Exhibit 10.19


 


INDEMNITY AGREEMENT


 


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


 


RECITALS


 


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


 


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


 


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


 


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


 


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


 


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


 

















 


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


 


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


 


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


 


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


 


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


 


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


 


THE PARTIES AGREE AS
FOLLOWS:


 


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


 


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


 


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


 


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


 

















 


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


 


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


 


3.             Maintenance of Liability Insurance.


 


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


 


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


 


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


 


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


 


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


 

















 


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


 


7.             Notice and Other Indemnification Procedures.


 


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


 


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


 


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


 


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


 


8.             Determination of Right to Indemnification.


 


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


 


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


 

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 

















 


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


 


 


	
   

  	
  PROCYTE CORPORATION

  
	
   

  	
   

  
	
   

  	
  [Address:]

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  John F. Clifford

  	
   

  
	
   

  	
   

  	
  John
  F. Clifford

  
	
   

  	
   

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  INDEMNITEE

  
	
   

  	
   

  
	
   

  	
  [Address:]

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/  Robert W. Benson

  	
   

  
	
   

  	
   

  	
  Robert W. Benson