June 8, 2009
Exhibit 10.3
June 8, 2009
Xx. Xxxxx X. Xxxxx
00000 X. Xxxxxxxxxx
Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
00000 X. Xxxxxxxxxx
Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Re: First Amendment to Employment Agreement
Dear Xxxxx:
On March 30, 2007, you entered into a letter agreement with Zila, Inc. (the “Company”) with
respect to your employment (the “Agreement”) pursuant to which you are entitled to a payment if the
Company terminates your employment in certain limited circumstances. The Company has decided to
provide you with limited additional protection in the event that certain material adverse changes
are made to the terms of your employment with the Company. The Company proposes to amend the
Agreement as follows effective as of June 8, 2009:
Section 13 (Severance Benefits) of the Agreement is hereby amended and restated in its
entirety to read as follows:
13. Severance Benefits. If the Company terminates your employment
or if you terminate your employment for “Good Reason” (as defined
below), you shall be eligible to receive severance benefits in
accordance with the following:
13.1 Change in Control. If your employment is terminated (with
or Without Cause) by the Company or if you terminate your employment
for Good Reason because of a change in control of the Company
(“Change in Control”), you shall be entitled to receive severance
pay in (i) an amount equivalent to eighteen (18) months of your
annual base salary in effect on the date your employment is
terminated; and (ii) an amount equivalent to the maximum cash
bonus(es) (expressed as a percentage of your annual base salary in
effect on the date your employment is terminated) for which you
would have been eligible during the eighteen (18) months following
termination of your employment had your employment not terminated
and had you stayed in the position you occupied as of termination of
your employment, under any employee incentive bonus plan(s) in
effect on the date your employment is terminated. For purposes of
this Agreement, “Change in Control” shall be defined and governed by
the
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definition of “change in control” contained in the Stock Option
Plan, or such amended or restated stock option plan as may then be
in effect or, in the absence of such plan, in the last such plan
that was in effect. If the Company terminates your employment or
you terminate your employment for Good Reason within eighteen (18)
months of a Change in Control, a presumption shall arise that the
termination was because of a Change in Control. This presumption,
however, shall be rebutted if a preponderance of the evidence shows
that the reason for your termination was something other than a
Change in Control.
13.2 Termination Without Cause. If, for a reason other than a
Change in Control, the Company terminates your employment without
cause (“Without Cause”) or you terminate your employment for Good
Reason, you shall be entitled be entitled to receive severance pay
in an amount equivalent to eighteen (18) months of your annual base
salary in effect on the date your employment is terminated by the
Company or you terminate your employment for Good Reason. For
purposes of this Agreement, “Cause” shall mean (i) your failure to
correct a specific conduct or job-performance issue or issues about
which you have been informed in writing and given an opportunity to
correct; or (ii) conduct or job performance that the Company
believes is sufficiently willful and/or egregious that providing you
with written notice and an opportunity to correct is an inadvisable
business practice; or (iii) your inability to perform your job
(e.g., due to incapacity or death). If your employment terminates
for any other reason (with the exception of a termination because of
a Change in Control), such termination shall be deemed Without Cause
and this subpart 13.2 shall apply.
13.3 Definition of Good Reason. For purposes of this
Agreement, “Good Reason” means a termination of employment within
twelve (12) months following the occurrence of one or more of the
following circumstances without your express consent: (i) a
material diminution in your base compensation after June 8, 2009;
(ii) a material diminution in your authority, duties or
responsibilities; (iii) a material change in the geographic location
of your principal office; or (iv) any other action or inaction that
constitutes a material breach by the Company of this Agreement. You
must provide written notice to the Company of the existence
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of the Good Reason condition described in clauses (i)-(iv)
above within ninety (90) days of the initial existence of the
condition. Notwithstanding anything to the contrary, an event
described in clauses (i)-(iv) above will not constitute Good Reason
if, within thirty (30) days after you give the Company notice of the
occurrence or existence of an event that you believe constitutes
Good Reason, the Company has fully corrected such event.
