Document:

exv10w1

Exhibit 10.1

[ZILA, INC. LETTERHEAD]

May 9, 2008

Mr. David R. Bethune

5227 North Seventh Street

Phoenix, AZ 85014-2800

	 	 	 	 	 
	 

	 	Re:
	 	Employment Terms

Dear David:

     The purpose of this letter is to set forth a new agreement between you and Zila, Inc. (the
“Company”) with respect to your employment. Accordingly, your August 14, 2007 letter agreement is
hereby terminated in its entirety and shall be of no further force or effect (except with respect
to any equity awards granted thereunder), and this letter agreement (the “Agreement”) shall be
substituted in its place and stead. The effective date of this Agreement shall be May 1, 2008.

     1. Title. You will continue to serve as Chairman and interim Chief Executive Officer of the
Company.

     2. Reporting Structure. You will report to the Board of Directors of the Company.

     3. Responsibilities. Your responsibilities will be those consistent with the above-described
positions as they may be assigned to you by the Company.

     4. Base Salary. Your base salary will be paid at the rate of three hundred fifty thousand
dollars ($350,000) per year, less applicable withholdings as may be required by law, in accordance
with the Company’s regular payroll practices (currently bi-weekly). You may, at your option,
defer and accrue your base salary based on the cash availability of the Company.

     5. Performance Bonuses. You will be eligible to participate in whatever incentive bonus
plan(s) the Company maintains, or successor plans as may be applicable. You will have 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, subject to plan achievement for
the fiscal years ended July 31, 2008 and 2009; provided you are employed by the Company on the
last day of the applicable fiscal year. If there is a subsequent restatement of a reporting
period for which an incentive payment is made which results in the failure to achieve the plan
target for that period, the incentive payment must be returned to the Company.

 

 

Mr. David R. Bethune

May 9, 2008

Page 2

     6. Restricted Stock. Subject to the approval of the Company’s Board of Directors, you will
be granted 300,000 shares of restricted stock following the filing of a registration statement
covering such shares. The restrictions on the shares will be removed and such shares shall vest
(provided you are employed by the Company on such dates) as follows:

          (i) 150,000 shares on the date of issuance;

          (ii) 8,333 shares on the last day of each month commencing on May 31, 2008 and ending on
September 30, 2009; and

          (iii) 8,339 shares on October 31, 2009.

In addition, except as otherwise provided herein, the restrictions on the shares will be removed
and such shares shall vest immediately upon the hiring of a permanent chief executive officer by
the Company.

     7. Term. The term of this Agreement shall end on the earlier of your departure from the Zila
Board of Directors or October 31, 2009.

     8. 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.

     9. 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.

     10. 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.

     11. Severance Benefits. If the Company terminates your employment, you shall be eligible to
receive severance benefits in accordance with the following:

          11.1 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 (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

 

 

Mr. David R. Bethune

May 9, 2008

Page 3

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 Company’s 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 within eighteen (18) months following a
Change in Control (including upon expiration of the term of this Agreement as provided in Paragraph
7), 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 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
your base salary until the later of the expiration of the term of this Agreement as provided in
Paragraph 7 or twelve (12) months following the date of termination. 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 the Company terminates your employment (including upon expiration of the term of this Agreement
as provided in Paragraph 7) 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 shall apply.

          11.3 Stock Options and Restricted Stock. If your employment is terminated by the Company
because of a Change in Control or Without Cause, and upon expiration of any revocation period
contained in the release required by subpart 11.4 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”).

          11.4 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. 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. If you fail to

 

 

Mr. David R. Bethune

May 9, 2008

Page 4

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.

          11.5 No Other Right to Severance Benefits. Severance Benefits will not be provided and/or
take effect if you voluntarily resign from your employment, this Agreement terminates in accordance
with Paragraph 7, 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.

          11.6 Timing of Severance Pay. All sums payable to you pursuant to subparts 11.1 or 11.2 above
shall be paid in a lump sum within six (6) months plus one (1) business day 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 11.1 or 11.2,
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 11.6) (the “409A 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.

