Document:

Exhibit 10.1

 

HOSPIRA
SUPPLEMENTAL PENSION PLAN

 

(Effective as of May 1,
2004)

 

 

HOSPIRA
SUPPLEMENTAL PENSION PLAN

 

Section
1

INTRODUCTION

 

1-1.          Pursuant to a Separation
and Distribution Agreement by and between Abbott Laboratories (“Abbott”) and
Hospira, Inc.  (“Hospira”) dated as of
April 12 2004, Abbott distributed as a dividend to its shareholders all of the
outstanding shares of common stock, par value $0.01 per share, of Hospira,
together with the associated preferred stock purchase rights, owned by Abbott
(the “Distribution”).  In connection
with the Distribution, Hospira established the Abbott/Hospira Transitional
Annuity Retirement Plan (the “Annuity Plan”) and certain assets and liabilities
were transferred from the Abbott Laboratories Annuity Retirement Plan (the
“Abbott ARP”) to the Annuity Plan with respect to persons who were transferred
from employment with Abbott to employment with Hospira in connection or
contemporaneously with the Distribution (“Transferred Employees”).  In connection with the Distribution, Hospira
also assumed certain liabilities with respect to Transferred Employees under
the Abbott Laboratories Supplemental Pension Plan (the “Abbott SERP”).  Hospira now desires to establish this HOSPIRA
SUPPLEMENTAL PENSION PLAN (the “Supplemental Plan”) to provide (i) the benefits
associated with the obligations assumed by Hospira with respect to Transferred
Employees under the Abbott SERP, (ii) pension benefits calculated under the
Annuity Plan in excess of those which may be paid under that plan under the
limits imposed by Section 415 of the U.S. 
Internal Revenue Code of 1986, as amended (the “Code”), and the Employee
Retirement Income Security Act, as amended (“ERISA”), and (iii) the additional
pension benefits that would be payable under the Annuity Plan if deferred
awards under the Performance Incentive Plan and, with respect to any
Transferred Employee, under the Management Incentive Plan prior to the
Effective Date (as defined below) were included in “final earnings” as defined

 

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in
the Annuity Plan  This Supplemental
Plan is established effective as of May 1, 2004 (the “Effective Date”).

 

1-2.          The Supplemental Plan
shall apply to employees of Hospira and its subsidiaries and affiliates
existing as of the Effective Date or thereafter created or acquired.  (Hospira and each of such subsidiaries and
affiliates are hereinafter referred to as an “employer” and collectively as the
“employers”).

 

1-3.          All benefits provided
under the Supplemental Plan shall be provided from the general assets of the
employers and not from any trust fund or other designated asset.  All participants in the Supplemental Plan
shall be general creditors of the employers with no priority over other
creditors.

 

1-4.          The Supplemental Plan
shall be administered by the Hospira, Inc. Employee Benefit Board of Review  appointed by the Board of Directors of
Hospira (the “Board of Directors”) and acting under the Charter of the Hospira,
Inc. Employee Benefit Board of Review (“Board of Review”).  Except as stated below, the Board of Review
shall perform all powers and duties with respect to the Supplemental Plan,
including the power to direct payment of benefits, allocate costs among
employers, adopt amendments and determine questions of interpretation.  The Board of Directors shall have the sole
authority to terminate the Supplemental Plan.

 

Section
2

ERISA ANNUITY PLAN SUPPLEMENTAL BENEFIT

 

2-1.          The benefits described
in this Section 2 shall apply to all participants in the Annuity Plan who
retire, or terminate with a vested pension under that plan, on or after the
Effective Date.

 

2-2.          Each Annuity Plan
participant whose retirement or vested pension under that plan would otherwise
be limited by Section 415 of the Internal Revenue Code shall receive a

 

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supplemental
pension under this Supplemental Plan in an amount, which, when added to his or
her Annuity Plan pension, will equal the amount the participant would be
entitled to under the Annuity Plan as in effect from time to time, based on the
particular option selected by the participant, without regard to the
limitations imposed by Section 415 of the Internal Revenue Code.

 

Section
3

1986 TAX REFORM ACT SUPPLEMENTAL BENEFIT

 

3-1.          The benefits described
in this Section 3 shall apply to all participants in the Annuity Plan who
retire, or terminate with a vested pension under that plan after the Effective
Date.

 

3-2.          Each Annuity Plan
participant shall receive a supplemental pension under this Supplemental Plan
in an amount equal to the difference, if any, between:

 

(a)           the monthly benefit
payable under the Annuity Plan plus any supplement provided by Section 2; and

 

(b)           the monthly benefit
which would have been payable under the Annuity Plan (without regard to the
limits imposed by Section 415 of the Internal Revenue Code) if the
participant’s “final earnings”, as defined in the Annuity Plan, had included
compensation in excess of the limits imposed by Section 401(a)(17)of the Internal
Revenue Code, and any “pre-tax contributions” made by the participant under the
Hospira Supplemental 401(k) Plan.

 

For purposes
of calculating the benefit under this Section 3-2 with respect to any
Transferred Employee, any pre-tax contributions made by the participant under
the Abbott Laboratories Supplemental 401(k) Plan prior to the Effective Date
shall be treated as though made under the Hospira Supplemental 401(k) Plan.

 

Section
4

DEFERRED COMPENSATION PLAN ANNUITY PLAN SUPPLEMENTAL BENEFIT

 

4-1.          The benefits described
in this Section 4 shall apply to all participants in the Annuity Plan who
retire, or terminate with a vested pension, under that plan, on or after the

 

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Effective
Date and who made a Deferral Election under the Abbott Laboratories Deferred
Compensation Plan (the “Deferred Compensation Plan”) with respect to any
calendar month during the one hundred twenty consecutive calendar months
immediately preceding retirement or termination of employment.  For
purposes of calculating the benefit under this Section 4 with respect to any
Transferred Employee, amounts deferred under the Abbott Laboratories Deferred
Compensation Plan prior to the Effective Date shall be treated as deferred
under the Deferred Compensation Plan.

