Document:

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                                                                   Exhibit 10-Ap

                        SEVERANCE AGREEMENT AND RELEASE

                                     PART I
                    PARTIES, PURPOSE, ATTORNEY CONSULTATION

      1.1 PARTIES. The parties to this severance agreement and release
("Severance Agreement") are Lawrence A. Gyenes ("Mr. Gyenes") and Zila, Inc.
("Zila").(1)

      1.2 PURPOSE. Mr. Gyenes was employed by Zila until July 31, 2007 (the
"Separation Date"). At the outset of the parties' employment relationship, they
entered into an agreement memorialized by an offer letter from Zila to Mr.
Gyenes dated March 6, 2007 and executed by Mr. Gyenes on March 7, 2007 (the
"Offer Letter"), a true and correct copy of which is attached hereto as EXHIBIT
A. The purpose of this Severance Agreement is to set forth certain terms that
will govern the termination of the employment relationship between Mr. Gyenes
and Zila and to settle fully and finally all claims of any kind Mr. Gyenes might
have against Zila arising out of his employment with Zila, the Offer Letter
and/or any other act, omission or matter occurring before execution of this
Severance Agreement, including all claims of any kind which Zila might have
against Mr. Gyenes arising out of his employment with Zila and occurring before
the execution of this Severance Agreement.

      1.3 CONSULT WITH ATTORNEY. Zila hereby advises Mr. Gyenes to consult with
an attorney before signing this Severance Agreement.

                                    PART II
            RESIGNATION, OFFER LETTER TERMINATION, LEAVES OF ABSENCE,
                        COMPENSATION, SEVERANCE BENEFITS

      2.1 RESIGNATION. Mr. Gyenes hereby resigns, and Zila hereby accepts his
resignation, effective July 31,2007.

      2.2 OFFER LETTER TERMINATION. The Offer Letter is hereby terminated in its
entirety and shall have no further force or effect. Following execution of this
Severance Agreement, neither Mr. Gyenes nor Zila shall have any obligation to
the other arising out of the Offer Letter.

      2.3 LEAVES OF ABSENCE. Mr. Gyenes acknowledges that he received all leaves
of absence to which he was entitled during his employment with Zila.

      2.4 COMPENSATION. Mr. Gyenes acknowledges that he timely received all
compensation of any kind, whether in the form of base salary, automobile
allowance, performance bonus, stock grants, stock options, paid time off,
relocation benefits or other compensation (collectively, "Compensation") he had
earned or was owed as of the Separation Date, acknowledges that Zila presently
owes him no Compensation, and acknowledges that the only Compensation Zila will
owe him in the future is set forth in Section 2.5.1 below.

      2.5 SEVERANCE BENEFITS. Mr. Gyenes will receive severance benefits in
accordance with, and subject to, the following:

__________
(1)     As used herein, "Zila" is intended to include Zila, Inc. and each of its
      current parent, subsidiary and affiliated companies and entities.

                                        1

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            2.5.1 In return for the promises Mr. Gyenes makes in this Severance
Agreement, Zila will (i) provide Mr. Gyenes with severance pay in the amount of
one hundred fifty thousand dollars ($150,000.00), less applicable withholdings,
payable over a period of six months according to Zila's regular payroll schedule
at the rate Zila paid Mr. Gyenes his base salary prior to the Separation Date
and beginning on the first regular Zila payroll date that falls ten or more
business days after Mr. Gyenes' execution of this Severance Agreement; (ii) pay
Mr. Gyenes' COBRA premiums for a period of twelve months beginning with August
2007 and continuing through the end of July 2008; (iii) pay all reasonable costs
associated with transporting Mr. Gyenes' personal property and himself from
Arizona to New Jersey; and (iv) reimburse Mr. Gyenes for all relocation benefits
properly submitted to Zila by Mr. Gyenes in accordance with Paragraph 15 of the
Offer Letter (collectively, the "Severance Benefits").

            2.5.2 Zila agrees that all restrictions on Restricted Stock Grant
#771 are lifted and a stock certificate for 50,000 shares, less the number of
shares required for applicable withholdings, will be issued to Mr. Gyenes ten
business days after Mr. Gyenes' execution of this Severance Agreement.

            2.5.2 Mr. Gyenes' right to receive the Severance Benefits shall
immediately terminate if he breaches, and fails to cure within ten (10) days of
receipt of written notice describing such alleged breach, any contractual
obligation he owes Zila or violates any other promise or commitment he has made
to Zila or duty he owes to Zila,

                                    PART III
           REAFFIRMATION REGARDING CONFIDENTIALITY, NON-DISPARAGEMENT,
                      SUBPOENA, NON-DISCLOSURE, COOPERATION

      3.1 REAFFIRMATION REGARDING CONFIDENTIALITY: IN connection with his Zila
employment, Mr. Gyenes executed an Employee Confidentiality and Intellectual
Property Agreement (the "Confidentiality Agreement"), a true and correct copy of
which is attached hereto as EXHIBIT B. Mr. Gyenes hereby represents that to his
knowledge he has been in complete compliance with the Confidentiality Agreement
from the date of its execution through the date of execution of this Severance
Agreement. For example (but not by way of limitation), Mr. Gyenes represents
that he has delivered to Zila all Zila property that was within his possession
or control and that he has kept no originals or copies of any documents,
materials or media (whether in paper, electronic or other form) embodying or
reflecting "Confidential Information" (as that term is defined in the
Confidentiality Agreement). Mr. Gyenes hereby reaffirms all future obligations
he may have under the Confidentiality Agreement including, without limitation,
his obligation under Section 2 to refrain from using or disclosing any
"Confidential Information" (as that term is defined in the Confidentiality
Agreement) to any person or entity.

      3.2 NON-DISPARAGEMENT. Mr. Gyenes agrees that from the date of execution
of this Severance Agreement forward he will not, directly or indirectly, make
any disparaging statements to any third party about Zila. Nothing in this
provision shall be construed to require Mr. Gyenes to testify dishonestly if he
is compelled by operation of law to provide sworn testimony about Zila, to
refrain from participating or cooperating in a governmental investigation, to
refrain from seeking to enforce the terms of this Severance Agreement, or to
refrain from fairly and lawfully competing against Zila should one day he choose
to do so.

