Document:

Exhibit 10.9

 

ABBOTT LABORATORIES

1996 INCENTIVE STOCK PROGRAM

(as amended and restated through

February 20, 2004)

 

1.            
PURPOSE.  The purpose of
the Abbott Laboratories 1996 Incentive Stock Program (the “Program”) is to
attract and retain outstanding directors, officers and other employees of
Abbott Laboratories (the “Company”) and its subsidiaries, and to furnish
incentives to such persons by providing opportunities to acquire common shares
of the Company, or monetary payments based on the value of such shares or the
financial performance of the Company, or both, on advantageous terms as herein
provided and to further align such persons’ interests with those of the
Company’s other shareholders through compensation that is based on the value of
the Company’s common shares.

 

2.            
ADMINISTRATION.  The
Program will be administered by a committee (the “Committee”) of at least two
persons which shall be either the Compensation Committee of the Board of
Directors of the Company (the “Board of Directors”) or such other committee
comprised entirely of persons who are both: (i) “disinterested persons” as
defined in Rule 16b-3 of the Securities and Exchange Commission; and (ii)
“outside directors” as defined under Section 162(m) of the Internal Revenue
Code of 1986, as amended, or any successor provision; as the Board of Directors
may from time to time designate.  The Committee shall interpret the
Program, prescribe, amend and rescind rules and regulations relating thereto
and make all other determinations necessary or advisable for the administration
of the Program. A majority of the members of the Committee shall constitute a
quorum and all determinations of the Committee shall be made by a majority of
its members. Any determination of the Committee under the Program may be made
without notice of meeting of the Committee by a writing signed by all of the
Committee members.  The Committee may, from time to time, delegate any or
all of its duties, powers and authority to any officer or officers of the Company,
except to the extent such delegation would be inconsistent with Rule 16b-3 of
the Securities and Exchange Commission or other applicable law, rule or
regulation.  The Chief Executive Officer of the Company may, on behalf of
the Committee, grant stock options and restricted stock awards under the
Program, other than to persons subject to Section 16 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”). All such grants by the Chief
Executive Officer must be reported to, and ratified by, the Committee within
twelve months of the grant date but, if ratified, shall be effective as of the
grant date.

 

3.            
PARTICIPANTS.  Participants
in the Program will consist of such officers and other employees of the Company
and its subsidiaries as the Committee in its sole discretion may designate from
time to time to receive Benefits hereunder.  The Committee’s designation
of a participant in any year shall not require the Committee to designate such
person to receive a Benefit in any other year.  The Committee shall
consider such factors as it deems pertinent in selecting participants and in
determining the type and amount of their respective Benefits, including without
limitation (i) the financial condition of the Company; (ii) anticipated profits
for the current or future years; (iii) contributions of participants to the
profitability and development of the Company; (iv) prior awards to
participants; and (v) other compensation provided to participants. Non-Employee
Directors shall also be participants in the Program solely for purposes of

 

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receiving Restricted Stock
Awards under paragraph 13 and Non-qualified Stock Options under paragraph
14.  The term “Non-Employee Director” shall mean a member of the Board of
Directors who is not a full-time employee of the Company or any of its
subsidiaries.

 

4.            
TYPES OF BENEFITS. 
Benefits under the Program may be granted in any one or a combination of (a)
Incentive Stock Options; (b) Non-qualified Stock Options; (c) Stock
Appreciation Rights; (d) Limited Stock Appreciation Rights; (e) Restricted
Stock Awards; (f) Performance Awards; and (g) Foreign Qualified Benefits, all
as described below.

 

5.            
SHARES RESERVED UNDER THE
PROGRAM.  There is hereby reserved for issuance under the Program: (i) an
aggregate of Five Million (5,000,000) common shares; plus (ii) an authorization
for each calendar year (the “Annual Authorization”) for the years 1996 through
1999, of seven-tenths of one percent (0.7%) of the total common shares of the
Company issued and outstanding as of the first day of such calendar year and
for the years from and including 2000, one and a half percent (1.5%) of the
total common shares of the Company issued and outstanding as of the first day
of such calendar year; which may be newly issued or treasury shares. The shares
hereby reserved are in addition to the shares previously reserved under the
Company’s 1981 Incentive Stock Program, 1986 Incentive Stock Program and 1991
Incentive Stock Program (the “Prior Programs”). Any common shares reserved for
issuance under the Prior Programs in excess of the number of shares as to which
options or other Benefits have been awarded on the date of shareholder approval
of this Program, plus any such shares as to which options or other Benefits
granted under the Prior Programs may lapse, expire, terminate or be canceled
after such date, shall also be reserved and available for issuance in
connection with Benefits under this Program. Any common shares reserved under
the Program for any calendar year under an Annual Authorization as to which
options or other Benefits have not been awarded as of the end of such calendar
year shall be available for issuance in connection with Benefits granted in
subsequent years.

 

If
there is a lapse, expiration, termination or cancellation of any Benefit
granted hereunder without the issuance of shares or payment of cash thereunder,
or if shares are issued under any Benefit and thereafter are reacquired by the
Company pursuant to rights reserved upon the issuance thereof, or shares are
reacquired pursuant to the payment of the purchase price of shares under stock
options by delivery of other common shares of the Company, the shares subject
to or reserved for such Benefit, or so reacquired, may again be used for new
options, rights or awards of any sort authorized under this Program; provided,
however, that in no event may the number of common shares issued under this
Program, and not reacquired by the Company pursuant to rights reserved upon the
issuance thereof or pursuant to the payment of the purchase price of shares
under stock options by delivery of other common shares of the Company, exceed
the total number of shares reserved for issuance hereunder.

 

6.            
INCENTIVE STOCK OPTIONS. 
Incentive Stock Options will consist of options to purchase common shares at
purchase prices not less than One Hundred percent (100%) of the Fair Market
Value of such common shares on the date of grant. An Incentive Stock Option
will not be exercisable after the expiration of ten (10) years from the date
such option is granted. In the event of termination of employment for any
reason other than

 

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retirement, disability or
death, the right of the optionee to exercise an Incentive Stock Option shall
terminate upon the earlier of the end of the original term of the option or
three (3) months after the optionee’s last day of work for the Company and its
subsidiaries. In the event of termination of employment due to retirement or
disability, or if the optionee should die while employed, the right of the
optionee or his or her successor in interest to exercise an Incentive Stock
Option shall terminate upon the end of the original term of the option. If the
optionee should die within three (3) months after termination of employment for
any reason other than retirement or disability, the right of his or her
successor in interest to exercise an Incentive Stock Option shall terminate upon
the earlier of the end of the original term of the option or three (3) months
after the date of such death. To the extent the aggregate fair market value
(determined as of the time the Option is granted) of the common shares with
respect to which any Incentive Stock Option is exercisable for the first time
by any individual during any calendar year (under all option plans of the
Company and its subsidiary corporations) exceeds $100,000, the excess shall be
treated as a Non-qualified Stock Option. An Incentive Stock Option shall be
exercisable as determined by the Committee, but in no event earlier than six
(6) months from its grant date.

