Document:

Prepared by R.R. Donnelley Financial -- 2004 Equity Incentive Plan

 Exhibit 10.3 
  
 CUTERA, INC. 
  
 2004 EQUITY INCENTIVE PLAN 
  
 1. Purposes of the Plan. The purposes of this Plan are: 
  

	 	•	 	to attract and retain the best available personnel for positions of substantial responsibility, 

  

	 	•	 	to provide additional incentive to Employees, Directors and Consultants, and 

  

	 	•	 	to promote the success of the Company’s business. 

  
 The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Stock Appreciation Rights, Performance Units and
Performance Shares. 
  
 2. Definitions. As used herein, the
following definitions will apply: 
  
 (a)
“Administrator” means the Board or any of its Committees as will be administering the Plan, in accordance with Section 4 of the Plan. 
  
 (b) “Affiliated SAR” means an SAR that is granted in connection with a related Option, and which automatically will be deemed to be
exercised at the same time that the related Option is exercised. 
  
 (c) “Applicable Laws” means the requirements relating to the administration of equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on
which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under the Plan. 
  

(d) “Award” means, individually or collectively, a grant under the Plan of Options, SARs, Restricted Stock, Performance Units or
Performance Shares. 
  
 (e) “Award Agreement”
means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan. 
  
 (f) “Board” means the Board of Directors of the Company.

  
 (g) “Change in Control” means the occurrence
of any of the following events: 
  
 (i) Any “person”
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or
more of the total voting power represented by the Company’s then outstanding voting securities; or 

 (ii) The consummation of the sale or disposition by the Company of all or substantially all of the
Company’s assets; 
  
 (iii) A change in the composition of
the Board occurring within a two-year period, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” means directors who either (A) are Directors as of the effective date of the Plan, or
(B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but will not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating to the election of directors to the Company); or 
  
 (iv) The consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of
the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation. 
  
 (h) “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a section of the Code
herein will be a reference to any successor or amended section of the Code. 
  
 (i) “Committee” means a committee of Directors appointed by the Board in accordance with Section 4 of the Plan. 
  

(j) “Common Stock” means the common stock of the Company. 
  
 (k) “Company” means Cutera, Inc., a Delaware corporation, or any successor thereto. 
  
 (l) “Consultant” means any person, including an advisor,
engaged by the Company or a Parent or Subsidiary to render services to such entity. 
  
 (m) “Director” means a member of the Board. 
  
 (n) “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code, provided that in the case of Awards other than Incentive Stock Options, the Administrator in its
discretion may determine whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Administrator from time to time. 
  
 (o) “Employee” means any person, including Officers and Directors, employed by the Company or any Parent or
Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company. 
  
 (p) “Exchange Act” means the Securities Exchange Act of 1934, as amended. 
  

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 (q) “Exchange Program” means a program under which (i) outstanding Awards are
surrendered or cancelled in exchange for Awards of the same type (which may have lower exercise prices and different terms), Awards of a different type, and/or cash, and/or (ii) the exercise price of an outstanding Award is reduced. The terms and
conditions of any Exchange Program will be determined by the Administrator in its sole discretion. 
  
 (r) “Fair Market Value” means, as of any date, the value of Common Stock determined as follows: 
  
 (i) If the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value will be the closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; 
  
 (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the
Fair Market Value of a Share of Common Stock will be the mean between the high bid and low asked prices for the Common Stock on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems
reliable; 
  
 (iii) For purposes of any Awards granted on the
Registration Date, the Fair Market Value will be the initial price to the public as set forth in the final prospectus included within the registration statement in Form S-1 filed with the Securities and Exchange Commission for the initial public
offering of the Company’s Common Stock; or 
  
 (iv) In the
absence of an established market for the Common Stock, the Fair Market Value will be determined in good faith by the Administrator. 
  
 (s) “Fiscal Year” means the fiscal year of the Company. 
  
 (t) “Freestanding SAR” means a SAR that is granted independently of any Option. 
  
 (u) “Incentive Stock Option” means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder. 
  
 (v) “Inside Director” means a Director who is an Employee. 
  
 (w) “Nonstatutory Stock Option” means an Option that by its terms does not qualify or is not intended to
qualify as an Incentive Stock Option. 
  
 (x)
“Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. 
  
 (y) “Option” means a stock option granted pursuant to the Plan. 
  

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 (z) “Optioned Stock” means the Common Stock subject to an Award. 
  
 (aa) “Outside Director” means a Director who is not an
Employee. 
  
 (bb) “Parent” means a “parent
corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code. 
  
 (cc) “Participant” means the holder of an outstanding Award. 
  
 (dd) “Performance Share” means an Award granted to a Participant pursuant to Section 9. 
  
 (ee) “Performance Unit” means an Award granted to a
Participant pursuant to Section 9. 
  
 (ff) “Period of
Restriction” means the period during which the transfer of Shares of Restricted Stock are subject to restrictions and therefore, the Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of
time, the achievement of target levels of performance, or the occurrence of other events as determined by the Administrator. 
  
 (gg) “Plan” means this 2004 Equity Incentive Plan. 
  
 (hh) “Registration Date” means the effective date of the first registration statement that is filed by the
Company and declared effective pursuant to Section 12(g) of the Exchange Act, with respect to any class of the Company’s securities. 
  
 (ii) “Restricted Stock” means shares of Common Stock issued pursuant to a Restricted Stock award under Section 7 of the Plan, or issued
pursuant to the early exercise of an Option. 
  
 (jj)
“Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan. 
  
 (kk) “Section 16(b) “ means Section 16(b) of the Exchange Act. 
  
 (ll) “Service Provider” means an Employee, Director or
Consultant. 
  
 (mm) “Share” means a share of the
Common Stock, as adjusted in accordance with Section 13 of the Plan. 
  
 (nn) “Stock Appreciation Right” or “SAR” means an Award, granted alone or in connection with an Option, that pursuant to Section 8 is designated as a SAR. 
  
 (oo) “Subsidiary” means a “subsidiary
corporation”, whether now or hereafter existing, as defined in Section 424(f) of the Code. 
  
 (pp) “Tandem SAR” means a SAR that is granted in connection with a related Option, the exercise of which will require forfeiture of the
right to purchase an equal number of Shares under the related Option (and when a Share is purchased under the Option, the SAR will be canceled to the same extent). 
  

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 (qq) “Unvested Awards” will mean Options or Restricted Stock that (i) were granted to an
individual in connection with such individual’s position as an Employee and (ii) are still subject to vesting or lapsing of Company repurchase rights or similar restrictions. 
  
 3. Stock Subject to the Plan. 
  
 (a) Stock Subject to the Plan. Subject to the provisions of Section 13 of the Plan, the maximum aggregate number of
Shares that may be optioned and sold under the Plan is 1,750,000 Shares plus (i) the number of Shares which have been reserved but not issued under the Company’s 1998 Stock Plan (the “1998 Plan”) as of the Registration Date, (ii) any
Shares returned to the 1998 Plan as a result of termination of options or repurchase of Shares issued under such plan, and (iii) an annual increase to be added on the first day of the Company’s fiscal year beginning in 2005, equal to the
lesser of (A) 2,000,000 Shares, (B) 5% of the outstanding Shares on such date or (C) an amount determined by the Board. The Shares may be authorized, but unissued, or reacquired Common Stock. Shares will not be deemed to have been issued
pursuant to the Plan with respect to any portion of an Award that is settled in cash. Upon payment in Shares pursuant to the exercise of an SAR, the number of Shares available for issuance under the Plan will be reduced only by the number of Shares
actually issued in such payment. If the exercise price of an Option is paid by tender to the Company, or attestation to the ownership, of Shares owned by the Participant, the number of Shares available for issuance under the Plan will be reduced by
the gross number of Shares for which the Option is exercised. 
  