 

4-2.          Each Annuity Plan
participant shall receive a supplemental pension under this Supplemental Plan
in an amount equal to the difference, if any, between:

 

(a)           the monthly benefit
payable under the Annuity Plan plus any supplement provided by Section 2 and
Section 3; and

 

(b)           the monthly benefit
which would have been payable under the Annuity Plan (without regard to the
limits imposed by Section 415 of the Internal Revenue Code) if the
participant’s “base earnings”, as defined in the Annuity Plan, included
deferrals made under the Deferred Compensation Plan and any compensation in
excess of the limits imposed by Section 401(a)(17)of the Internal Revenue Code

 

Section
5

DEFERRED MIP ANNUITY PLAN SUPPLEMENTAL BENEFIT

 

5-1.          The benefits described
in this Section 5 shall apply to all participants in the Annuity Plan who
retire, or terminate with a vested pension, under that plan, on or after the
Effective Date and who were awarded Performance Incentive Plan awards for any
calendar year during the ten consecutive calendar years ending with the year of
retirement or termination of employment. 
For purposes of calculating the benefits under this Section 5 with
respect to any Transferred Employee, awards and payments made prior to the
Effective Date under the Management Incentive Plan, Awards for Performance
Excellence Plan or any Division Incentive Plan maintained by Abbott shall be
treated as awards and payments, as applicable, under the

 

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Performance
Incentive Plan, Awards for Performance Excellence or a Division Incentive Plan
maintained by Hospira after the Effective Date.

 

5-2.          Each Annuity Plan
participant shall receive a supplemental pension under this Supplemental Plan
in an amount determined as follows:

 

(a)           The supplemental
pension shall be the difference, if any, between:

 

(i)            the monthly benefit
payable under the Annuity Plan plus any supplement provided by Section 2,
Section 3, and Section 4; and

 

(ii)           the monthly benefit which
would have been payable under the Annuity Plan (without regard to the limits
imposed by Section 415 of the Internal Revenue Code) if the participant’s
“final earnings”, as defined in the Annuity Plan, were one-sixtieth of the sum
of:

 

(A)          the participant’s total
“basic earnings” (excluding any payments under the Performance Incentive Plan,
Awards for Performance Excellence Plan or any Division Incentive Plan) received
in the sixty consecutive calendar months for which his basic earnings
(excluding any payments under the Performance Incentive Plan, Awards for
Performance Excellence Plan or any Division Incentive Plan) were highest within
the last one hundred twenty consecutive calendar months immediately preceding
his retirement or termination of employment; and

 

(B)           the amount of the
participant’s total awards under the Performance Incentive Plan, Awards for
Performance Excellence Plan and any Division Incentive Plan (whether paid
immediately or deferred) made for the five consecutive calendar years during
the ten consecutive calendar years ending with the year of retirement or
termination for which such amount is the greatest and (for participants granted
Performance Incentive Plan awards for less than five consecutive calendar years
during such ten year period) which include all Performance Incentive Plan
awards granted for consecutive calendar years within such ten year period.

 

(b)           That portion of any
Performance Incentive Plan award which the Compensation Committee has
determined shall be excluded from the participant’s “basic earnings” shall be
excluded from the calculation of “final earnings” for purposes of this Section
5-2 and that portion of any award under the Management Incentive Plan which,
prior to the Effective Date, the Compensation Committee of Abbott had
determined would be excluded from a Transferred Employee’s “basic earnings”
shall be excluded from the calculation of “final earnings” for purposes of this
Section 5-2.  “Final earnings” for
purposes of this subsection 5-2 shall

 

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include any
compensation in excess of the limits imposed by Section 401(a)(17)of the
Internal Revenue Code.

 

(c)           In the event the period
described in subsection 5-2(a)(ii)(B) is the final five calendar years of employment
and a Performance Incentive Plan award is made to the participant subsequent to
retirement for the participant’s final calendar year of employment, the
supplemental pension shall be adjusted by adding such new award and subtracting
a portion of the earliest Performance Incentive Plan award included in the
calculation, from the amount determined under subsection 5-2(a)(ii)(B).  The portion subtracted shall be equal to
that portion of the participant’s final calendar year of employment during
which the participant was employed by Hospira; provided, however, that in the
case of any Transferred Employee whose termination occurs in 2004, the portion
of the participant’s final calendar year of employment for this purpose shall
include any portion of 2004 that the participant was employed by Abbott.  If such adjustment results in a greater
supplemental pension, the greater pension shall be paid beginning the first
month following the date of such new award.

 

Section
6

CORPORATE OFFICER ANNUITY PLAN SUPPLEMENTAL BENEFIT

 

6-1.          The benefits described
in this Section 6 shall apply to all participants in the Annuity Plan who are
corporate officers of Hospira as of the Effective Date or who become corporate
officers thereafter, and who retire, or terminate with a vested pension under
that plan on or after the Effective Date. 
The term “corporate officer” for purposes of this Supplemental Plan
shall mean an individual elected an officer of Hospira by its Board of
Directors (or designated as such for purposes of this Section 6 by the
Compensation Committee of the Board of Directors of Hospira), but shall not
include assistant officers. 
Notwithstanding the foregoing or any other provision of this
Supplemental Plan to the contrary, in the case of any Transferred Employee who
was a corporate officer of Abbott immediately prior to the Effective Date and
who is not a corporate officer of Hospira on or after the Effective Date,
benefits shall be provided under this Section 6.

 

6-2.          Subject to the
limitations and adjustments described below, each participant described in
subsection 6-1 shall receive a monthly supplemental pension under this

 

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Supplemental
Plan commencing on the participant’s normal retirement date under the Annuity
Plan and payable as a life annuity, equal to 6/10 of 1 percent (.006) of the
participant’s final earnings (as determined under subsection 5-2) for each of
the first twenty years of the participant’s benefit service (as defined in the
Annuity Plan) occurring after the participant’s attainment of age 35.

 

6-3.          In no event shall the
sum of (a) the participant’s aggregate percentage of final earnings calculated
under subsection 6-2 and (b) of the participant’s aggregate percentage of final
earnings calculated under subsections 5.1(a)(ii)(A) and 5-1(b)(i)of the Annuity
Plan, exceed the maximum aggregate percentage of final earnings allowed under
subsection 5-1  of the Annuity Plan
(without regard to any limits imposed by the Internal Revenue Code), as in effect
on the date of the participant’s retirement or termination.  In the event the limitation described in
this subsection 6-3 would be exceeded for any participant, the participant’s
aggregate percentage calculated under subsection 6-2 shall be reduced until the
limit is not exceeded.

 

6-4.          Subject to the
provisions of subsection 6.1 with respect to any Transferred Employee who is
not a corporate officer of Hospira on or after the Effective Date, benefit
service occurring during any period that a participant is not a corporate
officer of Hospira or was not a corporate officer of Abbott Laboratories prior to the
Effective Date  shall be disregarded in calculating the participant’s
aggregate percentage under subsection 6-2.