 

7.            
NON-QUALIFIED STOCK
OPTIONS.  Non-qualified Stock Options will consist of options to purchase
common shares at purchase prices not less than One Hundred percent (100%) of
the Fair Market Value of such common shares on the date of grant. A
Non-qualified Stock Option will not be exercisable after the expiration of ten
(10) years from the date such option is granted. In the event of termination of
employment for any reason other than retirement, disability or death, the right
of the optionee to exercise a Non-qualified Stock Option shall terminate upon
the earlier of the end of the original term of the option or three (3) months
after the optionee’s last day of work for the Company and its subsidiaries. In
the event of termination of employment due to retirement or disability, or if
the optionee should die while employed, the right of the optionee or his or her
successor in interest to exercise a Non-qualified Stock Option shall terminate
upon the end of the original term of the option. If the optionee should die
within three (3) months after termination of employment for any reason other
than retirement or disability, the right of his or her successor in interest to
exercise a Non-qualified Stock Option shall terminate upon the earlier of the
end of the original term of the option or three (3) months after the date of
such death. A Non-qualified Stock Option shall be exercisable as determined by
the Committee, but in no event earlier than six (6) months from its grant date.

 

8.            
STOCK APPRECIATION RIGHTS. 
The Committee may, in its discretion, grant a Stock Appreciation Right to the
holder of any stock option granted hereunder or under the Prior Programs. Such
Stock Appreciation Rights shall be subject to such terms and conditions
consistent with the Program as the Committee shall impose from time to time,
including the following:

 

(a)          
A Stock Appreciation Right may
be granted with respect to a stock option at the time of its grant or at any
time thereafter up to six (6) months prior to its expiration.

 

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(b)          
Stock Appreciation Rights will
permit the holder to surrender any related stock option or portion thereof
which is then exercisable and to elect to receive in exchange therefor cash in
an amount equal to:

 

(i)           
The excess of the Fair Market
Value on the date of such election of one common share over the option price
multiplied by

 

(ii)          
The number of shares covered by
such option or portion thereof which is so surrendered.

 

(c)          
A Stock Appreciation Right
granted to a participant who is subject to Section 16 of the Exchange Act may
be exercised only after six (6) months from its grant date (unless such
exercise would not affect the exemption under Rule 16b-3 of the Securities and
Exchange Commission).

 

(d)          
A Stock Appreciation Right may
be granted to a participant regardless of whether such participant has been
granted a Limited Stock Appreciation Right with respect to the same stock
option.  However, a Stock Appreciation Right may not be exercised during
any period that a Limited Stock Appreciation Right with respect to the same
stock option may be exercised.

 

(e)          
In the event of the exercise of
a Stock Appreciation Right, the number of shares reserved for issuance
hereunder shall be reduced by the number of shares covered by the stock option
or portion thereof surrendered.

 

9.            
LIMITED STOCK APPRECIATION
RIGHTS.  The Committee may, in its discretion, grant a Limited Stock
Appreciation Right to the holder of any stock option granted hereunder or under
the Prior Programs.  Such Limited Stock Appreciation Rights shall be
subject to such terms and conditions consistent with the Program as the
Committee shall impose from time to time, including the following:

 

(a)          
A Limited Stock Appreciation
Right may be granted with respect to a stock option at the time of its grant or
at any time thereafter up to six (6) months prior to its expiration.

 

(b)          
A Limited Stock Appreciation
Right will permit the holder to surrender any related stock option or portion
thereof which is then exercisable and to receive in exchange therefor cash in
an amount equal to:

 

(i)           
The excess of the Fair Market
Value on the date of such election of one common share over the option price
multiplied by

 

(ii)          
The number of shares covered by
such option or portion thereof which is so surrendered.

 

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(c)          
A Limited Stock Appreciation
Right granted to a participant who is subject to Section 16 of the Exchange Act
may be exercised only after six (6) months from its grant date (unless such
exercise would not affect the exemption under Rule 16b-3 of the Securities and
Exchange Commission) and only during the sixty (60) day period commencing on
the later of:

 

(i)           
the day following the date of a
Change in Control; or (ii) the first date on which such exercise would be
exempt under Rule 16b-3 of the Securities and Exchange Commission.

 

(d)          
A Limited Stock Appreciation
Right may be granted to a participant regardless of whether such participant
has been granted a Stock Appreciation Right with respect to the same stock
option.

 

(e)          
In the event of the exercise of
a Limited Stock Appreciation Right, the number of shares reserved for issuance
hereunder shall be reduced by the number of shares covered by the stock option
or portion thereof surrendered.

 

10.         (a)          
RESTRICTED STOCK AWARDS AND RESTRICTED STOCK UNITS.  Restricted Stock Awards will consist of common shares transferred
to participants without other payment therefor as additional compensation for
their services to the Company or any of its subsidiaries. Restricted Stock
Awards granted under this paragraph 10 shall be satisfied from the Company’s
available treasury shares.  Restricted Stock
Awards shall be subject to such terms and conditions as the Committee
determines appropriate, including, without limitation, restrictions on the sale
or other disposition of such shares and rights of the Company to reacquire such
shares upon termination of the participant’s employment within specified
periods.  Subject to such other
restrictions as are imposed by the Committee, the common shares covered by a
Restricted Stock Award granted to a participant who is subject to Section 16 of
the Exchange Act may be sold or otherwise disposed of only after six (6) months
from the grant date of the award (unless such sale would not affect the
exemption under Rule 16b-3 of the Securities and Exchange Commission).

 

(b)          
RESTRICTED STOCK UNITS.  Restricted
Stock Units will consist of an unfunded promise to deliver shares of stock at
some future date to participants without other payment therefore as additional
compensation for their services to the Company or any of its subsidiaries.  Stock delivered under this paragraph 10(b)
shall be satisfied from the Company’s available treasury shares.  Restricted Stock Units granted under this
paragraph 10(b) shall be subject to such terms and conditions as the Committee
determines appropriate, including, without limitation, restrictions on the sale
or other disposition of such stock units, the rights of the Company to provide
for the forfeiture of such stock units upon termination of the participant’s
employment within specified periods and the right to receive dividend
equivalent payments.

 

(c)          
No more than ten percent (10%) of the total number of shares available for
grant in any calendar year may be granted as Restricted Stock Units or
Restricted Stock Awards (in the aggregate) under paragraphs 10 and 13 in that
year.

 

11.          
PERFORMANCE AWARDS. 
Performance Awards in the form of Performance Units or Performance Shares may
be granted to any participant in the Program.  Performance Units shall
consist of monetary awards which may be earned in whole or in part if the
Company achieves certain goals established by the Committee over a designated
period of time. Performance Shares shall consist of common shares or awards
denominated in common shares which may be earned in whole or in part if the
Company achieves certain goals established by the Committee over a designated
period of time. The goals established by the Committee shall be based on any
one, or combination of, earnings per share, return on equity, return on assets,
total shareholder return, net operating income, cash flow, increase in revenue,
economic value added, increase in share price or cash flow return on
investment. Partial achievement of the goal(s) may result in a payment or
vesting corresponding to the degree of achievement. Payment of an award earned
may be in cash or in common shares or in a combination of both, and may be made
when earned, or may be vested and deferred, as the Committee in its sole

 

5

 

discretion determines. 
The maximum amount which may be granted under all Performance Awards for any
one year for any one participant shall be Five Million Dollars ($5,000,000).
This limit shall be applied to Performance Shares by multiplying the number of
Performance Shares granted by the fair market value of one common share on the
date of the award.  During the term of the Program, no more than 5 million
shares of Abbott common stock may be granted in the form of Performance Units
and no more than 5 million shares of Abbott common stock may be granted in the
form of Performance Shares. This paragraph 11 is intended to comply with the
performance-based compensation requirements of Section 162(m) of the Internal
Revenue Code of 1986, as amended, and shall be interpreted in accordance with the
rules and regulations thereunder.

