Document:

Exhibit
10.3

RELIANT TECHNOLOGIES, INC.

2003 EQUITY
INCENTIVE PLAN

RESTRICTED
STOCK AGREEMENT

Pursuant to the Restricted Stock
Grant Notice (“Grant Notice”) and this
Restricted Stock Agreement (collectively, the “Award”)
and in consideration of your future services, Reliant Technologies, Inc. (the “Company”) has awarded you a stock
bonus under its 2003 Equity Incentive Plan (the “Plan”)
for the number of shares of the Company’s Common Stock subject to the Award as
indicated in the Grant Notice. 
Capitalized terms not explicitly defined in this Restricted Stock
Agreement but defined in the Plan shall have the same definitions as in the
Plan.

The details of your Award are as
follows:

1.             VESTING.  Subject to the limitations contained herein,
your Award will vest as provided in the Grant Notice, provided that vesting
will cease upon the termination of your Continuous Service and you will be
entitled to the shares vested, including accelerated vesting, as set forth in
the Restricted Stock Grant Notice.

2.             NUMBER OF SHARES.  The number of shares subject to your Award
may be adjusted from time to time for Capitalization Adjustments, as provided
in the Plan.

3.             SECURITIES LAW COMPLIANCE.  You may not be issued any shares under your
Award unless the shares are either (i) then registered under the Securities Act
or (ii) the Company has determined that such issuance would be exempt from the
registration requirements of the Securities Act. Your Award must also comply
with other applicable laws and regulations governing the Award, and you will
not receive such shares if the Company determines that such receipt would not
be in material compliance with such laws and regulations.

4.             MARKET STAND-OFF AGREEMENT.  By acquiring shares of Common Stock under your
Award, you shall not sell, dispose of, transfer, make any short sale of, grant
any option for the purchase of, or enter into any hedging or similar
transaction with the same economic effect as a sale, any shares of Common Stock
or other securities of the Company held by you, for a period of one hundred
eighty (180) days following the effective date of a registration statement of
the Company filed under the Securities Act or such longer period as necessary
to permit compliance with NASD Rule 2711 and similar or successor regulatory
rules and regulations (the “Lock-Up Period”);
provided, however, that nothing contained in this Section 4 shall prevent the
exercise of a repurchase option, if any, in favor of the Company during the
Lock-Up Period.  You further agree to
execute and deliver such other agreements as may be reasonably requested by the
Company and/or the underwriter(s) that are consistent with the foregoing or
that are necessary to give further effect thereto.  In order to enforce the foregoing covenant,
the Company may impose stop-transfer instructions with respect to your shares
of Common Stock until the end of such period. 
The underwriters of the Company’s stock

 

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are
intended third party beneficiaries of this Section 4 and shall have the right,
power and authority to enforce the provision hereof as though they were a party
hereto.

5.             RIGHT OF FIRST REFUSAL.  Shares that are received under your Award are
subject to any right of first refusal that may be described in the Company’s
bylaws in effect at such time the Company elects to exercise its right.

6.             RIGHT OF REACQUISITION.

(a)           The Company shall have a Reacquisition Right as to the
shares you received pursuant to your Award that have not as yet vested in
accordance with the Vesting Schedule on the Grant Notice (“Unvested
Shares”) on the following terms and conditions:

(i)            The Company, shall simultaneously with termination of
your Continuous Service automatically reacquire for no consideration all of the
Unvested Shares, unless the  Company agrees
to waive its Reacquisition Right as to some or all of the Unvested Shares as
provided in the Award or otherwise.  Any
such waiver shall be exercised by the Company by written notice to you or your
representative (with a copy to the Escrow Holder as defined below) within
ninety (90) days after the termination of your Continuous Service, and the
Escrow Holder may then release to you the number of Unvested Shares not being
reacquired by the Company.  If the
Company does not waive its Reacquisition Right as to all of the Unvested
Shares, then upon such termination of your Continuous Service, the Escrow
Holder shall transfer to the Company the number of shares the Company is
reacquiring.

(ii)           The Company initially shall have the right to
reacquire Unvested Shares for no monetary consideration (that is, for $0.00).

(iii)         The shares issued under your Award shall be held in
escrow pursuant to the terms of the Joint Escrow Instructions attached to the
Grant Notice as Attachment IV.  You agree
to execute two (2) Assignment Separate From Certificate forms (with date and
number of shares blank) substantially in the form attached to the Grant Notice
as Attachment III and deliver the same, along with the certificate or
certificates evidencing the shares, for use by the escrow agent pursuant to the
terms of the Joint Escrow Instructions.

(iv)          Subject to the provisions of your Award, you shall,
during the term of your Award, exercise all rights and privileges of a
shareholder of the Company with respect to the shares deposited in escrow. You
shall be deemed to be the holder of the shares for purposes of receiving any
dividends which may be paid with respect to such shares and for purposes of
exercising any voting rights relating to such shares, even if some or all of
such shares have not yet vested and been released from the Company’s
Reacquisition Right.

(v)            If, from time to time, there is any stock dividend,
stock split or other change in the character or amount of any of the
outstanding stock of the corporation the stock of which is subject to the
provisions of your Award, then in such event any and all new, substituted or
additional securities to which you is entitled by reason of your ownership of
the shares acquired under your Award shall be immediately subject to the
Reacquisition Right with the same force and effect as the shares subject to
this Reacquisition Right immediately before such event.

 

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7.             RESTRICTIVE
LEGENDS.  The shares issued under your Award shall be
endorsed with appropriate legends determined by the Company.

8.             AWARD NOT A SERVICE CONTRACT.  Your Award is not an employment or service
contract, and nothing in your Award shall be deemed to create in any way
whatsoever any obligation on your part to continue in the employ of the Company
or an Affiliate, or on the part of the Company or an Affiliate to continue your
employment or service arrangement.  In
addition, nothing in your Award shall obligate the Company or an Affiliate,
their respective shareholders, boards of directors, Officers or Employees to
continue any relationship that you might have as a Director or Consultant for
the Company or an Affiliate.

9.             WITHHOLDING
OBLIGATIONS.

(a)           At the time your
Award is made, or at any time thereafter as requested by the Company, you
hereby authorize withholding from payroll and any other amounts payable to you,
and otherwise agree 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, if any, which arise in connection with your Award.

(b)           Unless the tax
withholding obligations of the Company and/or any Affiliate are satisfied, the
Company shall have no obligation to issue a certificate for such shares or
release such shares from any escrow provided for herein.

10.          TAX
CONSEQUENCES.
  The
acquisition and vesting of the shares may have adverse tax consequences to
you.  YOU ACKNOWLEDGE THAT SUCH TAX
CONSEQUENCES ARE YOUR OWN RESPONSIBILITY AND NOT THE COMPANY’S AND YOU ARE NOT
RELYING ON THE COMPANY OR ANY OF ITS REPRESENTATIVES FOR TAX ADVICE.

11.          NOTICES.  Any notices provided for in your Award or the
Plan shall be given in writing and shall be deemed effectively given upon
receipt or, in the case of notices delivered by the Company to you, five (5)
days after deposit in the United States mail, postage prepaid, addressed to you
at the last address you provided to the Company.

12.          MISCELLANEOUS.

(a)           The rights and obligations of the Company under your
Award shall be transferable to any one or more persons or entities, and all
covenants and agreements hereunder shall inure to the benefit of, and be
enforceable by the Company’s successors and assigns. Your rights and
obligations under your Award shall not be transferable except by will or by
laws of descent and distribution and shall be exercisable during your lifetime
only by you.

(b)           You agree upon request to execute any further
documents or instruments necessary or desirable in the sole determination of
the Company to carry out the purposes or intent of your Award.

 

3

 

(c)           You acknowledge and agree that you have reviewed your
Award in its entirety, have had an opportunity to obtain the advice of counsel
prior to executing and accepting your Award and fully understand all provisions
of your Award.

13.          CHOICE OF LAW.  The law of the State of California shall
govern all questions concerning the construction, validity and interpretation
of the Plan and this Award, without regard to such state’s conflict of laws
rules.

14.          GOVERNING PLAN DOCUMENT.  Your Award is subject to all the provisions
of the Plan, the provisions of which are hereby made a part of your Award, and
is further subject to all interpretations, amendments, rules and regulations
which may from time to time be promulgated and adopted pursuant to the
Plan.  In the event of any conflict
between the provisions of your Award and those of the Plan, the provisions of
the Plan shall control.

 

4Exhibit 10.4

RELIANT TECHNOLOGIES, INC.

2007 EQUITY INCENTIVE PLAN

APPROVED BY THE BOARD:  AUGUST 9, 2007

APPROVED BY THE STOCKHOLDERS:  __________,
2007

TERMINATION DATE:  AUGUST 8, 2017

1.             GENERAL.

(a)           Successor and Continuation of Prior Plan.  The
Plan is intended as the successor to the Reliant Technologies, Inc. 2003 Equity
Incentive Plan, as amended (the “Prior Plan”). 
Following the Effective Date, no additional stock awards shall be
granted under the Prior Plan.  All
outstanding stock awards granted under the Prior Plan shall remain subject to
the terms of the Prior Plan and shares issuable under such awards shall be
issued from such Prior Plan. All Awards granted following the Effective Date shall
be subject to the terms of this Plan.

(b)           Eligible Award Recipients.  The persons eligible to receive
Awards are Employees, Directors and Consultants.

(c)           Available Awards.  The Plan provides for the grant
of the following Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options, (iii) Restricted Stock Awards, (iv) Restricted Stock Unit Awards, (v)
Stock Appreciation Rights, (vi) Performance Stock Awards, (vii) Performance
Cash Awards and (viii) Other Stock Awards.

(d)           Purpose.  The Company, by means of the Plan, seeks to
secure and retain the services of the group of persons eligible to receive
Awards as set forth in Section 1(b), to provide incentives for such persons to
exert maximum efforts for the success of the Company and any Affiliate, and to
provide a means by which such eligible recipients may be given an opportunity
to benefit from increases in value of the Common Stock through the granting of
Stock Awards.

2.             ADMINISTRATION.

(a)           Administration by Board.  The
Board shall administer the Plan unless and until the Board delegates administration
of the Plan to a Committee or Committees, as provided in Section 2(c).

(b)           Powers of Board.  The Board shall have the power,
subject to, and within the limitations of, the express provisions of the Plan:

(i)            To
determine from time to time (A) which of the persons eligible under the Plan
shall be granted Awards; (B) when and how each Award shall be granted; (C) what
type or combination of types of Awards shall be granted; (D) the provisions of
each Award granted (which need not be identical), including the time or times
when a person shall be permitted to receive cash or Common Stock pursuant to an
Award; and (E) the number of shares of Common Stock with respect to which a
Stock Award shall be granted to each such person.

(ii)           To
construe and interpret the Plan and Awards granted under it, and to establish,
amend and revoke rules and regulations for its administration.  The Board, in the exercise of this power, may
correct any defect, omission or inconsistency in the Plan or in any Stock Award
Agreement or in the

 

 

written terms of a Performance Cash Award, in a manner and to the
extent it shall deem necessary or expedient to make the Plan or Award fully
effective.