 

6-5.          Any supplemental pension
otherwise due a participant under this Section 6 shall be reduced by the amount
(if any) by which:

 

(a)           the sum of (i) the
benefits due such participant under the Annuity Plan and this Supplemental
Plan, plus (ii) the actuarially equivalent value of the employer-paid portion
of all benefits due such participant under the primary retirement plans of all
non-Hospira employers of such participant; exceeds

 

(b)           the maximum benefit
that would be due under the Annuity Plan (without regard to the limits imposed
by Section 415 of the Internal Revenue Code) based on the

 

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participant’s
final earnings (as determined under subsection 5-2), if the participant had
accrued the maximum benefit service recognized by the Annuity Plan.

 

The term “primary retirement plan” shall mean any
pension benefit plan as defined in ERISA, whether or not qualified under the
Internal Revenue Code, which is determined by the Board of Review to be the
primary pension plan of its sponsoring employer.  The term “non-Hospira employer” shall mean any employer other
than Hospira or a subsidiary or affiliate of Hospira.  A retirement plan maintained by an employer prior to such
employer’s acquisition by Hospira shall be deemed a retirement plan maintained
by a non-Hospira employer for purposes of this subsection 6-5.

 

6-6.          Any supplemental pension
due a participant under this Section 6 shall be actuarially adjusted as
provided in the Annuity Plan to reflect the pension form selected by the
participant and the participant’s age at commencement of the pension, and shall
be paid as provided in subsection 7-2.

 

Section
7

CORPORATE OFFICER ANNUITY PLAN

SUPPLEMENTAL EARLY RETIREMENT BENEFIT

 

7-1.          The benefits described
in this Section 7 shall apply to all persons described in subsection 6-1.

 

7-2.          The supplemental pension
due under Sections 2, 3, 4, 5 and 6 to each participant described in subsection
7-1 shall be reduced as provided in subsections 5-3 and 5-6 of the Annuity Plan
for each month by which its commencement date precedes the last day of the
month in which the participant will attain age 60.  No reduction will be made for the period between the last day of
the months the participant will attain age 60 and age 62.

 

7-3.          Each participant
described in subsection 7-1 shall receive a monthly supplemental pension under
this Supplemental Plan equal to any reduction made in such participant’s
Annuity

 

9

 

Plan
pension under subsections 5-3 or 5-6 of the Annuity Plan for the period between
the last day of the months the participant will attain age 60 and age 62.

 

Section
8

MISCELLANEOUS

 

8-1.          For purposes of this
Supplemental Plan, the term “Performance Incentive Plan” shall mean the Hospira
2004 Performance Incentive Plan and any successor plans to such plan, and the
term “Management Incentive Plan” shall mean  the Abbott Laboratories Management Incentive Plan and
any successor plans to such plan.

 

8-2.          The supplemental pension
described in Sections 2, 3, 4, 5, 6 and 7 shall be paid to the participant or
his or her beneficiary based on the particular pension option elected by the
participant, in the same manner, at the same time, for the same period and on
the same terms and conditions as the pension payable to the participant or his
beneficiary under the Annuity Plan.  In
the event a participant is paid his or her pension under the Annuity Plan in a
lump sum, any supplemental pension due under Sections 2, 3, 4, 5, 6 or 7 shall
likewise be paid in a lump sum. 
Notwithstanding the foregoing provision of this subsection 8-2: if the
monthly vested supplemental pensions, expressed as a straight life annuity, due
a participant or his or her beneficiary under Sections 2, 3, 4, 5, 6 and 7 do
not exceed an aggregate of One Hundred Fifty Dollars ($150.00) as of the
commencement date of the pension payable such participant or his or her
beneficiary under the Annuity Plan, then the present value of such supplemental
pensions shall be paid such participant or beneficiary in a lump-sum.

 

8-3.          Notwithstanding any
other provisions of this Supplemental Plan, if employment of any participant
with Hospira and its subsidiaries and affiliates should terminate for any
reason within five (5) years after the date of a Change in Control:

 

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(a)           The present value of
any supplemental pension due the participant under Section 2 (whether or not
then payable) shall be paid to the participant in a lump sum within thirty (30)
days following such termination; and

 

(b)           The present value of
any supplemental pension due the participant under Sections 3, 4 or 5 (whether
or not then payable) shall be paid to the participant in a lump sum within
thirty (30) days following such termination.

 

The supplemental pension described in paragraph (a)
shall be computed using as the applicable limit under Section 415 of the
Internal Revenue Code, such limit as is in effect on the termination date and
based on the assumption that the participant will receive his or her Annuity
Plan pension in the form of a straight life annuity with no ancillary
benefits.  The present values of the
supplemental pensions described in paragraphs (a) and (b) shall be computed as
of the date of payment by using an interest rate equal to the applicable
interest rate as defined in section 417(e) of the Code and as determined for
purposes of the Annuity Plan as of the date of payment.

 

8-4.          For purposes of
subsection 8-3, a “Change in Control” shall be deemed to have occurred on the
earliest of the following dates:

 

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

 

(b)           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 Hospira) whose appointment or election by the Board of
Directors or nomination for election by Hospira’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

 

(c)           the date on which there
is consummated a merger or consolidation of Hospira or any direct or indirect
subsidiary of Hospira with any other corporation or other

 

11

 

entity, other than
(i) a merger or consolidation (A) 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 Hospira, the entity surviving
such merger or consolidation or, if Hospira or the entity surviving such merger
or consolidation is then a subsidiary, the ultimate parent thereof and (B)
which results in the voting securities of Hospira 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 Hospira
or any subsidiary of Hospira, at least 50% of the combined voting power of the
securities of Hospira or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (ii) a merger or
consolidation effected to implement a recapitalization of Hospira (or similar
transaction) in which no Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of Hospira (not including in the securities
Beneficially Owned by such Person any securities acquired directly from Hospira
or its Affiliates) representing 20% or more of the combined voting power of
Hospira’s then outstanding securities; or

 

(d)           the date the
shareholders of Hospira approve a plan of complete liquidation or dissolution
of Hospira or there is consummated an agreement for the sale or disposition by
Hospira of all or substantially all of Hospira’s assets, other than a sale or
disposition by Hospira of all or substantially all of Hospira’s assets to an
entity, at least 50% of the combined voting power of the voting securities of
which are owned by shareholders of Hospira, in combination with the ownership
of any trustee or other fiduciary holding securities under an employee benefit
plan of Hospira or any subsidiary of Hospira, in substantially the same
proportions as their ownership of Hospira 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 Hospira immediately prior to such transaction or
series of transactions continue to have substantially the same proportionate
ownership in an entity which owns all or substantially all of the assets of
Hospira immediately following such transaction or series of transactions.  In no event shall the Distribution be
considered a Change in Control for purposes of this Supplemental Plan.