          11.7 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 commence employment or other engagement with any person or entity that
directly competes in an areas 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.

     12. 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.

 

 

Mr. David R. Bethune

May 9, 2008

Page 5

     13. 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 11 of this Agreement (or its subparts), or to any payment(s) arguably
due under Paragraph 11 of this Agreement (or its subparts), or to any dispute arising under
Paragraph 11 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.

     14. 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
provisions of this Agreement shall remain in full force and effect to the fullest extent permitted
by law.

     15. 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.

     The Company looks forward to your continuing contributions, and I hope you will accept this
offer. If you wish to do so, please sign where indicated below and return this Agreement. Please
let me know if you have any questions.

	 	 	 	 	 
	 

	 	Sincerely,
	 	 
	 
	 	 	 	 
	 

	 	ZILA, INC.	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	/s/ Gary V. Klinefelter 
	 	 
	 

	 	Gary V. Klinefelter, Secretary	 	 

Statement of Acceptance:

     I have read the foregoing and agree to accept employment with the Company on the terms stated
in this Agreement.

	 	 	 	 	 
	Dated: May 9, 2008

	 	/s/ David R. Bethune 

	 	 
	 

	 	David R. BethuneSpecimen Stock Certificate

Exhibit 4.1

	Number  	  	Shares  
	  
	CYNERGI HOLDINGS, INC. 
	INCORPORATED UNDER THE LAWS OF THE STATE OF 
	NEVADA 100,000,000 SHARES COMMON STOCK AUTHORIZED, 
	$0.00001 PAR VALUE 
	  
	  	  	CUSIP  _______
	  	  	SEE REVERSE  
	  	  	FOR  
	This  	  	CERTAIN  
	certifies  	  	DEFINITIONS  
	that  	  	  
	is the owner of  	  	  
	  
	  
	FULLY PAID AND NON-ASSESSABLE 
	SHARES OF COMMON STOCK OF 
	  
	  
	CYNERGI HOLDINGS, INC. 
	transferable on the books of the corporation in person or by duly 
	authorized attorney upon surrender of this certificate properly 
	endorsed. This certificate and the shares represented hereby 
	are subject to the laws of the State of Nevada, and to the 
	Articles of Incorporation and Bylaws of the Corporation, 
	as now or hereafter amended. This certificate is not valid 
	unless countersigned by the Transfer Agent. WITNESS 
	the facsimile seal of the Corporation and the signature 
	of its duly authorized officers 
	  
	  
	  
	 
	  
	PRESIDENT  	[SEAL]  	SECRETARY  

     The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations.

	TEN COM  	as tenants in common  	UNIF GIFT MIN ACT  _______________	Custodian  _______________
	TEN ENT  	as tenants by the entireties  	                                    (Cust)	                    (Minor)  
	JT TEN  	as joint tenants with the right of  	                               Act_________________________________  
	  	survivorship and not as tenants  	  	(State)  
	  	in common  	  	  

Additional abbreviations may also be used though not in the above list.

	For value received,  	_______________________________________hereby sell, assign and transfer unto  
	  PLEASE INSERT SOCIAL SECURITY OR OTHER                           
	  IDENTIFYING NUMBER OF ASSIGNEE                          
	  
	  
	(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE) 
	  
	 
	 
	 
	 
	 
	 
	____________________________________________________________________________  shares of  
	the capital stock represented by the within Certificate, and do hereby irrevocably constitute and appoint  
	  
	_____________________________________________________________________________, Attorney to  
	transfer the said stock on the books of the within named Corporation with full power of substitution in the  
	premises.  	  
	  
	Dated  _________________________
	  
	X ______________________________________________________________________________
	THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THIS CERTIFICATE IN  
	EVERY PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER. THE SIGNATURE(S) MUST BE  
	GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (Banks, Stockbrokers, Savings and Loan Associations and Credit Unions)  

 

SIGNATURE GUARANTEED:

 

TRANSFER FEE WILL APPLY

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