 

12.          
FOREIGN QUALIFIED
BENEFITS.  Benefits under the Program may be granted to such employees of
the Company and its subsidiaries who are residing in foreign jurisdictions as
the Committee in its sole discretion may determine from time to time.  The
Committee may adopt such supplements to the Program as may be necessary to
comply with the applicable laws of such foreign jurisdictions and to afford
participants favorable treatment under such laws; provided, however, that no
Benefit shall be granted under any such supplement with terms or conditions
which are inconsistent with the provisions as set forth under the Program.

 

13.          
RESTRICTED STOCK AWARDS FOR
NON-EMPLOYEE DIRECTORS.

 

(a)          
Each year, on the date of the
annual shareholders meeting, each person who is elected a Non-Employee Director
at the annual shareholders meeting shall be awarded both: (i) a Restricted
Stock Award covering a number of common shares with a fair market value on the
date of the award closest to, but not in excess of, an amount equal to six
times the monthly fee in effect under Section 3.1 of the Abbott Laboratories
Non-Employee Director’s Fee Plan on the date of the award and (ii) in the years
1996 through 2005, a Restricted Stock Award covering a number of common shares
with a fair market value on the date of the award closest to, but not in excess
of, Twenty-Two Thousand Dollars ($22,000) for awards made in years 1996 through
2000 and Twenty-Five Thousand Dollars ($25,000) for awards made in years 2001
through 2005.

 

(b)          
ISSUANCE OF CERTIFICATES. 
As soon as practicable following the date of the award the Company shall issue
certificates (“Certificates”) to the Non-Employee Director receiving the award,
representing the number of common shares covered by the award. Each Certificate
shall bear a legend describing the restrictions on such shares imposed by this
paragraph 13.

 

(c)          
RIGHTS.  Upon issuance of
the Certificates, the directors in whose names they are registered shall,
subject to the restrictions of this paragraph 13, have all of the rights of a
shareholder with respect to the shares represented by the certificates,
including the right to vote such shares and receive cash dividends and other distributions
thereon.

 

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(d)          
RESTRICTED PERIOD.  The
shares covered by awards granted under this paragraph 13 may not be sold or
otherwise disposed of within six (6) months following their grant date (unless
such sale would not affect the exemption under Rule 16b-3 of the Securities and
Exchange Commission) and in addition shall be subject to the restrictions of
this paragraph 13 for a period (the “Restricted Period”) commencing with the
date of the award and ending on the earliest of the following events:

 

(i)           
The date the director terminates
or retires from the Board;

 

(ii)          
The date the director dies; or

 

(iii)         
The date of occurrence of a
Change in Control (as defined in paragraph 20(c)).

 

(e)          
RESTRICTIONS.  All shares
covered by awards granted under this paragraph 13 shall be subject to the
following restrictions during the Restricted Period:

 

(i)           
The shares may not be sold,
assigned, transferred, pledged, hypothecated or otherwise disposed of.

 

(ii)          
Any additional common shares of
the Company or other securities or property issued with respect to shares
covered by awards granted under this paragraph 13 as a result of any stock
dividend, stock split or reorganization, shall be subject to the restrictions
and other provisions of this paragraph 13.

 

(iii)         
A director shall not be entitled
to receive any shares prior to completion of all actions deemed appropriate by
the Company to comply with federal or state securities laws and stock exchange
requirements.

 

(f)           
Except in the event of conflict,
all provisions of the Program shall apply to this paragraph 13. In the event of
any conflict between the provisions of the Program and this paragraph 13, this
paragraph 13 shall control. Those provisions of paragraph 17 which authorize
the Committee to declare outstanding restricted stock awards to be vested and
to amend or modify the terms of Benefits shall not apply to awards granted
under this paragraph 13.  Restricted Stock Awards granted under this
paragraph 13 shall be satisfied from the Company’s available treasury shares.

 

14.          
NON-QUALIFIED STOCK OPTIONS FOR
NON-EMPLOYEE DIRECTORS.

 

(a)          
Each Non-Employee Director may
elect to receive any or all of his or her fees earned during the second half of
1996 and each subsequent calendar year under Section 3 of the Abbott
Laboratories Non-Employee Directors’ Fee Plan (the “Directors’ Fee Plan”) in
the form of Non-qualified Stock Options under this Section 14.  Each such
election shall be irrevocable, and must be made in writing and filed with the
Secretary of the Company

 

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by December 31, 1995 (for
fees earned in the second half of 1996) and (for fees earned in subsequent
calendar years) by June 30 of the calendar year preceding the calendar year in
which such fees are earned (or such later date as may be permissible under Rule
16b-3 of the Securities and Exchange Commission, but in no event later than
December 31 of such preceding calendar year).

 

(b)          
A Non-Employee Director may file
a new election each calendar year applicable to fees earned in the immediately
succeeding calendar year. If no new election or revocation of a prior election
is received by June 30 of any calendar year (or such later date as may be
permissible under paragraph (a)), the election, if any, in effect for such
calendar year shall continue in effect for the immediately succeeding calendar
year. Any election made under this Section 14 shall take precedence over any
election made by the director for the same period, under the Directors’ Fee
Plan, to the extent necessary to resolve any conflict between such
elections.  If a director does not elect to receive his or her fees in the
form of Non-qualified Stock Options, the fees due such director shall be paid
or deferred as provided in the Directors’ Fee Plan and any applicable election
thereunder by the director.

 

(c)          
The number of common shares
covered by each Non-qualified Stock Option granted in any year under this
Section 14 shall be determined based on an independent appraisal for such year
of the intrinsic value of options granted hereunder and the amount of fees
covered by the director’s election for such year.  The number of common
shares covered by options granted in 1996 (as determined under this procedure)
shall be the number of whole shares equal to (i) the product of three (3) times
the amount of fees which the director has elected under paragraph (a) to
receive in the form of Non-qualified Stock Options, divided by (ii) One Hundred
percent (100%) of the Fair Market Value of one common share on the grant date.
Any fraction of a share shall be disregarded, and the remaining amount of the
fees corresponding to such option shall be paid as provided in the Directors’
Fee Plan and any applicable election thereunder by the director.

 

(d)          
Effective on October 10, 1997,
each Non-qualified Stock Option due a director under this Section 14 prior to
the 1998 annual shareholders meeting shall be granted on October 10, 1997 at a
purchase price equal to One Hundred percent (100%) of the Fair Market Value of
the common shares covered by such option on the grant date.  Effective with
the 1998 Annual Shareholders Meeting, each Non-qualified Stock Option due a
director under this Section 14 shall be granted annually, on the date of the
annual shareholders meeting, at a purchase price equal to One Hundred percent
(100%) of the Fair Market Value of the common shares covered by such option on
the grant date.  Each such option shall be immediately exercisable and
nonforfeitable, and shall not be exercisable after the expiration of ten (10)
years from the date it is granted. Each such option shall contain provisions
allowing payment of the purchase price and, to the extent permitted, any taxes
due on exercise, by delivery of other common

 

8

 

shares of the Company (or,
in the case of the payment of taxes, by withholding of shares).

