement (the “Agreement”). The undersigned has carefully reviewed the Agreement.

     2. The undersigned either [check as applicable]:

     ___(a) has consulted, and has been fully advised by, the undersigned’s own tax advisor,
                                                            , whose business address is                                                                                 , regarding the federal, state and local tax
consequences of entering into the Agreement, and particularly regarding the advisability of making
elections pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended (the “Code”),
and pursuant to the corresponding provisions, if any, of applicable state laws; or

     ___(b) has knowingly chosen not to consult such a tax advisor.

     3. The undersigned hereby states that the undersigned has decided [check as applicable]:

     ___(a) to make an election pursuant to Section 83(b) of the Code and is submitting to the
Company an executed form which is attached as Exhibit 5B to the Agreement; or

     ___(b) not to make an election pursuant to Section 83(b) of the Code.

     4. Neither the Company nor any subsidiary or representative of the Company had made any
warranty or representation to the undersigned with respect to the tax consequences of the Agreement
or of the making or failure to make an election pursuant to Section 83(b) of the Code or the
corresponding provisions, if any, of applicable state law.

     5. The undersigned is also submitting to the Company an executed original of an election, if
any is made, of the undersigned pursuant to provisions of state law corresponding to

 

 

Section 83(b) of the Code, if any, which are applicable to the undersigned’s purchase of shares
under the Agreement.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Date:
	 	 	 	 	 	 	,	 	20	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	[Purchaser]	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Date:
	 	 	 	 	 	 	,	 	20	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Purchaser]	 	 

-2-

 

EXHIBIT 5B

ELECTION PURSUANT TO SECTION 83(b) OF THE

INTERNAL REVENUE CODE

     The undersigned hereby elects pursuant to Section 83(b) of the Internal Revenue Code of 1986,
as amended (the “Code”), to include in the undersigned’s gross income the excess (if any) of (x)
the fair market value of the property described below, over (y) the amount the undersigned paid for
such property plus, if the shares to which this election relates were acquired by exercise of an
“incentive stock option” within the meaning of Section 422 of the Code, the amount excluded from
the undersigned’s income pursuant to Sections 421 and 422 of the Code. This election is made to
the same effect, and with the same limitations, with respect to the analogous provisions of
Sections 83(b) (and, if applicable, Sections 421 and 422) of the Code under any applicable state
statute. Pursuant to applicable Treasury Regulations the following information is provided:

     1. The undersigned’s name, address and taxpayer identification (social security) number are:

     Name:                                                                                

     Address:                                                                                                     

     Social Security #:                                                                                                     

     2. The
property with respect to which the election is made consists of                      shares of
Common Stock of VOLCANO CORPORATION, a Delaware corporation (the “Company”).

     3. The date on which the above property was transferred to the undersigned was                     ,
20___, and the taxable year to which this election relates is 20___.

     4. The above property is subject to the following restrictions: (a) a right of repurchase by
the Company at the initial purchase price, if the undersigned ceases to be an employee of, or a
consultant to, the Company or an affiliate of the Company; and (b) a right of first refusal by the
Company should the undersigned wish to transfer the shares to a person or entity other than the
Company.

     5. The fair market value of the above property at the time of transfer (determined without
regard to any restrictions other than those which by their terms will never lapse) is $                    
per share.

     6. The amount paid for the above property by the undersigned was $                     per share.

     7. A copy of this election has been furnished to the Company, and a copy will be filed with
the income tax return of the undersigned to which this election relates.

 

 

     8. If the shares to which this election relates were acquired by exercise of an “incentive
stock option” within the meaning of Section 422 of the Code, this election is protective only, is
made solely to bar application of Section 83(a) of the Code, and is not an election of the
undersigned actually to recognize income which apart from this election is protected from
recognition by Sections 421 and 422 of the Code. However, the undersigned does intend for this
election to be an effective election under Section 83(b) of the Code for all purposes of the
Alternative Minimum Tax, and in particular for purposes of computing the adjustment described in
Section 56(b)(3) of the Code.

     If the shares to which this election relates were acquired by exercise of an incentive stock
option, the amount expressly excluded from income pursuant to Sections 421 and 422 of the Code is
$                     per share.

     Dated:                     , 20___.

                                                                                

-2-

 

SCHEDULE 1 OF THE

OPTIONEE RESTRICTION AGREEMENT

     The Right of Repurchase (as defined in Section 4 of the Optionee Restriction Agreement) shall
expire on with respect to 25% of the total number of Shares acquired or to be acquired, and
thereafter with respect to an additional 1/36th of the remaining Shares at the end of each of the
immediately following calendar months (the “Vesting Schedule”). During any period of leave of
absence by the Optionee, as approved by the President of the Company in his or her sole discretion,
the Vesting Schedule shall be tolled until such time as the Optionee’s approved leave of absence
terminates. In no event shall the period of tolling of the Optionee’s Vesting Schedule extend the
termination date of the Option as set forth in Section 4 of the Award Agreement.

     The Right of Repurchase shall expire with respect to all of the shares acquired upon the
consummation of a Company Sale. For purposes hereof, a “Company Sale” shall mean (1) the
acquisition of the Company by another entity by means of any transaction or series of related
transactions (including, without limitation, any reorganization, merger, stock purchase or
consolidation) or (2) a sale of all or substantially all of the assets of the Company; unless the
Company’s stockholders of record as constituted immediately prior to any such transaction will,
immediately after such transaction (by virtue of securities issued as consideration for the
Company’s capital stock, assets or otherwise) hold more than fifty percent (50%) of the voting
power of the surviving or acquiring entity.

	 	 	 	 	 	 	 	 	 
	INITIALED BY:	 	VOLCANO CORPORATION	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Scott Huennekens,	 	 
	 

	 	 	 	 	 	President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Optionee:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

 

 

NEITHER THIS OPTION NOR THE UNDERLYING COMMON SHARES HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 NOR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS. THE CORPORATION WILL NOT
TRANSFER THIS OPTION OR THE UNDERLYING COMMON SHARES UNLESS (i) THERE IS AN EFFECTIVE REGISTRATION
COVERING SUCH OPTION OR SUCH SHARES, AS THE CASE MAY BE, UNDER THE SECURITIES ACT OF 1933 AND
APPLICABLE STATE SECURITIES LAWS, (ii) IT FIRST RECEIVES A LETTER FROM AN ATTORNEY, ACCEPTABLE TO
THE BOARD OF DIRECTORS OR ITS AGENTS STATING THAT IN THE OPINION OF THE ATTORNEY THE PROPOSED
TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND UNDER ALL APPLICABLE
STATE SECURITIES LAWS, OR (iii) THE TRANSFER IS MADE PURSUANT TO RULE 144 UNDER THE SECURITIES ACT
OF 1933.

VOLCANO CORPORATION LONG TERM INCENTIVE PLAN

NON-QUALIFIED STOCK OPTION AWARD AGREEMENT

     THIS
AWARD AGREEMENT (the “Award Agreement”), made as of
          (the “Grant Date”) by and
between Volcano Corporation, a Delaware corporation (the “Company”), and           (the “Optionee”), is
made with reference to the following facts:

     A. The Company is desirous of providing additional incentives to the Optionee in rendering
services to and on behalf of the Company and its parent and subsidiary corporations and, in order
to accomplish this result, has determined to grant the Optionee the right and option to purchase
shares of Common Stock of the Company (the “Common Stock”) pursuant to the Company’s Long Term
Incentive Plan (the “Plan”) on the terms and conditions set forth herein. Capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the Plan.

     B. The Optionee is desirous of accepting said stock option on the terms and conditions set
forth herein.

     NOW, THEREFORE, it is agreed as follows:

     1. Grant. The Company grants to the Optionee the right and option to purchase, on the
terms and conditions hereinafter set forth (the “Option”), all or any part of an aggregate of
shares of the Common Stock at the purchase price of            per share (the “Exercise Price”),
exercisable from time to time in accordance with the provisions of this Award Agreement and the
Plan pursuant to which this Award Agreement is being executed.

     2. Relationship to Plan. This Option will not be treated as an “incentive stock
option” within the meaning of Section 422 of the Code and the regulations promulgated thereunder.
This Option is subject to all of the terms, conditions and provisions of the Plan and
administrative interpretations thereunder, if any, which have been adopted by the Administrator
thereunder and are in effect on the date hereof. Except as defined herein, capitalized terms shall

 

 

have the same meanings ascribed to them under the Plan. For purposes of this Award Agreement:

     (a) “Act” shall mean the Securities Act of 1933, as amended from time to time.

     (b) “Cause” shall mean cause as defined in any employment agreement between the
Optionee and the Company or any Subsidiary in effect at the time of the Optionee’s
termination of employment or, in the absence of any such employment agreement, any of the
following: (i) conviction of the Optionee by a court of competent jurisdiction of any
felony or a crime involving moral turpitude; (ii) the Optionee’s knowing failure or refusal
to follow reasonable instructions of the Board or reasonable policies, standards and
regulations of the Company or any Subsidiary; (iii) the Optionee’s continued failure or
refusal to faithfully and diligently perform the usual, customary duties of his employment
with the Company or any Subsidiary; (iv) the Optionee’s continuously conducting himself in
an unprofessional, unethical, immoral or fraudulent manner; or (v) the Optionee’s conduct
discredits the Company or any Subsidiary or is detrimental to the reputation, character and
standing of the Company or any Subsidiary.

     (c) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time
to time.

     3. Exercise Schedule. This Option shall be immediately exercisable in full as to all
of the Option Shares.

     4. Termination of Option. The Option hereby granted shall terminate and be of no
force and effect with respect to any shares of Common Stock not previously purchased by the
Optionee upon the first to occur of:

     (a) The tenth anniversary of the Grant Date;

     (b) The expiration of ninety (90) days from the date of termination of the Optionee’s
engagement as an employee with the Company or its parent or subsidiary corporations (other
than a termination described in subparagraph (d) or (e) below or on account of death);
provided that if the Optionee shall die during such ninety (90) day period, the provisions
of subparagraph (c) below shall apply;

     (c) The expiration of one (1) year following the date of the Optionee’s death, if such
death occurs during the Optionee’s employment with the Company or its parent or subsidiary
corporations;

     (d) The expiration of one (1) year from the date of termination of the Optionee’s
engagement as an employee with the Company or its parent or subsidiary corporations if such
termination is attributable to a disability of the Optionee within the meaning of Section
22(e)(3) of the Code. The Board shall have the right to determine whether the Optionee’s
termination is attributable to a disability of the Optionee within

-2-

 

the meaning of Section
22(e)(3) of the Code, such determination of the Board to be final and conclusive.

     (e) Immediately upon the termination of the Optionee’s engagement as an employee with
the Company or its parent or subsidiary corporations if such termination constitutes or is
attributable to a breach by the Optionee of his or her employment agreement, if any, with
the Company or its parent or subsidiaries or if the Optionee is discharged for Cause. The
Board shall have the right to determine whether the Optionee has been discharged for Cause
and the date of such discharge; such determination of the Board to be final and conclusive.

     Nothing contained herein or in the Plan shall obligate the Company or its parent or subsidiary
corporations to continue to engage the Optionee as an employee or in any other capacity with the
Company, nor confer upon the Optionee any right to continue such engagement or in any other
capacity with the Company or its parent or subsidiary corporations, nor limit in any way the right
of the Company or its parent or subsidiary corporations to amend, modify or terminate his or her
compensation or engagement at any time.

     5. Exercise of Option. The Optionee may exercise this Option by delivering or mailing
to the Company, Attention: Corporate Secretary, a notice of exercise, in the form specified by the
Company, specifying therein the number of shares of Common Stock he or she has elected to purchase,
accompanied by (i) payment in cash or by check payable to the order of the Company for the purchase
price per share multiplied by the number of shares to be purchased; (ii) if required, the letter
described in Section 9; and (iii) executing and delivering to the Company the Acknowledgment and
Statement of Decision Regarding Election Pursuant to Section 83(b) and a copy of the executed
Election Pursuant to Section 83(b) if applicable, in accordance with Section 5 of the Optionee
Restriction Agreement attached hereto as Exhibit “A” and being executed concurrently herewith.
Notwithstanding the foregoing, the aggregate purchase price to be paid upon any exercise of this
Option may, if permissible under applicable state law and in the discretion of the Board, be paid
(1) in installments or in whole or in part by a promissory note of the Optionee (in a form
reasonably satisfactory to the Company) and secured by a security interest in the shares issued
upon such exercise and/or (2) in whole or in part by delivery to the Company of shares of Common
Stock previously acquired by the Optionee having a Fair Market Value (determined as of the date of
exercise of this Option and in the manner set forth in the Plan) equal to the portion of the
aggregate purchase price being paid by delivery of such shares and, in the case of (1) or (2), if
and to the extent applicable, cash or a check (or, in the case of (2) only, a note) made payable to
the Company for any remaining portion of the aggregate purchase price. If so requested by the
Board, prior to the acceptance of shares of Common Stock in satisfaction (in whole or in part) of
the purchase price and/or the withholding taxes upon such exercise of this Option, the Optionee
shall supply the Board with written representations and warranties, including without limitation a
representation and warranty that the Optionee has good and marketable title to such shares, free
and clear of liens and encumbrances. The exercise of this Option shall not be deemed effective
unless and until the Optionee has complied with all of the provisions of this Section. No partial
exercise of this Option may be for less than            shares and, in no event, shall the Company be
required to issue fractional shares.

-3-

 

     If any law or regulation requires the Company to take any action with respect to the shares
specified in such notice, the time for delivery thereof, which would otherwise be as promptly as
possible, shall be postponed for the period of time necessary to take such action.

     6. Notices. Notice of exercise of the Option must be made in the following manner,
using such forms as the Company may from time to time provide:

     (a) by registered or certified United States mail, postage prepaid, to Volcano
Corporation, Attn: Corporate Secretary, 2870 Kilgore Road, Rancho Cordova, California,
95670, in which case the date of exercise shall be two (2) days after deposit in the U.S.
mail; or

     (b) by hand delivery or otherwise to Volcano Corporation, Attn: Corporate Secretary,
2870 Kilgore Road, Rancho Cordova, California, 95670, in which case the date of exercise
shall be the date when receipt is acknowledged by the Company.

     Notwithstanding the foregoing, in the event that the address of the Company is changed prior
to the date of any exercise of this Option, notice of exercise shall instead be made pursuant to
the foregoing provisions at the Company’s current address.

     Any other notices provided for in this Award Agreement or in the Plan shall be given in
writing and shall be deemed effectively delivered or given upon receipt or, in the case of notices
delivered by the Company to the Optionee, five (5) days after deposit in the United States mail,
postage prepaid, addressed to the Optionee at the address specified at the end of this Award
Agreement or at such other address as the Optionee hereafter designates by written notice to the
Company.

     7. Assignment of Option. This Option and the rights and privileges granted hereby
shall not be transferred other than by will or by the laws of descent and distribution. This
Option and the rights and privileges granted hereby may be transferred by the Optionee (a) by will
or the laws of descent and distribution or (b) subject to the following sentence, during the
Optionee’s lifetime to (1) the Optionee’s children or grandchildren, including those by adoption
(“Immediate Family Members”), (2) the trustee of a trust for the exclusive benefit of the
Optionee’s Immediate Family Members, or (3) to a partnership or partnerships in which such
Immediate Family Members have at least ninety-nine percent (99%) of the equity, profit and loss
interests. Any such assignment of this Option shall be permitted only if the Optionee receives no
consideration therefor, the transferee becomes, immediately upon such transfer, subject to all of
the conditions of this Option prior to its transfer and such assignment is made in compliance with
all of the terms of the Plan and all applicable federal and state securities laws. Upon any
attempt to transfer this Option or any right or privilege granted hereby other than by will or by
the laws of descent and distribution and contrary to the provisions hereof, this Option and said
rights and privileges shall immediately become null and void.

     8. Anti-Dilution. In the event that the shares of Common Stock subject to this Option
shall be changed into or exchanged for a different number or kind of shares of stock or other
securities of the Company or of another corporation (whether by reason of merger,

-4-

 

consolidation,
recapitalization, reclassification, split-up, combination of shares, or otherwise) or if the number
of such shares of Common Stock shall be increased solely through the payment of a stock dividend,
then there shall be substituted for or added to each share of stock of the Company theretofore
appropriated or thereafter subject to this Option the number and kind of shares of
stock or other securities into which each outstanding share of stock of the Company shall be
so changed, or for which each such share shall be exchanged, or to which each such share shall be
entitled, as the case may be. This Option shall also be appropriately amended as to price and
other terms as may be necessary to reflect the foregoing events. In the event there shall be any
other change in the number or kind of the outstanding shares of stock of the Company subject to
this Option, or of any stock or other securities into which such stock shall have been changed, or
for which it shall have been exchanged, then if the Board, in its sole discretion, determines that
such change equitably requires an adjustment in this Option, such adjustments shall be made in
accordance with such determination. The Optionee understands that if, subsequent to the date of
this Award Agreement, the Company issues additional shares of the Company’s securities, the
percentage ownership of the Company represented by the number of shares of Common Stock subject to
this Option will be proportionately reduced by each such issuance and that the number of shares
covered hereby and the Exercise Price shall not be adjusted except as otherwise set forth in this
Award Agreement.

     Fractional shares resulting from any adjustment in this Option pursuant to this Section 8
shall be eliminated. Notice of any adjustment shall be given by the Company to the Optionee, such
adjustment (whether or not such notice is given) to be final and conclusive for all purposes
hereof.

     9. Securities Law. The shares of Common Stock subject to this Option have not been
registered under the Securities Act of 1933, as amended (the “Act”). Accordingly, the Optionee
agrees that he or she will take any shares of Common Stock acquired pursuant to the exercise hereof
in good faith for purposes of investment and without a view to any distribution thereof in
violation of the Act and the rules and regulations promulgated thereunder. The Optionee
understands that the Company will be relying upon the truth and accuracy of this representation in
issuing the Common Stock without first registering the issuance thereof under the Act. The
Optionee acknowledges that he or she is aware that the Common Stock issuable upon exercise hereof
has not been registered (and there is no obligation on behalf of the Company to register such
shares) under the Act and that such Common Stock will not be freely tradeable and must be held by
him or her indefinitely or until such time, if any, as herein provided and until such Common Stock
is either registered under the Act or transfers may be made pursuant to an exemption from such
registration as is accorded by the Act or the rules and regulations promulgated thereunder. In
this regard, the Optionee acknowledges that he or she is also aware that, if the exemption under
Rule 144 of the rules and regulations promulgated under the Act becomes applicable to the Common
Stock, shares of the Common Stock may be sold pursuant to said Rule only (i) following the filing
of any required reports by the Company under the Securities and Exchange Act of 1934, (ii) after
the minimum holding period specified in said Rule has been satisfied, and (iii) thereafter, only in
limited amounts in the manner prescribed in said Rule.

-5-

 

     The Optionee agrees that at the time of any exercise hereunder, he or she will provide the
Company with a letter embodying the aforementioned expressions of understanding and intent and
agrees that any shares issued to him or her following the exercise of any option arising hereunder
may bear such restrictive legend as the Company may deem necessary to reflect the status of such
shares under the Act. Before consenting to the removal of such legend and the transfer of any such
shares, the Company may insist upon the delivery to it of an opinion from counsel, satisfactory to it, that the contemplated transfer does not constitute a violation of
the Act.

     Notwithstanding the foregoing, the provisions of this Section 9 shall be suspended and be of
no force or effect during any period during which the shares of Common Stock subject to this Award
Agreement are registered under the Act.

     10. Withholding.

     (a) The Optionee hereby authorizes withholding from payroll and any other amounts
payable to the Optionee at the time the Optionee exercises this Option, in whole or in part,
or at any time thereafter as requested by the Company, and the Optionee otherwise agrees to
make adequate provision for any sums required to satisfy the federal, state, local and
foreign tax withholding obligations of the Company or an Affiliate (as defined in the Plan),
if any, which arise in connection with the exercise of this Option.

     (b) Upon the Optionee’s request and subject to approval by the Company, in its sole
discretion, and compliance with any applicable conditions or restrictions of law, the
Company may withhold from fully vested shares of Common Stock otherwise issuable to the
Optionee upon the exercise of this Option a number of whole shares of Common Stock having a
Fair Market Value (determined as of the date of exercise of this Option and in the manner
set forth in the Plan) not in excess of the minimum amount of tax required to be withheld by
law. If the date of determination of any tax withholding obligation is deferred to a date
later than the date of exercise of this Option, share withholding pursuant to the preceding
sentence shall not be permitted unless the Optionee makes a proper and timely election under
Section 83(b) of the Internal Revenue Code, covering the aggregate number of shares of
Common Stock acquired upon such exercise with respect to which such determination is
otherwise deferred, to accelerate the determination of such tax withholding obligation to
the date of exercise of this Option. Notwithstanding the filing of such election, shares of
Common Stock shall be withheld solely from fully vested shares of Common Stock determined as
of the date of exercise of this Option that are otherwise issuable to the Optionee upon such
exercise. Any adverse consequences to the Optionee arising in connection with such share
withholding procedure shall be the Optionee’s sole responsibility.

     (c) Notwithstanding any provision herein to the contrary, the Optionee may not exercise
this Option unless the tax withholding obligations of the Company and/or any Affiliate are
satisfied. Accordingly, the Optionee may not be able to exercise this Option when desired
even though this Option is vested, and the Company shall have no obligation to issue a
certificate for such shares of Common Stock.

-6-

 

     11. Stockholder Rights. Neither the Optionee nor any other person legally entitled to
exercise this Option shall be entitled to any of the rights or privileges of a stockholder of the
Company in respect to any shares issuable upon any exercise of this Option unless and until a
certificate or certificates representing such shares shall have been actually issued and delivered
to him.

     12. Successors and Assigns. This Award Agreement shall bind and inure to the benefit
of and be enforceable by the Optionee, the Company and their respective permitted successors and
assigns (including personal representatives, heirs and legatees), except that the Optionee may not
assign any rights or obligations under this Award Agreement except to the extent and in the manner
expressly permitted herein.

     13. Governing Law. This Award Agreement shall be governed by, construed and enforced
in accordance with the laws of the State of California.

     14. Entire Agreement. This Award Agreement, the Plan and the Optionee Restriction
Agreement (as defined below) together represent the entire agreement between the parties hereto
regarding the options on the Company’s Common Stock granted hereunder and supersede any and all
previous written or oral agreements or discussions between the parties and any other person or
legal entity concerning the transactions contemplated herein or therein. Except as otherwise
expressly provided herein, this Award Agreement cannot be amended or modified except by a written
instrument executed by the parties hereto.

     15. Construction. The headings of the Sections are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Award Agreement. If any of the
provisions of this Award Agreement shall be unlawful, void or for any reason unenforceable, they
shall be deemed separable from, and shall in no way affect the validity or enforceability of, the
remaining provisions of this Award Agreement.

     16. Interpretation. In interpreting any provision of this Award Agreement, the
masculine shall include the feminine and neuter, and vice versa and the singular shall include the
plural, and vice versa.

     17. Further Acts. The parties hereto agree to execute and deliver such further
instruments as may be reasonably necessary to carry out the intent of this Award Agreement.

     18. Optionee Restriction Agreement. Concurrently herewith, the Optionee has executed
and delivered to the Company an Optionee Restriction Agreement in substantially the form of Exhibit
“A” to this Award Agreement (the “Optionee Restriction Agreement”).

-7-

 

     IN WITNESS WHEREOF, the parties have executed this Award Agreement on the date first above
written.

	 	 	 	 	 	 	 	 	 	 	 
	INITIALED BY:	 	VOLCANO CORPORATION  
	 
	 	 	 	 	 	 	 	 	 	 
	Dated:

	 	 	 	By:	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Scott Huennekens,	 	 	 	 
	 

	 	 	 	 	 	President and Chief Executive Officer	 	 	 	 

-8-

 

     The Optionee hereby accepts the foregoing Award Agreement, subject to the terms and provisions
of the Plan and administrative interpretations thereof referred to above.

	 	 	 	 	 
	Date:
	 	 	 	 
	 

	 	 
	 	 
	 

	 	 	 	 
	 

	 	 	 	Optionee’s Address:

-9-

 

CONSENT OF SPOUSE

     The undersigned, the spouse of the Optionee under the foregoing Award Agreement (“Agreement”),
does hereby consent to and approve of each of the terms and conditions of the Agreement and agrees
that the undersigned’s interest in the Agreement and the shares of Common Stock issuable upon
exercise of the option granted thereunder are subject to such terms and conditions.

