--------------------------------------------------------------------------------

 
EXHIBIT 10.46
 
STOCK OPTION AGREEMENT
THIS AGREEMENT, effective as of October 31, 2016, is made by and between Strata
Skin Sciences, Inc. (the "Company"), a Delaware corporation, and Frank J.
McCaney (the "Employee"), an employee of the Company.
Recitals:
WHEREAS, the Company has established the Strata Skin Sciences, Inc. 2016 Omnibus
Incentive Plan (the "Plan"), the terms of which are hereby incorporated by
reference and made a part of this Agreement; and
WHEREAS, the Company and Employee are parties to an Employment Agreement dated
as of October 31, 2016 (the "Employment Agreement")
WHEREAS, the Committee (as hereinafter defined) has determined that it would be
in the best interest of the Company to grant a stock option under the Plan, as
provided for herein, to the Employee as an incentive for increased efforts
during the Employee's employment by the Company, subject to the execution and
delivery by the Employee of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, receipt of which is hereby acknowledged,
the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Capitalized terms used herein and not defined in this Agreement shall have the
meanings specified in the Plan.  Whenever the following terms are used in this
Agreement, they shall have the meanings specified below:
"Act" shall mean the Securities Act of 1933, as amended.
"Cause" shall have the meaning set forth in Section 5(c) of the Employment
Agreement.
"Change of Control" shall have the meaning set forth in Section 5(d) of the
Employment Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Committee" shall mean the Committee established in accordance with Section
3.1(a) of the Plan, if one has been appointed, or the Board of Directors of the
Company if no such committee has been appointed.
"Common Stock" shall mean the Company's Common Stock, $.001 par value.
"Good Reason" shall have the meaning set forth in Section 5(e) of the Employment
Agreement.

--------------------------------------------------------------------------------

"Option" shall mean the stock option granted under this Agreement.
"Plan" shall have the meaning set forth in the first Recital paragraph above.
"Retirement" shall mean a termination of employment by reason of an Employee's
retirement at or after the Employee's earliest permissible retirement date
pursuant to and in accordance with a regular retirement plan or the personnel
practices of the Company.
"Subsidiary" shall mean any corporation in an unbroken chain of corporations
beginning with the Company if each of the corporations other than the last
corporation in the unbroken chain then owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
"Termination of Employment" shall mean the time when the employee-employer
relationship between the Employee and the Company or a Subsidiary is terminated
for any reason, including, but not limited to, a termination by resignation,
discharge, death or Retirement, but excluding any termination where there is a
simultaneous reemployment by the Company or a Subsidiary.  The Committee, in its
absolute discretion, shall determine the effect of all matters and questions
relating to Termination of Employment, including, but not limited to, whether a
Termination of Employment resulted from a discharge for Cause and whether a
particular leave of absence constitutes a Termination of Employment; provided,
however, that a leave of absence shall constitute a Termination of Employment
if, and to the extent that, such leave of absence interrupts employment for
purposes of Section 422(a)(2) of the Code and the then applicable Regulations
and Revenue Rulings under Section 422(a)(2).
ARTICLE 2
GRANT OF OPTION
Section 2.1 - Grant of Option
In consideration of the Employee's employment by the Company and for other good
and valuable consideration, on the date hereof the Company grants to the
Employee the Option to purchase any part or all of a total of 1,550,000 shares
of the Company's Common Stock upon the terms and conditions set forth in this
Agreement.  The Option shall be subject in all respects to the provisions of
this Agreement, the Employment Agreement and of the Plan.  To the extent
permitted by applicable law, the Option is intended to be an incentive stock
option under Section 422 of the Code; provided, however, that any portion of the
Option that does not qualify for incentive stock option treatment shall be
treated as a nonqualified stock options in accordance with Section 6.1(c) of the
Plan.
Section 2.2 - Purchase Price
The purchase price of the shares of Common Stock covered by the Option shall be
$0.55 per share without commission or other charge, which represents the fair
market value on the date of grant.
- 2 -