 

(e)          
All Non-qualified Stock Options
granted under this Section 14 prior to October 10, 1997, shall be immediately
exercisable and nonforfeitable, and shall not be exercisable after the
expiration of ten (10) years from the date granted.

 

15.          
NONTRANSFERABILITY.  Except
as provided by the Committee, each stock option and stock appreciation right
granted under this Program shall not be transferable other than by will or the
laws of descent and distribution, and shall be exercisable, during the
participant’s lifetime, only by the participant or the participant’s guardian
or legal representative.

 

16.          
OTHER PROVISIONS.  The
award of any Benefit under the Program may also be subject to other provisions
(whether or not applicable to the Benefit awarded to any other participant) as
the Committee determines appropriate, including, without limitation, provisions
for the purchase of common shares under stock options in installments,
provisions for the payment of the purchase price of shares under stock options
by delivery of other common shares of the Company having a then market value
equal to the purchase price of such shares, restrictions on resale or other
disposition, such provisions as may be appropriate to comply with federal or
state securities laws and stock exchange requirements and understandings or
conditions as to the participant’s employment in addition to those specifically
provided for under the Program.

 

In
the case of a participant who is subject to Section 16(a) and 16(b) of the
Exchange Act, the Committee may, at any time, add such conditions and
limitations to any Benefit granted to such participant, or any feature of any
such Benefit, as the Committee, in its sole discretion, deems necessary or
desirable to comply with Section 16(a) or 16(b) and the rules and regulations
thereunder or to obtain any exemption therefrom. A participant may pay the
purchase price of shares under stock options by delivery of a properly executed
exercise notice together with a copy of irrevocable instructions to a broker to
deliver promptly to the Company the amount of sale or loan proceeds to pay the
purchase price.  To facilitate the foregoing, the Company may enter into
agreements for coordinated procedures with one or more brokerage firms.

 

The
Committee may, in its discretion and subject to such rules as it may adopt,
permit or require a participant to pay all or a portion of the federal, state
and local taxes, including FICA and medicare withholding tax, arising in
connection with the following transactions: (a) the exercise of a Non-qualified
Stock Option; (b) the lapse of restrictions on common shares received as a
Restricted Stock Award; or (c) the receipt or exercise of any other Benefit; by
(i) having the Company withhold common shares, (ii) tendering back common
shares received in connection with such Benefit or (iii) delivering other
previously acquired common shares of the Company having a fair market value
approximately equal to the amount to be withheld.

 

The
Committee may grant stock options under the Program (and, for stock options
granted prior to shareholder approval of this Program, under the Company’s 1991
Incentive Stock Program) that provide for the grant of replacement stock
options if all or

 

9

 

any portion of the purchase
price or taxes incurred in connection with the exercise, are paid by delivery
(or, in the case of payment of taxes, by withholding of shares) of other common
shares of the Company.  The replacement stock option shall cover the
number of common shares surrendered to pay the purchase price, plus the number
of shares surrendered or withheld to satisfy the participant’s tax liability,
shall have an exercise price equal to One Hundred percent (100%) of the Fair
Market Value of such common shares on the date such replacement stock option is
granted, shall first be exercisable six months from the date of grant of the
replacement stock option and shall have an expiration date equal to the
expiration date of the original stock option.

 

17.          
TERM OF PROGRAM AND AMENDMENT,
MODIFICATION, CANCELLATION OR ACCELERATION OF BENEFITS.  The Program shall
continue in effect until terminated by the Board of Directors, except that no Incentive
Stock Option shall be granted after October 13, 2005 and that no other Benefits
shall be granted after April 27, 2010. The terms and conditions applicable to
any Benefits may at any time be amended, modified or canceled by mutual
agreement between the Committee and the participant or such other persons as
may then have an interest therein, so long as any amendment or modification
does not increase the number of common shares issuable under this Program; and
provided further, that the Committee may, at any time and in its sole
discretion, declare any or all stock options and stock appreciation rights then
outstanding under this Program or the Prior Programs to be exercisable and any
or all then outstanding Restricted Stock Awards to be vested, whether or not
such options, rights or awards are then otherwise exercisable or vested.
Notwithstanding the foregoing, except as provided in paragraph 22, the
Committee shall neither lower the purchase price of any option granted under
the Program nor grant any option under the Program in replacement of a
cancelled option which had previously been granted at a higher purchase price,
without shareholder approval.

 

18.          
AMENDMENT TO PRIOR PROGRAMS. No
options or other Benefits shall be granted under the Prior Programs on or after
the date of shareholder approval of this Program.

 

19.          
INDIVIDUAL LIMIT ON OPTIONS AND
STOCK APPRECIATION RIGHTS; AGGREGATE LIMIT ON INCENTIVE STOCK OPTIONS. The
maximum number of shares with respect to which Incentive Stock Options,
Non-qualified Stock Options, Stock Appreciation Rights and Limited Stock
Appreciation Rights may be granted to any one participant, in aggregate in any
one calendar year, shall be Two Million (2,000,000) shares. Incentive Stock
Options with respect to no more than the lesser of (i) One Hundred and Fifty
Million (150,000,000) shares (plus any shares acquired by the Company pursuant
to payment of the purchase price of shares under incentive stock options by
delivery of other common shares of the Company), or (ii) the total number of
shares reserved under paragraph 5 may be issued under the Plan.

 

20.          
TAXES.  The Company shall
be entitled to withhold the amount of any tax attributable to any amount
payable or shares deliverable under the Program after giving the person
entitled to receive such amount or shares notice as far in advance as
practicable, and the Company may defer making payment or delivery if any such
tax may be pending unless and until indemnified to its satisfaction.

 

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21.          
DEFINITIONS.

 

(a)          
FAIR MARKET VALUE.  Except
as provided below, the Fair Market Value of the Company’s common shares shall
be determined by such methods or procedures as shall be established by the
Committee; provided that, in the case of any Limited Stock Appreciation Right
(other than a right related to an Incentive Stock Option), the Fair Market
Value shall be the higher of:

 

(i)           
The highest daily closing price
of the Company’s common shares during the sixty (60) day period following the
Change in Control; or

 

(ii)          
The highest gross price paid or
to be paid for the Company’s common shares in any of the transactions described
in paragraphs 21(c)(i) and 21(c)(ii).

 

(b)          
SUBSIDIARY.  The term
“subsidiary” for all purposes other than the Incentive Stock Option provisions
in paragraph 6, shall mean any corporation, partnership, joint venture or
business trust, fifty percent (50%) or more of the control of which is owned,
directly or indirectly, by the Company. For Incentive Stock Option purposes the
term “subsidiary” shall be defined as provided in Internal Revenue Code Section
424(f).

