EXHIBIT 10Af
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT ("Agreement"), dated as of October 11, 2002 is by
and between Zila, Inc. ("Company"), a Delaware corporation, and Janice L. Backus
("Executive"), (collectively referred to herein as the "Parties"). As used in
this Agreement, the term "Company" includes all of the directors, agents,
officers, shareholders, distributors, licensees, consultants, employees,
successors in interest, legal representatives, customers, subsidiaries, parent
corporations, related entities, and other agents of the Company, Zila or their
affiliated entities and their spouses.
WHEREAS, Executive and Company have agreed that Executive's employment
with Company will terminate effective October 11, 2002; and
WHEREAS, Executive and Company have agreed to compromise and settle all
differences between them arising out Executive's employment and termination
thereof.
NOW, THEREFORE, in exchange for and in consideration of the acts, promises
and mutual agreements contained in this Agreement, Executive and Company hereby
agree as follows:
1. Consideration and Payment. In consideration for the waiver and release
included in this Agreement, Company shall pay to Executive a severance payment
equal to her continued salary until December 31, 2003 ("Severance Amount"). The
Severance Amount shall be paid in semi-monthly payments, in accordance with
Company's standard payroll practices.
a. Health and Dental Insurance. Executive will be eligible to
receive COBRA benefits. Company agrees to pay for Executive's COBRA benefits up
through and including December 31, 2003. Executive will not be compensated for
any costs that are not covered by the COBRA benefits.
b. Stock Options. Executive's stock options that were vested as of
October 11, 2002 shall be subject to the provisions in the option agreements
that are applicable to terminated employees.
c. Expenses. Zila will reimburse Executive for any unpaid business
expenses.
Zila and Executive agree that Zila has no obligation to pay Executive any
severance payments and that the above payments are being made solely in exchange
for Executive's release and is not in any way owed to Executive, except for her
agreement to this release.
2. Mutual Release. Except with respect to the obligations created by,
acknowledged, or arising out of this Agreement, and subject to paragraph 2(a) of
this Agreement, Executive, for herself, and her successors and assigns on one
side, and Company, for itself,
directors, agents, officers, shareholders, distributors, licensees, consultants,
employees, successors in interest, legal representatives, customers,
subsidiaries, parent corporations, related entities, and other agents of the
Company, Zila or their affiliated entities and their spouses on the other side,
hereby release and forever discharge the other of and from any and all causes of
action, charges, claims, demands, damages, liabilities, costs, expenses,
attorneys' fees, and actions of every kind and nature whatsoever, whether now
known or unknown, suspected or unsuspected, which they or anyone claiming
through them may now have or assert, or may hereafter have or assert against the
other based upon or arising out of any matter, cause, fact, thing, act, or
omission whatsoever occurring or existing at any time up to and including the
date of this Agreement (all of which are hereinafter referred to as and included
within the meaning of "Released Matters"). The Released Matters do not include
the causes of action identified in paragraph 2(a) herein.
The Parties understand and expressly agree that the Released Matters
include (but are not limited to) claims related to the termination of
Executive's employment, and all claims asserted and unasserted by Executive
against Company and by Company against Executive, except as stated in paragraph
2(a) herein. The Released Matters include any and all claims for damages,
liquidated damages, exemplary damages, attorneys' fees, and costs. This waiver
and release specifically extends to any and all rights under federal, state or
local laws pertaining to employment, discrimination or retaliation, including
Title VII of the Civil Rights Act of 1964, as amended, the Americans with
Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Age
Discrimination in Employment Act of 1967, as amended, breach of contract, other
tort claims, and any other federal, state, or local law, common law, contract,
ordinance or regulation under which any claim may be brought. under federal,
state, or local laws or regulations or executive orders that regulate any aspect
of employment.
The Parties acknowledge that they understand that by entering into this
Agreement, they will no longer have the right to assert any claims or lawsuits
of any kind, whether known or unknown at the time of this Agreement, attempting
to recover money or any other relief from the other. Executive also acknowledges
that she understands that the only payments Company will make to her in the
future are the payments provided in paragraph 1 of this Agreement.
Notwithstanding the foregoing, this Agreement shall not affect Executive's right
to file an appropriate charge or action to challenge the validity of this waiver
and release pursuant to the Older Workers Benefits Protection Act. The Company
reserves the right to contest any such charge or action.