 

For purposes of this Supplemental Plan: “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; “Exchange Act” shall mean the Securities Exchange Act of
1934, as amended from time to time; 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) Hospira or any
of its subsidiaries, (ii) a trustee or other fiduciary holding securities under
an employee benefit plan of Hospira or any of its Affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a

 

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corporation owned, directly or indirectly, by the shareholders of
Hospira in substantially the same proportions as their ownership of stock of
Hospira.

 

8-5.          POTENTIAL CHANGE IN
CONTROL.  A “Potential Change in
Control” shall exist during any period in which the circumstances described in
paragraphs (a), (b), (c) or (d), below, exist (provided, however, that a
Potential Change in Control shall cease to exist not later than the occurrence
of a Change in Control):

 

(a)           Hospira enters into an
agreement, the consummation of which would result in the occurrence of a Change
in Control, provided that a Potential Change in Control described in this
paragraph (a) shall cease to exist upon the expiration or other termination of
all such agreements.

 

(b)           Any Person (without
regard to the exclusions set forth in subsections (i) through (iv) of such
definition) publicly announces an intention to take or to consider taking
actions the consummation of which would constitute a Change in Control; provided
that a Potential Change in Control described in this paragraph (b) shall cease
to exist upon the withdrawal of such intention, or upon a determination by the
Board of Directors that there is no reasonable chance that such actions would
be consummated.

 

(c)           Any Person becomes the
Beneficial Owner, directly or indirectly, of securities of Hospira representing
10% or more of either the then outstanding shares of common stock of Hospira or
the combined voting power of Hospira’s then outstanding securities (not
including in the securities beneficially owned by such Person any securities
acquired directly from Hospira or its Affiliates).

 

(d)           The Board of Directors
adopts a resolution to the effect that, for purposes of this Agreement, a
Potential Change in Control exists; provided that a Potential Change in Control
described in this paragraph (d) shall cease to exist upon a determination by
the Board of Directors that the reasons that gave rise to the resolution
providing for the existence of a Potential Change in Control have expired or no
longer exist.

 

In no event shall the Distribution be considered a Potential Change in
Control for purposes of this Supplemental Plan.

 

8-6.          The provisions of
subsections 8-3, 8-4, 8-5 and this subsection 8-6 may not be amended or
deleted, nor superseded by any other provision of this Supplemental Plan, (i)
during the pendency of a Potential Change in Control and (ii) during the period
beginning on the date of a Change in Control and ending on the date five (5)
years following such Change in Control.

 

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8-7.          All benefits due under
this Supplemental Plan shall be paid by Hospira and Hospira shall be reimbursed
for such payments by the employee’s employer. 
In the event the employee is employed by more than one employer, each
employer shall reimburse Hospira in proportion to the period of time the
employee was employed by such employer, as determined by the Board of Review in
its sole discretion.

 

8-8.          The benefits under the
Supplemental Plan are not in any way subject to the debts or other obligations
of the persons entitled to benefits and may not be voluntarily or involuntarily
sold, transferred or assigned.

 

8-9.          Nothing contained in
this Supplemental Plan shall confer on any employee the right to be retained in
the employ of Hospira or any of its subsidiaries or affiliates.

 

14Exhibit 10.7

 

CHANGE OF CONTROL AGREEMENT

 

This Change of Control
Agreement (this “Agreement”), dated as of July 1, 2004, is between PROCYTE
CORPORATION, a Washington corporation (the “Company”), and ROBIN L. CARMICHAEL
(the “Executive”).

 

The Board of Directors of
the Company (the “Board”) has determined that it is in the best interests of
the Company and its stockholders to ensure that the Company will have the
continued dedication of the Executive, notwithstanding the possibility, threat
or occurrence of a Change of Control (as defined in Section 1.1 below) of
the Company.  The Board believes it is
imperative to diminish the inevitable distraction of the Executive arising from
the personal uncertainties and risks created by a pending or threatened Change of
Control, to encourage the Executive’s full attention and dedication to the
Company currently and in the event of any threatened or pending Change of
Control, and to provide the Executive with reasonable compensation and benefit
arrangements upon a Change of Control.

 

In order to accomplish these
objectives, the Board has caused the Company to enter into this Agreement.

 

1.                                      DEFINITIONS

 

1.1                                 “Change of Control” shall have the
definition set forth in Appendix A to this Agreement, which is hereby
incorporated by reference.

 

1.2                                 “Change of Control Date” shall mean
the first date on which a Change of Control occurs.

 

1.3                                 “Employment Period” shall mean the
two-year period commencing on the Change of Control Date and ending on the
second anniversary of such date.

 

2.                                      TERM

 

The term of this Agreement
(“Term”) shall be for a period of two (2) years from the date of this Agreement
as first entered above, at which time this Agreement shall terminate without
further action by either the Company or the Executive; provided, however, that
if a Change of Control occurs during the Term, the Term shall automatically
extend for the duration of the Employment Period.

 

3.                                      EMPLOYMENT

 

3.1                               Employment Period

 

During the Employment
Period, the Company hereby agrees to continue the Executive in its employ or in
the employ of its affiliated companies, and the Executive hereby agrees to
remain in the employ of the Company or its affiliated companies, in accordance
with the terms and provisions of this Agreement; provided, however, that either
the Company or the Executive may terminate the employment relationship subject
to the terms of this Agreement.

 

1

 

3.2                               Position and Duties

 

During the Employment
Period, the Executive’s position, authority, duties and responsibilities shall
be at least commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 90-day period
immediately preceding the Change of Control Date.

 

3.3                               Location

 

During the Employment
Period, the Executive’s services shall be performed at the Company’s
headquarters on the Change of Control Date or any office which is subsequently
designated as the headquarters of the Company and is less than 30 miles from
such location.

 

3.4                               Employment at Will

 

The Executive and the
Company acknowledge that, except as may otherwise be provided under any other
written agreement between the Executive and the Company, the employment of the
Executive by the Company or its affiliated companies is “at will” and may be
terminated by either the Executive or the Company or its affiliated companies
at any time with or without cause. 
Moreover, if prior to the Change of Control Date, the Executive’s employment
with the Company or its affiliated companies terminates for any reason, then
the Executive shall have no further rights under this Agreement; provided,
however, that Company may not avoid liability for any termination payments
which would have been required during the Employment Period pursuant to
Section 8 below by terminating the Executive prior to the Employment
Period where such termination is carried out in anticipation of a Change of
Control and the principal motivating purpose is to avoid liability for such
termination payments.

