Document:

Exhibit 10.7

 

EXHIBIT 10.7

2006 Equity Incentive Plan

of

ARTES MEDICAL, Inc.

1. Purpose of this Plan

     The purpose of this 2006 Equity Incentive Plan is to enhance the long-term stockholder value
of Artes Medical, Inc. by offering opportunities to eligible individuals to participate in the
growth in value of the equity of Artes Medical, Inc.

2. Definitions and Rules of Interpretation

     2.1 Definitions.

     This Plan uses the following defined terms:

          (a) “Administrator” means the Board or the Committee, or any officer or employee of
the Company to whom the Board or the Committee delegates authority to administer this Plan.

          (b) “Affiliate” means a “parent” or “subsidiary” (as each is defined in Section 424
of the Code) of the Company and any other entity that the Board or Committee designates as an
“Affiliate” for purposes of this Plan.

          (c) “Applicable Law” means any and all laws of whatever jurisdiction, within or
without the United States, and the rules of any stock exchange or quotation system on which Shares
are listed or quoted, applicable to the taking or refraining from taking of any action under this
Plan, including the administration of this Plan and the issuance or transfer of Awards or Award
Shares.

          (d) “Award” means a Stock Award (e.g. restricted stock unit award), SAR, Cash Award,
or Option granted in accordance with the terms of this Plan.

          (e) “Award Agreement” means the document evidencing the grant of an Award.

          (f) “Award Shares” means Shares covered by an outstanding Award or purchased under
an Award.

          (g) “Awardee” means: (i) a person to whom an Award has been granted, including a
holder of a Substitute Award, (ii) a person to whom an Award has been transferred in accordance
with all applicable requirements of Sections 6.5, 7(h), and 17.

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

          (i) “Cash Award” means the right to receive cash as described in Section 8.3.

 

 

          (j) “Change in Control” means any transaction or event that the Board specifies as a
Change in Control under Section 10.4.

          (k) “Code” means the Internal Revenue Code of 1986.

          (l) “Committee” means a committee composed of Company Directors appointed in
accordance with the Company’s charter documents and Section 4.

          (m) “Company” means Artes Medical, Inc., a Delaware corporation.

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

          (o) “Consultant” means an individual who, or an employee of any entity that,
provides bona fide services to the Company or an Affiliate not in connection with the offer or sale
of securities in a capital-raising transaction, but who is not an Employee.

          (p) “Director” means a member of the Board of Directors of the Company or an
Affiliate.

          (q) “Divestiture” means any transaction or event that the Board specifies as a
Divestiture under Section 10.5.

          (r) “Domestic Relations Order” means a “domestic relations order” as defined in, and
otherwise meeting the requirements of, Section 414(p) of the Code, except that reference to a
“plan” in that definition shall be to this Plan.

          (s) “Effective Date” means the first date of the sale by the Company of shares of
its capital stock in an initial public offering pursuant to a registration statement on Form S-1
filed with the SEC.

          (t) “Employee” means a regular employee of the Company or an Affiliate, including an
officer or Director, who is treated as an employee in the personnel records of the Company or an
Affiliate, but not individuals who are classified by the Company or an Affiliate as: (i) leased
from or otherwise employed by a third party, (ii) independent contractors, or (iii) intermittent or
temporary workers. The Company’s or an Affiliate’s classification of an individual as an
“Employee” (or as not an “Employee”) for purposes of this Plan shall not be altered retroactively
even if that classification is changed retroactively for another purpose as a result of an audit,
litigation or otherwise. An Awardee shall not cease to be an Employee due to transfers between
locations of the Company, or between the Company and an Affiliate, or to any successor to the
Company or an Affiliate that assumes the Awardee’s Options under Section 10. Neither service as a
Director nor receipt of a director’s fee shall be sufficient to make a Director an “Employee.”

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

          (v) “Executive” means, if the Company has any class of any equity security
registered under Section 12 of the Exchange Act, an individual who is subject to Section 16 of

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the Exchange Act or who is a “covered employee” under Section 162(m) of the Code, in either
case because of the individual’s relationship with the Company or an Affiliate. If the Company
does not have any class of any equity security registered under Section 12 of the Exchange Act,
“Executive” means any (i) Director, (ii) officer elected or appointed by the Board, or (iii)
beneficial owner of more than 10% of any class of the Company’s equity securities.

          (w) “Expiration Date” means, with respect to an Award, the date stated in the Award
Agreement as the expiration date of the Award or, if no such date is stated in the Award Agreement,
then the last day of the maximum exercise period for the Award, disregarding the effect of an
Awardee’s Termination or any other event that would shorten that period.

          (x) “Fair Market Value” means the value of Shares as determined under Section 18.2.

          (y) “Fundamental Transaction” means any transaction or event described in Section
10.3.

          (z) “Grant Date” means the date the Administrator approves the grant of an Award.
However, if the Administrator specifies that an Award’s Grant Date is a future date or the date on
which a condition is satisfied, the Grant Date for such Award is that future date or the date that
the condition is satisfied.

          (aa) “Incentive Stock Option” means an Option intended to qualify as an incentive
stock option under Section 422 of the Code and designated as an Incentive Stock Option in the Award
Agreement for that Option.

          (bb) “Nonstatutory Option” means any Option other than an Incentive Stock Option.

          (cc) “Non-Employee Director” means any person who is a member of the Board but is
not an Employee of the Company or any Affiliate of the Company and has not been an Employee of the
Company or any Affiliate of the Company at any time during the preceding twelve months. Service as
a Director does not in itself constitute employment for purposes of this definition.

          (dd) “Objectively Determinable Performance Condition” shall mean a performance
condition (i) that is established (A) at the time an Award is granted or (B) no later than the
earlier of (1) 90 days after the beginning of the period of service to which it relates, or (2)
before the elapse of 25% of the period of service to which it relates, (ii) that is uncertain of
achievement at the time it is established, and (iii) the achievement of which is determinable by a
third party with knowledge of the relevant facts. Examples of measures that may be used in
Objectively Determinable Performance Conditions include net order dollars, net profit dollars, net
profit growth, net revenue dollars, revenue growth, individual performance, earnings per share,
return on assets, return on equity, and other financial objectives, objective customer satisfaction
indicators and efficiency measures, each with respect to the Company and/or an Affiliate or
individual business unit.

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          (ee) “Officer” means an officer of the Company as defined in Rule 16a-1 adopted
under the Exchange Act.

          (ff) “Option” means a right to purchase Shares of the Company granted under this
Plan.

          (gg) “Option Price” means the price payable under an Option for Shares, not
including any amount payable in respect of withholding or other taxes.

          (hh) “Option Shares” means Shares covered by an outstanding Option or purchased
under an Option.

          (ii) “Plan” means this 2006 Equity Incentive Plan of Artes Medical, Inc.

          (jj) “Prior Plans” means the Company’s 2001 Stock Option/Stock Issuance Plan.

          (kk) “Purchase Price” means the price payable under a Stock Award for Shares, not
including any amount payable in respect of withholding or other taxes.

          (ll) “Rule 16b-3” means Rule 16b-3 adopted under Section 16(b) of the Exchange Act.

          (mm) “SAR” or “Stock Appreciation Right” means a right to receive cash based on a
change in the Fair Market Value of a specific number of Shares pursuant to an Award Agreement, as
described in Section 8.1.

          (nn) “Securities Act” means the Securities Act of 1933.

          (oo) “Share” means a share of the common stock of the Company or other securities
substituted for the common stock under Section 10.

          (pp) “Stock Award” means an offer by the Company to sell shares subject to certain
restrictions pursuant to the Award Agreement as described in Section 8.2 or, as determined by the
Committee, a notional account representing the right to be paid an amount based on Shares.

          (qq) “Substitute Award” means a Substitute Option, Substitute SAR or Substitute
Stock Award granted in accordance with the terms of this Plan.

          (rr) “Substitute Option” means an Option granted in substitution for, or upon the
conversion of, an option granted by another entity to purchase equity securities in the granting
entity.

          (ss) “Substitute SAR” means a SAR granted in substitution for, or upon the
conversion of, a stock appreciation right granted by another entity with respect to equity
securities in the granting entity.

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          (tt) “Substitute Stock Award” means a Stock Award granted in substitution for, or
upon the conversion of, a stock award granted by another entity to purchase equity securities in
the granting entity.

          (uu) “Termination” means that the Awardee has ceased to be, with or without any
cause or reason, an Employee, Director or Consultant. However, unless so determined by the
Administrator, or otherwise provided in this Plan, “Termination” shall not include a change in
status from an Employee, Consultant or Director to another such status. An event that causes an
Affiliate to cease being an Affiliate shall be treated as the “Termination” of that Affiliate’s
Employees, Directors, and Consultants.

     2.2 Rules of Interpretation. Any reference to a “Section,” without more, is to a
Section of this Plan. Captions and titles are used for convenience in this Plan and shall not, by
themselves, determine the meaning of this Plan. Except when otherwise indicated by the context,
the singular includes the plural and vice versa. Any reference to a statute is also a reference to
the applicable rules and regulations adopted under that statute. Any reference to a statute, rule
or regulation, or to a section of a statute, rule or regulation, is a reference to that statute,
rule, regulation, or section as amended from time to time, both before and after the Effective Date
and including any successor provisions.

