**Exhibit 10.15**

 

**PROCYTE CORPORATIONKEY EXECUTIVE SEVERANCE AGREEMENT**

 

ThisKey Executive Severance Agreement (this “Agreement”), dated and effective as ofJuly 1, 2004, is between PROCYTE CORPORATION, a Washington corporation(the “Company”), and JOHN F. CLIFFORD (the “Executive”).

 

TheBoard of Directors of the Company (the “Board”) has determined that it is inthe best interests of the Company and its stockholders to ensure that theCompany will have the continued dedication of the Executive, notwithstandingthe fact that the Executive does not have any form of traditional employmentcontract or other assurance of job security. The Board believes it is imperative to diminish any distraction of theExecutive arising from the personal uncertainty and insecurity that arises inthe absence of any assurance of job security by providing the Executive withreasonable compensation and benefit arrangements in the event of termination ofExecutive’s employment by the Company under certain defined circumstances.

 

Inorder to accomplish these objectives, the Board has caused the Company to enterinto this Agreement.

 

**1.****                                     ****TERM**

 

Theterm of this Agreement (“Term”) shall be for a period of two (2) years from thedate of this Agreement as first entered above, at which time this Agreementshall terminate without further action by either the Company or the Executive.

 

**2.****                                     ****EMPLOYMENT**

 

TheExecutive and the Company acknowledge that, except as may otherwise be providedunder any other written agreement between the Executive and the Company, theemployment of the Executive by the Company or by any affiliated or successorcompany is “at will” and may be terminated by either the Executive or theCompany or its affiliated companies at any time with or without cause, subjectto the termination payments prescribed herein.

 

**3.****                                     ****ATTENTION AND EFFORT**

 

Duringany period of time that Executive remains in the employ of the Company, andexcluding any periods of vacation and sick leave to which the Executive isentitled, the Executive will devote all of his productive time, ability,attention and effort to the business and affairs of the Company and thedischarge of the responsibilities assigned to him hereunder, and will use hisreasonable best efforts to perform faithfully and efficiently such responsibilities.  It shall not be a violation of this Agreementfor the Executive to (a) serve on corporate, civic or charitable boards orcommittees, (b) deliver lectures, fulfill speaking engagements or teach at educationalinstitutions, and (c) manage personal investments, so long as such activitiesdo not significantly interfere with the performance of the Executive’sresponsibilities in accordance with this Agreement.  It is expressly understood and agreed that tothe extent any such activities have been conducted by the Executive prior tothe Term, the continued conduct of such activities (or the conduct ofactivities similar in nature and scope thereto) during the Term shall

 

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not thereafter be deemed to interfere with theperformance of the Executive’s responsibilities to the Company.

 

**4.****                                     ****TERMINATION**

 

Duringthe Term, employment of the Executive may be terminated as follows but, in anycase, the nondisclosure provisions set forth in Section 7 hereof shallsurvive the termination of this Agreement and the termination of theExecutive’s employment with the Company:

 

**4.1****                              ****By the Company or theExecutive**

 

Atany time during the Term, the Company may terminate the employment of theExecutive with or without Cause (as defined below), and the Executive mayterminate his employment for Good Reason (as defined below) or for any reason,upon giving Notice of Termination (as defined below).

 

**4.2****                              ****Automatic Termination**

 

ThisAgreement and the Executive’s employment shall terminate automatically upon thedeath or Total Disability of the Executive. The term “Total Disability” as used herein shall mean the Executive’sinability (with such accommodation as may be required by law and which placesno undue burden on the Company), as determined by a physician selected by theCompany and acceptable to the Executive, to perform the Executive’s essentialduties for a period or periods aggregating 120 calendar days in any 12-monthperiod as a result of physical or mental illness, loss of legal capacity or anyother cause beyond the Executive’s control, unless the Executive is granted aleave of absence by the Board.

