Unassociated Document





ProCyte
Corporation 1996 Stock Option Plan







Section
1. Purpose




The
purpose of the ProCyte Corporation 1996 Stock Option Plan (the "Plan") is to
enhance the long-term shareholder value of ProCyte Corporation, a Washington
corporation (the "Company"), by offering opportunities to
employees, directors, officers, consultants, agents, advisors and
independent contractors of the Company and its Subsidiaries (as defined in
Section 2) to participate in the Company's growth and success, and to encourage
them to remain in the service of the Company and its Subsidiaries and to acquire
and maintain stock ownership in the Company.




Section
2. Definitions




For
purposes of the Plan, the following terms shall be defined as set forth
below:





	1.1  	
      Award







"Award"
means an award or grant made to a Participant pursuant to the Plan, including
awards or grants of Incentive Stock Options and Nonqualified Stock Options or
any combination of the foregoing.





	1.2  	
      Board







"Board"
means the Board of Directors of the Company.

 


	1.3  	
      Cause







"Cause"
means dishonesty, fraud, misconduct, unauthorized use or disclosure of
confidential information or trade secrets, or conviction or confession of a
crime punishable by law (except minor violations), in each case as determined by
the Plan Administrator, and its determination shall be conclusive and
binding.





	1.4  	
      Code







"Code"
means the Internal Revenue Code of 1986, as amended from time to
time.





	1.5  	
      Common
      Stock







"Common
Stock" means the Common Stock of the Company.





	1.6  	
      Corporate
      Transaction







"Corporate
Transaction" means any of the following events:










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(a) Consummation
of any merger or consolidation of the Company in which the Company is not the
continuing or surviving corporation, or pursuant to which shares of the Common
Stock are converted into cash, securities or other property, if following such
merger or consolidation the holders of the Company's outstanding voting
securities immediately prior to such merger or consolidation own less than
66-2/3% of the outstanding voting securities of the surviving
corporation;




(b) Consummation
of any sale, lease, exchange or other transfer in one transaction or a series of
related transactions of all or substantially all of the Company's assets other
than a transfer of the Company's assets to a majority-owned subsidiary
corporation (as the term "subsidiary corporation" is defined in Section 8.3) of
the Company;




(c) Approval
by the holders of the Common Stock of any plan or proposal for the liquidation
or dissolution of the Company; or





(d)  Acquisition
by a person, within the meaning of Section 3(a)(9) or of Section 13(d)(3) (as in
effect on the date of adoption of the Plan) of the Exchange Act of a majority or
more of the Company's outstanding voting securities (whether directly or
indirectly, beneficially or of record).






(e)  Ownership
of voting securities shall take into account and shall include ownership as
determined by applying Rule 13d-3(d)(1)(i) (as in effect on the date of adoption
of the Plan) pursuant to the Exchange Act.






	1.7  	
      Disability







"Disability"
means "disability" as that term is defined for purposes of Section 22(e)(3) of
the Code.





	1.8  	
      Exchange
      Act







"Exchange
Act" means the Securities Exchange Act of 1934, as amended.





	1.9  	
      Fair
      Market Value







"Fair
Market Value" shall be as established in good faith by the Plan Administrator or
(a) if the Common Stock is listed on the Nasdaq National Market, the closing
selling price for the Common Stock as reported by the Nasdaq National Market for
a single trading day or (b) if the Common Stock is listed on the New York Stock
Exchange or the American Stock Exchange, the closing selling price for the
Common Stock as such price is officially quoted in the composite tape of
transactions on such exchange for a single trading day. If there is no such
reported price for the Common Stock for the date in question, then such price on
the last preceding date for which such price exists shall be determinative of
Fair Market Value.

 







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1.10 Good
Reason





"Good
Reason" means the occurrence of any of the following events or conditions and
the failure of the Successor Corporation to cure such event or condition within
30 days after receipt of written notice by the Holder:




(a) a change
in the Holder's status, title, position or responsibilities (including reporting
responsibilities) that, in the Holder's reasonable judgment, represents a
substantial reduction in the status, title, position or responsibilities as in
effect immediately prior thereto; the assignment to the Holder of any duties or
responsibilities that, in the Holder's reasonable judgment, are materially
inconsistent with such status, title, position or responsibilities; or any
removal of the Holder from or failure to reappoint or reelect the Holder to any
of such positions, except in connection with the termination of the Holder's
employment for Cause, for Disability or as a result of his or her death, or by
the Holder other than for Good Reason;




(b) a
reduction in the Holder's annual base salary;




(c) the
Successor Corporation's requiring the Holder (without the Holder's consent) to
be based at any place outside a 35-mile radius of his or her place of employment
prior to a Corporate Transaction, except for reasonably required travel on the
Successor Corporation's business that is not materially greater than such travel
requirements prior to the Corporate Transaction;