--------------------------------------------------------------------------------

Section 2.3 - Adjustments in Option
The number of shares subject to issuance upon exercise of the Option and the
purchase price thereof are subject to adjustment in accordance with Section 11.7
of the Plan.
ARTICLE 3
EXERCISABILITY OF OPTIONS
Section 3.1 - Commencement of Exercisability
(a)          Subject to the provisions of this Article 3, provided the Employee
remains employed by the Company on such applicable dates, the Option shall vest
and become exercisable as follows:
(i)          options to purchase up to 542,500 shares shall vest in three equal
installments of 180,834 shares on October 31, 2017, 180,833 shares on October
31, 2018 and 180,833 shares on October 31, 2019, respectively; and
(ii)          options to purchase up to 1,007,500 shares shall vest in
installments as follows per year over three years upon a determination by the
Board of Directors of the Company (the "Board") that the Company has achieved
the following milestones for each of the 2017, 2018 and 2019 fiscal years of the
Company, respectively: (i) if the Company achieves the revenue plan established
by the Board for the respective year: 111,945 shares with respect to 2017,
111,945 shares with respect to 2017, and 111,945 shares with respect to 2019;
(ii) if the Company achieves the EBITDA plan established by the Board for the
respective year: 111,945 shares with respect to 2017, 111,944 shares with
respect to 2018, and 111,944 shares with respect to 2019; and (iii) if the
Company achieves the respective goals established by the Board for the
respective year: 111,944 shares with respect to 2017, 111,944 shares with
respect to 2018, and 111,944 shares with respect to 2019; provided, however,
that if the option(s) to purchase any such shares does not vest with respect to
any particular year due to the failure to satisfy one or more milestone
conditions for that year all rights with respect to those shares shall terminate
as of the end of that year and shall no longer become exercisable.
(b)          No portion of the Option that is not exercisable at the time of the
Employee's Termination of Employment shall thereafter become exercisable.
Section 3.2 - Duration of Exercisability
Upon vesting, the installments provided for in Section 3.1 shall be cumulative. 
Each such installment that vests and becomes exercisable pursuant to Section 3.1
shall remain exercisable until it becomes unexercisable under Section 3.3.
Section 3.3 - Expiration of Option
The Option may not be exercised to any extent after the first to occur of the
following events:
(a)          the expiration of ten years from the date the Option was granted;
- 3 -

--------------------------------------------------------------------------------

(b)          the expiration of three months after the date of the Employee's
Termination of Employment unless such Termination of Employment results from the
Employee's (i) death, (ii) Retirement, (iii) disability (within the meaning of
Section 22(e)(3) of the Code), or (iv) Cause;
(c)          the expiration of one year from the date of the Employee's
Termination of Employment by reason of the Employee's death, Retirement or
disability (within the meaning of Section 22(e)(3) of the Code), provided that
in the event that the Option is exercised more than three months after
termination of employment due to Retirement, the Option shall lose its status as
an incentive stock option and shall be treated as a nonqualified stock option;
or
(d)          the date of Employee's Termination of Employment if the Termination
of Employment is for Cause.
Section 3.4 - Acceleration of Exercisability
If (i) a Change of Control of the Company shall occur before the stock option
vests in full and (ii) Employee is not offered post-Change of Control employment
by the Company or any successor entity, or if offered such post-Change of
Control employment and Employee terminates his employment for Good Reason within
a period of thirty (30) days after the date of the Change of Control, and
Employee satisfies the requirements of Section 5(f)(iv) of the Employment
Agreement), all such stock options that have not previously terminated shall
accelerate and shall vest in full upon the effective date of the termination of
Employee's employment.
ARTICLE 4
EXERCISE OF OPTION
Section 4.1 - Person Eligible to Exercise
During the lifetime of the Employee, only the Employee may exercise the Option
or any portion thereof.  After the death of the Employee, any portion of the
Option that is exercisable on the date of the Employee's death may, prior to the
time when the Option may no longer be exercised pursuant to the provisions of
Section 3.3, be exercised by the Employee's personal representative or by any
person empowered to do so under the Employee's will or under the then applicable
laws of descent and distribution.
Section 4.2 - Partial Exercise
Any exercisable portion of the Option or the entire Option, if then wholly
exercisable, may be exercised at any time prior to the time when the Option or
portion thereof may no longer be exercised pursuant to the provisions of Article
3; provided, however, that each partial exercise shall be for whole shares only.
Section 4.3 - Manner of Exercise
The Option, or any exercisable portion thereof, may be exercised solely by
delivery to the Secretary of the Company of all of the following prior to the
time when the Option or such portion may no longer be exercised pursuant to the
provisions of Article 3:
- 4 -

