June 8, 2009
Exhibit 10.1
June 8, 2009
Xx. Xxxxx X. Xxxxxxx
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:
By letter dated May 8, 2008, 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:
1. Section 7 (Term) of the Agreement is hereby amended and restated in its entirety to read as
follows:
7. Term. This Agreement shall continue in full force and effect until
terminated by either party pursuant to Section 10.
2. Section 11 (Severance Benefits) of the Agreement is hereby amended and restated in its
entirety to read as follows:
11. 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:
11.1 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 twenty-four (24) 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 (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 twenty-four (24) months following termination of your employment had
your employment not terminated and had you
Xx. Xxxxx X. Xxxxxxx
June 8, 2009
Page 2
June 8, 2009
Page 2
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
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 following
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.
Notwithstanding the foregoing, “Change in Control” shall not include
any such transaction in which you participate (as an investor or
otherwise) on behalf of any party other than the Company.
11.2 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 a payment equal
to twelve (12) months of your base salary. 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 11.2 shall
apply.
11.3 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
Xx. Xxxxx X. Xxxxxxx
June 8, 2009
Page 3
June 8, 2009
Page 3
breach by the Company of this Agreement. You must provide written
notice to the Company of the existence 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.
11.4 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 11.5
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”).
11.5 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. Such release will explicitly
recognize, and except from the release, any ongoing rights of
indemnification (or similar rights) you may have. 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.
11.6 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.
Xx. Xxxxx X. Xxxxxxx
June 8, 2009
Page 4
June 8, 2009
Page 4
11.7 Timing of Severance Pay. Any amounts payable to you
pursuant to subparts 11.1 or 11.2 of this Agreement that are not
subject to Section 409A of the Internal Revenue Code (the “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 11.1 or 11.2 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 11.1 or 11.2 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.
11.8 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, or (ii) you commence employment or other engagement
with any person or entity that directly competes in an area of the
Company (including the Company’s affiliated companies and divisions)
in which you had operational oversight or direct responsibilities at
the time of the termination of your employment with the Company; 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.
Xx. Xxxxx X. Xxxxxxx
June 8, 2009
Page 5
June 8, 2009
Page 5
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/ Xxxx X. Xxxxxxxxxxx | |||
Xxxx X. Xxxxxxxxxxx, Secretary | ||||
AGREED: |
||||
/s/ Xxxxx X. Xxxxxxx | Date: June 9, 2009 | |||
Xxxxx X. Xxxxxxx | ||||