Document:

PROCYTE
CORPORATION

 

1989
RESTATED STOCK OPTION PLAN

 

Section
1. Purpose

 

The
purpose of the 1989 Restated Stock Option Plan (this "Plan") is to provide a
means whereby selected employees, officers, agents, consultants, advisors and
independent contractors of ProCyte Corporation (the "Company"), or of any parent
or subsidiary (as defined in subsection 5.7 and referred to hereinafter as
"related corporations") thereof, may be granted incentive stock options and/or
nonqualified stock options to purchase the Common Stock (as defined in
Section 3) of the Company, in order to attract and retain the services or
advice of such employees, officers, agents, consultants, advisors and
independent contractors and to provide added incentive to such persons by
encouraging stock ownership in the Company.

 

Section
2. Administration

 

This Plan
shall be administered by the Board of Directors of the Company (the "Board") or,
in the event the Board shall appoint and/or authorize a committee to administer
this Plan, by such committee. The administrator of this Plan shall hereinafter
be referred to as the "Plan Administrator."

 

In the
event a member of the Board (or the committee) may be eligible, subject to the
restrictions set forth in Section 4, to participate in or receive or hold
options under this Plan, no member of the Board or the committee shall vote with
respect to the granting of an option hereunder to himself or herself, as the
case may be, and, if state corporate law does not permit a committee to grant
options to directors, then any option granted under this Plan to a director for
his or her services as such shall be approved by the full Board.

 

The
members of any committee serving as Plan Administrator shall be appointed by the
Board for such term as the Board may determine. The Board may from time to time
remove members from, or add members to, the committee. Vacancies on the
committee, however caused, may be filled by the Board.

 

With
respect to grants made under this Plan to officers and directors of the Company
who are subject to Section 16 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Plan Administrator shall be constituted at all
times so as to meet the requirements of Rule 16b-3 promulgated under
Section 16(b) of the Exchange Act.

 

Currently,
selection of officers and directors who are subject to Section 16 of the
Exchange Act for participation and decisions concerning the timing, pricing and
amount of grant or award, shall be made by (i) the Board, if each member of the
Board is a disinterested person, or (ii) by a committee which consists solely of
not less than two disinterested directors of the Company. For purposes of this
Section 2, a disinterested director is a 

 

1

 

member of
the Board who meets the definition of "disinterested person" as set forth in the
rules and regulations promulgated under Section 16(b) of the Exchange Act.
Currently, a disinterested director, for purposes of this Section 2, is a member
of the Board who has not during the one year prior to service as an
administrator of the Plan, or during such service, been granted or awarded
equity securities pursuant to the Plan or any other plan of the Company or any
of its affiliates, unless such plan meets the requirements of paragraphs (A),
(B), (C) or (D) of Rule 16b-3(c)(2)(i) promulgated under Section 16(b) of
the Exchange Act.

 

2.1 Procedures

 

The Board
shall designate one of the members of the Plan Administrator as chairman. The
Plan Administrator may hold meetings at such times and places as it shall
determine. The acts of a majority of the members of the Plan Administrator
present at meetings at which a quorum exists, or acts reduced to or approved in
writing by all Plan Administrator members, shall be valid acts of the Plan
Administrator.

 

2.2 Responsibilities

 

Except
for the terms and conditions explicitly set forth in this Plan, the Plan
Administrator shall have the authority, in its discretion, to determine all
matters relating to the options to be granted under this Plan, including
selection of the individuals to be granted options, the number of shares to be
subject to each option, the exercise price, and all other terms and conditions
of the options. Grants under this Plan need not be identical in any respect,
even when made simultaneously. The interpretation and construction by the Plan
Administrator of any terms or provisions of this Plan or any option issued
hereunder, or of any rule or regulation promulgated in connection herewith,
shall be conclusive and binding on all interested parties, so long as such
interpretation and construction with respect to incentive stock options
correspond to the requirements of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), the regulations thereunder and any amendments
thereto.

 

2.3 Section
16(b) Compliance and Bifurcation of Plan

 

It is the
intention of the Company that this Plan comply in all respects with
Rule 16b-3 under the Exchange Act and, if any Plan provision is later found
not to be in compliance with such Section, the provision shall be deemed null
and void, and in all events this Plan shall be construed in favor of its meeting
the requirements of Rule 16b-3. Notwithstanding anything in this Plan to
the contrary, the Board, in its absolute discretion, may bifurcate this Plan so
as to restrict, limit or condition the use of any provision of this Plan to
participants who are officers and directors subject to Section 16 of the
Exchange Act without so restricting, limiting or conditioning this Plan with
respect to other participants.