Dated:                                                            

                                                                                                                        

-10-

 

EXHIBIT A

VOLCANO CORPORATION

OPTIONEE RESTRICTION AGREEMENT

     THIS OPTIONEE RESTRICTION AGREEMENT (the “Agreement”) is made and entered into as of
between VOLCANO CORPORATION, a Delaware corporation (the “Company”), and (“Optionee”).

R E C I T A L S:

     A. Optionee owns as of the date hereof an option granted by the Company to purchase all or any
part of an aggregate of            shares (the “Shares”) of the Common Stock of the Company at a price
of            per Share. The term “Shares” refers to all shares acquired or which could be acquired
pursuant to such option and to all securities received in addition thereto or in replacement
thereof, pursuant to or in consequence of any stock dividend, stock split, recapitalization,
merger, reorganization, exchange of shares or other similar event.

     B. In order to provide assurance to certain present and future holders (collectively, the
“Investors”) of the Preferred Stock of the Company (the “Preferred Shares”) and thereby to assist
in future equity financings of the Company, Optionee is willing to enter into this Agreement for
the benefit of the Company, the Investors and any other person or entity who holds stock of the
Company from time to time.

     THE PARTIES AGREE AS FOLLOWS:

1. Company’s Right of First Refusal Respecting Shares.

          1.1 Right of First Refusal. Subject to Section 1.5, in the event that the Optionee
proposes to sell, pledge, or otherwise transfer any Shares, the Company shall have a right of first
refusal (the “Right of First Refusal”) with respect to such Shares. Optionee shall give a written
notice (the “Transfer Notice”) to the Company describing fully any proposed transfer of Shares,
including the number of Shares proposed to be transferred, the proposed transfer price, and the
name and address of the proposed transferee. The Transfer Notice shall be signed both by the
Optionee and by the proposed transferee. The Company shall have the right to purchase all, but not
less than all, of the Shares subject to the Transfer Notice at a price per share equal to the lower
of (i) the proposed per share transfer price, or (ii) the fair market value of a share of Common
Stock of the Company, as most recently determined by the Board of Directors of the Company (the
“Board”) prior to delivery of the Transfer Notice, by delivery of a notice of exercise of the
Company’s Right of First Refusal within thirty (30) days after the date the Transfer Notice is
delivered to the Company. The Company’s rights under this Section 1.1 shall be freely assignable,
in whole or in part.

 

 

          1.2 Transfer of Shares. If the Company fails to exercise the Right of First Refusal
within thirty (30) days from the date the Transfer Notice is delivered to the Company, the Optionee
may, not later than ninety (90) days following delivery to the Company of the Transfer Notice,
conclude a transfer of the Shares subject to the Transfer Notice on the terms and conditions
described in the Transfer Notice. Any proposed transfer on terms and conditions different from
those described in the Transfer Notice, as well as any subsequent proposed transfer by the
Optionee, shall again be subject to the Right of First Refusal and shall require compliance by the
Optionee with the procedure described in Section 1.1 of this Agreement. If the Company exercises
the Right of First Refusal, the parties shall consummate the sale of Shares on the terms set forth
in the Transfer Notice; provided, however, in the event the Transfer Notice provides for payment
for the Shares other than in cash, the Company shall have the option of paying for the Shares by
the discounted cash equivalent of the consideration described in the Transfer Notice.

          1.3 Binding Effect of Right of First Refusal. The Company’s Right of First Refusal
shall inure to the benefit of the successors and assigns of the Company and shall be binding upon
any transferee of Shares other than a transferee acquiring Shares in a transaction where the
Company failed to exercise the Right of First Refusal (a “Free Transferee”) or a transferee of a
Free Transferee.

          1.4 Termination of the Company’s Right of First Refusal. Notwithstanding anything in
this Section 1, the Company shall have no Right of First Refusal, and Optionee shall have no
obligation to comply with the procedures in Sections 1.1 through 1.3 after the earlier of (i) the
Company’s initial registered public offering of Common Stock to the public generally, or (ii) the
date ten (10) years after the date of this Agreement.

          1.5 Limitations to Rights. Without regard and not subject to the provisions of
Sections 1.1 and 2.1;

               (i) The Optionee may sell or otherwise assign Shares to any or all of his ancestors,
descendants, spouse, or members of his immediate family, or to a custodian, trustee (including a
trustee of a voting trust), executor, or other fiduciary for the account of his ancestors,
descendants, spouse, or members of his immediate family, provided that each such transferee or
assignee, prior to the completion of the sale, transfer, or assignment, shall have executed
documents assuming the obligations of the Optionee under this Agreement with respect to the
transferred securities.

               (ii) To the extent permitted by the Company, the Optionee may sell or transfer Shares in the
first firmly underwritten public offering of securities of the Company registered under the
Securities Act of 1933, as amended (the “Act”).

-2-

 

     2. Rights of Co-Sale.

          2.1 The Rights of Investors. If at any time Optionee proposes to sell any Shares to
parties other than the Investors or their assignees or transferees (the “Eligible Holders”) in a
transaction (the “Transaction”) not registered under the Act in reliance upon a claimed exemption
thereunder, then to the extent the Company has not exercised its Right of First Refusal as to any
Shares being sold, any Eligible Holder (a “Selling Holder”) which notifies the Company in writing,
within thirty (30) days after receipt of the notification from the Optionee referred to in Section
2.2, shall have the opportunity to sell a pro rata portion of Shares which the Optionee proposes to
sell to such third party in the Transaction; whereupon the Optionee shall assign so much of his
interest in the agreement of sale as the Selling Holder shall be entitled to and shall request
hereunder, and the Selling Holder shall assume such part of the obligations of the Optionee under
such agreement as shall relate to the sale of the Shares by the Selling Holder. For the purposes
of this Section 2, the “pro rata portion” which the Selling Holder shall be entitled to sell shall
be an amount of shares equal to the total amount of Shares proposed to be sold multiplied by a
fraction, the numerator of which is the number of shares of Common Stock issuable upon conversion
of the Preferred Shares and shares of Common Stock owned by a Selling Holder, and the denominator
of which is the total number of such shares owned by all participating Selling Holders and the
Optionee. Each Selling Holder shall notify the Optionee whether it elects to sell an amount equal
to, more than or less than its pro rata portion of the Shares so offered. Each Selling Holder
shall be entitled to apportion Shares to be sold among its partners and affiliates, provided that
such Selling Holder notifies the Company of such allocation.

          2.2 Notice. Prior to any sale by the Optionee of any Shares, the Optionee shall
notify each Eligible Holder and the Company, in writing, of his intention to sell and issue such
securities, setting forth the general terms under which he proposes to make such sale. Such notice
shall be signed by the third parties, or a representative of such third parties, or shall be
accompanied by a letter of intent signed by the third parties or representatives of such third
parties, to whom the sale, assignment or transfer is proposed and shall indicate the third parties’
concurrence with the description of the terms.

          2.3 Failure to Notify. If within thirty (30) days after the Optionee gives his notice
to the Eligible Holders, the Eligible Holders do not notify the Company that they desire to sell
all of their pro rata portion of the Shares described in such notice at the price and on the terms
and conditions set forth therein, then the Optionee may, not later than ninety (90) days following
delivery of the notice under Section 2.2, as to the Shares to which the Eligible Holders do not
indicate a desire to sell, conclude a transfer on the terms and conditions described in the notice.
In the event the Optionee has not sold the Shares or entered into an agreement to sell the Shares
within such ninety (90) days, the Optionee shall not thereafter sell any Shares without first
notifying the Eligible Holders and the Company in the manner provided above. The exercise or
non-exercise of the right to participate in one or more sales of Shares made by the Optionee shall
not adversely affect an Eligible Holder’s right to participate in subsequent sales of Shares by the
Optionee pursuant to Section 2.1 hereof.

-3-

 

          2.4 Termination. The obligations of the Optionee under this Section 2 shall terminate
and be of no further force and effect upon the occurrence of either event described in subsection
1.4 of this Agreement.

     3. Market Standoff. Optionee hereby agrees that if so requested by the Company or any
representative of the underwriters in connection with any registration of the offering of any
securities of the Company under the Act, Optionee shall not sell or otherwise transfer any Shares
for a period of one hundred eighty (180) days following the effective date of a registration
statement filed under the Act; provided, however, that such restriction shall apply only to the
first two registration statements of the Company to become effective under the Act which include
securities to be sold on behalf of the Company to the public in an underwritten public offering
under the Act. The Company may impose stop-transfer instructions with respect to securities
subject to the foregoing restrictions until the end of such one hundred eighty (180) day period.

4. Company’s Right to Repurchase Upon Termination of Employment Relationship.

          4.1 Repurchase Right. The Shares shall be subject to a right (but not obligation) of
repurchase in favor of the Company (the “Right of Repurchase”). If the Optionee’s employment
relationship with the Company or an affiliate terminates for any reason whatsoever (the “Engagement
Termination”) before the Right of Repurchase expires in accordance with Schedule 1 hereto, the
Company may purchase Shares subject to the Right of Repurchase at a purchase price per share equal
to the purchase price per share paid by the Optionee for the Shares (exclusive of any taxes paid
upon acquisition of the stock). The Optionee may not dispose of or transfer any Shares while such
Shares are subject to the Right of Repurchase and any such attempted transfer shall be null and
void. The Company’s rights under this Section 4.1 shall be freely assignable, in whole or in part.

          4.2 Repurchase Procedure. The Company’s Right of Repurchase shall terminate if not
exercised by written notice from the Company to the Optionee within ninety (90) days from the date
on which the Company learns of the Engagement Termination. If the Company exercises its Right of
Repurchase, the Optionee shall promptly endorse and deliver to the Company the stock certificates
representing the Shares being repurchased, and the Company shall then pay promptly (but in no event
later than ninety (90) days after the date of Engagement Termination), pursuant to the provisions
of Section 4.3 of this Agreement, the total repurchase price to the Optionee.

          4.3 Repurchase Payment. If, at the time of repurchase, any notes are outstanding
which represent any portion of the total purchase price for Shares being so repurchased, the
repurchase price shall be paid first by cancellation of any obligation for accrued but unpaid
interest under such notes, next by cancellation of principal under such notes, and finally by
payment of cash or check.

-4-

 

          4.4 Binding Effect. The Company’s Right of Repurchase shall inure to the benefit of
the successors and assigns of the Company and shall be binding upon any representative, executor,
administrator, heir, or legatee of the Optionee.

     5. Taxes. Concurrently with the exercise of the Option, the Optionee shall execute
and deliver to the Company (i) a copy of the Acknowledgment and Statement of Decision Regarding
Election Pursuant to Section 83(b) of the Internal Revenue Code (the “Acknowledgement”) attached
hereto as Exhibit 5A; and (ii) a copy of the Election Pursuant to Section 83(b) of the Code,
attached hereto as Exhibit 5B, if the Optionee has indicated in the Acknowledgment his or her
decision to make such an election. The Optionee should consult his or her own tax advisor to
determine if there is a comparable election to file in the state of his or her residence and
whether such filing is desirable under the circumstances. The Company may withhold from the
Optionee’s wages, or require the Optionee to pay to the Company, any applicable withholding or
employment taxes resulting from the lapse of any restrictions imposed on the Shares.

     6. Involuntary Transfers. In the event, at any time after the date of this Agreement,
of any transfer by operation of law or other involuntary transfer (excluding upon death but
including upon divorce or as a result of bankruptcy, attachment, levy execution, sequestration or
garnishment) of all or any portion of the Shares by the record holder thereof, the Company shall
have a right (but not an obligation) to acquire all or any of the Shares, and any such transferee
shall be subject to and bound by the terms of this Section 5. Upon any such transfer, the
transferee thereof shall immediately notify the Company in writing of such transfer. The right of
the Company under this Section 5 to acquire any or all of the Shares so transferred shall terminate
ninety (90) days following receipt of such notice from the transferee. If the Company elects to
exercise such right as to any or all of the Shares, the Company shall notify the transferee in
writing thereof within such ninety (90) day period, specifying therein the number of Shares to be
so acquired (and, if less than all of the Shares so transferred, the specific Shares to be so
acquired), accompanied by payment, in cash or by check, for the Shares being so acquired. The
purchase price to be paid by the Company for the Shares to be so acquired shall be the sum of the
fair market value per share thereof as of such date, as determined in good faith by the Board
(which determination shall be final, binding and conclusive on the Company and the transferee).
Upon receipt of the foregoing, the transferee shall promptly endorse and deliver to the Company the
stock certificates representing the Shares being acquired by the Company pursuant hereto. The
Company’s rights under this Section 6 shall be freely assignable, in whole or in part.

     7. Stock Certificate Restrictive Legends. Stock certificates evidencing Shares may
bear such restrictive legends as the Company and the Company’s counsel deem necessary or advisable
under applicable law or pursuant to this Agreement, including, without limitation, the following
legends:

-5-

 

“THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO A RIGHT OF FIRST
REFUSAL BY THE COMPANY AND A RIGHT OF CO-SALE ON THE PART OF CERTAIN
STOCKHOLDERS PURSUANT TO THE PROVISIONS OF AN AGREEMENT BETWEEN THE
COMPANY AND THE ORIGINAL PURCHASER OF SUCH SECURITIES RELATING TO
SUCH SECURITIES, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT
IN COMPLIANCE WITH THE TERMS OF SUCH AGREEMENT.”

“THE SECURITIES REPRESENTED HEREBY MAY BE SUBJECT TO A RIGHT OF
REPURCHASE BY THE COMPANY, PURSUANT TO THE PROVISIONS OF AN
AGREEMENT BETWEEN THE COMPANY AND THE ORIGINAL PURCHASER OF SUCH
SECURITIES RELATING TO SUCH SECURITIES.”

“THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO RESTRICTIONS ON
TRANSFER FOR A PERIOD OF 180 DAYS FOLLOWING THE EFFECTIVE DATE OF A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR AN OFFERING OF THE COMPANY’S SECURITIES AS MORE FULLY PROVIDED
IN THE AGREEMENT RELATING TO THE OPTION TO PURCHASE SUCH SECURITIES
BETWEEN THE COMPANY AND THE ORIGINAL PURCHASER OF SUCH SECURITIES.”

     8. Binding Effect. Subject to the limitations set forth in this Agreement, this
Agreement shall be binding upon, and inure to the benefit of, the executors, administrators, heirs,
legal representatives, successors, and assigns of the parties hereto.

     9. Damages. Optionee shall be liable to the Company for all costs and damages,
including incidental and consequential damages, resulting from a disposition of Shares which is not
in conformity with the provisions of this Agreement.

     10. Governing Law and Forum Selection. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to contracts entered
into and wholly to be performed within the State of California by California residents. The
parties agree that the exclusive jurisdiction and venue of any action with respect to this
Agreement shall be in the Superior Court of California for the County of Sacramento or the United
States District Court for the Eastern District of California, and each of the parties hereby
submits itself to the exclusive jurisdiction and venue of such courts for the purpose of such
action. The parties agree that service of process in any such action may be effected by delivery
of the summons to the parties in the manner provided for delivery of notices set forth in Section
11.

-6-

 

     11. Notices. All notices and other communications under this Agreement shall be in
writing. Unless and until Optionee is notified in writing to the contrary, all notices,
communications and documents directed to the Company and related to the Agreement, if not delivered
by hand, shall be mailed, addressed as follows:

VOLCANO CORPORATION

2870 Kilgore Road

Rancho Cordova, California 95670

Attention: President

Unless and until the Company is notified in writing to the contrary, all notices, communications
and documents intended for Optionee and related to this Agreement, if not delivered by hand, shall
be mailed to Optionee’s last known address as shown on the Company’s books. Notices and
communications shall be mailed by registered or certified mail, return receipt requested, postage
prepaid. All notices related to this Agreement shall be deemed received upon delivery or, if
mailed, within five (5) days after mailing in accordance with this Section 11.

     12. Attorneys’ Fees. If any action or proceeding is brought by any party with respect
to this Agreement or with respect to the interpretation, enforcement or breach hereof, the
prevailing party in such action shall be entitled to an award of all reasonable costs of
litigation, including without limitation attorneys’ fees, court costs and expert witness fees, to
be paid by the losing party, in such amount as may be determined by the court having jurisdiction
of such action.

-7-

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	VOLCANO CORPORATION
	 
	 	 	 	 	 	 	 	 	 	 
	Dated:

	 	 	 	By:	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Scott Huennekens,	 	 	 	 
	 

	 	 	 	 	 	President and Chief Executive Officer	 	 	 	 

     Optionee hereby accepts and agrees to be bound by all of the terms and conditions of this
Agreement.

	 	 	 	 	 
	 

	 	Optionee:	 	 
	 

	 	 	 

     Optionee’s spouse indicates by the execution of this Agreement her/his consent to be bound by
the terms herein as to her/his interests, whether as community property or otherwise, if any, in
the Shares.

	 	 	 	 	 
	 

	 	Optionee’s Spouse:	 	 
	 

	 	 	 	 

-8-

 

EXHIBIT 5A

ACKNOWLEDGMENT AND STATEMENT

OF DECISION REGARDING ELECTION

PURSUANT TO SECTION 83(b) OF

THE INTERNAL REVENUE CODE

     The undersigned (which term includes the undersigned’s spouse), a holder of shares of common
stock of VOLCANO CORPORATION, a Delaware corporation (the “Company”), hereby states as follows:

     1. The undersigned acknowledges receipt of a copy of the Company’s Optionee Restriction
Agreement (the “Agreement”). The undersigned has carefully reviewed the Agreement.

     2. The undersigned either [check as applicable]:

     ___(a) has consulted, and has been fully advised by, the undersigned’s own tax advisor,
                                                            , whose business address is                                                             , regarding the federal, state and local tax
consequences of entering into the Agreement, and particularly regarding the advisability of making
elections pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended (the “Code”),
and pursuant to the corresponding provisions, if any, of applicable state laws; or

     ___(b) has knowingly chosen not to consult such a tax advisor.

     3. The undersigned hereby states that the undersigned has decided [check as applicable]:

     ___(a) to make an election pursuant to Section 83(b) of the Code and is submitting to the
Company an executed form which is attached as Exhibit 5B to the Agreement; or

     ___(b) not to make an election pursuant to Section 83(b) of the Code.

     4. Neither the Company nor any subsidiary or representative of the Company had made any
warranty or representation to the undersigned with respect to the tax consequences of the Agreement
or of the making or failure to make an election pursuant to Section 83(b) of the Code or the
corresponding provisions, if any, of applicable state law.

     5. The undersigned is also submitting to the Company an executed original of an election, if
any is made, of the undersigned pursuant to provisions of state law corresponding to

 

 

Section 83(b) of the Code, if any, which are applicable to the undersigned’s purchase of shares
under the Agreement.

	 	 	 	 	 	 	 
	Date:

	 	 	 	, 20___	 	 
	 

	 	 
	 	 	 	 
	 

	 	 	 	 	 	[Purchaser]
	 
	 	 	 	 	 	 
	Date:

	 	 	 	, 20___	 	 
	 

	 	 
	 	 	 	 
	 

	 	 	 	 	 	[Purchaser]

-2-

 

EXHIBIT 5B

ELECTION PURSUANT TO SECTION 83(b) OF THE

INTERNAL REVENUE CODE

     The undersigned hereby elects pursuant to Section 83(b) of the Internal Revenue Code of 1986,
as amended (the “Code”), to include in the undersigned’s gross income the excess (if any) of (x)
the fair market value of the property described below, over (y) the amount the undersigned paid for
such property plus, if the shares to which this election relates were acquired by exercise of an
“incentive stock option” within the meaning of Section 422 of the Code, the amount excluded from
the undersigned’s income pursuant to Sections 421 and 422 of the Code. This election is made to
the same effect, and with the same limitations, with respect to the analogous provisions of
Sections 83(b) (and, if applicable, Sections 421 and 422) of the Code under any applicable state
statute. Pursuant to applicable Treasury Regulations the following information is provided:

     1. The undersigned’s name, address and taxpayer identification (social security) number are:

     Name:                                                                                

 

     Address:                                                                                

 

     Social Security #:                                                                                

     2. The
property with respect to which the election is made consists of                      shares of
Common Stock of VOLCANO CORPORATION, a Delaware corporation (the “Company”).

     3. The date on which the above property was transferred to the undersigned was                                         ,
20___, and the taxable year to which this election relates is 20___.

     4. The above property is subject to the following restrictions: (a) a right of repurchase by
the Company at the initial purchase price, if the undersigned ceases to be an employee of the
Company or an affiliate of the Company; and (b) a right of first refusal by the Company should the
undersigned wish to transfer the shares to a person or entity other than the Company.

     5. The fair market value of the above property at the time of transfer (determined without
regard to any restrictions other than those which by their terms will never lapse) is $                                        
per share.

     6. The amount paid for the above property by the undersigned was $                     per share.

 

 

     7. A copy of this election has been furnished to the Company, and a copy will be filed with
the income tax return of the undersigned to which this election relates.

     8. If the shares to which this election relates were acquired by exercise of an “incentive
stock option” within the meaning of Section 422 of the Code, this election is protective only, is
made solely to bar application of Section 83(a) of the Code, and is not an election of the
undersigned actually to recognize income which apart from this election is protected from
recognition by Sections 421 and 422 of the Code. However, the undersigned does intend for this
election to be an effective election under Section 83(b) of the Code for all purposes of the
Alternative Minimum Tax, and in particular for purposes of computing the adjustment described in
Section 56(b)(3) of the Code.

     If the shares to which this election relates were acquired by exercise of an incentive stock
option, the amount expressly excluded from income pursuant to Sections 421 and 422 of the Code is
$                     per share.

     Dated:                                         , 20___.

                                                                                                    

-2-

 

SCHEDULE 1 OF THE

OPTIONEE RESTRICTION AGREEMENT

     The Right of Repurchase (as defined in Section 4 of the Optionee Restriction Agreement) shall
expire on            with respect to 25% of the total number of Shares acquired or to be acquired, and
thereafter with respect to an additional 1/36th of the remaining Shares at the end of each of the
immediately following calendar months. During any period of leave of absence by the Optionee, as
approved by the President of the Company in his or her sole discretion, the Vesting Schedule shall
be tolled until such time as the Optionee’s approved leave of absence terminates. In no event
shall the period of tolling of the Optionee’s Vesting Schedule extend the termination date of the
Option as set forth in Section 4 of the Award Agreement.

     The Right of Repurchase shall expire with respect to all of the shares acquired upon the
consummation of a Company Sale. For purposes hereof, a “Company Sale” shall mean (1) the
acquisition of the Company by another entity by means of any transaction or series of related
transactions (including, without limitation, any reorganization, merger, stock purchase or
consolidation) or (2) a sale of all or substantially all of the assets of the Company; unless the
Company’s stockholders of record as constituted immediately prior to any such transaction will,
immediately after such transaction (by virtue of securities issued as consideration for the
Company’s capital stock, assets or otherwise) hold more than fifty percent (50%) of the voting
power of the surviving or acquiring entity.

	 	 	 	 	 	 	 
	INITIALED BY:	 	VOLCANO CORPORATION
	 
	 	 	 	 	 	 
	 

	 	 	 	By:	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Scott Huennekens,

President and Chief Executive Officer
	 
	 	 	 	 	 	 
	 	 	Optionee: 	 	 	 
	 

	 	 	 	 

-3-

 

NEITHER THIS OPTION NOR THE UNDERLYING COMMON SHARES HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 NOR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS. THE CORPORATION WILL NOT
TRANSFER THIS OPTION OR THE UNDERLYING COMMON SHARES UNLESS (i) THERE IS AN EFFECTIVE REGISTRATION
COVERING SUCH OPTION OR SUCH SHARES, AS THE CASE MAY BE, UNDER THE SECURITIES ACT OF 1933 AND
APPLICABLE STATE SECURITIES LAWS, (ii) IT FIRST RECEIVES A LETTER FROM AN ATTORNEY, ACCEPTABLE TO
THE BOARD OF DIRECTORS OR ITS AGENTS STATING THAT IN THE OPINION OF THE ATTORNEY THE PROPOSED
TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND UNDER ALL APPLICABLE
STATE SECURITIES LAWS, OR (iii) THE TRANSFER IS MADE PURSUANT TO RULE 144 UNDER THE SECURITIES ACT
OF 1933.