3. Shares Subject to this Plan; Term of this Plan

     3.1 Number of Award Shares. The Shares issuable under this Plan shall be authorized
but unissued or reacquired Shares, including Shares repurchased by the Company on the open market.
The number of Shares initially reserved for issuance over the term of this Plan shall be
5,882,352, which number includes (i) the 2,352,941 Shares authorized and reserved for issuance
under the Prior Plans as last approved by the Company’s stockholders, (ii) those Shares that are
not delivered because of net exercise to pay taxes or an exercise price under the Plan or the Prior
Plans, and (iii) those Shares that are restored pursuant to the decision of the Board or Committee
pursuant to Section 6.4(a) to deliver only such Shares as are necessary to award the net Share
appreciation; provided, however, that the Shares reserved for issuance under the Plan shall not
include the Shares actually issued, whether before or after the Effective Date, upon the exercise
of options granted under the Prior Plans (i.e., the Shares reserved under the Plan shall include
the number of Shares available for issuance, as of the Effective Date, under the Prior Plans as
last approved by the Company’s stockholders and (ii) those Shares issued under the Prior Plans that
are forfeited or repurchased by the Company or that are issuable upon exercise of options granted
pursuant to the Prior Plans that expire or become unexercisable for any reason without having been
exercised in full after the Effective Date). The maximum number of Shares shall be cumulatively
increased on the first January 1 after the Effective Date and each January 1 thereafter for 9 more
years, by a number of Shares equal to the least of (a) 5% of the number of Shares issued and
outstanding on the immediately preceding December 31,
(b) 2,352,941 Shares, and (c) a number of
Shares set by the Board. Except as required by applicable law, Shares shall not reduce the number
of Shares reserved for issuance under this Plan until the earlier of the date such
Shares are vested pursuant to the terms of the applicable Award or the actual date of delivery
of the Shares to the Awardee. Also, if an Award later terminates or expires without having been
exercised in full, the maximum number of shares that may be issued under this Plan shall be
increased by the number of Shares that were covered by,

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but not purchased under, that Award. By
contrast, the repurchase of Shares by the Company shall not increase the maximum number of Shares
that may be issued under this Plan.

     3.2 Source of Shares. Award Shares may be: (a) Shares that have never been issued,
(b) Shares that have been issued but are no longer outstanding, or (c) Shares that are outstanding
and are acquired to discharge the Company’s obligation to deliver Award Shares.

3.3 Term of this Plan

          (a) This Plan shall be effective on, and Awards may be granted under this Plan on
and after, the earliest the date on which the Plan has been both adopted by the Board and approved
by the Company’s stockholders.

          (b) Subject to the provisions of Section 14, Awards may be granted under this Plan
for a period of ten years from the earlier of the date on which the Board approves this Plan and
the date the Company’s stockholders approve this Plan. Accordingly, Awards may not be granted
under this Plan after the earlier of those dates.

4. Administration

     4.1 General

          (a) The Board shall have ultimate responsibility for administering this Plan. The
Board may delegate certain of its responsibilities to a Committee, which shall consist of at least
two members of the Board. The Board or the Committee may further delegate its responsibilities to
any Employee of the Company or any Affiliate. Where this Plan specifies that an action is to be
taken or a determination made by the Board, only the Board may take that action or make that
determination. Where this Plan specifies that an action is to be taken or a determination made by
the Committee, only the Committee may take that action or make that determination. Where this Plan
references the “Administrator,” the action may be taken or determination made by the Board, the
Committee, or other Administrator. However, only the Board or the Committee may approve grants of
Awards to Executives, and an Administrator other than the Board or the Committee may grant Awards
only within the guidelines established by the Board or Committee. Moreover, all actions and
determinations by any Administrator are subject to the provisions of this Plan.

          (b) So long as the Company has registered and outstanding a class of equity
securities under Section 12 of the Exchange Act, the Committee shall consist of Company Directors
who are “Non-Employee Directors” as defined in Rule 16b-3 and, after the expiration of any
transition period permitted by Treasury Regulations Section 1.162-27(h)(3), who are “outside
directors” as defined in Section 162(m) of the Code.

     4.2
Authority of the Board or the Committee. Subject to the other provisions of this
Plan, the Board or the Committee shall have the authority to:

          (a) grant Awards, including Substitute Awards;

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          (b) determine the Fair Market Value of Shares;

          (c) determine the Option Price and the Purchase Price of Awards;

          (d) select the Awardees;

          (e) determine the times Awards are granted;

          (f) determine the number of Shares subject to each Award;

          (g) determine the methods of payment that may be used to purchase Award Shares;

          (h) determine the methods of payment that may be used to satisfy withholding tax
obligations;

          (i) determine the other terms of each Award, including but not limited to the time
or times at which Awards may be exercised, whether and under what conditions an Award is
assignable, and whether an Option is a Nonstatutory Option or an Incentive Stock Option;

          (j) modify or amend any Award;

          (k) authorize any person to sign any Award Agreement or other document related to
this Plan on behalf of the Company;

          (l) determine the form of any Award Agreement or other document related to this
Plan, and whether that document, including signatures, may be in electronic form;

          (m) interpret this Plan and any Award Agreement or document related to this Plan;

          (n) correct any defect, remedy any omission, or reconcile any inconsistency in this
Plan, any Award Agreement or any other document related to this Plan;

          (o) adopt, amend, and revoke rules and regulations under this Plan, including rules
and regulations relating to sub-plans and Plan addenda;

          (p) adopt, amend, and revoke special rules and procedures which may be inconsistent
with the terms of this Plan, set forth (if the Administrator so chooses) in sub-plans regarding
(for example) the operation and administration of this Plan and the terms of Awards, if and to the
extent necessary or useful to accommodate non-U.S. Applicable Laws and practices as
they apply to Awards and Award Shares held by, or granted or issued to, persons working or
resident outside of the United States or employed by Affiliates incorporated outside the United
States;

          (q) determine whether a transaction or event should be treated as a Change in
Control, a Divestiture or neither;

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          (r) determine the effect of a Fundamental Transaction and, if the Board determines
that a transaction or event should be treated as a Change in Control or a Divestiture, then the
effect of that Change in Control or Divestiture; and

          (s) make all other determinations the Administrator deems necessary or advisable for
the administration of this Plan.

     4.3 Scope of Discretion. Subject to the provisions of this Section 4.3, on all
matters for which this Plan confers the authority, right or power on the Board, the Committee, or
other Administrator to make decisions, that body may make those decisions in its sole and absolute
discretion. Those decisions will be final, binding and conclusive. In making its decisions, the
Board, Committee or other Administrator need not treat all persons eligible to receive Awards, all
Awardees, all Awards or all Award Shares the same way. Notwithstanding anything herein to the
contrary, and except as provided in Section 14.3, the discretion of the Board, Committee or other
Administrator is subject to the specific provisions and specific limitations of this Plan, as well
as all rights conferred on specific Awardees by Award Agreements and other agreements.

5. Persons Eligible to Receive Awards

     5.1 Eligible Individuals. Awards (including Substitute Awards) may be granted to,
and only to, Employees, Directors and Consultants, including to prospective Employees, Directors
and Consultants conditioned on the beginning of their service for the Company or an Affiliate.
However, Incentive Stock Options may only be granted to Employees, as provided in Section 7(g).

     5.2 Section 162(m) Limitation.

          (a) Options and SARs. Subject to the provisions of this Section 5.2, for so long as
the Company is a “publicly held corporation” within the meaning of Section 162(m) of the Code: (i)
no Employee may be granted one or more SARs and Options within any fiscal year of the Company under
this Plan to purchase more than 470,588 Shares under Options or to receive compensation
calculated with reference to more than that number of Shares under SARs, subject to adjustment
pursuant to Section 10, (ii) Options and SARs may be granted to an Executive only by the Committee
(and, notwithstanding anything to the contrary in Section 4.1(a), not by the Board). If an Option
or SAR is cancelled without being exercised or of the Option Price of an Option is reduced, that
cancelled or repriced Option or SAR shall continue to
be counted against the limit on Awards that my be granted to any individual under this Section
5.2.

          (b) Cash Awards and Stock Awards. Any Cash Award or Stock Award intended as
“qualified performance-based compensation” within the meaning of Section 162(m) of the Code must
vest or become exercisable contingent on the achievement of one or more Objectively Determinable
Performance Conditions. The Committee shall have the discretion to determine the time and manner
of compliance with Section 162(m) of the Code. The maximum annual Stock Award to any individual
shall be 470,588 Shares and the maximum annual cash award to any individual shall be $2,000,000.

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6. Terms and Conditions of Options

     The following rules apply to all Options:

     6.1 Price. No Option intended as “qualified incentive-based compensation” within
the meaning of Section 162(m) of the Code may have an Option Price less than 100% of the Fair
Market Value of the Shares on the Grant Date. In no event will the Option Price of any Option be
less than the par value of the Shares issuable under the Option if that is required by Applicable
Law. The Option Price of an Incentive Stock Option shall be subject to Section 7(f).

     6.2 Term. No Option shall be exercisable after its Expiration Date. No Option may
have an Expiration Date that is more than ten years after its Grant Date. Additional provisions
regarding the term of Incentive Stock Options are provided in Sections 7(a) and 7(e).

     6.3 Vesting. Options shall be exercisable: (a) on the Grant Date, or (b) in
accordance with a schedule related to the Grant Date, the date the Optionee’s directorship,
employment or consultancy begins, or a different date specified in the Option Agreement.
Additional provisions regarding the vesting of Incentive Stock Options are provided in Section
7(c). No Option granted to an individual who is subject to the overtime pay provisions of the Fair
Labor Standards Act may be exercised before the expiration of six months after the Grant Date.

     6.4 Form and Method of Payment.

          (a) The Board or Committee shall determine the acceptable form and method of payment
for exercising an Option. So long as variable accounting pursuant to “APB 25” does not apply and
the Board or Committee otherwise determines there is no material adverse accounting consequence at
the time of exercise, the Board or Committee may require the delivery in Shares for the value of
the net appreciation of the Shares at the time of exercise over the exercise price. The difference
between full number of Shares covered by the exercised
portion of the Award and the number of Shares actually delivered shall be restored to the
amount of Shares reserved for issuance under Section 3.1.

