Exhibit 10.15


 


PROCYTE CORPORATION

KEY EXECUTIVE SEVERANCE AGREEMENT


 


This
Key Executive Severance Agreement (this “Agreement”), dated and effective as of
July 1, 2004, is between PROCYTE CORPORATION, a Washington corporation
(the “Company”), and JOHN F. CLIFFORD (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 fact that the Executive does not have any form of traditional employment
contract or other assurance of job security. 
The Board believes it is imperative to diminish any distraction of the
Executive arising from the personal uncertainty and insecurity that arises in
the absence of any assurance of job security by providing the Executive with
reasonable compensation and benefit arrangements in the event of termination of
Executive’s employment by the Company under certain defined circumstances.


 


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


 


1.                                      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.


 


2.                                      EMPLOYMENT


 


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 by any affiliated or successor
company 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, subject
to the termination payments prescribed herein.


 


3.                                      ATTENTION AND EFFORT


 


During
any period of time that Executive remains in the employ of the Company, and
excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive will devote all of his productive time, ability,
attention and effort to the business and affairs of the Company and the
discharge of the responsibilities assigned to him hereunder, and will use his
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 Term, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) during the Term shall


 


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


 


4.                                      TERMINATION


 


During
the Term, employment of the Executive may be terminated as follows but, in any
case, the nondisclosure provisions set forth in Section 7 hereof shall
survive the termination of this Agreement and the termination of the
Executive’s employment with the Company:


 


4.1                               By the Company or the
Executive


 


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


 


4.2                               Automatic Termination


 


This
Agreement and the Executive’s employment 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 Executive’s essential
duties 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.


 


4.3                               Notice of Termination


 


Any
termination by the Company or by the Executive during the Term shall be
communicated by Notice of Termination to the other party given in accordance
with Section 9 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.


 


4.4                               Date of Termination


 


“Date
of Termination” means (a) if the Executive’s employment is terminated by reason
of death, the last day 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 his duties during such period.


 


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5.                                      TERMINATION PAYMENTS


 


In
the event of termination of the Executive’s employment during the Term, all
compensation and benefits shall terminate except as specifically provided in
this Section 5.


 


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


 


If
during the Term the Company terminates the Executive’s employment other than
for Cause or the Executive terminates his 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 then current annual base salary through the Date of
Termination to the extent not theretofore paid; and


 


(ii)                                  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 (1) year after the Date of
Termination, the Company shall pay the Executive’s premiums for health
insurance benefit continuation for Executive and his 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 Executive’s then current annual base salary for the fiscal year in
which the Date of Termination occurs, subject to payment and potential
reduction as set forth in Section 5.5 hereof.


 


5.2                               Termination for Cause or
Other Than for Good Reason


 


If
during the Term 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 the Accrued
Obligations to the extent theretofore unpaid.


 


5.3                               Expiration of Term


 


In
the case of a termination of the Executive’s employment at the expiration of
the Term, 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.


 


5.4                               Termination Because of Death
or Total Disability


 


If
the Executive’s employment is terminated during the Term 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 his legal representatives under this Agreement, other than the
Company’s obligation to pay the Executive the Accrued Obligations (which shall
be paid to the


 


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Executive’s
estate or beneficiary, as applicable in the case of the Executive’s death), and
to provide COBRA Continuation.


 


5.5                               Payment Schedule and
Offset for Other Earnings


 


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


 


(a)                                  The Executive shall have no affirmative duty
to seek other employment or otherwise mitigate lost earnings during the Payment
Period;


 


(b)                                 The Executive shall disclose to the Company
any earnings received (or which the Executive had the right to receive) from
employment, consulting or performance of other personal services during the
Payment Period, and the source(s) of such earnings; and


 


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


 


5.6                               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 reasonably consistent with those duties;


 


(b)                                 Persistent failure to carry out any lawful
duties of the Executive or any directions of the Board or senior management
reasonably consistent with those duties, 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 8.


 


5.7                               Good Reason


 


For
purposes of this Agreement, “Good Reason” means


 


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(a)                                  Reduction of the Executive’s annual base
salary to a level more than fifteen percent below the level in effect on the
date of this Agreement, regardless of any change in the Executive’s duties or
responsibilities;


 


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


 


(c)                                  Any failure by the Company to comply with and
satisfy Section 10 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 10 hereof; or


 


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


 


5.8                               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.


 


6.                                      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:


 


6.1                               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 him from fulfilling his 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.


 


6.2                               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.


 


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7.                                      NONDISCLOSURE; RETURN OF
MATERIALS


 


7.1                               Nondisclosure


 


Except
as required by his 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 him compensation, granting him any promotions or raises, or entrusting
him with any information which helps the Company compete with others.


 


7.2                               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 his 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.


 


8.                                      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 5.6 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.


 


9.                                      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:

  	
   

  	
  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 in
accordance with the terms hereof.  Except
as set forth in Section 4.4 hereof, if notice is mailed, such notice shall
be effective upon mailing.


 


10.                               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 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 succeeding entity
shall not be deemed to constitute a termination or trigger any severance
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.


 


11.                               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.


 


12.                               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.


 


13.                               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.


 


14.                               ARBITRATION; ATTORNEYS’ FEES


 


Except
in connection with enforcing Section 7 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


 


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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.


 


15.                               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.


 


16.                               COORDINATION WITH CHANGE OF
CONTROL AGREEMENT


 


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


 


(a)                                  Accrued Obligations under this Agreement need
not be paid if already paid as Accrued Obligations under the Change of Control
Agreement;


 


(b)                                 COBRA Continuation under this Agreement need
not be provided if COBRA Continuation is provided for at least as long a period
of time under the Change of Control Agreement; and


 


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


 


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17.                               ENTIRE AGREEMENT


 


Except
as described in Section 16 hereof, this Agreement 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 Key
Executive Severance Agreement between the Company and the Executive dated as of
February 19, 1997 and all amendments thereto, are hereby superseded and
nullified in their entireties; provided, however, 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.


 


18.                               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.


 


19.                               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.


 


IN
WITNESS WHEREOF, the parties have executed and entered into this Agreement
effective 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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