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EXHIBIT 99.2
PROCYTE CORPORATION
1998 NONEMPLOYEE DIRECTOR STOCK PLAN
Section 1. Purposes
The purposes of the ProCyte Corporation 1998 Nonemployee Director Stock
Plan (the "Plan") are to attract and retain the services of experienced and
knowledgeable nonemployee directors of ProCyte Corporation (the "Corporation")
and to provide an incentive for such directors to increase their proprietary
interests in the Corporation's long-term success and progress.
Section 2. Definitions
When used herein, the following terms shall have the respective meanings
set forth below:
(a) "Board" or "Board of Directors" means the Board of Directors of the
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Corporation.
(b) "Common Stock" means the common stock, $0.01 par value, of the
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Corporation.
(c) "Corporation" means ProCyte Corporation, a Washington corporation, or
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any successor corporation as provided in Section 13.
(d) "Employee" means any employee of the Corporation or of any Subsidiary.
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Directors who are not otherwise employed by the Corporation or any Subsidiary
shall not be considered employees for purposes of the Plan.
(e) "Excess Quarterly Retainer" has the meaning set forth in Section 7(a).
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(f) "Market Price" means the closing sales price on the National
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Association of Securities Dealers Automated Quotation System or the principal
exchange on which shares of such Common Stock are then traded for a specified
day.
(g) "Nonemployee Director" or "Participant" means any person who is
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elected or appointed to the Board of Directors and who is not an Employee.
(h) "Plan" means the Corporation's 1998 Nonemployee Director Stock Plan as
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set forth herein, as it may be amended from time to time.
(i) "Plan Administrator" means the Board or a committee whose members meet
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the requirements of Section 4(a), appointed from time to time by the Board to
administer the Plan.
(j) "Quarterly Retainer" means the quarterly retainer payable to all
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Nonemployee Directors (exclusive of any per-meeting fees, fees for serving as
chairman of the Board or a committee, or expense reimbursements). The Quarterly
Retainer shall be prorated based on the number of calendar months (including
partial calendar months) a director has served as a Nonemployee Director during
the fiscal quarter for which the Quarterly Retainer is payable.
(k) "Stock Payment" means the fixed portion of the Quarterly Retainer to
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be paid to Nonemployee Directors in shares of Common Stock rather than cash for
services rendered as a director of the Corporation as provided in Section 6 and
that portion of the Quarterly Retainer to be paid to Nonemployee Directors in
shares of Common Stock resulting from the election specified in Section 7.
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(l) "Subsidiary" means any corporation that is a "subsidiary corporation"
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of the Corporation, as that term is defined in Section 424(f) of the Internal
Revenue Code of 1986, as amended.
Section 3. Shares Subject to the Plan
Subject to adjustment in accordance with Section 9 hereof, the maximum
aggregate number of shares of Common Stock that may be issued under the Plan is
400,000 shares. The shares shall be shares presently authorized but unissued or
subsequently acquired by the Corporation.
Section 4. Administration of the Plan
(a) The Plan shall be administered by the Board or by a committee
appointed by the Board consisting of one or more persons who are not eligible to
participate in the Plan (the "Plan Administrator"). Members of such committee
need not be members of the Board. The Corporation shall pay all costs of
administration of the Plan.
(b) Subject to the express provisions of the Plan, the Plan Administrator
has and may exercise such powers and authority as may be necessary or
appropriate for the Plan Administrator to carry out its functions under the
Plan. Without limiting the generality of the foregoing, the Plan Administrator
shall have full power and authority to (i) determine all questions of fact that
may arise under the Plan; (ii) interpret the Plan and make all other
determinations necessary or advisable for the administration of the Plan; and
(iii) prescribe, amend and rescind rules and regulations relating to the Plan,
including, without limitation, any rules the Plan Administrator determines are
necessary or appropriate to ensure that the Corporation and the Plan will be
able to comply with all applicable provisions of any federal, state or local
law, including securities laws. All interpretations, determinations and actions
by the Plan Administrator shall be final, conclusive and binding upon all
parties. Any action of the Plan Administrator with respect to the
administration of the Plan shall be taken pursuant to a majority vote at a
meeting of the Plan Administrator (at which members may participate by
telephone) or by the unanimous written consent of its members.
Section 5. Eligibility to Participate in the Plan
All Nonemployee Directors shall participate in the Plan, subject to the
conditions and limitations of the Plan, so long as they remain eligible to
participate in the Plan as set forth below.
Section 6. Determination of Quarterly Retainers and Stock Payments
(a) The Board, in its sole discretion, shall determine the Quarterly
Retainer for all Nonemployee Directors.
(b) Each Nonemployee Director in office immediately following the 1998
Annual Meeting of Shareholders and thereafter at any time during a calendar year
shall receive a Stock Payment as all or as a portion of the Quarterly Retainer
payable to such director. Stock Payments shall be made with respect to
Quarterly Retainers payable on or after July 1, 1998. The number of shares of
Common Stock to be issued to each Participant as a Stock Payment shall be
determined by dividing the average Market Price of the Common Stock for the last
20 business days of a fiscal quarter into the first $3,000 of any Quarterly
Retainer payable to such Participant for that fiscal quarter; provided, however,
that no fractional shares shall be issued, and in lieu thereof the number of
shares in the Stock Payment shall be rounded to the nearest whole number of
shares. Certificates evidencing the shares of Common Stock constituting Stock
Payments shall be registered in the respective names of, or as directed by, the
Participants and shall be issued to each Participant. The Stock Payment shall
be made as soon as possible following a fiscal quarter end.