(d) the
Successor Corporation's failure to (i) continue in effect any material
compensation or benefit plan (or the substantial equivalent thereof) in which
the Holder was participating at the time of a Corporate Transaction, including,
but not limited to, the Plan, or (ii) provide the Holder with compensation and
benefits substantially equivalent (in terms of benefit levels and/or reward
opportunities) to those provided for under each material employee benefit plan,
program and practice as in effect immediately prior to the Corporate
Transaction;




(e) any
material breach by the Successor Corporation of its obligations to the Holder
under the Plan or any substantially equivalent plan of the Successor
Corporation; or




(f) any
purported termination of the Holder's employment or service for Cause by the
Successor Corporation that does not comply with the terms of the Plan or any
substantially equivalent plan of the Successor Corporation.

 




1.11 Grant
Date





"Grant
Date" means the date the Plan Administrator adopted the granting resolution or a
later date designated in a resolution of the Plan Administrator as the date an
Award is to be granted.





1.12 Holder



"Holder"
means the Participant to whom an Award is granted or, for a Holder who has died,
the personal representative of the Holder's estate, the person(s) to whom the
Holder's rights under the Award have passed by will or the applicable laws of
descent and distribution or the beneficiary designated pursuant to Section
10.










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1.13
Incentive
Stock Option





"Incentive
Stock Option" means an Option to purchase Common Stock granted under Section 7
with the intention that it qualify as an "incentive stock option" as that term
is defined in Section 422 of the Code.





1.14
Nonqualified
Stock Option





"Nonqualified
Stock Option" means an Option to purchase Common Stock granted under Section 7
other than an Incentive Stock Option.





1.15
Option





"Option"
means the right to purchase Common Stock granted under Section 7.





1.16
Participant





"Participant"
means an individual who is a Holder of an Award or, as the context may require,
any employee, director, officer, consultant, agent, advisor or independent
contractor of the Company or a Subsidiary who has been designated by the Plan
Administrator as eligible to participate in the Plan.





1.17
Plan
Administrator





"Plan
Administrator" means the Board or any committee of the Board designated to
administer the Plan under Section 3.1.





2.18 Securities
Act





"Securities
Act" means the Securities Act of 1933, as amended.





2.19 Subsidiary





"Subsidiary,"
except as provided in Section 8.3 in connection with Incentive Stock Options,
means any entity that is directly or indirectly controlled by the Company or in
which the Company has a significant ownership interest, as determined by the
Plan Administrator, and any entity that may become a direct or indirect parent
of the Company.





2.20
Successor
Corporation





"Successor
Corporation" has the meaning set forth under Section 11.2.










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Section
3. Administration




3.1 Plan
Administrator




The Plan
shall be administered by the Board or a committee or committees (which term
includes subcommittees) appointed by, and consisting of two or
more members of, the Board. If and so long as the Common Stock is registered
under Section 12(b) or 12(g) of the Exchange Act, the Board shall consider in
selecting the Plan Administrator and the membership of any committee acting as
Plan Administrator for any persons subject or likely to become subject to
Section 16 under the Exchange Act the provisions regarding (a) "outside
directors" as contemplated by Section 162(m) of the Code and (b) "nonemployee
directors" as contemplated by Rule 16b-3 under the Exchange Act. The Board may
delegate the responsibility for administering the Plan with respect to
designated classes of eligible Participants to different committees, subject to
such limitations as the Board deems appropriate. Committee members shall serve
for such term as the Board may determine, subject to removal by the Board at any
time. 

 

3.2 Administration
and Interpretation by the Plan Administrator




Except
for the terms and conditions explicitly set forth in the Plan, the Plan
Administrator shall have exclusive authority, in its discretion, to determine
all matters relating to Awards under the Plan, including the selection of
individuals to be granted Awards, the type of Awards, the number of shares of
Common Stock subject to an Award, all terms, conditions, restrictions and
limitations, if any, of an Award and the terms of any instrument that evidences
the Award. The Plan Administrator shall also have exclusive authority to
interpret the Plan and may from time to time adopt, and change, rules and
regulations of general application for the Plan's administration. The Plan
Administrator's interpretation of the Plan and its rules and regulations, and
all actions taken and determinations made by the Plan Administrator pursuant to
the Plan, shall be conclusive and binding on all parties involved or affected.
The Plan Administrator may delegate administrative duties to such of the
Company's officers as it so determines.




Section
4. Stock
subject to the plan

 

4.1 Authorized
Number of Shares




Subject
to adjustment from time to time as provided in Section 11.1, a maximum of
1,750,000 shares of Common Stock shall be available for issuance under the Plan.
Shares issued under the Plan shall be drawn from authorized and unissued
shares.

