CARDO MEDICAL, LLC NONSTATUTORY OPTION COVER SHEET

Vesting Schedule:

Twenty percent (20%) upon the first anniversary of the Date of Grant and an additional twenty percent (20%) upon each anniversary of the Date of Grant thereafter.

Entire Agreement

This Agreement constitutes the entire understanding between you and the Company regarding the Option. Any prior agreements, commitments or negotiations concerning the Option are superseded.

Nonstatutory Option

The Option is a nonstatutory option and is not intended to be an incentive stock option under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code" ), and will be interpreted accordingly. The Option represents the right to purchase Units in accordance with the terms and conditions of this Agreement.

Vesting

Your right to exercise the Option vests as shown on the cover sheet. The number of Units which may be purchased under the Option by you at the Exercise Price shall be equal to the difference between (a) the number of Units covered by the Option which have vested according to the vesting schedule on the preceding page minus (b) the number of Units purchased pursuant to the Option prior to such exercise. Except as otherwise provided below in the section entitled "Effect of Termination of Service," no additional Units will vest after: (i) your service as an Employee of the Company ( "Service" ) has terminated for any reason, or (ii) you cease to perform Services for or on behalf of the Company; unless, in either case, as otherwise provided in any employment or consulting agreement between you and the Company or its affiliates.

Term

Subject to the termination provisions set forth in this Agreement, your Option, and all rights to purchase the Units covered by the Option, will expire on the close of business on the tenth (10th) anniversary of the Date of Grant.

Notice of Exercise

When you wish to exercise the Option, you must notify the Company by delivering the properly completed "Notice of Exercise" form (as attached hereto in Schedule C ), and such other documents and instruments as may be required by the Managers of the Company (the "Managers" ), at the Company's principal executive offices. Your notice must specify how many Units you wish to purchase. Your Units will be registered in your name or the names of you and your spouse only. The notice will be effective when it is received by the Company.

Form of Payment

When you submit your notice of exercise, you must include payment of the Exercise Price for the Units you are purchasing. Payment may be made only in cash, by your personal check, by cashier's check or money order, or by wire transfer of immediately available funds.

Withholding Taxes

To the extent required by applicable law, you will not be allowed to exercise the Option unless you make acceptable arrangements to pay any withholding or other taxes that may be due as a result of the Option exercise or the sale of Units acquired upon exercise of the Option. In addition, the Company will have the right at the time of exercise of the Option to make adequate provision for any federal, state, local or foreign taxes which it believes are or may be required by law to be withheld with respect to such exercise ( "Tax Liability" ), to ensure the payment by you (through withholding from any compensation due to you, the Units or otherwise as the Managers deem in their sole and conclusive discretion to be in the best interests of the Company) of any such Tax Liability.

Restrictions on Exercise and Resale     

The Option may not be exercised if the issuance of Units on such exercise would constitute a violation of any applicable federal or state securities laws or any other law or regulation or any requirements of any regulatory bodies having jurisdiction over the Company. The exercise of the Option may be suspended without liability to the Company whenever such suspension is necessary to preclude a violation of any requirement of applicable law or regulatory bodies having jurisdiction over the Company. In addition, by signing this Agreement, you agree not to exercise the Option or sell any Units acquired by exercise of the Option at a time when Company or underwriter trading policies prohibit exercise or sale. Without limiting the generality of the foregoing, the Managers shall have the right to designate one or more periods of time, each of which shall not exceed one hundred eighty (180) days in length, during which the Option shall not be exercisable and/or the Units acquired by exercise of the Option shall not be transferable if the Managers determine (in their sole discretion) that such limitation on exercise or transfer could in any way facilitate a lessening of any restriction on transfer pursuant to the Securities Act of 1933, as amended (the "Securities Act" ), or any state securities laws with respect to any issuance of securities by the Company, facilitate the registration or qualification of any securities by the Company under the Securities Act or any state securities laws or any offering pursuant thereto, or facilitate the perfection of any exemption from the registration or qualification requirements of the Securities Act or any applicable state securities laws for the issuance or transfer of any securities. Such limitations on exercise shall not alter the vesting schedule set forth in this Agreement other than to limit the periods during which the Option shall be exercisable.