 

**4.3****                              ****Notice of Termination**

 

Anytermination by the Company or by the Executive during the Term shall becommunicated by Notice of Termination to the other party given in accordancewith Section 9 hereof.  The term“Notice of Termination” shall mean a written notice which (a) indicates thespecific termination provision in this Agreement relied upon and (b) to theextent applicable, sets forth in reasonable detail the facts and circumstancesclaimed to provide a basis for termination of the Executive’s employment underthe provision so indicated.  The failureby the Executive or the Company to set forth in the Notice of Termination anyfact or circumstance which contributes to a showing of Good Reason or Causeshall not waive any right of the Executive or the Company hereunder or precludethe Executive or the Company from asserting such fact or circumstance inenforcing the Executive’s or the Company’s rights hereunder.

 

**4.4****                              ****Date of Termination**

 

“Dateof Termination” means (a) if the Executive’s employment is terminated by reasonof death, the last day of the calendar month in which the Executive’s deathoccurs, (b) if the Executive’s employment is terminated by reason of TotalDisability, immediately upon a determination by the Company of the Executive’sTotal Disability, and (c) in all other cases, five days after the date ofpersonal delivery or mailing of the Notice of Termination.  The Executive’s employment and performance ofservices will continue during such five-day period; provided, however,that the Company may, upon notice to the Executive and without reducing theExecutive’s compensation during such period, excuse the Executive from any orall of his duties during such period.

 

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**5.****                                     ****TERMINATION PAYMENTS**

 

Inthe event of termination of the Executive’s employment during the Term, allcompensation and benefits shall terminate except as specifically provided inthis Section 5.

 

**5.1****                              ****Termination by the CompanyOther Than for Cause or by the Executive for Good Reason**

 

Ifduring the Term the Company terminates the Executive’s employment other thanfor Cause or the Executive terminates his employment for Good Reason, theExecutive shall be entitled to:

 

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

 

(i)                                     the Executive’s then current annual base salary through the Date ofTermination to the extent not theretofore paid; and

 

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

 

(b)                                 for one (1) year after the Date ofTermination, the Company shall pay the Executive’s premiums for healthinsurance benefit continuation for Executive and his family members, ifapplicable, which the Company provides to the Executive under the provisions ofthe federal Comprehensive Omnibus Budget Reconciliation Act of 1986, as amended(“COBRA”) to the extent that the Company would have paid such premiums had theExecutive remained employed by the Company (such continued payment ishereinafter referred to as “COBRA Continuation”); and

 

(c)                                  an amount as severance pay equal to one (1)times the Executive’s then current annual base salary for the fiscal year inwhich the Date of Termination occurs, subject to payment and potentialreduction as set forth in Section 5.5 hereof.

 

**5.2****                              ****Termination for Cause orOther Than for Good Reason**

 

Ifduring the Term the Executive’s employment shall be terminated by the Companyfor Cause or by the Executive for other than Good Reason, this Agreement shallterminate without further obligation on the part of the Company to theExecutive, other than the Company’s obligation to pay the Executive the AccruedObligations to the extent theretofore unpaid.

 

**5.3****                              ****Expiration of Term**

 

Inthe case of a termination of the Executive’s employment at the expiration ofthe Term, this Agreement shall terminate without further obligation on the partof the Company to the Executive, other than the Company’s obligation to pay theExecutive the Accrued Obligations.

 

**5.4****                              ****Termination Because of Deathor Total Disability**

 

Ifthe Executive’s employment is terminated during the Term by reason of theExecutive’s death or Total Disability, this Agreement shall terminateautomatically without further obligation on the part of the Company to theExecutive or his legal representatives under this Agreement, other than theCompany’s obligation to pay the Executive the Accrued Obligations (which shallbe paid to the

 

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Executive’sestate or beneficiary, as applicable in the case of the Executive’s death), andto provide COBRA Continuation.