 

4.2
Limitations




Subject
to adjustment from time to time as provided in Section 11.1, not more than
150,000 shares of Common Stock may be made subject to Awards under the Plan to
any individual Participant in the aggregate in any one fiscal year of the
Company; except that the Company may make additional one-time grants of up to
300,000 shares to newly hired Participants such limitation shall be applied in a
manner consistent with the requirements of, and only to the extent 

 







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required
for compliance with, the exclusion from the limitation on deductibility of
compensation under Section 162(m) of the Code.

 

4.3 Reuse
of Shares




Any
shares of Common Stock that have been made subject to an Award that cease to be
subject to the Award (other than by reason of exercise or payment of the Award
to the extent it is exercised for in shares), shall again be available for
issuance in connection with future grants of Awards under the Plan; provided,
however, that any such shares shall be counted in accordance with the
requirements of Section 162(m) of the Code.




Section
5. Eligibility




Awards
may be granted under the Plan to those officers, directors and key employees of
the Company and its Subsidiaries as the Plan Administrator from time to time
selects. Awards may also be made to consultants, agents, advisors and
independent contractors who provide services to the Company and its
Subsidiaries. 




Section
6. Awards

 

6.1 Form
and Grant of Awards




The Plan
Administrator shall have the authority, in its sole discretion, to determine the
type or types of Awards to be made under the Plan. Such Awards may consist of
Incentive Stock Options and/or Nonqualified Stock Options. Awards may be granted
singly or in combination.

 

6.2 Acquired
Company Awards




Notwithstanding
anything in the Plan to the contrary, the Plan Administrator may grant Awards
under the Plan in substitution for awards issued under other plans, or assume
under the Plan awards issued under other plans, if the other plans are or were
plans of other acquired entities ("Acquired Entities") (or the parent of the
Acquired Entity) and the new Award is substituted, or the old award is assumed,
by reason of a merger, consolidation, acquisition of property or of stock,
reorganization or liquidation (the "Acquisition Transaction"). In the event that
a written agreement pursuant to which the Acquisition Transaction is completed
is approved by the Board and said agreement sets forth the terms and conditions
of the substitution for or assumption of outstanding awards of the Acquired
Entity, said terms and conditions shall be deemed to be the action of the Plan
Administrator without any further action by the Plan Administrator, except as
may be required for compliance with Rule 16b-3 under the Exchange Act, and the
persons holding such Awards shall be deemed to be Participants and
Holders.

 







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Section
7. Awards
of options




7.1 Grant
of Options




The Plan
Administrator is authorized under the Plan, in its sole discretion, to issue
Options as Incentive Stock Options or as Nonqualified Stock Options, which shall
be appropriately designated.

 

7.2 Option
Exercise Price




The
exercise price for shares purchased under an Option shall be as determined by
the Plan Administrator, but shall not be less than 100% of the Fair Market Value
of the Common Stock on the Grant Date with respect to Incentive Stock Options
and not less than 85% of the Fair Market Value of the Common Stock on the Grant
Date with respect to Nonqualified Stock Options.

 

7.3 Term
of Options




The term
of each Option shall be as established by the Plan Administrator or, if not so
established, shall be 10 years from the Grant Date.

 

7.4 Exercise
of Options




The Plan
Administrator shall establish and set forth in each instrument that evidences an
Option the time at which or the installments in which the Option shall become
exercisable, which provisions may be waived or modified by the Plan
Administrator at any time. If not so established in the instrument evidencing
the Option, the Option will become exercisable according to the following
schedule, which may be waived or modified by the Plan Administrator at any
time:





	
      Period
      of Holder's Continuous Employment

      or
      Service With the Company or Its Subsidiaries

      From
      the Option Grant Date
	
      Percent
      of Total Option

      That
      Is Exercisable

	
      After
      1 year
	
      1/3

	
      After
      2 years
	
      2/3

	
      After
      3 years
	
      100%







Unless
the Plan Administrator determines otherwise, the vesting schedule of an Option
shall be adjusted proportionately to the extent the Holder works less than "full
time" as that term is defined by the Plan Administrator.




To the
extent that the right to purchase shares has accrued thereunder, an Option may
be exercised from time to time by written notice to the Company, in accordance
with procedures established by the Plan Administrator, setting forth the number
of shares with respect to which the Option is being exercised and accompanied by
payment in full as described in Section 7.5. 

 







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The Plan
Administrator may determine at any time that an Option may not be exercised as
to less than 100 shares at any one time (or the lesser number of remaining
shares covered by the Option).

