8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported):  February 20, 2008

EXPRESS SCRIPTS, INC.

(Exact Name of Registrant as Specified in its Charter)

DELAWARE	0-20199	43-1420563
(State or Other Jurisdiction of Incorporation or Organization	(Commission File Number)	(I.R.S. Employer Identification No.)

One Express Way, St. Louis, MO (Address of Principal Executive Offices) 63121 (Zip Code)

Registrant’s telephone number including area code: 314-996-0900

No change since last report

(Former Name or Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 5.02  Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

Annual Compensation Decisions

On February 20, 2008, the Compensation and Development Committee (the “Compensation Committee”) of the Board of Directors of Express Scripts, Inc. (the “Company”) met and approved several compensation related items for the Company’s Named Executive Officers.  The Named Executive Officers were determined based on those identified in the Summary Compensation Table contained in the Company’s proxy statement dated April 23, 2007 (the “2007 Proxy Statement”).  However, as previously disclosed by the Company, David A. Lowenberg stepped down from his position as senior executive officer in charge of the Company’s specialty operations on December 31, 2007, but will remain with the Express Scripts organization until March 1, 2008.  As such, no compensation related items were considered with to respect to Mr. Lowenberg and all references to Named Executive Officers herein and in Exhibit 10.1 hereto do not include Mr. Lowenberg.   In addition, as previously disclosed by the Company, Edward J. Stiften, the Company’s Chief Financial Officer, announced that he intends to retire from the Company by May 31, 2008.  As a result, the Compensation Committee did not consider 2008 compensation adjustments or equity grants for Mr. Stiften.

A summary of the base salaries for the Named Executive Officers is attached as Exhibit 10.1 hereto and is incorporated by reference herein.

The Compensation Committee also approved target and potential annual bonus awards and equity awards for the Named Executive Officers (other than Mr. Stiften).  A summary of the bonus and equity awards is also included in Exhibit 10.1 hereto and incorporated by reference herein.

ITEM 9.01       Financial Statements and Exhibits.

See exhibit index.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	EXPRESS SCRIPTS, INC.
	(Registrant)
Date:  February 26, 2008	By:	/s/ Thomas M. Boudreau
		Thomas M. Boudreau
		Executive Vice President,
		Business and Strategy

Exhibit Index

Exhibit No.		Exhibit
10.1	*	Summary Of Named Executive Officer 2008 Salaries, 2007 Bonus Awards, 2008 Maximum Bonus Potential, and 2008 Equity and Performance Awards
10.2	*	Form of Performance Share Award Agreement used with respect to grants of performance shares by the Company under the Express Scripts, Inc. 2000 Long-Term Incentive Plan.
10.3	*	Form of Stock Option Agreement used with respect to grants of stock options by the Company under the Express Scripts, Inc. 2000 Long-Term Incentive Plan.
10.4	*	Form of Restricted Stock Agreement used with respect to grants of restricted stock by the Company under the Express Scripts, Inc. 2000 Long-Term Incentive Plan, incorporated by reference to Exhibit No. 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ending September 30, 2004
10.5	*	Amended and Restated Express Scripts, Inc. 2000 Long-Term Incentive Plan, incorporated by reference to Exhibit No. 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ending June 30, 2001
10.6	*	Second Amendment to the Express Scripts, Inc. 2000 Long-Term Incentive Plan, incorporated by reference to Exhibit No. 10.27 to the Company's Annual Report on Form 10-K for the year ended December 31, 2001
10.7	*	Third Amendment to the Express Scripts, Inc. 2000 Long-Term Incentive Plan, incorporated by reference to Exhibit A to the Company's Proxy Statement filed April 18, 2006
10.8	*	Executive Employment Agreement, dated as of April 11, 2005, and effective as of April 1, 2005, between the Company and George Paz, incorporated by reference to Exhibit No. 10.1 to the Company’s Current Report on Form 8-K filed April 14, 2005.
10.9	*	Form of Executive Employment Agreement entered into between the Company and certain key executives (including all of the Company’s named executive officers other than Mr. Paz), incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 4, 2006

* Denotes management contract or compensatory plan arrangements .