(iii)         To
settle all controversies regarding the Plan and Awards granted under it.

(iv)          To
accelerate the time at which a Stock Award may first be exercised or the time
during which an Award or any part thereof will vest in accordance with the
Plan, notwithstanding the provisions in the Award stating the time at which it
may first be exercised or the time during which it will vest.

(v)            To
effect, at any time and from time to time, (A) the reduction of the exercise
price of any outstanding Option or the strike price of any outstanding Stock
Appreciation Right; (B) the cancellation of any outstanding Option or Stock
Appreciation Right and the grant in substitution therefor of (I) a new Option
or Stock Appreciation Right under the Plan or another equity plan of the
Company covering the same or different number of shares of Common Stock, (II) a
Restricted Stock Award, (III) a Restricted Stock Unit Award, (IV) an Other
Stock Award, (V) cash, and/or (VI) other valuable consideration as determined
by the Board in its sole discretion; or (C) any other action that is treated as
a repricing under generally accepted accounting principles.

(vi)          To suspend
or terminate the Plan at any time. 
Suspension or termination of the Plan shall not impair rights and
obligations under any Award granted while the Plan is in effect except with the
written consent of the adversely affected Participant.

(vii)         To
amend the Plan in any respect the Board deems necessary or advisable,
including, without limitation, relating to Incentive Stock Options and certain
nonqualified deferred compensation under Section 409A of the Code and/or to
bring the Plan or Awards granted under the Plan into compliance therewith,
subject to the limitations, if any, of applicable law. However, except as
provided in Section 9(a) relating to Capitalization Adjustments, stockholder
approval shall be required for any amendment of the Plan that either (A)
materially increases the number of shares of Common Stock available for
issuance under the Plan, (B) materially expands the class of individuals
eligible to receive Awards under the Plan, (C) materially increases the
benefits accruing to Participants under the Plan or materially reduces the
price at which shares of Common Stock may be issued or purchased under the
Plan, (D) materially extends the term of the Plan, or (E) expands the types of
Awards available for issuance under the Plan, but in each of (A) through (E)
only to the extent required by applicable law or listing requirements. Except
as provided above, rights under any Award granted before amendment of the Plan
shall not be impaired by any amendment of the Plan unless the Company requests
the consent of the adversely affected Participant, and such Participant
consents in writing.

(viii)        To submit
any amendment to the Plan for stockholder approval, including, but not limited
to, material amendments to the Plan intended to satisfy the requirements of (A)
Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to Covered Employees, (B) Section 422 of the
Code regarding Incentive Stock Options, or (C) Rule 16b-3.

(ix)          To
approve forms of Award Agreements for use under the Plan and to amend the terms
of any one or more Awards, including, but not limited to, amendments to provide
terms more favorable than previously provided in the Award Agreement, subject
to any specified limits in the Plan that are not subject to Board discretion; provided however, that, the rights under any Award shall not
be impaired by any such amendment unless the Company requests the consent of
the adversely affected Participant, and such Participant consents in
writing.  Notwithstanding anything to the
contrary herein, subject to the limitations of applicable law, if any, and
without the adversely affected Participant’s

 

 

consent, the Board may amend the terms of any one or more Awards, or
correct any clerical errors, if necessary to maintain the qualified status of
the Stock Award as an Incentive Stock Option or to bring the Award into
compliance with Section 409A of the Code and the related guidance thereunder.

(x)           Generally,
to exercise such powers and to perform such acts as the Board deems necessary
or expedient to promote the best interests of the Company and that are not in
conflict with the provisions of the Plan or Awards.

(xi)          To
adopt such procedures and sub-plans as are necessary or appropriate to permit
participation in the Plan by Employees, Directors or Consultants who are
foreign nationals or employed outside the United States.

(c)           Delegation
to Committee.

(i)            General.  The Board may delegate some or
all of the administration of the Plan to a Committee or Committees.  If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board that have been
delegated to the Committee, including the power to delegate to a subcommittee
of the Committee any of the administrative powers the Committee is authorized
to exercise (and references in the Plan to the Board shall thereafter be to the
Committee or subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board.  The Board may retain
the authority to concurrently administer the Plan with the Committee and may,
at any time, revest in the Board some or all of the powers previously
delegated.

(ii)           Section 162(m) and Rule 16b-3 Compliance.  In
the sole discretion of the Board, the Committee may consist solely of two or
more Outside Directors, in accordance with Section 162(m) of the Code, and/or
solely of two or more Non-Employee Directors, in accordance with Rule
16b-3.  In addition, the Board or the
Committee, in its sole discretion, may (A) delegate to a Committee who need not
be Outside Directors the authority to grant Awards to eligible persons who are
either (I) not then Covered Employees and are not expected to be Covered
Employees at the time of recognition of income resulting from such Award, or
(II) not persons with respect to whom the Company wishes to comply with Section
162(m) of the Code, and/or (B) delegate to a Committee who need not be
Non-Employee Directors the authority to grant Awards to eligible persons who
are not then subject to Section 16 of the Exchange Act.

(d)           Delegation to Officers.  The Board may delegate to one
or more Officers the authority to do one or both of the following (i) designate
Officers and Employees of the Company or any of its Subsidiaries to be
recipients of Options (and, to the extent permitted by Delaware law, other
Awards) and the terms thereof, and (ii) determine the number of shares of
Common Stock to be subject to such Stock Awards granted to such Officers and
Employees; provided, however, that
the Board resolutions regarding such delegation shall specify the total number
of shares of Common Stock that may be subject to the Stock Awards granted by
such Officers and that such Officer may not grant a Stock Award to himself or
herself.  Notwithstanding anything to the
contrary in this Section 2(d), the Board may not delegate to an Officer
authority to determine the Fair Market Value of the Common Stock pursuant to
Section 13(w)(ii) below.

(e)           Effect of Board’s Decision. All determinations, interpretations and constructions made by the Board
in good faith shall not be subject to review by any person and shall be final,
binding and conclusive on all persons.

 

 

3.             SHARES SUBJECT TO THE PLAN.

(a)           Share Reserve. Subject to the provisions of Section 9(a) relating to Capitalization
Adjustments, the aggregate number of shares of common stock of the Company that
may be issued pursuant to Stock Awards under the Plan shall not exceed one
million (1,000,000)(1) shares of Common Stock. 
In addition, the number of shares of Common Stock available for issuance
under the Plan shall automatically increase on January 1st of each year
commencing in 2008 and ending on (and including) January 1, 2017, in an amount
equal to the greater of (A) five percent (5%) of the total number of shares of
Common Stock outstanding on December 31st of the preceding calendar year, or
(B) three million (3,000,000)  (2)
shares. Notwithstanding the foregoing, the Board may act prior to the first day
of any calendar year, to provide that there shall be no increase in the share
reserve for such calendar year or that the increase in the share reserve for
such calendar year shall be a lesser number of shares of Common Stock than
would otherwise occur pursuant to the preceding sentence.  Shares may be issued in connection with a
merger or acquisition as permitted by NASD Rule 4350(i)(1)(A)(iii) or, if
applicable, NYSE Listed Company Manual Section 303A.08, or AMEX Company Guide
Section 711 and such issuance shall not reduce the number of shares available
for issuance under the Plan.

(1) Pre-IPO,
pre-split numbers

(2) Pre-IPO, pre-split numbers

(b)           Reversion of Shares to the Share Reserve.  If
(i) any Stock Award shall for any reason expire or otherwise terminate, in
whole or in part, without having been exercised in full, (ii) any shares of
Common Stock issued to a Participant pursuant to a Stock Award are forfeited
back to or repurchased by the Company because of the failure to meet a
contingency or condition required for the vesting of such shares, (iii) a Stock
Award is settled in cash, (iv) any shares of Common Stock are cancelled in
accordance with the cancellation and regrant provisions of Section 3(b)(v),
then the shares of Common Stock not issued under such Stock Award, or forfeited
to or repurchased by the Company, shall revert to and again become available
for issuance under the Plan.  If any
shares subject to a Stock Award are not delivered to a Participant because such
shares are withheld for the payment of taxes or the Stock Award is exercised
through a reduction of shares subject to the Stock Award (i.e., “net exercised”)
or an appreciation distribution in respect of a Stock Appreciation right is
paid in shares of Common Stock, the number of shares subject to the Stock Award
that are not delivered to the Participant shall remain available for subsequent
issuance under the Plan.  If the exercise
price of any Stock Award is satisfied by tendering shares of Common Stock held
by the Participant (either by actual delivery or attestation), then the number
of shares so tendered shall remain available for issuance under the Plan.

(c)           Incentive Stock Option Limit. 
Notwithstanding
anything to the contrary in this Section 3(c), subject to the provisions of
Section 9(a) relating to Capitalization Adjustments the aggregate maximum
number of shares of Common Stock that may be issued pursuant to the exercise of
Incentive Stock Options shall be fifteen million (15,000,000)(3) shares of
Common Stock immediately following the IPO Date, plus the amount of any
increase in the number of shares that may be available for issuance pursuant to
Stock Awards pursuant to Section 3(a).

(3) Post-IPO,
post-split numbers

(d)           Source of Shares.  The stock issuable under the
Plan shall be shares of authorized but unissued or reacquired Common Stock,
including shares repurchased by the Company on the open market.

 

 

4.             ELIGIBILITY.

(a)           Eligibility for Specific Stock Awards. 
Incentive Stock Options may be granted only to employees of the Company
or a “parent corporation” or “subsidiary corporation” thereof (as such terms
are defined in Sections 424(e) and 424(f) of the Code).  Stock Awards other than Incentive Stock
Options may be granted to Employees, Directors and Consultants.

(b)           Ten Percent Stockholders.  A Ten
Percent Stockholder shall not be granted an Incentive Stock Option unless the
exercise price of such Option is at least one hundred ten percent (110%) of the
Fair Market Value of the Common Stock on the date of grant and the Option is
not exercisable after the expiration of five (5) years from the date of grant.

(c)           Section 162(m) Limitation. 
Subject to the provisions of Section 9(a) relating to Capitalization
Adjustments, at such time as the Company may be subject to the applicable
provisions of Section 162(m) of the Code, no Employee shall be eligible to be
granted during any calendar year Stock Awards whose value is determined by
reference to an increase over an exercise or strike price of at least one
hundred percent (100%) of the Fair Market Value of the Common Stock on the date
the Stock Award is granted covering more than one million (1,000,000)(4) shares
of Common Stock.

(4) Post-IPO,
pre-split numbers

5.             OPTION PROVISIONS.

Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. 
All Options shall be separately designated Incentive Stock Options or
Nonstatutory Stock Options at the time of grant, and, if certificates are
issued, a separate certificate or certificates shall be issued for shares of
Common Stock purchased on exercise of each type of Option.  If an Option is not specifically designated
as an Incentive Stock Option, then the Option shall be a Nonstatutory Stock
Option.  The provisions of separate Options
need not be identical; provided, however,
that each Option Agreement shall conform to (through incorporation of
provisions hereof by reference in the Option Agreement or otherwise) the
substance of each of the following provisions:

(a)           Term.  Subject to the provisions of
Section 4(b) regarding Ten Percent Stockholders, no Option shall be exercisable
after the expiration of ten (10) years from the date of its grant or such
shorter period specified in the Option Agreement.