 

7.5 Payment
of Exercise Price




The
exercise price for shares purchased under an Option shall be paid in full to the
Company by delivery of consideration equal to the product of the Option exercise
price and the number of shares purchased. Such consideration must be paid in
cash or by check, or a combination of cash and/or check and one or more of the
following alternative forms: (a) tendering (either actually or, if and so long
as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange
Act, by attestation) Common Stock already owned by the Holder for at least six
months (or any shorter period necessary to avoid a charge to the Company's
earnings for financial reporting purposes) having a Fair Market Value on the day
prior to the exercise date equal to the aggregate Option exercise price; (b) if
and so long as the Common Stock is registered under Section 12(b) or 12(g) of
the Exchange Act, delivery of a properly executed exercise notice, together with
irrevocable instructions, to (i) a brokerage firm designated by the Company to
deliver promptly to the Company the aggregate amount of sale or loan proceeds to
pay the Option exercise price and any withholding tax obligations that may arise
in connection with the exercise and (ii) the Company to deliver the certificates
for such purchased shares directly to such brokerage firm, all in accordance
with the regulations of the Federal Reserve Board; if permitted by the Plan
Administrator, in its sole discretion, either at the time the Option is granted
or at any time before it is exercised and subject to such limitations as the
Plan Administrator may determine, (c) a promissory note delivered pursuant to
Section 9; or (d) such other consideration as the Plan Administrator may permit.


 

7.6 Post-Termination
Exercises




The Plan
Administrator shall establish and set forth in each instrument that evidences an
Option whether the Option will continue to be exercisable, and the terms and
conditions of such exercise, if a Holder ceases to be employed by, or to provide
services to, the Company or its Subsidiaries, which provisions may be waived or
modified by the Plan Administrator at any time. If not so established in the
instrument evidencing the Option, the Option will be exercisable according to
the following terms and conditions, which may be waived or modified by the Plan
Administrator at any time. 




In case
of termination of the Holder's employment or services other than by reason of
death or Cause, the Option shall be exercisable, to the extent of the number of
shares purchasable by the Holder at the date of such termination, only (a)
within three months after the
date the Holder ceases to be an employee, director, officer, consultant, agent,
advisor or independent contractor of the Company or a Subsidiary if termination
of the Holder's employment or services is for any reason other than Disability
or (b) within one year if such termination is because of Disability, but in no
event later than the remaining term of the Option. Any Option exercisable at the
time of the Holder's death may be exercised, at any time or from time to time
within one year after the date of death, but in no event later than the
remaining term of the Option, to the extent of the number of shares purchasable
by the Holder at the date of the Holder's death, by the personal 

 







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representative
of the Holder's estate the person(s) to whom the Holder's rights under the Award
have passed by will or the applicable laws of descent and distribution or the
beneficiary designated pursuant to Section 10. In case of termination of the
Holder's employment or services for Cause, the Option shall automatically
terminate upon first notification to the Holder of such termination, unless the
Plan Administrator determines otherwise. If a Holder's employment or services
with the Company are suspended pending an investigation of whether the Holder
shall be terminated for Cause, all the Holder's rights under any Option likewise
shall be suspended during the period of investigation. 




A
transfer of employment or services between or among the Company and its
Subsidiaries shall not be considered a termination of employment or services.
The effect of a Company-approved leave of absence on the terms and conditions of
an option shall be determined by the Plan Administrator, in its sole
discretion.




Section
8. Incentive
stock option limitations




To the
extent required by Section 422 of the Code, Incentive Stock Options shall be
subject to the following additional terms and conditions:

 

8.1 Dollar
Limitation




To the
extent the aggregate Fair Market Value (determined as of the Grant Date) of
Common Stock with respect to which Incentive Stock Options are exercisable for
the first time during any calendar year (under the Plan and all other stock
option plans of the Company) exceeds $100,000, such portion in excess of
$100,000 shall be treated as a Nonqualified Stock Option. In the event the
Participant holds two or more such Options that become exercisable for the first
time in the same calendar year, such limitation shall be applied on the basis of
the order in which such Options are granted.

 

8.2 10%
Shareholders




If a
Participant owns more than 10% of the total voting power of all classes of the
Company's stock, then the exercise price per share of an Incentive Stock Option
shall not be less than 110% of the Fair Market Value of the Common Stock on the
Grant Date and the Option term shall not exceed five years. The determination of
10% ownership shall be made in accordance with Section 422 of the
Code.

 

8.3 Eligible
Employees




Individuals
who are not employees of the Company or one of its parent corporations or
subsidiary corporations may not be granted Incentive Stock Options. For purposes
of this Section .3, "parent corporation" and "subsidiary corporation" shall have
the meanings attributed to those terms for purposes of Section 422 of the
Code.