 

4.                                      ATTENTION AND EFFORT

 

During the Employment
Period, and excluding any periods of vacation and sick leave to which the
Executive is entitled, the Executive will devote all of her productive time,
ability, attention and effort to the business and affairs of the Company and
the discharge of the responsibilities assigned to her hereunder, and will use
her reasonable best efforts to perform faithfully and efficiently such
responsibilities.  It shall not be a
violation of this Agreement for the Executive to (a) serve on corporate, civic
or charitable boards or committees, (b) deliver lectures, fulfill speaking
engagements or teach at educational institutions, and (c) manage personal
investments, so long as such activities do not significantly interfere with the
performance of the Executive’s responsibilities in accordance with this
Agreement.  It is expressly understood
and agreed that to the extent any such activities have been conducted by the
Executive prior to the Employment Period, the continued conduct of such
activities (or the conduct of activities similar in nature and scope thereto)
during the Employment Period shall not thereafter be deemed to interfere with
the performance of the Executive’s responsibilities to the Company.

 

5.                                      COMPENSATION

 

As long as the Executive
remains employed by the Company during the Employment Period, the Company
agrees to pay or cause to be paid to the Executive, and the Executive agrees to
accept in exchange for the services rendered hereunder by her, the following
compensation:

 

2

 

5.1                               Salary

 

The Executive shall receive
an annual base salary (the “Annual Base Salary”), at least equal to the annual
salary established by the Board or the Compensation Committee of the Board (the
“Compensation Committee”) for the fiscal year in which the Change of Control
Date occurs.  The Annual Base Salary
shall be paid in substantially equal installments and at the same intervals as
the salaries of other executives of the Company are paid.  The Board or the Compensation Committee
shall review the Annual Base Salary at least annually and shall determine in
good faith and consistent with any generally applicable Company policy any
increases for future years.

 

5.2                               Bonus

 

In addition to Annual Base
Salary, the Executive shall be awarded, for each fiscal year ending during the
Employment Period, an annual bonus (the “Annual Bonus”) in cash at least equal
to the average annualized (for any fiscal year consisting of less than 12 full
months) bonus paid or payable, including by reason of any deferral, to the
Executive by the Company and its affiliated companies in respect of the three
fiscal years immediately preceding the fiscal year in which the Change of
Control Date occurs.  Each such Annual
Bonus shall be paid no later than 90 days after the end of the fiscal year for
which the Annual Bonus is awarded, unless the Executive shall elect to defer
the receipt of such Annual Bonus.

 

6.                                      BENEFITS

 

6.1                               Incentive, Retirement and
Welfare Benefit Plans; Vacation

 

During the Employment
Period, the Executive shall be entitled to participate, subject to and in
accordance with applicable eligibility requirements, in such fringe benefit
programs as shall be generally made available to other executives of the
Company and its affiliated companies from time to time during the Employment
Period by action of the Board (or any person or committee appointed by the
Board to determine fringe benefit programs and other emoluments), including,
without limitation, paid vacations; any stock purchase, savings or retirement
plan, practice, policy or program; and all welfare benefit plans, practices,
policies or programs (including, without limitation, medical, prescription,
dental, disability, salary continuance, employee life, group life, accidental
death and travel accident insurance plans or programs).

 

6.2                               Expenses

 

During the Employment
Period, the Executive shall be entitled to receive prompt reimbursement for all
reasonable employment expenses incurred by her in accordance with the policies,
practices and procedures of the Company and its affiliated companies in effect
for the executives of the Company and its affiliated companies during the
Employment Period.

 

7.                                      TERMINATION

 

During the Employment
Period, employment of the Executive may be terminated as follows but, in any
case, the nondisclosure provisions set forth in Section 10 hereof shall
survive the termination of this Agreement and the termination of the
Executive’s employment with the Company:

 

3

 

7.1                               By the Company or the
Executive

 

At any time during the
Employment Period, the Company may terminate the employment of the Executive
with or without Cause (as defined below), and the Executive may terminate her
employment for Good Reason (as defined below) or for any reason, upon giving
Notice of Termination (as defined below).

 

7.2                               Automatic Termination

 

This Agreement and the
Executive’s employment during the Employment Period shall terminate
automatically upon the death or Total Disability of the Executive.  The term “Total Disability” as used herein
shall mean the Executive’s inability (with such accommodation as may be
required by law and which places no undue burden on the Company), as determined
by a physician selected by the Company and acceptable to the Executive, to
perform the duties set forth in Section 3.2 hereof for a period or periods
aggregating 120 calendar days in any 12-month period as a result of physical or
mental illness, loss of legal capacity or any other cause beyond the
Executive’s control, unless the Executive is granted a leave of absence by the
Board.  The Executive and the Company
hereby acknowledge that the duties specified in Section 3.2 hereof are
essential to Executive’s position and that Executive’s ability to perform those
duties is the essence of this Agreement.

 

7.3                               Notice of Termination

 

Any termination by the
Company or by the Executive during the Employment Period shall be communicated
by Notice of Termination to the other party given in accordance with
Section 12 hereof.  The term
“Notice of Termination” shall mean a written notice which (a) indicates the
specific termination provision in this Agreement relied upon and (b) to the
extent applicable, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive’s employment under
the provision so indicated.  The failure
by the Executive or the Company to set forth in the Notice of Termination any
fact or circumstance which contributes to a showing of Good Reason or Cause
shall not waive any right of the Executive or the Company hereunder or preclude
the Executive or the Company from asserting such fact or circumstance in
enforcing the Executive’s or the Company’s rights hereunder.

 

7.4                               Date of Termination

 

During the Employment
Period, “Date of Termination” means (a) if the Executive’s employment is
terminated by reason of death, at the end of the calendar month in which the
Executive’s death occurs, (b) if the Executive’s employment is terminated by
reason of Total Disability, immediately upon a determination by the Company of
the Executive’s Total Disability, and (c) in all other cases, five days after
the date of personal delivery or mailing of the Notice of Termination.  The Executive’s employment and performance
of services will continue during such five-day period; provided, however,
that the Company may, upon notice to the Executive and without reducing the
Executive’s compensation during such period, excuse the Executive from any or
all of her duties during such period.

