March 30, 2007 Mr. Gary V. Klinefelter 8555 South College Lane Tempe, AZ 85284 Dear Gary:
Exhibit 10.2
|
March 30,
2007
Xx. Xxxx
X. Xxxxxxxxxxx
0000 Xxxxx Xxxxxxx Xxxx
Xxxxx, XX 00000
0000 Xxxxx Xxxxxxx Xxxx
Xxxxx, XX 00000
Dear Xxxx:
The purpose of this letter is set forth a new agreement between you and Zila, Inc. (the
“Company”) with respect to your employment. Accordingly,
your November 16, 2004 letter agreement
is hereby revoked in its entirety and shall be of no further force or effect, and this letter
agreement (the “Agreement”) shall be substituted in its place and stead. The effective date of
this Agreement shall be January 1, 2007.
1. Title.
You will continue to serve as an Executive Vice President of the Company and as
the Company’s General Counsel.
2. Reporting
Structure. You will report directly to me in my capacity as CEO of the
Company.
3. Responsibilities. Your responsibilities will be those consistent with the
above-described position and/or as they may be assigned to you by the Company.
4. Base
Salary. Your base salary will be paid at the rate of two hundred forty thousand
dollars ($240,000.00) per year, less applicable withholdings as may be required by law, in
accordance with the Company’s regular payroll practices (currently bi-weekly).
5. Auto
allowance. You will receive an auto allowance of $800 per month, subject to
Internal Revenue Service regulations and paid in accordance with the
Company’s regular payroll
practices.
6. Eligibility
for Performance Bonuses. You will continue to be eligible to participate
in whatever incentive bonus plan(s) the Company maintains, or
successor plans as may be
applicable. Currently, the Company’s incentive bonus plan
provides you with an opportunity to
receive a cash performance bonus of up to fifty percent (50%) of your
current base salary, less
applicable withholdings as may be required by law.
7. Stock
Options. Subject to approval of Zila, Inc.’s Board of
Directors or its Compensation Committee, you will continue to be eligible to receive stock option grants
to purchase the Company’s common stock under the Zila, Inc. 1997 Stock Option Award Plan,
as amended and restated September 30, 2004 (the “Stock Option Plan”), or such amended or
restated stock option plan as may then be in effect, based on individual performance and/or as
may be
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commensurate with grants to other executive-level management. All stock option grants shall be
governed in all respects by the Stock Option Plan or such amended or restated stock option plan as
may then be in effect.
8. Insurance. You will receive insurance benefits as provided to other executive-level
management. Currently, these consist of medical, dental and vision
coverage for you and your
dependents, life insurance and short-term disability coverage for
you, and directors and officers’
liability insurance.
9. Paid
Time Off. You will receive paid time off (“PTO”) in accordance with the Company’s
regular PTO policy. You will also receive paid holidays in accordance
with the Company’s regular
holiday policies.
10. Other Benefits. You will receive other benefits as may be commensurate with those
provided to other executive-level management. Currently, these include participation in a 401(k)
plan, an employee stock purchase plan, a flexible spending program/Section 125, and employee
recognition programs.
11. Compensation
and Terms of Employment Subject to Change. All terms and conditions of
employment, including all compensation terms, are subject to change
at the Company’s discretion.
12. At-Will
Employment. Your employment with the Company is at will, meaning that it lawfully
can be terminated at any time by either you or the Company, with or
without cause or notice.
Nothing contained in this Agreement changes the at-will nature of
your employment.
13. Severance
Benefits. If the Company terminates your employment, you shall be eligible to
receive severance benefits in accordance with the following:
13.1 Change in Control. If your employment is terminated 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(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 twenty-four (24) 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 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
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the last such plan that was in effect. If the Company terminates your employment 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 the Company terminates your employment without cause
(“Without Cause”) and for a reason other than a Change in
Control, you shall be entitled to receive
severance pay in an amount equivalent to twenty-four (24) months of your annual base salary in
effect on the date your employment is terminated. 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
Stock Options and Restricted Stock. If your employment is terminated because of a Change
in Control or Without Cause, and upon expiration of any revocation
period contained in the release
required by subpart 13.4 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”).
13.4
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. 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.
13.5
No Other Right to Severance Benefits. Severance Benefits will not be provided and/or take
effect if you voluntarily resign from your employment, 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.
13.6
Timing of Severance Pay. All sums payable to you pursuant to
subparts 13.1 or 13.2 above
shall be paid in a lump sum within six (6) months plus one (1) business days
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after termination of your employment (the “Payment Date”). However, if you are a “Specified
Employee” of the Company for purposes of Internal Revenue Code Section 409A (“Code Section 409A”)
at the time of any event that triggers a payment obligation on the part of the Company pursuant to
subparts 13.1 or 13.2, then the required payment shall be made to you by the Company on the first
day such payment may be made without incurring excise taxes under Code Section 409A (without
regard to whether that shortens, lengthens or does not affect the time period set forth in the
first sentence of this subpart 13.6) (the “409 A Payment Date”). Should this 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.
13.7 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 solicit, induce, or attempt to influence any employee of the Company or
its affiliated companies to terminate his or her employment.
14. Cooperation in Dispute Resolution. During your employment and thereafter (including
following termination of your employment for any reason), you will
make yourself reasonably
available to consult with the Company or any of its affiliated
companies with regard to any
potential or actual dispute the Company or any of its affiliated
companies may have with any third
party concerning matters about which you have personal knowledge, and
to testify about any such
matter should such testimony be required, so long as doing so does
not unreasonably interfere with
your then-current professional activities.
15. Applicable
Law. You hereby consent to application of Arizona law to this Agreement
without regard to choice-of-law or conflict-of-law rules. However, in
recognition of the fact that
the Severance Benefits set forth above are not items of ordinary
compensation, and as an inducement
for the Company to agree to those provisions, we have specifically
agreed that Arizona Revised
Statute § 23-355 (which provides for the possibility of treble
damages for unpaid wages) shall not
apply to Paragraph 13 of this Agreement (or its subparts), or to
any payment(s) arguably due under
Paragraph 13 of this Agreement (or its subparts), or to any dispute arising under Paragraph 13 of
this Agreement (or its subparts). This does not affect your right to Severance Benefits, but means
that if we have a dispute about whether Severance Benefits are owed, you cannot seek three times the
amount of such Severance Benefits in a legal action.
16. Severability.
In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, in whole or in part, the remaining
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provisions of this Agreement shall remain in full force and effect to the fullest extent
permitted by law.
17. Other agreements. Like all Company employees, you may in the future be required, in
the Company’s reasonable discretion, to execute agreements relating to other Company policies
or substantive matters.
I look forward to continuing to work together.
Sincerely,
Xxxxxxx X. Xxxxxxx, Ph.D.
CEO and President
Statement of Acceptance:
I have read the foregoing Agreement and agree to its terms.
| Dated: 4/12/07 | /s/ Xxxx X. Xxxxxxxxxxx | |||
| Xxxx X. Xxxxxxxxxxx | ||||