EX-10.1

Exhibit 10.1

Summary of Named Executive Officer 2008 Salaries, 2007 Bonus

Awards, 2008 Maximum Bonus Potential, and 2008 Equity and Performance Awards

Base Salary Adjustments.  The Compensation Committee approved adjustments to the annual base salaries for certain of the Named Executive Officers after a review of performance and competitive market data.  The table below sets forth the annual base salary levels of the Company's Named Executive Officers for 2007 and 2008 (the salary for 2007 became effective on April 1, 2007, and the salary for 2008 will become effective as of April 1, 2008).  The Named Executive Officers were determined based on those identified in the Summary Compensation Table contained in the Company’s proxy statement dated April 23, 2007 (the “2007 Proxy Statement”), but do not include Mr. Lowenberg, former senior executive officer in charge specialty operations, who will leave the Company on March 1, 2008 (as previously disclosed).

Annual Bonus Awards.  The Compensation Committee also authorized the payment of annual incentive (i.e., bonus) awards to each of the Company's executive officers in respect of the year ended December 31, 2007.  The annual bonus awards were made pursuant to the Company's annual bonus plan, with target percentages ranging from 60% to 120 % in 2007.  For each of the Named Executive Officers a minimum target percentage was established pursuant to such executive’s employment agreement with the Company, which are listed as exhibits to the Company’s Current Report on Form 8-K to which this Exhibit 10.1 is attached and which are hereby incorporated by reference herein.  The Employment Agreement for Mr. Paz is also described in the 2007 Proxy Statement under the caption “Employment Agreements and Potential Payments Upon Termination or Change in Control — Employment Agreement with Mr. Paz” beginning on page 25, and the Employment Agreements for Messrs. Stiften, Boudreau and McNamee are described in the 2007 Proxy Statement under the caption “Employment Agreements and Potential Payments Upon Termination or Change in Control — Employment Agreements with Other Named Executive Officers” beginning on page 29.

Pursuant to the bonus plan, in order for any bonus amount to be paid the Company must meet an annual financial goal which is based on budgeted EBITDA (earnings before interest, taxes, depreciation and amortization) and earnings per share.  If the corporate financial target is not met, then the corporate bonus pool is reduced to the extent necessary to enable the Company to meet its target.  If the Company has met its annual financial goal, then actual bonus awards for executive officers are determined based on the executive officers’ respective bonus targets and an evaluation by the Committee (and in the case of senior executives also by the CEO) of the extent to which work plan goals were achieved.  In addition, if the Company meets certain “stretch” financial and work plan targets, bonus targets may be increased by as much as 100%.  The Committee reviews and approves the annual financial targets and the stretch work plan goals.  In determining the extent of the achievement of work plan goals, the Committee and the CEO evaluate the executive’s individual contribution to the corporate work plan.  For 2007, the Company achieved its “stretch” financial and work plan goals, and, accordingly, bonuses awarded to the Named Executive Officers were enhanced by up to 100%.

The Compensation Committee also authorized the award of annual incentive (i.e., bonus) awards to each of the Company’s Named Executive Officers (excluding Mr. Stiften who has announced his intention to retire from the Company by May 31, 2008, as previously disclosed) in respect of the year ending December 31, 2008.  These awards were granted as “Other Awards” under the Company’s 2000 Long-Term Incentive Plan, as amended (the “2000 LTIP”), and represent the maximum amount which may be earned by the executive based on the achievement of individual and corporate stretch financial and workplan goals.  The Compensation Committee may exercise discretion to reduce such bonuses based on Company performance, individual performance and other factors, but may in no event increase the amount of such bonuses beyond the maximum.  In addition, if certain threshold earnings per share targets are not met, then no such bonuses may be paid.

The following table sets forth the 2007 and 2008 base salary levels, along with the annual bonus awards for 2007 and the maximum annual bonus awards for 2008, for each of the Named Executive Officers:

		Annual Base Salary				Annual Bonus Award		Maximum Bonus Award
Name	Title	2007		2008		2007		2008
George Paz	President, CEO and Chairman	$	920,000	$	950,000	$	2,124,000	$	2,470,000
Edward J.Stiften	Executive Vice President & CFO	$	445,000	$	445,000	$	697,600		N/A
Thomas M.Boudreau	Executive Vice President, Legal and Strategy, and General Counsel	$	465,000	$	500,000	$	626,150	$	875,000
Edward Ignaczak	Executive Vice President, Sales and Account Management	$	350,000	$	450,000	$	456,890	$	900,000

EX-10.2

Exhibit 10.2

PERFORMANCE SHARE AWARD AGREEMENT

UNDER THE

EXPRESS SCRIPTS, INC.