 

8.                                      TERMINATION PAYMENTS

 

In the event of termination
of the Executive’s employment during the Employment Period, all compensation
and benefits shall terminate except as specifically provided in this
Section 8.

 

4

 

8.1                               Termination by the Company
Other Than for Cause or by the Executive for Good Reason

 

If during the Employment
Period the Company terminates the Executive’s employment other than for Cause
or the Executive terminates her employment for Good Reason, the Executive shall
be entitled to:

 

(a)                                  receive payment of the following accrued
obligations (the “Accrued Obligations”):

 

(i)                                     the Executive’s Annual Base Salary through
the Date of Termination to the extent not theretofore paid;

 

(ii)                                  the product of (x) the Annual Bonus payable
with respect to the fiscal year in which the Date of Termination occurs and (y)
a fraction, the numerator of which is the number of days in the current fiscal
year through the Date of Termination, and the denominator of which is 365; and

 

(iii)
any compensation previously deferred by the Executive (together with accrued
interest or earnings thereon, if any) and any accrued vacation pay which would
be payable under the Company’s standard policy, in each case to the extent not
theretofore paid;

 

(b)                                 for one year after the Date of Termination,
the Company shall pay the Executive’s premiums for health insurance benefit
continuation for Executive and her family members, if applicable, which the
Company provides to the Executive under the provisions of the federal
Comprehensive Omnibus Budget Reconciliation Act of 1986, as amended (“COBRA”)
to the extent that the Company would have paid such premiums had the Executive
remained employed by the Company (such continued payment is hereinafter
referred to as “COBRA Continuation”); and

 

(c)                                  an amount as severance pay equal to one  (1) times the Annual Base Salary for the
fiscal year in which the Date of Termination occurs.

 

8.2                               Termination for Cause or
Other Than for Good Reason

 

If during the Employment
Period the Executive’s employment shall be terminated by the Company for Cause
or by the Executive for other than Good Reason, this Agreement shall terminate
without further obligation on the part of the Company to the Executive, other
than the Company’s obligation to pay the Executive (a) her Annual Base Salary
through the Date of Termination, (b) 
the amount of any compensation previously deferred by the Executive, and
(c) any accrued vacation pay which would be payable under the Company’s
standard policy, in each case to the extent theretofore unpaid.

 

8.3                               Expiration of Term

 

In the case of a termination
of the Executive’s employment as a result of the expiration of the Term of this
Agreement, this Agreement shall terminate without further obligation on the
part of the Company to the Executive, other than the Company’s obligation to
pay the Executive the Accrued Obligations.

 

5

 

8.4                               Termination Because of Death
or Total Disability

 

If during the Employment
Period the Executive’s employment is terminated by reason of the Executive’s
death or Total Disability, this Agreement shall terminate automatically without
further obligation on the part of the Company to the Executive or her legal
representatives under this Agreement, other than the Company’s obligation to
pay the Executive the Accrued Obligations (which shall be paid to the
Executive’s estate or beneficiary, as applicable in the case of the Executive’s
death), and to provide COBRA Continuation.

 

8.5                               Payment Schedule

 

All payments of Accrued
Obligations, or any portion thereof payable pursuant to this Section 8,
shall be made to the Executive within ten working days of the Date of
Termination.  Any payments payable to
the Executive pursuant to Section 8.1(c) shall be made to the Executive,
at the Company’s option, either (a) in a lump sum within ten working days of
the Date of Termination; or (b) in two equal payments, the first of which is
made within ten working days of the Date of Termination and the second of which
is made within six months of the Date of Termination.

 

8.6                               Cause

 

For purposes of this
Agreement, “Cause” means cause given by the Executive to the Company and shall
include, without limitation, the occurrence of one or more of the following
events:

 

(a)                                  A clear refusal to carry out any material
lawful duties of the Executive or any directions of the Board or senior
management of the Company, all reasonably consistent with those duties
described in Section 3.2 hereof ;

 

(b)                                 Persistent failure to carry out any lawful
duties of the Executive described in Section 3.2 hereof or any directions
of the Board or senior management reasonably consistent with those duties
herein set forth to be performed by the Executive, provided Executive has been
given reasonable notice and opportunity to correct any such failure;

 

(c)                                  Violation by the Executive of a state or
federal criminal law involving the commission of a crime against the Company or
any other criminal act involving moral turpitude;

 

(d)                                 Current abuse by the Executive of alcohol or
controlled substances; deception, fraud, misrepresentation or dishonesty by the
Executive; or any incident materially compromising the Executive’s reputation
or ability to represent the Company with investors, customers or the public; or

 

(e)                                  Any other material violation of any provision
of this Agreement by the Executive, subject to the notice and opportunity to
cure requirements of Section 11.

 

8.7                               Good Reason

 

For purposes of this
Agreement, “Good Reason” means

 

(a)                                  The assignment to the Executive of any duties
materially inconsistent with the Executive’s position, authority, duties or
responsibilities as contemplated by Section 3.2 hereof or any other action
by the Company which results in a material diminution in such position,
authority, duties or responsibilities, excluding for this purpose an isolated
and inadvertent action not taken in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;

 

6

 

(b)                                 Any failure by the Company to comply with any
of the provisions of Section 5 or Section 6 hereof, other than an
isolated and inadvertent failure not taken in bad faith and which is remedied
by the Company promptly after receipt of notice thereof given by the Executive;

 

(c)                                  The Company’s requiring the Executive to be
based at any office or location other than that described in Section 3.3
hereof;

 

(d)                                 Any failure by the Company to comply with and
satisfy Section 13 hereof, provided that the Company’s successor has
received at least ten days’ prior written notice from the Company or the
Executive of the requirements of Section 13 hereof; or

 

(e)                                  Any other material violation of any provision
of this Agreement by the Company, subject to the notice and opportunity to cure
requirements of Section 11.

 

8.8                               Excess Parachute Limitation

 

If either the Company or the
Executive receives confirmation from the Company’s independent tax counsel or
its certified public accounting firm, or such other accounting firm retained as
independent certified public accountants for the Company (the “Tax Advisor”),
that any payment by the Company to the Executive under this Agreement or
otherwise would be considered to be an “excess parachute payment” within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended,
or any successor statute then in effect (the “Code”), then the aggregate
payments by the Company pursuant to this Agreement shall be reduced to the
highest amount that may be paid to the Executive by the Company under this
Agreement without having any portion of any amount payable to the Executive by
the Company or a related entity under this Agreement or otherwise treated as such
an “excess parachute payment”, and, if permitted by applicable law and without
adverse tax consequence, such reduction shall be made to the last payment due
hereunder.  Any payments made by the
Company to the Executive under this Agreement which are later confirmed by the
Tax Advisor to be “excess parachute payments” shall promptly be repaid by the
Executive to the Company.