 

**5.5****                              ****Payment Schedule andOffset for Other Earnings**

 

Allpayments of Accrued Obligations, or any portion thereof payable pursuant tothis Section 5, shall be made to the Executive within ten working days ofthe Date of Termination.  Any severancepayments payable to the Executive pursuant to Section 5.1(c) shall be madeto the Executive in the form of salary continuation, payable at normal payrollintervals during the one (1) year period following the Date of Termination (the“Payment Period”), and subject to offset for other earnings received by theExecutive as follows:

 

(a)                                  The Executive shall have no affirmative dutyto seek other employment or otherwise mitigate lost earnings during the PaymentPeriod;

 

(b)                                 The Executive shall disclose to the Companyany earnings received (or which the Executive had the right to receive) fromemployment, consulting or performance of other personal services during thePayment Period, and the source(s) of such earnings; and

 

(c)                                  The Company, in each payroll period that aseverance payment is due, shall have the right to offset on a dollar-for-dollarbasis all such earnings which the Executive received or had the right toreceive during that payroll period.

 

**5.6****                              ****Cause**

 

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

 

(a)                                  A clear refusal to carry out any materiallawful duties of the Executive or any directions of the Board or seniormanagement of the Company reasonably consistent with those duties;

 

(b)                                 Persistent failure to carry out any lawfulduties of the Executive or any directions of the Board or senior managementreasonably consistent with those duties, provided Executive has been givenreasonable notice and opportunity to correct any such failure;

 

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

 

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

 

(e)                                  Any other material violation of any provisionof this Agreement by the Executive, subject to the notice and opportunity tocure requirements of Section 8.

 

**5.7****                              ****Good Reason**

 

Forpurposes of this Agreement, “Good Reason” means

 

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(a)                                  Reduction of the Executive’s annual basesalary to a level more than fifteen percent below the level in effect on thedate of this Agreement, regardless of any change in the Executive’s duties orresponsibilities;

 

(b)                                 The Company’s requiring the Executive to bebased at any office or location more than thirty (30) miles from the Company’scurrent location in Kirkland, Washington;

 

(c)                                  Any failure by the Company to comply with andsatisfy Section 10 hereof, provided that the Company’s successor hasreceived at least ten days’ prior written notice from the Company or theExecutive of the requirements of Section 10 hereof; or

 

(d)                                 Any other material violation of any provisionof this Agreement by the Company, subject to the notice and opportunity to curerequirements of Section 8.

 

**5.8****                              ****Excess Parachute Limitation**

 

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

 

**6.****                                     ****REPRESENTATIONS, WARRANTIESAND OTHER CONDITIONS**

 

Inorder to induce the Company to enter into this Agreement, the Executiverepresents and warrants to the Company as follows:

 

**6.1****                              ****Health**

 

TheExecutive is in good health and knows of no physical or mental disabilitywhich, with any accommodation which may be required by law and which places noundue burden on the Company, would prevent him from fulfilling his obligationshereunder.  The Executive agrees, if theCompany requests, to submit to reasonable periodic medical examinations by aphysician or physicians designated by, paid for and arranged by theCompany.  The Executive agrees that theexamination’s medical report shall be provided to the Company.

 

**6.2****                              ****No Violation of OtherAgreements**

 

TheExecutive represents that neither the execution nor the performance of thisAgreement by the Executive will violate or conflict in any way with any otheragreement by which the Executive may be bound.

 

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**7.****                                     ****NONDISCLOSURE; RETURN OFMATERIALS**

 

**7.1****                              ****Nondisclosure**

 

Exceptas required by his employment with the Company, the Executive will not, at anytime 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 ortrade secret information without the prior written consent of the Company.  The Executive understands that the Companywill be relying on this covenant in continuing the Executive’s employment,paying him compensation, granting him any promotions or raises, or entrustinghim with any information which helps the Company compete with others.

 

**7.2****                              ****Return of Materials**

 

Alldocuments, records, notebooks, notes, memoranda, drawings or other documentsmade or compiled by the Executive at any time while employed by the Company, orin his possession, including any and all copies thereof, shall be the propertyof the Company and shall be held by the Executive in trust and solely for thebenefit of the Company, and shall be delivered to the Company by the Executiveupon termination of employment or at any other time upon request by theCompany.