 

2

 

Section
3. Stock Subject to This Plan

 

The stock
subject to this Plan shall be the Company's Common Stock (the "Common Stock"),
presently authorized but unissued or subsequently acquired by the Company.
Subject to adjustment as provided in Section 7, the aggregate amount of
Common Stock to be delivered upon the exercise of all options granted under this
Plan shall not exceed 1,500,000 shares as such Common Stock was constituted on
the effective date of this Plan, as amended. If any option granted under this
Plan shall expire or be surrendered, exchanged for another option, cancelled or
terminated for any reason without having been exercised in full, the unpurchased
shares subject thereto shall thereupon again be available for purposes of this
Plan, including for replacement options which may be granted in exchange for
such surrendered, terminated or cancelled options.

 

Section
4. Eligibility

 

An
incentive stock option may be granted only to any individual who, at the time
the option is granted, is an employee of the Company or any related corporation.
A nonqualified stock option may be granted to any employee, officer, agent,
consultant, advisor or independent contractor of the Company or any related
corporation, whether an individual or an entity. In order to qualify as a
disinterested administrator under Section 16(b) of the Exchange Act, a
director may not, during the one year prior to service as an administrator of
the Plan, or during such service, be granted or awarded equity securities
pursuant to the Plan or any other plan of the Company or any of its affiliates,
unless such plan meets the requirements of paragraphs (A), (B), (C) or (D)
or Rule 16b-3(c)(2)(i) promulgated under Section 16(b) of the Exchange
Act. Any party to whom an option is granted under this Plan shall be referred to
hereinafter as an "Optionee."

 

Section
5. Terms and Conditions of Options

 

Options
granted under this Plan shall be evidenced by written agreements which shall
contain such terms, conditions, limitations and restrictions as the Plan
Administrator shall deem advisable and which are not inconsistent with this
Plan. Notwithstanding the foregoing, options shall include or incorporate by
reference the following terms and conditions:

 

5.1 Number
of Shares and Price

 

The
maximum number of shares that may be purchased pursuant to the exercise of each
option and the price per share at which such option is exercisable (the
"exercise price") shall be as established by the Plan Administrator, provided,
that the maximum number of shares with respect to which an option or options may
be granted to any optionee in any one fiscal year of the Company shall not
exceed 150,000 shares (the "Maximum Annual Optionee Grant"); and provided that
the Plan Administrator shall act in good faith to establish the exercise price
which shall be not less than the
fair market value per share of the Common Stock at the time the option is
granted with respect to incentive stock options and not less 

 

3

 

than 85%
of the fair market value per share of the Common Stock at the time the option is
granted with respect to nonqualified stock options, and also provided that, with
respect to incentive stock options granted to greater than 10% shareholders, the
exercise price shall be as required by subsection 6.1.

 

5.2 Term
and Maturity

 

Subject
to the restrictions contained in Section 6 with respect to granting
incentive stock options to greater than 10% shareholders, the
term of each incentive stock option shall be as established by the Plan
Administrator and, if not so established, shall be 10 years from the date it is
granted but in no event shall it exceed 10 years. The term of each nonqualified
stock option shall be as established by the Plan Administrator and, if not so
established, shall be 10 years. To ensure that the Company or any related
corporation will achieve the purpose and receive the benefits contemplated in
this Plan, any option granted to any Optionee hereunder shall, unless the
condition of this sentence is waived or modified in the agreement evidencing the
option or by resolution adopted at any time by the Plan Administrator, be
exercisable according to the following schedule:

 

	
      Period
      of Optionee's Continuous 

      Relationship
      With the Company or 

      Related
      Corporation From the Date the 

      Option
      Is Granted
	
      Portion
      of Total Option Which Is Exercisable

	 	 
	 

      after
      one year
	 

      20%

	 

      after
      two years
	 

      40%

	 

      after
      three years
	 

      60%

	 

      after
      four years
	 

      80%

	 

      after
      five years
	 

      100%

 

5.3 Exercise

 

Subject
to the vesting schedule described in subsection 5.2, each option may be
exercised in whole or in part at any time and from time to time; provided,
however, that no fewer than 100 shares (or the remaining shares then purchasable
under the option, if less than 100 shares) may be purchased upon any exercise of
option rights hereunder and that only whole shares will be issued pursuant to
the exercise of any option. During an Optionee's lifetime, any options granted
under this Plan are personal to him or her and are exercisable solely by such
Optionee or, with respect to a nonqualified option pursuant to the terms of a
qualified domestic relations order, as defined in the Code. Options shall be
exercised by delivery to the Company of notice of the number of shares with
respect to which the option is exercised, together with payment of the exercise
price.

 

4

 

5.4 Payment
of Exercise Price

 

Payment
of the option exercise price shall be made in full at the time the notice of
exercise of the option is delivered to the Company and shall be in cash, bank
certified or cashier's check or personal check (unless at the time of exercise
the Plan Administrator in a particular case determines not to accept a personal
check) for the Common Stock being purchased.