2000 LONG-TERM INCENTIVE PLAN

THIS AWARD AGREEMENT is made and entered into _______________ (the "Date of Grant"), by and between Express Scripts, Inc. (the "Company"), and ______________ ("Employee").

BACKGROUND

A. The Board of Directors of the Company (the "Board of Directors") has adopted, and the Company's shareholders have approved, the Express Scripts, Inc. 2000 Long-Term Incentive Plan (the "Plan"), pursuant to which performance share incentive awards may be granted to employees of the Company and its subsidiaries and certain other individuals.

B. The Board of Directors intends to amend the Plan, subject to approval of the shareholders of the Company, to revise the performance measures thereunder.

C. The Company desires to grant to Employee a performance share award under the terms of the Plan.

D.           Pursuant to the Plan, the Company and Employee agree as follows:

AGREEMENT

1. Grant of Award.  Pursuant to action of the Committee (as defined herein) which was taken on the Date of Grant, the Company grants to Employee _______ performance shares ("Performance Shares"), subject to the terms, conditions, and adjustments set forth in this Award Agreement and Exhibit A hereto.  The Performance Shares granted under this Section 1 are referred to in this Award Agreement as the "Target Grant."

2. Award Subject to Plan.  This award is granted under, and is expressly subject to, the terms and provisions of the Plan, as amended from time to time, which terms are incorporated herein by reference, and this Award Agreement.  The Committee described in Section 3 of the Plan (the "Committee") has been appointed by the Board of Directors, and designated by it, as the Committee to make awards.

3. Performance Period.  The performance period for this award shall be as set forth on Exhibit A hereto (the "Performance Period").

4. Payment.  Subject to early termination of this Award Agreement pursuant to Section 6 below, following the end of the Performance Period and during the calendar year in which such Performance Period ends, the Company will deliver to Employee one share of the Company's Stock for each then-outstanding Performance Share under this Award Agreement; except that, fractional Shares shall be rounded down to the nearest whole Share and that a portion of the payment shall be withheld to satisfy the 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 as provided in Section 7.

5. Performance Criteria and Adjustments.  The Target Grant shall be adjusted pursuant to the Company’s performance against certain criteria (the “Performance Criteria”) as further set out on Exhibit A hereto.

6. Termination of Award.

a. Except as otherwise specifically set forth in this Section 6, this Award Agreement will terminate and be of no further force or effect on the date that Employee is no longer actively employed by the Company or any of its Affiliates prior to the date on which the Performance Period ends.  Employee will, however, be entitled to receive any Stock payable under Section 4 of this Award Agreement if Employee's employment terminates after the Performance Period but before Employee's receipt of such Stock.

b. If Employee’s employment terminates before the end of the Performance Period on account of death, Disability or Retirement, any portion of this award which has not yet vested shall vest at such time, but only to the extent the Performance Criteria are ultimately achieved and any payment under Section 4 hereof shall be prorated for the portion of the Performance Period during which Employee was employed by the Company or any Affiliate.

c. If Employee’s employment is terminated by the Company without Cause before the end of the Performance Period, a portion of this award which has not yet vested shall vest at such time, which portion shall be equal to the lesser of:

 (i) the portion of the award which would have vested and been paid had the Employee’s employment been terminated due to death, Disability or Retirement, as determined under Section 6(b) above (after taking into account the pro-ration for the portion of the Performance Period during which Employee was employed by the Company or any Affiliate); or

(ii) the portion of the award which would have vested and been paid, based on the extent the Performance Criteria had been achieved, if the Performance Period had ended as of the date on which the Employee’s employment is terminated, which amount shall also be prorated for the portion of the actual Performance Period during which Employee was employed by the Company or any Affiliate.