 







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8.4 Term





The term
of an Incentive Stock Option shall not exceed 10 years.

 

8.5 Exercisability




To
qualify for Incentive Stock Option tax treatment, an Option designated as an
Incentive Stock Option must be exercised within three months after termination
of employment for reasons other than death, except that, in the case of
termination of employment due to total disability, such Option must be exercised
within one year after such termination. Employment shall not be deemed to
continue beyond the first 90 days of a leave of absence unless the Participant's
reemployment rights are guaranteed by statute or contract. For purposes of this
Section 8.5, "total disability" shall mean a mental or physical impairment of
the Participant which is expected to result in death or which has lasted or is
expected to last for a continuous period of 12 months or more and which causes
the Participant to be unable, in the opinion of the Company and two independent
physicians, to perform his or her duties for the Company and to be engaged in
any substantial gainful activity. Total disability shall be deemed to have
occurred on the first day after the Company and the two independent physicians
have furnished their opinion of total disability to the Plan
Administrator.

 

8.6 Taxation
of Incentive Stock Options




In order
to obtain certain tax benefits afforded to Incentive Stock Options under Section
422 of the Code, the Participant must hold the shares issued upon the exercise
of an Incentive Stock Option for two years after the Grant Date of the Incentive
Stock Option and one year from the date of exercise. A Participant may be
subject to the alternative minimum tax at the time of exercise of an Incentive
Stock Option. The Plan Administrator may require a Participant to give the
Company prompt notice of any disposition of shares acquired by the exercise of
an Incentive Stock Option prior to the expiration of such holding
periods.

 

8.7 Promissory
Notes




The
amount of any promissory note delivered pursuant to Section 9 in connection with
an Incentive Stock Option shall bear interest at a rate specified by the Plan
Administrator but in no case less than the rate required to avoid imputation of
interest (taking into account any exceptions to the imputed interest rules) for
federal income tax purposes.




Section
9. Loans,
installment payments and loan guarantees




To assist
a Holder (including a Holder who is an officer or director of the Company) in
acquiring shares of Common Stock pursuant to an Award granted under the Plan,
the Plan Administrator, in its sole discretion, may authorize, either at the
Grant Date or at any time before the acquisition of Common Stock pursuant to the
Award, (a) the extension of a loan to the Holder by the Company, (b) the payment
by the Holder of the purchase price, if any, of the Common Stock in
installments, or (c) the guarantee by the Company of a loan obtained by the
grantee from a third party. The terms of any loans, installment payments or loan
guarantees, including the interest 

 







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rate and
terms of repayment, will be subject to the Plan Administrator's discretion.
Loans, installment payments and loan guarantees may be granted with or without
security. The maximum credit available is the purchase price, if any, of the
Common Stock acquired, plus the maximum federal and state income and employment
tax liability that may be incurred in connection with the
acquisition.




Section
10. Assignability




No Award
granted under the Plan may be assigned, pledged or transferred by the Holder
other than by will or by the laws of descent and distribution, and during the
Holder's lifetime, such Awards may be exercised only by the Holder.
Notwithstanding the foregoing, and to the extent permitted by Section 422 of the
Code, the Plan Administrator, in its sole discretion, may permit such
assignment, transfer and exercisability and may permit a Holder of such Awards
to designate a beneficiary who may exercise the Award or receive compensation
under the Award after the Holder's death; provided, however, that any Award so
assigned or transferred shall be subject to all the same terms and conditions
contained in the instrument evidencing the Award.




Section
11. Adjustments

 

11.1 Adjustment
of Shares




In the
event that, at any time or from time to time, a stock dividend, stock split,
spin-off, combination or exchange of shares, recapitalization, merger,
consolidation, distribution to shareholders other than a normal cash dividend,
or other change in the Company's corporate or capital structure results in (a)
the outstanding shares, or any securities exchanged therefor or received in
their place, being exchanged for a different number or class of securities of
the Company or of any other corporation or (b) new, different or additional
securities of the Company or of any other corporation being received by the
holders of shares of Common Stock of the Company, then the Plan Administrator,
in its sole discretion, shall make such equitable adjustments as it shall deem
appropriate in the circumstances in (i) the maximum number and class of
securities subject to the Plan as set forth in Section 4.1, (ii) the maximum
number and class of securities that may be made subject to Awards to any
individual Participant as set forth in Section 4.2, and (iii) the number and
class of securities that are subject to any outstanding Award and the per share
price of such securities, without any change in the aggregate price to be paid
therefor. The determination by the Plan Administrator as to the terms of any of
the foregoing adjustments shall be conclusive and binding.