          (b) Acceptable forms of payment for all Option Shares are cash, check or wire
transfer, denominated in U.S. dollars except as specified by the Administrator for non-U.S.
Employees or non-U.S. sub-plans.

          (c) In addition, the Administrator may permit payment to be made by any of the
following methods:

               (i) other Shares, or the designation of other Shares, which (A) are “mature” shares
for purposes of avoiding variable accounting treatment under generally accepted accounting
principles (generally mature shares are those that have been owned by the Optionee for more than
six months on the date of surrender), and (B) have a Fair Market Value on the date of surrender
equal to the Option Price of the Shares as to which the Option is being exercised;

               (ii) provided that a public market exists for the Shares, consideration received by
the Company under a procedure under which a licensed broker-dealer advances

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funds on behalf of an
Optionee or sells Option Shares on behalf of an Optionee (a “Cashless Exercise Procedure”),
provided that if the Company extends or arranges for the extension of credit to an Optionee under
any Cashless Exercise Procedure, no Officer or Director may participate in that Cashless Exercise
Procedure;

               (iii) cancellation of any debt owed by the Company or any Affiliate to the Optionee
by the Company including without limitation waiver of compensation due or accrued for services
previously rendered to the Company; and

               (iv) any combination of the methods of payment permitted by any paragraph of this
Section 6.4.

          (d) The Administrator may also permit any other form or method of payment for Option
Shares permitted by Applicable Law.

     6.5 Nonassignability of Options. Except as determined by the Administrator, no
Option shall be assignable or otherwise transferable by the Optionee except by will or by the laws
of descent and distribution. However, Options may be transferred and exercised in accordance with
a Domestic Relations Order and may be exercised by a guardian or conservator appointed to act for
the Optionee. Incentive Stock Options may only be assigned in compliance with Section 7(h).

     6.6 Substitute Options. The Board may cause the Company to grant Substitute Options
in connection with the acquisition by the Company or an Affiliate of equity securities of any
entity (including by merger, tender offer, or other similar transaction) or of all or a portion of
the assets of any entity. Any such substitution shall be effective on the effective date of the
acquisition. Substitute
Options may be Nonstatutory Options or Incentive Stock Options. Unless and to the extent
specified otherwise by the Board, Substitute Options shall have the same terms and conditions as
the options they replace, except that (subject to the provisions of Section 10) Substitute Options
shall be Options to purchase Shares rather than equity securities of the granting entity and shall
have an Option Price determined by the Board.

     6.7 Repricings. In furtherance of, and not in limitation of the provisions of
Section 10, Options may be repriced, replaced or regranted through cancellation or modification
without stockholder approval.

7. Incentive Stock Options.

     The following rules apply only to Incentive Stock Options and only to the extent these rules
are more restrictive than the rules that would otherwise apply under this Plan. With the consent
of the Optionee, or where this Plan provides that an action may be taken notwithstanding any other
provision of this Plan, the Administrator may deviate from the requirements of this Section,
notwithstanding that any Incentive Stock Option modified by the Administrator will thereafter be
treated as a Nonstatutory Option.

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          (a) The Expiration Date of an Incentive Stock Option shall not be later than ten
years from its Grant Date, with the result that no Incentive Stock Option may be exercised after
the expiration of ten years from its Grant Date.

          (b) No Incentive Stock Option may be granted more than ten years from the date this
Plan was approved by the Board.

          (c) Options intended to be incentive stock options under Section 422 of the Code
that are granted to any single Optionee under all incentive stock option plans of the Company and
its Affiliates, including incentive stock options granted under this Plan, may not vest at a rate
of more than $100,000 in Fair Market Value of stock (measured on the grant dates of the options)
during any calendar year. For this purpose, an option vests with respect to a given share of stock
the first time its holder may purchase that share, notwithstanding any right of the Company to
repurchase that share. Unless the administrator of that option plan specifies otherwise in the
related agreement governing the option, this vesting limitation shall be applied by, to the extent
necessary to satisfy this $100,000 rule, treating certain stock options that were intended to be
incentive stock options under Section 422 of the Code as Nonstatutory Options. The stock options or
portions of stock options to be reclassified as Nonstatutory Options are those with the highest
option prices, whether granted under this Plan or any other equity compensation plan of the Company
or any Affiliate that permits that treatment. This Section 7(c) shall not cause an Incentive Stock
Option to vest before its original vesting date or cause an Incentive Stock Option that has already
vested to cease to be vested.

          (d) In order for an Incentive Stock Option to be exercised for any form of payment
other than those described in Section 6.4(b), that right must be stated at the time of grant in the
Option Agreement relating to that Incentive Stock Option.

          (e) Any Incentive Stock Option granted to a Ten Percent Stockholder, must have an
Expiration Date that is not later than five years from its Grant Date, with the result that no such
Option may be exercised after the expiration of five years from the Grant Date. A “Ten Percent
Stockholder” is any person who, directly or by attribution under Section 424(d) of the Code, owns
stock possessing more than ten percent of the total combined voting power of all classes of stock
of the Company or of any Affiliate on the Grant Date.

          (f) The Option Price of an Incentive Stock Option shall never be less than the Fair
Market Value of the Shares at the Grant Date. The Option Price for the Shares covered by an
Incentive Stock Option granted to a Ten Percent Stockholder shall never be less than 110% of the
Fair Market Value of the Shares at the Grant Date.

          (g) Incentive Stock Options may be granted only to Employees. If an Optionee changes
status from an Employee to a Consultant, that Optionee’s Incentive Stock Options become
Nonstatutory Options if not exercised within the time period described in Section 7(i) (determined
by treating that change in status as a Termination solely for purposes of this Section 7(g)).

          (h) No rights under an Incentive Stock Option may be transferred by the Optionee,
other than by will or the laws of descent and distribution. During the life of the

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Optionee, an
Incentive Stock Option may be exercised only by the Optionee. The Company’s compliance with a
Domestic Relations Order, or the exercise of an Incentive Stock Option by a guardian or conservator
appointed to act for the Optionee, shall not violate this Section 7(h).

          (i) An Incentive Stock Option shall be treated as a Nonstatutory Option if it
remains exercisable after, and is not exercised within, the three-month period beginning with the
Optionee’s Termination for any reason other than the Optionee’s death or disability (as defined in
Section 22(e) of the Code). In the case of Termination due to death, an Incentive Stock Option
shall continue to be treated as an Incentive Stock Option if it remains exercisable after, and is
not exercised within, the three month period after the Optionee’s Termination provided it is
exercised before the Expiration Date. In the case of Termination due to disability, an Incentive
Stock Option shall be treated as a Nonstatutory Option if it remains exercisable after, and is not
exercised within, one year after the Optionee’s Termination.

          (j) An Incentive Stock Option may only be modified by the Board.

8. Stock Appreciation Rights, Stock Awards and Cash Awards

     8.1 Stock Appreciation Rights. The following rules apply to SARs:

          (a) General. SARs may be granted either alone, in addition to, or in tandem with
other Awards granted under this Plan. The Administrator may grant SARs to eligible participants
subject to terms and conditions not inconsistent with this Plan and determined by the
Administrator. The specific terms and conditions applicable to the Awardee shall be provided for in
the Award Agreement. SARs shall be exercisable, in whole or in part, at such times as the
Administrator shall specify in the Award Agreement. The grant or vesting of a SAR may be made
contingent on the achievement of Objectively Determinable Performance Conditions.

          (b) Exercise of SARs. Upon the exercise of an SAR, in whole or in part, an Awardee
shall be entitled to a payment in an amount equal to the excess of the Fair Market Value of a fixed
number of Shares covered by the exercised portion of the SAR on the date of exercise, over the Fair
Market Value of the Shares covered by the exercised portion of the SAR on the Grant Date. The
amount due to the Awardee upon the exercise of a SAR shall be paid in cash, Shares or a combination
thereof, over the period or periods specified in the Award Agreement. An Award Agreement may place
limits on the amount that may be paid over any specified period or periods upon the exercise of a
SAR, on an aggregate basis or as to any Awardee. A SAR shall be considered exercised when the
Company receives written notice of exercise in accordance with the terms of the Award Agreement
from the person entitled to exercise the SAR. If a SAR has been granted in tandem with an Option,
upon the exercise of the SAR, the number of shares that may be purchased pursuant to the Option
shall be reduced by the number of shares with respect to which the SAR is exercised.

          (c) Nonassignability of SARs. Except as determined by the Administrator, no SAR
shall be assignable or otherwise transferable by the Awardee except by will or by the laws of
descent and distribution. Notwithstanding anything herein to the contrary, SARs may be transferred
and exercised in accordance with a Domestic Relations Order.

12

 

          (d) Substitute SARs. The Board may cause the Company to grant Substitute SARs in
connection with the acquisition by the Company or an Affiliate of equity securities of any entity
(including by merger) or all or a portion of the assets of any entity. Any such substitution shall
be effective on the effective date of the acquisition. Unless and to the extent specified
otherwise by the Board, Substitute SARs shall have the same terms and conditions as the options
they replace, except that (subject to the provisions of Section 9) Substitute SARs shall be
exercisable with respect to the Fair Market Value of Shares rather than equity securities of the
granting entity and shall be on terms that, as determined by the Board in its sole and absolute
discretion, properly reflects the substitution.

          (e) Repricings. A SAR may not be repriced, replaced or regranted, through
cancellation or modification without stockholder approval.