      3.3 SUBPOENA OR OTHER LEGAL ORDER. If Mr. Gyenes receives a subpoena or
other legal order requiring him to provide information or testimony (or is
otherwise required to provide information or testimony) that he reasonably
anticipates will involve Zila, he shall provide Zila with a copy of the subpoena
or other legal order (or, in the absence of such a subpoena or other legal
order, other written

                                       2

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notice of the event) at least thirty (30) days (or as many days as is
practicable) prior to the date on which Mr. Gyenes anticipates being required to
provide information or testimony.

      3.4 NON-DISCLOSURE. Mr. Gyenes agrees that he will not, except as may be
required by law, disclose the terms of this Severance Agreement to anyone other
than his fiance/spouse, attorneys or financial advisors (so long as such
individuals agree to hold confidential the terms of this Severance Agreement).

      3.5 COOPERATION. Mr. Gyenes shall make himself available in the future to
consult with Zila with regard to any potential or actual dispute Zila may have
with any third party concerning matters about which Mr. Gyenes has personal
knowledge, and to testify about any such matters should such testimony be
requested, so long as doing so does not unreasonably interfere with his
then-current professional activities. To the extent Mr. Gyenes has out-of-pocket
expenses in connection with such cooperation, including reasonable attorneys
fees, Zila agrees to reimburse such expenses upon Mr. Gyenes' submission of
documentation requested by Zila.

                                     PART IV
   RELEASE, NO ASSIGNMENT OR PENDING ACTION, WAIVER OF RECOVERY, CONSIDERATION

      4.1 RELEASE. Subject to the terms and conditions of this Severance
Agreement, Mr. Gyenes hereby provides the following complete and unconditional
release from legal liability:

            4.1.1 Mr. Gyenes releases the following entities and persons: (i)
Zila and each of its current and past parent, subsidiary and affiliated
companies and entities; and (ii) all current and past owners, officers,
directors, agents and employees of each such company and entity (together, the
"Released Parties").

            4.1.2 Except for claims (a) alleging breach of this Severance
Agreement, and (b) for indemnification under Zila's Certificate of
Incorporation, other corporate documents or applicable directors and officers
liability insurance in respect of third party claims, Mr. Gyenes releases the
Released Parties from all claims, liabilities, costs and expenses, damages,
actions and causes of action of whatever kind or nature, whether known or
unknown, arising out of acts, omissions or matters occurring before execution of
this Severance Agreement. Mr. Gyenes and Zila intend this release to be as broad
as legally permissible and to cover, without limitation, all claims relating to
or arising out of Mr. Gyenes' employment with Zila, the termination of that
employment, the Offer Letter, and any compensation allegedly owed Mr. Gyenes by
Zila, as well as all other contract and tort claims that might exist under
applicable law, claims relating to attorneys' fees Mr. Gyenes might have
incurred, and claims arising out of federal, state and local employment-related
statutes, including the following: (i) the Arizona Civil Rights Act; (ii) the
Arizona Employment Protection Act; (iii) Title VII of the Civil Rights Act of
1964; (iv) the Civil Rights Acts of 1866, 1871 and 1991; (v) the Age
Discrimination in Employment Act; (vi) the Americans with Disabilities Act;
(vii) the Equal Pay Act; (viii) the National Labor Relations Act; (ix) the
Family and Medical Leave Act; and (x) the Employee Retirement Income Security
Act.

            4.1.3 Nothing in this Severance Agreement shall affect any vested
rights Mr. Gyenes may have in any defined benefit plan maintained by Zila.

      4.2 NO ASSIGNMENT OF CLAIMS OR PENDING ACTION. Mr. Gyenes hereby
represents that as of the date of execution of this Severance Agreement, he has
made no assignment to any third party of any legal claims against any of the
Released Parties, and that he has not filed any legal action, charge or suit
against any of the Released Parties with any court, administrative agency or
legal body of any sort.

                                       3

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      4.3 WAIVER OF RECOVERY. Mr. Gyenes hereby waives any right to remedy or
recovery as a result of any administrative proceeding or other legal action
related to his employment with Zila that has been or may in the future be filed
on his behalf by any third party.

      4.4 CONSIDERATION. Pursuant to this Severance Agreement, Mr. Gyenes is
making certain commitments to Zila and related entities and persons. Mr. Gyenes
acknowledges that he is receiving good and valuable consideration for the
commitments he is making pursuant to this Severance Agreement, that such
consideration is over and above what he is owed in the absence of this Severance
Agreement, and that he would not receive the consideration he is receiving
pursuant to this Severance Agreement if he did not agree to all of the
provisions of this Severance Agreement.

      4.5 GENERAL RELEASE BY ZILA. Zila unconditionally and forever releases,
discharges and holds harmless, and agrees to indemnify, Mr. Gyenes of and from
any and all actions, causes of action, suits, debts, accounts, liabilities,
covenants, contracts, disputes, agreements, promises, claims and demands, of any
kind or nature whatsoever, fixed or contingent, whether at law or in equity,
which Zila had, now has or may have against Mr. Gyenes, whether or not currently
known, arising from or relating to Mr. Gyenes' employment with Zila, or any
event, dispute or occurrence which arose on or prior to the date of this
Severance Agreement; provided, however, that nothing in this Severance Agreement
shall be deemed to release Mr. Gyenes from the obligations of this severance
Agreement and all the promises contained in this Severance Agreement. Zila
specifically waives the benefits of any statutory or common law of any state,
which in effect provides that a general release does not extend to claims which
the releaser does not know or suspect to exist in his favor. It is expressly
understood and agreed that the releases contained in this Section 4.5 are
intended to cover and do cover all known facts and/or claims, as well as any
further facts and/or claims within the scope of such released claims not known
or anticipated, but which may later develop or be discovered, including all the
effects and consequences thereof. Zila acknowledges that it may hereafter
discover facts in addition to, or different from, those which it now believes to
be true with respect to the subject matter of the claims released herein, but
agrees that it has taken that possibility into account in reaching this
Severance Agreement, and that the releases given herein shall be and remain in
effect notwithstanding the discovery or existence of any such additional or
different facts, as to which Zila expressly assumes the risk.