 (b) Lapsed Awards. If an Award expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Exchange Program, the unpurchased Shares which were subject thereto will become available for
future grant or sale under the Plan (unless the Plan has terminated); provided, however, that Shares that have actually been issued under the Plan, whether upon exercise of an Award, will not be returned to the Plan and will not become
available for future distribution under the Plan, except that if unvested Shares are forfeited or repurchased by the Company, such Shares will become available for future grant under the Plan. 
  
 (c) Share Reserve. The Company, during the term of this Plan, will at
all times reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of the Plan. 
  
 4. Administration of the Plan. 
  
 (a) Procedure. 
  
 (i) Multiple Administrative Bodies. Different Committees with respect to different groups of Service Providers may administer the Plan.

  
 (ii) Section 162(m). To the extent that the
Administrator determines it to be desirable to qualify Options granted hereunder as “performance-based compensation” within the meaning of Section 162(m) of the Code, the Plan will be administered by a Committee of two or more
“outside directors” within the meaning of Section 162(m) of the Code. 
  

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 (iii) Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule
16b-3, the transactions contemplated hereunder will be structured to satisfy the requirements for exemption under Rule 16b-3. 
  
 (iv) Other Administration. Other than as provided above, the Plan will be administered by (A) the Board or (B) a Committee, which committee will
be constituted to satisfy Applicable Laws. 
  
 (b) Powers of
the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator will have the authority, in its discretion: 
  
 (i) to determine the Fair Market Value; 
  
 (ii) to select the Service Providers to whom Awards may be granted
hereunder; 
  
 (iii) to determine the number of Shares to be
covered by each Award granted hereunder; 
  
 (iv) to approve
forms of agreement for use under the Plan; 
  
 (v) to determine
the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may be exercised (which may be based
on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator will determine;

  
 (vi) to institute an Exchange Program; 
  
 (vii) to construe and interpret the terms of the Plan and Awards granted
pursuant to the Plan; 
  
 (viii) to prescribe, amend and rescind
rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws; 
  
 (ix) to modify or amend each Award (subject to Section 17(c) of the Plan), including the discretionary authority to extend
the post-termination exercisability period of Awards longer than is otherwise provided for in the Plan; 
  
 (x) to allow Participants to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of
an Award that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld (the Fair Market Value of the Shares to be withheld will be determined on the date that the amount of tax to be withheld is to be
determined and all elections by a Participant to have Shares withheld for this purpose will be made in such form and under such conditions as the Administrator may deem necessary or advisable); 
  

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 (xi) to authorize any person to execute on behalf of the Company any instrument required to effect the
grant of an Award previously granted by the Administrator; 
  
 (xii) to allow a Participant to defer the receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant under an Award 
  
 (xiii) to make all other determinations deemed necessary or advisable for administering the Plan. 
  
 (c) Effect of Administrator’s Decision. The Administrator’s
decisions, determinations and interpretations will be final and binding on all Participants and any other holders of Awards. 
  
 5. Eligibility. Nonstatutory Stock Options, Restricted Stock, Stock Appreciation Rights, Performance Units and Performance Shares may be granted to
Service Providers. Incentive Stock Options may be granted only to Employees. 
  
 6. Stock Options. 
  
 (a)
Limitations. 
  
 (i) Each Option will be designated in
the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options will be treated as Nonstatutory Stock Options. For purposes of this Section 6(a),
Incentive Stock Options will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted. 
  
 (ii) The following limitations will apply to grants of Options and Stock
Appreciation Rights: 
  
 (1) No Service Provider will be
granted, in any Fiscal Year, Options to purchase more than 500,000 Shares. 
  
 (2) In connection with his or her initial service, a Service Provider may be granted Options to purchase up to an additional 500,000 Shares, which will not count against the limit set forth in Section 6(a)(2)(ii)(1)
above. 
  
 (3) The foregoing limitations will be adjusted
proportionately in connection with any change in the Company’s capitalization as described in Section 13. 
  
 (4) If an Option is cancelled in the same Fiscal Year in which it was granted (other than in connection with a transaction described in Section 13), the
cancelled 

  

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Option will be counted against the limits set forth in subsections (1) and (2) above. For this purpose, if the exercise price of an Option is reduced, the
transaction will be treated as a cancellation of the Option and the grant of a new Option. 
  
 (b) Term of Option. The term of each Option will be stated in the Award Agreement. In the case of an Incentive Stock Option, the term will be ten (10) years from the date of grant or such shorter term as may be
provided in the Award Agreement. Moreover, in the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement. 
  
 (c) Option Exercise Price and Consideration. 
  
 (i) Exercise Price. The per share exercise price for the Shares to
be issued pursuant to exercise of an Option will be determined by the Administrator, subject to the following: 
  
 (1) In the case of an Incentive Stock Option 
  
 a) granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price will be no less than 110% of the Fair Market Value per Share on the date of grant. 
  
 b) granted to any Employee other than an Employee described in paragraph (A) immediately above, the per Share exercise
price will be no less than 100% of the Fair Market Value per Share on the date of grant. 
  
 c) Notwithstanding the foregoing, Incentive Stock Options may be granted with a per Share exercise price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a transaction described
in, and in a manner consistent with, Section 424(a) of the Code. 
  
 (2) In the case of a Nonstatutory Stock Option, the per Share exercise price will be determined by the Administrator. In the case of a Nonstatutory Stock Option intended to qualify as “performance-based compensation” within the
meaning of Section 162(m) of the Code, the per Share exercise price will be no less than 100% of the Fair Market Value per Share on the date of grant. 
  
 (ii) Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator will fix the period within which the Option may be
exercised and will determine any conditions that must be satisfied before the Option may be exercised. 
  
 (iii) Form of Consideration. The Administrator will determine the acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator will determine the acceptable form of consideration at the time of grant. Such consideration may consist entirely of: (1) cash; (2) check; 

  

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(3) promissory note; (4) other Shares, provided Shares acquired directly or indirectly from the Company, (A) have been owned by the Participant and not
subject to substantial risk of forfeiture 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 aggregate exercise price of the Shares as to which said Option will be exercised; (5)
consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan; (6) a reduction in the amount of any Company liability to the Participant, including any liability attributable to the
Participant’s participation in any Company-sponsored deferred compensation program or arrangement; (7) any combination of the foregoing methods of payment; or (8) such other consideration and method of payment for the issuance of Shares to the
extent permitted by Applicable Laws. 
  
 (d) Exercise of
Option. 
  
 (i) Procedure for Exercise; Rights as a
Stockholder. Any Option granted hereunder will be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An Option may not be exercised
for a fraction of a Share. 
  
 An Option will be deemed exercised
when the Company receives: (i) written or electronic notice of exercise (in accordance with the Award Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised.
Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant or, if
requested by the Participant, in the name of the Participant and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to
vote or receive dividends or any other rights as a stockholder will exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is
exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 13 of the Plan. 
  
 Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan
and for sale under the Option, by the number of Shares as to which the Option is exercised. 
  
 (ii) Termination of Relationship as a Service Provider. If a Participant ceases to be a Service Provider, other than upon the Participant’s death or Disability, the Participant may exercise his or her
Option within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement).
In the absence of a specified time in the Award Agreement, the Option will remain exercisable for three (3) months following the Participant’s termination. Unless otherwise provided by the Administrator, if on the date of termination the
Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified by the
Administrator, the Option will terminate, and the Shares covered by such Option will revert to the Plan. 
  