 

The Plan
Administrator can determine at any time before exercise that additional forms of
payment will be permitted. To the extent permitted by the Plan Administrator and
applicable laws and regulations (including, but not limited to, federal tax and
securities laws and regulations and state corporate law), an option may be
exercised by:

 

(a) delivery
of shares of stock of the Company held by an Optionee having a fair market value
equal to the exercise price, such fair market value to be determined in good
faith by the Plan Administrator; provided, however, that payment in stock held
by an Optionee shall not be made unless the stock shall have been owned by the
Optionee for a period of at least six months;

 

(b) delivery
of a properly executed exercise notice, together with irrevocable instructions
to a broker, all in accordance with the regulations of the Federal Reserve
Board, to promptly deliver to the Company the amount of sale or loan proceeds to
pay the exercise price and any federal, state or local withholding tax
obligations that may arise in connection with the exercise.

 

5.5 Withholding
Tax Requirement

 

The
Company or any related corporation shall have the right to retain and withhold
from any payment of cash or Common Stock under this Plan the amount of taxes
required by any government to be withheld or otherwise deducted and paid with
respect to such payment. At its discretion, the Company may require an Optionee
receiving shares of Common Stock to reimburse the Company for any such taxes
required to be withheld by the Company and withhold any distribution in whole or
in part until the Company is so reimbursed. In lieu thereof, the Company shall
have the right to withhold from any other cash amounts due or to become due from
the Company to the Optionee an amount equal to such taxes. The Company may also
retain and withhold or the Optionee may elect, subject to the approval by the
Company in its sole discretion, to have the Company retain and withhold a number
of shares having a market value not less than the amount of such taxes required
to be withheld by the Company to reimburse the Company for any such taxes and
cancel (in whole or in part) any such shares so withheld. In order to qualify
such election for exemption under Rule 16b-3 promulgated under Section
16(b) of the Exchange Act, an officer or director who is subject to Section 16
of the Exchange Act must (i) make such election six months prior to the
date the option exercise becomes taxable or (ii) make such election and
exercise the option during a quarterly 10-day window period required under
Section 16(b) of the Exchange Act for exercises of stock appreciation
rights.

 

5

 

5.6 Nontransferability
of Options

 

Options
granted under this Plan and the rights and privileges conferred hereby may not
be transferred, assigned, pledged or hypothecated in any manner (whether by
operation of law or otherwise) other than by will or by the applicable laws of
descent and distribution or, with respect to nonqualified stock options,
pursuant to the terms of a qualified domestic relations order as defined in the
Code, and shall not be subject to execution, attachment or similar process. Any
attempt to transfer, assign, pledge, hypothecate or otherwise dispose of any
option under this Plan or of any right or privilege conferred hereby, contrary
to the Code or to the provisions of this Plan, or the sale or levy or any
attachment or similar process upon the rights and privileges conferred hereby
shall be null and void. Notwithstanding the foregoing, if the Company permits,
an Optionee may, during the Optionee's lifetime, designate a person who may
exercise the option after the Optionee's death by giving written notice of such
designation to the Plan Administrator. Such designation may be changed from time
to time by the Optionee by giving written notice to the Plan Administrator
revoking any earlier designation and making a new designation.

 

5.7 Termination
of Relationship

 

If the
Optionee's relationship with the Company or any related corporation ceases for
any reason other than termination for cause, death or total disability, and
unless by its terms the option sooner terminates or expires, then the Optionee
may exercise, for a three-month period, that portion of the Optionee's option
which is exercisable at the time of such cessation, but the Optionee's option
shall terminate at the end of such period following such cessation as to all
shares for which it has not theretofore been exercised, unless such provision is
waived in the agreement evidencing the option or by resolution adopted at any
time by the Plan Administrator. If, in the case of an incentive stock option, an
Optionee's relationship with the Company or any related corporation changes
(i.e., from
employee to nonemployee, such as a consultant), such change shall constitute a
termination of an Optionee's employment with the Company or any related
corporation and the Optionee's incentive stock option shall terminate in
accordance with this subsection 5.7.

 

If an
Optionee is terminated for cause, any option granted hereunder shall
automatically terminate as of the first discovery by the Company of any reason
for termination for cause, and such Optionee shall thereupon have no right to
purchase any shares pursuant to such option. "Termination for cause" shall mean
dismissal for dishonesty, conviction or confession of a crime punishable by law
(except minor violations), fraud, misconduct or disclosure of confidential
information. If an Optionee's relationship with the Company or any related
corporation is suspended pending an investigation of whether or not the Optionee
shall be terminated for cause, all the Optionee's rights under any option
granted hereunder likewise shall be suspended during the period of
investigation.