d. Without limiting the foregoing, in the event Employee’s employment terminates before the end of the Performance Period on account of death, Disability, Retirement or termination by the Company without Cause, any portion of the award which vests in accordance with either Section 6(b) or 6(c) above shall be payable at the time and in the manner set forth in Section 4 after the end of the Performance Period.

e. Notwithstanding the foregoing or any provision of the Plan to the contrary, upon a Change in Control prior to the date on which the Performance Period ends, the following shall occur:

 (i) if Employee continues to be actively employed by the Company or any Affiliate on the date of such Change in Control, Employee shall receive in cash the value of one share of Company Stock on the last trading day before the Change in Control Date multiplied by the greater of the following: (A) the total number of Performance Shares awarded pursuant to this Agreement (without pro-ration), or (B) the portion of the award which would have vested and been paid, based on the extent the Performance Criteria had been achieved, if the Performance Period had ended as of the day immediately preceding the Change in Control Date (without pro-ration).

(ii) if Employee’s employment was terminated on account of death, Disability or Retirement prior to such Change in Control, Employee shall receive in cash the value of one share of Company Stock on the last trading day before the Change in Control multiplied by the number of Performance Shares awarded pursuant to this Agreement (without pro-ration),

(iii) if the Employee’s employment was terminated by the Company without Cause prior to such Change in Control, Employee shall receive in cash the value of one share of Company Stock on the last trading day before the Change in Control multiplied by the lesser of (A) the total number of Performance Shares awarded pursuant to this Agreement, prorated for the portion of the Performance Period during which Employee was employed by the Company or any Affiliate, or (B) the number of Performance Shares which would have been paid under Section 6(c)(ii) above.

The amount payable under this Section 6(e) shall be subject to applicable withholding taxes.  This Award shall terminate immediately following payment upon a Change in Control, and no further payment shall be made hereunder.

f. With respect to any provisions of this Agreement which require the calculation of the portion of the award which would have vested and been paid based on the extent the Performance Criteria had been achieved as of a date other than the original ending date for the Performance Period (e.g. Sections 6(c)(ii), 6(e)(i) and 6(e)(iii)), to the extent applicable to the selected Performance Criteria, such calculations shall be made as follows:

(i)           Performance Criteria based on factors which are readily measurable as of the calculation date or the preceding business day (e.g. those based on publicly-reported trading price) shall be determined (for both the Company and any peer companies) as if the Performance Period ended on such calculation date;

(ii)           Performance Criteria which are not readily measurable as of the calculation date or the preceding business day, but which may be measured based on regularly-reported quarterly financial statements, shall be measured for both the Company and any peer companies based on each such company’s most recently reported quarterly (or year-end) financial results; and

(iii)           for any Performance Criteria which may not be measured pursuant to preceding paragraphs (i) and (ii), the Company shall retain an independent consultant to determine the extent to which such Performance Criteria have been achieved as of the calculation date.

7. Tax Withholding. Employee must pay, or make arrangements acceptable to the Company for the payment of, any and all federal, state, and local income and payroll tax withholding that in the opinion of the Company is required by law.  Unless Employee satisfies any such tax withholding obligation by paying the amount in cash or by check, the Company will withhold cash and/or shares of Stock having a Fair Market Value on the date of withholding sufficient to cover the withholding obligation.

8. Non-Transferability.  Neither this award nor any rights under this Award Agreement may be assigned, transferred, or in any manner encumbered except by will or the laws of descent and distribution, and any attempted assignment, transfer, mortgage, pledge or encumbrance except as herein authorized, will be void and of no effect.

9. Definitions: Copy of Plan and Plan Prospectus.  To the extent not specifically defined in this Award Agreement, all capitalized terms used in this Award Agreement will have the same meanings ascribed to them in the Plan.  By signing this Award Agreement, Employee acknowledges receipt of a copy of the Plan and the related Plan Prospectus.

10. Choice of Law.  To the extent that federal laws do not otherwise control, this Award Agreement and all determinations made and actions taken hereunder shall be governed by the laws of the State of Delaware, without giving effect to principles of conflicts of laws, and construed accordingly.