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 (iii) Disability of Participant. If a Participant ceases to be a Service Provider as a result of
the Participant’s Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent the Option is vested on the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following the Participant’s termination. Unless
otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the
Participant does not exercise his or her Option within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan. 
  
 (iv) Death of Participant. If a Participant dies while a Service Provider, the Option may be exercised following the
Participant’s death within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of death (but in no event may the option be exercised later than the expiration of the term of such Option
as set forth in the Award Agreement), by the Participant’s designated beneficiary, provided such beneficiary has been designated prior to Participant’s death in a form acceptable to the Administrator. If no such beneficiary has been
designated by the Participant, then such Option may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the Option is transferred pursuant to the Participant’s will or in accordance with the
laws of descent and distribution. In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following Participant’s death. Unless otherwise provided by the Administrator, if at the time
of death Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option will
terminate, and the Shares covered by such Option will revert to the Plan. 
  
 7. Restricted Stock. 
  
 (a) Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Service Providers in such amounts as the Administrator, in
its sole discretion, will determine. 
  
 (b) Restricted Stock
Agreement. Each Award of Restricted Stock will be evidenced by an Award Agreement that will specify the Period of Restriction, the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, will
determine. Unless the Administrator determines otherwise, Shares of Restricted Stock will be held by the Company as escrow agent until the restrictions on such Shares have lapsed. 
  
 (c) Transferability. Except as provided in this Section 7, Shares of Restricted Stock may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction. 
  
 (d) Other Restrictions. The Administrator, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock as it may deem
advisable or appropriate. 
  

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 (e) Removal of Restrictions. Except as otherwise provided in this Section 7, Shares of Restricted
Stock covered by each Restricted Stock grant made under the Plan will be released from escrow as soon as practicable after the last day of the Period of Restriction. The Administrator, in its discretion, may accelerate the time at which any
restrictions will lapse or be removed. 
  
 (f) Voting
Rights. During the Period of Restriction, Service Providers holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless the Administrator determines otherwise. 
  
 (g) Dividends and Other Distributions. During the Period of
Restriction, Service Providers holding Shares of Restricted Stock will be entitled to receive all dividends and other distributions paid with respect to such Shares unless otherwise provided in the Award Agreement. If any such dividends or
distributions are paid in Shares, the Shares will be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid. 
  
 (h) Return of Restricted Stock to Company. On the date set forth in
the Award Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the Company and again will become available for grant under the Plan. 
  
 8. Stock Appreciation Rights. 
  
 (a) Grant of SARs. Subject to the terms and conditions of the Plan, a SAR may be granted to Service Providers at any
time and from time to time as will be determined by the Administrator, in its sole discretion. The Administrator may grant Affiliated SARs, Freestanding SARs, Tandem SARs, or any combination thereof. 
  
 (b) Number of Shares. The Administrator will have complete discretion
to determine the number of SARs granted to any Service Provider. 
  
 (c) Exercise Price and Other Terms. The Administrator, subject to the provisions of the Plan, will have complete discretion to determine the terms and conditions of SARs granted under the Plan. However, the exercise price of Tandem
or Affiliated SARs will equal the exercise price of the related Option. 
  
 (d) Exercise of Tandem SARs. Tandem SARs may be exercised for all or part of the Shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then exercisable. With respect to a Tandem SAR granted in connection with an Incentive Stock Option: (a) the Tandem SAR will expire no later than the expiration of the
underlying Incentive Stock Option; (b) the value of the payout with respect to the Tandem SAR will be for no more than one hundred percent (100%) of the difference between the exercise price of the underlying Incentive Stock Option and the Fair
Market Value of the Shares subject to the underlying Incentive Stock Option at the time the Tandem SAR is exercised; and (c) the Tandem SAR will be exercisable only when the Fair Market Value of the Shares subject to the Incentive Stock Option
exceeds the Exercise Price of the Incentive Stock Option. 
  

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 (e) Exercise of Affiliated SARs. An Affiliated SAR will be deemed to be exercised upon the
exercise of the related Option. The deemed exercise of an Affiliated SAR will not necessitate a reduction in the number of Shares subject to the related Option. 
  

(f) Exercise of Freestanding SARs. Freestanding SARs will be exercisable on such terms and conditions as the Administrator, in its sole
discretion, will determine. 
  
 (g) SAR Agreement. Each SAR
grant will be evidenced by an Award Agreement that will specify the exercise price, the term of the SAR, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, will determine. 
  
 (h) Expiration of SARs. An SAR granted under the Plan will expire upon
the date determined by the Administrator, in its sole discretion, and set forth in the Award Agreement. Notwithstanding the foregoing, the rules of Section 6(d) also will apply to SARs. 
  
 (i) Payment of SAR Amount. Upon exercise of an SAR, a Participant will be entitled to receive payment from the
Company in an amount determined by multiplying: 
  
 (i) The
difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times 
  
 (ii) The number of Shares with respect to which the SAR is exercised. 
  
 At the discretion of the Administrator, the payment upon SAR exercise may be in cash, in Shares of equivalent value, or in
some combination thereof. 
  
 9. Performance Units and
Performance Shares. 
  
 (a) Grant of Performance
Units/Shares. Performance Units and Performance Shares may be granted to Service Providers at any time and from time to time, as will be determined by the Administrator, in its sole discretion. The Administrator will have complete discretion in
determining the number of Performance Units and Performance Shares granted to each Participant. 
  
 (b) Value of Performance Units/Shares. Each Performance Unit will have an initial value that is established by the Administrator on or before the
date of grant. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant. 
  
 (c) Performance Objectives and Other Terms. The Administrator will set performance objectives or other vesting provisions in its discretion which,
depending on the extent to which they are met, will determine the number or value of Performance Units/Shares that will be paid out to the Service Providers. The time period during which the performance objectives or other vesting provisions must be
met will be called the “Performance Period.” Each Award of Performance Units/Shares will be evidenced by an Award Agreement that will specify the Performance Period, and such other terms and conditions as the Administrator, in its sole
discretion, will determine. The Administrator may set performance objectives based upon the achievement of Company-wide, divisional, or individual goals, applicable federal or state securities laws, or any other basis determined by the Administrator
in its discretion. 
  

 -12- 

 (d) Earning of Performance Units/Shares. After the applicable Performance Period has ended, the
holder of Performance Units/Shares will be entitled to receive a payout of the number of Performance Units/Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding
performance objectives or other vesting provisions have been achieved. After the grant of a Performance Unit/Share, the Administrator, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions for such
Performance Unit/Share. 
  
 (e) Form and Timing of Payment of
Performance Units/Shares. Payment of earned Performance Units/Shares will be made as soon as practicable after the expiration of the applicable Performance Period. The Administrator, in its sole discretion, may pay earned Performance
Units/Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Units/Shares at the close of the applicable Performance Period) or in a combination thereof. 
  
 (f) Cancellation of Performance Units/Shares. On the date set forth in
the Award Agreement, all unearned or unvested Performance Units/Shares will be forfeited to the Company, and again will be available for grant under the Plan. 
  

10. Formula Option Grants to Outside Directors. 
  
 All grants of Options to Outside Directors pursuant to this Section will be automatic and nondiscretionary and will be made in accordance with the
following provisions: 
  
 (a) Type of Option. All Options
granted pursuant to this Section will be Nonstatutory Stock Options and, except as otherwise provided herein, will be subject to the other terms and conditions of the Plan. 
  