 

(c)          
CHANGE IN CONTROL.  A
“Change in Control” shall be deemed to have occurred on the earliest of the
following dates:

 

(i)           
the date any Person is or
becomes the Beneficial Owner, directly or indirectly, of securities of the
Company (not including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its Affiliates) representing
20% or more of the combined voting power of the Company’s then outstanding
securities, excluding any Person who becomes such a Beneficial Owner in
connection with a transaction described in clause (a) of paragraph (iii) below;
or

 

(ii)          
the date the following
individuals cease for any reason to constitute a majority of the number of
directors then serving: individuals who, on the date hereof, constitute the
Board of Directors and any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation, relating to the
election of directors of the Company) whose appointment or election by the
Board of Directors or nomination for election by the Company’s shareholders was
approved or recommended by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors on the date hereof or whose
appointment, election or nomination for election was previously so approved or
recommended; or

 

11

 

(iii)         
the date on which there is
consummated a merger or consolidation of the Company or any direct or indirect
subsidiary of the Company with any other corporation or other entity, other
than (a) a merger or consolidation (I) immediately following which the
individuals who comprise the Board of Directors immediately prior thereto
constitute at least a majority of the Board of Directors of the Company, the
entity surviving such merger or consolidation or, if the Company or the entity
surviving such merger or consolidation is then a subsidiary, the ultimate
parent thereof and (II) which results in the voting securities of the Company
outstanding immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof), in combination with
the ownership of any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any subsidiary of the Company, at least
50% of the combined voting power of the securities of the Company or such
surviving entity or any parent thereof outstanding immediately after such
merger or consolidation, or (b) a merger or consolidation effected to implement
a recapitalization of the Company (or similar transaction) in which no Person
is or becomes the Beneficial Owner, directly or indirectly, of securities of
the Company (not including in the securities Beneficially Owned by such Person
any securities acquired directly from the Company or its Affiliates)
representing 20% or more of the combined voting power of the Company’s then
outstanding securities; or

 

(iv)         
the date the shareholders of the
Company approve a plan of complete liquidation or dissolution of the Company or
there is consummated an agreement for the sale or disposition by the Company of
all or substantially all of the Company’s assets, other than a sale or
disposition by the Company of all or substantially all of the Company’s assets
to an entity, at least 50% of the combined voting power of the voting
securities of which are owned by shareholders of the Company, in combination
with the ownership of any trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any subsidiary of the Company, in
substantially the same proportions as their ownership of the Company immediately
prior to such sale.

 

Notwithstanding the
foregoing, a “Change in Control” shall not be deemed to have occurred by virtue
of the consummation of any transaction or series of integrated transactions
immediately following which the record holders of the common stock of the
Company immediately prior to such transaction or series of

 

12

 

transactions continue to
have  substantially the same
proportionate ownership in an entity which owns all or substantially all of the
assets of the Company immediately following such transaction or series of
transactions.

 

For purposes of this
Program: “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated
under Section 12 of the Exchange Act; “Beneficial Owner” shall have the meaning
set forth in Rule 13d-3 under the Exchange Act; and “Person” shall have the
meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof, except that such term shall not include (i)
the Company or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of its
Affiliates, (iii) an underwriter temporarily holding securities pursuant to an
offering of such securities, or (iv) a corporation owned, directly or
indirectly, by the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company.

 

(d)          
DISABILITY.  The term
“disability” for all purposes of the Program shall mean the participant’s
disability as defined in subsection 4.1(a) of the Abbott Laboratories Extended
Disability Plan for twelve (12) consecutive months.

 

22.          
ADJUSTMENT PROVISIONS.

 

(a)          
If the Company shall at any time
change the number of issued common shares without new consideration to the
Company (such as by stock dividends or stock splits), the total number of
shares reserved for issuance under this Program, the individual and aggregate
limits described in paragraphs 11 and 19 on the number of shares that may be
granted or issued (as the case may be), the number of shares covered by each
outstanding Benefit and the purchase price of such shares shall be adjusted so
that the aggregate consideration payable to the Company and the value of each
such Benefit shall not be changed.  Subject to paragraph 22(c), the
Committee shall also have the right to provide for the continuation of Benefits
or for other equitable adjustments after changes in the Company or in the
common shares resulting from reorganization, sale, merger, consolidation,
spin-off or similar occurrence.

 

(b)          
Subject to paragraph 22(c),
without affecting the number of shares otherwise reserved or available
hereunder, the Committee may authorize the issuance or assumption of Benefits
in connection with any merger, consolidation, acquisition of property or stock,
or reorganization upon such terms and conditions as it may deem appropriate.

 

13

 

(c)          
Notwithstanding any other
provision of this Program or the Prior Programs including the terms of any
Benefit granted hereunder, if the outstanding common shares of the Company
shall be combined, or be changed into, or exchanged for, another kind of stock
of the Company, into securities of another corporation, or into property
(including cash) whether through recapitalization, reorganization, sale,
merger, consolidation, spin-off, business combination or a similar transaction
(a “Transaction”), the Company shall cause its successor, acquiror (or ultimate
parent of any successor or acquiror), as applicable, to assume each stock
option, Stock Appreciation Right and Limited Stock Appreciation Right
outstanding immediately prior to the Transaction (or to cause new options or
rights to be substituted therefor).  Pursuant to such assumed or
substituted option or rights, participants shall thereafter be entitled to
receive, upon due exercise of any portion of the option or right, (a) in the
event of a Transaction in which the outstanding common shares of the Company
are combined, or changed into, or exchanged for, solely another kind of stock
of the Company or securities of another corporation (disregarding, for this
purpose, cash paid in lieu of fractional shares), the securities which that
person would have been entitled to receive for common shares acquired through
exercise of the same portion of such option or right immediately prior to the
effective date of such Transaction, and (b) in the event of a Transaction in which
the outstanding common shares of the Company are changed into, or exchanged
for, property (including cash) other than solely stock of the Company or
securities of another corporation (disregarding, for this purpose, cash paid in
lieu of fractional shares), securities the fair market value of which
immediately following the effective date of such Transaction (as determined by
the Committee) equals the fair market value (as determined by the Committee) of
the property which that person would have been entitled to receive for common
shares acquired through exercise of the same portion of such option or right
immediately prior to the effective date of such Transaction.  In each case
such assumed or substituted option or right shall continue to be subject to the
same terms and conditions (including, without limitation, with respect to any
right to receive “replacement options” upon option exercise) to which it was
subject immediately prior to the Transaction.

 

Notwithstanding the
immediately preceding paragraph, upon a Transaction in which the outstanding
common shares of the Company are changed into, or exchanged for, property
(including cash) other than solely stock of the Company or securities of
another corporation (disregarding, for this purpose, cash paid in lieu of
fractional shares) and which constitutes a Change in Control, each participant
may elect to receive, immediately following such Transaction in exchange for
cancellation of any stock option (other than an Incentive Stock Option granted
prior to June 20, 2003), Stock Appreciation Right or Limited Appreciation Right
held by such participant immediately prior to the Transaction, a cash payment,
with respect to each common share subject to such option or right, equal to the
difference between the value of consideration (as determined by the

 

14

 

Committee) received by the
shareholders for a common share of the Company in the Transaction, less any
applicable purchase price.

 

(d)          
Notwithstanding any other
provision of this Program or the Prior Programs including the terms of any
Benefit granted hereunder, upon the occurrence of a Change in Control:

 

(i)           
All stock options then
outstanding under this Program or the Prior Programs shall become fully
exercisable as of the date of the Change in Control, whether or not then
otherwise exercisable;

 

(ii)          
All Stock Appreciation Rights
and Limited Stock Appreciation Rights then outstanding shall become fully
exercisable as of the date of the Change in Control, whether or not then
otherwise exercisable;

 

(iii)         
All terms and conditions of all
Restricted Stock Awards then outstanding shall be deemed satisfied as of the
date of the Change in Control; and

 

(iv)         
All Performance Awards then
outstanding shall be deemed to have been fully earned and to be immediately
payable, in cash, as of the date of the Change in Control.