VOLCANO CORPORATION LONG TERM INCENTIVE PLAN

NON-QUALIFIED STOCK OPTION AWARD AGREEMENT

     THIS
AWARD AGREEMENT (the “Award Agreement”), made as of
      (the “Grant Date”) by and
between Volcano Corporation, a Delaware corporation (the
“Company”), and       (the “Optionee”), is
made with reference to the following facts:

     A. The Company is desirous of providing additional incentives to the Optionee in rendering
services to and on behalf of the Company and its parent and subsidiary corporations and, in order
to accomplish this result, has determined to grant the Optionee the right and option to purchase
shares of Common Stock of the Company (the “Common Stock”) pursuant to the Company’s Long Term
Incentive Plan (the “Plan”) on the terms and conditions set forth herein. Capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the Plan.

     B. The Optionee is desirous of accepting said stock option on the terms and conditions set
forth herein.

     NOW, THEREFORE, it is agreed as follows:

     1. Grant. The Company grants to the Optionee the right and option to purchase, on the
terms and conditions hereinafter set forth (the “Option”), all or any part of an aggregate of
shares of the Common Stock at the purchase price of            per share (the “Exercise Price”),
exercisable from time to time in accordance with the provisions of this Award Agreement and the
Plan pursuant to which this Award Agreement is being executed.

     2. Relationship to Plan. This Option will not be treated as an “incentive stock
option” within the meaning of Section 422 of the Code and the regulations promulgated thereunder.
This Option is subject to all of the terms, conditions and provisions of the Plan and
administrative interpretations thereunder, if any, which have been adopted by the Administrator
thereunder and are in effect on the date hereof. Except as defined herein, capitalized terms shall

 

 

have the same meanings ascribed to them under the Plan. For purposes of this Award Agreement:

     (a) “Act” shall mean the Securities Act of 1933, as amended from time to time.

     (b) “Cause” shall mean cause as defined in any employment or consulting agreement
between the Optionee and the Company or any Subsidiary in effect at the time of the
Optionee’s termination of employment or termination of consulting agreement or, in the
absence of any such employment or consulting agreement, any of the following: (i)
conviction of the Optionee by a court of competent jurisdiction of any felony or a crime
involving moral turpitude; (ii) the Optionee’s knowing failure or refusal to follow
reasonable instructions of the Board or reasonable policies, standards and regulations of
the Company or any Subsidiary; (iii) the Optionee’s continued failure or refusal to
faithfully and diligently perform the usual, customary duties of his employment or
consulting agreement with the Company or any Subsidiary; (iv) the Optionee’s continuously
conducting himself in an unprofessional, unethical, immoral or fraudulent manner; or (v) the
Optionee’s conduct discredits the Company or any Subsidiary or is detrimental to the
reputation, character and standing of the Company or any Subsidiary.

     (c) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time
to time.

     3. Exercise Schedule. This Option shall be immediately exercisable in full as to all
of the Option Shares.

     4. Termination of Option. The Option hereby granted shall terminate and be of no
force and effect with respect to any shares of Common Stock not previously purchased by the
Optionee upon the first to occur of:

     (a) The tenth anniversary of the Grant Date;

     (b) The expiration of ninety (90) days from the date of termination of the Optionee’s
engagement as a consultant or advisor with the Company or its parent or subsidiary
corporations (other than a termination described in subparagraph (d) or (e) below or on
account of death); provided that if the Optionee shall die during such ninety (90) day
period, the provisions of subparagraph (c) below shall apply;

     (c) The expiration of one (1) year following the date of the Optionee’s death, if such
death occurs during the Optionee’s employment or consulting agreement with the Company or
its parent or subsidiary corporations;

     (d) The expiration of one (1) year from the date of termination of the Optionee’s
engagement as a consultant or advisor with the Company or its parent or subsidiary
corporations if such termination is attributable to a disability of the Optionee within the
meaning of Section 22(e)(3) of the Code. The Board shall have the right to determine
whether the Optionee’s termination is attributable to a disability of the

-2-

 

Optionee within the meaning of Section 22(e)(3) of the Code, such determination of the Board to be final and
conclusive.

     (e) Immediately upon the termination of the Optionee’s engagement as a consultant or
advisor with the Company or its parent or subsidiary corporations if such termination
constitutes or is attributable to a breach by the Optionee of his or her employment or
consulting agreement, if any, with the Company or its parent or subsidiaries or if the
Optionee is discharged for Cause. The Board shall have the right to determine whether the
Optionee has been discharged for Cause and the date of such discharge; such determination of
the Board to be final and conclusive.

          Nothing contained herein or in the Plan shall obligate the Company or its parent or subsidiary
corporations to continue to engage the Optionee as a consultant or advisor or in any other capacity
with the Company, nor confer upon the Optionee any right to continue such engagement or in any
other capacity with the Company or its parent or subsidiary corporations, nor limit in any way the
right of the Company or its parent or subsidiary corporations to amend, modify or terminate his or
her compensation or engagement at any time.

     5. Exercise of Option. The Optionee may exercise this Option by delivering or mailing
to the Company, Attention: Corporate Secretary, a notice of exercise, in the form specified by the
Company, specifying therein the number of shares of Common Stock he or she has elected to purchase,
accompanied by (i) payment in cash or by check payable to the order of the Company for the purchase
price per share multiplied by the number of shares to be purchased; (ii) if required, the letter
described in Section 9; and (iii) executing and delivering to the Company the Acknowledgment and
Statement of Decision Regarding Election Pursuant to Section 83(b) and a copy of the executed
Election Pursuant to Section 83(b) if applicable, in accordance with Section 5 of the Optionee
Restriction Agreement attached hereto as Exhibit “A” and being executed concurrently herewith.
Notwithstanding the foregoing, the aggregate purchase price to be paid upon any exercise of this
Option may, if permissible under applicable state law and in the discretion of the Board, be paid
(1) in installments or in whole or in part by a promissory note of the Optionee (in a form
reasonably satisfactory to the Company) and secured by a security interest in the shares issued
upon such exercise and/or (2) in whole or in part by delivery to the Company of shares of Common
Stock previously acquired by the Optionee having a Fair Market Value (determined as of the date of
exercise of this Option and in the manner set forth in the Plan) equal to the portion of the
aggregate purchase price being paid by delivery of such shares and, in the case of (1) or (2), if
and to the extent applicable, cash or a check (or, in the case of (2) only, a note) made payable to
the Company for any remaining portion of the aggregate purchase price. If so requested by the
Board, prior to the acceptance of shares of Common Stock in satisfaction (in whole or in part) of
the purchase price and/or the withholding taxes upon such exercise of this Option, the Optionee
shall supply the Board with written representations and warranties, including without limitation a
representation and warranty that the Optionee has good and marketable title to such shares, free
and clear of liens and encumbrances. The exercise of this Option shall not be deemed effective
unless and until the Optionee has complied with all of the provisions of this Section. No partial
exercise of this Option may be for less than            shares and, in no event, shall the Company be
required to issue fractional shares.

-3-

 

          If any law or regulation requires the Company to take any action with respect to the shares
specified in such notice, the time for delivery thereof, which would otherwise be as promptly as
possible, shall be postponed for the period of time necessary to take such action.

     6. Notices. Notice of exercise of the Option must be made in the following manner,
using such forms as the Company may from time to time provide:

     (a) by registered or certified United States mail, postage prepaid, to Volcano
Corporation, Attn: Corporate Secretary, 2870 Kilgore Road, Rancho Cordova, California,
95670, in which case the date of exercise shall be two (2) days after deposit in the U.S.
mail; or

     (b) by hand delivery or otherwise to Volcano Corporation, Attn: Corporate Secretary,
2870 Kilgore Road, Rancho Cordova, California, 95670, in which case the date of exercise
shall be the date when receipt is acknowledged by the Company.

          Notwithstanding the foregoing, in the event that the address of the Company is changed prior
to the date of any exercise of this Option, notice of exercise shall instead be made pursuant to
the foregoing provisions at the Company’s current address.

          Any other notices provided for in this Award Agreement or in the Plan shall be given in
writing and shall be deemed effectively delivered or given upon receipt or, in the case of notices
delivered by the Company to the Optionee, five (5) days after deposit in the United States mail,
postage prepaid, addressed to the Optionee at the address specified at the end of this Award
Agreement or at such other address as the Optionee hereafter designates by written notice to the
Company.

     7. Assignment of Option. This Option and the rights and privileges granted hereby
shall not be transferred other than by will or by the laws of descent and distribution. This
Option and the rights and privileges granted hereby may be transferred by the Optionee (a) by will
or the laws of descent and distribution or (b) subject to the following sentence, during the
Optionee’s lifetime to (1) the Optionee’s children or grandchildren, including those by adoption
(“Immediate Family Members”), (2) the trustee of a trust for the exclusive benefit of the
Optionee’s Immediate Family Members, or (3) to a partnership or partnerships in which such
Immediate Family Members have at least ninety-nine percent (99%) of the equity, profit and loss
interests. Any such assignment of this Option shall be permitted only if the Optionee receives no
consideration therefor, the transferee becomes, immediately upon such transfer, subject to all of
the conditions of this Option prior to its transfer and such assignment is made in compliance with
all of the terms of the Plan and all applicable federal and state securities laws. Upon any
attempt to transfer this Option or any right or privilege granted hereby other than by will or by
the laws of descent and distribution and contrary to the provisions hereof, this Option and said
rights and privileges shall immediately become null and void.

     8. Anti-Dilution. In the event that the shares of Common Stock subject to this Option
shall be changed into or exchanged for a different number or kind of shares of stock or other
securities of the Company or of another corporation (whether by reason of merger,

-4-

 

consolidation, recapitalization, reclassification, split-up, combination of shares, or otherwise) or if the number
of such shares of Common Stock shall be increased solely through the payment of a stock dividend,
then there shall be substituted for or added to each share of stock of the Company theretofore
appropriated or thereafter subject to this Option the number and kind of shares of
stock or other securities into which each outstanding share of stock of the Company shall be
so changed, or for which each such share shall be exchanged, or to which each such share shall be
entitled, as the case may be. This Option shall also be appropriately amended as to price and
other terms as may be necessary to reflect the foregoing events. In the event there shall be any
other change in the number or kind of the outstanding shares of stock of the Company subject to
this Option, or of any stock or other securities into which such stock shall have been changed, or
for which it shall have been exchanged, then if the Board, in its sole discretion, determines that
such change equitably requires an adjustment in this Option, such adjustments shall be made in
accordance with such determination. The Optionee understands that if, subsequent to the date of
this Award Agreement, the Company issues additional shares of the Company’s securities, the
percentage ownership of the Company represented by the number of shares of Common Stock subject to
this Option will be proportionately reduced by each such issuance and that the number of shares
covered hereby and the Exercise Price shall not be adjusted except as otherwise set forth in this
Award Agreement.

          Fractional shares resulting from any adjustment in this Option pursuant to this Section 8
shall be eliminated. Notice of any adjustment shall be given by the Company to the Optionee, such
adjustment (whether or not such notice is given) to be final and conclusive for all purposes
hereof.

     9. Securities Law. The shares of Common Stock subject to this Option have not been
registered under the Securities Act of 1933, as amended (the “Act”). Accordingly, the Optionee
agrees that he or she will take any shares of Common Stock acquired pursuant to the exercise hereof
in good faith for purposes of investment and without a view to any distribution thereof in
violation of the Act and the rules and regulations promulgated thereunder. The Optionee
understands that the Company will be relying upon the truth and accuracy of this representation in
issuing the Common Stock without first registering the issuance thereof under the Act. The
Optionee acknowledges that he or she is aware that the Common Stock issuable upon exercise hereof
has not been registered (and there is no obligation on behalf of the Company to register such
shares) under the Act and that such Common Stock will not be freely tradeable and must be held by
him or her indefinitely or until such time, if any, as herein provided and until such Common Stock
is either registered under the Act or transfers may be made pursuant to an exemption from such
registration as is accorded by the Act or the rules and regulations promulgated thereunder. In
this regard, the Optionee acknowledges that he or she is also aware that, if the exemption under
Rule 144 of the rules and regulations promulgated under the Act becomes applicable to the Common
Stock, shares of the Common Stock may be sold pursuant to said Rule only (i) following the filing
of any required reports by the Company under the Securities and Exchange Act of 1934, (ii) after
the minimum holding period specified in said Rule has been satisfied, and (iii) thereafter, only in
limited amounts in the manner prescribed in said Rule.

-5-

 

          The Optionee agrees that at the time of any exercise hereunder, he or she will provide the
Company with a letter embodying the aforementioned expressions of understanding and intent and
agrees that any shares issued to him or her following the exercise of any option arising hereunder
may bear such restrictive legend as the Company may deem necessary to reflect the status of such
shares under the Act. Before consenting to the removal of such legend and the transfer of any such
shares, the Company may insist upon the delivery to it of an opinion from
counsel, satisfactory to it, that the contemplated transfer does not constitute a violation of
the Act.

          Notwithstanding the foregoing, the provisions of this Section 9 shall be suspended and be of
no force or effect during any period during which the shares of Common Stock subject to this Award
Agreement are registered under the Act.

     10. Withholding.

     (a) The Optionee hereby authorizes withholding from payroll and any other amounts
payable to the Optionee at the time the Optionee exercises this Option, in whole or in part,
or at any time thereafter as requested by the Company, and the Optionee otherwise agrees to
make adequate provision for any sums required to satisfy the federal, state, local and
foreign tax withholding obligations of the Company or an Affiliate (as defined in the Plan),
if any, which arise in connection with the exercise of this Option.

     (b) Upon the Optionee’s request and subject to approval by the Company, in its sole
discretion, and compliance with any applicable conditions or restrictions of law, the
Company may withhold from fully vested shares of Common Stock otherwise issuable to the
Optionee upon the exercise of this Option a number of whole shares of Common Stock having a
Fair Market Value (determined as of the date of exercise of this Option and in the manner
set forth in the Plan) not in excess of the minimum amount of tax required to be withheld by
law. If the date of determination of any tax withholding obligation is deferred to a date
later than the date of exercise of this Option, share withholding pursuant to the preceding
sentence shall not be permitted unless the Optionee makes a proper and timely election under
Section 83(b) of the Internal Revenue Code, covering the aggregate number of shares of
Common Stock acquired upon such exercise with respect to which such determination is
otherwise deferred, to accelerate the determination of such tax withholding obligation to
the date of exercise of this Option. Notwithstanding the filing of such election, shares of
Common Stock shall be withheld solely from fully vested shares of Common Stock determined as
of the date of exercise of this Option that are otherwise issuable to the Optionee upon such
exercise. Any adverse consequences to the Optionee arising in connection with such share
withholding procedure shall be the Optionee’s sole responsibility.

     (c) Notwithstanding any provision herein to the contrary, the Optionee may not exercise
this Option unless the tax withholding obligations of the Company and/or any Affiliate are
satisfied. Accordingly, the Optionee may not be able to exercise this Option when desired
even though this Option is vested, and the Company shall have no obligation to issue a
certificate for such shares of Common Stock.

-6-

 

     11. Stockholder Rights. Neither the Optionee nor any other person legally entitled to
exercise this Option shall be entitled to any of the rights or privileges of a stockholder of the
Company in respect to any shares issuable upon any exercise of this Option unless and until a
certificate or certificates representing such shares shall have been actually issued and delivered
to him.

     12. Successors and Assigns. This Award Agreement shall bind and inure to the benefit
of and be enforceable by the Optionee, the Company and their respective permitted successors and
assigns (including personal representatives, heirs and legatees), except that the Optionee may not
assign any rights or obligations under this Award Agreement except to the extent and in the manner
expressly permitted herein.

     13. Governing Law. This Award Agreement shall be governed by, construed and enforced
in accordance with the laws of the State of California.

     14. Entire Agreement. This Award Agreement, the Plan and the Optionee Restriction
Agreement (as defined below) together represent the entire agreement between the parties hereto
regarding the options on the Company’s Common Stock granted hereunder and supersede any and all
previous written or oral agreements or discussions between the parties and any other person or
legal entity concerning the transactions contemplated herein or therein. Except as otherwise
expressly provided herein, this Award Agreement cannot be amended or modified except by a written
instrument executed by the parties hereto.

     15. Construction. The headings of the Sections are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Award Agreement. If any of the
provisions of this Award Agreement shall be unlawful, void or for any reason unenforceable, they
shall be deemed separable from, and shall in no way affect the validity or enforceability of, the
remaining provisions of this Award Agreement.

     16. Interpretation. In interpreting any provision of this Award Agreement, the
masculine shall include the feminine and neuter, and vice versa and the singular shall include the
plural, and vice versa.

     17. Further Acts. The parties hereto agree to execute and deliver such further
instruments as may be reasonably necessary to carry out the intent of this Award Agreement.

     18. Optionee Restriction Agreement. Concurrently herewith, the Optionee has executed
and delivered to the Company an Optionee Restriction Agreement in substantially the form of Exhibit
“A” to this Award Agreement (the “Optionee Restriction Agreement”).

-7-

 

     IN WITNESS WHEREOF, the parties have executed this Award Agreement on the date first above
written.

	 	 	 	 	 	 	 	 	 
	INITIALED BY:	 	 	 	VOLCANO CORPORATION
	 
	 	 	 	 	 	 	 	 
	Dated:

	 	 	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Scott Huennekens,
	 

	 	 	 	 	 	 	 	President and Chief Executive Officer

-8-

 

          The Optionee hereby accepts the foregoing Award Agreement, subject to the terms and provisions
of the Plan and administrative interpretations thereof referred to above.

	 	 	 	 	 	 	 
	Date:

	 	 	 	 	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Optionee’s Address:

-9-

 

CONSENT OF SPOUSE

     The undersigned, the spouse of the Optionee under the foregoing Award Agreement (“Agreement”),
does hereby consent to and approve of each of the terms and conditions of the Agreement and agrees
that the undersigned’s interest in the Agreement and the shares of Common Stock issuable upon
exercise of the option granted thereunder are subject to such terms and conditions.

     Dated:                                         

	 	 	 
	 

	 	 
	 

	 	 

-10-

 

EXHIBIT A

VOLCANO CORPORATION

OPTIONEE RESTRICTION AGREEMENT

     THIS OPTIONEE RESTRICTION AGREEMENT (the “Agreement”) is made and entered into as of
between VOLCANO CORPORATION, a Delaware corporation (the “Company”), and           (“Optionee”).

R E C I T A L S:

     A. Optionee owns as of the date hereof an option granted by the Company to purchase all or any
part of an aggregate of            shares (the “Shares”) of the Common Stock of the Company at a price
of            per Share. The term “Shares” refers to all shares acquired or which could be acquired
pursuant to such option and to all securities received in addition thereto or in replacement
thereof, pursuant to or in consequence of any stock dividend, stock split, recapitalization,
merger, reorganization, exchange of shares or other similar event.

     B. In order to provide assurance to certain present and future holders (collectively, the
“Investors”) of the Preferred Stock of the Company (the “Preferred Shares”) and thereby to assist
in future equity financings of the Company, Optionee is willing to enter into this Agreement for
the benefit of the Company, the Investors and any other person or entity who holds stock of the
Company from time to time.

     THE PARTIES AGREE AS FOLLOWS:

     1. Company’s Right of First Refusal Respecting Shares.

          1.1 Right of First Refusal. Subject to Section 1.5, in the event that the Optionee
proposes to sell, pledge, or otherwise transfer any Shares, the Company shall have a right of first
refusal (the “Right of First Refusal”) with respect to such Shares. Optionee shall give a written
notice (the “Transfer Notice”) to the Company describing fully any proposed transfer of Shares,
including the number of Shares proposed to be transferred, the proposed transfer price, and the
name and address of the proposed transferee. The Transfer Notice shall be signed both by the
Optionee and by the proposed transferee. The Company shall have the right to purchase all, but not
less than all, of the Shares subject to the Transfer Notice at a price per share equal to the lower
of (i) the proposed per share transfer price, or (ii) the fair market value of a share of Common
Stock of the Company, as most recently determined by the Board of Directors of the Company (the
“Board”) prior to delivery of the Transfer Notice, by delivery of a notice of exercise of the
Company’s Right of First Refusal within thirty (30) days after the date the Transfer Notice is
delivered to the Company. The Company’s rights under this Section 1.1 shall be freely assignable,
in whole or in part.

 

 

          1.2 Transfer of Shares. If the Company fails to exercise the Right of First Refusal
within thirty (30) days from the date the Transfer Notice is delivered to the Company, the Optionee
may, not later than ninety (90) days following delivery to the Company of the Transfer Notice,
conclude a transfer of the Shares subject to the Transfer Notice on the terms and conditions
described in the Transfer Notice. Any proposed transfer on terms and conditions different from
those described in the Transfer Notice, as well as any subsequent proposed transfer by the
Optionee, shall again be subject to the Right of First Refusal and shall require compliance by the
Optionee with the procedure described in Section 1.1 of this Agreement. If the Company exercises
the Right of First Refusal, the parties shall consummate the sale of Shares on the terms set forth
in the Transfer Notice; provided, however, in the event the Transfer Notice provides for payment
for the Shares other than in cash, the Company shall have the option of paying for the Shares by
the discounted cash equivalent of the consideration described in the Transfer Notice.

          1.3 Binding Effect of Right of First Refusal. The Company’s Right of First Refusal
shall inure to the benefit of the successors and assigns of the Company and shall be binding upon
any transferee of Shares other than a transferee acquiring Shares in a transaction where the
Company failed to exercise the Right of First Refusal (a “Free Transferee”) or a transferee of a
Free Transferee.

          1.4 Termination of the Company’s Right of First Refusal. Notwithstanding anything in
this Section 1, the Company shall have no Right of First Refusal, and Optionee shall have no
obligation to comply with the procedures in Sections 1.1 through 1.3 after the earlier of (i) the
Company’s initial registered public offering of Common Stock to the public generally, or (ii) the
date ten (10) years after the date of this Agreement.

          1.5 Limitations to Rights. Without regard and not subject to the provisions of
Sections 1.1 and 2.1;

               (i) The Optionee may sell or otherwise assign Shares to any or all of his ancestors,
descendants, spouse, or members of his immediate family, or to a custodian, trustee (including a
trustee of a voting trust), executor, or other fiduciary for the account of his ancestors,
descendants, spouse, or members of his immediate family, provided that each such transferee or
assignee, prior to the completion of the sale, transfer, or assignment, shall have executed
documents assuming the obligations of the Optionee under this Agreement with respect to the
transferred securities.

               (ii) To the extent permitted by the Company, the Optionee may sell or transfer Shares in the
first firmly underwritten public offering of securities of the Company registered under the
Securities Act of 1933, as amended (the “Act”).

-2-

 

     2. Rights of Co-Sale.

          2.1 The Rights of Investors. If at any time Optionee proposes to sell any Shares to
parties other than the Investors or their assignees or transferees (the “Eligible Holders”) in a
transaction (the “Transaction”) not registered under the Act in reliance upon a claimed exemption
thereunder, then to the extent the Company has not exercised its Right of First Refusal as to any
Shares being sold, any Eligible Holder (a “Selling Holder”) which notifies the Company in writing,
within thirty (30) days after receipt of the notification from the Optionee referred to in Section
2.2, shall have the opportunity to sell a pro rata portion of Shares which the Optionee proposes to
sell to such third party in the Transaction; whereupon the Optionee shall assign so much of his
interest in the agreement of sale as the Selling Holder shall be entitled to and shall request
hereunder, and the Selling Holder shall assume such part of the obligations of the Optionee under
such agreement as shall relate to the sale of the Shares by the Selling Holder. For the purposes
of this Section 2, the “pro rata portion” which the Selling Holder shall be entitled to sell shall
be an amount of shares equal to the total amount of Shares proposed to be sold multiplied by a
fraction, the numerator of which is the number of shares of Common Stock issuable upon conversion
of the Preferred Shares and shares of Common Stock owned by a Selling Holder, and the denominator
of which is the total number of such shares owned by all participating Selling Holders and the
Optionee. Each Selling Holder shall notify the Optionee whether it elects to sell an amount equal
to, more than or less than its pro rata portion of the Shares so offered. Each Selling Holder
shall be entitled to apportion Shares to be sold among its partners and affiliates, provided that
such Selling Holder notifies the Company of such allocation.