If the sale of Units under the Plan is not registered under the Securities Act, but an exemption is available which requires an investment or other representation, you shall represent and agree at the time of exercise that the Units being acquired upon exercising the Option are being acquired for investment, and not with a view to the sale or distribution thereof, and shall make such other representations as are deemed necessary or appropriate by the Managers and the Company's counsel. The Company is under no obligation to register or qualify the issuance of Units upon the exercise of the Option under the Securities Act or any state securities laws or to effect any such registration or qualification covering resales of Units issued upon the exercise of the Option.

Continual Service Requirement

Unless otherwise provided by the Managers or in any employment or consulting agreement between you and the Company, and except as otherwise provided below in the Section entitled "Effect of Termination of Service," an Option may not be exercised unless, from the date of grant to the date of exercise, you remain continuously an Employee of the Company. Unless otherwise provided in any employment or consulting agreement between you and the Company, the Managers shall determine, in their discretion in the particular case, whether and to what the extent the period of continuous employment shall be deemed to include any period in which you are on leave of absence with the consent of the Managers.

Effect of Termination of Service

Upon the termination of your Service with the Company and its Subsidiaries by reason of death or Disability, (a) all Options then held by you, to the extent exercisable on the date of termination of Service, shall remain in full force and effect and may be exercised pursuant to the provisions thereof at any time until the earlier of the end of the fixed term thereof and the expiration of twelve (12) months following termination of your Service, and (b) all Options then held by you, to the extent not then presently exercisable, shall terminate as of the date of such termination of Service and shall not be exercisable thereafter.

Upon the termination of your Service with the Company and its Subsidiaries by the Company without Cause, or by you for Good Reason, at any time on or prior to September 4, 2010, then fifty percent (50%) of your unvested Options shall become fully exercisable as of the date of termination of your Service for such reason (the "Termination Date" ) and, together with any vested Options then held by you at the Termination Date, to the extent exercisable on the Termination Date, shall remain in full force and effect and may be exercised pursuant to the provisions thereof at any time until the earlier of the end of the fixed term thereof and the expiration of ninety (90) days following the Termination Date (except that this ninety (90)-day period will be extended to twelve (12) months from the Termination Date if you die during this ninety (90)-day period), and (2) all Options then held by you, to the extent not then presently exercisable, shall terminate as of the Termination Date and shall not be exercisable thereafter.

Upon the termination of your Service with the Company and its Subsidiaries for any reason other than (i) death, (ii) Disability , (iii) termination by the Company without Cause, or termination by you for Good Reason, at any time on or prior to September 4, 2010, or (iv ) Termination for Cause, then (1) all Options then held by you, to the extent exercisable on the date of termination of Service, shall remain in full force and effect and may be exercised pursuant to the provisions thereof at any time until the earlier of the end of the fixed term thereof and the expiration of ninety (90) days following termination of your Service (except that this ninety (90)-day period will be extended to twelve (12) months from the date of termination if you die during this ninety (90)-day period), and (2) all Options then held by you, to the extent not then presently exercisable, shall terminate as of the date of such termination of Service and shall not be exercisable thereafter.

Notwithstanding anything else in this Agreement to the contrary, if your Service with the Company terminates as a result of a Termination for Cause, the Option and all rights to purchase Units thereunder, whether vested or unvested, shall terminate concurrently with the first discovery by the Company of any reason for a Termination for Cause, and the Option shall not be exercisable thereafter. If your Service with the Company is suspended pending an investigation of whether there shall be a Termination for Cause, all of your rights under the Option, including, without limitation, the right to exercise the Option, shall likewise be suspended during the period of investigation.

Transfer of Option and Units

No Option shall be transferable by you other than by will or the laws of intestate succession. No Option or any interest therein shall be subject to attachment, execution, garnishment, sequestration, the laws of bankruptcy or any other legal or equitable process. The Option shall be exercisable during your lifetime only by you or by your guardian or legal representative.

None of the Units shall be transferable without the prior consent of the Managers, which may be given or withheld at the sole discretion of the Managers. Any transfer in violation of these provisions shall be null and void. You agree to cause any permitted transferee of all or any part of the Units to agree to take and hold such securities subject to these provisions.

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