(b)           Exercise Price.  Subject to the provisions of
Section 4(b) regarding Ten Percent Stockholders, and notwithstanding anything
in the Option Agreement to the contrary, the exercise price of each Option
shall be not less than one hundred percent (100%) of the Fair Market Value of
the Common Stock subject to the Option on the date the Option is granted.  Notwithstanding the foregoing, an Option may
be granted with an exercise price lower than one hundred percent (100%) of the
Fair Market Value of the Common Stock subject to the Option if such Option is
granted pursuant to an assumption or substitution for another option in a
manner consistent with the provisions of Sections 409A and 424(a) of the Code
(whether or not such options are Incentive Stock Options).

(c)           Consideration.  The purchase price of Common
Stock acquired pursuant to the exercise of an Option shall be paid, to the
extent permitted by applicable law and as determined by the Board in its sole
discretion, by any combination of the methods of payment set forth below. The
Board shall have the authority to grant Options that do not permit all of the
following methods of payment (or otherwise restrict the ability to use certain
methods) and to grant Options that require the consent of the Company to
utilize a particular method of payment. 
The methods of payment permitted by this Section 5(c) are:

 

 

(i)            by
cash, check, bank draft or money order payable to the Company;

(ii)           pursuant
to a program developed under Regulation T as promulgated by the Federal Reserve
Board that, prior to the issuance of the stock subject to the Option, results
in either the receipt of cash (or check) by the Company or the receipt of
irrevocable instructions to pay the aggregate exercise price to the Company
from the sales proceeds;

(iii)         by
delivery to the Company (either by actual delivery or attestation) of shares of
Common Stock;

(iv)          by
a “net exercise” arrangement pursuant to which the Company will reduce the
number of shares of Common Stock issuable upon exercise by the largest whole
number of shares with a Fair Market Value that does not exceed the aggregate
exercise price; provided, however,
that the Company shall accept a cash or other permitted payment from the
Participant to the extent of any remaining balance of the aggregate exercise
price not satisfied by such reduction in the number of whole shares to be
issued; provided, further, that
shares of Common Stock will no longer be outstanding under an Option and will
not be exercisable thereafter to the extent that (A) shares are used to pay the
exercise price pursuant to the “net exercise,” (B) shares are delivered to the
Participant as a result of such exercise, and (C) shares are withheld to
satisfy tax withholding obligations;  or

(v)            in
any other form of legal consideration that may be acceptable to the Board in
its sole discretion and permissible under applicable law.

(d)           Transferability of Options.  The
Board may, in its sole discretion, impose such limitations on the
transferability of Options as the Board shall determine.  If the Board determines that an Option will
be transferable, the Option will contain such additional terms and conditions
as the Board deems appropriate.  In the
absence of such a determination by the Board to the contrary, the following
restrictions on the transferability of Options shall apply:

(i)            Restrictions on Transfer.  An
Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder; provided, however,
that the Board may, in its sole discretion, permit transfer of the Option in a
manner that is consistent with applicable tax and securities laws upon the
Optionholder’s request.

(ii)           Domestic Relations Orders. 
Notwithstanding the foregoing, an Option may be transferred pursuant to
a domestic relations order, provided, however,
that if an Option is an Incentive Stock Option, such Option may be deemed to be
a Nonstatutory Stock Option as a result of such transfer.

(iii)         Beneficiary Designation. Notwithstanding the foregoing, the
Optionholder may, by delivering written notice to the Company, in a form
provided by or otherwise satisfactory to the Company and any broker designated
by the Company to effect Option exercises, designate a third party who, in the
event of the death of the Optionholder, shall thereafter be entitled to exercise
the Option.  In the absence of such a
designation, the executor or administrator of the Optionholder’s estate shall
be entitled to exercise the Option.

(e)           Vesting of Options Generally.  The
total number of shares of Common Stock subject to an Option may vest and
therefore become exercisable in periodic installments that may or may not be
equal.  The Option may be subject to such
other terms and conditions on the time or times when it may or may not be
exercised (which may be based on the satisfaction of Performance Goals or other
criteria) as the Board may deem appropriate. 
The vesting provisions of individual Options may vary.  The

 

 

 

provisions of this Section 5(e)
are subject to any Option provisions governing the minimum number of shares of
Common Stock as to which an Option may be exercised.

(f)            Termination of Continuous Service.  In
the event that an Optionholder’s Continuous Service terminates (other than for
Cause or upon the Optionholder’s death or Disability), the Optionholder may
exercise his or her Option (to the extent that the Optionholder was entitled to
exercise such Option as of the date of termination of Continuous Service) but
only within such period of time ending on the earlier of (i) the date three (3)
months following the termination of the Optionholder’s Continuous Service (or
such longer or shorter period specified in the Option Agreement), or (ii) the
expiration of the term of the Option as set forth in the Option Agreement.  If, after termination of Continuous Service,
the Optionholder does not exercise his or her Option within the time specified
herein or in the Option Agreement (as applicable), the Option shall terminate.

(g)           Extension of Termination Date.  An
Optionholder’s Option Agreement may provide that if the exercise of the Option
following the termination of the Optionholder’s Continuous Service (other than
for Cause or upon the Optionholder’s death or Disability) would be prohibited
at any time solely because the issuance of shares of Common Stock would violate
the registration requirements under the Securities Act, then the Option shall
terminate on the earlier of (i) the expiration of a period of three (3) months
after the termination of the Optionholder’s Continuous Service during which the
exercise of the Option would not be in violation of such registration
requirements and would not subject the Optionholder to short-swing liability
under Section 16(b) of the Exchange Act, or (ii) the expiration of the term of
the Option as set forth in the Option Agreement.

(h)           Disability of Optionholder.  In the event that an
Optionholder’s Continuous Service terminates as a result of the Optionholder’s
Disability, the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise such Option as of the date of
termination of Continuous Service), but only within such period of time ending
on the earlier of (i) the date twelve (12) months following such termination of
Continuous Service (or such longer or shorter period specified in the Option
Agreement), or (ii) the expiration of the term of the Option as set forth in
the Option Agreement.  If, after
termination of Continuous Service, the Optionholder does not exercise his or
her Option within the time specified herein or in the Option Agreement (as
applicable), the Option shall terminate.

(i)            Death of Optionholder.  In
the event that (i) an Optionholder’s Continuous Service terminates as a result
of the Optionholder’s death, or (ii) the Optionholder dies within the period
(if any) specified in the Option Agreement after the termination of the
Optionholder’s Continuous Service for a reason other than death, then the
Option may be exercised (to the extent the Optionholder was entitled to
exercise such Option as of the date of death) by the Optionholder’s estate, by
a person who acquired the right to exercise the Option by bequest or
inheritance or by a person designated to exercise the option upon the
Optionholder’s death, but only within the period ending on the earlier of (A)
the date eighteen (18) months following the date of death (or such longer or
shorter period specified in the Option Agreement), or (B) the expiration of the
term of such Option as set forth in the Option Agreement.  If, after the Optionholder’s death, the
Option is not exercised within the time specified herein or in the Option
Agreement (as applicable), the Option shall terminate.

(j)            Termination for Cause. 
Except as otherwise explicitly provided in an Optionholder’s Option
Agreement, in the event that an Optionholder’s Continuous Service is terminated
for Cause, the Option shall terminate immediately and cease to remain
outstanding.

(k)           Non-Exempt Employees.  No Option granted to an
Employee that is a non-exempt employee for purposes of the Fair Labor Standards
Act shall be first exercisable for any shares of

 

 

Common Stock until at least six months
following the date of grant of the Option. 
The foregoing provision is intended to operate so that any income
derived by a non-exempt employee in connection with the exercise or vesting of
an Option will be exempt from his or her regular rate of pay.

6.             PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.

(a)           Restricted Stock Awards.  Each
Restricted Stock Award Agreement shall be in such form and shall contain such
terms and conditions as the Board shall deem appropriate.  To the extent consistent with the Company’s
Bylaws, at the Board’s election, shares of Common Stock may be (i) held in book
entry form subject to the Company’s instructions until any restrictions
relating to the Restricted Stock Award lapse; or (ii) evidenced by a
certificate, which certificate shall be held in such form and manner as
determined by the Board.  The terms and
conditions of Restricted Stock Award Agreements may change from time to time,
and the terms and conditions of separate Restricted Stock Award Agreements need
not be identical, provided, however,
that each Restricted Stock Award Agreement shall conform to (through
incorporation of the provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions:

(i)            Consideration.  A Restricted Stock Award may be
awarded in consideration for (A) cash, check, bank draft or money order payable
to the Company; (B) past or future services actually or to be rendered to the
Company or an Affiliate; or (C) any other form of legal consideration that may
be acceptable to the Board in its sole discretion and permissible under
applicable law.

(ii)           Vesting.  Shares of Common Stock awarded
under a Restricted Stock Award Agreement may be subject to forfeiture to the
Company in accordance with a vesting schedule to be determined by the Board.

(iii)         Termination of Participant’s Continuous Service.  In
the event a Participant’s Continuous Service terminates, the Company may
receive via a forfeiture condition or a repurchase right, any or all of the
shares of Common Stock held by the Participant which have not vested as of the
date of termination of Continuous Service under the terms of the Restricted
Stock Award Agreement.

(iv)          Transferability. 
Rights to acquire shares of Common Stock under the Restricted Stock
Award Agreement shall be transferable by the Participant only upon such terms
and conditions as are set forth in the Restricted Stock Award Agreement, as the
Board shall determine in its sole discretion, so long as Common Stock awarded
under the Restricted Stock Award Agreement remains subject to the terms of the
Restricted Stock Award Agreement.

(b)           Restricted Stock Unit Awards.  Each Restricted Stock Unit Award Agreement shall be in such form and
shall contain such terms and conditions as the Board shall deem
appropriate.  The terms and conditions of
Restricted Stock Unit Award Agreements may change from time to time, and the
terms and conditions of separate Restricted Stock Unit Award Agreements need
not be identical, provided, however, that
each Restricted Stock Unit Award Agreement shall conform to (through
incorporation of the provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions:

(i)            Consideration.  At the time of grant of a
Restricted Stock Unit Award, the Board will determine the consideration, if
any, to be paid by the Participant upon delivery of each share of Common Stock
subject to the Restricted Stock Unit Award. The consideration to be paid (if
any) by the Participant for each share of Common Stock subject to a Restricted
Stock Unit Award may be paid in any form of legal consideration that may be
acceptable to the Board in its sole discretion and permissible under applicable
law.

 

 

(ii)           Vesting.  At the time of the grant of a Restricted
Stock Unit Award, the Board may impose such restrictions or conditions to the
vesting of the Restricted Stock Unit Award as it, in its sole discretion, deems
appropriate.

(iii)         Payment.  A Restricted Stock Unit Award may be settled
by the delivery of shares of Common Stock, their cash equivalent, any
combination thereof or in any other form of consideration, as determined by the
Board and contained in the Restricted Stock Unit Award Agreement.