 

**8.****                                     ****NOTICE AND CURE OF BREACH**

 

Whenevera breach of this Agreement by either party is relied upon as justification forany action taken by the other party pursuant to any provision of thisAgreement, other than clause (a), (b), (c) or (d) of Section 5.6 hereof,before such action is taken, the party asserting the breach of this Agreementshall give the other party at least ten days’ prior written notice of theexistence and the nature of such breach before taking further action hereunderand shall give the party purportedly in breach of this Agreement theopportunity to correct such breach during the ten-day period.

 

**9.****                                     ****FORM OF NOTICE**

 

Everynotice required by the terms of this Agreement shall be given in writing byserving the same upon the party to whom it was addressed personally or byregistered or certified mail, return receipt requested, at the address setforth below or at such other address as may hereafter be designated by noticegiven in compliance with the terms hereof:

 
| If  to the Executive: |   | John  F. Clifford                   |
|-----------------------|--------|-------------------------------------|
|                  |   |                                |
|                  |   |                                |
|                  |   |                                |
| If  to the Company:   |   | ProCyte  Corporation                |
|                  |   | 12040  115th Avenue N.E., Suite 210 |
|                  |   | Kirkland,  Washington 98034         |
|                  |   | Attn:  Corporate Secretary     |
|                  |   |                                |
| With  a copy to:      |   | Perkins  Coie LLP                   |
|                  |   | Attn:  James R. Lisbakken      |
|                  |   | 1201  Third Avenue, 40th Floor      |
|                  |   | Seattle,  WA  98101-3099       |

 

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or such other address as shall be provided inaccordance with the terms hereof.  Exceptas set forth in Section 4.4 hereof, if notice is mailed, such notice shallbe effective upon mailing.

 

**10.****                              ****ASSIGNMENT**

 

ThisAgreement is personal to the Executive and shall not be assignable by theExecutive.

 

TheCompany shall assign to and require any successor (whether direct or indirect,by purchase, merger, consolidation or otherwise) to all or substantially allthe business and/or assets of the Company to assume expressly and agree toperform this Agreement in the same manner and to the same extent that theCompany would be required to perform it if no such succession had takenplace.  As used in this Agreement,“Company” shall mean ProCyte Corporation and any affiliated company orsuccessor to its business and/or assets as aforesaid which assumes and agreesto perform this Agreement by contract, operation of law, or otherwise; and aslong as such successor assumes and agrees to perform this Agreement, thetermination of Executive’s employment by one such entity and the immediatehiring and continuation of the Executive’s employment by the succeeding entityshall not be deemed to constitute a termination or trigger any severanceobligation under this Agreement.  All theterms and provisions of this Agreement shall be binding upon and inure to thebenefit of and be enforceable by the parties hereto and their respectivesuccessors and permitted assigns.

 

**11.****                              ****WAIVERS**

 

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

 

**12.****                              ****AMENDMENTS IN WRITING**

 

Noamendment, modification, waiver, termination or discharge of any provision ofthis 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 theExecutive, and each such amendment, modification, waiver, termination ordischarge shall be effective only in the specific instance and for the specificpurpose for which given.  No provision ofthis Agreement shall be varied, contradicted or explained by any oralagreement, course of dealing or performance or any other matter not set forthin an agreement in writing and signed by the Company and the Executive.

 

**13.****                              ****APPLICABLE LAW**

 

ThisAgreement shall in all respects, including all matters of construction,validity and performance, be governed by, and construed and enforced inaccordance with, the laws of the State of Washington, without regard to anyrules governing conflicts of laws.