                                     PART V
                               GENERAL PROVISIONS

      5.1 KNOWING AND VOLUNTARY AGREEMENT. Each party enters into this Severance
Agreement of his or its own free will and has not been pressured or coerced in
any way whatever into signing this Severance Agreement. In addition:

            5.1.1 Mr. Gyenes has been advised, in writing, to consult with an
attorney prior to executing this Severance Agreement.

            5.1.2 Mr. Gyenes understands that he is waiving all rights and
claims against the Released Parties that he may have under the Age
Discrimination in Employment Act, 29 U.S.C. Section 621 et seq. ("ADEA"), as
well as all rights and claims as more fully described in Section 4.1.

            5.1.3 By executing this Severance Agreement, Mr. Gyenes understands
that he is not waiving rights or claims that may arise out of acts, omissions or
matters occurring after execution of this Severance Agreement.

                                       4
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            5.1.4 Mr. Gyenes acknowledges that he has been given the opportunity
to consider this Severance Agreement for twenty-one (21) calendar days, and that
he may take, and has taken, as much of that time as he wants in order to
consider this Severance Agreement before signing it.

            5.1.5 Mr. Gyenes understands that he has seven (7) calendar days
following his execution of this Severance Agreement to revoke this Severance
Agreement and that this Severance Agreement shall not become effective until the
conclusion of that seven (7)-day period. To revoke this Severance Agreement
during that seven (7)-day period, Mr. Gyenes must provide a written revocation
notice to Gary Klinefelter, Vice President and General Counsel, Zila, Inc., 5227
North Seventh Street, Phoenix, AZ 85014 (fax number 602.280.1216; e-mail
gklinefelter@zila.com). If Mr. Gyenes revokes this Severance Agreement, none of
its provisions shall be effective or enforceable.

      5.2 SUBSEQUENT LITIGATION COSTS. In the event of any legal proceeding
arising out of or related to this Severance Agreement, litigation costs shall be
paid as follows:

            5.2.1 Although Mr. Gyenes waives his rights to bring legal claims
against Zila, including claims under the ADEA, Mr. Gyenes retains his right (as
provided by applicable law) to challenge the validity of his waiver of ADEA
claims under this Severance Agreement. If Mr. Gyenes chooses to challenge the
validity of the ADEA release provided by this Severance Agreement, the
litigation costs, including attorneys' fees, of the parties related to that
challenge will be paid as provided by applicable law and/or as ordered by the
court hearing the challenge.

            5.2.2 In the event of any other kind of legal proceeding arising out
of or related to this Severance Agreement, the prevailing party shall recover
his or its litigation costs (including, without limitation, reasonable
attorneys' fees, expert witness fees and both taxable and non-taxable costs)
incurred in connection with the dispute underlying such legal proceeding.

      5.3 SEVERABILITY. In the event that any provision or part of any provision
of this Severance Agreement should be held to be invalid or for any reason
unenforceable, the remaining portions of this Severance Agreement shall remain
in full force and effect unless, as a result of such unenforceability, the
fundamental purpose of this Severance Agreement is thwarted.

      5.4 ASSIGNMENT TO THIRD PARTIES. Neither this Severance Agreement nor any
of the rights or obligations arising hereunder may be assigned by any party to
this Severance Agreement to any third party without the prior written consent of
the non-assigning party except that Zila may, without such consent, assign all
such rights and obligations to an affiliate of Zila or to a successor in
interest to Zila, which party shall assume all obligations and liabilities
hereunder.

      5.5 MODIFICATION / WAIVER. No modification, amendment or waiver of any of
the provisions contained in this Severance Agreement shall be binding upon any
party hereto unless made in writing and signed by such party or by a duly
authorized officer or agent of such party.

      5.6 GOVERNING LAW / VENUE AND JURISDICTION. This Severance Agreement shall
be governed by the laws and judicial decisions of the State of Arizona. Any
legal action arising out of or related to this Severance Agreement shall be
instituted in the state or federal courts within the State of Arizona, and both
Mr. Gyenes and Zila specifically consent to venue and personal jurisdiction in
such courts.

      5.7 HEADINGS. Headings used in this Severance Agreement, as designated by
bold typeface, are for convenience only and shall not be used to interpret or
construe the Severance Agreement's provisions.

                                       5
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      5.8 NO EFFECT ON OTHER OBLIGATIONS. This Severance Agreement does not
eliminate or change any post-employment obligations Mr. Gyenes may have to Zila
that are unrelated to the subject matter of this Severance Agreement.

      5.9 INTEGRATION. Except as specifically noted in Section 3.1 above, this
Severance Agreement constitutes a single, integrated written contract expressing
the entire agreement of the parties concerning the subject matter of this
Severance Agreement. With the exception noted in the preceding sentence, no
other agreements or understandings of any kind concerning the subject matter of
this Severance Agreement, whether express or implied in law or fact, have been
made by the parties to this Severance Agreement.

      5.10 SIGNATURES AND EFFECTIVE DATE. The parties hereto have executed this
Severance Agreement on the dates appearing below. This Severance Agreement shall
become effective upon (i) its execution by all parties hereto, and (ii)
expiration of the revocation period set forth in Section 5.1.5 above. If any
party fails to execute this Severance Agreement, or Mr. Gyenes revokes this
Severance Agreement within the applicable revocation period, this Severance
Agreement shall have no force or effect.

Dated: 7/30/07                  /s/ Lawrence A. Gyenes
                                ------------------------------------------------
                                Lawrence A. Gyenes

                                ZILA, INC.

Dated: 7/30/07                  By: /s/ Frank J. Bellizzi
                                    --------------------------------------------
                                    Frank J. Bellizzi, Executive Vice President

                                        6
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                                                                       Exhibit A

                                     [ZILA LOGO]

                                                        Zila Biotechnology, Inc.
                              5227 North 7th Street - Phoenix Arizona 85014-2800
                    Toll-Free 800-922-7887 - Tel 602-266-6700 - Fax 602-280-1207
                                                                     [ILLEGIBLE]
                                                                    www.zila.com

March 6, 2007

Mr. Lawrence A. Gyenes
16 Benedict Crescent
Basking Ridge, NJ 07920

Re:   Employment with Zila, Inc.