          2.2 Notice. Prior to any sale by the Optionee of any Shares, the Optionee shall
notify each Eligible Holder and the Company, in writing, of his intention to sell and issue such
securities, setting forth the general terms under which he proposes to make such sale. Such notice
shall be signed by the third parties, or a representative of such third parties, or shall be
accompanied by a letter of intent signed by the third parties or representatives of such third
parties, to whom the sale, assignment or transfer is proposed and shall indicate the third parties’
concurrence with the description of the terms.

          2.3 Failure to Notify. If within thirty (30) days after the Optionee gives his notice
to the Eligible Holders, the Eligible Holders do not notify the Company that they desire to sell
all of their pro rata portion of the Shares described in such notice at the price and on the terms
and conditions set forth therein, then the Optionee may, not later than ninety (90) days following
delivery of the notice under Section 2.2, as to the Shares to which the Eligible Holders do not
indicate a desire to sell, conclude a transfer on the terms and conditions described in the notice.
In the event the Optionee has not sold the Shares or entered into an agreement to sell the Shares
within such ninety (90) days, the Optionee shall not thereafter sell any Shares without first
notifying the Eligible Holders and the Company in the manner provided above. The exercise or
non-exercise of the right to participate in one or more sales of Shares made by the Optionee shall
not adversely affect an Eligible Holder’s right to participate in subsequent sales of Shares by the
Optionee pursuant to Section 2.1 hereof.

-3-

 

          2.4 Termination. The obligations of the Optionee under this Section 2 shall terminate
and be of no further force and effect upon the occurrence of either event described in subsection
1.4 of this Agreement.

     3. Market Standoff. Optionee hereby agrees that if so requested by the Company or any
representative of the underwriters in connection with any registration of the offering of any
securities of the Company under the Act, Optionee shall not sell or otherwise transfer any Shares
for a period of one hundred eighty (180) days following the effective date of a registration
statement filed under the Act; provided, however, that such restriction shall apply only to the
first two registration statements of the Company to become effective under the Act which include
securities to be sold on behalf of the Company to the public in an underwritten public offering
under the Act. The Company may impose stop-transfer instructions with respect to securities
subject to the foregoing restrictions until the end of such one hundred eighty (180) day period.

     4. Company’s Right to Repurchase Upon Termination of Consulting Relationship.

          4.1 Repurchase Right. The Shares shall be subject to a right (but not obligation) of
repurchase in favor of the Company (the “Right of Repurchase”). If the Optionee’s consulting
relationship with the Company or an affiliate terminates for any reason whatsoever (the “Engagement
Termination”) before the Right of Repurchase expires in accordance with Schedule 1 hereto, the
Company may purchase Shares subject to the Right of Repurchase at a purchase price per share equal
to the purchase price per share paid by the Optionee for the Shares (exclusive of any taxes paid
upon acquisition of the stock). The Optionee may not dispose of or transfer any Shares while such
Shares are subject to the Right of Repurchase and any such attempted transfer shall be null and
void. The Company’s rights under this Section 4.1 shall be freely assignable, in whole or in part.

          4.2 Repurchase Procedure. The Company’s Right of Repurchase shall terminate if not
exercised by written notice from the Company to the Optionee within ninety (90) days from the date
on which the Company learns of the Engagement Termination. If the Company exercises its Right of
Repurchase, the Optionee shall promptly endorse and deliver to the Company the stock certificates
representing the Shares being repurchased, and the Company shall then pay promptly (but in no event
later than ninety (90) days after the date of Engagement Termination), pursuant to the provisions
of Section 4.3 of this Agreement, the total repurchase price to the Optionee.

          4.3 Repurchase Payment. If, at the time of repurchase, any notes are outstanding
which represent any portion of the total purchase price for Shares being so repurchased, the
repurchase price shall be paid first by cancellation of any obligation for accrued but unpaid
interest under such notes, next by cancellation of principal under such notes, and finally by
payment of cash or check.

-4-

 

          4.4 Binding Effect. The Company’s Right of Repurchase shall inure to the benefit of
the successors and assigns of the Company and shall be binding upon any representative, executor,
administrator, heir, or legatee of the Optionee.

     5. Taxes. Concurrently with the exercise of the Option, the Optionee shall execute
and deliver to the Company (i) a copy of the Acknowledgment and Statement of Decision Regarding
Election Pursuant to Section 83(b) of the Internal Revenue Code (the “Acknowledgement”) attached
hereto as Exhibit 5A; and (ii) a copy of the Election Pursuant to Section 83(b) of the Code,
attached hereto as Exhibit 5B, if the Optionee has indicated in the Acknowledgment his or her
decision to make such an election. The Optionee should consult his or her own tax advisor to
determine if there is a comparable election to file in the state of his or her residence and
whether such filing is desirable under the circumstances. The Company may require the Optionee to
pay to the Company, any applicable withholding or employment taxes resulting from the lapse of any
restrictions imposed on the Shares.

     6. Involuntary Transfers. In the event, at any time after the date of this Agreement,
of any transfer by operation of law or other involuntary transfer (excluding upon death but
including upon divorce or as a result of bankruptcy, attachment, levy execution, sequestration or
garnishment) of all or any portion of the Shares by the record holder thereof, the Company shall
have a right (but not an obligation) to acquire all or any of the Shares, and any such transferee
shall be subject to and bound by the terms of this Section 5. Upon any such transfer, the
transferee thereof shall immediately notify the Company in writing of such transfer. The right of
the Company under this Section 5 to acquire any or all of the Shares so transferred shall terminate
ninety (90) days following receipt of such notice from the transferee. If the Company elects to
exercise such right as to any or all of the Shares, the Company shall notify the transferee in
writing thereof within such ninety (90) day period, specifying therein the number of Shares to be
so acquired (and, if less than all of the Shares so transferred, the specific Shares to be so
acquired), accompanied by payment, in cash or by check, for the Shares being so acquired. The
purchase price to be paid by the Company for the Shares to be so acquired shall be the sum of the
fair market value per share thereof as of such date, as determined in good faith by the Board
(which determination shall be final, binding and conclusive on the Company and the transferee).
Upon receipt of the foregoing, the transferee shall promptly endorse and deliver to the Company the
stock certificates representing the Shares being acquired by the Company pursuant hereto. The
Company’s rights under this Section 6 shall be freely assignable, in whole or in part.

     7. Stock Certificate Restrictive Legends. Stock certificates evidencing Shares may
bear such restrictive legends as the Company and the Company’s counsel deem necessary or advisable
under applicable law or pursuant to this Agreement, including, without limitation, the following
legends:

-5-

 

“THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO A RIGHT OF FIRST
REFUSAL BY THE COMPANY AND A RIGHT OF CO-SALE ON THE PART OF CERTAIN
STOCKHOLDERS PURSUANT TO THE PROVISIONS OF AN AGREEMENT BETWEEN THE
COMPANY AND THE ORIGINAL PURCHASER OF SUCH SECURITIES RELATING TO
SUCH SECURITIES, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT
IN COMPLIANCE WITH THE TERMS OF SUCH AGREEMENT.”

“THE SECURITIES REPRESENTED HEREBY MAY BE SUBJECT TO A RIGHT OF
REPURCHASE BY THE COMPANY, PURSUANT TO THE PROVISIONS OF AN
AGREEMENT BETWEEN THE COMPANY AND THE ORIGINAL PURCHASER OF SUCH
SECURITIES RELATING TO SUCH SECURITIES.”

“THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO RESTRICTIONS ON
TRANSFER FOR A PERIOD OF 180 DAYS FOLLOWING THE EFFECTIVE DATE OF A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR AN OFFERING OF THE COMPANY’S SECURITIES AS MORE FULLY PROVIDED
IN THE AGREEMENT RELATING TO THE OPTION TO PURCHASE SUCH SECURITIES
BETWEEN THE COMPANY AND THE ORIGINAL PURCHASER OF SUCH SECURITIES.”

     8. Binding Effect. Subject to the limitations set forth in this Agreement, this
Agreement shall be binding upon, and inure to the benefit of, the executors, administrators, heirs,
legal representatives, successors, and assigns of the parties hereto.

     9. Damages. Optionee shall be liable to the Company for all costs and damages,
including incidental and consequential damages, resulting from a disposition of Shares which is not
in conformity with the provisions of this Agreement.

     10. Governing Law and Forum Selection. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to contracts entered
into and wholly to be performed within the State of California by California residents. The
parties agree that the exclusive jurisdiction and venue of any action with respect to this
Agreement shall be in the Superior Court of California for the County of Sacramento or the United
States District Court for the Eastern District of California, and each of the parties hereby
submits itself to the exclusive jurisdiction and venue of such courts for the purpose of such
action. The parties agree that service of process in any such action may be effected by delivery
of the summons to the parties in the manner provided for delivery of notices set forth in Section
11.

-6-

 

     11. Notices. All notices and other communications under this Agreement shall be in
writing. Unless and until Optionee is notified in writing to the contrary, all notices,
communications and documents directed to the Company and related to the Agreement, if not delivered
by hand, shall be mailed, addressed as follows:

VOLCANO CORPORATION

2870 Kilgore Road

Rancho Cordova, California 95670

Attention: President

Unless and until the Company is notified in writing to the contrary, all notices, communications
and documents intended for Optionee and related to this Agreement, if not delivered by hand, shall
be mailed to Optionee’s last known address as shown on the Company’s books. Notices and
communications shall be mailed by registered or certified mail, return receipt requested, postage
prepaid. All notices related to this Agreement shall be deemed received upon delivery or, if
mailed, within five (5) days after mailing in accordance with this Section 11.

     12. Attorneys’ Fees. If any action or proceeding is brought by any party with respect
to this Agreement or with respect to the interpretation, enforcement or breach hereof, the
prevailing party in such action shall be entitled to an award of all reasonable costs of
litigation, including without limitation attorneys’ fees, court costs and expert witness fees, to
be paid by the losing party, in such amount as may be determined by the court having jurisdiction
of such action.

-7-

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	VOLCANO CORPORATION
	 
	 	 	 	 	 	 	 	 
	Dated:

	 	 	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Scott Huennekens,
	 

	 	 	 	 	 	 	 	President and Chief Executive Officer

     Optionee hereby accepts and agrees to be bound by all of the terms and conditions of this
Agreement.

	 	 	 	 	 
	 

	 	Optionee:	 	 
	 

	 	 	 	 

     Optionee’s spouse indicates by the execution of this Agreement her/his consent to be bound by
the terms herein as to her/his interests, whether as community property or otherwise, if any, in
the Shares.

	 	 	 	 	 
	 

	 	Optionee’s Spouse:	 	 
	 

	 	 	 	 

-8-

 

EXHIBIT 5A

ACKNOWLEDGMENT AND STATEMENT

OF DECISION REGARDING ELECTION

PURSUANT TO SECTION 83(b) OF

THE INTERNAL REVENUE CODE

     The undersigned (which term includes the undersigned’s spouse), a holder of shares of common
stock of VOLCANO CORPORATION, a Delaware corporation (the “Company”), hereby states as follows:

     1. The undersigned acknowledges receipt of a copy of the Company’s Optionee Restriction
Agreement (the “Agreement”). The undersigned has carefully reviewed the Agreement.

     2. The undersigned either [check as applicable]:

           (a) has consulted, and has been fully advised by, the undersigned’s own tax advisor,
                                                            , whose business address is                                                             , regarding the federal, state and local tax
consequences of entering into the Agreement, and particularly regarding the advisability of making
elections pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended (the “Code”),
and pursuant to the corresponding provisions, if any, of applicable state laws; or

           (b) has knowingly chosen not to consult such a tax advisor.

     3. The undersigned hereby states that the undersigned has decided [check as applicable]:

           (a) to make an election pursuant to Section 83(b) of the Code and is submitting to the
Company an executed form which is attached as Exhibit 5B to the Agreement; or

           (b) not to make an election pursuant to Section 83(b) of the Code.

     4. Neither the Company nor any subsidiary or representative of the Company had made any
warranty or representation to the undersigned with respect to the tax consequences of the Agreement
or of the making or failure to make an election pursuant to Section 83(b) of the Code or the
corresponding provisions, if any, of applicable state law.

     5. The undersigned is also submitting to the Company an executed original of an election, if
any is made, of the undersigned pursuant to provisions of state law corresponding to

 

 

Section 83(b) of the Code, if any, which are applicable to the undersigned’s purchase of shares
under the Agreement.

	 	 	 	 	 	 	 	 	 
	Date:

	 	                    , 20___
	 	 
	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	[Purchaser]	 	 
	 
	 	 	 	 	 	 	 	 
	Date:

	 	                    , 20___	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	[Purchaser]	 	 

-2-

 

EXHIBIT 5B

ELECTION PURSUANT TO SECTION 83(b) OF THE

INTERNAL REVENUE CODE

     The undersigned hereby elects pursuant to Section 83(b) of the Internal Revenue Code of 1986,
as amended (the “Code”), to include in the undersigned’s gross income the excess (if any) of (x)
the fair market value of the property described below, over (y) the amount the undersigned paid for
such property plus, if the shares to which this election relates were acquired by exercise of an
“incentive stock option” within the meaning of Section 422 of the Code, the amount excluded from
the undersigned’s income pursuant to Sections 421 and 422 of the Code. This election is made to
the same effect, and with the same limitations, with respect to the analogous provisions of
Sections 83(b) (and, if applicable, Sections 421 and 422) of the Code under any applicable state
statute. Pursuant to applicable Treasury Regulations the following information is provided:

     1. The undersigned’s name, address and taxpayer identification (social security) number are:

     Name:                                                                                  

     Address:                                                                                  

     Social Security #:                                                                                  

     2. The
property with respect to which the election is made consists of                      shares of
Common Stock of VOLCANO CORPORATION, a Delaware corporation (the “Company”).

     3. The date on which the above property was transferred to the undersigned was                     ,
20___, and the taxable year to which this election relates is 20___.

     4. The above property is subject to the following restrictions: (a) a right of repurchase by
the Company at the initial purchase price, if the undersigned ceases to be a consultant to the
Company or an affiliate of the Company; and (b) a right of first refusal by the Company should the
undersigned wish to transfer the shares to a person or entity other than the Company.

     5. The fair market value of the above property at the time of transfer (determined without
regard to any restrictions other than those which by their terms will never lapse) is $                    
per share.

     6. The amount paid for the above property by the undersigned was $                     per share.

 

 

     7. A copy of this election has been furnished to the Company, and a copy will be filed with
the income tax return of the undersigned to which this election relates.

     8. If the shares to which this election relates were acquired by exercise of an “incentive
stock option” within the meaning of Section 422 of the Code, this election is protective only, is
made solely to bar application of Section 83(a) of the Code, and is not an election of the
undersigned actually to recognize income which apart from this election is protected from
recognition by Sections 421 and 422 of the Code. However, the undersigned does intend for this
election to be an effective election under Section 83(b) of the Code for all purposes of the
Alternative Minimum Tax, and in particular for purposes of computing the adjustment described in
Section 56(b)(3) of the Code.

     If the shares to which this election relates were acquired by exercise of an incentive stock
option, the amount expressly excluded from income pursuant to Sections 421 and 422 of the Code is
$                     per share.

     Dated:                     , 20___.

	 	 	 
	 

	 	 
	 

	 	 

-2-

 

SCHEDULE 1 OF THE

OPTIONEE RESTRICTION AGREEMENT

     The Right of Repurchase (as defined in Section 4 of the Optionee Restriction Agreement) shall
expire on       with respect to 25% of the total number of Shares acquired or to be acquired, and
thereafter with respect to an additional 1/36th of the remaining Shares at the end of each of the
immediately following calendar months.

     The Right of Repurchase shall expire with respect to all of the shares acquired upon the
consummation of a Company Sale. For purposes hereof, a “Company Sale” shall mean (1) the
acquisition of the Company by another entity by means of any transaction or series of related
transactions (including, without limitation, any reorganization, merger, stock purchase or
consolidation) or (2) a sale of all or substantially all of the assets of the Company; unless the
Company’s stockholders of record as constituted immediately prior to any such transaction will,
immediately after such transaction (by virtue of securities issued as consideration for the
Company’s capital stock, assets or otherwise) hold more than fifty percent (50%) of the voting
power of the surviving or acquiring entity.

	 	 	 	 	 	 	 	 	 
	INITIALED BY:	 	 	 	VOLCANO CORPORATION
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Scott Huennekens,
	 

	 	 	 	 	 	 	 	President and Chief Executive Officer

	 	 	 	 	 
	 

	 	Optionee:exv10w3

 

Exhibit 10.3

VOLCANO CORPORATION

2005 EQUITY COMPENSATION PLAN

     The purpose of the Volcano Corporation 2005 Equity Compensation Plan (the “Plan”) is to
provide (i) designated employees of Volcano Corporation (the “Company”) and its parents and
subsidiaries, (ii) certain consultants and advisors who perform services for the Company or its
parents or subsidiaries, and (iii) non-employee members of the Board of Directors of the Company
(the “Board”) with the opportunity to receive grants of incentive stock options, nonqualified stock
options, stock awards (including restricted stock units), and stock appreciation rights. The
Company believes that the Plan will encourage the participants to contribute materially to the
growth of the Company, thereby benefiting the Company’s stockholders, and will align the economic
interests of the participants with those of the stockholders.

     1. Administration

     (a) Committee.
The Plan shall be administered and interpreted by the members of
the Compensation Committee of the Board (the “Committee”),
which (i) shall consist of “outside
directors” as defined under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
“Code”), and related Treasury regulations, and “non-employee directors” as defined under Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”); and (ii) shall have the
authority set forth below.

     (b) Committee
Authority. The Committee or its delegate shall have the sole authority to
(i) determine the individuals to whom grants shall be made under
the Plan; (ii) determine the type,
size, and terms of the grants to be made to each such individual; (iii) determine the time when the
grants will be made and the duration of any applicable exercise or restriction period, including the
criteria for exercisability and the acceleration of exercisability; (iv) amend the terms of any
previously issued grant; and (v) deal with any other matters arising under the Plan. However, the
Board may ratify or approve any grants as it deems appropriate, and the Board shall approve and
administer all grants made to non-employee directors.

     (c) Committee
Determinations. The Committee or its delegate shall have full
 power and
authority to administer and interpret the Plan, to make factual
determinations and to adopt or amend
such rules, regulations, agreements, and instruments for implementing the Plan and for the conduct
of its business as it deems necessary or advisable, in its sole discretion. The Committee’s or its
delegate’s interpretations of the Plan and all determinations made by the Committee or its delegate
pursuant to the powers vested in it hereunder shall be conclusive and binding on all persons having
any interest in the Plan or in any awards granted hereunder. All powers of the Committee or
its delegate shall be executed in its or their sole discretion, in
the best interest of the Company,
not as a fiduciary, and in keeping with the objectives of the Plan
and need not be uniform as to
similarly situated individuals.

 

 

     (d) Other
Equity Awards. The terms of this Plan shall not impact or govern the
administration by the Company or the rights of any holders of an
option or stock award granted
pursuant to the Volcano Corporation 2000 Long Term Incentive Plan, as amended (the “2000 Plan”).
Unless otherwise provided by the Company and agreed to by the recipient of an award under the 2000
Plan, all awards granted pursuant to the 2000 Plan shall continue to be governed by the terms of
such plan.

     (e) No
Repricings. Notwithstanding anything in this Plan to the
contrary, with respect
to Options held by a person subject to Section 16 of the
Exchange Act, in no event may the Board,
the Committee or its or their delegate (i) amend or modify an Option in a manner that would reduce
the exercise price of such Option; (ii) substitute an Option for another Option with a lower
exercise price; (iii) cancel an Option and issue a new Option with a lower exercise price to the
holder of the cancelled Option within six (6) months following the date of the cancellation of the
cancelled Option; or (iv) cancel an outstanding Option that is under water (i.e., for which the Fair
Market Value, as defined below, of the underlying Shares is less than the Option’s Exercise Price,
as defined below) for the purpose of granting a replacement Grant (as
defined below) of a different
type.

     2. Grants

     (a) Awards under the Plan may consist of grants of incentive stock options as described
in Section 5 (“Incentive Stock Options”), nonqualified stock options as described in Section 5
(“Nonqualified Stock Options”) (Incentive Stock Options and Nonqualified Stock Options are
collectively referred to as “Options”), stock awards as described in Section 6 (“Stock Awards”),
restricted stock units as described in Section 6 (“Restricted Stock Units”), and Stock Appreciation
Rights described in Section 7 (“SARs”) (hereinafter collectively referred to as “Grants”). All
Grants shall be subject to the terms and conditions set forth herein and to such other terms and
conditions consistent with this Plan and as specified in the individual grant instrument or an
amendment to the grant instrument (the “Grant Instrument”). All Grants shall be made conditional
upon the Grantee’s acknowledgement, in writing or by acceptance of the Grant, that all decisions
and determination of the Committee or its delegate shall be final and binding on the Grantee, his
or her beneficiaries and any other person having or claiming an interest under such Grant. Grants
under a particular Section of the Plan need not be uniform as among the grantees.

     3. Shares Subject to the Plan

     (a) Shares Authorized. Subject to adjustment as described below, (i) the maximum
aggregate number of shares of common stock of the Company (“Company Stock”) that may be issued or
transferred under any forms of Grants under the Plan is six million four hundred seventy eight
thousand eight hundred and fourteen (6,478,814) shares minus the sum of (A) such number of shares
subject to stock options granted under the 2000 Plan, which stock options are issued and
outstanding or issued and exercised and (B) such number of shares subject to stock awards granted
under the 2000 Plan and not forfeited or repurchased, (ii) the maximum aggregate number of shares
of Company

-2-

 

Stock that may be issued under the Plan under Incentive Stock Options is the number of shares
calculated under Section 3(a)(i) above, and (iii) the maximum aggregate number of shares of Company
Stock that may be issued under the Plan under Awards other than Options is the lesser of (A) one
million six hundred thousand (1,600,000) shares minus such number of stock awards granted under the
2000 Plan and not forfeited or repurchased and (B) the number of shares calculated under Section
3(a)(i) above. For purposes of this Section 3(a), stock appreciation rights to be settled in shares
of Company Stock shall be counted in full against the number of shares of Company Stock available
for award under the Plan, regardless of the number of exercise gain shares issued upon the
settlement of the stock appreciation right. The maximum aggregate number of shares of Company Stock
that shall be subject to Grants made under the Plan to any individual during any calendar year
shall be the lesser of (A) one million (1,000,000) shares and (B) the number of shares calculated
under Section 3(a)(i) above, subject to adjustment as described below. The shares may be authorized
but unissued shares of Company Stock or reacquired shares of Company Stock, including shares
purchased by the Company on the open market for purposes of the Plan. If and to the extent Options
granted under the Plan terminate, expire, or are canceled, forfeited, exchanged, or surrendered
without having been exercised or if any Stock Awards (including restricted Stock Awards received
upon the exercise of Options) are forfeited, the shares subject to such Grants shall again be
available for purposes of the Plan. Notwithstanding the foregoing, at any such time as the offer
and sale of securities pursuant to the Plan is subject to compliance with Section 260.140.45 of
Title 10 of the California Code of Regulations (“Section 260.140.45”), the total number of shares
of Company Stock issuable upon the exercise of all outstanding Options (together with options
outstanding under any other stock option plan of the Company) and the total number of shares
provided for under any stock bonus or similar plan of the Company shall not exceed thirty percent
(30%) (or such other higher percentage limitation as may be approved by the stockholders of the
Company pursuant to Section 260.140.45) of the then outstanding shares of the Company as calculated
in accordance with the conditions and exclusions of Section 260.140.45.

     (b) Adjustments. If there is any change in the number or kind of shares of
Company Stock outstanding (i) by reason of a stock dividend, spinoff, recapitalization, stock
split, or combination or exchange of shares; (ii) by reason of a merger, reorganization, or
consolidation; (iii) by reason of a reclassification or change in par value; or (iv) by reason of
any other extraordinary or unusual event affecting the outstanding Company Stock as a class without
the Company’s receipt of consideration, or if the value of outstanding shares of Company Stock is
substantially reduced as a result of a spinoff or the Company’s payment of an extraordinary
dividend or distribution, the maximum number of shares of Company Stock available for Grants, the
maximum number of shares of Company Stock that any individual participating in the Plan may be
granted in any year, the number of shares covered by outstanding Grants, the kind of shares issued
under the Plan, and the price per share of such Grants shall be appropriately adjusted by the
Committee or its delegate to reflect any increase or decrease in the number of, or change in the
kind or value of, issued shares of Company Stock to preclude, to the extent practicable, the
enlargement or dilution of rights and benefits under such Grants; provided, however, that any
fractional shares resulting from such

-3-

 

adjustment shall be rounded down to the nearest whole share. Any adjustments determined by
the Committee or its delegate shall be final, binding, and conclusive.