--------------------------------------------------------------------------------

(a)          Notice in writing signed by the Employee or the other person then
entitled to exercise the Option, stating that the Option or a portion thereof is
thereby exercised, such notice complying with all applicable rules established
by the Committee;
(b)          At the discretion of the Employee:
(i)          delivery of full payment (in cash or by check) for the shares with
respect to which the Option or portion is exercised; or
(ii)          surrender to the Company of that number of fully paid and
non-assessable shares of Common Stock owned by Employee based on the Fair Market
Value (as that term is defined in the Plan) equal to applicable exercise price;
or

(iii)          delivery of notice of a "net value" exercise which reduces the
number of shares to be received upon such exercise to a "Net Number" of shares
determined according to the following formula:

Net Number = (A x (B - C))/B. For purposes of the foregoing formula:

A = the total number of shares with respect to which this Option is then being
exercised;
B = the last reported sale price (as reported by the principal national
securities exchange on which the Common Stock is then traded) of the Common
Stock on the trading date immediately preceding the date of the applicable
exercise of this Option; and
C = the exercise price then in effect at the time of such exercise.
 
It is specifically intended that any such exercise contemplated hereunder be
exempt from the "short-swing profit" rule of Section 16(b) of the Exchange
Act of 1934, as amended (the "Exchange Act"), as provided by Rule 16b-3 of the
Exchange Act.

(iv)          delivery of a combination of the consideration provided in the
foregoing Sections 4.3(b)(i), and 4.3(b)(ii).

(c)          A bona fide written representation and agreement in a form
satisfactory to the Committee, signed by the Employee or other person then
entitled to exercise such Option or portion, stating that the shares of Common
Stock are being acquired for the Employee's own account, for investment and
without any present intention of distributing or reselling said shares or any of
them except as may be permitted under the Act and then applicable rules and
regulations thereunder, and that the Employee or other person then entitled to
exercise the Option or portion will indemnify the Company against and hold it
free and harmless from any loss, damage, expense or liability resulting to the
Company if any sale or distribution of the shares by such person is contrary to
the representation and agreement referred to above.  The Committee may, in its
absolute discretion, take whatever additional actions it deems appropriate to
ensure the observance and performance of such representation and agreement and
to effect compliance with the Act and any other federal or state securities laws
or regulations.  Without limiting the generality of the foregoing, the Committee
may require an opinion of counsel
- 5 -

--------------------------------------------------------------------------------

acceptable to it to the effect that any subsequent transfer of the shares
acquired upon the exercise of the Option does not violate the Act and may issue
stop-transfer orders covering such shares.  Share certificates evidencing Common
Stock issued upon the exercise of the Option shall bear an appropriate legend
referring to the provisions of this Section 4.3(c) and the agreements herein and
therein.  The written representation and agreement referred to in the first
sentence of this Section 4.3(c) shall, however, not be required if the shares to
be issued pursuant to such exercise have been registered under the Act and such
registration is then effective in respect of such shares.
(d)          In the event the Option or portion shall be exercised pursuant to
Section 4.1 by any person or persons other than the Employee, appropriate proof
of the right of such person or persons to exercise the Option.
Section 4.4 - Conditions to Issuance of Shares
The shares of Common Stock deliverable upon the exercise of the Option, or any
portion thereof, may be either previously authorized but unissued shares or
treasury shares.  Such shares shall be fully paid and nonassessable.  The
Company shall not be required to issue any shares of Common Stock purchased upon
the exercise of the Option or portion thereof prior to fulfillment of all of the
following conditions:
(a)          The admission of such shares to listing on all stock exchanges on
which such class of stock shall then be listed;
(b)          The completion of any registration or other qualification of such
shares under any state or federal law or under rulings or regulations of the
Securities and Exchange Commission or of any other governmental regulatory body,
which the Committee shall, in its absolute discretion, deem necessary or
advisable;
(c)          The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(d)          The lapse of such reasonable period of time following the exercise
of the Option as the Committee may from time to time establish for reasons of
administrative convenience.
Section 4.5 - Rights as Stockholder
The holder of the Option shall not be, and shall not have any of the rights or
privileges of, a stockholder of the Company in respect of any shares purchasable
upon the exercise of any part of the Option unless and until such part of the
Option is exercised in accordance with its terms.
- 6 -