(iv)          Additional Restrictions. 
At the time of the
grant of a Restricted Stock Unit Award, the Board, as it deems appropriate, may
impose such restrictions or conditions that delay the delivery of the shares of
Common Stock (or their cash equivalent) subject to a Restricted Stock Unit
Award to a time after the vesting of such Restricted Stock Unit Award.

(v)            Dividend Equivalents. 
Dividend equivalents
may be credited in respect of shares of Common Stock covered by a Restricted
Stock Unit Award, as determined by the Board and contained in the Restricted
Stock Unit Award Agreement.  At the sole
discretion of the Board, such dividend equivalents may be converted into
additional shares of Common Stock covered by the Restricted Stock Unit Award in
such manner as determined by the Board. 
Any additional shares covered by the Restricted Stock Unit Award
credited by reason of such dividend equivalents will be subject to all the
terms and conditions of the underlying Restricted Stock Unit Award Agreement to
which they relate.

(vi)          Termination of Participant’s Continuous Service.  Except as otherwise provided in the applicable Restricted Stock Unit
Award Agreement, such portion of the Restricted Stock Unit Award that has not
vested will be forfeited upon the Participant’s termination of Continuous
Service.

(vii)         Compliance with Section 409A of the Code. 
Notwithstanding anything to the contrary set forth herein, any
Restricted Stock Unit Award granted under the Plan that is not exempt from the
requirements of Section 409A of the Code shall contain such provisions so that
such Restricted Stock Unit Award will comply with the requirements of Section
409A of the Code.  Such restrictions, if
any, shall be determined by the Board and contained in the Restricted Stock
Unit Award Agreement evidencing such Restricted Stock Unit Award.  For example, such restrictions may include,
without limitation, a requirement that any Common Stock that is to be issued in
a year following the year in which the Restricted Stock Unit Award vests must
be issued in accordance with a fixed pre-determined schedule.

(c)           Stock Appreciation Rights.  Each Stock Appreciation Right Agreement shall be in such form and shall
contain such terms and conditions as the Board shall deem appropriate.  Stock Appreciation Rights may be granted as
stand-alone Stock Awards or in tandem with other Stock Awards.  The terms and conditions of Stock
Appreciation Right Agreements may change from time to time, and the terms and
conditions of separate Stock Appreciation Right Agreements need not be
identical; provided, however,
that each Stock Appreciation Right Agreement shall conform to (through
incorporation of the provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions:

(i)            Term.  No Stock Appreciation Right
shall be exercisable after the expiration of ten (10) years from the date of
its grant or such shorter period specified in the Stock Appreciation Right
Agreement.

(ii)           Strike Price. Each Stock Appreciation Right will be denominated in shares of Common
Stock equivalents.  Notwithstanding
anything in the applicable Stock Award Agreement to the contrary, the strike
price of each Stock Appreciation Right shall not be less than one hundred
percent

 

 

(100%) of the Fair Market Value of the Common Stock equivalents subject
to the Stock Appreciation Right on the date of grant.

(iii)         Calculation of Appreciation.  The
appreciation distribution payable on the exercise of a Stock Appreciation Right
will be not greater than an amount equal to the excess of (A) the aggregate
Fair Market Value (on the date of the exercise of the Stock Appreciation Right)
of a number of shares of Common Stock equal to the number of share of Common
Stock equivalents in which the Participant is vested under such Stock
Appreciation Right, and with respect to which the Participant is exercising the
Stock Appreciation Right on such date, over (B) the aggregate strike price of
the Common Stock equivalents being exercised.

(iv)          Vesting.  At the time of the grant of a Stock
Appreciation Right, the Board may impose such restrictions or conditions to the
vesting of such Stock Appreciation Right as it, in its sole discretion, deems
appropriate.

(v)            Exercise.  To exercise any outstanding
Stock Appreciation Right, the Participant must provide written notice of
exercise to the Company in compliance with the provisions of the Stock
Appreciation Right Agreement evidencing such Stock Appreciation Right.

(vi)          Payment.  The appreciation distribution in respect of a
Stock Appreciation Right may be paid in Common Stock, in cash, in any
combination of the two or in any other form of consideration, as determined by
the Board and set forth in the Stock Appreciation Right Agreement evidencing
such Stock Appreciation Right.

(vii)         Termination of Continuous Service.  In
the event that a Participant’s Continuous Service terminates (other than for
Cause), the Participant may exercise his or her Stock Appreciation Right (to
the extent that the Participant was entitled to exercise such Stock
Appreciation Right as of the date of termination of Continuous Service) but
only within such period of time ending on the earlier of (A) the date three (3)
months following the termination of the Participant’s Continuous Service (or
such longer or shorter period specified in the Stock Appreciation Right
Agreement), or (B) the expiration of the term of the Stock Appreciation Right
as set forth in the Stock Appreciation Right Agreement.  If, after termination of Continuous Service,
the Participant does not exercise his or her Stock Appreciation Right within
the time specified herein or in the Stock Appreciation Right Agreement (as
applicable), the Stock Appreciation Right shall terminate.

(viii)        Termination for Cause.  Except as explicitly provided
otherwise in an Participant’s Stock Appreciation Right Agreement, in the event
that a Participant’s Continuous Service is terminated for Cause, the Stock
Appreciation Right shall terminate upon the termination date of such
Participant’s Continuous Service, and the Participant shall be prohibited from
exercising his or her Stock Appreciation Right from and after the time of such
termination of Continuous Service.

(ix)          Extension of Termination Date.  If
the exercise of the Stock Appreciation Right following the termination of the
Participant’s Continuous Service would either (A) be prohibited at any time
solely because the issuance of shares of Common Stock would violate the
registration requirements under the Securities Act, or (B) subject the Participant
to short-swing liability under Section 16(b) of the Exchange Act, then the
Stock Appreciation Right shall terminate on the earlier of (I) the expiration
of a period of ninety (90) days after the termination of the Participant’s
Continuous Service during which the exercise of the Stock Appreciation Right
would not be in violation of such registration requirements and would not
subject the Participant to short-swing liability under Section 16(b) of the
Exchange Act, or (II) the expiration of the term of the Stock Appreciation
Right as set forth in the Stock Appreciation Right Agreement.

 

 

 

(d)           Performance Awards.

(i)            Performance Stock Awards.  A
Performance Stock Award is either a Restricted Stock Award or Restricted Stock
Unit Award that may be granted or may vest based upon the attainment during a
Performance Period of certain Performance Goals.  A Performance Stock Award may, but need not,
require the completion of a specified period of Continuous Service. The length
of any Performance Period, the Performance Goals to be achieved during the
Performance Period, and the measure of whether and to what degree such
Performance Goals have been attained shall be conclusively determined by the
Committee in its sole discretion.  The
maximum Performance Stock Award that may be granted in a calendar year to any
Participant pursuant to this Section 6(d)(i) shall not exceed the value of five
hundred thousand (500,000)(5) shares of Common Stock (as determined at the time
of grant).  In addition, to the extent
permitted by applicable law and the applicable Award Agreement, the Board may
determine that cash may be used in payment of Performance Stock Awards.

(5) Post-IPO,
pre-split numbers

(ii)           Performance Cash Awards.  A Performance Cash Award is a
cash award granted pursuant to this Section 6(d)(ii) that is paid upon the
attainment during a Performance Period of certain Performance Goals.  A Performance Cash Award may also require the
completion of a specified period of Continuous Service.  The length of any Performance Period, the
Performance Goals to be achieved during the Performance Period, and the measure
of whether and to what degree such Performance Goals have been attained shall
be conclusively determined by the Committee in its sole discretion.  The maximum Performance Cash Award that may
be granted to a Participant in a calendar year and made subject to the future
attainment of one or more Performance Goals shall not exceed four million
dollars ($4,000,000).  The Board may
provide for or, subject to such terms and conditions as the Board may specify,
may permit a Participant to elect for, the payment of any Performance Cash
Award to be deferred to a specified date or event.  The Committee may specify the form of payment
of Performance Cash Awards, which may be cash or other property, or may provide
for a Participant to have the option for his or her Performance Cash Award, or
such portion thereof as the Board may specify, to be paid in whole or in part
in cash or other property.  In addition,
to the extent permitted by applicable law and the applicable Award Agreement,
the Board may determine that Common Stock authorized under this Plan may be
used in payment of Performance Cash Awards, including additional shares in
excess of the Performance Cash Award as an inducement to hold shares of Common
Stock.

(e)           Other Stock Awards.  Other forms of Stock Awards
valued in whole or in part by reference to, or otherwise based on, Common Stock
(“Other Stock Awards”)
may be granted either alone or in addition to Stock Awards provided for under
Section 5 and the preceding provisions of this Section 6.  Such Other Stock Awards will be subject to a
written Award Agreement between the Company and a holder of an Other Stock
Award evidencing the terms and conditions of an Other Stock Award, and each
Other Stock Award shall be subject to the terms and conditions of the Plan.
Subject to the provisions of the Plan, the Board shall have sole and complete
authority to determine the persons to whom and the time or times at which such
Other Stock Awards will be granted, the number of shares of Common Stock (or
the cash equivalent thereof) to be granted pursuant to such Other Stock Awards
and all other terms and conditions of such Other Stock Awards.

7.             COVENANTS OF THE COMPANY.

(a)           Availability of Shares. 
During the terms of the Awards, the Company shall keep available at all
times the number of shares of Common Stock required to satisfy such Awards.

 

 

 

(b)           Securities Law Compliance.  The
Company shall seek to obtain from each regulatory commission or agency having
jurisdiction over the Plan such authority as may be required to grant Stock
Awards and to issue and sell shares of Common Stock upon exercise of the Stock
Awards; provided, however, that this undertaking
shall not require the Company to register under the Securities Act the Plan,
any Award or any Common Stock issued or issuable pursuant to any such
Award.  If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or agency the
authority that counsel for the Company deems necessary for the lawful issuance
and sale of Common Stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell Common Stock upon exercise of such
Awards or make payments of cash or other property in settlement of Awards
unless and until such authority is obtained. 
A Participant shall not be eligible for the grant of a Stock Award or
the subsequent issuance of Common Stock pursuant to the Stock Award if such
grant or issuance would be in violation of any applicable securities laws.

(c)           No Obligation to Notify. 
The Company
shall have no duty or obligation to any holder of an Award to advise such
holder as to the time or manner of exercising or settling such Award.  Furthermore, the Company shall have no duty
or obligation to warn or otherwise advise such holder of a pending termination
or expiration of an Award or a possible period in which the Award may not be
exercised or settled.  The Company has no
duty or obligation to minimize the tax consequences of an Award to the holder
of such Award.

8.             MISCELLANEOUS.

(a)           Use of Proceeds.  Proceeds from the sale of shares of Common
Stock pursuant to Stock Awards shall constitute general funds of the Company.