     4. Eligibility for Participation

     (a) Eligible Persons. All employees of the Company and its parents
or subsidiaries (“Employees”), including Employees who are
officers or members of the Board, and
members of the Board who are not Employees (“Non-Employee
Directors”) shall be eligible to
participate in the Plan. Consultants and advisors who perform services for the Company or any of its
parents or subsidiaries (“Key Advisors”) shall be eligible to participate in the Plan if the Key
Advisors render bona fide services to the Company or its parents or subsidiaries, the services are
not in connection with the offer and sale of securities in a capital-raising transaction, and the
Key Advisors do not directly or indirectly promote or maintain a market for the Company’s
securities.

     (b) Selection
of Grantees. The Committee or its delegate shall select the Employees,
and Key Advisors to receive Grants and shall determine the number of
shares of Company Stock subject
to a particular Grant. The Board shall select the Non-Employee Directors to receive Grants and
shall determine the number of shares of Company Stock subject to a particular Grant of a
Non-Employee Director. Employees, Key Advisors, and Non-Employee Directors who receive Grants under
this Plan shall hereinafter be referred to as “Grantees.”

     5. Granting of Options

     The Company may grant an Option to an Employee, Non-Employee Director, or Key Advisor.
The following provisions are applicable to Options.

     (a) Number
of Shares. The Company shall determine the number of shares of Company Stock
that will be subject to each Grant of Options to Employees, Non-Employee Directors, and Key
Advisors.

     (b) Type of Option and Price.

          (i) Incentive Stock Options are intended to satisfy the requirements of Section 422 of
the Code. Nonqualified Stock Options are not intended to so qualify. Incentive Stock Options may be
granted only to employees of the Company or its parents or subsidiaries, as defined in Section 424
of the Code. Nonqualified Stock Options may be granted to Employees, Non-Employee Directors, and
Key Advisors.

          (ii) The purchase price (the “Exercise Price”) of Company Stock subject to an Option may
be equal to or greater than the Fair Market Value (as defined below) of a share of Company Stock on
the date the Option is granted; provided, however, that an Incentive Stock Option may not be
granted to an Employee who, at the time of grant, owns or beneficially owns stock possessing more
than ten percent (10%) of the total combined voting power of all classes of stock of the Company or
any parent or subsidiary of the Company, unless the Exercise Price per share is not less than one

-4-

 

hundred ten percent (110%) of the Fair Market Value of Company Stock on the date of grant.

          (iii) So long as the Company Stock is not publicly traded or, if publicly traded, is not
subject to reported transactions or “bid” or “asked” quotations as set forth below, the Fair Market
Value per share shall be as determined by the Committee. If the Company Stock is publicly traded,
the Fair Market Value per share shall be determined as follows: (x) if the principal trading market
for the Company Stock is a national securities exchange or the Nasdaq National Market, the last
reported sale price thereof on the relevant date or (if there were no trades on that date) the
latest preceding date upon which a sale was reported, or (y) if the Company Stock is not
principally traded on such exchange or market, the mean between the last reported “bid” and “asked”
prices of Company Stock on the relevant date, as reported on Nasdaq or, if not so reported, as
reported by the National Daily Quotation Bureau, Inc. or as reported in a customary financial
reporting service, as applicable and as the Company determines.

     (c) Option
Term. The term of any Option shall not exceed seven (7) years from the date
of grant. However, an Incentive Stock Option that is granted to an
Employee who, at the time of
grant, owns or beneficially owns stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company, or any parent or subsidiary of the Company, may
not have a term that exceeds five (5) years from the date of grant.

     (d) Exercisability of Options.

          (i) Options shall become exercisable in accordance with such terms and conditions of the
Plan and specified in the Grant Instrument. The Committee or its delegate may accelerate the
exercisability of any or all outstanding Options at any time for any reason.

          (ii) The Company may provide in a Grant Instrument that the Grantee may elect to exercise
part or all of an Option before it otherwise has become exercisable. Any shares so purchased shall
be restricted shares and shall be subject to a repurchase right in favor of the Company during a
specified restriction period, with the repurchase price equal to the lesser of (i) the Exercise
Price or (ii) the Fair Market Value of such shares at the time of repurchase, and (iii) any other
restrictions determined by the Company.

     (e) Grants
to Non-Exempt Employees. Options granted to persons who are non-exempt
employees under the Fair Labor Standards Act of 1938, as amended,
shall have an Exercise Price not
less than one hundred percent (100%) of the Fair Market Value of the Company Stock on the date of
grant, and may not be exercisable for at least six (6) months after the date of grant (except that
such Options may become exercisable upon the Grantee’s death, Disability or retirement, or upon a
Change in Control or other circumstances permitted by applicable regulations).

-5-

 

     (f) Termination of Employment, Disability, or Death.

          (i) For purposes of this Section 5(f) and Section 6:

     (A)
The term “Employer” shall mean the Company and its parent and subsidiary
corporations or other entities, as determined by the Board.

     (B)
“Employed by, or provide service to, the Employer” shall mean employment or service
as an Employee, Key Advisor or member of the Board (so that, for purposes of exercising
Options or SARs and satisfying conditions with respect to Stock Awards, a Grantee shall not
be considered to have terminated employment or service until the Grantee ceases to be an
Employee, Key Advisor or member of the Board).

     (C)
“Disability” shall mean the inability to perform the duties of an employee’s
position for a continuous period of more than three months by reason of any medically
determinable physical or mental impairment.

     (D)
“Misconduct” means cause or misconduct as defined in any employment agreement
between the Grantee and the Company or an affiliate in effect at the time of the Grantee’s
termination of employment, or, in the absence of any such employment agreement, any of the
following (i) conviction of the Grantee by a court of competent jurisdiction of any felony
or a crime involving moral turpitude; (ii) the Grantee’s knowing failure or refusal to
follow reasonable
 instructions of the Board or reasonable policies, standards and
regulations of the Company or its affiliate; (iii) the Grantee’s continued failure or
refusal to faithfully and diligently perform the usual, customary duties of his
employment with the Company or its affiliate; (iv) the Grantee’s continuously conducting
him or herself in an unprofessional, unethical, immoral or fraudulent
manner; or (v) the
Grantee’s conduct discredits the Company or any affiliate or its
detrimental to the
reputation, character and standing of the Company or any affiliate.

          (ii) Except as provided below, an Option may only be exercised while the Grantee is
employed by, or providing service to, the Employer (as defined below) as an Employee, Key Advisor
or member of the Board, In the event that a Grantee ceases to be employed by, or provide service
to, the Employer for any reason other than Disability, death, termination for Misconduct, or as set
forth in subsection 5(f)(vi) of this Plan, any Option which is otherwise exercisable by the Grantee
shall terminate unless exercised within ninety (90) days after the date on which the Grantee ceases
to be employed by, or provide service to, the Employer (or within such other period of time as may
be specified by the Company), but in any event no later than the date of expiration of the Option
term. Except as otherwise provided, any of the Grantee’s Options that are not otherwise exercisable
as of the date on which the Grantee ceases to be employed by, or provide service to, the Employer
shall terminate as of such date.

          (iii) In the event the Grantee ceases to be employed by, or provide service to, the
Employer on account of a termination by the Employer for Misconduct or if the Grantee breaches his
or her employment agreement with the Employer, any Option held by the Grantee shall terminate on
the date on which the Grantee ceases to be

-6-

 

employed by, or provide service to, the Employer or the date on which such Option would otherwise
expire, if earlier. In addition, notwithstanding any other provisions of this Section 5, if the
Company determines that the Grantee has engaged in conduct that constitutes Misconduct or has
breached his or her employment agreement at any time while the Grantee is or was employed by, or
providing service to, the Employer or after the Grantee’s termination of employment or service, any
Option held by the Grantee shall terminate as of the date on which such Misconduct first occurred,
or the date on which such Option would otherwise expire, if earlier. Upon any exercise of an
Option, the Company may withhold delivery of share certificates pending resolution of an inquiry
that could lead to a finding resulting in a forfeiture.

          (iv) In the event the Grantee ceases to be employed by, or provide service to, the
Employer because the Grantee is Disabled, any Option which is otherwise exercisable by the Grantee
shall terminate unless exercised within one (1) year after the date on which the Grantee ceases to
be employed by, or provide service to, the Employer (or within such other period of time as may be
specified by the Company), but in any event no later than the date of expiration of the Option
term. Except as otherwise provided, any of the Grantee’s Options that are not otherwise exercisable
as of the date on which the Grantee ceases to be employed by, or provide service to, the Employer
shall terminate as of such date.

          (v) If the Grantee dies while employed by, or providing service to, the Employer, all of
the unexercised outstanding Options of Grantee shall become immediately exercisable and remain
exercisable for a period of one (1) year from his or her date of death, but in no event later than
the date of expiration of the Option term. If the Grantee dies within ninety (90) days after the
date on which the Grantee ceases to be employed or provide service on account of a termination
specified in Section 5(f)(ii) above (or within such other period of time as may be specified by the
Company), any Option that is otherwise exercisable by the Grantee shall terminate unless exercised
within one (1) year after the date on which the Grantee ceases to be employed by, or provide
service to, the Employer (or within such other period of time as may be specified), but in any
event no later than the date of expiration of the Option term. Except as otherwise provided, any of
the Grantee’s Options that are not otherwise exercisable as of the date on which the Grantee ceases
to be employed by, or provide service to, the Employer shall terminate as of such date.

          (vi) Notwithstanding anything herein to the contrary, to the extent that any
Company-sponsored plan or arrangement, or any agreement to which the Company is a party provides
for a longer exercise period for a Grantee’s Options under applicable circumstances than the
exercise period that is provided for in this Section 5(f) under those circumstances, then the
exercise period set forth in such plan, arrangement or agreement applicable to such circumstances
shall apply in lieu of the exercise period provided for in this Section 5(f). In no event, however,
may such exercise period continue past the end of the term of the Option as set forth in this Plan.

     (g) Exercise of Options. A Grantee may exercise an Option that has become
exercisable, in whole or in part, by delivering a notice of exercise to the Company. The

-7-

 

Grantee shall pay the Exercise Price for an Option in cash, or, to the extent permitted by the
Committee, (i) with payment through a broker in accordance with procedures permitted by Regulation
T of the Federal Reserve Board, or (ii) by such other method as the Committee may approve. The
Grantee shall pay the Exercise Price and the amount of any withholding tax due (pursuant to Section
8).

     (h) Limits on Incentive Stock Options. Each Incentive Stock Option shall provide
that, if the aggregate Fair Market Value of the Company Stock on the date of the grant with respect
to which Incentive Stock Options are exercisable for the first time by a Grantee during any
calendar year, under the Plan or any other stock option plan of the Company or a parent or
subsidiary, exceeds One Hundred Thousand Dollars ($100,000), then the Option, as to the excess,
shall be treated as a Nonqualified Stock Option. An Incentive Stock Option shall not be granted to
any person who is not an Employee of the Company or a parent or subsidiary (within the meaning of
Section 424(f) of the Code) of the Company.

     6. Stock Awards

     The Company may transfer shares of Company Stock or cash to an Employee, Non-Employee
Director, or Key Advisor under a Stock Award. The following provisions are applicable to Stock
Awards:

     (a) General Requirements. Shares of Company Stock issued or transferred pursuant to
Stock Awards may be issued or transferred for consideration or for no consideration, and subject to
restrictions or no restrictions. In the case of Stock Awards issued prior to the date, if any, on
which the Company Stock covered by this Plan have been registered under the Securities Act of 1933,
as amended of 1933, as amended (the“Securities Act”), the per share valuation or purchase price
shall be no less than 100% of the Fair Market Value per share of the Company Stock on the date of
grant. Restrictions on Stock Awards shall lapse over a period of time or according to such other
criteria asset forth in the Grant Instrument. The period of time during which the Stock Award
will remain subject to restrictions will be designated in the Grant Instrument as the “Restriction
Period.”

     (b) Number of Shares. The Grant Instrument shall set forth the number of shares of
Company Stock to be issued or transferred pursuant to a Stock Award and the restrictions applicable
to such shares.

     (c) Requirement of Employment or Service. If the Grantee ceases to be employed by, or
provide service to, the Employer (as defined in Section 5(f)) during a period designated in the
Grant Instrument as the Restriction Period, or if other specified conditions are not met, the Stock
Award shall terminate as to all shares covered by the award as to which the restrictions have not
lapsed, and those shares of Company Stock must be immediately returned to the Company. The Company
may, however, provide for complete or partial exceptions to this requirement as it deems
appropriate.

     (d) Restrictions on Transfer and Legend on Stock Certificate. During the Restriction
Period, a Grantee may not sell, assign, transfer, pledge, or otherwise dispose

-8-

 

of the shares of the Stock Award except to a successor under Section 9(a). Each certificate for
Stock Awards shall contain a legend giving appropriate notice of the restrictions in the Grant. The
Grantee shall be entitled to have the legend removed from the stock certificate covering the shares
subject to restrictions when all restrictions on such shares have lapsed. The Company may determine
that it will not issue certificates for Stock Awards until all restrictions on such shares have
lapsed, or that the Company will retain possession of certificates for Stock Awards until all
restrictions on such shares have lapsed.

     (e) Right to Vote and to Receive Dividends. Except as otherwise determined by the
Committee or its delegate, during the Restriction Period, the Grantee shall not have the right to
vote shares subject to Stock Awards or to receive any dividends or other distributions paid on such
shares.

     (f) Lapse of Restrictions. All restrictions imposed on Stock Awards shall lapse upon
the expiration of the applicable Restriction Period and the satisfaction of all conditions. The
Company may determine, as to any or all Stock Awards, that the restrictions shall lapse without
regard to any Restriction Period.

     (g) Designation as Qualified Performance-Based Compensation. The Committee may
determine that Stock Awards granted to an Employee shall be considered “qualified performance-based
compensation” under Section 162(m) of the Code. The provisions of this paragraph (g) shall apply to
Stock Awards that are to be considered “qualified performance-based compensation” under Section
162(m) of the Code.

          (i) Performance Goals. When Stock Awards that are to be considered “qualified
performance-based compensation” are granted, the Committee shall establish in writing (A) the
objective performance goals that must be met, (B) the performance period during which the
performance goals must be met (the “Performance Period”), (C) the threshold, target and maximum
amounts that may be paid if the performance goals are met, and (D) any other conditions that the
Committee deems appropriate and consistent with the Plan and Section

162(m) of the Code. The
performance goals may relate to the Employee’s business unit or the performance of the Company and
its parents and subsidiaries as a whole, or any combination of the foregoing. The Committee shall
use objectively determinable performance goals based on one or more of the following criteria:
stock price, earnings per share, net earnings, operating earnings, return on assets, stockholder
return, return on equity, growth in assets, unit volume, sales, market share, or strategic business
criteria consisting of one or more objectives based on meeting specified revenue goals, market
penetration goals, geographic business expansion goals, cost targets or goals relating to
acquisitions or divestitures.

          (ii) Establishment of Goals. The Committee shall establish the performance
goals in writing either before the beginning of the Performance Period or during a period ending no
later than the earlier of (i) ninety (90) days after the beginning of the Performance Period or
(ii) the date on which twenty-five percent (25%) of the Performance Period has been completed, or
such other date as may be required or permitted under applicable regulations under Section 162(m)
of the Code. The

-9-

 

performance goals shall satisfy the requirements for “qualified performance-based compensation,”
including the requirement that the achievement of the goals be substantially uncertain at the time
they are established and that the goals be established in such a way that a third party with
knowledge of the relevant facts could determine whether and to what extent the performance goals
have been met. The Committee shall not have discretion to increase the amount of compensation that
is payable upon achievement of the designated performance goals.

          (iii) Maximum Payment. If Stock Awards, measured with respect to the Fair Market
Value of Company Stock, are granted, not more than the lesser of (A) one million (1,000,000) shares
of Company Stock and (B) the number of shares of Company Stock calculated under Section 3(a)(i)
above may be granted to an Employee under the Stock Award for any Performance Period.

          (iv) Announcement of Grants. The Committee shall certify and announce the results
for each Performance Period to all Grantees immediately following the announcement of the Company’s
financial results for the Performance Period. If and to the extent that the Committee does not
certify that the performance goals have been met, the grants of Stock Awards for the Performance
Period shall be forfeited or shall not be made, as applicable.

          (v) Death, Disability or Other Circumstances. The Committee may provide that
Stock Awards shall be payable or restrictions on Stock Awards shall lapse, in whole or in part, in
the event of the Grantee’s death or Disability during the Performance Period, or under other
circumstances consistent with the Treasury regulations and rulings under Section 162(m) of the
Code.

     (h) Restricted Stock Units. The Committee or its delegate may grant restricted
stock units (“Restricted Units”) to an Employee or Key Advisor. Each Restricted Unit shall
represent the right of the Grantee to receive an amount in cash or Common Stock (as determined by
the Committee or its delegate) based on the value of the Restricted Unit, if performance goals
established by the Committee are met or upon the lapse of a specified vesting period. A Restricted
Unit shall be based on the Fair Market Value of a share of Company Stock or on such other
measurement base as the Committee or its delegate deems appropriate. The Committee or its delegate
shall determine the number of Restricted Units to be granted and the requirements applicable to
such Restricted Units. All such Restricted Units shall comply with Section 409A of the Code.

     7. Stock Appreciation Rights

     The Company may grant SARs to an Employee, Non-Employee Director, or Key Advisor. The
following provisions are applicable to SARs.

     (a) General Requirements. The Company may grant SARs to an Employee,
Non-Employee Director or Key Advisor separately or in tandem with any Option (for all or a portion
of the applicable Option). Tandem SARs may be granted either at the time

-10-

 

the Option is granted or at any time thereafter while the Option remains outstanding; provided,
however, that, in the case of an Incentive Stock Option, SARs may be granted only at the time of
the grant of the Incentive Stock Option. Unless otherwise specified in the Grant Instrument, the
base amount of each SAR shall be equal to the per share Exercise Price of the related Option or, if
there is no related Option, the Fair Market Value of a share of Company Stock as of the date of
grant of the SAR.

     (b) Tandem SARs. In the case of tandem SARs, the number of SARs granted to a Grantee
that shall be exercisable during a specified period shall not exceed the number of shares of Company
Stock that the Grantee may purchase upon the exercise of the related Option during such period. Upon
the exercise of an Option, the SARs relating to the Company Stock covered by such Option shall
terminate. Upon the exercise of SARs, the related Option shall terminate to the extent of an equal
number of shares of Company Stock.

     (c) Exercisability. A SAR shall be exercisable during the period specified in the Grant
Instrument and shall be subject to such vesting and other restrictions as may be specified. The
Company may accelerate the exercisability of any or all outstanding SARs at any time for any reason.
SARs may only be exercised while the Grantee is employed by, or providing service to, the Employer
or during the applicable period after termination of employment or service as described in Section
5(f). A tandem SAR shall be exercisable only during the period when the Option to which it is
related is also exercisable.

     (d) Grants to Non-Exempt Employees. Notwithstanding the foregoing, SARs granted to
persons who are non-exempt employees under the Fair Labor Standards Act of 1938, as amended, shall
have a base amount not less than one hundred percent (100%) of the Fair Market Value of the Company
Stock on the date of grant, and may not be exercisable for at least six (6) months after the date of
grant (except that such SARs may become exercisable, as determined by the Committee, upon the
Grantee’s death, Disability or retirement, or upon a Change of Control or other circumstances
permitted by applicable regulations).

     (e) Value of SARs. When a Grantee exercises SARs, the Grantee shall receive in
settlement of such SARs an amount equal to the value of the stock appreciation for the number of
SARs exercised, payable in Company Stock. The stock appreciation for a SAR is the amount by which
the Fair Market Value of the underlying Company Stock on the date of exercise of the SAR exceeds the
base amount of the SAR as described in subsection (a). For purposes of calculating the number of
shares of Company Stock to be received, shares of Company Stock shall be valued at their Fair Market
Value on the date of exercise of the SAR. Notwithstanding anything to the contrary, the Company may
pay the appreciation of a SAR in the form of cash, shares of Company Stock, or a combination of the
two, so long as the ability to pay such amount in cash does not result in the Grantee incurring
taxable income related to the SAR prior to the Grantee’s exercise of the SAR.

-11-

 

     (f) Number of SARs Authorized for Issuance. For purposes of 3(a) of the Plan,
stock appreciation rights to be settled in shares of Company Stock shall be counted in full against
the number of shares available for award under the Plan, regardless of the number of exercise gain
shares issued upon the settlement of the stock appreciation right.

     8. Withholding of Taxes

     (a) Required Withholding. All Grants under the Plan shall be subject
to applicable federal (including FICA), state, and local tax withholding requirements. The Employer
may require that the Grantee or other person receiving or exercising Grants pay to the Employer the
amount of any federal, state, or local taxes that the Employer is required to withhold with respect
to such Grants, or the Employer may deduct from Grant proceeds or other wages paid by the Employer
the amount of any withholding taxes due with respect to such Grants. Grants under the plan may also
be subject to taxation by various governmental entities outside of the United States. Except as
otherwise required by law, the Participant shall be solely responsible for payment of any such taxes
payable to governmental entities outside of the United States.

     (b) Election to Withhold Shares. If the Company so permits, a Grantee may elect to
satisfy the Employer’s income tax withholding obligation with respect to a Grant by having shares
withheld up to an amount that does not exceed the Grantee’s minimum applicable withholding tax rate
for federal (including FICA), state, and local tax liabilities. The election must be in a form and
manner prescribed by the Company.

     9. Transferability of Grants

     (a) Nontransferability of Grants. Except as provided below, only the Grantee may
exercise rights under a Grant during the Grantee’s lifetime. A Grantee may not transfer those rights
except by will or by the laws of descent and distribution. When a Grantee dies, the personal
representative or other person entitled to succeed to the rights of the Grantee may exercise such
rights. Any such successor must furnish proof satisfactory to the Company of his or her right to
receive the Grant under the Grantee’s will or under the applicable laws of descent and distribution.

     (b) Transfer
of Nonqualified Stock Options. Notwithstanding the foregoing, the Grant
Instrument may provide that a Grantee may transfer Nonqualified Stock Options to family members, or
one or more trusts or other entities for the benefit of or owned by family members, consistent with
applicable securities laws, provided that the Grantee receives no consideration for the transfer of
an Option and the transferred Option shall continue to be subject to the same terms and conditions
as were applicable to the Option immediately before the transfer.

     10. Change in Control of the Company

     (a) “Change in Control” means the determination (which may be made effective as
of a particular date specified by the Board) by the Board, made by a majority vote that a change in
control has occurred, or is about to occur. Such a change shall not include, however, a
restructuring, reorganization, merger or other change in capitalization

-12-

 

in which the Persons who own an interest in the Company on the date hereof (the “Current Owners”)
(or any individual or entity which receives from a Current Owner an interest in the Company through
will or the laws of descent and distribution) maintain more than a fifty percent (50%) interest in
the resultant entity. Regardless of the vote of the Board or whether or not the Board votes, a
Change in Control will be deemed to have occurred as of the first day any one (1) or more of the
following subsections shall have been satisfied:

     (b) Any Person (other than the Person in control of the Company as of the date of this Plan, or
other than a trustee or other fiduciary holding securities under an employee benefit plan of the
Company, or a company owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company), becomes the
beneficial owner, directly or indirectly, of securities of the Company representing more than
thirty-five percent (35%) of the combined voting power of the Company’s then outstanding securities;
or

     (c) The stockholders of the Company approve:

          (i) A plan of complete liquidation of the Company;

          (ii) An agreement for the sale or disposition of all or substantially all of the
Company’s assets; or

          (iii) A merger, consolidation or reorganization of the Company with or involving any other
company, other than a merger, consolidation or reorganization that would result in the voting
securities of the Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the surviving entity) at
least fifty percent (50%) of the combined voting power of the voting securities of the Company (or
such surviving entity) outstanding immediately after such merger, consolidation or reorganization.