--------------------------------------------------------------------------------

ARTICLE 5
MISCELLANEOUS
Section 5.1 - Options Not Transferable
Neither the Option nor any interest or right therein or part thereof shall be
liable for the debts, contracts or engagements of the Employee or the Employee's
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition shall be voluntary or involuntary or by operation of
law by judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that this Section 5.1
shall not prevent transfers by will or by the applicable laws of descent and
distribution in accordance with the Plan.
Section 5.2 - Administration
The Committee shall have the power to interpret the Plan and this Agreement and
to adopt such rules for the administration, interpretation and application of
the Plan as are consistent therewith and to interpret or revoke any such rules. 
All actions taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon the Employee, the
Company and all other interested persons.  No member of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or the Option.
Section 5.3 - Withholding
All amounts that, under federal, state or local law, are required to be withheld
from the amount payable with respect to any Option shall be withheld by the
Company.  Whenever the Company proposes or is required to issue or transfer
shares of Common Stock, the Company shall have the right to require the
recipient to remit to the Company an amount sufficient to satisfy any federal,
state or local withholding tax requirements prior to the delivery of any
certificate or certificates for such shares.  The Employee may elect to satisfy
any tax withholding obligation of the Company with respect to the Option by
having Common Stock withheld up to an amount that does not exceed the minimum
applicable withholding tax rate for federal (including FICA), state and local
tax liabilities.
Section 5.4 - No Right of Continued Employment
Nothing contained in this Agreement or in the Plan shall confer upon the
Employee any right to continue in the employ of the Company or any Subsidiary or
shall interfere with or restrict in any way the rights of the Company and any
Subsidiary, which are hereby expressly reserved, to discharge the Employee at
any time for any reason whatsoever, with or without Cause.
Section 5.5 - Notices
Any notice to be given under the terms of this Agreement to the Company shall be
addressed to the Company in care of its Secretary, and any notice to be given to
the Employee
- 7 -

--------------------------------------------------------------------------------

shall be addressed to the Employee at the address given beneath the Employee's
signature hereto.  By a notice given pursuant to this Section 5.5, either party
may hereafter designate a different address for notices to be given to such
party.  Any notice that is required to be given to the Employee shall, if the
Employee is then deceased, be given to the Employee's personal representative if
such representative has previously informed the Company of his or her status and
address by written notice under this Section 5.5.  Any notice shall have been
deemed duly given when addressed as aforesaid and deposited (with postage
prepaid) in the United States mail or sent by overnight courier (with charges
prepaid).
Section 5.6 - Entire Agreement
This Agreement, the Employment Agreement and the Plan set forth the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings between the parties regarding
the Option.
Section 5.7 - Successors and Assigns
This Agreement shall inure to the successors and assigns of the parties;
provided, however, that neither this Agreement nor any rights hereunder may be
assigned by the Employee.
Section 5.8 - Survival
Each provision of this Agreement that, by its terms, is intended to survive
beyond the exercise of the Option shall continue in effect thereafter until such
time as such term shall no longer apply.
Section 5.9 - Titles
Titles are provided herein for convenience only and are not to serve as a basis
for interpretation or construction of this Agreement.
Section 5.10 - Counterparts; Electronic Transmission
This Agreement may be executed by the parties on separate counterparts, each of
which shall be an original and both of which together shall constitute one and
the same agreement.  A facsimile or electronic transmission of a scanned copy of
a signed counterpart signature page hereto shall be deemed to be an originally
executed copy for purposes of this Agreement.
(Signature page follows.)
- 8 -

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, and intending to be legally bound hereby, this Agreement has
been executed and delivered by the parties hereto.
STRATA SKIN SCIENCES, INC.

By:  /s/ Jeffrey F. O'Donnell, Sr.          
       Jeffrey F. O'Donnell, Sr.
       Chairman of the Board

        /s/ Frank J. McCaney          
       Frank J. McCaney

 
 

--------------------------------------------------------------------------------

- 9 -