(b)           Corporate Action Constituting Grant of Awards. 
Corporate action constituting a grant by the Company of an Award to any
Participant shall be deemed completed as of the date of such corporate action,
unless otherwise determined by the Board, regardless of when the instrument,
certificate, or letter evidencing the Award is communicated to, or actually
received or accepted by, the Participant. 
If the Board determines that the terms of an Award do not reflect the
appropriate exercise, strike or purchase price on the appropriate date of grant
in accordance with the requirements of the Plan, the terms of the Award shall
be automatically corrected to reflect the appropriate price or other terms
provided for under the Plan, as determined by the Board, without the need for
consent of the Participant; provided,
however, that no such correction shall result in a direct or
indirect reduction in the exercise price or strike price of the Award.

(c)           Stockholder Rights.  No
Participant shall be deemed to be the holder of, or to have any of the rights
of a holder with respect to, any shares of Common Stock subject to an Award
unless and until (i) such Participant has satisfied all requirements for
exercise or settlement of the Award pursuant to its terms, and (ii) the
issuance of the Common Stock pursuant to such exercise or settlement has been
entered into the books and records of the Company.

(d)           No Employment or Other Service Rights. 
Nothing in the Plan, any Award Agreement or other instrument executed
thereunder or in connection with any Award granted pursuant to the Plan shall
confer upon any Participant any right to continue to serve the Company or an
Affiliate in the capacity in effect at the time the Award was granted or shall
affect the right of the Company or an Affiliate to terminate (i) the employment
of an Employee with or without notice and with or without cause, (ii) the
service of a Consultant pursuant to the terms of such Consultant’s agreement
with the Company or an Affiliate, or (iii) the service of a Director pursuant
to the Bylaws of the Company or an Affiliate, and any applicable provisions of
the corporate law of the state in which the Company or the Affiliate is
incorporated, as the case may be.

 

 

 

(e)           Incentive Stock Option $100,000 Limitation.  To
the extent that the aggregate Fair Market Value (determined at the time of
grant) of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionholder during any calendar year
(under all plans of the Company and any Affiliates) exceeds one hundred
thousand dollars ($100,000), the Options or portions thereof that exceed such
limit (according to the order in which they were granted) shall be treated as
Nonstatutory Stock Options, notwithstanding any contrary provision of the
applicable Option Agreement(s) or any Board or Committee resolutions related
thereto.

(f)            Investment Assurances.  The
Company may require a Participant, as a condition of exercising or acquiring
Common Stock under any Award, (i) to give written assurances satisfactory to
the Company as to the Participant’s knowledge and experience in financial and
business matters and/or to employ a purchaser representative reasonably
satisfactory to the Company who is knowledgeable and experienced in financial
and business matters and that he or she is capable of evaluating, alone or
together with the purchaser representative, the merits and risks of exercising
the Stock Award; and (ii) to give written assurances satisfactory to the
Company stating that the Participant is acquiring Common Stock subject to the
Award for the Participant’s own account and not with any present intention of
selling or otherwise distributing the Common Stock.  The foregoing requirements, and any
assurances given pursuant to such requirements, shall be inoperative if (A) the
issuance of the shares upon the exercise or acquisition of Common Stock under
the Award has been registered under a then currently effective registration
statement under the Securities Act, or (B) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws.  The Company may, upon advice of counsel to
the Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the
transfer of the Common Stock.

(g)           Withholding Obligations. 
Unless prohibited by the terms of an Award Agreement, the Company may,
in its sole discretion, satisfy any federal, state or local tax withholding
obligation relating to an Award by any of the following means (in addition to
the Company’s right to withhold from any compensation paid to the Participant
by the Company) or by a combination of such means: (i) causing the Participant
to tender a cash payment; (ii)  withholding shares of Common Stock
from the shares of Common Stock issued or otherwise issuable to the Participant
in connection with the Award; provided, however,
that no shares of Common Stock are withheld with a value exceeding the minimum
amount of tax required to be withheld by law (or such lower amount as may be
necessary to avoid classification of the Stock Award as a liability for
financial accounting purposes); (iii) withholding cash from an Award settled in
cash; (iv) withholding payment from any amounts otherwise payable to the
Participant; or (v) by such other method as may be set forth in the Award
Agreement.

(h)           Electronic Delivery.  Any
reference herein to a “written” agreement or document shall include any
agreement or document delivered electronically or posted on the Company’s
intranet.

(i)            Deferrals.  To the extent permitted by
applicable law, the Board, in its sole discretion, may determine that the
delivery of Common Stock or the payment of cash, upon the exercise, vesting or
settlement of all or a portion of any Award may be deferred and may establish
programs and procedures for deferral elections to be made by Participants.  Deferrals by Participants will be made in
accordance with Section 409A of the Code. Consistent with Section 409A of the
Code, the Board may provide for distributions while a Participant is still an
employee.  The Board is authorized to
make deferrals of Awards and determine when, and in what annual percentages,
Participants may receive payments, including lump sum payments, following the
Participant’s termination of employment or retirement, and implement such other
terms and conditions consistent with the provisions of the Plan and in
accordance with applicable law.

 

 

 

(j)            Compliance with Section 409A.  To the extent that the Board determines that any Award granted under
the Plan is, or may reasonably be, subject to Section 409A of the Code
(together, with any state law of similar effect, “Section 409A”), the Award Agreement
evidencing such Award shall incorporate the terms and conditions necessary to
avoid the consequences described in Section 409A(a)(1) of the Code (or any
similar provision).  To the extent
applicable and permitted by law, the Plan and Award Agreements shall be
interpreted in accordance with Section 409A and Department of Treasury
regulations and other interpretive guidance issued thereunder, including
without limitation any such regulations or other guidance that may be issued or
amended after the Effective Date.

Notwithstanding any provision of the Plan to
the contrary, in the event that following the Effective Date the Board
determines that any Award is, or may reasonably be, subject to Section 409A and
related Department of Treasury guidance (including such Department of Treasury
guidance as may be issued after the Effective Date), the Board may adopt such
amendments to the Plan and the applicable Award Agreement or adopt other
policies and procedures (including amendments, policies and procedures with
retroactive effect), or take any other actions, that the Board determines are
necessary or appropriate to (A) exempt the Award from Section 409A and/or
preserve the intended tax treatment of the benefits provided with respect to
the Award, or (B) comply with the requirements of Section 409A and related
Department of Treasury guidance.

In addition, and except as otherwise set
forth in the applicable Award Agreement, if the Company determines that any
Award granted under this Plan constitutes, or may reasonably constitute, “deferred
compensation” under Section 409A and the Participant is a “specified employee”
of the Company at the relevant date, as such term is defined in Section
409A(a)(2)(B)(i) (a “Specified
Employee”), then, solely to the extent necessary to avoid the
incurrence of the adverse personal tax consequences under Section 409A, the
time at which cash payments shall be paid, or shares of Common Stock issued, to
such Participant shall be automatically delayed as follows:  on the earlier to occur of (A) the date that
is six months and one day after the date of termination of the Participant’s
Continuous Service or (B) the date of the Participant’s death (such earlier
date, the “Delayed
Initial Payment Date”), the Company shall (I) pay to the
Participant a lump sum amount equal to the sum of the cash payments, and issue
to the Participant that number of shares of Common Stock, that the Participant
would otherwise have received through the Delayed Initial Payment Date if such
issuance or payment had not been delayed pursuant to this Section 8(j), in each
case, without liability to the Participant for interest during such period of
delay, and (II) commence paying or issuing the balance of the amounts due under
the Award in accordance with the applicable schedules set forth in the Award
Agreement.

Notwithstanding anything to the contrary
contained herein, neither the Company nor any of its Affiliates shall be
responsible for, or required to reimburse or otherwise make any participant
whole for, any tax or penalty imposed on, or losses incurred by, any
Participant that arises in connection with the potential or actual application
of Section 409A to any Award granted hereunder.

9.             ADJUSTMENTS UPON CHANGES IN COMMON STOCK; OTHER
CORPORATE EVENTS.

(a)           Capitalization Adjustments.  In
the event of a Capitalization Adjustment, in order to prevent diminution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan, the Board shall appropriately and proportionately adjust: (i)
the class(es) and maximum number of securities subject to the Plan pursuant to
Section 3(a) (including Section 3(a)(ii)); (ii) the class(es) and maximum
number of securities that may be issued pursuant to the exercise of Incentive
Stock Options pursuant to Section 3(c); (iii) the class(es) and maximum
number of securities that may be awarded to any person pursuant to Section 4(c)
and 6(d)(i); and (iv) the class(es) and number of securities and price per
share of stock subject to outstanding Awards. 
The Board shall make such adjustments, and its determination shall be
final, binding and conclusive.

 

 

 

(b)           Dissolution or Liquidation. 
Except as otherwise provided in a Stock Award Agreement, in the event of
a dissolution or liquidation of the Company, all outstanding Stock Awards
(other than Stock Awards consisting of vested and outstanding shares of Common
Stock not subject to a forfeiture condition or the Company’s right of
repurchase) shall terminate immediately prior to the completion of such
dissolution or liquidation, and the shares of Common Stock subject to the
Company’s repurchase rights may be repurchased by the Company notwithstanding
the fact that the holder of such Stock Award is providing Continuous Service, provided, however, that the Board may, in
its sole discretion, cause some or all Stock Awards to become fully vested,
exercisable and/or no longer subject to repurchase or forfeiture (to the extent
such Stock Awards have not previously expired or terminated) before the
dissolution or liquidation is completed but contingent on its completion.  All other Awards that are not Stock Awards
shall be treated in accordance with the applicable Award Agreements.

(c)         Corporate Transaction.   The following provisions shall
apply to Awards in the event of a Corporate Transaction unless otherwise provided in the Award
Agreement or any other applicable written agreement between the Company or any
Affiliate and the holder of the Award, or unless otherwise expressly provided
by the Board at the time of grant of an Award.

(i)            Stock
Awards May Be Assumed. 
Any surviving corporation or acquiring corporation (or the surviving or
acquiring corporation’s parent company) may assume or continue any or all Awards
outstanding under the Plan or may substitute similar awards for Awards
outstanding under the Plan (including but not limited to, awards to acquire the
same consideration paid to the stockholders of the Company pursuant to the
Corporate Transaction), and any reacquisition or repurchase rights held by the
Company in respect of Common Stock issued pursuant to Awards may be assigned by
the Company to the successor of the Company (or the successor’s parent company,
if any), in connection with such Corporate Transaction.  A surviving corporation or acquiring
corporation (or its parent) may choose to assume or continue only a portion of
an Award or substitute a similar stock award for only a portion of an Award.  The terms of any assumption, continuation or substitution
shall be set by the Board in accordance with the provisions of this Plan.