 

**14.****                              ****ARBITRATION; ATTORNEYS’ FEES**

 

Exceptin connection with enforcing Section 7 of this Agreement, for which legaland equitable remedies may be sought in a court of law, any dispute arisingunder this Agreement shall be subject to arbitration.  The arbitration proceeding shall be conductedin accordance with the Commercial

 

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ArbitrationRules of the American Arbitration Association then in effect, conducted by onearbitrator either mutually agreed upon or selected in accordance with the AAARules.  The arbitration shall beconducted in King County, Washington under the jurisdiction of the Seattleoffice of the American Arbitration Association. The arbitrator shall have authority only to interpret and apply theprovisions of this Agreement, and shall have no authority to add to, subtractfrom, or otherwise modify the terms of this Agreement.  Any demand for arbitration must be madewithin sixty (60) days of the event(s) giving rise to the claim that thisAgreement has been breached.  Thearbitrator’s decision shall be final and binding, and each party agrees to bebound to by arbitrator’s award subject only to an appeal therefrom inaccordance with the laws of the State of Washington.  Either party may obtain judgment upon thearbitrator’s award in the Superior Court of King, County, Washington.

 

Ifit becomes necessary to pursue or defend any legal proceeding, whether inarbitration or court, in order to resolve a dispute arising under thisAgreement, the prevailing party in any such proceeding shall be entitled torecover its reasonable costs and attorneys’ fees.

 

**15.****                              ****SEVERABILITY**

 

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

 

**16.****                              ****COORDINATION WITH CHANGE OFCONTROL AGREEMENT**

 

TheCompany and the Executive are contemporaneously entering into a Change ofControl Agreement dated as of the date hereof (the “Change of ControlAgreement”), which agreement provides for certain forms of severance andbenefit payments in the event of termination of Executive’s employment undercertain defined circumstances.  ThisAgreement is in addition to the Change of Control Agreement, providing certainassurances to the Executive in circumstances that the Change of ControlAgreement does not cover, and in no way supersedes or nullifies the Change ofControl Agreement.  Nevertheless, it ispossible that a termination of employment by the Company or by the Executivemay fall within the scope of both agreements. In such event, payments made to Executive under Section 5.1 hereofshall be coordinated with payments made to Executive under Section 8.1 ofthe Change of Control Agreement as follows:

 

(a)                                  Accrued Obligations under this Agreement neednot be paid if already paid as Accrued Obligations under the Change of ControlAgreement;

 

(b)                                 COBRA Continuation under this Agreement neednot be provided if COBRA Continuation is provided for at least as long a periodof time under the Change of Control Agreement; and

 

(c)                                  The severance payment required underSection 5.1(c) of this Agreement need not be paid if a severance paymentis made under Section 8.1(c) of the Change of Control Agreement.

 

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**17.****                              ****ENTIRE AGREEMENT**

 

Exceptas described in Section 16 hereof, this Agreement constitutes the entireagreement between the Company and the Executive with respect to the subjectmatter hereof, and all prior or contemporaneous oral or written communications,understandings or agreements between the Company and the Executive with respectto such subject matter, including, but not limited to, that certain KeyExecutive Severance Agreement between the Company and the Executive dated as ofFebruary 19, 1997 and all amendments thereto, are hereby superseded andnullified in their entireties; provided, however, that the ProprietaryInformation and Invention Agreement between the Executive and the Company shallcontinue in full force and effect to the extent not superseded bySection 10 hereof.

 

**18.****                              ****WITHHOLDING**

 

TheCompany may withhold from any amounts payable under this Agreement suchfederal, state or local taxes as shall be required to be withheld pursuant toany applicable law or regulation.

 

**19.****                              ****COUNTERPARTS**

 

ThisAgreement may be executed in counterparts, each of which counterpart shall bedeemed an original, but all of which together shall constitute one and the sameinstrument.

 

INWITNESS WHEREOF, the parties have executed and entered into this Agreementeffective on the date first set forth above.

 

 
| **PROCYTE CORPORATION**                  | **EXECUTIVE** |
|------------------------------------------|---------------|
| ** **                               | ** **    |
| ** **                               | ** **    |
| By:  /s/  Matt L. Leavitt |          | /s/  John F. Clifford | ** ** |
|                                     |          |   |
| Name:  Matt  L. Leavitt        |          |   |
| Chair of Compensation Committee          |          |

 

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