 

11.2 Corporate
Transaction




Except as
otherwise provided in the instrument that evidences the Award, in the event of
any Corporate Transaction, each Award that is at the time outstanding shall
automatically accelerate so that each such Award shall, immediately prior to the
specified effective date for the Corporate Transaction, become 100% vested,
except that such acceleration will not occur, if in the opinion of the Company's
accountants, it would render unavailable "pooling of interest" accounting for a
Corporate Transaction that would otherwise qualify for such accounting
treatment. Such Award shall not so accelerate, however, if and to the extent
that (a) such Award is, in connection with 

 







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the
Corporate Transaction, either to be assumed by the successor corporation or
parent thereof (the "Successor Corporation") or to be replaced with a comparable
award for the purchase of shares of the capital stock of the Successor
Corporation or (b) such Award is to be replaced with a cash incentive program of
the Successor Corporation that preserves the spread existing at the time of the
Corporate Transaction and provides for subsequent payout in accordance with the
same vesting schedule applicable to such Award. The determination of Award
comparability under clause (a) above shall be made by the Plan Administrator,
and its determination shall be conclusive and binding. All such Awards shall
terminate and cease to remain outstanding immediately following the consummation
of the Corporate Transaction, except to the extent assumed by the Successor
Corporation. Any such Awards that are assumed or replaced in the Corporate
Transaction and do not otherwise accelerate at that time shall be accelerated in
the event the Holder's employment or services should subsequently terminate
within two years following such Corporate Transaction, unless such employment or
services are terminated by the Successor Corporation for Cause or by the Holder
voluntarily without Good Reason.

 

11.3 Further
Adjustment of Awards




Subject
to the preceding Section 11.2, the Plan Administrator shall have the discretion,
exercisable at any time before a sale, merger, consolidation, reorganization,
liquidation or change in control of the Company, as defined by the Plan
Administrator, to take such further action as it determines to be necessary or
advisable, and fair and equitable to Participants, (but shall not be limited to)
establishing, amending or waiving the type, terms, conditions or duration of, or
restrictions on, Awards so as to provide for earlier, later, extended or
additional time for exercise and other modifications, and the Plan Administrator
may take such actions with respect to all Participants, to certain categories of
Participants or only to individual Participants. The Plan Administrator may take
such actions before or after granting Awards to which the action relates and
before or after any public announcement with respect to such sale, merger,
consolidation, reorganization, liquidation or change in control that is the
reason for such action.

 

11.4 Limitations




The grant
of Awards will in no way affect the Company's right to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.




Section
12. Withholding




The
Company may require the Holder to pay to the Company the amount of any
withholding taxes that the Company is required to withhold with respect to the
grant or exercise of any Award. In such instances, the Plan Administrator may,
in its discretion and subject to the Plan and applicable law, permit the Holder
to satisfy withholding obligations, in whole or in part, by paying cash, by
electing to have the Company withhold shares of Common Stock or by transferring
shares of Common Stock to the Company, in such amounts as are equivalent to the
Fair Market Value of the withholding obligation. The Company shall have the
right to withhold from any shares of Common Stock issuable pursuant to an Award
or from any cash amounts otherwise due or to become due from the Company to the
Participant an amount equal to such 

 







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taxes.
The Company may also deduct from any Award any other amounts due from the
Participant to the Company or a Subsidiary.




Section
13. Amendment
and termination of plan

 

13.1 Amendment
of Plan




The Plan
may be amended by the shareholders of the Company. The Board may also amend the
Plan in such respects as it shall deem advisable; however, to the extent
required for compliance with Section 422 of the Code or any applicable law or
regulation, shareholder approval will be required for any amendment that will
(a) increase the aggregate number of shares as to which Options may be granted,
(b) modify the employees or class of employees eligible to receive Incentive
Stock Options, or (c) otherwise require shareholder approval under any
applicable law or regulation. Amendments made to the Plan which would constitute
"modifications" to Incentive Stock Options outstanding on the date of such
Amendments shall not be applicable to such outstanding Incentive Stock Options
but shall have prospective effect only.

 

13.2 Termination
of Plan




The
Company's shareholders or the Board may suspend or terminate the Plan at any
time. The Plan will have no fixed expiration date; provided, however, that no
Incentive Stock Options may be granted more than 10 years after the earlier of
the Plan's adoption by the Board or approval by the shareholders.

 

13.3 Consent
of Holder




The
amendment or termination of the Plan shall not, without the consent of the
Holder of any Award under the Plan, alter or impair any rights or obligations
under any Award theretofore granted under the Plan.




Section
14. General

 

14.1 Award
Agreements




Awards
granted under the Plan shall be evidenced by a written agreement which shall
contain such terms, conditions, limitations and restrictions as the Plan
Administrator shall deem advisable and which are not inconsistent with the
Plan.