 

If an
Optionee's relationship with the Company or any related corporation ceases
because of a total disability, the Optionee's option shall not terminate or, in
the case of an incentive stock option, cease to be treated as an incentive stock
option until the end of the 12-

 

6

 

month
period following such cessation (unless by its terms it sooner terminates and
expires). As used in this Plan, the term "total disability" refers to a mental
or physical impairment of the Optionee 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 Optionee 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.

 

For
purposes of this subsection 5.7, a transfer of relationship between the
Company and any related corporation shall not be deemed to constitute a
cessation of relationship with the Company or any of its related corporations.
For purposes of this subsection 5.7, with respect to incentive stock
options, employment shall be deemed to continue while the Optionee is on
military leave, sick leave or other bona fide leave of absence (as determined by
the Plan Administrator). The foregoing notwithstanding, employment shall not be
deemed to continue beyond the first 90 days of such leave, unless the Optionee's
reemployment rights are guaranteed by statute or by contract.

 

As used
herein, the term "related corporation," when referring to a subsidiary
corporation, shall mean any corporation (other than the Company) in, at the time
of the granting of the option, an unbroken chain of corporations ending with the
Company, if stock possessing 50% or more of the total combined voting power of
all classes of stock of each of the corporations other than the Company is owned
by one of the other corporations in such chain. When referring to a parent
corporation, the term "related corporation" shall mean any corporation in an
unbroken chain of corporations ending with the Company if, at the time of the
granting of the option, each of the corporations other than the Company 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.

 

5.8 Death
of Optionee

 

If an
Optionee dies while he or she has a relationship with the Company or any related
corporation or within the 3-month period (or 12-month period in the case of
totally disabled Optionees) following cessation of such relationship, any option
held by such Optionee to the extent that the Optionee would have been entitled
to exercise such option, may be exercised within one year after his or her death
by the personal representative of his or her estate or by the person or persons
to whom the Optionee's rights under the option shall pass by will or by the
applicable laws of descent and distribution.

 

5.9 No
Status as Shareholder

 

Neither
the Optionee nor any party to which the Optionee's rights and privileges under
the option may pass shall be, or have any of the rights or privileges of, a
shareholder of the
Company with respect to any of the shares issuable upon the exercise of any
option granted under this Plan unless and until such option has been
exercised.

 

7

 

5.10 Continuation
of Employment

 

Nothing
in this Plan or in any option granted pursuant to this Plan shall confer upon
any Optionee any right to continue in the employ of the Company or of a related
corporation, or to interfere in any way with the right of the Company or of any
such related corporation to terminate his or her employment or other
relationship with the Company at any time.

 

5.11 Modification
and Amendment of Option

 

Subject
to the requirements of Code Section 422 with respect to incentive stock
options and to the terms and conditions and within the limitations of this Plan,
the Plan Administrator may modify or amend outstanding options granted under
this Plan. The modification or amendment of an outstanding option shall not,
without the consent of the Optionee, impair or diminish any of his or her rights
or any of the obligations of the Company under such option. Except as otherwise
provided in this Plan, no outstanding option shall be terminated without the
consent of the Optionee. Unless the Optionee agrees otherwise, any changes or
adjustments made to outstand-ing incentive stock options granted under this Plan
shall be made in such a manner so as not to constitute a "modification" as
defined in Code Section 425(h) and so as not to cause any incentive stock
option issued hereunder to fail to continue to qualify as an incentive stock
option as defined in Code Section 422(b).

 

5.12 Limitation
on Value for Incentive Stock Options

 

As to all
incentive stock options granted under the terms of this Plan, to the extent that
the aggregate fair market value of the stock (determined at the time the
incentive stock option is granted) with respect to which incentive stock options
are exercisable for the first time by the Optionee during any calendar year
(under this Plan and all other incen-tive stock option plans of the Company, a
related corporation or a predecessor corporation) exceeds $100,000, such options
shall be treated as nonqualified stock options. The previous sentence shall not
apply if the Internal Revenue Service issues a public rule, issues a private
ruling to the Company, any Optionee or any legatee, personal representative or
distributee of an Optionee or issues regulations changing or eliminating such
annual limit.

 

Section
6. Greater Than 10% Shareholders

 

6.1 Exercise
Price and Term of Incentive Stock Options

 

If
incentive stock options are granted under this Plan to employees who own more
than 10% of the total combined voting power of all classes of stock of the
Company or any related corporation, the term of such incentive stock options
shall not exceed five years and the exercise price shall be not less than 110%
of the fair market value of the Common Stock at the time the incentive stock
option is granted. This provision shall control notwithstanding any contrary
terms contained in an option agreement or any other document.