     (d) However, in no event shall a Change in Control be deemed to have occurred, with respect to
a Grantee, if the Employee is part of a purchasing group which consummates the Change in Control
transaction. A Grantee shall be deemed “part of the purchasing group” for purposes of the preceding
sentence if the Grantee is an equity participant or has agreed to become an equity participant in
the purchasing company or group (except for (i) passive ownership of less than five percent (5%) of
the voting securities of the purchasing company; or (ii) ownership of equity participation in
the purchasing company or group which is otherwise deemed not to be significant, as determined prior
to the Change in Control by a majority of the non-employee continuing Directors of the Board).

     11. Consequences of a Change in Control

     (a) Notice and Acceleration. Upon a Change in Control, unless the Company
determines otherwise, (i) the Company shall provide each Grantee with outstanding Grants written
notice of such Change in Control, (ii) all outstanding Options and SARs

-13-

 

shall automatically accelerate and become fully exercisable, and (iii) the restrictions and
conditions on all outstanding Stock Awards shall immediately lapse.

     (b) Assumption of Grants. Upon a Change in Control where the Company is not the
surviving corporation (or survives only as a subsidiary of another corporation), each Grantee shall
have the right to elect within thirty (30) days of receiving the notice described in paragraph (a)
immediately above one (1) of the following methods of treating his or her outstanding Options,
SARs, and Stock Awards: (i) all outstanding Options and SARs that are not exercised shall be
assumed by, or replaced with comparable options or stock appreciation rights by, the surviving
corporation (or a parent or subsidiary of the surviving corporation), and outstanding Stock Awards
shall be converted to Stock Awards of the surviving corporation (or a parent or subsidiary of the
surviving corporation); or (ii) each Grantee may surrender his or her outstanding Options, SARs, or
Stock Awards in exchange for a payment by the Company, in cash or Company Stock (as elected by the
Grantee) in an amount equal to the amount by which the then Fair Market Value of the shares of
Company Stock underlying the Option or SAR exceeds the Exercise Price of the Grantee’s unexercised
Options or the based amount of the Grantee’s unexercised SARs or for the then Fair Market Value of
shares of Company Stock underlying the Grantee’s Stock Awards.

     12. Requirements for Issuance or Transfer of Shares

     (a) Limitations on Issuance or Transfer of Shares. No Company Stock shall be
issued or transferred in connection with any Grant hereunder unless and until all legal
requirements applicable to the issuance or transfer of such Company Stock have been complied with.
Any Grant made shall be conditioned on the Grantee’s undertaking in writing to comply with such
restrictions on his or her subsequent disposition of such shares of Company Stock, and certificates
representing such shares may be legended to reflect any such restrictions. Certificates
representing shares of Company Stock issued or transferred under the Plan will be subject to such
stop-transfer orders and other restrictions as may be required by applicable laws, regulations and
interpretations, including any requirement that a legend be placed thereon.

     (b) Lock-Up Period. If so requested by the Company or any representative of the
underwriters (the “Managing Underwriter”) in connection with any underwritten offering of
securities of the Company under the Securities Act, a Grantee (including any successor or assigns)
shall not sell or otherwise transfer any shares or other securities of the Company during the
thirty (30) day period preceding and the one hundred eighty (180)-day period following the
effective date of a registration statement of the Company filed under the Securities Act for such
underwriting (or such shorter period as may be requested by the Managing Underwriter and agreed to
by the Company) (the “Market Standoff Period”). The Company may impose stop-transfer instructions
with respect to securities subject to the foregoing restrictions until the end of such Market
Standoff Period.

-14-

 

     13. Amendment and Termination of the Plan

     (a) Amendment. The Board or its delegate may amend or terminate the Plan at any time;
provided, however, that neither the Board nor its delegate shall have the authority to amend the
Plan without stockholder approval if such approval is required in order to comply with the Code or
other applicable laws, or to comply with applicable stock exchange requirements.

     (b) Termination of Plan. The Plan shall terminate on the day immediately preceding the
tenth (10th) anniversary of its effective date, unless the Plan is terminated earlier by
the Company or is extended by the Company with the approval of the stockholders.

     (c) Termination and Amendment of Outstanding Grants. A termination or amendment of the
Plan that occurs after a Grant is made shall not materially impair the rights of a Grantee unless
the Grantee consents or unless the Company acts under Section 20(b). The termination of the Plan
shall not impair the power and authority of the Company with respect to an outstanding Grant.
Whether or not the Plan has terminated, an outstanding Grant may be terminated or amended under
Section 20(b) or may be amended by agreement of the Company and the Grantee consistent with the
Plan.

     (d) Governing Document. The Plan shall be the controlling document. No other
statements, representations, explanatory materials or examples, oral or written, may amend the Plan
in any manner. The Plan shall be binding upon and enforceable against the Company and its
successors and assigns.

     14. Funding of the Plan

     This Plan shall be unfunded. The Company shall not be required to establish any special or
separate fund or to make any other segregation of assets to assure the payment of any Grants under
this Plan. In no event shall interest be paid or accrued on any Grant, including unpaid
installments of Grants.

     15. Rights of Participants

     Nothing in this Plan shall entitle any Employee, Key Advisor, Non-Employee Director, or other
person to any claim or right to be granted a Grant under this Plan. Neither this Plan nor any
action taken hereunder shall be construed as giving any individual any rights to be retained by or
in the employ of the Employer or any other employment rights.

     16. No Fractional Shares

     No fractional shares of Company Stock shall be issued or delivered pursuant to the Plan or any
Grant. The Company shall determine whether cash, other awards or other property shall be issued or
paid in lieu of such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.

-15-

 

     17. Headings

     Section headings are for reference only. In the event of a conflict between a title and the
content of a Section, the content of the Section shall control.

     18. Effective Date of the Plan

     The Plan shall be effective on                               , 2005. If required by applicable
law, continuance of the Plan shall be subject to approval by the stockholders of the Company within
twelve (12) months before or after the date the Plan is adopted. Such stockholder approval shall be
obtained in the manner and to the degree required under the applicable law.

     19. Information and Documents to Grantees. Prior to the date, if any, upon which the
Company Stock covered by this Plan becomes registered under the Securities Act, and if required by
the applicable laws, the Company shall provide financial statements at least annually to each
Grantee and to each individual who acquired Grants pursuant to the Plan, during the period such
Grantee has one or more Options or SARs outstanding, and in the case of an individual who acquired
shares of Company Stock pursuant to the Plan, during the period such individual owns such shares.
The Company shall not be required to provide such information if the issuance of Grants under the
Plan is limited to key employees whose duties in connection with the Company assure their access to
equivalent information.

     20. Miscellaneous

     (a) Grants in Connection with Corporate Transactions and Otherwise. Nothing contained
in this Plan shall be construed to (i) limit the right of the Company to make Grants under this
Plan in connection with the acquisition, by purchase, lease, merger, consolidation or otherwise, of
the business or assets of any corporation, firm or association, including Grants to employees
thereof who become Employees, or for other proper corporate purposes, or (ii) limit the right of
the Company to grant stock options or make other awards outside of this Plan. Without limiting the
foregoing, the Company may make a Grant to an employee of another corporation who becomes an
Employee by reason of a corporate merger, consolidation, acquisition of stock or property,
reorganization or liquidation involving the Company, the parent or any of their subsidiaries in
substitution for a stock option or Stock Awards grant made by such corporation. The terms and
conditions of the substitute grants may vary from the terms and conditions required by the Plan and
from those of the substituted stock incentives. The Company shall prescribe the provisions of the
substitute grants.

     (b) Compliance with Law. The Plan, the exercise of Options and SARs, and the
obligations of the Company to issue or transfer shares of Company Stock under Grants shall be
subject to all applicable laws and to approvals by any governmental or regulatory agency as may be
required. With respect to persons subject to Section 16 of the Exchange Act it is the intent of the
Company that the Plan and all transactions under the Plan comply with all applicable provisions of
Rule 16b-3 or its successors under the

-16-

 

Exchange Act. In addition, it is the intent of the Company that the Plan and applicable Grants
under the Plan comply with the applicable provisions of Section 162(m) of the Code and Section 422
of the Code. To the extent that any legal requirement of Section 16 of the Exchange Act or Section
162(m) or 422 of the Code as set forth in the Plan ceases to be required under Section 16 of the
Exchange Act or Section 162(m) or 422 of the Code, that Plan provision shall cease to apply. The
Company may revoke any Grant if it is contrary to law or modify a Grant to bring it into compliance
with any valid and mandatory government regulation. The Company may also adopt rules regarding the
withholding of taxes on payments to Grantees. The Company may, in its sole discretion, agree to
limit its authority under this Section.

     (c) Employees
Subject to Taxation Outside the United States. With respect to Grantees who are subject to taxation in countries other than the United States, Grants
may be made on such terms and conditions as the Company deems appropriate to comply with the laws
of the applicable countries, and the Company may create such procedures, addenda and subplans and
make such modifications as may be necessary or advisable to comply with such laws.

     (d) Governing
Law. The validity, construction, interpretation, and effect of the Plan
and Grant Instruments issued under the Plan shall be governed and construed by and determined in
accordance with the laws of the State of California, without giving effect to the conflict of laws
provisions thereof.

     Volcano Corporation

     /s/ Scott Huennekens

-17-

 

VOLCANO CORPORATION

2005 EQUITY COMPENSATION PLAN

NONQUALIFIED OPTION GRANT

     The Board of Directors of Volcano Corporation has determined to grant to you nonqualified
stock options under the Volcano Corporation 2005 Equity Compensation Plan (the “Plan”). The terms
of the grant are set forth in the Nonqualified Option Grant Agreement provided to you (the
“Grant”). The following provides a summary of the key terms of the Grant; however, you should read
the entire Grant, along with the terms of the Plan, to fully understand the Grant.

SUMMARY OF NONQUALIFIED OPTION GRANT

	 	 	 	 	 
	Grantee:

	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	Date of Grant:
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	Vesting Schedule:
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	Vesting Commencement Date:
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	Exercise Price Per Share:
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	Total Number of Options Granted:
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	Term/Expiration Date:
	 	 	 	 
	 	 	 	 	 

 

 

VOLCANO CORPORATION

2005 EQUITY COMPENSATION PLAN

NONQUALIFIED OPTION GRANT AGREEMENT

     This NONQUALIFIED OPTION GRANT AGREEMENT (the “Agreement”), dated as of , (the “Date of
Grant”), is delivered by Volcano Corporation (the
“Company”) to      (the “Grantee”).

RECITALS

     A. The Volcano Corporation 2005 Equity Compensation Plan (the “Plan”) provides for the grant
of nonqualified stock options to purchase shares of common stock of the Company (“Shares”). The
Board of Directors of the Company (the “Board”) has decided to make a nonqualified stock option
grant as an inducement for the Grantee to promote the best interests of the Company and its
shareholders. A copy of the Plan is attached.

     B. The Plan is administered by the Compensation Committee of the Board. All references in
this Agreement to the “Board” shall be deemed to refer to the Compensation Committee.

     NOW, THEREFORE, the parties to this Agreement, intending to be legally bound hereby, agree as
follows:

1. Grant of Option. Subject to the terms and conditions set forth in this
Agreement and in the Plan, the Company hereby grants to the Grantee a nonqualified stock option
(the “Option”) to purchase (     )
Shares at an exercise price of       ($     ) per Share. The Option shall
become exercisable according to Paragraph 2 below.

2. Exercisability of Option. This Option shall be immediately exercisable in
full as to all of the Shares.

3. Term of Option.

     (a) The Option shall have a term of seven years from the Date of Grant and shall
terminate at the expiration of that period, unless it is terminated at an earlier date pursuant to
the provisions of this Agreement or the Plan.

     (b) Unless a later termination date is provided for in a Company-sponsored plan,
policy or arrangement, or any agreement to which the Company is a party (as provided in Section
5(f)(vi) of the Plan), the Option shall automatically terminate upon the happening of the first of
the following events:

     (i) The expiration of the 90-day period after the Grantee ceases to be
employed by, or provide service to, the Employer, if the termination is for any reason other
than Disability (as defined in the Plan), death, Misconduct (as defined in the Plan), or
breach of an employment agreement.

     (ii) The expiration of the one-year period after the Grantee ceases to be
employed by, or provide service to, the Employer on account of the Grantee’s Disability.

-1-

 

     (iii) The expiration of the one-year period after the Grantee ceases to be
employed by, or provide service to, the Employer, if the Grantee dies while employed by, or
providing service to, the Employer or within 90 days after the Grantee ceases to be so
employed or provide such services on account of a termination described in subparagraph (i)
above.

     (iv) The date on which the Grantee ceases to be employed by, or provide
service to, the Employer due to Misconduct or breach of an employment agreement. In
addition, notwithstanding the prior provisions of this Paragraph 3, if the Company
determines that the Grantee has engaged in conduct that constitutes Misconduct or breach of
an employment agreement at any time while the Grantee is employed by, or providing service
to, the Employer or after the Grantee’s employment or service terminates, the Option shall
terminate as of the date on which such Misconduct or breach first occurred.

Notwithstanding the foregoing, in no event may the Option be exercised after the date that is
immediately before the seventh anniversary of the Date of Grant. Any portion of the Option that is
not vested at the time the Grantee ceases to be employed by, or provide service to, the Employer
shall immediately terminate.

4. Exercise Procedures.

     (a) Subject to the provisions of Paragraphs 2 and 3 above, the Grantee may exercise
part or all of the exercisable Option by giving the Company written notice of intent to exercise in
the manner provided in this Agreement, specifying the number of Shares as to which the Option is to
be exercised. The Grantee shall pay the exercise price (i) in cash, (ii) by payment through a
broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board, or
(iii) by such other method as the Board may approve. The Board may impose from time to time such
limitations as it deems appropriate on the use of Shares to exercise the Option.

     (b) The obligation of the Company to deliver Shares upon exercise of the Option
shall be subject to all applicable laws, rules, and regulations and such approvals by governmental
agencies as may be deemed appropriate by the Company, including such actions as Company counsel
shall deem necessary or appropriate to comply with relevant laws and regulations. The Company may
require that the Grantee (or other person exercising the Option after the Grantee’s death)
represent that the Grantee is purchasing Shares for the Grantee’s own account and not with a view
to or for sale in connection with any distribution of the Shares, or such other representation as
the Company deems appropriate.

     (c) All obligations of the Company under this Agreement shall be subject to the
rights of the Company as set forth in the Plan to withhold amounts required to be withheld for any
taxes, if applicable. Subject to approval of the Company, the Grantee may elect to satisfy any
income tax withholding obligation with respect to the Option by having Shares withheld up to an
amount that does not exceed the minimum applicable withholding tax rate for federal (including
FICA), state, and local tax liabilities.

5. Change in Control. The provisions of the Plan applicable to a Change in
Control (as defined in the Plan) shall apply to the Option, and, in the event of a Change in
Control, the Board may take such actions as it deems appropriate pursuant to the Plan.

6. Restrictions on Exercise. Except as the Company may otherwise permit pursuant
to the Plan, only the Grantee may exercise the Option during the Grantee’s lifetime. After the
Grantee’s death, the Option shall be exercisable (subject to the limitations specified in the Plan)
solely by the legal representatives of the Grantee, or by the person who acquires the right to
exercise the Option by will or by

-2-

 

the laws of descent and distribution, to the extent that the Option is exercisable pursuant to this
Agreement.

7. Grant Subject to Plan Provisions. This grant is made pursuant to the Plan,
the terms of which are incorporated herein by reference, and in all respects shall be interpreted
in accordance with the Plan. The grant and exercise of the Option are subject to interpretations,
regulations, and determinations concerning the Plan established from time to time by the Board in
accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to
(i) rights and obligations with respect to withholding taxes, (ii) changes in capitalization of the
Company, and (iii) other requirements of applicable law. The Board shall have the authority to
interpret and construe the Option pursuant to the terms of the Plan, and its decisions shall be
conclusive as to any questions arising hereunder.

8. No Employment or Other Rights. The grant of the Option shall not confer upon
the Grantee any right to be retained by or in the employ or service of the Employer and shall not
interfere in any way with the right of the Employer to terminate the Grantee’s employment or
service at any time. The right of the Employer to terminate at will the Grantee’s employment or
service at any time for any reason is specifically reserved.

9. No Shareholder Rights. Neither the Grantee, nor any person entitled to
exercise the Grantee’s rights in the event of the Grantee’s death, shall have any of the rights and
privileges of a shareholder with respect to the Shares subject to the Option, until the Shares have
been issued and recorded upon exercise of the Option.

10. Assignment and Transfers. Except as the Board may otherwise permit pursuant
to the Plan, the rights and interests of the Grantee under this Agreement may not be sold,
assigned, encumbered, or otherwise transferred except, in the event of the death of the Grantee, by
will or by the laws of descent and distribution. In the event of any attempt by the Grantee to
alienate, assign, pledge, hypothecate, or otherwise dispose of the Option or any right hereunder,
except as provided for in this Agreement, or in the event of the levy or any attachment, execution,
or similar process upon the rights or interests hereby conferred, the Company may terminate the
Option by notice to the Grantee, and the Option and all rights hereunder shall thereupon become
null and void. The rights and protections of the Company hereunder shall extend to any successors
or assigns of the Company and to the Company’s parents, subsidiaries, and affiliates.

11. Applicable Law. The validity, construction, interpretation, and effect of
this Agreement shall be governed by and construed in accordance with the laws of the State of
California, without giving effect to the conflicts of laws provisions thereof.

12. Notice. Any notice to the Company provided for in this Agreement shall be
addressed to Director of Human Resources in Rancho Cordova, California, and any notice to the
Grantee shall be addressed to such Grantee at the current address shown on the payroll of the
Employer, or to such other address as the Grantee may designate to the Employer in writing. Any
notice shall be delivered by hand, sent by telecopy, or enclosed in a properly sealed envelope
addressed as stated above, registered and deposited, postage prepaid, in a post office regularly
maintained by the United States Postal Service.

13. Grantee Restriction Agreement. Concurrently herewith, the Grantee has
executed and delivered to the Company a Grantee Restriction Agreement in substantially the form of
Exhibit “A” to this Agreement.

-3-

 

     IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this
Agreement, and the Grantee has executed this Agreement, effective as of the Date of Grant.

	 	 	 	 	 
	 	 	VOLCANO CORPORATION
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Name:
	 	Scott Huennekens
	 
	 	 	 	 
	 

	 	Title:
	 	President & Chief Executive Officer

I hereby accept the Option described in this Agreement, and I agree to be bound by the terms of the
Plan and this Agreement. I hereby further agree that all the decisions and determinations of the
Board shall be final, binding, and conclusive.

	 	 	 	 	 
	 

	 	Grantee:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Date:	 	 
	 

	 	 	 	 

-4-

 

CONSENT OF SPOUSE

     The undersigned, the spouse of the Grantee under the foregoing Nonqualified Option Grant
Agreement (“Agreement”), does hereby consent to and approve of each of the terms and conditions of
the Agreement and agrees that the undersigned’s interest in the Agreement and the shares of common
stock issuable upon exercise of the option granted thereunder are subject to such terms and
conditions.

	 	 	 	 	 	 	 
	Dated:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Grantee’s Spouse:	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Print Name:	 	 
	 

	 	 	 	 	 	 

-5-

 

EXHIBIT A

VOLCANO CORPORATION

GRANTEE RESTRICTION AGREEMENT

     THIS
GRANTEE RESTRICTION AGREEMENT (the “Agreement”) is made and
entered into as of      between
VOLCANO CORPORATION, a Delaware corporation (the “Company”), and (“Grantee”).

R E C I T A L S:

     WHEREAS, Grantee owns as of the date hereof an option (the “Option”) granted by the Company to
purchase all or any part of an aggregate of
      (     ) shares (the “Shares”) of the Common Stock of the
Company at a price of       ($     ) per Share. The term “Shares” refers to all shares acquired or which
could be acquired pursuant to such Option and to all securities received in addition thereto or in
replacement thereof, pursuant to or in consequence of any stock dividend, stock split,
recapitalization, merger, reorganization, exchange of shares or other similar event.

     THE PARTIES AGREE AS FOLLOWS:

     1. Company’s Right to Repurchase Upon Termination of Employment.

          1.1 Repurchase Right. The Shares shall be subject to a right (but not obligation) of
repurchase in favor of the Company (the “Right of Repurchase”). If the Grantee ceases to be
employed by or provide services to the Company or an affiliate for any reason whatsoever (the
“Employment Termination”) before the Right of Repurchase expires in accordance with Schedule 1
hereto, the Company may purchase Shares subject to the Right of Repurchase at a purchase price per
share equal to the purchase price per share paid by the Grantee for the Shares (exclusive of any
taxes paid upon acquisition of the stock). The Grantee may not dispose of or transfer any Shares
while such Shares are subject to the Right of Repurchase and any such attempted transfer shall be
null and void. The Company’s rights under this Section 1.1 shall be freely assignable, in whole or
in part.

          1.2 Repurchase Procedure. The Company’s Right of Repurchase shall terminate if not
exercised by written notice from the Company to the Grantee within ninety (90) days from the date
on which the Company learns of the Employment Termination. If the Company exercises its Right of
Repurchase, the Grantee shall promptly endorse and deliver to the Company the stock certificates
representing the Shares being repurchased, and the Company shall then pay promptly (but in no event
later than ninety (90) days after the date of Employment Termination), pursuant to the provisions
of Section 1.3 of this Agreement, the total repurchase price to the Grantee.

          1.3 Repurchase Payment. If, at the time of repurchase, any notes are outstanding
which represent any portion of the total purchase price for Shares being so repurchased, the
repurchase price shall be paid first by cancellation of any obligation for accrued but unpaid
interest under such notes, next by cancellation of principal under such notes, and finally by
payment of cash or check.

          1.4 Binding Effect. The Company’s Right of Repurchase shall inure to the benefit of
the successors and assigns of the Company and shall be binding upon any representative, executor,
administrator, heir, or legatee of the Grantee.

-6-

 

     2. Company’s Right of First Refusal Respecting Shares.

          2.1 Right of First Refusal. Subject to Section 2.5, in the event that the Grantee
proposes to sell, pledge, or otherwise transfer any Shares, the Company shall have a right of first
refusal (the “Right of First Refusal”) with respect to such Shares. Grantee shall give a written
notice (the “Transfer Notice”) to the Company describing fully any proposed transfer of Shares,
including the number of Shares proposed to be transferred, the proposed transfer price, and the
name and address of the proposed transferee. The Transfer Notice shall be signed both by the
Grantee and by the proposed transferee. The Company shall have the right to purchase all, but not
less than all, of the Shares subject to the Transfer Notice at a price per share equal to the lower
of (i) the proposed per share transfer price, or (ii) the fair market value of a share of Common
Stock of the Company, as most recently determined by the Board of Directors of the Company (the
“Board”) prior to delivery of the Transfer Notice, by delivery of a notice of exercise of the
Company’s Right of First Refusal within thirty (30) days after the date the Transfer Notice is
delivered to the Company. The Company’s rights under this Section 2.1 shall be freely assignable,
in whole or in part.

          2.2 Transfer of Shares. If the Company fails to exercise the Right of First Refusal
within thirty (30) days from the date the Transfer Notice is delivered to the Company, the Grantee
may, not later than ninety (90) days following delivery to the Company of the Transfer Notice,
conclude a transfer of the Shares subject to the Transfer Notice on the terms and conditions
described in the Transfer Notice. Any proposed transfer on terms and conditions different from
those described in the Transfer Notice, as well as any subsequent proposed transfer by the Grantee,
shall again be subject to the Right of First Refusal and shall require compliance by the Grantee
with the procedure described in Section 2.1 of this Agreement. If the Company exercises the Right
of First Refusal, the parties shall consummate the sale of Shares on the terms set forth in the
Transfer Notice; provided, however, in the event the Transfer Notice provides for payment for the
Shares other than in cash, the Company shall have the option of paying for the Shares by the
discounted cash equivalent of the consideration described in the Transfer Notice.

          2.3 Binding Effect of Right of First Refusal. The Company’s Right of First Refusal
shall inure to the benefit of the successors and assigns of the Company and shall be binding upon
any transferee of Shares other than a transferee acquiring Shares in a transaction where the
Company failed to exercise the Right of First Refusal (a “Free Transferee”) or a transferee of a
Free Transferee.

          2.4 Termination of the Company’s Right of First Refusal. Notwithstanding anything in
this Section 2, the Company shall have no Right of First Refusal, and Grantee shall have no
obligation to comply with the procedures in Sections 2.1 through 2.3 after the earlier of (i) the
Company’s initial registered public offering of Common Stock to the public generally, or (ii) the
date ten (10) years after the date of this Agreement.