Dear Larry:

      I am pleased to extend an employment offer to you on behalf Zila, Inc.
(the "Company") on the following terms:

      1. TITLE. Your title will be Chief Financial Officer (CFO).

      2. START DATE. Your target start date is March 12, 2007. (Your actual
first day of employment with the Company, whether March 12, 2007 or some other
date, is referred to herein as the "Start Date.")

      3. REPORTING STRUCTURE. You will report directly to me in my capacity as
CEO of the Company.

      4. RESPONSIBILITIES. Your responsibilities will be those consistent with
the above-described position and/or as they may be assigned to you by the
Company.

      5. BASE SALARY. Your initial base salary will be paid at the rate of three
hundred thousand dollars ($300,000.00) per year, less applicable withholdings as
may be required by law, in accordance with the Company's regular payroll
practices (currently bi-weekly).

      6. AUTO ALLOWANCE. You will receive an auto allowance as may approximately
be commensurate with those provided other executive-level employees. Initially,
this will be $800 per month, subject to Internal Revenue Service regulations and
paid in accordance with the Company's regular payroll practices.

      7. SPECIAL BONUS. No later than the first regular Company payroll date on
or after sixty (60) says from the Start Date, you will receive a one-time
special bonus in the amount of twenty-five thousand dollars ($25,000.00), less
applicable withholdings as may be required by law. You must still be employed by
the Company on such payroll date to receive this bonus. If you voluntarily
terminate your employment with the Company within six (6) months of the Start
Date, you will repay the Company 100% of this bonus.

<PAGE>

Mr. Lawrence A. Gyenes
March 6, 2007
Page 2

      8. ELIGIBILITY FOR PERFORMANCE BONUSES. You will 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 base salary, less applicable withholdings as may
be required by law. You will be eligible to participate in such incentive bonus
plan for fiscal year 2007 (ending July 31, 2007) on a pro rata basis based on
time actually employed during this fiscal year.

      9. STOCK OPTIONS. Subject to approval of the Company's Board of Directors
or its Compensation Committee, you will receive the following stock option
grants to purchase the Company's common stock under the Zila, Inc. 1997 Stock
Option Award Plan, as amended and restated December 5, 2002 (the "Stock Option
Plan"), or such amended or restated stock option plan as may then be in effect:
A total of 200,000 options, effective on the Start Date and Vesting in three
equal installments on the first, second and third anniversaries of the Start
Date (66,667 on the first and second anniversaries, respectively, and 66,666 on
the third anniversary). You will also be eligible for additional stock option
grants based on individual performance and/or as may be commensurate with grants
to other executive-level employees. 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.

      10. RESTRICTED STOCK. Subject to approval of the Company's Board of
Directors or its Compensation Committee, you will be granted 50,000 shares of
restricted stock. The restrictions on the shares will be removed in equal
amounts on the first, second and third anniversaries of the Start Date,
respectively.

      11. INSURANCE. You will receive insurance benefits as provided to other
executive-level employees. 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.

      12. PAID TIME OFF. You will receive paid time off ("PTO") in accordance
with the Company's regular PTO policy except your initial allotment of PTO will
be 20 days rather than the 18 recited in the policy. Otherwise, all aspects of
the Company's regular PTO policy will apply to you. You will also receive paid
holidays in accordance with the Company's regular holiday policies.

      13. OTHER BENEFITS. You will receive other benefits as may be commensurate
with those provided to other executive-level employees. Currently, these include
participation in a 40l(k) plan, an employee stock purchase plan, a flexible
spending program/Section 125, and employee recognition programs.

<PAGE>

Mr. Lawrence A. Gyenes
March 6, 2007
Page 3

      14. TERM. The term of this Agreement shall be for three (3) years from the
Start Date. The term shall automatically be extended for successive one-year
terms starting on the third anniversary of the Start Date, and continuing each
anniversary thereafter, unless the Company gives you a minimum of 120 days
advance written notice of nonextension before any such anniversary.

      15. RELOCATION BENEFITS. The Company will reimburse you for the following
actual, documented expenses in connection with your relocation to Arizona: (i)
Reasonable out-of-pocket expenses related to trips between New Jersey and
Arizona for you and/or your fiance to transition living arrangements, not to
exceed a total of $10,000; (ii) costs associated with the move to Arizona of
your possessions from your current principal residence and up to two vehicles at
actual professional van line costs based on the lowest bid from three separate
companies; (iii) reasonable out-of-pocket expenses related to transporting (by
airplane or automobile) you and your fiance for your move from New Jersey to
Arizona; (iv) temporary housing in the Phoenix area for up to six months at a
maximum of $3,000 per month; and (v) realtor fees and other traditional closing
costs that are your responsibility on any sale of your current principal
residence within one year of the Start Date, and on any purchase of a home in
the Phoenix area within one year of the Start Date, the total of which closing
costs may not exceed the sum of $50,000 (collectively, "Relocation Benefits").
Relocation Benefits will be paid in accordance with Internal Revenue Service
regulations.

            15.1 REPAYMENT OF RELOCATION BENEFITS. If you voluntarily terminate
your employment with the Company on or before 15 months from the Start Date, you
will repay the Company 100% of all Relocation Benefits you actually received
pursuant to this Agreement. If you voluntarily terminate your employment with
the Company later than 15 months from the Start Date and on or before 18 months
from the Start Date, you will repay the Company 75% of all such Relocation
Benefits. If you voluntarily terminate your employment with the Company later
than 18 months from the Start Date and on or before 21 months from the Start
Date, you will repay the Company 50% of all such Relocation Benefits. If you
voluntarily terminate your employment with the Company later than 21 months from
the Start Date and on or before 24 months from the Start Date, you will repay
the Company 25% of all such Relocation Benefits. If you voluntarily terminate
your employment later than 24 months from the Start Date, you will have no
repayment obligation. You agree that the Company may withhold from any
compensation that may be due you upon termination of your employment any sum you
may owe the Company pursuant to this provision, and that if you are not due
sufficient funds to cover what you owe the Company, the Company may withhold all
compensation due you and you will pay the balance owing the Company within
thirty (30) calendar days of your last day of employment.

      16. 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.