 (b) No Discretion. No person will have any discretion to select which Outside Directors will be granted Options under
this Section or to determine the number of Shares to be covered by such Options (except as provided in Sections 10(f) and 13). 
  
 (c) First Option. Each person who first becomes an Outside Director following the Registration Date will be automatically granted an Option to
purchase 30,000 Shares (the “First Option”) on or about the date on which such person first becomes an Outside Director, whether through election by the stockholders of the Company or appointment by the Board to fill a vacancy; provided,
however, that an Inside Director who ceases to be an Inside Director, but who remains a Director, will not receive a First Option. 
  
 (d) Subsequent Option. Each Outside Director will be automatically granted an Option to purchase 10,000 Shares (a “Subsequent Option”) on
each date of the annual meeting of the stockholders of the Company beginning in 2005, if as of such date, he or she will have served on the Board for at least the preceding six (6) months. 
  
 (e) Terms. The terms of each Option granted pursuant to this Section
will be as follows: 
  
 (i) The term of the Option will be ten
(10) years. 
  

 -13- 

 (ii) The exercise price per Share will be 100% of the Fair Market Value per Share on the date of grant
of the Option. 
  
 (iii) Subject to Section 14, the First Option
will vest and become exercisable as to 1/3rd of the Shares subject to such First Option on each anniversary of its
date of grant, provided that the Participant continues to serve as a Director through each such date. 
  
 (iv) Subject to Section 14, the Subsequent Option will vest and become exercisable as to 100% of the Shares subject to such Option on the third
anniversary of its date of grant, provided that the Participant continues to serve as a Director through such date. 
  
 (f) Amendment. The Administrator in its discretion may change the number of Shares subject to the First Options and Subsequent Options. 

 
 11. Leaves of Absence. Unless the Administrator provides otherwise,
vesting of Awards granted hereunder will be suspended during any unpaid leave of absence. A Service Provider will not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, or any Subsidiary. For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If
reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three months following the 91st day of such leave any Incentive Stock Option held by the Participant will cease to be treated as an Incentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option. 
  
 12. Transferability of Awards. Unless determined otherwise by the
Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by
the Participant. If the Administrator makes an Award transferable, such Award will contain such additional terms and conditions as the Administrator deems appropriate. 
  
 13. Adjustments; Dissolution or Liquidation; Merger or Change in Control. 
  
 (a) Adjustments. In the event that any dividend or other distribution
(whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other
securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available
under the Plan, may (in its sole discretion) adjust the number and class of Shares that may be delivered under the Plan and/or the number, class, and price of Shares covered by each outstanding Award, the numerical Share limits in Sections 3 and 6
of the Plan and the number of Shares issuable pursuant to Section 10. 
  
 (b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction.
To the extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such proposed action. 
  

 -14- 

 (c) Change in Control. In the event of a Change in Control, each outstanding Award will be assumed
or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the Award, the Participant will fully
vest in and have the right to exercise all of his or her outstanding Options and Stock Appreciation Rights, including Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on Restricted Stock shall lapse, and,
with respect to Performance Shares and Performance Units, all performance goals will be deemed achieved at target levels and all other terms and conditions met. In addition, if an Option or Stock Appreciation Right becomes fully vested and
exercisable in lieu of assumption or substitution in the event of a Change in Control, the Administrator will notify the Participant in writing or electronically that the Option or Stock Appreciation Right will be fully vested and exercisable for a
period of time determined by the Administrator in its sole discretion, and the Option or Stock Appreciation Right will terminate upon the expiration of such period. 
  
 With respect to Awards granted to an Outside Director that are assumed or substituted for, if on the date of or following
such assumption or substitution the Participant’s status as a Director or a director of the successor corporation, as applicable, is terminated other than upon a voluntary resignation by the Participant, then the Participant will fully vest in
and have the right to exercise Options and/or Stock Appreciation Rights as to all of the Optioned Stock, including Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on Restricted Stock shall lapse, and,
with respect to Performance Shares and Performance Units, all performance goals will be deemed achieved at target levels and all other terms and conditions met. 
  

For the purposes of this subsection (c), an Award will be considered assumed if, following the Change in Control, the Award confers the right to
purchase or receive, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or other securities or property) or, in the case of a Stock Appreciation Right upon the exercise of which
the Administrator determines to pay cash or a Performance Share or Performance Unit which the Administrator can determine to pay in cash, the fair market value of the consideration received in the merger or Change in Control by holders of Common
Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such
consideration received in the Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the
exercise of an Option or Stock Appreciation Right or upon the payout of a Performance Share or Performance Unit, for each Share subject to such Award (or in the case of Performance Units, the number of implied shares determined by dividing the value
of the Performance Units by the per share consideration received by holders of Common Stock in the Change in Control), to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration
received by holders of Common Stock in the Change in Control. 
  
 Notwithstanding anything in this Section 13(c) to the contrary, an Award that vests, is earned or paid-out upon the satisfaction of one or more performance goals will not be considered 

  

 -15- 

 
assumed if the Company or its successor modifies any of such performance goals without the Participant’s consent; provided, however, a modification to
such performance goals only to reflect the successor corporation’s post-Change in Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption. 
  
 14. No Effect on Employment or Service. Neither the Plan nor any Award will confer upon a Participant any right with
respect to continuing the Participant’s relationship as a Service Provider with the Company, nor will they interfere in any way with the Participant’s right or the Company’s right to terminate such relationship at any time, with or
without cause, to the extent permitted by Applicable Laws. 
  
 15.
Date of Grant. The date of grant of an Award will be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the
determination will be provided to each Participant within a reasonable time after the date of such grant. 
  
 16. Term of Plan. Subject to Section 20 of the Plan, the Plan will become effective upon its adoption by the Board. It will continue in effect for
a term of ten (10) years unless terminated earlier under Section 17 of the Plan. 
  
 17. Amendment and Termination of the Plan. 
  
 (a) Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan. 
  
 (b) Stockholder Approval. The Company will obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with
Applicable Laws. 
  
 (c) Effect of Amendment or
Termination. No amendment, alteration, suspension or termination of the Plan will impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed
by the Participant and the Company. Termination of the Plan will not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.

  
 18. Conditions Upon Issuance of Shares. 
  
 (a) Legal Compliance. Shares will not be issued pursuant to the
exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance. 

 
 (b) Investment Representations. As a condition to the exercise of
an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is required. 
  

 -16- 

 19. Inability to Obtain Authority. The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority will not have been obtained. 
  
 20. Stockholder Approval. The Plan will be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted. Such stockholder approval will be obtained in the
manner and to the degree required under Applicable Laws. 
  

 -17-Prepared by R.R. Donnelley Financial -- 2004 Employee Stock Purchase Plan

 Exhibit 10.4 
  
 CUTERA, INC. 
  
 2004 EMPLOYEE STOCK PURCHASE PLAN 
  
 The following constitutes the provisions of the 2004 Employee Stock Purchase Plan of Cutera, Inc. 
  
 1. Purpose. The purpose of the Plan is to provide Employees with an
opportunity to purchase Common Stock through accumulated payroll deductions. It is the intention of the Company to have the Plan qualify as an “employee stock purchase plan” under Section 423 of the Code. The provisions of the Plan,
accordingly, shall be construed so as to extend and limit Plan participation in a manner that is consistent with the requirements of that section of the Code. 
  

2. Definitions. 
  
 (a) “Administrator” means the Board or any committee thereof designated by the Board in accordance with Section 14. 
  