 

8

 

6.2 Attribution
Rule

 

For
purposes of subsection 6.1, in determining stock ownership, an employee
shall be deemed to own the stock owned, directly or indirectly, by or for his or
her brothers, sisters, spouse, ancestors and lineal descendants. Stock owned,
directly or indirectly, by or for a corporation, partnership, estate or trust
shall be deemed to be owned proportionately by or for its shareholders,
partners or beneficiaries. If an employee or a person related to the employee
owns an unexercised option or warrant to purchase stock of the Company, the
stock subject to that portion of the option or warrant which is unexercised
shall not be counted in determining stock ownership. For purposes of this
Section 6, stock owned by an employee shall include all stock actually
issued and outstanding immediately before the grant of the incentive stock
option to the employee.

 

Section
7. Adjustments Upon Changes in Capitalization

 

The
aggregate number and class of shares for which options may be granted under this
Plan, the number and class of shares covered by each outstanding option and the
exercise price per share thereof (but not the total price), and each such
option, shall all be proportionately adjusted for any increase or decrease in
the number of issued shares of Common Stock of the Company resulting from a
split-up or consolidation of shares or any like capital adjustment, or the
payment of any stock dividend.

 

7.1 Effect
of Liquidation or Reorganization

 

7.1.1
Cash, Stock or Other Property for Stock

 

Except as
provided in subsection 7.1.2, upon a merger (other than a merger of the
Company in which the holders of Common Stock immediately prior to the merger
have the same proportionate ownership of Common Stock in the surviving
corporation immediately after the merger), consolidation, acquisition of
property or stock, separation, reorganization (other than a mere reincorporation
or the creation of a holding company) or liquidation of the Company, as a result
of which the shareholders
of the Company receive cash,
stock or other property in exchange for or in connection with their
shares of Common Stock, any option granted hereunder shall terminate, but the
Optionee shall have the right immediately prior to any such merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation to exercise such Optionee's option in whole or in part whether or
not the vesting requirements set forth in the option agreement have been
satisfied.

 

7.1.2
Conversion of Options on Stock for Stock Exchange

 

If the
shareholders
of the Company receive capital
stock of another corporation ("Exchange Stock") in exchange for their shares
of Common Stock in any transaction involving a merger (other than a merger of
the Company in which the holders of Common Stock immediately prior to the merger
have the same proportionate ownership of Common Stock in the surviving
corporation immediately after the merger), consolidation, acquisition

 

9

 

of
property or stock, separation or reorganization (other than a mere
reincorporation or the creation of a holding company), all options granted
hereunder shall be converted into options to purchase shares of Exchange Stock
unless the Company and the corporation issuing the Exchange Stock, in their sole
discretion, determine that any or all such options granted hereunder shall not
be converted into options to purchase shares of Exchange Stock but instead shall
terminate in accordance with the provisions of subsection 7.1.1. The amount
and price of converted options shall be determined by adjusting the amount and
price of the options granted hereunder in the same proportion as used for
determining the number of shares of Exchange Stock the holders of the Common
Stock receive in such merger, consolidation, acquisition of property or stock,
separation or reorganization. Unless the Board determines otherwise, the
converted options shall be fully vested whether or not the vesting requirements
set forth in the option agreement have been satisfied.

 

7.2 Fractional
Shares

 

In the
event of any adjustment in the number of shares covered by any option, any
fractional shares resulting from such adjustment shall be disregarded and each
such option shall cover only the number of full shares resulting from such
adjustment.

 

7.3 Determination
of Board to Be Final

 

All
Section 7 adjustments shall be made by the Board, and its determination as
to what adjustments shall be made, and the extent thereof, shall be final,
binding and conclusive. Unless an Optionee agrees otherwise, any change or
adjustment to an incentive stock option shall be made in such a manner so as not
to constitute a "modification" as defined in Code Section 425(h) and so as
not to cause his or her incentive stock option issued hereunder to fail to
continue to qualify as an incentive stock option as defined in Code
Section 422(b).

 

Section
8. Securities Regulation

 

Shares
shall not be issued with respect to an option granted under this Plan unless the
exercise of such option and the issuance and delivery of such shares pursuant
thereto shall comply with all relevant provisions of law, including, without
limitation, any applicable state securities laws, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder, 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, including the availability of an exemption from
registration for the issuance and sale of any shares hereunder. 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.