 

14.2 Continued
Employment or Services; Rights in Awards




None of
the Plan, participation in the Plan as a Participant or any action of the Plan
Administrator taken under the Plan shall be construed as giving any Participant
or employee of the Company any right to be retained in the employ of the Company
or limit the Company's right to terminate the employment or services of the
Participant.

 







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14.3 Registration;
Certificates for Shares




The
Company shall be under no obligation to any Participant to register for offering
or resale or to qualify for exemption under the Securities Act, or to register
or qualify under state securities laws, any shares of Common Stock, security or
interest in a security paid or issued under, or created by, the Plan, or to
continue in effect any such registrations or qualifications if made. The Company
may issue certificates for shares with such legends and subject to such
restrictions on transfer and stop-transfer instructions as counsel for the
Company deems necessary or desirable for compliance by the Company with federal
and state securities laws.




Inability
of the Company to obtain, from any regulatory body having jurisdiction, the
authority deemed by the Company's counsel to be necessary for the lawful
issuance and sale of any shares hereunder or the unavailability of an exemption
from registration for the issuance and sale of any shares hereunder shall
relieve the Company of any liability in respect of the nonissuance or sale of
such shares as to which such requisite authority shall not have been
obtained.

 

14.4 No
Rights as a Shareholder




No Award
shall entitle the Holder to any dividend, voting or other right of a shareholder
unless and until the date of issuance under the Plan of the shares that are the
subject of such Award, free of all applicable restrictions.

 

14.5 Compliance
With Laws and Regulations




Notwithstanding
anything in the Plan to the contrary, the Board, in its sole discretion, may
bifurcate the Plan so as to restrict, limit or condition the use of any
provision of the Plan to Participants who are officers or directors subject to
Section 16 of the Exchange Act without so restricting, limiting or conditioning
the Plan with respect to other Participants. Additionally, in interpreting and
applying the provisions of the Plan, any Option granted as an Incentive Stock
Option pursuant to the Plan shall, to the extent permitted by law, be construed
as an "incentive stock option" within the meaning of Section 422 of the
Code.

 

14.6 No
Trust or Fund




The Plan
is intended to constitute an "unfunded" plan. Nothing contained herein shall
require the Company to segregate any monies or other property, or shares of
Common Stock, or to create any trusts, or to make any special deposits for any
immediate or deferred amounts payable to any Participant, and no Participant
shall have any rights that are greater than those of a general unsecured
creditor of the Company.

 

14.7 Severability




If any
provision of the Plan or any Award is determined to be invalid, illegal or
unenforceable in any jurisdiction, or as to any person, or would disqualify the
Plan or any Award under any law deemed applicable by the Plan Administrator,
such provision shall be construed or deemed amended to conform to applicable
laws, or, if it cannot be so construed or deemed amended 

 







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-












 

without,
in the Plan Administrator's determination, materially altering the intent of the
Plan or the Award, such provision shall be stricken as to such jurisdiction,
person or Award, and the remainder of the Plan and any such Award shall remain
in full force and effect.




Section
15. Effective
date




The
Plan's effective date is the date on which it is adopted by the Board, so long
as it is approved by the Company's shareholders at any time within 12 months of
such adoption or, if earlier, and to the extent required for compliance with
Rule 16b-3 under the Exchange Act, at the next annual meeting of the
Company's shareholders after adoption of the Plan by the Board.




Adopted
by the Board on July
23,
1996 and approved by the Company's shareholders on May 15,
1997.

 







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-












 


AMENDED
TERMS OF STOCK OPTION GRANT PROGRAM FOR NONEMPLOYEE DIRECTORS UNDER THE PROCYTE
CORPORATION 1996 STOCK OPTION PLAN

 




The
following provisions set forth the amended terms of the stock option grant
program (the "Program") for nonemployee directors of ProCyte Corporation (the
"Company") under the ProCyte Corporation 1996 Stock Option Plan (the "Plan").
The following terms are intended to supplement, not alter or change, the
provisions of the Plan, and in the event of any inconsistency between the terms
contained herein and in the Plan, the Plan shall govern. All capitalized terms
that are not defined herein shall be as defined in the Plan.





	1.  	
      Eligibility







Each
elected or appointed director of the Company who is not otherwise an employee of
the Company or a Subsidiary (an "Eligible Director") shall be eligible to
receive Initial Grants and Annual Grants under the Plan, as described
below.





	2.  	
      Initial
      Grants







Upon the
earlier of an Eligible Director's initial election or appointment to the Board,
an initial grant ("Initial Grant") of a Nonqualified Stock Option to purchase
12,000 shares of Common Stock shall be granted to such Eligible
Director.