 (b) “Board” means the Board of Directors of the Company.

  
 (c) “Change of Control” means the occurrence
of any of the following events: 
  
 (i) Any “person”
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or
more of the total voting power represented by the Company’s then outstanding voting securities; or 
  
 (ii) The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; or 
  
 (iii) The consummation of a merger or consolidation of the Company, with any
other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company, or such surviving entity or its parent outstanding immediately after such merger or
consolidation. 
  
 (iv) A change in the composition of the Board,
as a result of which fewer than a majority of the Directors are Incumbent Directors. “Incumbent Directors” means Directors who either (A) are Directors as of the effective date of the Plan (pursuant to Section 23), or (B) are elected, or
nominated for election, to the Board with the affirmative votes of at least a majority of those Directors whose election or nomination was not in connection with any transaction described in subsections (i), (ii) or (iii) or in connection with an
actual or threatened proxy contest relating to the election of Directors of the Company. 

 (d) “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a
section of the Code herein shall be a reference to any successor or amended section of the Code. 
  
 (e) “Common Stock” means the common stock of the Company. 
  
 (f) “Company” means Cutera, Inc., a Delaware corporation. 
  
 (g) “Compensation” means an Employee’s base straight
time gross earnings, commissions (to the extent such commissions are an integral, recurring part of compensation), overtime and shift premium, but exclusive of payments for incentive compensation, bonuses and other compensation. 
  
 (h) “Designated Subsidiary” means any Subsidiary that has
been designated by the Administrator from time to time in its sole discretion as eligible to participate in the Plan. 
  
 (i) “Director” means a member of the Board. 
  
 (j) “Employee” means any individual who is a common law employee of an Employer and is customarily employed for at least twenty (20)
hours per week and more than five (5) months in any calendar year by the Employer. For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave of absence approved
by the Employer. Where the period of leave exceeds ninety (90) days and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship shall be deemed to have terminated on the 91st day of
such leave. 
  
 (k) “Employer” means any one or
all of the Company and its Designated Subsidiaries. 
  
 (l)
“Enrollment Date” means the first Trading Day of each Offering Period. 
  
 (m) “Exchange Act” means the Securities Exchange Act of 1934, as amended, including the rules and regulations promulgated thereunder. 
  
 (n) “Exercise Date” means the first Trading Day on or after May 1 and November 1 of each year. The first
Exercise Date under the Plan shall be November 1, 2004. 
  
 (o)
“Fair Market Value” means, as of any date, the value of Common Stock determined as follows: 
  
 (i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market
or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for the Common Stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the date of determination,
as reported in The Wall Street Journal or such other source as the Administrator deems reliable, or; 
  

 -2- 

 (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are
not reported, its Fair Market Value shall be the mean of the closing bid and asked prices for the Common Stock on the date of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable, or;

  
 (iii) In the absence of an established market for the Common
Stock, its Fair Market Value shall be determined in good faith by the Administrator, or; 
  
 (iv) For purposes of the Enrollment Date of the first Offering Period under the Plan, the Fair Market Value shall be the initial price to the public as set forth in the final prospectus deemed to be included within
the registration statement on Form S-1 filed with the Securities and Exchange Commission for the initial public offering of the Common Stock (the “Registration Statement”). 
  
 (p) “Offering Periods” means the periods of approximately twelve (12) months during which an option granted
pursuant to the Plan may be exercised, commencing on the first Trading Day on or after May 1 and November 1 of each year and terminating on the first Trading Day on or after the May 1 and November 1 Offering Period commencement date approximately
twelve months later; provided, however, that the first Offering Period under the Plan shall commence with the first Trading Day on or after the date on which the Securities and Exchange Commission declares the Company’s Registration Statement
effective and ending on the first Trading Day on or after the earlier of (i) May 1, 2005 or (ii) twenty-seven (27) months from the beginning of the first Offering Period; and provided, further, that the second Offering Period under the Plan shall
commence on May 1, 2004. The duration and timing of Offering Periods may be changed pursuant to Section 4 of this Plan. 
  
 (q) “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

  
 (r) “Plan” means this 2004 Employee Stock
Purchase Plan. 
  
 (s) “Purchase Period” means
the approximately six (6) month period commencing on one Exercise Date and ending with the next Exercise Date, except that the first Purchase Period of any Offering Period shall commence on the Enrollment Date and end with the next Exercise Date.

  
 (t) “Purchase Price” means an amount equal to
eighty-five percent (85%) of the Fair Market Value of a share of Common Stock on the Enrollment Date or on the Exercise Date, whichever is lower; provided however, that the Purchase Price may be adjusted by the Administrator pursuant to Section 20.

  
 (u) “Subsidiary” means a “subsidiary
corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code. 
  
 (v) “Trading Day” means a day on which the U.S. national stock exchanges and the Nasdaq System are open for trading. 
  

 -3- 

 3. Eligibility. 
  
 (a) First Offering Period. Any individual who is an Employee immediately prior to the first Offering Period under the
Plan shall be automatically enrolled in the first Offering Period. 
  
 (b) Subsequent Offering Periods. Any individual who is an Employee as of the Enrollment Date of any future Offering Period shall be eligible to participate in such Offering Period, subject to the requirements of Section 5.

  
 (c) Limitations. Any provisions of the Plan to the
contrary notwithstanding, no Employee shall be granted an option under the Plan (i) to the extent that, immediately after the grant, such Employee (or any other person whose stock would be attributed to such Employee pursuant to Section 424(d) of
the Code) would own capital stock of the Company or any Parent or Subsidiary of the Company and/or hold outstanding options to purchase such stock possessing five percent (5%) or more of the total combined voting power or value of all classes of the
capital stock of the Company or of any Parent or Subsidiary of the Company, or (ii) to the extent that his or her rights to purchase stock under all employee stock purchase plans (as defined in Section 423 of the Code) of the Company or any Parent
or Subsidiary of the Company accrues at a rate which exceeds twenty-five thousand dollars ($25,000) worth of stock (determined at the Fair Market Value of the stock at the time such option is granted) for each calendar year in which such option is
outstanding at any time. 
  
 4. Offering Periods. The Plan
shall be implemented by consecutive, overlapping Offering Periods with a new Offering Period commencing on the first Trading Day on or after May 1 and November 1 of each year, or on such other date as the Administrator shall determine, and
continuing thereafter until terminated in accordance with Section 20; provided, however, that the first Offering Period under the Plan shall commence with the first Trading Day on or after the date on which the Securities and Exchange Commission
declares the Company’s Registration Statement effective and ending on the first Trading Day on or after the earlier of (i) May 1, 2005 or (ii) twenty-seven (27) months from the beginning of the first Offering Period; and provided, further, that
the second Offering Period under the Plan shall commence on May 1, 2004. The Administrator shall have the power to change the duration of Offering Periods (including the commencement dates thereof) with respect to future offerings without
stockholder approval if such change is announced prior to the scheduled beginning of the first Offering Period to be affected thereafter. 
  
 5. Participation. 
  
 (a) First Offering Period. An Employee who has become a participant in the first Offering Period under the Plan pursuant to Section 3(a) shall be
entitled to continue his or her participation in such Offering Period only if he or she submits to the Company’s payroll office (or its designee) a properly completed subscription agreement authorizing payroll deductions in the form provided by
the Administrator for such purpose (i) no earlier than the effective date of the filing of the Company’s Registration Statement on Form S-8 with respect to the shares of Common Stock issuable under the Plan (the “Effective Date”) and
(ii) no later than five (5) business days from the Effective Date or such other period of time as the Administrator may determine (the “Enrollment Window”). A participant’s failure to submit the subscription agreement during the
Enrollment Window pursuant to this Section 5(a) shall result in the automatic termination of his or her participation in the first Offering Period under the Plan. 
  