     8.2 Stock Awards. The following rules apply to all Stock Awards:

          (a) General. The specific terms and conditions of a Stock Award applicable to the
Awardee shall be provided for in the Award Agreement. The Award Agreement shall state the number of
Shares that the Awardee shall be entitled to receive or purchase, the terms and conditions on which
the Shares shall vest, the price to be paid, whether Shares are to be delivered at the time of
grant or at some deferred date specified in the Award Agreement (e.g. a restricted stock unit award
agreement), whether the Award is payable solely in Shares, cash or either and, if applicable, the
time within which the Awardee must accept such offer. The offer shall be accepted by execution of
the Award Agreement. The Administrator may require that all Shares
subject to a right of repurchase or risk of forfeiture be held in escrow until such repurchase
right or risk of forfeiture lapses. The grant or vesting of a Stock Award may be made contingent
on the achievement of Objectively Determinable Performance Conditions.

          (b) Right of Repurchase. If so provided in the Award Agreement, Award Shares
acquired pursuant to a Stock Award may be subject to repurchase by the Company or an Affiliate if
not vested in accordance with the Award Agreement.

          (c) Form of Payment. The Administrator shall determine the acceptable form and
method of payment for exercising a Stock Award. Acceptable forms of payment for all Award Shares
are cash, check or wire transfer, denominated in U.S. dollars except as specified by the
Administrator for non-U.S. sub-plans. In addition, the Administrator may permit payment to be made
by any of the methods permitted with respect to the exercise of Options pursuant to Section 6.4.

          (d) Nonassignability of Stock Awards. Except as determined by the Administrator, no
Stock Award shall be assignable or otherwise transferable by the Awardee except by will or by the
laws of descent and distribution. Notwithstanding anything to the contrary herein, Stock Awards
may be transferred and exercised in accordance with a Domestic Relations Order.

          (e) Substitute Stock Award. The Board may cause the Company to grant Substitute
Stock Awards in connection with the acquisition by the Company or an Affiliate of equity securities
of any entity (including by merger) or all or a portion of the assets of any entity.

13

 

Unless and to
the extent specified otherwise by the Board, Substitute Stock Awards shall have the same terms and
conditions as the stock awards they replace, except that (subject to the provisions of Section 10)
Substitute Stock Awards shall be Stock Awards to purchase Shares rather than equity securities of
the granting entity and shall have a Purchase Price that, as determined by the Board in its sole
and absolute discretion, properly reflects the substitution. Any such Substituted Stock Award
shall be effective on the effective date of the acquisition.

     8.3 Cash Awards. The following rules apply to all Cash Awards:

     Cash Awards may be granted either alone, in addition to, or in tandem with other Awards
granted under this Plan. After the Administrator determines that it will offer a Cash Award, it
shall advise the Awardee, by means of an Award Agreement, of the terms, conditions and restrictions
related to the Cash Award.

9. Exercise of Awards

     9.1 In General. An Award shall be exercisable in accordance with this Plan and the
Award Agreement under which it is granted.

     9.2 Time of Exercise. Options and Stock Awards shall be considered exercised when the Company receives: (a) written
notice of exercise from the person entitled to exercise the Option or Stock Award, (b) full
payment, or provision for payment, in a form and method approved by the Administrator, for the
Shares for which the Option or Stock Award is being exercised, and (c) with respect to Nonstatutory
Options, payment, or provision for payment, in a form approved by the Administrator, of all
applicable withholding taxes due upon exercise. An Award may not be exercised for a fraction of a
Share. SARs shall be considered exercised when the Company receives written notice of the exercise
from the person entitled to exercise the SAR.

     9.3 Issuance of Award Shares. The Company shall issue Award Shares in the name of
the person properly exercising the Award. If the Awardee is that person and so requests, the Award
Shares shall be issued in the name of the Awardee and the Awardee’s spouse. The Company shall
endeavor to issue Award Shares promptly after an Award is exercised or after the Grant Date of a
Stock Award, as applicable. Until Award Shares are actually issued, as evidenced by the
appropriate entry on the stock register of the Company or its transfer agent, the Awardee will not
have the rights of a stockholder with respect to those Award Shares, even though the Awardee has
completed all the steps necessary to exercise the Award. No adjustment shall be made for any
dividend, distribution, or other right for which the record date precedes the date the Award Shares
are issued, except as provided in Section 10.

     9.4 Termination

          (a) In General. Except as provided in an Award Agreement or in writing by the
Administrator, including in an Award Agreement, and as otherwise provided in Sections 9.4(b), (c),
(d) and (e) after an Awardee’s Termination, the Awardee’s Awards shall be exercisable to the extent
(but only to the extent) they are vested on the date of that Termination and only during the ninety
(90) days after the Termination, but in no event after the Expiration

14

 

Date. To the extent the
Awardee does not exercise an Award within the time specified for exercise, the Award shall
automatically terminate. Notwithstanding the foregoing, as a clarification of rules in effect under
the Plan, in the event Shares pursuant to an Award may not be issued at the time they would
otherwise expire as provided in this Section 9.4 because the issuance would otherwise violate
Applicable Law, or in the event an Option would expire following termination of employment during a
time when trading in Shares is prohibited pursuant to the Company’s insider trading policy, the
exercise period provided herein shall be automatically extended past the date that the prohibition
on issuance or trading or trading ends by the lesser of the number of days after termination of
employment that issuance or trading is actually prohibited or 90 days. Notwithstanding the
foregoing, in no event may the Shares be exercised after the term of the Award.

          (b) Leaves of Absence. Unless otherwise provided in the Award Agreement, no Award
may be exercised more than three months after the beginning of a leave of absence, other than a
personal or medical leave approved by an authorized representative of the Company with employment
guaranteed upon return. Awards shall not continue to vest during a leave of absence, unless
otherwise determined by the Administrator with respect to an approved personal or medical leave
with employment guaranteed upon return.

          (c) Death or Disability. Unless otherwise provided by the Administrator, if an
Awardee’s Termination is due to death or disability (as determined by the Administrator with
respect to all Awards other than Incentive Stock Options and as defined by Section 22(e) of the
Code with respect to Incentive Stock Options), all Awards of that Awardee to the extent exercisable
at the date of that Termination may be exercised for one year after that Termination, but in no
event after the Expiration Date. In the case of Termination due to death, an Award may be
exercised as provided in Section 17. In the case of Termination due to disability, if a guardian
or conservator has been appointed to act for the Awardee and been granted this authority as part of
that appointment, that guardian or conservator may exercise the Award on behalf of the Awardee.
Death or disability occurring after an Awardee’s Termination shall not cause the Termination to be
treated as having occurred due to death or disability. To the extent an Award is not so exercised
within the time specified for its exercise, the Award shall automatically terminate.

          (d) Divestiture. If an Awardee’s Termination is due to a Divestiture, the Board may
take any one or more of the actions described in Section 10.3 or 10.4 with respect to the Awardee’s
Awards.

          (e) Administrator Discretion. Notwithstanding the provisions of Section 9.4
(a)-(e), the Plan Administrator shall have complete discretion, exercisable either at the time an
Award is granted or at any time while the Award remains outstanding, to:

               (i) Extend the period of time for which the Award is to remain exercisable,
following the Awardee’s Termination, from the limited exercise period otherwise in effect for that
Award to such greater period of time as the Administrator shall deem appropriate, but in no event
beyond the Expiration Date; and/or

15

 

               (ii) Permit the Award to be exercised, during the applicable post-Termination
exercise period, not only with respect to the number of vested Shares for which such Award may be
exercisable at the time of the Awardee’s Termination but also with respect to one or more
additional installments in which the Awardee would have vested had the Awardee not been subject to
Termination.

     (f) Consulting or Employment Relationship. Nothing in this Plan or in any Award
Agreement, and no Award or the fact that Award Shares remain subject to repurchase rights, shall:
(A) interfere with or limit the right of the Company or any Affiliate to terminate the employment
or consultancy of any Awardee at any time, whether with or without cause or reason, and with or
without the payment of severance or any other compensation or payment, or (B) interfere with the
application of any provision in any of the Company’s or any Affiliate’s charter documents or
Applicable Law relating to the election, appointment, term of office, or removal of a Director.

10. Certain Transactions and Events

     10.1 In General. Except as provided in this Section 10, no change in the capital structure of the Company, merger,
sale or other disposition of assets or a subsidiary, change in control, issuance by the Company of
shares of any class of securities or securities convertible into shares of any class of securities,
exchange or conversion of securities, or other transaction or event shall require or be the
occasion for any adjustments of the type described in this Section 10. Additional provisions with
respect to the foregoing transactions are set forth in Section 14.3.

     10.2 Changes in Capital Structure. In the event of any stock split, reverse stock
split, recapitalization, combination or reclassification of stock, stock dividend or extraordinary
cash dividend, spin-off, or similar change to the capital structure of the Company (not including a
Fundamental Transaction or Change in Control), the Board shall make whatever adjustments it
concludes are appropriate to: (a) the number and type of Awards that may be granted under this
Plan, (b) the number and type of Options that may be granted to any individual under this Plan, (c)
the terms of any SAR, (d) the Purchase Price of any Stock Award, (e) the Option Price and number
and class of securities issuable under each outstanding Option, and (f) the repurchase price of any
securities substituted for Award Shares that are subject to repurchase rights. The specific
adjustments shall be determined by the Board. Unless the Board specifies otherwise, any securities
issuable as a result of any such adjustment shall be rounded down to the next lower whole security.
The Board need not adopt the same rules for each Award or each Awardee.