(ii)           Awards Held
by Current Participants. 
In the event of a Corporate Transaction in which the surviving
corporation or acquiring corporation (or its parent company) does not assume or
continue outstanding Awards or substitute similar awards for outstanding
Awards, then with respect to Awards (or any portion thereof) that have not been
assumed, continued or substituted and that are held by Participants whose
Continuous Service has not terminated prior to the effective time of the
Corporate Transaction (referred to as the “Current Participants”), the vesting of such
Awards (and, with respect to Options and Stock Appreciation Rights, the time at
which such Awards may be exercised) shall be accelerated in full to a date
prior to the effective time of such Corporate Transaction (contingent upon the
effectiveness of the Corporate Transaction) as the Board shall determine (or,
if the Board shall not determine such a date, to the date that is five (5) days
prior to the effective time of the Corporate Transaction), and such Awards
shall terminate if not exercised (if applicable) at or prior to the effective
time of the Corporate Transaction, and any reacquisition or repurchase rights
held by the Company with respect to such Awards shall lapse (contingent upon
the effectiveness of the Corporate Transaction).

(iii)         Awards Held
by Persons other than Current Participants.  In the event of a Corporate Transaction in
which the surviving corporation or acquiring corporation (or its parent
company) does not assume or continue outstanding Awards or substitute similar
awards for outstanding Awards, then with respect to Awards (or any portion
thereof) that have not been assumed, continued or substituted and that are held
by persons other than Current Participants, such Awards shall terminate if not
exercised (if applicable) prior to the effective time of the Corporate
Transaction; provided, however, that any reacquisition or
repurchase rights held by the Company with respect to such Awards shall not
terminate and may continue to be exercised notwithstanding the Corporate
Transaction.

 

 

 

(iv)          Payment for
Stock Awards in Lieu of Exercise.  Notwithstanding the foregoing, in the event
an Award will terminate if not exercised prior to the effective time of a
Corporate Transaction, the Board may provide, in its sole discretion, that the
holder of such Award may not exercise such Award but will receive a payment, in
such form as may be determined by the Board, equal in value to the excess, if
any, of (A) the value of the property the holder of the Award would have
received upon the exercise of the Award pursuant to the terms of the Plan
(including, at the discretion of the Board, any unvested portion of such
Award), over (B) any exercise price payable by such holder in connection with
such exercise.

(d)           Change in Control.  An
Award may be subject to additional acceleration of vesting and exercisability
upon or after a Change in Control as may be provided in the Award Agreement for
such Award and/or in any other applicable written agreement between the Company
or any Affiliate and the Participant.  An
Award may vest as to all or any portion of the cash or shares subject to the
Award (i) immediately upon the occurrence of a Change in Control, whether or
not such Award is assumed, continued, or substituted by a surviving or
acquiring entity in the Change in Control, or (ii) in the event a Participant’s
Continuous Service is terminated, actually or constructively, within a
designated period following the occurrence of a Change in Control.  In the absence of such provisions, no such
acceleration shall occur.

10.          TERMINATION OR SUSPENSION OF THE PLAN.

(a)           Plan Term.  The Board may suspend or
terminate the Plan at any time.  Unless
terminated sooner, the Plan shall terminate on the day before the tenth (10th)
anniversary of the date the Plan is adopted by the Board.  No Awards may be granted under the Plan while
the Plan is suspended or after it is terminated.

(b)           No Impairment of Rights. 
Suspension or termination of the Plan shall not impair rights and
obligations under any Award granted while the Plan is in effect except with the
written consent of the adversely affected Participant.

11.          EFFECTIVE DATE OF PLAN.

The
Plan shall become effective on the IPO Date, but no Stock Award shall be
exercised (or, in the case of a Restricted Stock Award, Restricted Stock Unit
Award, Performance Stock Award, or Other Stock Award shall be granted and no
Performance Cash Award shall be settled) unless and until the Plan has been
approved by the stockholders of the Company, which approval shall be within
twelve (12) months after the date the Plan is adopted by the Board.

12.          CHOICE OF LAW.

The
law of the State of Delaware shall govern all questions concerning the
construction, validity and interpretation of this Plan, without regard to that
state’s conflict of laws rules.

13.          DEFINITIONS.

As
used in the Plan, the following definitions shall apply to the capitalized
terms indicated below:

(a)           “Affiliate” means, at the time of
determination, any “parent” or “subsidiary” of the Company as such terms are
defined in Rule 405 of the Securities Act. 
The Board shall have the authority to determine the time or times at
which “parent” or “subsidiary” status is determined within the foregoing
definition.

 

 

 

(b)           “Award” means a Stock Award or a
Performance Cash Award.

(c)           “Award Agreement” means a Stock Award
Agreement or the written terms of a Performance Cash Award. Each Award
Agreement shall be subject to the terms and conditions of the Plan.

(d)           “Board” means the Board of Directors
of the Company.

(e)           “Capitalization Adjustment” means any
change that is made in, or other events that occur with respect to, the Common
Stock subject to the Plan or subject to any Stock Award after the Effective
Date without the receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by
the Company). Notwithstanding the foregoing, the conversion of any convertible
securities of the Company shall not be treated as a transaction “without the
receipt of consideration” by the Company.

(f)            “Cause”  means with respect to a Participant, the
occurrence of any of the following events: 
(i) such Participant’s commission of any felony or any crime involving
fraud, dishonesty or moral turpitude under the laws of the United States or any
state thereof; (ii) such Participant’s attempted commission of, or
participation in, a fraud or act of dishonesty against the Company; (iii) such
Participant’s intentional, material violation of any contract or agreement
between the Participant and the Company or of any statutory duty owed to the
Company; (iv)  such Participant’s unauthorized use or disclosure of
the Company’s confidential information or trade secrets; or (v) such
Participant’s gross misconduct. The determination that a termination of the
Participant’s Continuous Service is either for Cause or without Cause shall be
made by the Board in its sole discretion. 
Any determination by the Board that the Continuous Service of a
Participant was terminated with or without Cause for the purposes of
outstanding Awards held by such Participant shall have no effect upon any
determination of the rights or obligations of the Company or such Participant
for any other purpose.

(g)           “Change in Control” means the
occurrence, in a single transaction or in a series of related transactions, of
any one or more of the following events:

(i)            any
Exchange Act Person becomes the Owner, directly or indirectly, of securities of
the Company representing more than fifty
percent (50%) of the combined voting power of the Company’s then
outstanding securities other than by virtue of a merger, consolidation or
similar transaction.  Notwithstanding the foregoing, a Change in
Control shall not be deemed to occur (A) on account of the acquisition of
securities of the Company by an investor, any affiliate thereof or any other
Exchange Act Person from the Company in a transaction or series of related
transactions the primary purpose of which is to obtain financing for the
Company through the issuance of equity securities or (B) solely because the
level of Ownership held by any Exchange Act Person (the “Subject Person”) exceeds the designated percentage
threshold of the outstanding voting securities as a result of a repurchase or
other acquisition of voting securities by the Company reducing the number of
shares outstanding, provided that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of voting
securities by the Company, and after such share acquisition, the Subject Person
becomes the Owner of any additional voting securities that, assuming the
repurchase or other acquisition had not occurred, increases the percentage of
the then outstanding voting securities Owned by the Subject Person over the
designated percentage threshold, then a Change in Control shall be deemed to
occur;

(ii)           there
is consummated a merger, consolidation or similar transaction involving
(directly or indirectly) the Company and, immediately after the consummation of
such merger,

 

 

 

consolidation or similar transaction, the stockholders of the Company
immediately prior thereto do not Own, directly or indirectly, either (A)
outstanding voting securities representing more than fifty percent (50%) of the combined outstanding voting power of
the surviving Entity in such merger, consolidation or similar transaction or
(B) more than fifty percent (50%)
of the combined outstanding voting power of the parent of the surviving Entity
in such merger, consolidation or similar transaction, in each case in
substantially the same proportions as their Ownership of the outstanding voting
securities of the Company immediately prior to such transaction;

(iii)         there
is consummated a sale, lease, exclusive license or other disposition of all or
substantially all of the consolidated assets of the Company and its
Subsidiaries, other than a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of the Company and its
Subsidiaries to an Entity, more than fifty
percent (50%) of the combined voting power of the voting securities of
which are Owned by stockholders of the Company in substantially the same
proportions as their Ownership of the outstanding voting securities of the
Company immediately prior to such sale, lease, license or other disposition; or

(iv)          over
a twelve month period, individuals who, on the date the Plan is adopted by the
Board, are members of the Board (the “Incumbent Board”) cease for any reason to
constitute at least a majority of the members of the Board; provided, however, that if the appointment or election (or
nomination for election) of any new Board member was approved or recommended by
a majority vote of the members of the Incumbent Board then still in office,
such new member shall, for purposes of the Plan, be considered as a member of
the Incumbent Board.

For
avoidance of doubt, the term Change in Control shall not include a sale of
assets, merger or other transaction effected exclusively for the purpose of
changing the domicile of the Company.

Notwithstanding
the foregoing or any other provision of the Plan, the definition of Change in
Control (or any analogous term) in an individual written agreement between the
Company or any Affiliate and the Participant shall supersede the foregoing
definition with respect to Awards subject to such agreement; provided, however, that if no definition
of Change in Control or any analogous term is set forth in such an individual
written agreement, the foregoing definition shall apply.

(h)           “Code” means the Internal Revenue
Code of 1986, as amended.

(i)            “Committee” means a committee of one
(1) or more Directors to whom authority has been delegated by the Board in
accordance with Section 2(c).

(j)            “Common Stock” means the common stock
of the Company.

(k)           “Company” means Reliant Technologies,
Inc., a Delaware corporation.

(l)            “Consultant” means any person, including an advisor, who
is (i) engaged by the Company or an Affiliate to render consulting or advisory
services and is compensated for such services, or (ii) serving as a member of
the board of directors of an Affiliate and is compensated for such
services.  However, service solely as a
Director, or payment of a fee for such service, shall not cause a Director to
be considered a “Consultant” for purposes of the Plan.

(m)          “Continuous Service” means that the
Participant’s service with the Company or an Affiliate, whether as an Employee,
Director or Consultant, is not interrupted or terminated.  A change in the capacity in which the
Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant
renders such service, provided

 

 

 

that there is no interruption or termination
of the Participant’s service with the Company or an Affiliate, shall not, by
itself, terminate a Participant’s Continuous Service; provided,
however, if the Entity for which a Participant is rendering services
ceases to qualify as an “Affiliate,” as determined by the Board in its sole
discretion, such Participant’s Continuous Service shall be considered to have
terminated on the date such Entity ceases to qualify as an Affiliate.  To the extent a Participant, upon a change in
capacity of service, ceases to provide service at a rate of more than 20% of
his or her rate of service (immediately prior to the change in capacity), such
Participant may be deemed to have suffered a termination of Continuous Service.
To the extent permitted by law, the Board or the chief executive officer of the
Company, in that party’s sole discretion, may determine whether Continuous
Service shall be considered interrupted in the case of: (i) any leave of
absence approved by the Board of the chief executive officer of the Company,
including sick leave, military leave or any other personal leave; or (ii)
transfers between the Company, an Affiliate, or their successors.  Notwithstanding the foregoing, and except as
otherwise required by applicable law or as otherwise determined by the Company,
a leave of absence shall be treated as Continuous Service for purposes of
vesting in a Stock Award only to such extent as may be provided in the Company’s
leave of absence policy, in the written terms of any leave of absence agreement
or policy applicable to the Participant, or as otherwise required by law.