 -4- 

 (b) Subsequent Offering Periods. An Employee who is eligible to participate in the Plan pursuant
to Section 3(b) may become a participant by (i) submitting to the Company’s payroll office (or its designee), on or before a date prescribed by the Administrator prior to an applicable Enrollment Date, a properly completed subscription
agreement authorizing payroll deductions in the form provided by the Administrator for such purpose, or (ii) following an electronic or other enrollment procedure prescribed by the Administrator. 
  
 6. Payroll Deductions. 
  
 (a) At the time a participant enrolls in the Plan pursuant to Section 5, he
or she shall elect to have payroll deductions made on each payday during the Offering Period in an amount not exceeding 15% of the Compensation which he or she receives on each such payday. 
  
 (b) Payroll deductions authorized by a participant shall commence on the
first payday following the Enrollment Date and shall end on the last payday in the Offering Period to which such authorization is applicable, unless sooner terminated by the participant as provided in Section 10; provided, however, that for the
first Offering Period under the Plan, payroll deductions shall commence on the first payday on or following the end of the Enrollment Window. 
  
 (c) All payroll deductions made for a participant shall be credited to his or her account under the Plan and shall be withheld in whole percentages only.
A participant may not make any additional payments into such account. 
  
 (d) A participant may discontinue his or her participation in the Plan as provided in Section 10, or may change the rate of his or her payroll deductions during the Offering Period by (i) properly completing and submitting to the
Company’s payroll office (or its designee), on or before a date prescribed by the Administrator prior to an applicable Exercise Date, a new subscription agreement authorizing the change in payroll deduction rate in the form provided by the
Administrator for such purpose, or (ii) following an electronic or other procedure prescribed by the Administrator; provided, however, that a participant may only make one payroll deduction change during each Purchase Period. If a participant has
not followed such procedures to change the rate of payroll deductions, the rate of his or her payroll deductions shall continue at the originally elected rate throughout the Offering Period and future Offering Periods (unless terminated as provided
in Section 10). The Administrator may, in its sole discretion, limit the nature and/or number of payroll deduction rate changes that may be made by participants during any Offering Period. Any change in payroll deduction rate made pursuant to this
Section 6(d) shall be effective as of the first full payroll period following five (5) business days after the date on which the change is made by the participant (unless the Administrator, in its sole discretion, elects to process a given change in
payroll deduction rate more quickly). 
  
 (e) Notwithstanding the
foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 3(c), a participant’s payroll deductions may be decreased to zero percent (0%) at any time during a Purchase Period. Payroll deductions shall recommence
at the rate originally elected by the participant effective as of the beginning of the first Purchase Period which is scheduled to end in the following calendar year, unless terminated by the participant as provided in Section 10. 
  

 -5- 

 (f) At the time the option is exercised, in whole or in part, or at the time some or all of the
Company’s Common Stock issued under the Plan is disposed of, the participant must make adequate provision for the Company’s federal, state, or other tax withholding obligations, if any, which arise upon the exercise of the option or the
disposition of the Common Stock. At any time, the Company may, but shall not be obligated to, withhold from the participant’s compensation the amount necessary for the Company to meet applicable withholding obligations, including any
withholding required to make available to the Company any tax deductions or benefits attributable to the sale or early disposition of Common Stock by the Employee. 
  
 7. Grant of Option. On the Enrollment Date of each Offering Period, each Employee participating in such Offering
Period shall be granted an option to purchase on each Exercise Date during such Offering Period (at the applicable Purchase Price) up to a number of shares of Common Stock determined by dividing such participant’s payroll deductions accumulated
prior to such Exercise Date and retained in the participant’s account as of the Exercise Date by the applicable Purchase Price; provided that in no event shall a participant be permitted to purchase during each Purchase Period more than 2,500
shares of Common Stock (subject to any adjustment pursuant to Section 19), and provided further that such purchase shall be subject to the limitations set forth in Sections 3(c) and 13. The Employee may accept the grant of such option (i) with
respect to the first Offering Period under the Plan, by submitting a properly completed subscription agreement in accordance with the requirements of Section 5(a) on or before the last day of the Enrollment Window, and (ii) with respect to any
future Offering Period under the Plan, by electing to participate in the Plan in accordance with the requirements of Section 5(b). The Administrator may, for future Offering Periods, increase or decrease, in its absolute discretion, the maximum
number of shares of Common Stock that a participant may purchase during each Purchase Period of such Offering Period. Exercise of the option shall occur as provided in Section 8, unless the participant has withdrawn pursuant to Section 10. The
option shall expire on the last day of the Offering Period. 
  
 8.
Exercise of Option. 
  
 (a) Unless a participant withdraws
from the Plan as provided in Section 10, his or her option for the purchase of shares of Common Stock shall be exercised automatically on the Exercise Date, and the maximum number of full shares subject to option shall be purchased for such
participant at the applicable Purchase Price with the accumulated payroll deductions in his or her account. No fractional shares of Common Stock shall be purchased; any payroll deductions accumulated in a participant’s account which are not
sufficient to purchase a full share shall be retained in the participant’s account for the subsequent Purchase Period or Offering Period, subject to earlier withdrawal by the participant as provided in Section 10. Any other monies left over in
a participant’s account after the Exercise Date shall be returned to the participant. During a participant’s lifetime, a participant’s option to purchase shares hereunder is exercisable only by him or her. 
  
 (b) Notwithstanding any contrary Plan provision, if the Administrator
determines that, on a given Exercise Date, the number of shares of Common Stock with respect to which options are to be exercised may exceed (i) the number of shares of Common Stock that were available for sale under the Plan on the Enrollment Date
of the applicable Offering Period, or (ii) the number of shares of Common Stock available for sale under the Plan on such Exercise Date, the Administrator may in its sole discretion (x) provide that the Company shall make a pro rata allocation of
the shares 

  

 -6- 

 
of Common Stock available for purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform a manner as shall be practicable and as it
shall determine in its sole discretion to be equitable among all participants exercising options to purchase Common Stock on such Exercise Date, and continue all Offering Periods then in effect, or (y) provide that the Company shall make a pro rata
allocation of the shares of Common Stock available for purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform a manner as shall be practicable and as it shall determine in its sole discretion to be equitable among all
participants exercising options to purchase Common Stock on such Exercise Date, and terminate any or all Offering Periods then in effect pursuant to Section 20. The Company may make pro rata allocation of the shares of Common Stock available on the
Enrollment Date of any applicable Offering Period pursuant to the preceding sentence, notwithstanding any authorization of additional shares of Common Stock for issuance under the Plan by the Company’s shareholders subsequent to such Enrollment
Date. 
  
 9. Delivery. As soon as administratively
practicable after each Exercise Date on which a purchase of shares of Common Stock occurs, the Company shall arrange the delivery to each participant, as appropriate, the shares purchased upon exercise of his or her option in a form determined by
the Administrator (in its sole discretion) and pursuant to rules established by the Administrator. No participant shall have any voting, dividend, or other shareholder rights with respect to shares of Common Stock subject to any option granted under
the Plan until such shares have been purchased and delivered to the participant as provided in this Section 9. 
  