     10.3 Fundamental Transactions. Except for grants to Non-Employee Directors pursuant
to Section 11 herein, in the event of (a) a merger or consolidation in which the Company is not the
surviving corporation (other than a merger or consolidation with a wholly-owned subsidiary, a
reincorporation of the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the stockholders of the Company or their relative stock holdings and the
Awards granted under this Plan are assumed, converted or replaced by the successor corporation,
which assumption shall be binding on all Participants), (b) a merger in which the Company is the
surviving corporation but after which the stockholders of

16

 

the Company immediately prior to such
merger (other than any stockholder that merges, or which owns or controls another corporation that
merges, with the Company in such merger) cease to own their shares or other equity interest in the
Company, (c) the sale of all or substantially all of the assets of the Company, or (d) the
acquisition, sale, or transfer of more than 50% of the outstanding shares of the Company by tender
offer or similar transaction (each, a “Fundamental Transaction”), any or all outstanding Awards may
be assumed, converted or replaced by the successor corporation (if any), which assumption,
conversion or replacement shall be binding on all participants under this Plan. In the
alternative, the successor corporation may substitute equivalent Awards or provide substantially
similar consideration to participants as was provided to stockholders (after taking into account
the existing provisions of the Awards). The successor corporation may also issue, in place of
outstanding Shares held by the participants, substantially similar shares or other property subject
to repurchase restrictions no less favorable to the participant. In the event such successor
corporation (if any) does not assume or substitute Awards, as provided above, pursuant to a
transaction described in this Subsection 10.3, the vesting with respect to such Awards shall fully
and immediately accelerate or the repurchase rights of the Company shall fully and
immediately terminate, as the case may be, so that the Awards may be exercised or the
repurchase rights shall terminate before, or otherwise in connection with the closing or completion
of the Fundamental Transaction or event, but then terminate. Notwithstanding anything in this Plan
to the contrary, the Committee may, in its sole discretion, provide that the vesting of any or all
Award Shares subject to vesting or right of repurchase shall accelerate or lapse, as the case may
be, upon a transaction described in this Section 10.3. If the Committee exercises such discretion
with respect to Options, such Options shall become exercisable in full prior to the consummation of
such event at such time and on such conditions as the Committee determines, and if such Options are
not exercised prior to the consummation of the Fundamental Transaction, they shall terminate at
such time as determined by the Committee. Subject to any greater rights granted to participants
under the foregoing provisions of this Section 10.3, in the event of the occurrence of any
Fundamental Transaction, any outstanding Awards shall be treated as provided in the applicable
agreement or plan of merger, consolidation, dissolution, liquidation, or sale of assets.

     10.4 Changes of Control. The Board may also, but need not, specify that other
transactions or events constitute a “Change in Control”. The Board may do that either before or
after the transaction or event occurs. Examples of transactions or events that the Board may treat
as Changes of Control are: (a) any person or entity, including a “group” as contemplated by Section
13(d)(3) of the Exchange Act, acquires securities holding 30% or more of the total combined voting
power or value of the Company, or (b) as a result of or in connection with a contested election of
Company Directors, the persons who were Company Directors immediately before the election cease to
constitute a majority of the Board. In connection with a Change in Control, notwithstanding any
other provision of this Plan, the Board may, but need not, take any one or more of the actions
described in Section 10.3. In addition, the Board may extend the date for the exercise of Awards
(but not beyond their original Expiration Date). The Board need not adopt the same rules for each
Award or each Awardee.

     10.5 Divestiture. If the Company or an Affiliate sells or otherwise transfers
equity securities of an Affiliate to a person or entity other than the Company or an Affiliate, or
leases, exchanges or transfers all or any portion of its assets to such a person or entity, then
the Board may specify that such transaction or event constitutes a “Divestiture”. In connection
with

17

 

a Divestiture, notwithstanding any other provision of this Plan, the Board may, but need not,
take one or more of the actions described in Section 10.3 or 10.4 with respect to Awards of Award
Shares held by, for example, Employees, Directors or Consultants for whom that transaction or event
results in a Termination. The Board need not adopt the same rules for each Award or Awardee.

     10.6 Dissolution. If the Company adopts a plan of dissolution, the Board may cause
Awards to be fully vested and exercisable (but not after their Expiration Date) before the
dissolution is completed but contingent on its completion and may cause the Company’s repurchase
rights on Award Shares to lapse upon completion of the dissolution. The Board need not adopt the
same rules for
each Award or each Awardee. Notwithstanding anything herein to the contrary, in the event of
a dissolution of the Company, to the extent not exercised before the earlier of the completion of
the dissolution or their Expiration Date, Awards shall terminate immediately prior to the
dissolution.

     10.7 Cut-Back to Preserve Benefits. If the Administrator determines that the net
after-tax amount to be realized by any Awardee, taking into account any accelerated vesting,
termination of repurchase rights, or cash payments to that Awardee in connection with any
transaction or event set forth in this Section 10 would be greater if one or more of those steps
were not taken or payments were not made with respect to that Awardee’s Awards or Award Shares,
then, at the election of the Awardee, to such extent, one or more of those steps shall not be taken
and payments shall not be made.

11. Reserved

12. Withholding and Tax Reporting

     12.1 Tax Withholding Alternatives

          (a) General. Whenever Award Shares are issued or become free of restrictions, the
Company may require the Awardee to remit to the Company an amount sufficient to satisfy any
applicable tax withholding requirement, whether the related tax is imposed on the Awardee or the
Company. The Company shall have no obligation to deliver Award Shares or release Award Shares from
an escrow or permit a transfer of Award Shares until the Awardee has satisfied those tax
withholding obligations. Whenever payment in satisfaction of Awards is made in cash, the payment
will be reduced by an amount sufficient to satisfy all tax withholding requirements.

          (b) Method of Payment. The Awardee shall pay any required withholding using the
forms of consideration described in Section 6.4(b), except that, in the discretion of the
Administrator, the Company may also permit the Awardee to use any of the forms of payment described
in Section 6.4(c). The Administrator, in its sole discretion, may also permit Award Shares to be
withheld to pay required withholding. If the Administrator permits Award Shares to be withheld,
the Fair Market Value of the Award Shares withheld, as determined as of the date of withholding,
shall not exceed the amount determined by the applicable minimum statutory withholding rates.

18

 

     12.2 Reporting of Dispositions. Any holder of Option Shares acquired under an
Incentive Stock Option shall promptly notify the Administrator, following such procedures as the
Administrator may require, of the sale or other disposition of any of those Option Shares if the
disposition occurs during: (a) the longer of two years after the Grant Date of the Incentive Stock
Option and one year after the date the Incentive Stock Option was exercised, or (b) such other
period as the Administrator has established.

13. Compliance with Law

     The grant of Awards and the issuance and subsequent transfer of Award Shares shall be subject
to compliance with all Applicable Law, including all applicable securities laws. Awards may not be
exercised, and Award Shares may not be transferred, in violation of Applicable Law. Thus, for
example, Awards may not be exercised unless: (a) a registration statement under the Securities Act
is then in effect with respect to the related Award Shares, or (b) in the opinion of legal counsel
to the Company, those Award Shares may be issued in accordance with an applicable exemption from
the registration requirements of the Securities Act and any other applicable securities laws. The
failure or inability of the Company to obtain from any regulatory body the authority considered by
the Company’s legal counsel to be necessary or useful for the lawful issuance of any Award Shares
or their subsequent transfer shall relieve the Company of any liability for failing to issue those
Award Shares or permitting their transfer. As a condition to the exercise of any Award or the
transfer of any Award Shares, the Company may require the Awardee to satisfy any requirements or
qualifications that may be necessary or appropriate to comply with or evidence compliance with any
Applicable Law.

14. Amendment or Termination of this Plan or Outstanding Awards

     14.1 Amendment and Termination. The Board may at any time amend, suspend, or
terminate this Plan.

     14.2 Stockholder Approval. The Company shall obtain the approval of the Company’s
stockholders for any amendment to this Plan if stockholder approval is necessary or desirable to
comply with any Applicable Law or with the requirements applicable to the grant of Awards intended
to be Incentive Stock Options. The Board may also, but need not, require that the Company’s
stockholders approve any other amendments to this Plan.

     14.3 Effect. No amendment, suspension, or termination of this Plan, and no
modification of any Award even in the absence of an amendment, suspension, or termination of this
Plan, shall impair any existing contractual rights of any Awardee unless the affected Awardee
consents to the amendment, suspension, termination, or modification. Notwithstanding anything
herein to the contrary, no such consent shall be required if the Board determines, in its sole and
absolute discretion, that the amendment, suspension, termination, or modification: (a) is required
or advisable in order for the Company, this Plan or the Award to satisfy Applicable Law, to meet
the requirements of any accounting standard or to avoid any adverse accounting treatment, or (b) in
connection with any transaction or event described in Section 10, is in the best interests of the
Company or its stockholders. The Board may, but need not, take the tax or accounting consequences
to affected Awardees into consideration in acting under the preceding sentence. Those decisions
shall be final, binding and conclusive. Termination of this Plan shall

19

 

not affect the
Administrator’s ability to exercise the powers granted to it under this Plan with respect to
Awards granted before the termination of Award Shares issued under such Awards even if those
Award Shares are issued after the termination.

15. Reserved Rights

     15.1 Nonexclusivity of this Plan. This Plan shall not limit the power of the
Company or any Affiliate to adopt other incentive arrangements including, for example, the grant or
issuance of stock options, stock, or other equity-based rights under other plans.

     15.2 Unfunded Plan. This Plan shall be unfunded. Although bookkeeping accounts may
be established with respect to Awardees, any such accounts will be used merely as a convenience.
The Company shall not be required to segregate any assets on account of this Plan, the grant of
Awards, or the issuance of Award Shares. The Company and the Administrator shall not be deemed to
be a trustee of stock or cash to be awarded under this Plan. Any obligations of the Company to any
Awardee shall be based solely upon contracts entered into under this Plan, such as Award
Agreements. No such obligations shall be deemed to be secured by any pledge or other encumbrance
on any assets of the Company. Neither the Company nor the Administrator shall be required to give
any security or bond for the performance of any such obligations.