(n)           “Corporate Transaction” means the
occurrence, in a single transaction or in a series of related transactions, of
any one or more of the following events:

(i)            a
sale  or other disposition of all or
substantially all, as determined by the Board in its sole discretion, of the
consolidated assets of the Company and its Subsidiaries;

(ii)           a
sale or other disposition of at least ninety
percent (90%) of the outstanding securities of the Company;

(iii)         the
consummation of a merger, consolidation or similar transaction following which
the Company is not the surviving corporation; or

(iv)          the
consummation of a merger, consolidation or similar transaction following which
the Company is the surviving corporation but the shares of Common Stock
outstanding immediately preceding the merger, consolidation or similar
transaction are converted or exchanged by virtue of the merger, consolidation
or similar transaction into other property, whether in the form of securities,
cash or otherwise.

(o)           “Covered Employee” shall have the
meaning provided in Section 162(m)(3) of the Code and the regulations
promulgated thereunder.

(p)           “Director” means a member of the
Board.

(q)           “Disability” means, with respect to a
Participant, the inability of such Participant to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, as provided in Section
22(e)(3) and 409A(a)(2)(c)(i) of the Code.

(r)           “Effective Date” means the effective
date of the Plan as set forth in Section 11.

(s)           “Employee” means any person employed by the Company or
an Affiliate.  However, service solely as
a Director, or payment of a fee for such services, shall not cause a Director
to be considered an “Employee” for purposes of the Plan.

 

 

 

(t)            “Entity” means a corporation,
partnership, limited liability company or other entity.

(u)           “Exchange Act” means the Securities
Exchange Act of 1934, as amended.

(v)            “Exchange Act Person”  means any natural person, Entity or
“group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act),
except that “Exchange Act Person” shall not include (i) the Company or any
Subsidiary of the Company, (ii) any employee benefit plan of the Company or any
Subsidiary of the Company or any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any Subsidiary of the Company,
(iii) an underwriter temporarily holding securities pursuant to an offering of
such securities, (iv) an Entity Owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
Ownership of stock of the Company; or (v) any natural person, Entity or “group”
(within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of
the Effective Date, is the Owner, directly or indirectly, of securities of the
Company representing more than fifty percent (50%) of the combined voting power
of the Company’s then outstanding securities.

(w)           “Fair Market Value” means, as of any
date, the value of the Common Stock determined as follows:

(i)            If
the Common Stock is listed on any established stock exchange or traded on any
established market, the Fair Market Value of a share of Common Stock shall be
the closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or market (or the exchange or market with
the greatest volume of trading in the Common Stock) on the date of
determination, as reported in The Wall Street Journal  or such other source as the Board deems
reliable. Unless otherwise provided by the Board, if there is no closing sales
price (or closing bid if no sales were reported) for the Common Stock on the
date of determination, then the Fair Market Value shall be the mean between the
bid and asked prices for the Common Stock on the last preceding date for which
such quotation exists.

(ii)           In
the absence of such markets for the Common Stock, the Fair Market Value shall
be determined by the Board in good faith and in a manner that complies with
Section 409A of the Code.

(x)           “Incentive Stock Option” means an
Option which qualifies as an “incentive stock option” within the meaning of
Section 422 of the Code and the regulations promulgated thereunder.

(y)           “IPO Date” means the date of the
underwriting agreement between the Company and the underwriter(s) managing the
initial public offering of the Common Stock, pursuant to which the Common Stock
is priced for the initial public offering.

(z)           “Non-Employee Director”  means a Director who either (i) is not a current employee
or officer of the Company or an Affiliate, does not receive compensation,
either directly or indirectly, from the Company or an Affiliate for services
rendered as a consultant or in any capacity other than as a Director (except
for an amount as to which disclosure would not be required under Item 404(a) of
Regulation S-K promulgated pursuant to the Securities Act (“Regulation S-K”)),
does not possess an interest in any other transaction for which disclosure
would be required under Item 404(a) of Regulation S-K, and is not engaged in a
business relationship for which disclosure would be required pursuant to
Item 404(b) of Regulation S-K; or (ii) is otherwise considered a “non-employee
director” for purposes of Rule 16b-3.

 

 

(aa)         “Nonstatutory Stock Option”
means an Option that does not qualify as an Incentive Stock Option.

(bb)         “Officer”
means a person who is an officer of the Company within the meaning of
Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.

(cc)         “Option”
means an Incentive Stock Option or a Nonstatutory Stock Option to purchase
shares of Common Stock granted pursuant to the Plan.

(dd)         “Option Agreement”
means a written agreement between the Company and an Optionholder evidencing
the terms and conditions of an Option grant. 
Each Option Agreement shall be subject to the terms and conditions of
the Plan.

(ee)         “Optionholder”
means a person to whom an Option is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Option.

(ff)           “Other Stock
Award” means an
award based in whole or in part by reference to the Common Stock which is
granted pursuant to the terms and conditions of Section 6(e).

(gg)         “Outside Director”
means a Director who either (i) is not a current employee of the Company or an “affiliated
corporation” (within the meaning of Treasury Regulations promulgated under
Section 162(m) of the Code), is not a former employee of the Company or an “affiliated
corporation” who receives compensation for prior services (other than benefits
under a tax-qualified retirement plan) during the taxable year, has not been an
officer of the Company or an “affiliated corporation,” and does not receive
remuneration from the Company or an “affiliated corporation,” either directly
or indirectly, in any capacity other than as a Director, or (ii) is otherwise
considered an “outside director” for purposes of Section 162(m) of the Code.

(hh)         “Own,” “Owned,” “Owner,”
“Ownership” A person or Entity shall
be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership”
of securities if such person or Entity, directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise, has or shares
voting power, which includes the power to vote or to direct the voting, with
respect to such securities.

(ii)           “Participant”
means a person to whom an Award is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Award.

(jj)           “Performance
Criteria” means
the one or more criteria that the Board shall select for purposes of
establishing the Performance Goals for a Performance Period.  The Performance Criteria that shall be used
to establish such Performance Goals may be based on any one of, or combination
of, on a U.S. generally accepted accounting standards or non-generally accepted
accounting standards basis, the following: (i) earnings per share; (ii)
earnings before interest, taxes and depreciation; (iii) earnings before
interest, taxes, depreciation and amortization (EBITDA); (iv) total stockholder
return; (v) return on equity; (vi) return on assets, investment, or capital
employed; (vii) operating margin; (viii) gross margin; (ix) operating income;
(x) net income (before or after taxes); (xi) net operating income; (xii) net
operating income after tax; (xiii) pre- and after-tax income; (xiv) pre-tax
profit; (xv) operating cash flow; (xvi) sales or revenue targets; (xvii)
orders and revenue; (xviii) increases in revenue or product revenue; (xix)
expenses and cost reduction goals; (xx) improvement in or attainment of expense
levels; (xxi) improvement in or attainment of working capital levels; (xxii)
economic value added (or an equivalent metric); (xxiii) market share; (xxiv)
cash flow; (xxv) cash flow per share; (xxvi) share price performance; (xxvii)
debt reduction; (xxviii) implementation or completion of projects or processes;

 

 

 

(xxix) customer satisfaction; (xxx)
stockholders’ equity; (xxxi) quality measures; and (xxxii) to the extent that a
Stock Award is not intended to comply with Section 162(m) of the Code, other
measures of performance selected by the Board. 
Partial achievement of the specified criteria may result in the payment
or vesting corresponding to the degree of achievement as specified in the Award
Agreement.  The Board shall, in its sole
discretion, define the manner of calculating the Performance Criteria it
selects to use for such Performance Period.

(kk)        “Performance
Goals” means, for
a Performance Period, the one or more goals established by the Board for the
Performance Period based upon the satisfaction of the Performance
Criteria.  Performance Goals may be based
on a Company-wide basis, with respect to one or more business units, divisions,
Affiliates, or business segments, and in either absolute terms or relative to
the performance of one or more comparable companies or the performance of one
or more relevant indices.  At the time of
the grant of any Award, the Board is authorized to determine whether, when
calculating the attainment of Performance Goals for a Performance Period: (i)
to exclude restructuring and/or other nonrecurring charges; (ii) to exclude
exchange rate effects, as applicable, for non-U.S. dollar denominated net sales
and operating earnings; (iii) to exclude the effects of changes to generally
accepted accounting standards required by the Financial Accounting Standards Board;
(iv) to exclude the effects of any statutory adjustments to corporate tax
rates; and (v) to exclude the effects of any “extraordinary items” as
determined under generally accepted accounting principles.  In addition, the Board retains the discretion
to reduce or eliminate the compensation or economic benefit due upon attainment
of Performance Goals.

(ll)           “Performance
Period” means one
or more periods of time, which may be of varying and overlapping duration, as
the Committee may select, over which the attainment of one or more Performance
Goals will be measured for the purpose of determining a Participant’s right to
and the payment of a Performance Stock Award or a Performance Cash Award.

(mm)       “Performance Stock Award”
means a Restricted Stock Award or Restricted Stock Unit Award which is granted
pursuant to the terms and conditions of Section 6(d)(i).

(nn)         “Plan” means
this Reliant Technologies, Inc. 2007 Equity Incentive Plan.

(oo)         “Prior Plan”
means the Company’s 2002 Stock Option Plan as in effect immediately prior to
the Effective Date.

(pp)         “Restricted
Stock Award”
means an award of shares of Common Stock which is granted pursuant to the terms
and conditions of Section 6(a).

(qq)         “Restricted
Stock Award Agreement” means a written agreement between the Company and a holder of a
Restricted Stock Award evidencing the terms and conditions of a Restricted
Stock Award grant.  Each Restricted Stock
Award Agreement shall be subject to the terms and conditions of the Plan.

(rr)         “Restricted
Stock Unit Award”  means a
right to receive shares of Common Stock which is granted pursuant to the terms
and conditions of Section 6(b).

(ss)         “Restricted
Stock Unit Award Agreement” means a written agreement between the Company and a holder of a
Restricted Stock Unit Award evidencing the terms and conditions of a Restricted
Stock Unit Award grant.  Each Restricted
Stock Unit Award Agreement shall be subject to the terms and conditions of the
Plan.

 

 

(tt)           “Rule 16b-3”
means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule
16b-3, as in effect from time to time.

(uu)         “Securities Act”
means the Securities Act of 1933, as amended.

(vv)          “Stock
Appreciation Right”
means a right to receive the appreciation on Common Stock that is granted
pursuant to the terms and conditions of Section 6(c).

(ww)        “Stock
Appreciation Right Agreement” means a written agreement between the Company and a holder of a Stock
Appreciation Right evidencing the terms and conditions of a Stock Appreciation
Right grant.  Each Stock Appreciation
Right Agreement shall be subject to the terms and conditions of the Plan.

(xx)         “Stock Award” means any right to receive Common Stock
granted under the Plan, including an Option, a Restricted Stock Award, a
Restricted Stock Unit Award, a Stock Appreciation Right, a Performance Stock
Award, or Other Stock Award.

(yy)         “Stock Award
Agreement” means
a written agreement between the Company and a Participant evidencing the terms
and conditions of a Stock Award grant. 
Each Stock Award Agreement shall be subject to the terms and conditions
of the Plan.