The Parties acknowledge and understand that this Release waives Company's
and Executive's rights to any monetary recovery against the other for any
potential charge, complaint, or lawsuit, except with respect to a breach of this
Agreement and except with respect to the Unreleased Matters defined in paragraph
2(a) herein. Executive agrees that the payments received under this Agreement
fully satisfy any potential claim for relief in connection with any charge,
complaint, or lawsuit.
a. Unreleased Matters. The Parties acknowledge and understand that the
Released Matters specifically do not include any unknown claims that Company may
have against Executive for fraud, gross misconduct, gross negligence, failure to
comply with instructions from
Company's board of directors, criminal acts, material omissions, and
misstatements. Company does not waive and shall retain the same rights to seek
redress from Executive for the Unreleased Matters, whether by a lawsuit or
otherwise, as it had prior to the effective date of this Agreement.
3. Executive's Immediate and Ongoing Obligations.
A. Executive will not make any disparaging comments about Company or any
of Company's directors, board members, officers, employees, agents or attorneys,
or regarding any of Company's products or practices to anyone, including but not
limited to Company board members, employees, officers, agents, customers,
contractors, and business contacts. This provision is not intended to apply to
communications between Executive and Executive's attorneys. Executive agrees
that this provision is a material term of this Agreement and that a breach of
this provision by Executive will result in the immediate termination of
Executive's right to receive any further payments from Company pursuant to this
Agreement.
B. Executive expressly agrees that she will not remove any Company
property from her office at the Company or from Company premises. Executive
covenants that she will remove only her personal belongings from the spaces that
were assigned to her by Company. Executive agrees to return to Company all
Company property in her possession, including, but not limited to, credit cards,
vehicles, records, memoranda or anything else owned or created by the Company.
Executive agrees that this provision is a material term of this Agreement and
that a breach of this provision by Executive will result in the immediate
termination of Executive's right to receive any further payments from Company
pursuant to this Agreement.
C. Executive will cooperate and provide consulting services to Company as
necessary to effectuate the smooth transition of Executive's job duties and
responsibilities and to train and educate Executive's replacement or other
designated individual(s). Until December 31, 2002, Executive's consulting
services pursuant to this provision will be at the discretion of Company's
President and Chief Executive Officer. Thereafter, Executive will be available
to consult with the Company from time to time as requested by the President and
Chief Executive Officer. Executive agrees to provide Company with reasonable
notice of her availability, including but not limited to any planned vacations
or trips out of the State of Arizona. Executive agrees that she will not be
entitled to any additional compensation, other than the Severance Amount herein,
for her services under this provision. Executive also agrees that this provision
is a material term of this Agreement and that failure to abide by her
obligations under this provision will result in the termination of Executive's
right to receive any further payments or benefits under this Agreement.
4. Executive's Acknowledgments. Executive acknowledges that she is not
aware of any actions or inactions on her part individually or by a Company
employee or other individual which could give rise to liability against the
Company.
5. Acknowledgments. Executive acknowledges that each of the following
statements are true and accurate:
a. Executive would not have been entitled to receive the
consideration set forth in Section 1 had Executive rejected this Agreement;
b. Executive has carefully read this entire Agreement and
understands all the terms of this Agreement, particularly the Release provisions
set forth in Section 2;
c. Executive has been advised to and has had the opportunity to
consult with an attorney before signing this Agreement;
d. Executive has freely, voluntarily, and knowingly entered into
this Agreement;
e. Executive has been given at least twenty-one (21) days to
consider this Agreement;
f. Executive may revoke or cancel this Agreement within seven (7)
days of signing it by notifying counsel for Company of the decision to revoke
this Agreement in writing;
g. Executive understands that the written revocation notice referred
to in Section 4(f) above must be sent to Christian J. Hoffmann, III, Quarles &
Brady Streich Lang, LLP, Renaissance One, Two N. Central Avenue, Phoenix, AZ
85004 and must be received by Mr. Hoffmann at that address before the end of the
seventh day after Executive signs this Agreement;
h. Executive has not relied on any oral or written statements that
are not set forth in this Agreement in determining whether to enter into this
Agreement.
6. No Admission of Liability. This Agreement is the settlement and
compromise of disputed claims. Nothing contained in this Agreement shall be
construed as an admission of liability on the part of either party; that it has
violated any statute, law or regulation or breached any contract or agreement.