16. Special Arrangements Regarding Award Shares

     16.1 Escrow of Stock Certificates. To enforce any restrictions on Award Shares, the
Administrator may require their holder to deposit the certificates representing Award Shares, with
stock powers or other transfer instruments approved by the Administrator endorsed in blank, with
the Company or an agent of the Company to hold in escrow until the restrictions have lapsed or
terminated. The Administrator may also cause a legend or legends referencing the restrictions to
be placed on the certificates.

     16.2 Repurchase Rights

          (a) General. If a Stock Award is subject to vesting conditions, the Company shall
have the right, during the seven months after the Awardee’s Termination, to repurchase any or all
of the Award Shares that were unvested as of the date of that Termination. The repurchase price
shall be determined by the Administrator in accordance with this Section 16.2 which shall be either
(i) the Purchase Price for the Award Shares (minus the amount of any cash dividends paid or payable
with respect to the Award Shares for which the record date precedes the repurchase) or (ii) the
lower of (A) the Purchase Price for the Shares or (B) the Fair Market Value of those Award Shares
as of the date of the Termination. The repurchase price shall be paid in cash. The Company may
assign this right of repurchase.

          (b) Procedure. The Company or its assignee may choose to give the Awardee a written
notice of exercise of its repurchase rights under this Section 16.2. However, the Company’s
failure to give such a notice shall not affect its rights to repurchase Award Shares. The Company
must, however, tender the repurchase price during the period specified in this Section 16.2 for
exercising its repurchase rights in order to exercise such rights.

20

 

17. Beneficiaries

     An Awardee may file a written designation of one or more beneficiaries who are to receive the
Awardee’s rights under the Awardee’s Awards after the Awardee’s death. An Awardee may change such
a designation at any time by written notice. If an Awardee designates a beneficiary, the
beneficiary may exercise the Awardee’s Awards after the Awardee’s death. If an Awardee dies when
the Awardee has no living beneficiary designated under this Plan, the Company shall allow the
executor or administrator of the Awardee’s estate to exercise the Award or, if there is none, the
person entitled to exercise the Option under the Awardee’s will or the laws of descent and
distribution. In any case, no Award may be exercised after its Expiration Date.

18. Miscellaneous

     18.1 Governing Law. This Plan, the Award Agreements and all other agreements
entered into under this Plan, and all actions taken under this Plan or in connection with Awards or
Award Shares, shall be governed by the laws of the State of Delaware.

     18.2 Determination of Value. Fair Market Value shall be determined as follows:

          (a) Listed Stock. If the Shares are traded on any established stock exchange or
quoted on a national market system, Fair Market Value shall be the closing sales price for the
Shares as quoted on that stock exchange or system for the date the value is to be determined (the
“Value Date”) as reported in The Wall Street Journal or a similar publication. If no sales are
reported as having occurred on the Value Date, Fair Market Value shall be that closing sales price
for the last preceding trading day on which sales of Shares are reported as having occurred. If no
sales are reported as having occurred during the five trading days before the Value Date, Fair
Market Value shall be the closing bid for Shares on the Value Date. If Shares are listed on
multiple exchanges or systems, Fair Market Value shall be based on sales or bid prices on the
primary exchange or system on which Shares are traded or quoted.

          (b) Stock Quoted by Securities Dealer. If Shares are regularly quoted by a
recognized securities dealer but selling prices are not reported on any established stock exchange
or quoted on a national market system, Fair Market Value shall be the mean between the high bid and
low asked prices on the Value Date. If no prices are quoted for the Value Date, Fair Market Value
shall be the mean between the high bid and low asked prices on the last preceding trading day on
which any bid and asked prices were quoted.

          (c) No Established Market. If Shares are not traded on any established stock
exchange or quoted on a national market system and are not quoted by a recognized securities
dealer, the Administrator (following guidelines established by the Board or Committee) will
determine Fair Market Value in good faith. The Administrator will consider the following factors,
and any others it considers significant, in determining Fair Market Value: (i) the price at which
other securities of the Company have been issued to purchasers other than Employees, Directors, or
Consultants, (ii) the Company’s stockholder’s equity, prospective earning power, dividend-paying
capacity, and non-operating assets, if any, and (iii) any other relevant factors, including the
economic outlook for the Company and the Company’s industry, the Company’s

21

 

position in that
industry, the Company’s goodwill and other intellectual property, and the values of securities of
other businesses in the same industry.

     18.3 Reservation of Shares. During the term of this Plan, the Company shall at all
times reserve and keep available such number of Shares as are still issuable under this Plan.

     18.4 Electronic Communications. Any Award Agreement, notice of exercise of an
Award, or other document required or permitted by this Plan may be delivered in writing or, to the
extent determined by the Administrator, electronically. Signatures may also be electronic if
permitted by the Administrator.

     18.5 Notices. Unless the Administrator specifies otherwise, any notice to the
Company under any Option Agreement or with respect to any Awards or Award Shares shall be in
writing (or, if so authorized by Section 18.4, communicated electronically), shall be addressed to
the Secretary of the Company, and shall only be effective when received by the Secretary of the
Company.

22exv10w15

 

EXHIBIT 10.15

INDEMNIFICATION AGREEMENT

     This Agreement is made as of                     , 2006, between Artes Medical, Inc., a Delaware
corporation (the “Company”), and                      (the “Indemnitee”).

RECITALS

     Both the Company and Indemnitee recognize that highly competent persons have become more
reluctant to serve publicly-held corporations as directors or in other capacities unless they are
provided with adequate protection through insurance or adequate indemnification against inordinate
risks of claims and actions against them arising out of their service to and activities on behalf
of the corporation.

     In recognition of Indemnitee’s need for substantial protection against personal liability in
order to enhance Indemnitee’s continued service to the Company in an effective manner and
Indemnitee’s reliance on the provisions of the Company’s Amended and Restated Certificate of
Incorporation, as may be amended from time to time (“Certificate of Incorporation”) and the
Company’s Bylaws (the “Bylaws”) requiring indemnification of the Indemnitee to the fullest extent
permitted by law, and in part to provide Indemnitee with specific contractual assurance that the
protection promised by such Certificate of Incorporation and Bylaws will be available to Indemnitee
(regardless of, among other things, any amendment to or revocation of such Certificate of
Incorporation or Bylaws or any change in the composition of the Company’s Board of Directors or
acquisition transaction relating to the Company), the Company wishes to provide in this Agreement
for the indemnification of, and the advancement of expenses to, Indemnitee to the fullest extent
(whether partial or complete) permitted by law and as set forth in this Agreement.

     The Certificate of Incorporation, the Bylaws and the General Corporation Law of the State of
Delaware (“DGCL”) expressly provide that the indemnification provisions set forth therein are not
exclusive and thereby contemplate that contracts may be entered into between the Company and
members of the board of directors, officers and other persons with respect to indemnification.

     It is reasonable, prudent and necessary for the Company contractually to obligate itself to
indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by
applicable law so that they will serve or continue to serve the Company free from undue concern
that they will not be so indemnified.

     This Agreement is a supplement to and in furtherance of the Certificate of Incorporation and
Bylaws and any resolutions adopted pursuant thereto and shall not be deemed a substitute therefor,
nor to diminish or abrogate any rights of Indemnitee thereunder.

AGREEMENT

     In consideration of the premises set forth above and of Indemnitee agreeing to serve or

 

 

continuing to serve the Company directly or, at its request, with another enterprise, and
intending to be legally bound hereby, the parties hereto agree as follows:

     1. Basic Indemnification Agreement.

          (a) In the event Indemnitee was, is or becomes a party to or witness or other participant in,
or is threatened to be made a party to or witness or other participant in, a Claim (as defined in
Section 9(b)) by reason of (or arising in part out of) an Indemnifiable Event (as defined in
Section 9(d)), the Company shall indemnify Indemnitee to the fullest extent permitted by law as
soon as practicable but in any event no later than 30 days after written demand is presented to the
Company, against any and all Expenses (as defined in Section 9(c)), judgments, fines, penalties and
amounts paid in settlement (including all interest, assessments and other charges paid or payable
in connection therewith) of such Claim actually and reasonably incurred by or on behalf of
Indemnitee in connection with such Claim and any federal, state, local or foreign taxes imposed on
Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement. If
requested by Indemnitee in writing, the Company shall advance (within ten business days of such
written request) any and all Expenses to Indemnitee (an “Expense Advance”). Notwithstanding
anything in this Agreement to the contrary, prior to a Change in Control (as defined in Section
9(a)) and except as set forth in Sections 1(b), 3 and 7, Indemnitee shall not be entitled to
indemnification pursuant to this Agreement in connection with any Claim (i) initiated by Indemnitee
against the Company or any director or officer of the Company unless the Company has joined in or
consented to the initiation of such Claim; (ii) made on account of Indemnitee’s conduct which
constitutes a breach of Indemnitee’s duty of loyalty to the Company or its stockholders or is an
act or omission not in good faith or which involves intentional misconduct or a knowing violation
of the law; or (iii) arising from the purchase and sale by Indemnitee of securities in violation of
Section 16(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

          (b) Notwithstanding the foregoing, (i) the indemnification obligations of the Company under
Section 1(a) shall not be applicable if the Reviewing Party (as defined in Section 9(f)) has
determined (in a written opinion, in any case in which the special independent counsel referred to
in Section 2 is involved) that Indemnitee would not be permitted to be indemnified under applicable
law, and (ii) the obligation of the Company to make an Expense Advance pursuant to Section 1(a)
shall be subject to the condition that the Company receives an undertaking that, if, when and to
the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so
indemnified under applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who
hereby agrees to reimburse the Company) for all such amounts theretofore paid; provided, however,
that if Indemnitee has commenced legal proceedings in the Court of Chancery of the State of
Delaware (the “Delaware Court”) to secure a determination that Indemnitee should be indemnified
under applicable law, any determination made by the Reviewing Party that Indemnitee would not be
permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be
required to reimburse the Company for any Expense Advance until a final judicial determination is
made with respect thereto (as to which all rights of appeal therefrom have been exhausted or
lapsed). Indemnitee’s obligation to reimburse the Company for Expense Advances shall be unsecured
and no interest shall be charged thereon. If there has not been a Change in Control, the Reviewing
Party shall be

-2-

 

selected by the Board of Directors, and if there has been such a Change in Control, the
Reviewing Party shall be the special independent counsel referred to in Section 2. If there has
been no determination by the Reviewing Party or if the Reviewing Party determines that Indemnitee
substantively would not be permitted to be indemnified in whole or in part under applicable law,
Indemnitee shall have the right to commence litigation in the Delaware Court seeking an initial
determination by the court or challenging any such determination by the Reviewing Party or any
aspect thereof, and the Company hereby consents to service of process and to appear in any such
proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on
the Company and Indemnitee. The Company shall indemnify Indemnitee for Expenses incurred by
Indemnitee in connection with the successful establishment or enforcement, in whole or in part, by
Indemnitee of Indemnitee’s right to indemnification or advances.