***********

An authorized representative of the Company has signed this Award Agreement, and Employee has signed this Award Agreement to evidence Employee's acceptance of the award on the terms specified in this Award Agreement, all as of the Date of Grant.

	EXPRESS SCRIPTS, INC.
Date	By:	/s/
		Name
		Title
	Employee

EX-10.3

Exhibit 10.3

EXPRESS SCRIPTS, INC.

2000 LONG-TERM INCENTIVE PLAN

STOCK OPTION GRANT NOTICE

Notice is hereby given of the following option grant (the “Option”) to purchase shares of common stock, $0.01 par value per share, of Express Scripts, Inc. (the “Company”) pursuant to the following terms and conditions:

·   Optionee:                                                                                            

·   Grant Date:                                                                                            

·   Vesting Commencement Date:                                                                                

·   Exercise Price Per Share:                                                                      $                                           

·   Number of Option Shares:                                                                                 

·   Term/Expiration Date of Option:                                                                     

·   Type of Option:                                                ____   Incentive Stock Option

   X      Nonstatutory Stock Option

·   Vesting Schedule:  The shares of common stock granted pursuant to the Option shall be vested and exercisable in accordance with the following vesting schedule:

-  One-third (1/3) vests and becomes exercisable on _____________.

-  An additional one-third (1/3) vests and becomes exercisable on _____________.

-  The final one-third (1/3) vests and becomes exercisable on _______________.

·   Other Provisions:  The Option is granted subject to, and in accordance with, the terms of the Stock Option Agreement (the “Option Agreement”) attached hereto as Exhibit A and the Express Scripts, Inc. 2000 Long-Term Incentive Plan (the “Plan”) attached hereto as Exhibit B.

This Option is granted under, and governed by, the terms and conditions of this Grant Notice, the Plan and the Option Agreement.

DATED:  _________________

	EXPRESS SCRIPTS, INC.
Date	By:	/s/
		Name
		Title

Attachments:

Exhibit A— Stock Option Agreement

Exhibit B—Express Scripts, Inc. 2000 Long-Term Incentive Plan

EXHIBIT A

EXPRESS SCRIPTS, INC.

2000 LONG-TERM INCENTIVE PLAN

STOCK OPTION AGREEMENT

Express Scripts, Inc., a Delaware corporation (“Company”), has granted you (“Optionee”) an option (“Option”) to purchase shares of common stock of the Company, $0.01 par value per share (“Common Stock”), pursuant to the terms and conditions set forth in your Stock Option Grant Notice (“Grant Notice”) and this Stock Option Agreement (“Option Agreement”).

The Option is granted pursuant to the Express Scripts, Inc. 2000 Long-Term Incentive Plan (the “Plan”), pursuant to which options, and other awards, may be granted to key personnel of the Company or an Affiliate.

The details of your Option are as follows:

1.           Grant of Option.  The committee appointed by the Board of Directors of the Company to administer the Plan (the “Committee”) has approved your Option.  The number of shares of Common Stock subject to your Option and the Exercise Price Per Share are set forth in the Grant Notice.  The Option shall be subject to the terms and conditions of the Plan, which is incorporated herein by reference.  If designated in the Grant Notice as an Incentive Stock Option  (“ISO”), this Option is intended to qualify as an Incentive Stock Option under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).  However, if this Option is intended to be an Incentive Stock Option, to the extent that it exceeds the $100,000 rule of Code Section 422(d), it shall nevertheless be treated as a Nonstatutory Stock Option (“NSO”).

2.           Term of Option.  This Option may be exercised only within the Term set forth in the Grant Notice, and may be exercised during such Term only in accordance with the Plan and the terms of this Option Agreement.

3.           Exercise of Option.

(a)           Right to Exercise.  This Option is exercisable during its Term in accordance with the Vesting Schedule set forth in the Grant Notice and the applicable provisions of the Plan and this Option Agreement.  In the event of a Change in Control (as defined in the Plan) or Optionee’s death, Disability (as defined in the Plan) or other termination of Optionee as an employee, Non-Employee Director (as defined in the Plan) or consultant, the exercisability of the Option is governed by the applicable provisions of the Plan.