	3.  	
      Annual
      Grants







Immediately
following each year's annual meeting of shareholders of the Company (an "Annual
Meeting"), each Eligible Director shall automatically receive an additional
Nonqualified Stock Option to purchase 6,000 shares of Common Stock; provided,
however, that any Eligible Director who received an Initial Grant within four
months prior to an Annual Meeting shall not receive such annual grant ("Annual
Grant") until immediately following the Annual Meeting at which such Initial
Grant becomes fully vested. 





	4.  	
      Time
      and Manner of Exercise of Option







Each
Initial and Annual Grant shall vest and become exercisable upon the first
subsequent Annual Meeting after grant; provided, however, that if an Initial
Grant is made within four months prior to an Annual Meeting, the Initial Grant
shall vest and become exercisable upon the second Annual Meeting after
grant.





	5.  	
      Option
      Exercise Price







The
exercise price of an Option shall be its Fair Market Value on the date of grant,
as that term is defined in the Plan.

 







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	6.  	
      Manner
      of Option Exercise







An Option
shall be exercised by giving the required notice to the Company, stating the
number of shares of Common Stock with respect to which the Option is being
exercised, accompanied by payment in full for such Common Stock, which payment
may be in whole or in part (a) in cash or check, (b) in shares of
Common Stock owned by the Eligible Director for at least six months (or such
shorter period necessary to avoid a charge to the Company's earnings for
financial reporting purposes) having a Fair Market Value on the day prior to the
exercise date equal to the aggregate Option exercise price, or (c) by
delivery of a properly executed exercise notice, together with irrevocable
instructions to a broker, to promptly deliver to the Company the amount of sale
or loan proceeds to pay the exercise price, all in accordance with the
regulations of the Federal Reserve Board.





	7.  	
      Term
      of Options







Each
Option shall expire ten years from the date of grant thereof, but shall be
subject to earlier termination as follows:





	a.  	
      In
      the event that an Eligible Director ceases to be a director of the Company
      for any reason other than the death of the Eligible Director, the unvested
      portion of an Option granted to such Eligible Director shall terminate
      immediately and the vested portion of the Option may be exercised by the
      Eligible Director only within three years after the date he or she ceases
      to be a director of the Company or prior to the date on which the Option
      expires by its terms, whichever is earlier.








	b.  	
      In
      the event of the death of an Eligible Director, the unvested portion of
      any Option granted to such Eligible Director shall terminate immediately
      and the vested portion of the Option may be exercised only within three
      years after the date of death of the Eligible Director or prior to the
      date on which the Option expires by its terms, whichever is earlier, by
      the personal representative of the Eligible Director's estate, the
      person(s) to whom the Eligible Director's rights under the Option have
      passed by will or the applicable laws of descent and distribution, or the
      beneficiary designated pursuant to the
Plan.








	8.  	
      Transferability







The right
of an Eligible Director to exercise an Option granted to him or her under the
Program may not be assigned, pledged or transferred by any such Eligible
Director otherwise than (a) by will or the laws of descent and
distribution, (b) in accordance with the terms of a domestic relations
order as defined in the Internal Revenue Code of 1986, as amended, or
(c) by gift or other transfer to either (i) a spouse or other
immediate family member or (ii) any trust, partnership or other entity in
which the Eligible Director or such person's spouse or other immediate family
member has a substantial beneficial interest; provided, however, that any Option
so assigned or transferred shall be subject to all the same terms and conditions
contained herein and in the Plan. Any Option granted 

 







2












 

under the
Program shall be exercisable during the lifetime of the Eligible Director only
by the Eligible Director or a permitted transferee or assignee. Any attempt to
assign, pledge, transfer, hypothecate or otherwise dispose of any Option under
this Program or of any right or privilege conferred thereby, contrary to the
provisions of the Program, or the sale or levy or any attachment or any similar
process upon the rights and privileges conferred hereby, shall be null and
void.





	9.  	
      Corporate
      Transactions







In the
event of any Corporate Transaction, each Option that is at the time outstanding
shall automatically accelerate so that each such Option shall, immediately prior
to the specified effective date of the Corporate Transaction, become fully
vested and exercisable.





	10.  	
      Amendment







The Board
may amend the provisions contained herein in such respects as it deems
advisable. Any such amendment shall not, without the consent of the Eligible
Director, impair or diminish any rights of an Eligible Director or any rights of
the Company under an Option.




Provisions
of the Plan (including any amendments) that were not discussed above, to the
extent applicable to Eligible Directors, shall continue to govern the terms and
conditions of Options granted to Eligible Directors.

 

Adopted
by the Board of Directors of ProCyte Corporation on March 2, 1999 and amended on
May 26, 1999.

 






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