7. Confidentiality. The parties verify and state they will not disclose to
anyone the terms and existence of this Agreement, the discussions that led to
this Agreement, and the disputes between the parties that are being resolved by
this Agreement that they shall not disclose any of those terms to any
unassociated third party, except (a) to the minimum extent necessary for tax
reporting and payment purposes, (b) as may be required by a valid court order or
other court process or rule, (c) as necessary to enforce any aspect of this
Agreement in properly commenced litigation or arbitration proceeding, or (d) as
otherwise required by law.
8. Termination. The Company may terminate this Agreement at any time if an
arbitrator appointed by the American Arbitration Association determines that
Executive breached any provision of this Agreement. The arbitrator selected, in
order to be eligible to serve, will be a lawyer in Phoenix, Arizona with at
least fifteen (15) years experience specializing in either general commercial
litigation or general corporate and commercial matters. In the event the parties
cannot agree on a mutually acceptable single arbitrator from the list submitted
by the
AAA, the AAA will appoint the arbitrator who will meet the foregoing criteria.
Should the Agreement be terminated by the Company and should such termination be
upheld in arbitration, Executive shall receive no additional funds as described
in paragraph 1 of this Agreement. Executive shall refund any payments already
received if so ordered by an arbitrator. Moreover, all paragraphs of this
Agreement, with the exception of paragraph 1, shall survive termination of this
Agreement and remain intact and in force for all time.
9. Miscellaneous.
a. Successors; Binding Agreement. This Agreement will be binding
upon and payments and benefits will inure to the Parties' personal or legal
representatives, beneficiaries, designees, executors, administrators, heirs,
distributes, devisees, and legatees.
b. Modification; No Waiver. This Agreement may not be modified or
amended except by an instrument in writing signed by the parties hereto. No term
or condition of this Agreement will be deemed to have been waived, nor will
there be any estoppel against the enforcement of any provision of this
Agreement, except by written instrument by the party charged with such waiver or
estoppel. No such written waiver will be deemed a continuing waiver unless
specifically stated therein, and each such waiver will operate only as to the
specific term or condition waived and will not constitute a waiver of such term
or condition for the future or as to any other term or condition.
c. Severability. The covenants and agreements contained herein are
separate and severable and the invalidity or unenforceability of any one or more
of such covenants or agreements, if not material to the Release that is the
basis for this Agreement, will not affect the validity or enforceability of any
other covenant or agreement contained herein.
d. Entire Understanding. This Agreement constitutes the entire
understanding between the parties hereto and no agreement, representation,
warranty or covenant has been made by either party except as expressly set forth
herein.
e. Governing Law. This Agreement will be construed in accordance
with and governed for all purposes by the laws of the State of Arizona
applicable to contracts executed and wholly performed within such state.
f. Notices. All notices, demands, and other communications provided
for hereunder will be in writing (including facsimile or similar transmission)
and mailed (by U.S. certified mail, return receipt requested, postage prepaid),
sent, or delivered (including by way of overnight courier service): (i) if to
the Company: Zila, Inc., 5227 North 7th Street Phoenix, Arizona 85014, fax no.
(620) 230-8418, with a copy to Christian J. Hoffmann, III, Quarles & Brady
Streich Lang, LLP, Two North Central Avenue, Phoenix, Arizona 85004-2391, fax
no. (602) 229-5690; and (ii) if to Executive: Janice L. Backus, 5998 N. 78th
Street, #212, Scottsdale, Arizona 85250 or, as to any party, to such other
person and/or at such other address or number as shall be designated by such
party in a written notice to the other party. All such notices, demands, and
communications, if mailed, will be effective upon the earlier of (i) actual
receipt by the addressee, (ii) the date shown on the return receipt of such
mailing, or (iii) three (3) days
after deposit in the mail. All such notices, demands, and communications, if not
mailed, will be effective upon the earlier of (i) actual receipt by the
addressee, (ii) with respect to facsimile and similar electronic transmission,
the earlier of (x) the time that electronic confirmation of a successful
transmission is received, or (y) the date of transmission, if a confirming copy
of the transmission is also mailed as described above on the date of
transmission, and (iii) with respect to delivery by overnight courier service,
the day after deposit with the courier service, if delivery on such day by such
courier is confirmed with the courier or the recipient orally or in writing.
g. Authorization. Zila and Company represent and warrant that the
parties executing this Agreement for Zila and Company, respectively, have the
full authority to execute and bind Zila and Company to this Agreement.
COMPANY
Zila, Inc.
By: Date:
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Douglas D. Burkett, Ph.D, President and
Chief Executive Officer
EXECUTIVE
Date:
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Janice L. Backus