 

10

 

As a
condition to the exercise of an option, the Company may require the Optionee 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 relevant provision of the aforementioned laws.
At the option of the Company, a stop-transfer order against any shares of stock
may be placed on the official stock books and records of the Company, and a
legend indicating that the stock may not be pledged, sold or otherwise
transferred unless an opinion of counsel is provided (concurred in by counsel
for the Company) stating that such transfer is not in violation of any
applicable law or regulation, may be stamped on stock certificates in order to
assure exemption from registration. The Plan Administrator may also require such
other action or agreement by the Optionees as may from time to time be necessary
to comply with the federal and state securities laws. THIS PROVISION SHALL NOT
OBLIGATE THE COMPANY TO UNDERTAKE REGISTRATION OF THE OPTIONS OR STOCK
HEREUNDER.

 

Should
any of the Company's capital stock of the same class as the stock subject to
options granted hereunder be listed on a national securities exchange, all stock
issued hereunder if not previously listed on such exchange shall be authorized
by that exchange for listing thereon prior to the issuance thereof.

 

If a
director or officer subject to Section 16 of the Exchange Act sells shares
of Common Stock obtained upon exercise of an option within six months after the
date the option was granted, the option grant will no longer be exempt from
Section 16(b) and will retroactively be deemed a nonexempt purchase as of
the date of the option grant.

 

Section
9. Amendment and Termination

 

9.1 Board
Action

 

The Board
may at any time suspend, amend or terminate this Plan, provided that to the
extent required for compliance with Rule 16b-3 under the Exchange Act, Section
422 of the Code, or by any applicable law or regulation, the Company's
shareholders must approve any amendment which will:

 

(a) increase
the number of shares that may be issued under this Plan;

 

(b) with
respect to nonqualified stock options, materially modify the requirements as to
eligibility for participation in this Plan or, with respect to incentive stock
options, change the designation of the participants or class of participants
eligible for participation in this Plan;

 

(c) materially
increase the benefits accruing to the participants under this Plan;
or

 

(d) otherwise
require shareholder approval under any applicable law or
regulation.

 

11

 

Such
shareholder approval must be obtained (a) within 12 months of the adoption by
the Board of such amendment or (b) if earlier, and to the extent required for
compliance with Rule 16b-3 under the Exchange Act, at the next annual meeting of
shareholders after such adoption by the Board. 

 

Any
amendment made to this Plan which would constitute a "modification" to incentive
stock options outstanding on the date of such amendment, shall not be applicable
to such outstanding incentive stock options, but shall have prospective effect
only, unless the Optionee agrees otherwise.

 

9.2 Automatic
Termination

 

Unless
sooner terminated by the Board, this Plan shall terminate ten years from the
earlier of (a) the date on which this Plan is adopted by the Board or
(b) the date on which this Plan is approved by the shareholders of the
Company. No option may be granted after such termination or during any
suspension of this Plan. The amendment or termination of this Plan shall not,
without the consent of the option holder, alter or impair any rights or
obligations under any option theretofore granted under this Plan.

 

Section
10. Effectiveness of This Plan

 

This Plan
shall become effective upon adoption by the Board so long as it is approved by
the holders of a majority of the Company's outstanding shares of voting capital
stock any time within 12 months before or after the adoption of this
Plan.

 

Plan
adopted by the Board of Directors on September 15, 1989 and approved by the
shareholders
on
September 29, 1989. Plan restated by the Board on February 21, 1992 and approved
by the shareholders on May 8,1992.

 

12PROCYTE
CORPORATION

1991
RESTATED STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS, AS
AMENDED

ARTICLE
1 - PURPOSE

The
purpose of the ProCyte Corporation 1991 Restated Stock Option Plan for
Nonemployee Directors as Amended (“the Plan”) is to attract and retain the
services of experienced and knowledgeable nonemployee directors of ProCyte
Corporation (the “Corporation”) and to provide an incentive for such directors
to increase their proprietary interest in the Corporation’s long-term success
and progress.

ARTICLE
II - SHARES SUBJECT TO THE PLAN

The total
number of shares of common stock (the “Shares”) of the Corporation for which
options may be granted under the Plan is 200,000, subject to adjustment in
accordance with Article IV hereof. Such Shares shall be shares presently
authorized but unissued or subsequently acquired by the Corporation and shall
include shares representing the unexercised portion of any option granted under
the Plan which expires or terminates without being exercised in
full.

ARTICLE
III - ADMINISTRATION OF THE PLAN

The
administrator of the Plan (the “Plan Administrator”) shall consist of a
committee appointed by the Board of Directors of the Corporation (the “Board”).
Subject to the terms of the Plan, the Plan Administrator shall have the power to
construe the provision of the Plan, to determine all questions arising
thereunder and to adopt and amend such rules and regulations for the
administration of the Plan as it may deem desirable.