 

23.          
AMENDMENT AND TERMINATION OF
PROGRAM.  The Board of Directors may amend the Program from time to time
or terminate the Program at any time, but no such action shall reduce the then
existing amount of any participant’s Benefit or adversely change the terms and
conditions thereof without the participant’s consent. Notwithstanding the
foregoing, except as provided in paragraph 22, the Company shall neither lower
the purchase price of any option granted under the Program nor grant any option
under the Program in replacement of a cancelled option which had previously
been granted at a higher purchase price, without shareholder approval.  To
the extent required for compliance with Rule 16b-3 of the Securities and
Exchange Commission, paragraph 13 of the Program may not be amended more
frequently than once every six months other than to comport with changes in the
Internal Revenue Code of 1986, as amended, or the rules thereunder, and no
amendment of the Program shall result in any Committee member losing his or her
status as a “disinterested person” as defined in Rule 16b-3 of the Securities
and Exchange Commission with respect to any employee benefit plan of the
Company or result in the Program or awards thereunder losing their exempt
status under said Rule 16b-3.

 

24.          
EFFECTIVE DATE.  The
Program was originally adopted by the Board of Directors on October 13, 1995.

 

15Exhibit 10.19

 

INDEMNITY AGREEMENT

 

THIS INDEMNITY AGREEMENT
(this “Agreement”) is made by and between PROCYTE CORPORATION, a Washington
corporation (the “Company”), and ROBERT W. BENSON (the “Indemnitee”), as of
June 3, 2004.

 

RECITALS

 

A.            The Company is aware that competent and
experienced persons are increasingly reluctant to serve as directors and
officers of corporations unless they are protected by comprehensive liability
insurance or indemnification, due to increased exposure to litigation costs and
risks resulting from their service to such corporations, and due to the fact
that the exposure frequently bears no reasonable relationship to the
compensation of such directors or officers;

 

B.            The statutes and judicial decisions regarding
the duties of directors and officers are often difficult to apply, ambiguous,
or conflicting, and therefore fail to provide such directors and officers with
adequate, reliable knowledge of legal risks to which they are exposed or
information regarding the proper course of action to take;

 

C.            Plaintiffs often seek damages in such large
amounts and the costs of litigation may be so enormous (whether or not the case
is meritorious), that the defense and/or settlement of such litigation is
beyond the personal resources of directors and officers;

 

D.            The Company believes that it is unfair for
its directors and officers to assume the risk of huge judgments and other
expenses which may occur in cases in which the director or officer received no
personal profit and in cases where the director or officer was not culpable;

 

E.             The Company recognizes that the issues in
controversy in litigation against a director or officer of a corporation such
as the Company are often related to the knowledge, motives, and intent of such
director or officer, that he or she is usually the only witness with knowledge
of the essential facts and exculpating circumstances regarding such matters and
that the long period of time which usually elapses before the trial or other
disposition of such litigation often extends beyond the time the director or
officer can reasonably recall such matters and may extend beyond the normal
time for retirement of such director or officer with the result that he or she,
after retirement (or in the event of death, his or her spouse, heirs, executors
or administrators), may be faced with limited ability and undue hardship in
maintaining an adequate defense, which may discourage such director or officer
from serving in that position;

 

F.             Based upon their experience as business managers,
the Board of Directors of the Company (the “Board”) has concluded that, to
retain and attract talented and experienced individuals to serve as directors
and officers of the Company and to encourage such individuals to take the
business risks necessary for the success of the Company, it is necessary for
the Company to contractually indemnify its directors and officers, and to
assume for itself maximum liability for expenses and damages in connection with
claims against such directors and officers in connection with their service to
the Company, and has further concluded that the failure to provide such
contractual indemnification could result in great harm to the Company and the
Company’s shareholders;

 

 

G.            The shareholders of the Company have adopted
Bylaws (the “Bylaws”) providing for indemnification of the officers, directors,
agents and employees of the Company as contemplated by the Washington Business
Corporation Act (the “Statute”);

 

H.            Section 23B.08.510 and .570 of the Statute,
under which the Company is organized (“Section 510/570”), empowers the Company
to indemnify persons who serve, at the request of the Company, as the
directors, officers, employees or agents of the Company or of other
corporations or enterprises;

 

I.              The Bylaws specifically provide that the
rights provided thereby are not exclusive, and Section 510/570 contemplates
that contracts may be entered into between the Company and the members of the
Board and its officers, employees and agents with respect to indemnification of
such persons;

 

J.             Recent developments with respect to the terms
and availability of directors’ and officers’ liability insurance and with
respect to the application, amendment and enforcement of statutory and bylaw
indemnification provisions generally have raised questions concerning the
adequacy and reliability of the protection afforded to directors, officers,
employees and agents thereby;

 

K.            The Company desires and has requested the
Indemnitee to serve or continue to serve as a director or officer of the
Company free from undue concern for claims for damages arising out of or
related to such services to the Company; and

 

L.             The Indemnitee is willing to serve, or to
continue to serve, the Company, provided that he or she is furnished the
indemnity provided for herein.

 

THE PARTIES AGREE AS
FOLLOWS:

 

1.             Definitions.  As used herein, the following
terms shall have the following meanings:

 

(a)           Agent.  “Agent” of the Company means
any person who is or was a director, officer, employee or other agent of the Company
or a Subsidiary (as defined below); or is or was serving at the request of, for
the convenience of, or to represent the interests of the Company or a
Subsidiary as a director, officer, employee or agent of another foreign or
domestic corporation, partnership, joint venture, trust or other enterprise; or
was a director, officer, employee or agent of a foreign or domestic corporation
which was a predecessor corporation of the Company or a Subsidiary, or is or
was a director, officer, employee or agent of another enterprise at the request
of, for the convenience of, or to represent the interests of such predecessor
corporation.

 

(b)           Expenses.  “Expenses” include all direct
and indirect costs of any type or nature whatsoever (including, without
limitation, all attorneys’ fees and related disbursements, other out-of-pocket
costs and reasonable compensation for time spent by the Indemnitee for which he
or she is not otherwise compensated by the Company or any third party) actually
and reasonably incurred by the Indemnitee in connection with either the
investigation, defense or appeal of a Proceeding (as defined below) or
establishing or enforcing a right to indemnification under this Agreement,
Section 510/570 or otherwise; provided, however, that
expenses shall not include any judgments, fines, ERISA excise taxes or
penalties or amounts paid in settlement of a Proceeding.

 

(c)           Proceeding.  “Proceeding” means any
threatened, pending, or completed action, suit or other proceeding, whether
civil, criminal, administrative, investigative or any other type whatsoever.

 

 

(d)           Subsidiary.  “Subsidiary” means any
corporation of which more than 50% of the outstanding voting securities is
owned directly or indirectly by the Company, by the Company and one or more
other subsidiaries, or by one or more other subsidiaries.

 

2.             Agreement to Serve.  The
Indemnitee agrees to serve and/or continue to serve as a director or officer of
the Company, at its will, so long as the Indemnitee is duly appointed or
elected and qualified in accordance with the applicable provisions of the
Bylaws or until such time as the Indemnitee tenders his or her resignation in
writing.