(b)           Method of Exercise.  This Option is exercisable pursuant to the procedures for exercise provided from time to time  by the Company and/or by a third-party vendor selected by the Company.  The Option exercise shall require payment of the aggregate exercise price as to all exercised shares.  The method of payment of the aggregate exercise price shall be in a form approved by the Company in accordance with Section 7(a)(ii) of the Plan.  This Option shall be deemed to be exercised upon receipt and approval by the Company (or the appropriate third party) of all required exercise notices, together with full payment of the exercise price and such additional documents as the Company (or the third-party vendor) may then require.

4.           Non-Transferability of Option.  This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by Optionee.  The terms of the Plan and this Option Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of Optionee.

5.           Stockholder Rights.  Optionee shall not have any stockholder rights with respect to the shares of Common Stock granted pursuant to this Option until Optionee shall have exercised the Option in accordance with Section 3 hereof.

6.           Adjustments Upon Changes in Capitalization or Corporate Acquisitions.  Should any change be made to the Common Stock by reason of any Fundamental Change (as defined in the Plan), reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, stock combination, rights offering, spin-off or other relevant change, appropriate adjustments shall be made to (a) the total number and/or class of securities subject to this Option, and (b) the Exercise Price Per Share set forth in the Grant Notice in order to reflect such change and thereby preclude a dilution or enlargement of benefits hereunder.

7.           Compliance with Laws and Regulations.  Notwithstanding anything herein to the contrary, no shares of Common Stock shall be issued pursuant to the exercise of this Option unless such issuance and exercise complies with all relevant provisions of law and the requirements of any stock exchange or quotation service upon which the shares of Common Stock are then listed.

8.           Committee Discretion.  The Committee shall have plenary authority to (a) interpret any provision of this Option Agreement, (b) make any determinations necessary or advisable for the administration of this Option Agreement, and (c) modify or amend any provision hereof in any manner which does not materially and adversely affect any right granted to Optionee by the express terms hereof, unless required as a matter of law.

9.           Withholding Obligations.  At the time Optionee exercises his or her Option, in whole or in part, or at any time thereafter requested by the Company, Optionee must authorize withholding from payroll, and any other amounts payable to Optionee, and must otherwise make adequate provision for any sums required to satisfy the federal, state and local tax withholding obligations of the Company or an Affiliate, if any, which arise in connection with the Option.  Upon Optionee’s request, Optionee may elect to have any such withholding obligations satisfied by: (i) delivering cash; (ii) delivering part or all of the withholding payment in previously owned shares (which have been held by Optionee for at least six months) of Common Stock (whether or not acquired through the prior exercise of an option; provided, however, if the Common Stock used was acquired in connection with the exercise of an ISO, then the ISO holding periods must be met before such Common Stock can be used to satisfy Optionee’s withholding obligations in connection with this Option); and/or (iii) irrevocably directing the Company to withhold from the vested shares of Common Stock that would otherwise be issued to Optionee upon the exercise of the Option that number of whole shares of Common Stock having a fair market value, determined by the Company, in its sole discretion, equal to the amount of tax required to be withheld, but not to exceed the Company’s required minimum statutory withholding.  If the Option is an ISO, Optionee must immediately notify the Company in writing in the event Common Stock received pursuant to the Option is sold on or before the later of (a) two years after the Grant Date (as set forth in the Grant Notice), or (b) one year after the exercise date of the Option.  Optionee may be subject to income tax withholding by the Company in accordance with this Section 9 hereof with respect to the compensation income recognized from such early disposition.

10.           Governing Law.  To the extent federal law does not otherwise control, this Agreement shall be governed by the laws of the State of Delaware, without giving effect to principles of conflicts of laws.

11.           Option Not A Service/Employment Contract.  Neither the Grant Notice nor this Option Agreement creates a service or employment contract and in no way obligates Optionee to remain in the employ of the Company or an Affiliate, or in no way obligates the Company or an Affiliate to continue Optionee’s employment.  In addition, neither the Grant Notice nor this Option Agreement obligates the Company or an Affiliate, or their respective stockholders, boards of directors, officers or employees to continue any relationship that Optionee might have as a Non-Employee Director or consultant for the Company or an Affiliate.