 

9.                                      REPRESENTATIONS, WARRANTIES
AND OTHER CONDITIONS

 

In order to induce the
Company to enter into this Agreement, the Executive represents and warrants to
the Company as follows:

 

9.1                               Health

 

The Executive is in good
health and knows of no physical or mental disability which, with any
accommodation which may be required by law and which places no undue burden on
the Company, would prevent her from fulfilling her obligations hereunder.  The Executive agrees, if the Company
requests, to submit to reasonable periodic medical examinations by a physician
or physicians designated by, paid for and arranged by the Company.  The Executive agrees that the examination’s
medical report shall be provided to the Company.

 

9.2                               No Violation of Other
Agreements

 

The Executive represents
that neither the execution nor the performance of this Agreement by the
Executive will violate or conflict in any way with any other agreement by which
the Executive may be bound.

 

7

 

10.                               NONDISCLOSURE; RETURN OF
MATERIALS

 

10.1                        Nondisclosure

 

Except as required by her
employment with the Company, the Executive will not, at any time during the
term of employment by the Company, or at any time thereafter, directly,
indirectly or otherwise, use, communicate, disclose, disseminate, lecture upon
or publish articles relating to any confidential, proprietary or trade secret
information without the prior written consent of the Company.  The Executive understands that the Company
will be relying on this covenant in continuing the Executive’s employment,
paying her compensation, granting her any promotions or raises, or entrusting
her with any information which helps the Company compete with others.

 

10.2                        Return of Materials

 

All documents, records,
notebooks, notes, memoranda, drawings or other documents made or compiled by
the Executive at any time while employed by the Company, or in her possession,
including any and all copies thereof, shall be the property of the Company and
shall be held by the Executive in trust and solely for the benefit of the
Company, and shall be delivered to the Company by the Executive upon
termination of employment or at any other time upon request by the Company.

 

11.                               NOTICE AND CURE OF BREACH

 

Whenever a breach of this
Agreement by either party is relied upon as justification for any action taken
by the other party pursuant to any provision of this Agreement, other than
clause (a), (b), (c) or (d) of Section 8.6 hereof, before such action is
taken, the party asserting the breach of this Agreement shall give the other
party at least ten days’ prior written notice of the existence and the nature
of such breach before taking further action hereunder and shall give the party
purportedly in breach of this Agreement the opportunity to correct such breach
during the ten-day period.

 

12.                               FORM OF NOTICE

 

Every notice required by the
terms of this Agreement shall be given in writing by serving the same upon the
party to whom it was addressed personally or by registered or certified mail,
return receipt requested, at the address set forth below or at such other
address as may hereafter be designated by notice given in compliance with the
terms hereof:

 

	
  If to the Executive:

  	
   

  	
  Robin L. Carmichael

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  If to the Company:

  	
   

  	
  ProCyte Corporation

  
	
   

  	
   

  	
  8511 154th Avenue N.E.,
  Bldg. A

  
	
   

  	
   

  	
  Redmond, Washington  98052-3557

  
	
   

  	
   

  	
  Attn:  President

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Perkins Coie LLP

  
	
   

  	
   

  	
  Attn:  James R. Lisbakken, Esq.

  
	
   

  	
   

  	
  1201 Third Avenue, 40th
  Floor

  
	
   

  	
   

  	
  Seattle, Washington
  98101-3099

  

 

8

 

or such other address as
shall be provided in accordance with the terms hereof.  Except as set forth in Section 7.4
hereof, if notice is mailed, such notice shall be effective upon mailing.

 

13.                               ASSIGNMENT

 

This Agreement is personal
to the Executive and shall not be assignable by the Executive.

 

The Company shall assign to
and require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all the business and/or
assets of the Company to assume expressly and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place.  As used in this Agreement, “Company” shall mean ProCyte
Corporation and any affiliated company or successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
contract, operation of law, or otherwise; and as long as such affiliated
company or successor assumes and agrees to perform this Agreement, the
termination of Executive’s employment by one such entity and the immediate
hiring and continuation of the Executive’s employment by the Company or other
affiliated company or successor shall not be deemed to constitute a termination
or trigger any obligation under this Agreement.  All the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the parties hereto and
their respective successors and permitted assigns.

 

14.                               WAIVERS

 

No delay or failure by any
party hereto in exercising, protecting or enforcing any of its rights, titles,
interests or remedies hereunder, and no course of dealing or performance with
respect thereto, shall constitute a waiver thereof.  The express waiver by a party hereto of any right, title,
interest or remedy in a particular instance or circumstance shall not
constitute a waiver thereof in any other instance or circumstance.  All rights and remedies shall be cumulative
and not exclusive of any other rights or remedies.

 

15.                               AMENDMENTS IN WRITING

 

No amendment, modification,
waiver, termination or discharge of any provision of this Agreement, nor
consent to any departure therefrom by either party hereto, shall in any event
be effective unless the same shall be in writing, specifically identifying this
Agreement and the provision intended to be amended, modified, waived,
terminated or discharged and signed by the Company and the Executive, and each
such amendment, modification, waiver, termination or discharge shall be
effective only in the specific instance and for the specific purpose for which
given.  No provision of this Agreement
shall be varied, contradicted or explained by any oral agreement, course of
dealing or performance or any other matter not set forth in an agreement in
writing and signed by the Company and the Executive.

 

16.                               APPLICABLE LAW

 

This Agreement shall in all
respects, including all matters of construction, validity and performance, be
governed by, and construed and enforced in accordance with, the laws of the
State of Washington, without regard to any rules governing conflicts of laws.