<PAGE>

Mr. Lawrence A. Gyenes
March 6, 2007
Page 4

      17. SEVERANCE BENEFITS. If the Company terminates your employment, you
shall be eligible to receive severance benefits ("Severance Benefits") in
accordance with the following:

            17.1 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 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 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 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.

            17.2 TERMINATION WITHOUT CAUSE. If the Company terminates your
employment for any reason that is unrelated to (i) a Change in Control, (ii)
your conduct or job performance, and (iii) your inability to perform your job
(e.g., due to incapacity or death) (hereafter a termination "Without Cause"),
you shall 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.

            17.3 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 17.4
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").

            17.4 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

<PAGE>

Mr. Lawrence A. Gyenes
March 6, 2007
Page 5

of your receipt of same, your right to execute the release, and your
corresponding right to Severance Benefits, will be extinguished.

            17.5 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.

            17.6 TIMING OF SEVERANCE PAY. All sums payable to you pursuant to
subparts 17.1 or 17.2 above shall be paid in a lump sum within six (6) months
plus five (5) business days 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
subpart 17.1 or 17.2, 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 or lengthens
the time period set forth in the first sentence of this subpart 17.6) (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.

            17.7 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; (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.

      18. 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.

      19. 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
<PAGE>
Mr. Lawrence A. Gyenes
March 6,2007
Page 6

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 Scetion 23-355 (which
Provides for the possibility of treble damages for unpaid wages) shall not apply
to Paragraph 17 of this Agreement (or its subparts), or to any payment(s)
arguably due under Paragraph 17 of this Agreement (or its subparts), or to any
dispute arising under Paragraph 17 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.

      20. SEVERABILLTY. 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.

      21. OTHER AGREEMENTS. As a condition of your employment with the Company,
you must also execute the enclosed Employee Confidentiality and Intellectual
Property Agreement, 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.

      As with all our offers to prospective executive-level employees, this
offer is contingent upon satisfactory completion of those portions of our
standard due dillgence (including background and reference checks) as may be
applicable to your prospective employment.

      We believe you will be a valuable addition to the Company and we hope you
will accept this offer. If you wish to do so, please sign where indicated below
and return this Agreement. Please let us know if you have any questions.

                                      Sincerely,

                                      /s/ Douglas D. Burkett
                                      ------------------------------------------
                                      Douglas D. Burkett, Ph.D.
                                      CEO and President

<PAGE>

Mr.Lawrence A. Gyenes
March 6, 2007
Page 7

STATEMENT OF ACCEPTANCE:

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

Dated: March 7, 2007                            /s/ Lawrence A. Gyenes
                                                --------------------------------
                                                Lawrence A. Gyenes

<PAGE>

                                                                       Exhibit B

                                     [LOGO]

                            EMPLOYEE CONFIDENTIALITY
                       AND INTELLECTUAL PROPERTY AGREEMENT

      This Employee Confidentiality and Intellectual Property Agreement (this
"Agreement") is made by the undersigned employee ("I" or "me") with Zila, Inc.
(including each of its subsidiaries) ("Zila"). In consideration of my
employment, or my continued employment, with Zila, I agree as follows:

1.    DEFINITIONS

"Confidential Information" means all information (whether or not specifically
labeled as "confidential") that relates to the business, products, services,
research or development of Zila or its suppliers, distributors or customers
that: (i) qualifies as a trade secret under applicable law or (ii) derives value
(whether current or potential) from not being generally known to the public or
other persons in the same industry as Zila or (iii) is otherwise treated as
confidential by Zila or has not become publicly known. Examples include, but are
not limited to:

(a)   internal business information (including information relating to
      strategies, training, marketing, promotional and sales plans or practices,
      costs, rate and pricing structures and financial information);

(b)   identities of, and any information concerning, Zila's relationships with
      its suppliers, distributors, customers, investors, affiliates or other
      business associates, as well as their confidential information;

(c)   compilations of data and analyses, techniques, systems, computer programs,
      formulae, existing research or research plans, records, reports, manuals,
      documentation, models, customer and/or supplier lists, data and databases;
      and

(d)   Intellectual Property, as defined below.

"Intellectual Property" means all work product, ideas, designs, inventions,
processes, formulae, know how, devices, designs, methods, specifications,
programs, patentable or copyrightable works, mask works and all other
intellectual property that is produced, created, conceived or reduced to
practice by me, either alone or jointly with others, in whole or in part during
the term of my employment with Zila that (i) relate, at the time of production,
creation, conception or reduction to practice, to Zila's actual or anticipated
business or research and development or (ii) result from any work performed by
me for Zila or (iii) were developed with the use of Zila's equipment, supplies,
facilities or trade-secret information or (iv) were developed with the use of
time for which I was compensated by Zila.

<PAGE>

2.    NONDISCLOSURE OF CONFIDENTIAL INFORMATION

During my employment with Zila, I will not disclose or use any Confidential
Information except to the extent such disclosure or use is required in the
performance of my duties for Zila and is authorized by Zila. I will use my best
efforts to safeguard Confidential Information and protect it from disclosure,
misuse, loss or theft. I will not remove or transfer any Confidential
Information from Zila's premises (including electronically and/or for purposes
of working at home) without the prior consent of my supervisor and/or a
corporate officer of Zila.

After the termination of my employment with Zila, I will not use any
Confidential Information nor will I disclose any Confidential Information to any
person or entity. Upon termination of my employment, I will immediately deliver
to Zila all Zila property that is within my possession or control including,
without limitation, originals and all copies of all documents, materials or
media (whether in paper, electronic or other form) embodying or reflecting
Confidential Information. If Zila requests, I will provide written confirmation
that I have returned all Zila property and will provide a list of all such
property.

To the extent that I am bound by nondisclosure restrictions relating to
confidential information of third parties (e.g., former employers), I agree not
to disclose such information or violate such restrictions during the course of
or in connection with my employment with Zila.