 10. Withdrawal. 
  
 (a) Under procedures established by the Administrator, a participant may withdraw all but not less than all the payroll deductions credited to his or her
account and not yet used to exercise his or her option under the Plan at any time by (i) submitting to the Company’s payroll office (or its designee) a written notice of withdrawal in the form prescribed by the Administrator for such purpose,
or (ii) following an electronic or other withdrawal procedure prescribed by the Administrator. All of the participant’s payroll deductions credited to his or her account shall be paid to such participant as promptly as practicable after the
effective date of his or her withdrawal and such participant’s option for the Offering Period shall be automatically terminated, and no further payroll deductions for the purchase of shares shall be made for such Offering Period. If a
participant withdraws from an Offering Period, payroll deductions shall not resume at the beginning of the succeeding Offering Period unless the participant re-enrolls in the Plan in accordance with the provisions of Section 5. 
  
 (b) A participant’s withdrawal from an Offering Period shall not have
any effect upon his or her eligibility to participate in any similar plan which may hereafter be adopted by the Company or in succeeding Offering Periods which commence after the termination of the Offering Period from which the participant
withdraws. 
  
 11. Termination of Employment. Upon a
participant’s ceasing to be an Employee, for any reason, he or she shall be deemed to have elected to withdraw from the Plan and the payroll deductions credited to such participant’s account during the Offering Period but not yet used to
purchase shares of Common Stock under the Plan shall be returned to such participant or, in the case of his or her death, to the person or persons entitled thereto under Section 15, and such participant’s option shall be automatically
terminated. The preceding sentence notwithstanding, a participant who 

  

 -7- 

 
receives payment in lieu of notice of termination of employment shall be treated as continuing to be an Employee for the participant’s customary number
of hours per week of employment during the period in which the participant is subject to such payment in lieu of notice. 
  
 12. Interest. No interest shall accrue on the payroll deductions of a participant in the Plan. 
  
 13. Stock. 
  
 (a) Subject to adjustment upon changes in capitalization of the Company as
provided in Section 19, the maximum number of shares of Common Stock which shall be made available for sale under the Plan shall be 200,000 shares of Common Stock plus an annual increase to be added on the first day of the Company’s fiscal year
beginning in fiscal year 2004, equal to the lesser of (i) 600,000 shares of Common Stock, (ii) 2% of the outstanding shares of Common Stock on such date or (iii) an amount determined by the Board. 
  
 (b) Shares of Common Stock to be delivered to a participant under the Plan
shall be registered in the name of the participant or in the name of the participant and his or her spouse. 
  
 14. Administration. The Board or a committee of members of the Board who shall be appointed from time to time by, and shall serve at the pleasure
of, the Board, shall administer the Plan. The Administrator shall have full and exclusive discretionary authority to construe, interpret and apply the terms of the Plan, to determine eligibility, to adjudicate all disputed claims filed under the
Plan and to establish such procedures that it deems necessary for administration of the Plan (including, without limitation, to adopt such procedures and sub-plans as are necessary or appropriate to permit the participation in the Plan by employees
who are foreign nationals or employed outside the United States). The Administrator, in its sole discretion and on such terms and conditions as it may provide, may delegate to one or more individuals all or any part of its authority and powers under
the Plan. Every finding, decision and determination made by the Administrator (or its designee) shall, to the full extent permitted by law, be final and binding upon all parties. 
  
 15. Designation of Beneficiary. 
  
 (a) A participant may designate a beneficiary who is to receive any shares of Common Stock and cash, if any, from the
participant’s account under the Plan in the event of such participant’s death subsequent to an Exercise Date on which the option is exercised but prior to delivery to such participant of such shares and cash. In addition, a participant may
designate a beneficiary who is to receive any cash from the participant’s account under the Plan in the event of such participant’s death prior to exercise of the option. If a participant is married and the designated beneficiary is not
the spouse, spousal consent shall be required for such designation to be effective. 
  
 (b) Such designation of beneficiary may be changed by the participant at any time. In the event of the death of a participant and in the absence of a beneficiary validly designated under the Plan who is living at the
time of such participant’s death, the Company shall deliver such shares and/or cash to the executor or administrator of the estate of the participant, or if no such executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its discretion, may deliver such shares and/or cash to the spouse or to any one or more dependents or relatives of the participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the
Company may designate. 
  

 8 

 (c) All beneficiary designations under this Section 15 shall be made in such form and manner as the
Administrator may prescribe from time to time. 
  
 16.
Transferability. Neither payroll deductions credited to a participant’s account nor any rights with regard to the exercise of an option or to receive shares of Common Stock under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 15) by the participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that
the Company may treat such act as an election to withdraw from an Offering Period in accordance with Section 10. 
  
 17. Use of Funds. All payroll deductions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions. Until shares of Common Stock are issued under the Plan (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the
Company), a participant shall only have the rights of an unsecured creditor with respect to such shares. 
  
 18. Reports. Individual accounts shall be maintained for each participant in the Plan. Statements of account shall be given to participating
Employees at least annually, which statements shall set forth the amounts of payroll deductions, the Purchase Price, the number of shares of Common Stock purchased and the remaining cash balance, if any. 
  
 19. Adjustments, Dissolution, Liquidation or Change of Control.

  
 (a) Adjustments. In the event that any dividend or
other distribution (whether in the form of cash, Common Stock, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange
of Common Stock or other securities of the Company, or other change in the corporate structure of the Company affecting the Common Stock such that an adjustment is determined by the Administrator (in its sole discretion) to be appropriate in order
to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Administrator shall, in such manner as it may deem equitable, adjust the number and class of Common Stock which may be
delivered under the Plan, the Purchase Price per share and the number of shares of Common Stock covered by each option under the Plan which has not yet been exercised, and the numerical limits of Sections 7 and 13. 
  
 (b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Offering Period then in progress shall be shortened by setting a new Exercise Date (the “New Exercise Date”), and shall terminate immediately prior to the consummation of such proposed
dissolution or liquidation, unless provided otherwise by the Board. The New Exercise Date shall be before the date of the Company’s proposed dissolution or liquidation. The Board shall notify each participant in writing, at least ten (10)
business days prior to the New Exercise Date, that the Exercise Date for the participant’s option has been changed to the New Exercise Date and that the participant’s option shall be exercised automatically on the New Exercise Date, unless
prior to such date the participant has withdrawn from the Offering Period as provided in Section 10. 
  

 -9- 

 (c) Change of Control. In the event of a Change of Control, each outstanding option shall be
assumed or an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the option, any Purchase Periods then in
progress shall be shortened by setting a new Exercise Date (the “New Exercise Date”) and any Offering Periods then in progress shall end on the New Exercise Date. The New Exercise Date shall be before the date of the Company’s
proposed Change of Control. The Board shall notify each participant in writing, at least ten (10) business days prior to the New Exercise Date, that the Exercise Date for the participant’s option has been changed to the New Exercise Date and
that the participant’s option shall be exercised automatically on the New Exercise Date, unless prior to such date the participant has withdrawn from the Offering Period as provided in Section 10. 
  
 20. Amendment or Termination. 
  
 (a) The Administrator may at any time and for any reason terminate or amend
the Plan. Except as provided in Section 19, no such termination can affect options previously granted under the Plan, provided that an Offering Period may be terminated by the Administrator on any Exercise Date if the Administrator determines that
the termination or suspension of the Plan is in the best interests of the Company and its stockholders. Except as provided in Section 19 and this Section 20, no amendment may make any change in any option theretofore granted which adversely affects
the rights of any participant. To the extent necessary to comply with Section 423 of the Code (or any successor rule or provision or any other applicable law, regulation or stock exchange rule), the Company shall obtain stockholder approval in such
a manner and to such a degree as required. 
  