 

17.                               ARBITRATION; ATTORNEYS’ FEES

 

Except in connection with
enforcing Section 10 of this Agreement, for which legal and equitable
remedies may be sought in a court of law, any dispute arising under this
Agreement shall be subject to arbitration. 
The arbitration proceeding shall be conducted in accordance with the
Commercial

 

9

 

Arbitration Rules of the
American Arbitration Association then in effect, conducted by one arbitrator
either mutually agreed upon or selected in accordance with the AAA Rules.  The arbitration shall be conducted in King
County, Washington under the jurisdiction of the Seattle office of the American
Arbitration Association.  The arbitrator
shall have authority only to interpret and apply the provisions of this
Agreement, and shall have no authority to add to, subtract from, or otherwise
modify the terms of this Agreement.  Any
demand for arbitration must be made within sixty (60) days of the event(s)
giving rise to the claim that this Agreement has been breached.  The arbitrator’s decision shall be final and
binding, and each party agrees to be bound to by arbitrator’s award subject
only to an appeal therefrom in accordance with the laws of the State of
Washington.  Either party may obtain judgment
upon the arbitrator’s award in the Superior Court of King, County, Washington.

 

If it becomes necessary to
pursue or defend any legal proceeding, whether in arbitration or court, in
order to resolve a dispute arising under this Agreement, the prevailing party
in any such proceeding shall be entitled to recover its reasonable costs and
attorneys’ fees.

 

18.                               SEVERABILITY

 

If any provision of this
Agreement shall be held invalid, illegal or unenforceable in any jurisdiction,
for any reason, including, without limitation, the duration of such provision,
its geographical scope or the extent of the activities prohibited or required
by it, then, to the full extent permitted by law, (a) all other provisions
hereof shall remain in full force and effect in such jurisdiction and shall be
liberally construed in order to carry out the intent of the parties hereto as
nearly as may be possible, (b) such invalidity, illegality or unenforceability
shall not affect the validity, legality or enforceability of any other provision
hereof, and (c) any court or arbitrator having jurisdiction thereover shall
have the power to reform such provision to the extent necessary for such
provision to be enforceable under applicable law.

 

19.                               ENTIRE AGREEMENT

 

This Agreement on and as of
the date hereof constitutes the entire agreement between the Company and the
Executive with respect to the subject matter hereof and all prior or
contemporaneous oral or written communications, understandings or agreements
between the Company and the Executive with respect to such subject matter,
including, but not limited to, that certain Change of Control Agreement between
the Company and the Executive dated as of April 24, 1998 and all
amendments thereto, are hereby superseded and nullified in their entireties,
except that the Proprietary Information and Invention Agreement between the
Executive and the Company shall continue in full force and effect to the extent
not superseded by Section 10 hereof.

 

20.                               WITHHOLDING

 

The Company may withhold
from any amounts payable under this Agreement such federal, state or local
taxes as shall be required to be withheld pursuant to any applicable law or
regulation.

 

21.                               COUNTERPARTS

 

This Agreement may be
executed in counterparts, each of which counterpart shall be deemed an
original, but all of which together shall constitute one and the same
instrument.

 

10

 

IN WITNESS WHEREOF, the
parties have executed and entered into this Agreement effective on the date
first set forth above.

 

	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Robin L. Carmichael

  	
   

  
	
   

  	
  Robin L. Carmichael

  
	
   

  	
   

  
	
   

  	
  PROCYTE
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ John  F. Clifford

  	
   

  
	
   

  	
  Its

  	
  Chairman and CEO

  	
   

  

 

11

 

APPENDIX A TO

 

CHANGE OF CONTROL AGREEMENT

 

For purposes of this
Agreement, a “Change of Control” shall mean:

 

(a)                                  A “Board Change” which, for purposes of this
Agreement, shall have occurred if a majority (excluding vacant seats) of the
seats on the Company’s Board are occupied by individuals who were neither (i)
nominated by a majority of the Incumbent Directors nor (ii) appointed by
directors so nominated.  An “Incumbent
Director” is a member of the Board who has been either (i) nominated by a
majority of the directors of the Company then in office or (ii) appointed by
directors so nominated, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person (as hereinafter defined) other than the
Board; or

 

(b)                                 The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of (i) 20% or more of either (A) the then
outstanding shares of Common Stock of the Company (the “Outstanding Company
Common Stock”) or (B) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”), in the case of either
(A) or (B) of this clause (i), which acquisition is not approved in advance by
a majority of the Incumbent Directors, or (ii) 33% or more of either (A) the
Outstanding Company Common Stock or (B) the Outstanding Company Voting
Securities, in the case of either (A) or (B) of this clause (ii), which
acquisition is approved in advance by a majority of the Incumbent Directors; provided,
however, that the following acquisitions shall not constitute a Change
of Control:  (x) any acquisition by the
Company, (y) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company or (z) any acquisition by any corporation pursuant to a reorganization,
merger or consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (i), (ii) and (iii) of
subsection (c) of this Appendix A are satisfied; or

 

(c)                                  Approval by the stockholders of the Company
of a reorganization, merger or consolidation, in each case, unless, immediately
following such reorganization, merger or consolidation, (i) more than 60% of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and the Outstanding Company Voting Securities immediately
prior to such reorganization, merger or consolidation in substantially the same
proportion as their ownership immediately prior to such reorganization, merger
or consolidation of the Outstanding Company Common Stock and the Outstanding
Company Voting Securities, as the case may be, (ii) no Person (excluding the Company,
any employee benefit plan (or related trust) of the Company or such corporation
resulting from such reorganization, merger or consolidation and any Person
beneficially owning, immediately prior to such

 

12

 

reorganization, merger or
consolidation, directly or indirectly, 33% or more of the Outstanding Company
Common Stock or the Outstanding Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 33% or more of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation or the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors, and (iii) at least a majority of the
members of the board of directors of the corporation resulting from such
reorganization, merger or consolidation were the Incumbent Directors at the
time of the execution of the initial agreement providing for such
reorganization, merger or consolidation; or

 

(d)                                 Approval by the stockholders of the Company
of (i) a complete liquidation or dissolution of the Company or (ii) the sale or
other disposition of all or substantially all the assets of the Company, other
than to a corporation with respect to which immediately following such sale or
other disposition, (A) more than 60% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Company Common Stock
and the Outstanding Company Voting Securities immediately prior to such sale or
other disposition in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities, as the case may be,
(B) no Person (excluding the Company, any employee benefit plan (or related
trust) of the Company or such corporation and any Person beneficially owning,
immediately prior to such sale or other disposition, directly or indirectly,
33% or more of the Outstanding Company Common Stock or the Outstanding Company
Voting Securities, as the case may be) beneficially owns, directly or
indirectly, 33% or more of, respectively, the then outstanding shares of common
stock of such corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the
election of directors and (C) at least a majority of the members of the board
of directors of such corporation were approved by a majority of the Incumbent
Directors at the time of the execution of the initial agreement or action of
the Board providing for such sale or other disposition of assets of the
Company.

 

13

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"}]]