     2. Change in Control. The Company agrees that if there is a Change in Control of the
Company (other than a Change in Control which has been approved by two-thirds (66 2/3%) or more of
the Company’s Board of Directors who were directors immediately prior to such Change in Control)
then with respect to all matters thereafter arising concerning the rights of Indemnitee to
indemnity payments and Expense Advances under this Agreement or any other agreement, the Bylaws or
Certificate of Incorporation now or hereafter in effect relating to Claims for Indemnifiable
Events, the Company shall seek legal advice only from special independent counsel selected by
Indemnitee and approved by the Company (which approval shall not be unreasonably withheld or
delayed) and who has not otherwise performed services for the Company within the last five years
(other than in connection with such matters) or for Indemnitee. In the event that Indemnitee and
the Company are unable to agree on the selection of the special independent counsel, such special
independent counsel shall be selected by lot from among at least five law firms with offices in the
State of Delaware having more than fifty attorneys, having a rating of “av” or better in the then
current Martindale Hubbell Law Directory and having attorneys which specialize in corporate law.
Such selection shall be made in the presence of Indemnitee (and his or her legal counsel or either
of them, as Indemnitee may elect). Such counsel, among other things, shall, within 90 days of its
retention, render its written opinion to the Company and Indemnitee as to whether and to what
extent Indemnitee would be permitted to be indemnified under applicable law. The Company agrees to
pay the reasonable fees of the special independent counsel referred to above and to fully indemnify
such counsel against any and all expenses (including attorneys’ fees), claims, liabilities, and
damages arising out of or relating to this Agreement or its engagement pursuant hereto.

     3. Indemnification for Additional Expenses. The Company shall indemnify Indemnitee
against any and all expenses (including attorneys’ fees) and, if requested by Indemnitee in
writing, shall (within ten business days of such written request) advance such expenses to
Indemnitee, which are incurred by Indemnitee in connection with any Claim asserted against or
action brought by Indemnitee for (i) indemnification or advance payment of Expenses by the Company
under this Agreement or any other agreement, the Bylaws or Certificate of Incorporation now or
hereafter in effect relating to Claims for Indemnifiable Events and/or (ii) recovery under any
directors’ and officers’ liability insurance policies maintained by the Company, regardless of
whether the Company believes that Indemnitee is entitled to such indemnification, advance expense
payment or insurance recovery, as the case may be. The

-3-

 

Indemnitee shall qualify for advances solely upon the execution and delivery to the Company of
an undertaking providing that the Indemnitee undertakes to repay the advance to the extent that it
is ultimately determined that the Indemnitee is not entitled to be indemnified by the Company. The
Company shall accept such an undertaking without reference to Indemnitee’s ability to re-pay such
Expenses.

     4. Partial Indemnity. If Indemnitee is entitled under any provisions of this
Agreement to indemnification by the Company of some but not all of the Expenses, liabilities,
judgments, fines, penalties and amounts paid in settlement of a Claim, the Company shall
nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.
Moreover, notwithstanding any other provision of this Agreement, to the extent that Indemnitee has
been successful on the merits or otherwise in defense of any or all Claims relating in whole or in
part to an Indemnifiable Event or in defense of any issue or matter therein, including dismissal
without prejudice, Indemnitee shall be indemnified against all Expenses incurred in connection
therewith. In connection with any determination by the Reviewing Party or otherwise as to whether
Indemnitee is entitled to be indemnified hereunder the burden of proof shall be on the Company to
establish that Indemnitee is not so entitled.

     5. No Presumption/No Imputation. For purposes of this Agreement, the termination of
any action, suit or proceeding by judgment, order, settlement (whether with or without court
approval) or conviction, or upon a plea of nolo contendere, or its equivalent, shall not create a
presumption that Indemnitee did not meet any particular standard of conduct or have any particular
belief. In addition, for purposes of this Agreement, the knowledge and/or actions, of failure to
act, of any director, officer, agent or employee of the Company (other than Indemnitee’s) or the
Company itself shall not be imputed to Indemnitee for purposes of determining Indemnitee’s right to
indemnification under this Agreement.

     6. Notification and Defense of Claim. Within 30 days after receipt by Indemnitee of
notice of the commencement of a Claim which may involve an Indemnifiable Event, Indemnitee will, if
a claim in respect thereof is to be made against the Company under this Agreement, submit to the
Company a written notice identifying the proceeding, but the omission so to notify the Company will
not relieve it from any liability which it may have to Indemnitee under this Agreement unless the
Company is materially prejudiced by such lack of notice. With respect to any such Claim as to
which Indemnitee notifies the Company of the commencement thereof:

          (a) the Company will be entitled to participate therein at its own expense;

          (b) except as otherwise provided below, to the extent that it may wish, the Company jointly
with any other indemnifying party similarly notified will be entitled to assume the defense
thereof, with counsel selected by the Board of Directors and satisfactory to Indemnitee. After
notice from the Company to Indemnitee of its election to assume the defense thereof, the Company
will not be liable to Indemnitee under this Agreement for any legal or other expenses subsequently
incurred by Indemnitee in connection with the defense thereof other than reasonable costs of
investigation or as otherwise provided below. Indemnitee shall have the right to employ its own
counsel in such action, suit or proceeding, but the fees and expenses of such

-4-

 

counsel incurred after notice from the Company of its assumption of the defense thereof shall
be at the expense of Indemnitee unless (i) the employment of counsel by Indemnitee has been
authorized by the Company, (ii) Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Company and the Indemnitee in the conduct of the defense of such
action, or (iii) the Company shall not in fact have employed counsel to assume the defense of such
action, in each of which cases the fees and expenses of counsel shall be at the expense of the
Company. The Company shall not be entitled to assume the defense of any claim brought by or on
behalf of the Company or as to which Indemnitee shall have made the conclusion provided for in
clause (ii) above; and

          (c) the Company shall not be liable to indemnify Indemnitee under this Agreement for any
amounts paid in settlement of any action or claim effected without its written consent. The
Company shall not settle any action or claim in any manner which would impose any penalty or
limitation on Indemnitee without Indemnitee’s written consent. Neither the Company nor Indemnitee
will unreasonably withhold or delay their consent to any proposed settlement.

     7. Non-exclusivity. The rights of Indemnitee hereunder shall be in addition to any
other rights Indemnitee may have under the Certificate of Incorporation, the Bylaws, the DGCL, any
agreement, a vote of the stockholders, a resolution of directors or otherwise. No amendment,
alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right
of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee
acting on behalf of the Company and at the request of the Company prior to such amendment,
alteration or repeal. To the extent that a change in the DGCL (whether by statute or judicial
decision), the Certificate of Incorporation or the Bylaws permits greater indemnification by
agreement than would be afforded currently under the Certificate of Incorporation, the Bylaws and
this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this
Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is
intended to be exclusive of any other right or remedy, and every other right and remedy shall be
cumulative and in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other
right or remedy.

     8. Liability Insurance. The Company shall maintain an insurance policy or policies
providing directors’ and officers’ liability insurance. Indemnitee shall be covered by such policy
or policies in accordance with its or their terms to the maximum extent of the coverage available
for any Company director or officer; provided, however, the Company may elect to purchase
additional coverage for its independent directors. If, at the time the Company receives notice
from any source of a Claim as to which Indemnitee is a party or a participant (as a witness or
otherwise), the Company has director and officer liability insurance in effect, the Company shall
give prompt notice of such Proceeding to the insurers in accordance with the procedures set forth
in the respective policies. The Company shall thereafter take all necessary or desirable action to
cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such
Claim in accordance with the terms of such policies. In the event of a Potential Change in Control
(as defined in Section 9), the Company shall maintain in force any and all insurance

-5-

 

policies then maintained by the Company providing directors’ and officers’ liability
insurance, in respect of Indemnitee, for a period of six years thereafter. The Company shall
indemnify Indemnitee for Expenses incurred by Indemnitee in connection with any successful action
brought by Indemnitee for recovery under any insurance policy referred to in this Section 8 and
shall advance to Indemnitee the Expenses of such action in the manner provided in Section 3 above.