          2.5 Limitations to Rights. Without regard and not subject to the provisions of
Section 2.1;

               (a) The Grantee may sell or otherwise assign Shares to any or all of his ancestors,
descendants, spouse, or members of his immediate family, or to a custodian, trustee (including a
trustee of a voting trust), executor, or other fiduciary for the account of his ancestors,
descendants, spouse, or members of his immediate family, provided that each such transferee or
assignee, prior to the completion of the sale, transfer, or assignment, shall have executed
documents assuming the obligations of the Grantee under this Agreement with respect to the
transferred securities.

-7-

 

               (b) To the extent permitted by the Company, the Grantee may sell or transfer Shares in the
first firmly underwritten public offering of securities of the Company registered under the
Securities Act of 1933, as amended.

     3. Involuntary Transfers. Subject to the provisions of Section 1 above, in the event,
at any time after the date of this Agreement, of any transfer by operation of law or other
involuntary transfer (excluding upon death but including upon divorce or as a result of bankruptcy,
attachment, levy execution, sequestration or garnishment) of all or any portion of the Shares by
the record holder thereof, the Company shall have a right (but not an obligation) to acquire all or
any of the Shares, and any such transferee shall be subject to and bound by the terms of this
Section 3. Upon any such transfer, the transferee thereof shall immediately notify the Company in
writing of such transfer. The right of the Company under this Section 3 to acquire any or all of
the Shares so transferred shall terminate ninety (90) days following receipt of such notice from
the transferee. If the Company elects to exercise such right as to any or all of the Shares, the
Company shall notify the transferee in writing thereof within such ninety (90) day period,
specifying therein the number of Shares to be so acquired (and, if less than all of the Shares so
transferred, the specific Shares to be so acquired), accompanied by payment, in cash or by check,
for the Shares being so acquired. The purchase price to be paid by the Company for the Shares to
be so acquired shall be the sum of the fair market value per share thereof as of such date, as
determined in good faith by the Board (which determination shall be final, binding and conclusive
on the Company and the transferee). Upon receipt of the foregoing, the transferee shall promptly
endorse and deliver to the Company the stock certificates representing the Shares being acquired by
the Company pursuant hereto. The Company’s rights under this Section 3 shall be freely assignable,
in whole or in part.

     4. Stock Certificate Restrictive Legends. Stock certificates evidencing Shares may
bear such restrictive legends as the Company and the Company’s counsel deem necessary or advisable
under applicable law or pursuant to this Agreement, including, without limitation, the following
legends:

“THE SECURITIES REPRESENTED HEREBY MAY BE SUBJECT TO A RIGHT OF
REPURCHASE BY THE COMPANY, PURSUANT TO THE PROVISIONS OF AN
AGREEMENT BETWEEN THE COMPANY AND THE ORIGINAL PURCHASER OF SUCH
SECURITIES RELATING TO SUCH SECURITIES.”

“THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO A RIGHT OF FIRST
REFUSAL BY THE COMPANY PURSUANT TO THE PROVISIONS OF AN AGREEMENT
BETWEEN THE COMPANY AND THE ORIGINAL PURCHASER OF SUCH SECURITIES
RELATING TO SUCH SECURITIES, AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF SUCH AGREEMENT.”

     5. Tax Matters. With respect to the exercise of an Option for unvested Shares, an
election shall be filed by the Grantee with the Internal Revenue Service, within thirty (30) days
of the purchase of the Shares, electing pursuant to Section 83(b) of the Internal Revenue Code (the
“Code”) to be taxed currently on any difference between the purchase price of the Shares and their
fair market value on the date of purchase. In the case of a Nonqualified Stock Option, this will
result in a recognition of taxable income to the Grantee on the date of exercise, measured by the
excess, if any, of the fair market value of the Shares, at the time the Option is exercised over
the purchase price for the Shares. Absent such an election, taxable income will be measured and
recognized by Grantee at the time or times on which the Company’s Right of Repurchase lapses.
Grantee is strongly encouraged to seek the advice of his or her own tax consultants in connection
with the purchase of the Shares and the filing of the Election under

-8-

 

Section 83(b) of the Code. A form of Election under Section 83(b) is attached hereto as
Exhibit A for reference. Grantee acknowledges that it is Grantee’s sole responsibility and
not the Company’s to file timely the election under Section 83(b), even if Grantee requests the
Company or its representative to make this filing on Grantee’s behalf.

     6. Binding Effect. Subject to the limitations set forth in this Agreement, this
Agreement shall be binding upon, and inure to the benefit of, the executors, administrators, heirs,
legal representatives, successors, and assigns of the parties hereto.

     7. Damages. Grantee shall be liable to the Company for all costs and damages,
including incidental and consequential damages, resulting from a disposition of Shares which is not
in conformity with the provisions of this Agreement.

     8. Governing Law and Forum Selection. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to contracts entered
into and wholly to be performed within the State of California by California residents.

     9. Notices. All notices and other communications under this Agreement shall be in
writing. Unless and until Grantee is notified in writing to the contrary, all notices,
communications and documents directed to the Company and related to the Agreement, if not delivered
by hand, shall be mailed, addressed as follows:

VOLCANO CORPORATION

2870 Kilgore Road

Rancho Cordova, California 95670

Attention: Director of Human Resources

Unless and until the Company is notified in writing to the contrary, all notices, communications
and documents intended for Grantee and related to this Agreement, if not delivered by hand, shall
be mailed to Grantee’s last known address as shown on the Company’s books. Notices and
communications shall be mailed by registered or certified mail, return receipt requested, postage
prepaid. All notices related to this Agreement shall be deemed received upon delivery or, if
mailed, within five (5) days after mailing in accordance with this Section 9.

     10. Attorneys’ Fees. If any action or proceeding is brought by any party with respect
to this Agreement or with respect to the interpretation, enforcement or breach hereof, the
prevailing party in such action shall be entitled to an award of all reasonable costs of
litigation, including without limitation attorneys’ fees, court costs and expert witness fees, to
be paid by the losing party, in such amount as may be determined by the court having jurisdiction
of such action.

-9-

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 
	 	 	VOLCANO CORPORATION
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Name:
	 	Scott Huennekens
	 
	 	 	 	 
	 

	 	Its:
	 	President & Chief Executive Officer

     Grantee hereby accepts and agrees to be bound by all of the terms and conditions of this
Agreement.

	 	 	 	 	 	 	 
	 

	 	Grantee:	 	 	 	 
	 

	 	 	 	 

	 	 

     Grantee’s spouse indicates by the execution of this Agreement his consent to be bound by the
terms herein as to his interests, whether as community property or otherwise, if any, in the
Shares.

	 	 	 	 	 	 	 
	 

	 	Grantee’s Spouse:	 	 	 	 
	 

	 	 	 	 

	 	 

-10-

 

SCHEDULE 1 OF THE

GRANTEE RESTRICTION AGREEMENT

     The Right of Repurchase (as defined in Section 1 of the Grantee Restriction Agreement) shall
expire on with respect to 25% of the total number of Shares acquired or to be acquired, and
thereafter with respect to an additional 1/36th of the remaining Shares at the end of each of the
immediately following calendar months (the “Vesting Schedule”). During any period of leave of
absence by the Grantee, as approved by the President of the Company in his or her sole discretion,
the Vesting Schedule shall be tolled until such time as the Grantee’s approved leave of absence
terminates. In no event shall the period of tolling of the Grantee’s Vesting Schedule extend the
termination date of the Option as set forth in Section 3 of the Nonqualified Option Grant
Agreement.

     In the event of a Change in Control (as defined in the Volcano Corporation 2005 Equity
Compensation Plan (the “Plan”)), unless the Company determines otherwise, the Shares shall be
treated as Stock Awards (as defined in the Plan) for purposes of Section 11 of the Plan, and the
restrictions and conditions on all outstanding Shares shall immediately lapse.

	 	 	 	 	 	 	 
	INITIALED BY:	 	Volcano Corporation
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Scott Huennekens
	 
	 	 	 	 	 	 
	 

	 	 	 	Its:
	 	President and Chief Executive Officer
	 
	 	 	 	 	 	 
	 	 	Grantee:	 	 
	 

	 	 	 	 	 	 

-11-

 

VOLCANO CORPORATION

2005 EQUITY COMPENSATION PLAN

INCENTIVE STOCK OPTION GRANT

     The Board of Directors of Volcano Corporation has determined to grant to you incentive stock
options under the Volcano Corporation 2005 Equity Compensation Plan (the “Plan”). The terms of the
grant are set forth in the Incentive Stock Option Grant Agreement provided to you (the “Grant”).
The following provides a summary of the key terms of the Grant; however, you should read the entire
Grant, along with the terms of the Plan, to fully understand the Grant.

SUMMARY OF INCENTIVE STOCK OPTION GRANT

	 	 	 	 	 
	Grantee:

	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	Date of Grant:
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	Vesting Schedule:
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	Vesting Commencement Date:
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	Exercise Price Per Share:
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	Total Number of Options Granted:
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	Term/Expiration Date:
	 	 	 	 
	 	 	 	 	 

 

VOLCANO CORPORATION

2005 EQUITY COMPENSATION PLAN

INCENTIVE STOCK OPTION GRANT AGREEMENT

     This INCENTIVE STOCK OPTION GRANT AGREEMENT (the “Agreement”), dated as of (the “Date of
Grant”), is delivered by Volcano Corporation (the
“Company”) to       (the “Grantee”).

RECITALS

     A. The Volcano Corporation 2005 Equity Compensation Plan (the “Plan”) provides for the grant
of incentive stock options to purchase shares of common stock of the Company (“Shares”). The Board
of Directors of the Company (the “Board”) has decided to make an incentive stock option grant as an
inducement for the Grantee to promote the best interests of the Company and its shareholders. A
copy of the Plan is attached.

     B. The Plan is administered by the Compensation Committee of the Board. All references in
this Agreement to the “Board” shall be deemed to refer to the Compensation Committee.

     NOW, THEREFORE, the parties to this Agreement, intending to be legally bound hereby, agree as
follows:

1. Grant of Option. Subject to the terms and conditions set forth in this
Agreement and in the Plan, the Company hereby grants to the Grantee an incentive stock option (the
“Option”) to purchase
(      ) Shares at an exercise price of
      ($       ) per Share. The
Option shall become exercisable according to Paragraph 2 below.

2. Exercisability of Option. This Option shall be immediately exercisable in
full as to all of the Shares.

3. Term of Option.

     (a) The Option shall have a term of seven years from the Date of Grant and shall
terminate at the expiration of that period, unless it is terminated at an earlier date pursuant to
the provisions of this Agreement or the Plan.

     (b) Unless a later termination date is provided for in a Company-sponsored plan,
policy or arrangement, or any agreement to which the Company is a party (as provided in Section
5(f)(vi) of the Plan), the Option shall automatically terminate upon the happening of the first of
the following events:

     (i) The expiration of the 90-day period after the Grantee ceases to be
employed by, or provide service to, the Employer, if the termination is for any reason other
than Disability (as defined in the Plan), death, Misconduct (as defined in the Plan), or
breach of an employment agreement.

     (ii) The expiration of the one-year period after the Grantee ceases to be
employed by, or provide service to, the Employer on account of the Grantee’s Disability.

-1-

 

     (iii) The expiration of the one-year period after the Grantee ceases to be
employed by, or provide service to, the Employer, if the Grantee dies while employed by, or
providing service to, the Employer or within 90 days after the Grantee ceases to be so
employed or provide such services on account of a termination described in subparagraph (i)
above.

     (iv) The date on which the Grantee ceases to be employed by, or provide
service to, the Employer due to Misconduct or breach of an employment agreement. In
addition, notwithstanding the prior provisions of this Paragraph 3, if the Company
determines that the Grantee has engaged in conduct that constitutes Misconduct or breach of
an employment agreement at any time while the Grantee is employed by, or providing service
to, the Employer or after the Grantee’s employment or service terminates, the Option shall
terminate as of the date on which such Misconduct or breach first occurred.

Notwithstanding the foregoing, in no event may the Option be exercised after the date that is
immediately before the seventh anniversary of the Date of Grant. Any portion of the Option that is
not vested at the time the Grantee ceases to be employed by, or provide service to, the Employer
shall immediately terminate.

4. Exercise Procedures.

     (a) Subject to the provisions of Paragraphs 2 and 3 above, the Grantee may exercise
part or all of the exercisable Option by giving the Company written notice of intent to exercise in
the manner provided in this Agreement, specifying the number of Shares as to which the Option is to
be exercised. The Grantee shall pay the exercise price (i) in cash, (ii) by payment through a
broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board, or
(iii) by such other method as the Board may approve. The Board may impose from time to time such
limitations as it deems appropriate on the use of Shares to exercise the Option.

     (b) The obligation of the Company to deliver Shares upon exercise of the Option
shall be subject to all applicable laws, rules, and regulations and such approvals by governmental
agencies as may be deemed appropriate by the Company, including such actions as Company counsel
shall deem necessary or appropriate to comply with relevant laws and regulations. The Company may
require that the Grantee (or other person exercising the Option after the Grantee’s death)
represent that the Grantee is purchasing Shares for the Grantee’s own account and not with a view
to or for sale in connection with any distribution of the Shares, or such other representation as
the Company deems appropriate.

     (c) All obligations of the Company under this Agreement shall be subject to the
rights of the Company as set forth in the Plan to withhold amounts required to be withheld for any
taxes, if applicable. Subject to approval of the Company, the Grantee may elect to satisfy any
income tax withholding obligation with respect to the Option by having Shares withheld up to an
amount that does not exceed the minimum applicable withholding tax rate for federal (including
FICA), state and local tax liabilities.

5. Designation as Incentive Stock Option.

     (a) This Option is designated an incentive stock option under Section 422 of the
Internal Revenue Code of 1986, as amended (the “Code”). If the aggregate fair market value of the
stock on the date of the grant with respect to which incentive stock options are exercisable for
the first time by the Grantee during any calendar year, under the Plan or any other stock option
plan of the Company or a parent or subsidiary, exceeds $100,000, the Option, as to the excess,
shall be treated as a nonqualified stock option that does not meet the requirements of Section 422.
If, and to the extent that, the Option fails

-2-

 

to qualify as an incentive stock option under the Code, the Option shall remain outstanding
according to its terms as a nonqualified stock option.

     (b) The Grantee understands that favorable incentive stock option tax treatment is
available only if the Option is exercised while the Grantee is an employee of the Company or a
parent or subsidiary of the Company or within a period of time specified in the Code after the
Grantee ceases to be an employee. The Grantee understands that the Grantee is responsible for the
income tax consequences of the Option, and, among other tax consequences, the Grantee understands
that he or she may be subject to the alternative minimum tax under the Code in the year in which
the Option is exercised. The Grantee will consult with his or her tax adviser regarding the tax
consequences of the Option.

     (c) The Grantee agrees that the Grantee shall immediately notify the Company in
writing if the Grantee sells or otherwise disposes of any Shares acquired upon the exercise of the
Option and such sale or other disposition occurs on or before the later of (i) two years after the
Date of Grant or (ii) one year after the exercise of the Option. The Grantee also agrees to
provide the Company with any information requested by the Company with respect to such sale or
other disposition.

6. Change in Control. The provisions of the Plan applicable to a Change in
Control (as defined in the Plan) shall apply to the Option, and, in the event of a Change in
Control, the Board may take such actions as it deems appropriate pursuant to the Plan.

7. Restrictions on Exercise. Except as the Company may otherwise permit pursuant
to the Plan, only the Grantee may exercise the Option during the Grantee’s lifetime. After the
Grantee’s death, the Option shall be exercisable (subject to the limitations specified in the Plan)
solely by the legal representatives of the Grantee, or by the person who acquires the right to
exercise the Option by will or by the laws of descent and distribution, to the extent that the
Option is exercisable pursuant to this Agreement.

8. Grant Subject to Plan Provisions. This grant is made pursuant to the Plan,
the terms of which are incorporated herein by reference, and in all respects shall be interpreted
in accordance with the Plan. The grant and exercise of the Option are subject to interpretations,
regulations, and determinations concerning the Plan established from time to time by the Board in
accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to
(i) rights and obligations with respect to withholding taxes, (ii) changes in capitalization of the
Company, and (iii) other requirements of applicable law. The Board shall have the authority to
interpret and construe the Option pursuant to the terms of the Plan, and its decisions shall be
conclusive as to any questions arising hereunder.

9. No Employment or Other Rights. The grant of the Option shall not confer upon
the Grantee any right to be retained by or in the employ or service of the Employer and shall not
interfere in any way with the right of the Employer to terminate the Grantee’s employment or
service at any time. The right of the Employer to terminate at will the Grantee’s employment or
service at any time for any reason is specifically reserved.

10. No Shareholder Rights. Neither the Grantee, nor any person entitled to
exercise the Grantee’s rights in the event of the Grantee’s death, shall have any of the rights and
privileges of a shareholder with respect to the Shares subject to the Option, until the Shares have
been issued and recorded upon exercise of the Option.

11. Assignment and Transfers. Except as the Board may otherwise permit pursuant
to the Plan, the rights and interests of the Grantee under this Agreement may not be sold,
assigned, encumbered or otherwise transferred except, in the event of the death of the Grantee, by
will or by the laws of descent

-3-

 

and distribution. In the event of any attempt by the Grantee to alienate, assign, pledge,
hypothecate, or otherwise dispose of the Option or any right hereunder, except as provided for in
this Agreement, or in the event of the levy or any attachment, execution, or similar process upon
the rights or interests hereby conferred, the Company may terminate the Option by notice to the
Grantee, and the Option and all rights hereunder shall thereupon become null and void. The rights
and protections of the Company hereunder shall extend to any successors or assigns of the Company
and to the Company’s parents, subsidiaries, and affiliates.

12. Applicable Law. The validity, construction, interpretation and effect of
this Agreement shall be governed by and construed in accordance with the laws of the State of
California, without giving effect to the conflicts of laws provisions thereof.

13. Notice. Any notice to the Company provided for in this Agreement shall be
addressed to Director of Human Resources in Rancho Cordova, California, and any notice to the
Grantee shall be addressed to such Grantee at the current address shown on the payroll of the
Employer, or to such other address as the Grantee may designate to the Employer in writing. Any
notice shall be delivered by hand, sent by telecopy or enclosed in a properly sealed envelope
addressed as stated above, registered and deposited, postage prepaid, in a post office regularly
maintained by the United States Postal Service.

14. Grantee Restriction Agreement. Concurrently herewith, the Grantee has
executed and delivered to the Company a Grantee Restriction Agreement in substantially the form of
Exhibit “A” to this Agreement.

-4-

 

     IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this
Agreement, and the Grantee has executed this Agreement, effective as of the Date of Grant.

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	VOLCANO CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

I hereby accept the Option described in this Agreement, and I agree to be bound by the terms of the
Plan and this Agreement. I hereby further agree that all the decisions and determinations of the
Board shall be final, binding, and conclusive.

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Grantee:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 	 	 

-5-

 

CONSENT OF SPOUSE

The undersigned, the spouse of the Grantee under the foregoing Incentive Stock Option Grant
Agreement (“Agreement”), does hereby consent to and approve of each of the terms and conditions of
the Agreement and agrees that the undersigned’s interest in the Agreement and the shares of common
stock issuable upon exercise of the option granted thereunder are subject to such terms and
conditions.

Dated:                                                            

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Grantee’s Spouse:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Print Name:	 	 
	 

	 	 	 	 	 	 

-6-

 

EXHIBIT A

VOLCANO CORPORATION

GRANTEE RESTRICTION AGREEMENT

THIS GRANTEE RESTRICTION AGREEMENT (the “Agreement”) is made and entered into as of            between
VOLCANO CORPORATION, a Delaware corporation (the “Company”), and (“Grantee”).

R E C I T A L S:

WHEREAS, Grantee owns as of the date hereof an option (the “Option”) granted by the Company to
purchase all or any part of an aggregate of
(       ) shares (the “Shares”) of the Common Stock
of the Company at a price of
       ($       ) per Share. The term “Shares” refers to all shares
acquired or which could be acquired pursuant to such Option and to all securities received in
addition thereto or in replacement thereof, pursuant to or in consequence of any stock dividend,
stock split, recapitalization, merger, reorganization, exchange of shares or other similar event.

THE PARTIES AGREE AS FOLLOWS:

     1. Company’s Right to Repurchase Upon Termination of Employment.

          1.1 Repurchase Right. The Shares shall be subject to a right (but not obligation) of
repurchase in favor of the Company (the “Right of Repurchase”). If the Grantee ceases to be
employed by or provide services to the Company or an affiliate for any reason whatsoever (the
“Employment Termination”) before the Right of Repurchase expires in accordance with Schedule 1
hereto, the Company may purchase Shares subject to the Right of Repurchase at a purchase price per
share equal to the purchase price per share paid by the Grantee for the Shares (exclusive of any
taxes paid upon acquisition of the stock). The Grantee may not dispose of or transfer any Shares
while such Shares are subject to the Right of Repurchase and any such attempted transfer shall be
null and void. The Company’s rights under this Section 1.1 shall be freely assignable, in whole or
in part.

          1.2 Repurchase Procedure. The Company’s Right of Repurchase shall terminate if not
exercised by written notice from the Company to the Grantee within ninety (90) days from the date
on which the Company learns of the Employment Termination. If the Company exercises its Right of
Repurchase, the Grantee shall promptly endorse and deliver to the Company the stock certificates
representing the Shares being repurchased, and the Company shall then pay promptly (but in no event
later than ninety (90) days after the date of Employment Termination), pursuant to the provisions
of Section 1.3 of this Agreement, the total repurchase price to the Grantee.

          1.3 Repurchase Payment. If, at the time of repurchase, any notes are outstanding
which represent any portion of the total purchase price for Shares being so repurchased, the
repurchase price shall be paid first by cancellation of any obligation for accrued but unpaid
interest under such notes, next by cancellation of principal under such notes, and finally by
payment of cash or check.

          1.4 Binding Effect. The Company’s Right of Repurchase shall inure to the benefit of
the successors and assigns of the Company and shall be binding upon any representative, executor,
administrator, heir, or legatee of the Grantee.

     2. Company’s Right of First Refusal Respecting Shares.

-7-

 

          2.1 Right of First Refusal. Subject to Section 2.5, in the event that the Grantee
proposes to sell, pledge, or otherwise transfer any Shares, the Company shall have a right of first
refusal (the “Right of First Refusal”) with respect to such Shares. Grantee shall give a written
notice (the “Transfer Notice”) to the Company describing fully any proposed transfer of Shares,
including the number of Shares proposed to be transferred, the proposed transfer price, and the
name and address of the proposed transferee. The Transfer Notice shall be signed both by the
Grantee and by the proposed transferee. The Company shall have the right to purchase all, but not
less than all, of the Shares subject to the Transfer Notice at a price per share equal to the lower
of (i) the proposed per share transfer price, or (ii) the fair market value of a share of Common
Stock of the Company, as most recently determined by the Board of Directors of the Company (the
“Board”) prior to delivery of the Transfer Notice, by delivery of a notice of exercise of the
Company’s Right of First Refusal within thirty (30) days after the date the Transfer Notice is
delivered to the Company. The Company’s rights under this Section 2.1 shall be freely assignable,
in whole or in part.

          2.2 Transfer of Shares. If the Company fails to exercise the Right of First Refusal
within thirty (30) days from the date the Transfer Notice is delivered to the Company, the Grantee
may, not later than ninety (90) days following delivery to the Company of the Transfer Notice,
conclude a transfer of the Shares subject to the Transfer Notice on the terms and conditions
described in the Transfer Notice. Any proposed transfer on terms and conditions different from
those described in the Transfer Notice, as well as any subsequent proposed transfer by the Grantee,
shall again be subject to the Right of First Refusal and shall require compliance by the Grantee
with the procedure described in Section 2.1 of this Agreement. If the Company exercises the Right
of First Refusal, the parties shall consummate the sale of Shares on the terms set forth in the
Transfer Notice; provided, however, in the event the Transfer Notice provides for payment for the
Shares other than in cash, the Company shall have the option of paying for the Shares by the
discounted cash equivalent of the consideration described in the Transfer Notice.