3.    EMPLOYER OWNERSHIP OF INTELLECTUAL PROPERTY

I agree to promptly disclose, grant and irrevocably assign to Zila for its sole
use and benefit all Intellectual Property. I will execute and deliver such
documents as may be necessary or proper in Zila's opinion to vest in Zila
complete title to the Intellectual Property and to obtain and enforce its rights
to the Intellectual Property in the United States and throughout the world. In
the event I am unable to execute and/or deliver such documents, I irrevocably
designate and appoint Zila as my agent and attorney-in-fact to act for and on my
behalf to enable Zila to obtain and enforce its rights to the Intellectual
Property in the United States and throughout the world. These obligations
(including, without limitation, the obligation to disclose all Intellectual
Property produced, created, conceived or reduced to practice in whole or in part
during my employment with Zila) shall continue after termination of my
employment with Zila.

I agree that any Intellectual Property including, without limitation, written,
graphic or computer-programmed materials, authored, prepared, contributed to or
written by me shall be done as "work made for hire" as defined by the Copyright
Act of 1976.

4.    PRIOR INTELLECTUAL PROPERTY

Prior to becoming employed by Zila, I made no inventions and acquired no
interest in inventions that relate in any way to Zila's actual or anticipated
business or research and development and that are the subject of issued patents
or pending patent applications, or that might become the basis for one or more
patent applications, with the exception of those listed on Exhibit A.

                                       2

<PAGE>

Prior to becoming employed by Zila, I made no works and acquired no interest in
works that relate in any way to Zila's actual or anticipated business or
research and development and that are the subject of existing copyright
protection or pending applications for copyright protection, or that might
become the basis for one or more applications for copyright protection, with
the exception of those listed on Exhibit B.

5.    REASONABLENESS AND NON-COMPLIANCE

I agree that the limitations set forth in this Agreement are reasonable and are
properly required for the protection of the legitimate  business interests of
Zila.

I acknowledge that any violation of my obligations under this Agreement is
likely to result in immediate and irreparable harm to Zila, the exact monetary
amount of which will be difficult or impossible to ascertain, and that the
remedies at law for any such violation will not be reasonable or adequate
compensation to Zila for such a violation. Accordingly, I understand that if I
violate any of the provisions of this Agreement, Zila shall, in addition to any
other remedies that may be available at law or in equity, be entitled to an
injunction prohibiting my continued violation of this Agreement and/or a decree
of specific performance. In connection with any such application, Zila will not
be required to post bond or other security, and will not have to prove actual
damages. If Zila successfully enforces this Agreement against me in any court of
competent jurisdiction, I will reimburse and indemnify Zila for the actual costs
incurred by Zila in enforcing this Agreement, including reasonable attorneys'
fees and costs.

6.    SUBSEQUENT NOTIFICATION

I agree that Zila may present a copy of this Agreement to any of my actual or
prospective employers following termination of my employment with Zila. I also
agree that for one (1) year following termination of my employment with Zila, I
will, prior to accepting employment or other engagement with any person or
entity that competes in any way with Zila, show such person or entity a copy of
this Agreement.

7.    SEVERABILITY

In the event any provision or part of any provision of this Agreement is held or
found to be illegal, invalid or unenforceable, such provision shall not affect
any other provisions of this Agreement, and the remainder of this Agreement
shall continue in full force and effect.

                                       3

<PAGE>

8.    MODIFICATIONS AND WAIVERS

I understand that this Agreement may not be modified unless such modification is
in writing and signed by both an authorized representative of Zila and me. I
also understand that the failure by Zila to insist upon my compliance with this
Agreement in any particular instance or series of instances shall not be deemed
a waiver of this Agreement or any of its provisions.

9.    GOVERNING LAW

This Agreement shall be governed by the laws of the State of Arizona without
regard to any choice-of-law or conflict-of-law rule that would cause the
application of the laws of any other jurisdiction.

10.   JURISDICTION; VENUE AND JURY TRIAL WAIVER

I agree that the exclusive forum and venue for any litigation between me and
Zila arising out of or relating to this Agreement shall be the Arizona Superior
Court, sitting in Maricopa County or the United States District Court for the
District of Arizona. I hereby consent to submit myself and my property to the
exclusive jurisdiction of the Arizona Courts for the purposes of any such
litigation.

I HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT
TO ENFORCE ANY PROVISION OF THIS AGREEMENT

11.   ENTIRE AGREEMENT

This Agreement and its exhibits and amendments, if any, constitute a single,
integrated written contract expressing the entire agreement I have with Zila
regarding the subject matter of this Agreement and supercede any previous
understandings or agreements, whether written or oral, regarding such subject
matter.

                                       4

<PAGE>

12.   STATEMENT OF UNDERSTANDING

I have read this Agreement and I understand it. I have had the opportunity to
obtain advice from a lawyer about this Agreement, and if I have not obtained
such advice it is because I have chosen not to obtain it. I have had the
opportunity to ask Zila questions about this Agreement and any such questions I
have asked have been answered to my satisfaction. I enter into this Agreement of
my own free will. I have been given my own copy of this Agreement to keep for my
personal records.

Print full name: Lawrence A. Gyenes                 WITNESS:

Title: CFO                                          ____________________________

Signature: /s/ Lawrence A. Gyenes                   NOTARY:
           ----------------------

Date Signed: 3/12/07                                ____________________________

                                       5

<PAGE>

                                                                       EXHIBIT A

The following is a complete list of all inventions that I made or acquired an
interest in prior to becoming employed by Zila that relate in any way to Zila's
actual or anticipated business or research and development and that are the
subject of issued patents or pending patent applications or that might become
the basis for one or more patent applications as addressed in Section 4 of my
Employee Confidentiality and Intellectual Property Agreement:

       X
_________________                No inventions

_________________                See list below

_________________                See additional pages attached

Print full name: Lawrence A. Gyenes

Title: CFO

Signature: /s/ Lawrence A. Gyenes
           -----------------------

Date signed: 3/12/07

                                       6

<PAGE>

                                                                       EXHIBIT B

The following is a complete list of all works that I mads or acquired an
interest in prior to becoming employed by Zila that relete in any way to Zila's
actual or anticipated business or research and development and that are the
subject of existing copyright protection or pending applications for copyright
protection or that might become the basis for one or more applications for
copyright protection as addressed in Section 4 of my Employee Confidentiality
and Intellectual Property Agreement:

        X
___________________               No works

___________________               See list below

___________________               See additional pages attached

Print full name: Lawrence A. Gyenes

Title: CFO

Signature: /s/ Lawrence A. Gyenes
           ----------------------

Date signed: 3/12/07Well Service and Operating Agreement

Exhibit 10.1

WELL SERVICE AND OPERATING AGREEMENT

 

     This Well Service and Operating Agreement (“Agreement”) effective May 11, 2007 (“Effective Date”), is by and between Cobra Oil & Gas Company, a Nevada corporation, 17790 E. Purdue Place, Aurora, Colorado 80013 (“Cobra”) and DNR Oil & Gas, Inc., 12741 E. Caley, Unit 142, Englewood, Colorado 80111 (“DNR”). Cobra and DNR may be referred to herein individually as a “Party” or collectively as the “Parties.”