 (b) Without
stockholder consent and without regard to whether any participant rights may be considered to have been “adversely affected,” the Administrator shall be entitled to change the Offering Periods, limit the frequency and/or number of changes
in the amount withheld during an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a participant in order to adjust
for delays or mistakes in the Company’s processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of
Common Stock for each participant properly correspond with amounts withheld from the participant’s Compensation, and establish such other limitations or procedures as the Administrator determines in its sole discretion advisable which are
consistent with the Plan. 
  
 (c) In the event the Administrator
determines that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Board may, in its discretion and, to the extent necessary or desirable, modify or amend the Plan to reduce or eliminate such
accounting consequence including, but not limited to: 
  
 (i)
altering the Purchase Price for any Offering Period including an Offering Period underway at the time of the change in Purchase Price; 
  

 -10- 

 (ii) shortening any Offering Period so that Offering Period ends on a new Exercise Date, including an
Offering Period underway at the time of the Board action; and 
  
 (iii) allocating shares. 
  
 Such modifications or amendments shall not
require stockholder approval or the consent of any Plan participants. 
  
 21. Notices. All notices or other communications by a participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof. 
  
 22. Conditions Upon Issuance of Shares. Shares of Common Stock shall not be issued with respect to an option under the Plan unless the exercise of such option and the issuance and delivery of such shares pursuant thereto shall comply
with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended, including the rules and regulations promulgated thereunder, the Exchange Act and the requirements of any stock
exchange upon which the shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. 
  
 As a condition to the exercise of an option, the Company may require the person exercising such option to represent and warrant at the time of any such
exercise that the shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned
applicable provisions of law. 
  
 23. Term of Plan. The
Plan shall become effective upon the earlier to occur of its adoption by the Board or its approval by the stockholders of the Company. It shall continue in effect for a term of twenty(20) years, unless sooner terminated under Section 20. 

 
 24. Automatic Transfer to Low Price Offering Period. To the extent
permitted by any applicable laws, regulations, or stock exchange rules if the Fair Market Value of the Common Stock on any Exercise Date in an Offering Period is lower than the Fair Market Value of the Common Stock on the Enrollment Date of such
Offering Period, then all participants in such Offering Period shall be automatically withdrawn from such Offering Period immediately after the exercise of their option on such Exercise Date and automatically re-enrolled in the immediately following
Offering Period. 
  

 -11- 

 SAMPLE SUBSCRIPTION AGREEMENT 
  
 CUTERA, INC. 
  
 2004 EMPLOYEE STOCK PURCHASE PLAN 
  
 SUBSCRIPTION AGREEMENT 
  

	              Original Application
	  	Offering Date:                
	              Change in Payroll Deduction Rate
	  	 
	              Change of Beneficiary(ies)
	  	 

  

	1.	                     hereby elects to participate in the Cutera, Inc. 2004
Employee Stock Purchase Plan (the “Plan”) and subscribes to purchase shares of the Company’s Common Stock in accordance with this Subscription Agreement and the Plan. 

  

	2.	I hereby authorize payroll deductions from each paycheck in the amount of         % of my Compensation on each payday (from 0 to 15%)
during the Offering Period in accordance with the Plan. (Please note that no fractional percentages are permitted.) 

  

	3.	I understand that said payroll deductions shall be accumulated for the purchase of shares of Common Stock at the applicable Purchase Price determined in accordance with the Plan. I
understand that if I do not withdraw from an Offering Period, any accumulated payroll deductions will be used to automatically exercise my option. 

  

	4.	I have received a copy of the complete Plan. I understand that my participation in the Plan is in all respects subject to the terms of the Plan. I understand that my ability to
exercise the option under this Subscription Agreement is subject to shareholder approval of the Plan. 

  

	5.	Shares of Common Stock purchased for me under the Plan should be issued in the name(s) of Employee or Employee and Spouse only. 

  

	6.	 I understand that if I dispose of any shares received by me pursuant to the Plan within 2 years after the Offering Date (the first day of the Offering Period during
which I purchased such shares) or one year after the Exercise Date, I will be treated for federal income tax purposes as having received ordinary income at the time of such disposition in an amount equal to the excess of the fair market value of the
shares at the time such shares were purchased by me over the price which I paid for the shares. I hereby agree to notify the Company in writing within 30 days after the date of any disposition of my shares and I will make adequate provision for
Federal, state or other tax withholding obligations, if any, which arise upon the disposition of the Common Stock. The Company may, but will not be obligated to, withhold from my compensation the amount necessary to meet any applicable
withholding obligation including any withholding necessary to make available to the Company any tax deductions or 

	 	 
benefits attributable to sale or early disposition of Common Stock by me. If I dispose of such shares at any time after the expiration of the 2-year and
1-year holding periods, I understand that I will be treated for federal income tax purposes as having received income only at the time of such disposition, and that such income will be taxed as ordinary income only to the extent of an amount equal
to the lesser of (1) the excess of the fair market value of the shares at the time of such disposition over the purchase price which I paid for the shares, or (2) 15% of the fair market value of the shares on the first day of the Offering Period.
The remainder of the gain, if any, recognized on such disposition will be taxed as capital gain. 

  

	7.	I hereby agree to be bound by the terms of the Plan. The effectiveness of this Subscription Agreement is dependent upon my eligibility to participate in the Plan.

  

	8.	In the event of my death, I hereby designate the following as my beneficiary(ies) to receive all payments and/or shares due me under the Plan: 

  

	 NAME: (Please print)

	 	  	(First)	  	(Middle)	  	(Last)
		
	  

	  	  

	 Relationship
	  	 	  	 	  	 
		
	  

	  	  

	 Percentage Benefit
	  	              (Address)	  	 	  	 
	
	 NAME: (please print)

	 	  	(First)	  	(Middle)	  	(Last)
		
	  

	  	  

	 Relationship
	  	 	  	 	  	 
		
	  

	  	  

	 Percentage of Benefit
	  	              (Address)	  	 	  	 

  

 -2- 

	 	 	 Employee’s Social
 Security Number:
	 	  
  

			
	 	 	 Employee’s Address:
	 	

			
	 	 	 	 	

			
	 	 	 	 	

  
 I UNDERSTAND THAT THIS SUBSCRIPTION
AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME. 
  

	 Dated:

	 	 	  	  

	 	 	 	  	Signature of Employee
			
	 	 	 	  	

	 	 	 	  	Spouse’s Signature (If beneficiary other than spouse)

 SAMPLE WITHDRAWAL NOTICE 
  
 CUTERA, INC. 
  
 2004 EMPLOYEE STOCK PURCHASE PLAN 
  
 NOTICE OF WITHDRAWAL 
  
 The undersigned participant in the Offering Period of the Cutera, Inc. 2004 Employee Stock Purchase Plan which began on
                    ,              (the “Offering Date”) hereby
notifies the Company that he or she hereby withdraws from the Offering Period. He or she hereby directs the Company to pay to the undersigned as promptly as practicable all the payroll deductions credited to his or her account with respect to such
Offering Period. The undersigned understands and agrees that his or her option for such Offering Period will be automatically terminated. The undersigned understands further that no further payroll deductions will be made for the purchase of shares
in the current Offering Period and the undersigned shall be eligible to participate in succeeding Offering Periods only by delivering to the Company a new Subscription Agreement. 
  

	 Name and Address of Participant:

	  

	  

	  

	
	 Signature:

	  

	
	 Date:

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