     9. Certain Definitions.

          (a) A “Change in Control” shall be deemed to have occurred if:

     (1) any person, as that term is used in Section 13(d) and Section 14(d)(2) of
the Exchange Act, becomes, is discovered to be, or files a report on Schedule 13D or
14D-1 (or any successor schedule, form or report) disclosing that such person is a
beneficial owner (as defined in Rule 13d-3 under the Exchange Act or any successor
rule or regulation), directly or indirectly, of securities of the Company
representing 20% or more of the total voting power of the Company’s then outstanding
Voting Securities (unless such person becomes such a beneficial owner in connection
with the initial public offering of the Company’s Common Stock);

     (2) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the Company and any
new director whose election by the Board of Directors or nomination for election by
the Company’s stockholders was approved by a vote of at least two-thirds (66 2/3%)
of the directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof;

     (3) the Company, or any material subsidiary of the Company, is merged,
consolidated or reorganized into or with another corporation or other legal person
(an “Acquiring Person”) or securities of the Company are exchanged for securities of
an Acquiring Person, and immediately after such merger, consolidation,
reorganization or exchange less than a majority of the combined voting power of the
then outstanding securities of the Acquiring Person immediately after such
transaction are held, directly or indirectly, in the aggregate by the holders of
Voting Securities immediately prior to such transaction;

     (4) the Company, or any material subsidiary of the Company, in any transaction
or series of related transactions, sells or otherwise transfers all or substantially
all of its assets to an Acquiring Person, and less than a majority of the combined
voting power of the then outstanding securities of the Acquiring Person immediately
after such sale or transfer is held, directly or indirectly, in the aggregate by the
holders of Voting Securities immediately prior to such sale or transfer;

-6-

 

     (5) the Company and its subsidiaries, in any transaction or series of related
transactions, sells or otherwise transfers business operations that generated two
thirds or more of the consolidated revenues (determined on the basis of the
Company’s four most recently completed fiscal quarters) of the Company and its
subsidiaries immediately prior thereto;

     (6) the Company files a report or proxy statement with the Securities and
Exchange Commission pursuant to the Exchange Act disclosing that a change in control
of the Company has or may have occurred or will or may occur in the future pursuant
to any then existing contract or transaction; or

     (7) any other transaction or series of related transactions occur that have
substantially the effect of the transactions specified in any of the preceding
clauses in this paragraph (a).

Notwithstanding the provisions of Section 9(a)(1) or 9(a)(4), unless otherwise determined in a
specific case by majority vote of the Board of Directors of the Company, a Change in Control shall
not be deemed to have occurred for purposes of this Agreement solely because (i) the Company, (ii)
an entity in which the Company directly or indirectly beneficially owns 50% or more of the voting
securities or (iii) any Company-sponsored employee stock ownership plan, or any other employee
benefit plan of the Company, either files or becomes obligated to file a report or a proxy
statement under or in response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) under the Exchange Act, disclosing beneficial
ownership by it of shares of stock of the Company, or because the Company reports that a Change in
Control of the Company has or may have occurred or will or may occur in the future by reason of
such beneficial ownership.

          (b) A “Claim” is any threatened, pending or completed action, suit, proceeding or alternative
dispute resolution mechanism, or any inquiry, hearing or investigation whether conducted by the
Company or any other party, whether civil, criminal, administrative, investigative, whether formal
or informal, or other.

          (c) “Expenses” include attorneys’ fees and all other costs, fees, expenses and obligations of
any nature whatsoever paid or incurred in connection with investigating, defending, being a witness
in or participating in (including appeal), or preparing to defend, be a witness in or participate
in any Claim relating to any Indemnifiable Event. Expenses shall also mean any federal, state,
local or foreign taxes imposed on the Indemnitee as a result of the actual or deemed receipt of any
payments under this Agreement. Expenses shall also include the costs associated with the appeal of
any proceedings, including without limitation the premium, security for, and other costs relating
to any costs bond, supersedes bond or other appeal bond or its equivalent.

          (d) An “Indemnifiable Event” is any event or occurrence (whether before or after the date
hereof) related to the fact that Indemnitee is or was a director, officer, employee, consultant,
agent or fiduciary of or to the Company, or any subsidiary of the Company, or is or was serving at
the request of the Company as a director, officer, employee, trustee, agent or

-7-

 

fiduciary of another corporation, partnership, joint venture, employee benefit plan, trust or
other enterprise, or by reason of anything done or not done by Indemnitee in any such capacity.

          (e) A “Potential Change in Control” shall be deemed to have occurred if (i) the Company enters
into an agreement, the consummation of which would result in the occurrence of a Change in Control;
(ii) any person (including the Company) publicly announces an intention to take or to consider
taking actions which, if consummated, would constitute a Change in Control; (iii) any person, other
than a trustee or other fiduciary holding securities under an employee benefit plan of the Company
or a corporation owned, directly or indirectly, by the stockholders of the Company in substantially
the same proportions as their ownership of stock of the Company, who is or becomes the beneficial
owner, directly or indirectly, of securities of the Company representing 9.5% or more of the
combined voting power of the Company’s then outstanding Voting Securities, increases such person’s
beneficial ownership of such securities by five percentage points or more over the initial
percentage of such securities; or (iv) the Board of Directors of the Company adopts a resolution to
the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.

          (f) A “Reviewing Party” is (i) the Company’s Board of Directors (provided that a majority of
directors are not parties to the particular Claim for which Indemnitee is seeking indemnification)
or (ii) any other person or body appointed by the Company’s Board of Directors, who is not a party
to the particular Claim for which Indemnitee is seeking indemnification, or (iii) if there has been
a Change in Control, the special independent counsel referred to in Section 2 hereof.

          (g) “Voting Securities” means any securities of the Company which vote generally in the
election of directors.

     10. Amendments, Termination and Waiver. No supplement, modification, amendment or
termination of this Agreement shall be binding unless executed in writing by both of the parties
hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver.

     11. Contribution. If the indemnification provided in Sections 1 and 3 is unavailable,
then, in respect of any Claim in which the Company is jointly liable with Indemnitee (or would be
if joined in the Claim), the Company shall contribute to the amount of Expenses, judgments, fines,
penalties and amounts paid in settlement as appropriate to reflect: (i) the relative benefits
received by the Company, on the one hand, and Indemnitee, on the other hand, from the transaction
from which the Claim arose, and (ii) the relative fault of the Company, on the one hand, and of
Indemnitee, on the other, in connection with the events which resulted in such Expenses, judgments,
fines, penalties and amounts paid in settlement, as well as any other relevant equitable
considerations. The relative fault of the Company, on the one hand, and of Indemnitee, on the
other, shall be determined by reference to, among other things, the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent the circumstances resulting
in such Expenses and Liabilities. The parties agree that it would not be just and equitable if
contribution pursuant to this Section 11 were determined by pro rata

-8-

 

allocation or any other method of allocation which does not take account of the equitable
considerations described in this Section 11.

     12. Subrogation. In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall
execute all papers required and shall do everything that may be reasonably necessary to secure such
rights, including the execution of such documents necessary to enable the Company effectively to
bring suit to enforce such rights. The Company shall promptly pay any reasonable costs, fees or
expenses incurred by Indemnitee in conjunction with compliance with this Section 12.

     13. No Duplication of Payments. The Company shall not be liable under this Agreement
to make any payment in connection with any Claim made against Indemnitee to the extent Indemnitee
has otherwise actually received payment (under an insurance policy, the Certificate of
Incorporation or otherwise) of the amounts otherwise indemnifiable hereunder.

     14. Binding Effect. This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors, assigns, including any
direct or indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company, spouse, heirs, and personal and
legal representatives. This Agreement shall continue in effect through the end of the Term (as
defined in Section 18 hereof) regardless of whether Indemnitee continues to serve as a director or
officer (or in one of the capacities enumerated in Section 9(d) hereof) of the Company or of any
other enterprise at the Board of Director’s request.

     15. Severability. The provisions of this Agreement shall be severable in the event
that any of the provisions hereof (including any provision within a single section, paragraph or
sentence) are held by a court of competent jurisdiction to be invalid, void or otherwise
unenforceable, and the remaining provisions shall remain enforceable to the fullest extent
permitted by law.

     16. Applicable Law and Consent to Jurisdiction. This Agreement and the legal
relations among the parties shall be governed by, and construed and enforced in accordance with,
the laws of the State of Delaware, without regard to its conflict of laws rules. The Company and
Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising
out of or in connection with this Agreement shall be brought only in the Delaware Court and not in
any other state or federal court in the United States of America or any court in any other country,
(ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any
action or proceeding arising out of or in connection with this Agreement, (iii) appoint,
irrevocably, to the extent such party is not a resident of the State of Delaware, as its agent in
the State of Delaware as such party’s agent for acceptance of legal process in connection with any
such action or proceeding against such party with the same legal force and validity as if served
upon such party personally within the State of Delaware, (iv) waive any objection to the laying of
venue of any such action or proceeding in the Delaware Court, and (v) waive, and agree not to plead
or to make, any claim that any such action or proceeding brought in the Delaware Court has been
brought in an improper or inconvenient forum.

-9-

 

     17. Entire Agreement; Prior Agreements Superseded. This Agreement constitutes the
full and entire understanding and agreement between the parties with regard to the subjects hereof,
and no party shall be liable or bound to any other in any manner by any oral or written
representations, warranties, covenants and agreements except as specified herein or required under
applicable law. Each party agrees that upon the execution and delivery hereof, this Agreement
shall replace in its entirety any prior agreement, written or oral, between the parties (including
any prior Indemnification Agreement entered into by the Company and such party) with regard to the
subjects hereof, and that any such prior agreements shall terminate and be superseded in its
entirety by this Agreement.

     18. Duration of Agreement. This Agreement shall continue until and terminate upon the
later of (i) seven (7) years after the date that Indemnitee shall have ceased to serve as a
director or officer of the Company or (ii) one (1) year after the final termination of any Claim,
including any appeal, by reason of (or arising in part out of) an Indemnifiable Event (the “Term”).

     19. Identical Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original but all of which
together shall constitute one and the same Agreement. Only one such counterpart signed by the
party against whom enforceability is sought needs to be produced to evidence the existence of this
Agreement.

-10-

 

Executed on                     , 2006.

	 	 	 	 	 	 	 
	 	 	Artes Medical, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	[Name]	 	 
	 

	 	 	 	[Title]	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	[Indemnitee]

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