ARTICLE
IV - PARTICIPATION IN THE PLAN

Each
Director of the Corporation elected or appointed who is not otherwise an
employee of the Corporation or any subsidiary (an “Eligible Director”) shall be
eligible to receive the following option grants under the Plan:

1.
Initial
Grants

An option
to purchase 25,000 Shares (if granted prior to September 4, 1996) or 12,000
Shares (if granted on or after September 4, 1996) (as adjusted pursuant to
Article VI hereof) (an “Initial Grant”) shall be granted to

	(a)  	
      each
      Eligible Director immediately following the Board’s approval of the Plan,
      and

	(b)  	
      each
      Eligible Director upon the earlier of such Eligible Director’s initial
      election or appointment.

 

 

2.
Additional
and Supplemental Grants

Once an
Eligible Director’s Initial Grant for 25,000 Shares becomes fully vested,
provided such vesting occurs prior to September 4, 1996, such Eligible Director
shall automatically receive an additional grant (an “Additional Grant”) of an
option for the acquisition of 18,000 Shares immediately following the annual
meeting of shareholders of the Corporation as specified in the Corporation’s
Bylaws (an “Annual Meeting”) at which an option previously granted thereunder
becomes fully vested.

Each
Eligible Director in office on September 4, 1996 who will have continuously
served as an Eligible Director for at least five years as of September 30, 1996
shall automatically receive the grant of an option to purchase 6,000 Shares (a
“Supplemental Grant”) on September 4, 1996.

3.
Annual
Grants

Commending
with the 1997 Annual Meeting each Eligible Director shall automatically receive
an option to purchase 6,000 Shares immediately following each year’s Annual
Meeting (each an “Annual Grant”); provided that any Eligible Director who
received an Initial Grant for 25,000 Shares, or who received an Initial Grant
for 12,000 Shares within four months of an Annual Meeting shall not receive an
Annual Grant until immediately following the Annual Meeting at which such
Initial Grant becomes fully vested.

ARTICLE
V - OPTION TERMS

Each
option granted under the Plan and issuance of Shares thereunder shall be subject
to the following terms:

1.
Option
Agreement

Each
option granted under the Plan shall be evidenced by an option agreement (an
“Agreement”) duly executed on behalf of the Corporation and by the Eligible
Director to whom such option is granted. Each Agreement shall comply with and be
subject to the terms and conditions of the Plan. Any Agreement may contain such
other terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Plan Administrator.

 

 

Option
Exercise Price

The
option exercise price for an option granted under the Plan shall be the fair
market value of the Shares covered by the option at the time the option is
granted. For the purposes of the Plan, “fair market value” shall mean the
average between the high and low sale prices quoted on the day of grant on the
National Association of Securities Dealers Automated Quotation System or the
closing price on the principal exchange on which such Shares are then
traded.

2.
Time
and Manner of Exercise of Option

Each
Initial Grant for 25,000 Shares and each Additional Grant shall vest and become
exercisable in accordance with the following schedule and vested portions may be
exercised in full at one time or in part from time to time:

	
      Period
      of Optionee’s Continuous Service as a Director With the Corporation From
      the Date the Option is Granted
	
       

      Portion
      of Grant That is Exercisable

	 	 
	
      First
      Subsequent Annual Meeting After Grant
	
      33-1/3%

	
      Second
      Subsequent Annual Meeting After Grant
	
      66-2/3%

	
      Third
      Subsequent Annual Meeting After Grant
	
      100%

 

provided
that if such Initial Grant is made within four months of an Annual Meeting the
Initial Grant shall not begin to vest until the second subsequent Annual Meeting
after grant and shall vest ratably upon the second, third and fourth subsequent
Annual Meetings after grant.

Subject
to shareholder approval of the Plan as amended on September 4, 1996, each
Initial Grant for 12,000 Shares and each Supplemental Grant and Annual Grant
shall vest and become exercisable upon the first subsequent Annual Meeting after
grant; provided that if such Initial Grant is made within four months of an
Annual Meeting the Initial Grant shall vest and become exercisable upon the
second Annual Meeting after grant.

If the
shareholders of the Corporation fail to approve the Plan at the next Annual
Meeting, all options granted hereunder shall be deemed null and
void.

Any
option may be exercised by giving written notice, signed by the person
exercising the option, to the Corporation stating the number of Shares with
respect to which the option is being exercised, accompanied by payment in full
for such Shares, which payment may be in whole or in part in cash, check or (i)
shares of the Common Stock of the Corporation already owned for at least (6)
months by the person exercising the 

 

 

option,
valued at fair market value at the time of such exercise, or (ii) delivery of a
properly executed exercise notice, together with irrevocable instructions to a
broker, all in accordance with the regulations of the Federal Reserve Board, to
properly deliver to the Corporation the amount of sale or loan proceeds to pay
the exercise price and any federal, state or local withholding tax obligations
that may arise in connection with the exercise.