          2.3 Binding Effect of Right of First Refusal. The Company’s Right of First Refusal
shall inure to the benefit of the successors and assigns of the Company and shall be binding upon
any transferee of Shares other than a transferee acquiring Shares in a transaction where the
Company failed to exercise the Right of First Refusal (a “Free Transferee”) or a transferee of a
Free Transferee.

          2.4 Termination of the Company’s Right of First Refusal. Notwithstanding anything in
this Section 2, the Company shall have no Right of First Refusal, and Grantee shall have no
obligation to comply with the procedures in Sections 2.1 through 2.3 after the earlier of (i) the
Company’s initial registered public offering of Common Stock to the public generally, or (ii) the
date ten (10) years after the date of this Agreement.

          2.5 Limitations to Rights. Without regard and not subject to the provisions of
Section 2.1;

               (a) The Grantee may sell or otherwise assign Shares to any or all of his ancestors,
descendants, spouse, or members of his immediate family, or to a custodian, trustee (including a
trustee of a voting trust), executor, or other fiduciary for the account of his ancestors,
descendants, spouse, or members of his immediate family, provided that each such transferee or
assignee, prior to the completion of the sale, transfer, or assignment, shall have executed
documents assuming the obligations of the Grantee under this Agreement with respect to the
transferred securities.

               (b) To the extent permitted by the Company, the Grantee may sell or transfer Shares in the
first firmly underwritten public offering of securities of the Company registered under the
Securities Act of 1933, as amended.

-8-

 

     3. Involuntary Transfers. Subject to the provisions of Section 1 above, in the event,
at any time after the date of this Agreement, of any transfer by operation of law or other
involuntary transfer (excluding upon death but including upon divorce or as a result of bankruptcy,
attachment, levy execution, sequestration or garnishment) of all or any portion of the Shares by
the record holder thereof, the Company shall have a right (but not an obligation) to acquire all or
any of the Shares, and any such transferee shall be subject to and bound by the terms of this
Section 3. Upon any such transfer, the transferee thereof shall immediately notify the Company in
writing of such transfer. The right of the Company under this Section 3 to acquire any or all of
the Shares so transferred shall terminate ninety (90) days following receipt of such notice from
the transferee. If the Company elects to exercise such right as to any or all of the Shares, the
Company shall notify the transferee in writing thereof within such ninety (90) day period,
specifying therein the number of Shares to be so acquired (and, if less than all of the Shares so
transferred, the specific Shares to be so acquired), accompanied by payment, in cash or by check,
for the Shares being so acquired. The purchase price to be paid by the Company for the Shares to
be so acquired shall be the sum of the fair market value per share thereof as of such date, as
determined in good faith by the Board (which determination shall be final, binding and conclusive
on the Company and the transferee). Upon receipt of the foregoing, the transferee shall promptly
endorse and deliver to the Company the stock certificates representing the Shares being acquired by
the Company pursuant hereto. The Company’s rights under this Section 3 shall be freely assignable,
in whole or in part.

     4. Stock Certificate Restrictive Legends. Stock certificates evidencing Shares may
bear such restrictive legends as the Company and the Company’s counsel deem necessary or advisable
under applicable law or pursuant to this Agreement, including, without limitation, the following
legends:

“THE SECURITIES REPRESENTED HEREBY MAY BE SUBJECT TO A RIGHT OF
REPURCHASE BY THE COMPANY, PURSUANT TO THE PROVISIONS OF AN
AGREEMENT BETWEEN THE COMPANY AND THE ORIGINAL PURCHASER OF SUCH
SECURITIES RELATING TO SUCH SECURITIES.”

“THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO A RIGHT OF FIRST
REFUSAL BY THE COMPANY PURSUANT TO THE PROVISIONS OF AN AGREEMENT
BETWEEN THE COMPANY AND THE ORIGINAL PURCHASER OF SUCH SECURITIES
RELATING TO SUCH SECURITIES, AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF SUCH AGREEMENT.”

     5. Tax Matters. With respect to the exercise of an Option for unvested Shares, an
election shall be filed by the Grantee with the Internal Revenue Service, within thirty (30) days
of the purchase of the Shares, electing pursuant to Section 83(b) of the Internal Revenue Code (the
“Code”) to be taxed currently on any difference between the purchase price of the Shares and their
fair market value on the date of purchase. In the case of a Nonqualified Stock Option, this will
result in a recognition of taxable income to the Grantee on the date of exercise, measured by the
excess, if any, of the fair market value of the Shares, at the time the Option is exercised over
the purchase price for the Shares. Absent such an election, taxable income will be measured and
recognized by Grantee at the time or times on which the Company’s Right of Repurchase lapses. In
the case of an Incentive Stock Option, such an election will result in a recognition of income to
the Grantee for alternative minimum tax purposes on the date of exercise, measured by the excess,
if any, of the fair market value of the Shares, at the time the option is exercised, over the
purchase price for the Shares. Absent such an election, alternative minimum taxable income will be
measured and recognized by Grantee at the time or times on which the Company’s Right of Repurchase
lapses. Grantee is strongly encouraged to seek the advice of his or her own tax consultants

-9-

 

in connection with the purchase of the Shares and the filing of the Election under Section
83(b) of the Code. A form of Election under Section 83(b) is attached hereto as Exhibit A
for reference. Grantee acknowledges that it is Grantee’s sole responsibility and not the Company’s
to file timely the election under Section 83(b), even if Grantee requests the Company or its
representative to make this filing on Grantee’s behalf.

     6. Binding Effect. Subject to the limitations set forth in this Agreement, this
Agreement shall be binding upon, and inure to the benefit of, the executors, administrators, heirs,
legal representatives, successors, and assigns of the parties hereto.

     7. Damages. Grantee shall be liable to the Company for all costs and damages,
including incidental and consequential damages, resulting from a disposition of Shares which is not
in conformity with the provisions of this Agreement.

     8. Governing Law and Forum Selection. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to contracts entered
into and wholly to be performed within the State of California by California residents.

     9. Notices. All notices and other communications under this Agreement shall be in
writing. Unless and until Grantee is notified in writing to the contrary, all notices,
communications and documents directed to the Company and related to the Agreement, if not delivered
by hand, shall be mailed, addressed as follows:

VOLCANO CORPORATION

2870 Kilgore Road

Rancho Cordova, California 95670

Attention: Director of Human Resources

Unless and until the Company is notified in writing to the contrary, all notices, communications
and documents intended for Grantee and related to this Agreement, if not delivered by hand, shall
be mailed to Grantee’s last known address as shown on the Company’s books. Notices and
communications shall be mailed by registered or certified mail, return receipt requested, postage
prepaid. All notices related to this Agreement shall be deemed received upon delivery or, if
mailed, within five (5) days after mailing in accordance with this Section 9.

     10. Attorneys’ Fees. If any action or proceeding is brought by any party with respect
to this Agreement or with respect to the interpretation, enforcement or breach hereof, the
prevailing party in such action shall be entitled to an award of all reasonable costs of
litigation, including without limitation attorneys’ fees, court costs and expert witness fees, to
be paid by the losing party, in such amount as may be determined by the court having jurisdiction
of such action.

-10-

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 
	 	 	VOLCANO CORPORATION
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Its:

     Grantee hereby accepts and agrees to be bound by all of the terms and conditions of this
Agreement.

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Grantee:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	     [Name]	 	 

     Grantee’s spouse indicates by the execution of this Agreement his consent to be bound by the
terms herein as to his interests, whether as community property or otherwise, if any, in the
Shares.

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Grantee’s Spouse:	 	 	 	 
	 

	 	 	 	 	 	 

-11-

 

SCHEDULE 1 OF THE

GRANTEE RESTRICTION AGREEMENT

     The Right of Repurchase (as defined in Section 1 of the Grantee Restriction Agreement) shall
expire on           with respect to 25% of the total number of Shares acquired or to be acquired, and
thereafter with respect to an additional 1/36th of the remaining Shares at the end of each of the
immediately following calendar months (the “Vesting Schedule”). During any period of leave of
absence by the Grantee, as approved by the President of the Company in his or her sole discretion,
the Vesting Schedule shall be tolled until such time as the Grantee’s approved leave of absence
terminates. In no event shall the period of tolling of the Grantee’s Vesting Schedule extend the
termination date of the Option as set forth in Section 3 of the Incentive Stock Option Grant
Agreement.

     In the event of a Change in Control (as defined in the Volcano Corporation 2005 Equity
Compensation Plan (the “Plan”)), unless the Company determines otherwise, the Shares shall be
treated as Stock Awards (as defined in the Plan) for purposes of Section 11 of the Plan, and the
restrictions and conditions on all outstanding Shares shall immediately lapse.

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	INITIALED BY:	 	Volcano Corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Its:	 	 

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Grantee:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	     [Name]	 	 

-12-

 

VOLCANO CORPORATION

2005 EQUITY COMPENSATION PLAN

RESTRICTED STOCK GRANT

     The Board of Directors of Volcano Corporation has determined to grant to you restricted stock
under the Volcano Corporation 2005 Equity Compensation Plan (the “Plan”). The terms of the grant
are set forth in the Restricted Stock Grant Agreement provided to you (the “Grant”). The following
provides a summary of the key terms of the Grant; however, you should read the entire Grant, along
with the terms of the Plan, to fully understand the Grant.

SUMMARY OF RESTRICTED STOCK GRANT

	 	 	 
	Grantee:

	 	 

	 
	 	 
	Date of Grant:

	 	 

	 
	 	 
	Vesting Schedule:

	 	 

	 
	 	 
	Vesting Commencement Date:

	 	 

	 
	 	 
	Total Number of Restricted Shares Granted:

	 	 

	 
	 	 
	Required Price Per Share

	 	 

 

 

VOLCANO CORPORATION

2005 EQUITY COMPENSATION PLAN

RESTRICTED STOCK GRANT

     This RESTRICTED STOCK GRANT AGREEMENT (the “Agreement”), dated as of      (the “Date of Grant”),
is delivered by Volcano Corporation (the “Company”) to       (the “Grantee”).

RECITALS

     A. The Volcano Corporation 2005 Equity Compensation Plan (the “Plan”) provides for the grant
of restricted stock in accordance with the terms and conditions of the Plan. The Board of
Directors of the Company (the “Board”) has decided to make a restricted stock grant as an
inducement for the Grantee to promote the best interests of the Company and its shareholders. A
copy of the Plan is attached.

     B. The Plan is administered by the Compensation Committee of the Board. All references in
this Agreement to the “Board” shall be deemed to refer to the Compensation Committee.

     NOW, THEREFORE, the parties to this Agreement, intending to be legally bound hereby, agree as
follows:

1. Restricted Stock Grant. Subject to the terms and conditions set forth in this
Agreement and the Plan, the Company hereby grants to the Grantee      (     ) shares of common stock of the
Company, subject to the restrictions set forth below and in the Plan (“Restricted Stock”) [and
acknowledges payment by the Grantee of      ($     ) ($       per share) for the Restricted Stock]. Shares of
Restricted Stock may not be transferred by the Grantee or subjected to any security interest until
the shares have become vested pursuant to this Agreement and the Plan.

2. Vesting and Nonassignability of Restricted Stock.

     (a) The shares of Restricted Stock shall become vested, and the restrictions
described in Sections 2(b) and 2(c) shall lapse on       with respect to 25% of the total number of
shares of Restricted Stock, and thereafter with respect to an additional 1/36th of the remaining
shares of Restricted Stock at the end of each of the immediately following calendar months (the
“Vesting Schedule”), assuming the Grantee continues to be employed by, or provide service to, of
the Employer (as defined in the Plan) from the Date of Grant until the applicable vesting date.
Notwithstanding the foregoing, during any period of leave of absence by the Grantee, as approved by
the President of the Company in his or her sole discretion, the Vesting Schedule shall be tolled
until such time as the Grantee’s approved leave of absence terminates.

The vesting of the Restricted Stock shall be cumulative, but shall not exceed 100 percent of the
shares of Restricted Stock. If the foregoing schedule would produce fractional shares, the number
of shares that vest shall be rounded down to the nearest whole share.

     (b) If the Grantee’s employment or service with the Employer terminates for any
reason before the Restricted Stock is fully vested, the shares of Restricted Stock that are not
then vested shall be forfeited and must be immediately returned to the Company.

 

 

     (c) During the period before the shares of Restricted Stock vest (the “Restriction
Period”), the non-vested Restricted Stock may not be assigned, transferred, pledged, or otherwise
disposed of by the Grantee. Any attempt to assign, transfer, pledge, or otherwise dispose of the
shares contrary to the provisions hereof, and the levy of any execution, attachment, or similar
process upon the shares, shall be null, void and without effect.

3. Issuance of Certificates.

     (a) Certificates representing the Restricted Stock may be issued by the Company and
held in escrow by the Company until the Restricted Stock vests, or the Company may hold
non-certificated shares until the Restricted Stock vests. During the Restriction Period, the
Grantee shall not receive any cash dividends with respect to the shares of Restricted Stock, may
not vote the shares of Restricted Stock, and may not participate in any distribution pursuant to a
plan of dissolution or complete liquidation of the Company.

     (b) When the Grantee obtains a vested right to shares of Restricted Stock, a
certificate representing the vested shares shall be issued to the Grantee, free of the restrictions
under Section 2 of this Agreement.

     (c) The obligation of the Company to deliver shares upon the vesting of the
Restricted Stock shall be subject to all applicable laws, rules, and regulations and such approvals
by governmental agencies as may be deemed appropriate by the Company, including such actions as
Company counsel shall deem necessary or appropriate to comply with relevant laws and regulations.

     (d) Stock certificates evidencing Restricted Stock may bear such restrictive legends
as the Company and the Company’s counsel deem necessary or advisable under applicable law or
pursuant to this Agreement, including, without limitation, the following legends:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER AND FORFEITURE SET FORTH IN AN AGREEMENT
BETWEEN THE COMPANY AND THE ORIGINAL PURCHASER OF SUCH SECURITIES
RELATING TO SUCH SECURITIES, AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF SUCH AGREEMENT.”

“THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO A RIGHT OF FIRST
REFUSAL BY THE COMPANY PURSUANT TO THE PROVISIONS OF AN AGREEMENT
BETWEEN THE COMPANY AND THE ORIGINAL PURCHASER OF SUCH SECURITIES
RELATING TO SUCH SECURITIES, AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF SUCH AGREEMENT.”

     4. Change in Control. The provisions of the Plan applicable to a Change in
Control (as defined in the Plan) shall apply to the Restricted Stock, and, in the event of a Change
in Control, the Board may take such actions as it deems appropriate pursuant to the Plan.

     5. Grant Subject to Plan Provisions. This grant is made pursuant to the Plan,
the terms of which are incorporated herein by reference, and in all respects shall be interpreted
in accordance with the Plan. The grant is subject to interpretations, regulations and
determinations concerning the Plan established from

-2-

 

time to time by the Board in accordance with
the provisions of the Plan, including, but not limited to, provisions pertaining to (i) rights and
obligations with respect to withholding taxes, (ii) changes in capitalization of the Company, and
(iii) other requirements of applicable law. The Board shall have the authority to interpret and
construe the grant pursuant to the terms of the Plan, and its decisions shall be conclusive as to
any questions arising hereunder.

6. Withholding. The Grantee shall be required to pay to the Company, or make
other arrangements satisfactory to the Company to provide for the payment of, any federal, state,
local or other taxes that the Employer is required to withhold with respect to the grant or vesting
of the Restricted Stock. Subject to Board approval, the Grantee may elect to satisfy any tax
withholding obligation of the Employer with respect to the Restricted Stock by having shares
withheld up to an amount that does not exceed the minimum applicable withholding tax rate for
federal (including FICA), state, local, and other tax liabilities.

7. Company’s Right of First Refusal Respecting Restricted Stock.

     (a) Right of First Refusal. Subject to Section 7(e), and after the shares
of Restricted Stock have become vested pursuant to Section 2, in the event that the Grantee
proposes to sell, pledge, or otherwise transfer any shares of Restricted Stock, the Company shall
have a right of first refusal (the “Right of First Refusal”) with respect to such shares of
Restricted Stock. Grantee shall give a written notice (the “Transfer Notice”) to the Company
describing fully any proposed transfer of shares of Restricted Stock, including the number of
shares of Restricted Stock proposed to be transferred, the proposed transfer price, and the name
and address of the proposed transferee. The Transfer Notice shall be signed both by the Grantee
and by the proposed transferee. The Company shall have the right to purchase all, but not less
than all, of the shares of Restricted Stock subject to the Transfer Notice at a price per share
equal to the lower of (i) the proposed per share transfer price, or (ii) the fair market value of a
share of Common Stock of the Company, as most recently determined by the Board prior to delivery of
the Transfer Notice, by delivery of a notice of exercise of the Company’s Right of First Refusal
within thirty (30) days after the date the Transfer Notice is delivered to the Company. The
Company’s rights under this Section 7(a) shall be freely assignable, in whole or in part.

     (b) Transfer of Restricted Stock. If the Company fails to exercise the
Right of First Refusal within thirty (30) days from the date the Transfer Notice is delivered to
the Company, the Grantee may, not later than ninety (90) days following delivery to the Company of
the Transfer Notice, conclude a transfer of the Shares subject to the Transfer Notice on the terms
and conditions described in the Transfer Notice. Any proposed transfer on terms and conditions
different from those described in the Transfer Notice, as well as any subsequent proposed transfer
by the Grantee, shall again be subject to the Right of First Refusal and shall require compliance
by the Grantee with the procedure described in Section 7(a) of this Agreement. If the Company
exercises the Right of First Refusal, the parties shall consummate the sale of the shares of
Restricted Stock on the terms set forth in the Transfer Notice; provided, however, in the event the
Transfer Notice provides for payment for the shares of Restricted Stock other than in cash, the
Company shall have the option of paying for the shares of Restricted Stock by the discounted cash
equivalent of the consideration described in the Transfer Notice.

     (c) Binding Effect of Right of First Refusal. The Company’s Right of First
Refusal shall inure to the benefit of the successors and assigns of the Company and shall be
binding upon any transferee of shares of Restricted Stock other than a transferee acquiring shares
of Restricted Stock in a transaction where the Company failed to exercise the Right of First
Refusal (a “Free Transferee”) or a transferee of a Free Transferee.

-3-

 

     (d) Termination of the Company’s Right of First Refusal. Notwithstanding
anything in this Section 1, the Company shall have no Right of First Refusal, and Grantee shall
have no obligation to comply with the procedures in Sections 7(a) through (c) after the earlier of
(i) the Company’s initial registered public offering of Common Stock to the public generally, or
(ii) the date ten (10) years after the date of this Agreement.

     (e) Limitations to Rights. Without regard and not subject to the provisions
of Section 7(a);

          (i) The Grantee may sell or otherwise assign shares of Restricted Stock to any or
all of his ancestors, descendants, spouse, or members of his immediate family, or to a custodian,
trustee (including a trustee of a voting trust), executor, or other fiduciary for the account of
his ancestors, descendants, spouse, or members of his immediate family, provided that each such
transferee or assignee, prior to the completion of the sale, transfer, or assignment, shall have
executed documents assuming the obligations of the Grantee under this Agreement with respect to the
transferred securities.

          (ii) To the extent permitted by the Company, the Grantee may sell or transfer shares
of Restricted Stock in the first firmly underwritten public offering of securities of the Company
registered under the Securities Act of 1933, as amended (the “Securities Act”).

8. Other Restrictions on Sale or Transfer of Shares.

     (a) The Grantee is acquiring the shares underlying this grant solely for investment
purposes, with no present intention of distributing or reselling any of the shares or any interest
therein. The Grantee acknowledges that the shares have not been registered under the Securities
Act.

     (b) The Grantee is aware of the applicable limitations under the Securities Act and
under the Plan relating to a subsequent sale, transfer, pledge, or other assignment or encumbrance
of the shares. The Grantee further acknowledges that the shares must be held indefinitely unless
they are subsequently registered under the Securities Act and applicable state securities laws or
an exemption from such registration is available.

     (c) The Grantee will not sell, transfer, pledge, donate, assign, mortgage,
hypothecate, or otherwise encumber the shares underlying this grant unless the shares are
registered under the Securities Act or the Company is given an opinion of counsel reasonably
acceptable to the Company that such registration is not required under the Securities Act.

     (d) The Grantee realizes that there is no public market for the shares underlying
this grant, that no market may ever develop for them, and that they have not been approved or
disapproved by the Securities and Exchange Commission or any governmental agency.

9. Tax Matters. The Restricted Stock is subject to appropriate income tax
withholding and other deductions required by applicable laws or regulations, and Grantee and his
successors will be responsible for all income and other taxes payable as a result of grant or
vesting of the Restricted Stock or otherwise in connection with this Agreement. The Company is not
required to provide Grantee with any gross-up or other tax assistance in connection with the grant
of Restricted Stock. Grantee agrees that Grantee shall make an election pursuant to Section 83(b)
of the Internal Revenue Code (the “Code”) within thirty (30) days after the date Grantee acquired
the Restricted Stock hereunder, and under comparable provisions of any state tax law, to include in
Grantee’s gross income the excess of the fair market value (as of the date of acquisition) of the
Restricted Stock over the purchase price paid by the Grantee for the Restricted Stock. Absent such
an election, taxable income will be measured and recognized by Grantee at the time or

-4-

 

times on which the Restricted Stock vests. Concurrently with the execution of this Agreement, Grantee shall
(a) deliver to the Company a copy of the fully-executed Section 83(b) Election to Have Restricted
Property Taxed at the Time of Transfer attached hereto as Exhibit A, and (b) pay to the
Company an amount sufficient to satisfy any taxes or other amounts required by any governmental
authority to be withheld or paid over to such authority for Grantee’s account, or otherwise makes
arrangements satisfactory to the Company for the payment of such amounts through withholding or
otherwise. Grantee is strongly encouraged to seek the advice of his or her own tax consultants in
connection with the purchase of the Restricted Stock and the filing of the election under Section
83(b) of the Code. Grantee acknowledges that it is Grantee’s sole responsibility, and not the
Company’s, to file a timely election under Section 83(b), even if Grantee requests the Company or
its representative to make this filing on Grantee’s behalf.

10. No Employment or Other Rights. The grant shall not confer upon the Grantee
any right to be retained by or in the employ or service of the Employer and shall not interfere in
any way with the right of the Employer to terminate the Grantee’s employment or service at any
time. The right of the Employer to terminate at will the Grantee’s employment or service at any
time for any reason is specifically reserved.

11. Assignment and Transfers. Except as the Board may otherwise permit pursuant
to the Plan, the rights and interests of the Grantee under this Agreement may not be sold,
assigned, encumbered, or otherwise transferred except, in the event of the death of the Grantee, by
will or by the laws of descent and distribution. In the event of any attempt by the Grantee to
alienate, assign, pledge, hypothecate, or otherwise dispose of the Restricted Stock or any right
hereunder, except as provided for in this Agreement, or in the event of the levy or any attachment,
execution, or similar process upon the rights or interests hereby conferred, the Company may revoke
the Restricted Stock by notice to the Grantee, and the Restricted Stock and all rights hereunder
shall thereupon become null and void. The rights and protections of the Company hereunder shall
extend to any successors or assigns of the Company and to the Company’s parents, subsidiaries, and
affiliates.

12. Applicable Law. The validity, construction, interpretation and effect of
this Agreement shall be governed by and construed in accordance with the laws of the State of
California, without giving effect to the conflicts of laws provisions thereof.

13. Notice. Any notice to the Company provided for in this Agreement shall be
addressed to Director of Human Resources in Rancho Cordova, California, and any notice to the
Grantee shall be addressed to such Grantee at the current address shown on the payroll of the
Employer, or to such other address as the Grantee may designate to the Employer in writing. Any
notice shall be delivered by hand, sent by telecopy or enclosed in a properly sealed envelope
addressed as stated above, registered and deposited, postage prepaid, in a post office regularly
maintained by the United States Postal Service.

     IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this
Agreement, and the Grantee has executed this Agreement, effective as of the Date of Grant.

	 	 	 	 	 	 	 
	 

	 	 	 	VOLCANO CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 

-5-

 

	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

I hereby accept the Restricted Stock grant described in this Agreement, and I agree to be bound by
the terms of the Plan and this Agreement. I hereby further agree that all the decisions and
determinations of the Board shall be final, binding, and conclusive.

	 	 	 	 	 	 	 
	 

	 	Grantee:
	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 	 	 

-6-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00103-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00103-of-00352.parquet"}]]