 

3.             Maintenance of Liability Insurance.

 

(a)           The Company hereby covenants and agrees that, so long as the Indemnitee
shall continue to serve as a director or officer of the Company and thereafter
so long as the Indemnitee was an Agent of the Company, the Company, subject to
Section 3(b), shall use its best efforts, consistent with prudent business
practice, to obtain and maintain in full force and effect directors’ and
officers’ liability insurance (“D&O Insurance”) of which the Indemnitee
will be an insured, in reasonable amounts from established and reputable
insurers.

 

(b)           Notwithstanding the foregoing, the Company shall have no obligation to
obtain or maintain D&O Insurance if the Company determines in good faith
that such insurance is not reasonably available, the premium costs for such
insurance are disproportionate to the amount of coverage provided, or the coverage
provided by such insurance is limited by exclusions so as to provide an
insufficient benefit.

 

4.             Mandatory Indemnification. 
Subject to Section 9, if the Indemnitee is a person who was or is a
party or is threatened to be made a party to any Proceeding by reason of the
fact that the Indemnitee is or was an Agent of the Company, or by reason of
anything done or not done by the Indemnitee in any such capacity, the Company
shall indemnify and hold harmless the Indemnitee to the fullest extent
permitted by applicable law, as then in effect, without the requirement of any
further approval or finding by the shareholders, the Board or independent legal
counsel, against all Expenses, liabilities and losses (including, but not
limited to, judgments, fines, ERISA excise taxes or penalties, and amounts paid
in settlement) actually and reasonably incurred by the Indemnitee in connection
with the investigation, defense, settlement or appeal of the Proceeding.  The Company shall be obligated to provide
such indemnification even if the Indemnitee should be deceased prior to, during
the pendency of, or after completion of any Proceeding to which such
indemnification applies.

 

5.             Partial Indemnification.  If
the Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of any Expenses,
liabilities or losses of any type whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes or penalties, and amounts paid in
settlement) actually and reasonably incurred by the Indemnitee in connection
with the investigation, defense, settlement or appeal of a Proceeding but not
entitled, however, to indemnification for all of the total amount thereof, the
Company shall nevertheless indemnify the Indemnitee for that portion thereof to
which the Indemnitee is entitled.

 

6.             Mandatory Advancement of Expenses. 
Subject to Section 9(f), the Company shall advance all reasonable
expenses incurred by the Indemnitee in connection with the investigation,
defense, settlement or appeal of any Proceeding to which the Indemnitee is a
party or is threatened to be made a party by reason of the fact that the
Indemnitee is or was an Agent of the Company. 
The Indemnitee hereby undertakes to repay such amounts advanced only if,
and to the extent that, it shall ultimately be determined pursuant to Section 8
that the Indemnitee is not entitled to be indemnified by the Company as

 

 

authorized
hereby.  The advances to be made
hereunder shall be paid by the Company to the Indemnitee within 20 days
following delivery of a written request therefor by the Indemnitee to the
Company.

 

7.             Notice and Other Indemnification Procedures.

 

(a)           Promptly after receipt by the Indemnitee of notice of the commencement
of, or the threat of commencement of, any Proceeding, the Indemnitee shall, if
the Indemnitee believes that indemnification with respect thereto may be sought
from the Company under this Agreement, notify the Company of the commencement
or threat of commencement thereof.

 

(b)           If, at the time of receipt of a notice of the commencement of a
Proceeding pursuant to Section 7(a), the Company has D&O Insurance in
effect, the Company shall give prompt notice of the commencement of such
Proceeding to the insurers in accordance with the procedures set forth in the
respective policies.  The Company shall
thereafter take all necessary or desirable action to cause such insurers to
pay, on behalf of the Indemnitee, all amounts payable as a result of such
Proceeding in accordance with the terms of such policies.

 

(c)           If the Company shall be obligated to pay the Expenses of any Proceeding
against the Indemnitee, the Company, if appropriate, shall be entitled to
assume the defense of such Proceeding, with counsel approved by the Indemnitee
(which approval shall not be unreasonably withheld), upon the delivery to the
Indemnitee of written notice of its election so to do.  After delivery of such notice, approval of
such counsel by the Indemnitee and the retention of such counsel by the
Company, the Company will not be liable to the Indemnitee under this Agreement
for any fees of counsel subsequently incurred by the Indemnitee with respect to
the same Proceeding, provided that:  (i)
the Indemnitee shall have the right to employ his or her counsel in any such
Proceeding at the Indemnitee’s expense; and (ii) if (A) the employment of
counsel by the Indemnitee has been previously authorized by the Company, (B)
the Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and the Indemnitee in the conduct of any such
defense, or (C) the Company shall not, in fact, have employed counsel to assume
the defense of such Proceeding, the fees and Expenses of Indemnitee’s counsel
shall be at the expense of the Company.

 

(d)           The Company shall not be entitled to assume the defense of any action,
suit or Proceeding brought by or on behalf of the Company or as to which the
Indemnitee shall have reached the conclusion provided for in Section
7(c)(ii)(B).

 

8.             Determination of Right to Indemnification.

 

(a)           To the extent the Indemnitee has been successful on the merits or
otherwise in defense of any Proceeding referred to in Section 4 or in the
defense of any claim, issue or matter described therein, the Company shall
indemnify the Indemnitee against Expenses actually and reasonably incurred by
him or her in connection with the investigation, defense, or appeal of such
Proceeding.

 

(b)           In the event that Section 8(a) is inapplicable, the Company shall also
indemnify the Indemnitee unless, and only to the extent, that it is determined
by a forum described in Section 8(c) that the Indemnitee has not met the
applicable standard of conduct required to entitle the Indemnitee to such
indemnification.  The Indemnitee shall
be presumed to be entitled to indemnification hereunder upon submission of a
written claim (and, in any action brought to enforce a claim for expenses
incurred in defending any Proceeding, in advance of its final disposition) and
thereafter the Company shall have the burden of proof to overcome the
presumption that the Indemnitee is not so entitled.

 

 

(c)           The Indemnitee shall be entitled to select the forum in which the
validity of the Company’s claim under Section 8(b) that the Indemnitee is not
entitled to indemnification will be heard from among the following:

 

(l)            A quorum of the Board consisting of directors
who are not at the time parties to the Proceeding for which indemnification is
being sought;

 

(2)           If a quorum cannot be obtained under (1) of this subsection, by a
majority vote of a committee duly designated by the Board, in which designation
directors who are parties may participate, consisting solely of two or more
directors who are not at the time parties to the Proceeding for which
indemnification is being sought;

 

(3)           The shareholders of the Company (provided that shares owned by or voted
under the control of directors who are at the time parties to the Proceeding
may not be voted on the determination); or

 

(4)           Special legal counsel (i) selected by the Board or its committee in the
manner prescribed in (1) or (2) of this subsection or (ii) if a quorum of the
Board cannot be obtained under (1) of this subsection and a committee cannot be
designated under (2) of this subsection, selected by majority vote of the full
Board, in which selection directors who are parties may participate.

 

(d)           As soon as practicable, and in no event later than 30 days after
written notice of the Indemnitee’s choice of forum pursuant to Section 8(c),
the Company shall, at its own expense, submit to the selected forum, in such
manner as the Indemnitee or the Indemnitee’s counsel may reasonably request,
its claim that the Indemnitee is not entitled to indemnification; and the
Company shall act in the utmost good faith to ensure the Indemnitee a complete
opportunity to defend against such claim.