(zz)         “Subsidiary”
means, with respect to the Company, (i) any corporation of which more than
fifty percent (50%) of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, Owned by
the Company, and (ii) any partnership, limited liability company or other
entity in which the Company has a direct or indirect interest (whether in the
form of voting or participation in profits or capital contribution) of more
than fifty percent (50%).

(aaa)       “Ten Percent Stockholder”
means a person who Owns (or is deemed to Own pursuant to Section 424(d) of the
Code) stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or any Affiliate.

 

RELIANT TECHNOLOGIES, INC.

2007 EQUITY INCENTIVE PLAN

 

OPTION AGREEMENT

(INCENTIVE STOCK OPTION OR NONSTATUTORY STOCK OPTION)

Pursuant
to your Stock Option Grant Notice (“Grant Notice”)
and this Option Agreement, Reliant Technologies, Inc. (the “Company”) has granted you an option
under its 2007 Equity Incentive Plan (the “Plan”) to
purchase the number of shares of the Company’s Common Stock indicated in your
Grant Notice at the exercise price indicated in your Grant Notice.  Defined terms not explicitly defined in this
Option Agreement but defined in the Plan shall have the same definitions as in
the Plan.

The
details of your option are as follows:

1.             VESTING.  Subject to the limitations contained herein,
your option will vest as provided in your Grant Notice, provided that vesting
will cease upon the termination of your Continuous Service.

2.             NUMBER OF SHARES AND EXERCISE PRICE.  The number of shares of Common Stock subject
to your option and your exercise price per share referenced in your Grant
Notice may be adjusted from time to time for Capitalization Adjustments.

3.             EXERCISE RESTRICTION FOR NON-EXEMPT EMPLOYEES.  In the event that you are an Employee
eligible for overtime compensation under the Fair Labor Standards Act of 1938,
as amended (i.e., a “Non-Exempt Employee”),
you may not exercise your option until you have completed at least six (6)
months of Continuous Service measured from the Date of Grant specified in your
Grant Notice, notwithstanding any other provision of your option.

4.             METHOD OF PAYMENT.  Payment of the exercise price is due in full
upon exercise of all or any part of your option.  You may elect to make payment of the exercise
price in cash or by check or in any other manner permitted
by your Grant Notice, subject to the following:

a.             Provided
that at the time of exercise the Common Stock is publicly traded and quoted
regularly in The Wall Street Journal, pursuant
to a program developed under Regulation T as promulgated by the Federal Reserve
Board that, prior to the issuance of Common Stock, results in either the
receipt of cash (or check) by the Company or the receipt of irrevocable
instructions to pay the aggregate exercise price to the Company from the sales
proceeds.

b.             Provided
that at the time of exercise the Common Stock is publicly traded and quoted
regularly in The Wall Street Journal, and subject to the consent of the Company
at the time of exercise, by delivery to the Company (either by actual delivery
or attestation) of already-owned shares of Common Stock that are owned free and
clear of any liens, claims, encumbrances or security interests, and that are
valued at Fair Market Value on the date of exercise.  Notwithstanding the foregoing, you may not
exercise your option by tender to the Company of Common Stock to the extent such
tender would violate the provisions of any law, regulation or agreement
restricting the redemption of the Company’s stock.

c.             Provided
that at the time of exercise the Common Stock is publicly traded and quoted
regularly in The Wall Street Journal, and subject to the consent of the Company
at the time of exercise, by a “net exercise” arrangement pursuant to which the
Company will reduce the number of

 

 

 

shares of Common
Stock issued upon exercise of your option by the largest whole number of shares
with a Fair Market Value that does not exceed the aggregate exercise price;
provided, however, that the Company shall accept a cash or other payment from
you to the extent of any remaining balance of the aggregate exercise price not
satisfied by such reduction in the number of whole shares to be issued;
provided further, however, that shares of Common Stock will no longer be
outstanding under your option and will not be exercisable thereafter to the
extent that (1) shares are used to pay the exercise price pursuant to the “net
exercise,” (2) shares are delivered to you as a result of such exercise, and
(3) shares are withheld to satisfy tax withholding obligations.

5.             WHOLE SHARES.  You may exercise your option only for whole
shares of Common Stock.

6.             SECURITIES LAW COMPLIANCE.  Notwithstanding anything to the contrary
contained herein, you may not exercise your option unless the shares of Common
Stock issuable upon such exercise are then registered under the Securities Act
or, if such shares of Common Stock are not then so registered, the Company has
determined that such exercise and issuance would be exempt from the
registration requirements of the Securities Act.  The exercise of your option also must comply
with other applicable laws and regulations governing your option, and you may
not exercise your option if the Company determines that such exercise would not
be in material compliance with such laws and regulations.

7.             TERM.  You may not exercise your option before the
commencement or after the expiration of its term.  The term of your option commences on the Date
of Grant and expires upon the earliest of the following:

a.             immediately
upon the termination of your Continuous Service for Cause;

b.             three
(3) months after the termination of your Continuous Service for any reason
other than Cause, Disability or death, provided that if during any part of such
three (3)-month period you may not exercise your option solely because of the
condition set forth in the preceding paragraph relating to “Securities Law Compliance,”
your option shall not expire until the earlier of the Expiration Date or until
it shall have been exercisable for an aggregate period of three (3) months
after the termination of your Continuous Service;

c.             twelve
(12) months after the termination of your Continuous Service due to your
Disability;

d.             eighteen
(18) months after your death if you die either during your Continuous Service
or within three (3) months after your Continuous Service terminates for any
reason other than Cause;

e.             the
Expiration Date indicated in your Grant Notice; or

f.              the
day before the tenth (10th) anniversary of the Date of Grant.

If
your option is an Incentive Stock Option, note that, to obtain the federal
income tax advantages associated with an Incentive Stock Option, the Code
requires that at all times beginning on the date of grant of your option and
ending on the day three (3) months before the date of your option’s exercise,
you must be an employee of the Company or an Affiliate, except in the event of
your death or Disability.  The Company
has provided for extended exercisability of your option under certain
circumstances for your benefit but cannot guarantee that your option will
necessarily be treated as an Incentive Stock Option if you continue to provide
services to the Company or an Affiliate as a Consultant or Director after your

 

 

employment terminates or if you otherwise exercise your option more than
three (3) months after the date your employment terminates.

8.             EXERCISE.

a.             You
may exercise the vested portion of your option during its term by delivering a
Notice of Exercise (in a form designated by the Company) together with the
exercise price to the Secretary of the Company, or to such other person as the
Company may designate, during regular business hours, together with such
additional documents as the Company may then require.

b.             By
exercising your option you agree that, as a condition to any exercise of your
option, the Company may require you to enter into an arrangement providing for
the payment by you to the Company of any tax withholding obligation of the
Company arising by reason of (1) the exercise of your option, (2) the lapse of
any substantial risk of forfeiture to which the shares of Common Stock are
subject at the time of exercise, or (3) the disposition of shares of Common
Stock acquired upon such exercise.

c.             If
your option is an Incentive Stock Option, by exercising your option you agree
that you will notify the Company in writing within fifteen (15) days after the
date of any disposition of any of the shares of the Common Stock issued upon
exercise of your option that occurs within two (2) years after the date of your
option grant or within one (1) year after such shares of Common Stock are
transferred upon exercise of your option.

9.             TRANSFERABILITY.

1)            Restrictions
on Transfer.  Your
option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during your lifetime only by you; provided, however, that the Board may, in its sole discretion,
permit transfer of your options in a manner that is not prohibited by
applicable tax and securities laws upon your request.

2)            Domestic
Relations Orders. 
Notwithstanding the foregoing, your option may be transferred pursuant
to a domestic relations order; provided, however,
that if your option is an Incentive Stock Option, your option shall be deemed
to be a Nonstatutory Stock Option as a result of such transfer.

3)            Beneficiary
Designation. 
Notwithstanding the foregoing, you may, by delivering written notice to
the Company, in a form provided by or otherwise satisfactory to the Company and
any broker designated by the Company to effect option exercises, designate a
third party who, in the event of your death, shall thereafter be entitled to
exercise your option.  In the absence of
such a designation, the executor or administrator of your estate shall be
entitled to exercise your option.

10.          OPTION NOT A SERVICE CONTRACT.  Your option is not an employment or service
contract, and nothing in your option shall be deemed to create in any way
whatsoever any obligation on your part to continue in the employ of the Company
or an Affiliate, or of the Company or an Affiliate to continue your
employment.  In addition, nothing in your
option shall obligate the Company or an Affiliate, their respective
stockholders, Boards of Directors, Officers or Employees to continue any
relationship that you might have as a Director or Consultant for the Company or
an Affiliate.

 

 

 

11.          WITHHOLDING OBLIGATIONS.

a.             At
the time you exercise your option, in whole or in part, or at any time
thereafter as requested by the Company, you hereby authorize withholding from
payroll and any other amounts payable to you, and otherwise agree to make
adequate provision for (including by means of a “cashless exercise” pursuant to
a program developed under Regulation T as promulgated by the Federal Reserve
Board to the extent permitted by the Company), any sums required to satisfy the
federal, state, local and foreign tax withholding obligations of the Company or
an Affiliate, if any, which arise in connection with the exercise of your
option.

b.             Upon
your request and subject to approval by the Company, in its sole discretion,
and compliance with any applicable legal conditions or restrictions, the
Company may withhold from fully vested shares of Common Stock otherwise
issuable to you upon the exercise of your option a number of whole shares of
Common Stock having a Fair Market Value, determined by the Company as of the
date of exercise, not in excess of the minimum amount of tax required to be
withheld by law (or such lower amount as may be necessary to avoid
classification of your option as a liability for financial accounting
purposes).  If the date of determination
of any tax withholding obligation is deferred to a date later than the date of
exercise of your option, share withholding pursuant to the preceding sentence
shall not be permitted unless you make a proper and timely election under
Section 83(b) of the 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 your 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 your option that are
otherwise issuable to you upon such exercise. 
Any adverse consequences to you arising in connection with such share
withholding procedure shall be your sole responsibility.

c.             You
may not exercise your option unless the tax withholding obligations of the
Company and/or any Affiliate are satisfied. 
Accordingly, you may not be able to exercise your option when desired
even though your option is vested, and the Company shall have no obligation to
issue a certificate for such shares of Common Stock or release such shares of
Common Stock from any escrow provided for herein unless such obligations are
satisfied.

12.          NOTICES.  Any notices provided for in your option or
the Plan shall be given in writing and shall be deemed effectively given upon
receipt or, in the case of notices delivered by mail by the Company to you,
five (5) days after deposit in the United States mail, postage prepaid,
addressed to you at the last address you provided to the Company.

13.          GOVERNING PLAN
DOCUMENT.  Your
option is subject to all the provisions of the Plan, the provisions of which
are hereby made a part of your option, and is further subject to all
interpretations, amendments, rules and regulations, which may from time to time
be promulgated and adopted pursuant to the Plan.  In the event of any conflict between the
provisions of your option and those of the Plan, the provisions of the Plan
shall control.

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