3. 
Term
of Options

Each
option shall expire not more than ten (10) years from the date of the granting
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.

4.
Transferability

The right
of any optionee to exercise an option granted to him or her under the Plan may
not be assigned, pledged or transferred by any such optionee 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, of (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 original optionee or such person’s spouse or other immediate family
member has a substantial beneficial interest; provided that any option so
assigned or transferred shall be subject to the same terms and conditions
contained in the Plan. Any option granted under the Plan shall be exercisable
during the lifetime of the optionee only by the optionee or a permitted
transferee or assignee. Any attempt to assign, pledge, transfer, hypothecate or
otherwise dispose of any option under this Plan or of any right or privilege
conferred thereby, contrary to the provisions of this Plan, or the sale or levy
or any attachment or any similar process upon the rights and privileges
conferred thereby, shall be null and void.

 

5. 
Holding
Period

If an
individual subject to Section 16 of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) sells shares of Common Stock obtained upon the
exercise of any option granted under this Plan within six (6) months after the
date the option was granted, such sale may result in short-swing profit recovery
under Section 16(b) of the Exchange Act.

6.
Participant’s
or Successor’s Rights as Shareholder

Neither
the recipient of an option under the Plan nor his or her successor(s) in
interest shall have any rights as a shareholder of the Corporation with respect
to any Shares subject to an option granted to such person until such person
becomes a holder of record of such Shares.

7. 
Regulatory
Approval and Compliance

The
Corporation shall not be required to issue any certificate or certificates for
Shares upon the exercise of an option granted under the Plan, or record as a
holder of record of Shares the name of the individual exercising an option under
the Plan, without obtaining to the complete satisfaction of the Plan
Administrator the approval of all regulatory bodies deemed necessary by the Plan
Administrator, and without complying, to the Plan Administrator’s complete
satisfaction, with all rules and regulations under federal, state or local law
deemed applicable by the Plan Administrator.

ARTICLE
VI - CAPITAL ADJUSTMENTS

The
aggregate number of Shares with respect to which options may be granted under
the Plan, as provided in Article II, the additional aggregate number of Shares
with respect to which an option may be granted under the Plan as provided in
Article IV, the number of Shares subject to each outstanding option and the
price per share specified in each such option shall all be proportionally
adjusted for any increases or decreases in the number of issued shares of the
Corporation’s common stock resulting from a subdivision or consolidation of
shares or any other similar capital adjustments, the payment of a stock
dividend, or other increase or decrease in such shares effected without receipt
of consideration by, or a merger or consolidation of, the Corporation, or the
sale of all or substantially all of the assets of, or the liquidation of, the
Corporation.

 

 

ARTICLE
VII - EXPENSES OF THE PLAN

All costs
and expenses of the adoption and administration of the Plan shall be borne by
the Corporation, and none of such expenses shall be charged to any
optionee.

ARTICLE
VIII - APPROVAL OF SHAREHOLDERS

The Plan
shall be effective upon adoption by the Board so long as it receives any
required approval by the holders of a majority of the Corporation’s outstanding
shares of voting capital stock at the next Annual Meeting.

ARTICLE
IX - COMPLIANCE WITH RULE 16b-3

It is the
intention of the Corporation the Plan comply in all respects with the
requirements for a “formula plan” within the meaning attributed to that term for
purposes of Rule 16b-3 promulgated under Section 16(b) of the Exchange Act.
Therefor, if any Plan provision is later found not to be in compliance with such
requirement, that provision shall be deemed null and void, and in all events the
Plan shall be construed in favor of its meeting such requirements.

ARTICLE
X - TERMINATION AND AMENDMENT OF THE PLAN

The Board
may amend, terminate or suspend the Plan at any time, in its sole and absolute
discretion; provided, however, that if required to qualify the Plan as a formula
plan for purposes of Rule 16b-3 promulgated under Section 16 of the Exchange
Act, no amendment may be made more than once every six months that would change
the amount, price or timing of any option granted under the Plan, other than to
comport with changes in the Internal Revenue Code of 1986, as amended, or the
rules and regulations promulgated thereunder; and provided, further, that if
required by any applicable law or regulation, no amendment that would

	(a)  	
      materially
      increase the number of Shares that may be issued under the Plan,
      or

	(b)  	
      otherwise
      require approval under any applicable law or
regulation

shall be
made without the approval of the Corporation’s shareholders.

 

Adopted
by the Board of Directors on September 27, 1991 and approved by the Shareholders
on May 8, 1992. Plan amended and restated by the Board of Directors on February
24, 1994 and approved by the shareholders on May 10, 1994. Plan amended and
restated by the Board of Directors on September 4, 1996 and approved by the
shareholders on May 15, 1997. Plan amended by the Board of Directors on May 26,
1999.

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