ZILA INC
EX-10AN
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<P align="right" style="font-size: 10pt">Exhibit&nbsp;10-An



<P align="center" style="font-size: 10pt">January&nbsp;15, 2004



<P align="left" style="font-size: 10pt">Mr.&nbsp;Andrew A. Stevens<BR>
xxxxxxxxx Drive<BR>
Phoenix, Arizona


<P align="left" style="font-size: 10pt">Dear Andrew:



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pending, and subject to, final approval from the Zila, Inc. Board of
Directors and completion of our reference-checking procedures, we are pleased
to extend you this offer to become the Vice President, Chief Financial Officer
(CFO), Treasurer, and Secretary of Zila, Inc. (the &#147;Company&#148;). You would
report to me in my capacity as the Company&#146;s Chief Executive Officer.
Specifically, the terms of this offer are as follows:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.&nbsp;Start date. </B>January&nbsp;22, 2004.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.&nbsp;Title. </B>Vice President, Chief Financial Officer, Treasurer, and
Secretary.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.&nbsp;Responsibilities. </B>Those consistent with the position of CFO and/or as
may be assigned to you by the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.&nbsp;Hiring Bonus. </B>A one-time signing bonus of $5,000, paid in accordance
with the Company&#146;s regular payroll practices, paid to you on your first regular
payroll check.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.&nbsp;Base salary. </B>$190,000 per year, paid in accordance with the Company&#146;s
regular payroll practices (currently bi-weekly).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.&nbsp;Auto allowance. </B>$800 per month, paid in accordance with the Company&#146;s
regular payroll practices.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.&nbsp;Incentive bonus. </B>Beginning in fiscal year 2004, you will be eligible
to participate in such incentive bonus programs as may be maintained by the
Company and as may apply to similarly-situated employees in the Zila group of
companies. Currently, this consists of (i)&nbsp;the Zila, Inc. Incentive Bonus
Plan, (ii)&nbsp;the Zila, Inc. Executive Incentive Bonus Award Plan and (ii)&nbsp;the
Zila, Inc. 1997 Stock Option Award Plan, as amended and restated.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.&nbsp;Stock options. </B>If approval is given by the Zila, Inc. Board of
Directors or its Compensation Committee, you will receive the stock options set
forth below. No grant of stock options is effective without the requisite
approvals and signed documentation. The price per share of any options granted
will be established in compliance with the applicable plan (currently, the
Zila, Inc. 1997 Stock Option Award Plan, as amended and restated).


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    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right"><B>8.1</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon approval by the Board of Directors or its
Compensation Committee, options to purchase 100,000 shares of
Zila, Inc. common stock, which options shall vest over three
years in equal amounts on your first, second and third
anniversary dates, respectively.</TD>
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<P align="left" style="font-size: 10pt">Mr.&nbsp;Andrew A. Stevens<BR>
January&nbsp;15, 2004<BR>
Page 2


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    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right"><B>8.2</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon approval by the Board of Directors or its
Compensation Committee and upon completion of one full year of
employment, additional options to purchase 50,000 shares of
Zila, Inc. common stock, which options shall vest over three
years in equal amounts on your second, third and fourth
anniversary dates, respectively.</TD>
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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.&nbsp;Insurance. </B>Benefits as provided to other Company employees.
Currently, these consist of medical and dental coverage for you and your
dependents, and life, short-term disability and accidental death coverage for
you.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>10.&nbsp;Paid time off. </B>You will receive (i)&nbsp;paid time off (&#147;PTO&#148;) in
accordance with Zila&#146;s regular policies, which currently provide 18&nbsp;days per
year during years 1-4 with no PTO during the first 90&nbsp;days of employment and
time pro-rated for the remainder of 2004, and (ii)&nbsp;paid holidays in accordance
with Zila&#146;s regular policies (currently 11 per year).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>11.&nbsp;Other benefits. </B>As provided to other Company employees. Currently,
these consist of participation in a 401(k) plan, an employee stock purchase
plan, a flexible spending program/Section&nbsp;125, access to a credit union, and
employee recognition programs.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>12.&nbsp;Compensation subject to change. </B>The compensation package set forth
above, including the description of benefits, is intended to reflect your
initial compensation. All compensation terms are subject to change at the
Company&#146;s discretion.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>13.&nbsp;Termination. </B>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.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>14.&nbsp;Severance pay upon termination. </B>Your entitlement to severance pay
upon termination of employment shall be governed by the following:


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    <TD width="1%" nowrap align="right"><B>14.1</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>You will be entitled to receive severance pay
(&#147;Severance Pay&#148;) upon termination of employment only if (i)
the Company elects to terminate your employment without cause
(&#147;Cause&#148;) during the first three years of your employment, or
(ii)&nbsp;your employment with the Company terminates because of a
change in control<SUP>1</SUP> of Zila, Inc. during the first three years
of your employment. You will not be entitled to receive
Severance Benefits if your employment terminates for any other
reason or under any other circumstances including, without
limitation, the Company&#146;s termination</TD>
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    <TD width="1%" nowrap align="right"><SUP>1</SUP></TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">A &#147;change in control&#148; of Zila, Inc. shall be deemed to have occurred if the
transaction results in (i)&nbsp;less than 50% of the outstanding common shares and
voting power of the common shares of the surviving or resulting corporation
being owned, immediately after the transaction, by the owners of those shares
of Zila, Inc. immediately prior to the transaction; and (ii)&nbsp;less than 50% of
the officers and directors of the surviving or resulting corporation being the
same, immediately after the transaction, as the officers and directors of Zila,
Inc. immediately prior to the transaction.</TD>
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<P align="left" style="font-size: 10pt">Mr.&nbsp;Andrew A. Stevens<BR>
January&nbsp;15, 2004<BR>
Page 3


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    <TD>of your employment with Cause during your first three years
of employment, the termination of your employment for
whatever reason after three years of employment, or your
resignation at any time. In order to receive any Severance
Pay to which you are entitled, you will first need to
provide the Company with a written release, in a form
acceptable to the Company, from all legal liability arising
out of any actions or events that occurred prior to
execution of such release.</TD>
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<TR>
    <TD colspan="5">&nbsp;</TD>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right"><B>14.2</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;Cause&#148; shall mean (i)&nbsp;conduct or performance
that in the reasonable estimation of the Company warrants your
discharge, or (ii)&nbsp;your incapacity or other condition that
renders you unable to perform your duties for the Company.</TD>
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<TR>
    <TD colspan="5">&nbsp;</TD>
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    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right"><B>14.3</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If you are entitled to receive Severance Pay
pursuant to Paragraph&nbsp;14.1, you shall receive pay equivalent
to three months of your then-current base salary, payable over
the course of three months in accordance with the Company&#146;s
regular payroll schedule.</TD>
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</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>15.&nbsp;Applicable law. </B>Arizona law will apply to this letter agreement and
to all terms and conditions of your employment with the Company without regard
to choice-of-law or conflict-of-law rules. However, Arizona Revised Statute &#167;
23-355 (which provides for the possibility of treble damages for unpaid wages
following termination of employment) shall not apply to this letter agreement
or any aspect of your compensation arrangement with the Company (including,
without limitation, your entitlement to Severance Pay).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>16.&nbsp;Other agreements. </B>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&#146;s reasonable discretion, to execute
agreements relating to other Company policies or substantive matters. Refusal
to sign any such agreement shall constitute Cause for termination of employment
for purposes of Paragraph&nbsp;14.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe you will be a valuable addition to Zila, Inc. and we hope you
will accept this offer. If you wish to do so, please sign where indicated
below and return this letter. Please let us know if you have any questions.

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    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sincerely,</TD>
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    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Zila, Inc.</TD>
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    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Douglas D. Burkett</TD>
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    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
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</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Douglas D. Burkett, Ph.D.</TD>
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    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman, Chief Executive Officer and President</TD>
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<P align="left" style="font-size: 10pt">Mr.&nbsp;Andrew A. Stevens<BR>
January&nbsp;15, 2004<BR>
Page 4


<P align="left" style="font-size: 10pt"><B>Statement of Acceptance:</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I have read the foregoing letter and agree to accept employment with Zila,
Inc. on the terms stated in this letter.

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    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Dated: January&nbsp;18, 2004
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Andrew A. Stevens</TD>
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</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Andrew A. Stevens</TD>
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