 

(e)           If the forum listed in Section 8(c) selected by the Indemnitee
determines that the Indemnitee is entitled to indemnification with respect to a
specific Proceeding, such determination shall be final and binding on the
Company.  If the forum listed in Section
8(c) selected by the Indemnitee determines that the Indemnitee is not entitled
to indemnification with respect to a specific Proceeding, the Indemnitee shall
have the right to apply to the court in which that Proceeding is or was pending
or any other court of competent jurisdiction for the purpose of enforcing the
Indemnitee’s right to indemnification pursuant to this Agreement.

 

(f)            Notwithstanding any other provision in this
Agreement to the contrary, the Company shall indemnify the Indemnitee against
all reasonable Expenses incurred by the Indemnitee in connection with any
hearing or Proceeding under this Section 8 involving the Indemnitee and against
all reasonable Expenses incurred by the Indemnitee in connection with any other
Proceeding between the Company and the Indemnitee involving the interpretation
or enforcement of the rights of the Indemnitee under this Agreement unless a
court of competent jurisdiction finds that each of the claims and/or defenses
of the Indemnitee in any such Proceeding was frivolous or made in bad faith.

 

9.             Exceptions.  Any other provisions herein
to the contrary notwithstanding, the Company shall not be obligated pursuant to
the terms of this Agreement to indemnify the Indemnitee for Expenses,
liabilities or losses of any type whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes or penalties, and amounts paid in
settlement):

 

(a)           D&O Insurance. 
Which have been paid directly to the Indemnitee pursuant to policy of
D&O Insurance purchased and maintained by the Company; or

 

 

(b)           Certain Remuneration. 
With respect to remuneration paid to the Indemnitee if it shall be
determined by a final judgment or other final adjudication that such
remuneration was in violation of law; or

 

(c)           Certain Statutory Claims.  On
account of any suit in which judgment is rendered against the Indemnitee for an
accounting of profits made from the purchase or sale by the Indemnitee of
securities of the Company pursuant to the provisions of Section 16(b) of the
Securities Exchange Act of 1934 and amendments thereto or similar provisions of
any federal, state or local statutory law; or

 

(d)           Certain Conduct.  On
account of the Indemnitee’s conduct which is determined by the forum described
in Section 8(c) or by a court pursuant to Section 8(e) to have been
intentional misconduct, a knowing violation of law or RCW 23B.08.310 or any
successor provision of Section 510/570, or a transaction from which the
Indemnitee derived benefit in money, property or services to which the
Indemnitee is not legally entitled, unless and only to the extent that a court
shall determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, the Indemnitee is fairly and
reasonably entitled to indemnity for such amounts which the court shall deem
proper; or

 

(e)           Court Decision.  In
the event a determination has not been made by the forum described in Section
8(c) or in the event of a determination by such forum from which the Indemnitee
has applied to a court pursuant to Section 8(e), if a final decision by a court
having jurisdiction in the matter shall determine that such indemnification is
not lawful; or

 

(f)            Claims Initiated by Indemnitee. 
With respect to Proceedings or claims initiated or brought voluntarily
by the Indemnitee and not by way of defense, except with respect to Proceedings
brought to establish or enforce a right to indemnification under this Agreement
or any other statute or law or otherwise as required under Section 510/570, but
such indemnification or advancement of Expenses may be provided by the Company
in specific cases if the Board finds it to be appropriate; or

 

(g)           Lack of Good Faith. 
With respect to any Proceeding instituted by the Indemnitee to enforce
or interpret this Agreement, if a court of competent jurisdiction determines
that each of the material assertions made by the Indemnitee in such Proceeding
was not made in good faith or was frivolous; or

 

(h)           Unauthorized Settlements.  For
any amounts paid in settlement of any action or claim effected without its
written consent.  The Company shall not
settle any action or claim in any manner which would impose any penalty or
limitation on the Indemnitee without the Indemnitee’s written consent.  Neither the Company nor the Indemnitee will
unreasonably withhold its, his or her consent to any proposed settlement.

 

10.           Nonexclusivity; Continuation of Rights.  The
provisions for indemnification and advancement of Expenses set forth in this
Agreement shall not be deemed exclusive of any other rights which the
Indemnitee may have under any provision of law, the Company’s Articles of
Incorporation or Bylaws, the vote of the Company’s shareholders or
disinterested directors, other agreements, or otherwise, both as to action in
the Indemnitee’s official capacity and to action in another capacity while
occupying the position as an Agent of the Company.  All agreements and obligations of the Company contained herein
shall continue during the period the Indemnitee is a director, officer,
employee or Agent of the Company and shall continue thereafter so long as the
Indemnitee shall be subject to any possible claim or threatened, pending or
completed action, suit or Proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that the Indemnitee was an Agent of the
Company.

 

 

11.           Interpretation of Agreement.  It
is understood that the parties hereto intend this Agreement to be interpreted
and enforced so as to provide indemnification to the Indemnitee to the fullest
extent now or hereafter permitted by law.

 

12.           Severability.  If
any provision or provisions of this Agreement shall be held to be invalid,
illegal or unenforceable for any reason whatsoever:  (i) the validity, legality and enforceability of the remaining
provisions of this Agreement (including, without limitation, all portions of
any paragraphs of this Agreement containing any such provision held to be
invalid, illegal or unenforceable, that are not themselves invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby; and (ii)
to the fullest extent possible, the provisions of this Agreement (including,
without limitation, all portions of any paragraph of this Agreement containing
any such provisions held to be invalid, illegal or unenforceable, that are not
themselves invalid, illegal or unenforceable) shall be construed so as to give
effect to the intent manifested by the provision held invalid, illegal or
unenforceable and to give effect to Section 11.

 

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

 

14.           Successors and Assigns.  The
terms of this Agreement shall bind, and shall inure to the benefit of, the
successors and assigns of the parties hereto.

 

15.           Notices.  All notices, requests,
demands and other communications under this Agreement shall be in writing and
shall be deemed duly given:  (i) if
delivered by hand and receipted for by the party addressee; or (ii) if mailed
by certified or registered mail with postage prepaid, on the third business day
after the mailing date.  Address for
notice to either party is as shown on the signature pages of this Agreement, or
as subsequently modified by written notice.

 

16.           Governing Law. 
This Agreement shall be governed exclusively by and construed according
to the laws of the State of Washington, as applied to contracts between
Washington residents entered into and to be performed entirely within
Washington.

 

17.           Consent to Jurisdiction.  The
Company and the Indemnitee each hereby irrevocably consent to the jurisdiction
of the state and federal courts in the State of Washington for all purposes in
connection with any action or proceeding which arises out of or relates to this
Agreement and agree that any action instituted under this Agreement shall be
brought only in the state or federal courts in the State of Washington.

 

 

The parties hereto have
entered into this Agreement effective as of the date first above written.

 

 

	
   

  	
  PROCYTE CORPORATION

  
	
   

  	
   

  
	
   

  	
  [Address:]

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  John F. Clifford

  	
   

  
	
   

  	
   

  	
  John
  F. Clifford

  
	
   

  	
   

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  INDEMNITEE

  
	
   

  	
   

  
	
   

  	
  [Address:]

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/  Robert W. Benson

  	
   

  
	
   

  	
   

  	
  Robert W. Benson

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00070-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00070-of-00352.parquet"}]]