13.4 Stock Options and Restricted Stock. If your employment is
terminated because of a Change in Control or Without Cause or you
terminate your employment for Good Reason, and upon expiration of
any revocation period contained in the release required by subpart
13.5 below, (i) any stock options granted prior to termination of
your employment shall be deemed immediately vested and exercisable
according to their terms; and (ii) all restrictions applicable to
any restricted stock awarded prior to termination shall be deemed
immediately lifted. (Together, the severance pay set forth above
and these stock benefits are the “Severance Benefits”).
13.5 Release Required. Severance Benefits will be provided
and/or take effect only if you provide the Company and its
affiliated entities and persons with a written release, in a form
acceptable to the Company, from legal liability. In no event will
any Severance Benefits be provided or take effect until such release
is executed and its revocation period (if any) under applicable law
has expired unexercised. You will receive the release within ten
(10) days of the date on which your employment terminates. If you
fail to execute the release within thirty (30) days of your receipt
of same, your right to execute the release, and your corresponding
right to Severance Benefits, will be extinguished.
13.6 No Other Right to Severance Benefits. Severance Benefits
will not be provided and/or take effect if you voluntarily resign
from your employment (other than for Good Reason), or your
employment terminates for a reason other than a Change in Control or
Without Cause, or you do not qualify for Severance Benefits pursuant
to this Agreement for any other reason.
13.7 Timing of Severance Pay. Any amounts payable to you
pursuant to subparts 13.1 or 13.2 of this Agreement that are not
subject to Section 409A of the Internal Revenue Code (the
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“Code”) shall be paid in a lump sum six (6) months plus one (1)
business day after termination of your employment (the “Payment
Date”). Since (and as long as) you are a “Specified Employee” as
defined in Treasury Regulation Section 1.409A-1(i), any amounts
payable to you pursuant to subparts 13.1 or 13.2 of this Agreement
that are subject to Section 409A of the Code must be delayed for a
period of six (6) months following your “Separation from Service” as
defined in Treasury Regulation Section 1.409A-1(h). Accordingly,
any amounts payable to you pursuant to subparts 13.1 or 13.2 of this
Agreement that are subject to Section 409A of the Code shall be paid
in a lump sum six (6) months plus one (1) business day after your
Separation from Service (the “409A Payment Date”). Should the rule
described in the preceding sentence result in a delay of payments to
you beyond the Payment Date, then the Company shall also pay you
interest accrued from the Payment Date to the 409A Payment Date at
the rate of interest announced by Bank of America, Arizona from time
to time as its prime rate. For purposes of this provision, the term
Specified Employee shall have the meaning set forth in Section
409A(2)(B)(i) of the Internal Revenue Code of 1986, as amended, or
any successor provision and the Treasury Regulations and rulings
issued thereunder.
13.8 Termination of Your Right to Severance Benefits. Your
right to receive Severance Benefits shall immediately terminate if
(i) you breach any contractual obligation you owe the Company or
violate any other promise or commitment you have made to the Company
or duty you owe the Company, (ii) you commence employment or other
engagement with any person or entity that competes with the Company
or its affiliated companies, or (iii) you solicit, induce, or
attempt to influence any employee of the Company or its affiliated
companies to terminate his or her employment.
This First Amendment amends only the provisions of the Agreement as set forth herein, and
those provisions not expressly amended by this First Amendment shall continue in full force and
effect. Notwithstanding the foregoing, this First Amendment shall supersede the provisions of the
Agreement to the extent those provisions are inconsistent with the provisions and the intent of
this First Amendment.
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If you are in agreement with the terms of this First Amendment, please so indicate by signing
and returning to me the enclosed copy of this letter, which will constitute our binding agreement.
| Very truly yours, ZILA, INC. |
||||
| By: | /s/ Xxxxx X. Xxxxxxx | |||
| Xxxxx X. Xxxxxxx | ||||
| Chairman and CEO | ||||
AGREED:
/s/ Xxxxx X. Xxxxx
|
Date: June 9, 2009 | |
Xxxxx X. Xxxxx |