RECITALS.

     A.      Cobra is willing to retain DNR as an independent contractor to service and operate the Assets pursuant to the terms of this Agreement.

     B.      The Parties are sophisticated entities aware of the customs and practices of the oil and gas industry and are knowingly and voluntarily entering into this Agreement.

AGREEMENT

     In consideration of the following mutual promises and covenants, the Parties agree as follows:

     1.      Services to be Provided by DNR. DNR shall perform the following services for Cobra:

          a.      Operation of the Assets. DNR shall operate the Assets in accordance with past practices and the laws of the jurisdiction in which the Assets are located. DNR may contract with Tindall Operating Company to coordinate and assist in operation of those Assets in Colorado. Neither DNR nor Tindall Operating Company shall be liable in any way for any actions or failure to act resulting from its performance or lack of performance under this Agreement absent proof of willful misconduct or gross negligence.

          b.      Maintenance of the Assets and Repairs Costing $5,000 or Less. DNR shall perform routine, day to day maintenance on the Assets and, without consulting or obtaining approval from Cobra, may effectuate any repairs for which the expenditure does not exceed $5,000. DNR shall summarize its monthly maintenance and repair expenditures in the monthly statement to Cobra described herein. Cobra authorizes DNR to withhold the costs of routine, day to day maintenance and repairs, each of which cost $5,000 or less, from the monthly sales proceeds from the Assets collected by DNR and forwarded to Cobra.

          c.      Repairs or Expenses of More than $5,000. DNR shall not incur any repair or other expense related to the maintenance or operation of the Assets of more than $5,000 without the advance approval of Cobra. DNR shall summarize all expenses of more than $5,000 in a monthly statement to Cobra. Cobra authorizes DNR to withhold the costs of repairs or other expenses of more than $5,000 that have been approved in

 

1

advance by Cobra from the monthly sales proceeds from the Assets collected by DNR and forwarded to Cobra.

          d.      Sales of Oil and Gas. DNR shall market and sell oil and gas produced from the Assets in accordance with past practices and the laws of the jurisdiction in which each well is located unless otherwise directed in writing by Cobra.

          e.      Receipt and Disbursal of Funds. DNR shall collect all monies from the sale of oil and gas produced from the Assets and shall pay all billings resulting from the servicing and operation of the Assets including accounting and pumper costs. DNR also shall pay all royalties, overriding royalties and taxes accruing from production or sales of oil and gas from the Assets and any rentals or other payments required under any applicable agreement and any oil and gas lease on which the Assets are located. Cobra shall be solely liable for the payment or any failure by DNR or Tindall Operating Company to properly pay any billing, royalty, tax or other direct or indirect cost absent willful misconduct or gross negligence by DNR.

          f.      Monthly Statement of Operations and Accounts. Not later than 60 days after the end of each month, DNR shall provide to Cobra a statement of operations and an accounting of all receipts and expenditures incurred in the operation of the Assets for said month. Such statements and accountings shall be in a form generally utilized and accepted in the oil and gas industry and of sufficient factual detail so as to allow Cobra to monitor activities associated with the Assets. If the income generated from oil and gas sales for each month exceeds the direct and indirect costs associated with operating the Assets, including repair, maintenance and administrative charges, DNR shall remit to Cobra at the same time that it submits its statement of operations and accounting, the net profit from operations for that month. If the income generated from oil and gas sales for any month is less than the direct and indirect costs associated with operating the Assets, including repair, maintenance and administrative charges, DNR shall bill Cobra for the difference between receipts and expenditures. Cobra shall pay such billings within 30 days after receipt of the billing. Any billed items not paid by Cobra within 30 days shall accrue interest, compounded daily at a rate of 2%.

          g.      Filing of Government Reports. Cobra authorizes DNR to, and DNR shall file all reports required by the jurisdiction in which the Assets are located. DNR shall forward a copy of any filings to Cobra.

          h.      Access to Records and Right to Audit Records. DNR shall keep and maintain such books and records as are necessary to enable Cobra from time to time, to audit and verify: (i) the quantity and quality of oil and gas production from the Assets during the term of the Agreement; (ii) the price received by DNR for all oil and gas sold from the Assets during the term of the Agreement; and (iii) payment of all lease rentals, royalties, overriding royalties, direct and indirect well service and operational costs, administrative overhead charges and any other income, payments or expenses associated with the servicing and operation of the Assets during the term of the Agreement. DNR also shall keep and maintain reports, logs and other information as are customary with respect to oil and gas development, production and sales during the term of this 

 

2

Agreement. DNR shall maintain a copy of such books and records relating to operations during the term of the Agreement for a period of four years after the termination of the Agreement and, upon reasonable notice, Cobra shall have the right to inspect, copy and audit all such books and records.

     2.      Insurance. DNR shall obtain and continue in force during the term of this Agreement the following insurance coverages on an occurrence and not on a claims made basis:

	              	a.      	General Liability Insurance with a combined single limit of at least One Million Dollars ($1,000,000) including Contractual, Protective Liability, Products/Completed Operations and X, C, U, D and E Coverages. 
		 
		b.      	Automobile Liability Insurance covering all owned, non-owned and hired vehicles with limits of at least One Million Dollars ($1,000,000) combined single limit each occurred included. 
		 
		c.      	Workers’ Compensation Insurance in amounts required by applicable state law. 
		 
		d.      	Employers’ Liability Insurance with limits of at least five hundred Thousand Dollars ($500,000) each occurrence. 
		 
		e.      	The cost of these insurance coverages shall be an indirect cost billed back to and paid by Cobra. 
		 