(c) Subject to Section 7, any portion of a Quarterly Retainer in excess of
$3,000 shall be paid to Nonemployee Directors in cash at such times and in such
manner as may be determined by the Board.
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(d) Notwithstanding the foregoing, for future fiscal quarters, the Plan
Administrator may increase or decrease the portion of a Quarterly Retainer that
shall be paid in shares of Common Stock pursuant to Sections 6(b) and 6(c).
7. Election to Increase Amount of Stock Payment
(a) In lieu of receiving the cash portion of any Quarterly Retainer (the
"Excess Quarterly Retainer"), a Participant may make a written election to
reduce up to 100% of all Excess Quarterly Retainers to be paid during a calendar
year by a specified percentage or dollar amount and have such amount applied
toward the purchase of additional shares of Common Stock.
(b) The election shall be made on a form provided by the Plan
Administrator and must be returned to the Plan Administrator on a date the Plan
Administrator shall establish, but in any case no later than the first day of
the calendar year to which the election relates or within 60 days after the
effective date of the Plan with respect to the Excess Quarterly Retainers or
within 60 days after the Participant first becomes a Nonemployee Director. The
election form shall state the amount by which the Participant desires to reduce
the cash portion of his or her Quarterly Retainers for the calendar year, which
shall be applied toward the purchase of Common Stock in the same manner and on
the same dates that the Stock Payments are made pursuant to Section 6; provided,
however, that no fractional shares may be purchased, and in lieu thereof the
number of shares in the Stock Payment shall be rounded to the nearest whole
number of shares. No Participant shall be allowed to change or revoke any
election for the relevant calendar year, but may change his or her election for
any subsequent calendar year.
8. Shareholder Rights
Nonemployee Directors shall not be deemed for any purpose to be, or have
rights as, shareholders of the Corporation with respect to any shares of Common
Stock except as and when such shares are issued and then only from the date of
the certificate therefor. No adjustment shall be made for dividends or
distributions or other rights for which the record date precedes the date of
such stock certificate.
9. Adjustment for Changes in Capitalization
If the outstanding shares of Common Stock of the Corporation are increased,
decreased or exchanged for a different number or kind of shares or other
securities, or if additional shares or new or different shares or other
securities are distributed with respect to such shares of Common Stock or other
securities, through merger, consolidation, sale of all or substantially all of
the property of the Corporation, reorganization or recapitalization,
reclassification, stock dividend, stock split, reverse stock split, combinations
of shares, rights offering or other distribution with respect to such shares of
Common Stock or other securities or other change in the corporate structure or
shares of Common Stock, the maximum number of shares and/or the kind of shares
that may be issued under the Plan shall be appropriately adjusted by the Plan
Administrator. Any determination by the Plan Administrator as to any such
adjustment will be final, binding and conclusive. The maximum number of shares
issuable under the Plan as a result of any such adjustment shall be rounded down
to the nearest whole share.
10. Continuation of Directors in Same Status
Nothing in the Plan or in any instrument executed pursuant to the Plan, and
no action taken pursuant to the Plan, shall be construed as creating or
constituting evidence of any agreement or understanding, express or implied,
that a Nonemployee Director will have any right to continue as a director or in
any other capacity for any period of time or at a particular retainer or other
rate of compensation.
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11. Nontransferability of Rights
No Participant shall have the right to assign the right to receive any
Stock Payment or any other right or interest under the Plan, contingent or
otherwise, or to cause or permit any encumbrance, pledge or charge of any nature
to be imposed on any such Stock Payment (prior to the issuance of stock
certificates evidencing such Stock Payment) or any such right or interest.
12. Amendment and Termination of Plan
(a) The Board will have the power, in its discretion, to amend, suspend or
terminate the Plan at any time.
(b) No amendment, suspension or termination of the Plan will, without the
consent of the Participant, alter, terminate, impair or adversely affect any
right or obligation under any Stock Payment previously granted under the Plan to
such Participant, unless such amendment, suspension or termination is required
by applicable law.
13. Successors
All obligations of the Corporation under the Plan shall be binding on any
successor to the Corporation, whether the existence of such successor is the
result of a direct or indirect purchase, merger, consolidation or otherwise, of
all or substantially all of the business and/or assets of the Corporation.
14. Severability
In the event any provision of the Plan shall be held illegal or invalid for
any reason, the illegality or invalidity shall not affect the remaining parts of
the Plan, and the Plan shall be construed and enforced as if the illegal or
invalid provision had not been included.
15. Governing Law
The Plan shall be construed in accordance with, and governed by, the laws
of the state of Washington.
16. Effective Date and Duration of the Plan
The Plan shall become effective as of the date it is approved by the
Corporation's shareholders. The Plan shall remain in effect, subject to the
right of the Board to terminate the Plan at any time pursuant to Section 12,
until all shares subject to the Plan have been purchased or acquired according
to the Plan's provisions.
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