	     3.      	Duties of Cobra. Cobra shall do the following: 

              a.      Duty to Pay DNR Monthly. In addition to reimbursing DNR for incurred costs and payments described herein, Cobra also shall pay DNR $400.00 per month on the first day of each month in order to compensate DNR for the services it provides under this Agreement (the “Service Fee”).

               b.      Duty to Provide Access and Authority. Cobra shall provide DNR with access to the Assets and with authority necessary to operate the Assets and perform all other services required by this Agreement.

                c.      Duty to Communicate. Cobra shall communicate regularly with DNR about the Assets and provide telephone contact information such that DNR may always contact a Cobra representative.

                d.      Duty to Update DNR. Cobra shall promptly advise DNR of any change in lease ownership or of any other information relevant in any way to operation of the Assets or the other services being performed by DNR.

     4.      Term and Termination. The initial term of this Agreement shall be from the Effective Date through May 31, 2007. Thereafter, the term of the Agreement shall be

 

3

month to month until terminated by either Cobra or DNR as provided herein. 

          a.      Termination by DNR. DNR may not terminate this Agreement before May 31, 2008. On or after June 1, 2008, DNR may terminate this Agreement for any reason so long as it provides Cobra with 30 days advance written notice of its intent to terminate the Agreement.

          b.      Termination by Cobra. Cobra may terminate this Agreement at any time by providing DNR with 30 days advance written notice of its intent to terminate this Agreement and verifiable written proof acceptable to DNR that Cobra or some other designee has, without limitation, obtained all necessary insurance or bonds, filed all bonds, applications, or instruments, undertaken all other necessary actions and received all government permits and approvals required to assume operation of all of the Assets.

          c.      Transfer of Records upon Termination. Within 10 business days of the termination of this Agreement by either Party, DNR agrees to make the records in its possession related to the Assets available for pick-up at DNR’s offices by Cobra.

     5.      Miscellaneous Provisions.

          a.      Assignment. Cobra shall not assign this Agreement. DNR shall not assign this Agreement without the prior written consent of Cobra. All assignees of DNR approved by Cobra shall be bound by the terms of this Agreement.

          b.      Notices. Notices required under this Agreement shall be effective on receipt and shall be made in writing sent by mail and addressed as follows:

 

 

 

 

 

 

 

 

 

 

4

Cobra 

Cobra Oil & Gas Company

17790 E. Purdue Place

Aurora, Colorado 80013

Attention:      Doug Berry

DNR

DNR Oil and Gas, Inc.

12741 E. Caley, Unit 142

Englewood, CO 80111

Attention:      Charles B. Davis

          c.      Attorneys’ Fees. If the interpretation or enforcement of this Agreement, or any provision thereof, results in any legal action, each Party shall bear its own expenses, court costs and attorney fees.

          d.      Default. If either Party defaults in the performance of any of the covenants or provisions of this Agreement, the non-defaulting Party shall notify the defaulting Party in writing and the defaulting Party shall have 60 days after the receipt of such notification within which to cure the default. If the defaulting Party fails to cure any default within the 60 day cure period, the non-defaulting party may declare this Agreement terminated. Waiver of any default shall not be deemed a waiver of subsequent defaults.

          e.      Entire Agreement. This Agreement is the entire agreement between the Parties. It may only be amended in writing signed by all Parties.

          f.      Choice of Law. This Agreement shall be governed by Colorado law.

          g.      Force Majeure. If DNR is rendered unable, wholly or in part, by force majeure to carry out its obligations under this Agreement, other than the obligation to make money payments, DNR shall give Cobra prompt written notice of the force majeure. Thereafter, the obligations of DNR, so far as they are affected by the force majeure, shall be suspended during, but no longer than, the continuance of the force majeure. DNR shall use all possible diligence to remove the force majeure as quickly as possible. The term “force majeure” as herein employed shall mean an act of God, strike, lockout, or other industrial disturbance, act of the public enemy, war, blockade, public riot, lightning, fire, storm, snow, wet ground conditions, flood, explosion, governmental restraint, delay or failure of government to issue a permit or approval, unavailability of equipment, and any other cause, whether of the kind specifically enumerated above or otherwise, which is not reasonably within the control of DNR.

 

 

5

           h.      Counterpart Execution. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.

           i.      Further Assurances. The Parties agree to cooperate and to undertake whatever further actions including, but not limited to, the execution of additional documents necessary to effectuate the intent and purpose of this Agreement.

           j.      No Third-Party Beneficiaries. This Agreement is intended to benefit only the Parties; there are no third-party beneficiaries to this Agreement.

          k.      Relationship of the Parties. With respect to this Agreement, each Party shall not be considered the agent, partner, employee or fiduciary of the other Party, nor shall this Agreement be construed as creating a mining partnership or other partnership or association. DNR shall be considered to be an independent contractor of Cobra, and not a partner, member or joint venturer with Cobra. Cobra agrees not to direct the day to day activities of DNR; Cobra is only interested in the results obtained.

     IN WITNESS WHEREOF, the Parties have executed this Agreement on the date above written.

	COBRA OIL & GAS COMPANY  	DNR OIL AND GAS, INC  
	                                                           .  	  
	 	
	  
	DOUG BERRY  	CHARLES B. DAVIS  
	Doug Berry, President  	Charles B. Davis, President  

 

 

 

 

 

 

 

 

 

 

6

STATE OF COLORADO                      )

                                                               ) ss.

COUNTY OF ARAPAHOE                  )

     The foregoing instrument was acknowledged before me this 11th day of May 2007, by Doug Berry as President of Cobra Oil & Gas Company, a Nevada corporation.

     WITNESS my hand and official seal.

	My commission expires:  	CARRIE L. WITZEL  
	  	Notary Public  
	4/22/2011  	  

 

 

 

STATE OF COLORADO                      )

                                                               ) ss.

COUNTY OF ARAPAHOE                  )

     The foregoing instrument was acknowledged before me this 11th day of May 2007, by Charles B. Davis as President of DNR Oil and Gas, Inc., a Colorado corporation.

     WITNESS my hand and official seal.

	My commission expires:  	CARRIE L. WITZEL  
	  	Notary Public  
	4/22/2011  	  

 

 

 

 

 

 

 

7

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