FIRST AMENDMENT TO CREDIT AGREEMENT
EXHIBIT 10.3
FIRST AMENDMENT TO CREDIT AGREEMENT
This FIRST AMENDMENT, dated as of June 6, 2006 (this “Amendment”), to the Credit
Agreement referred to below is by and among (a) ZILA, INC., a Delaware corporation, ZILA
NUTRACEUTICALS, INC. (formerly known as Oxycal Laboratories Incorporated), an Arizona corporation,
ZILA TECHNICAL, INC., an Arizona corporation, ZILA BIOTECHNOLOGY, INC., an Arizona corporation,
ZILA PHARMACEUTICALS, INC., a Nevada corporation, and XXXX XXXX TECHNOLOGIES, INC., an Arizona
corporation (collectively, the “Borrowers”), (b) BLACK DIAMOND COMMERCIAL FINANCE, L.L.C.,
a Delaware corporation, as administrative agent for Lenders (the “Administrative Agent”),
and (c) the Required Lenders party to the Credit Agreement from time to time.
W I T N E S S E T H
WHEREAS, the Borrowers, the Lenders and the Administrative Agent are parties to that certain
Credit Agreement, dated as of March 24, 2006 (including all annexes, exhibits and schedules
thereto, and as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”); and
WHEREAS, the Administrative Agent and Required Lenders have agreed to amend the Credit
Agreement, in the manner, and on the terms and conditions, provided for herein.
NOW THEREFORE, in consideration of the premises and for other good and valuable consideration,
the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Credit Agreement.
2. Limited Waiver. The Administrative Agent and the Required Lenders hereby waive,
effective as of April 30, 2006, the Borrowers’ compliance with the Financial Covenants set forth in
Section 8.1(a)(i) (Minimum LTM EBITDA with respect to the Nutraceuticals Business),
Section 8.1(b)(i) (Minimum LTM EBITDA with respect to the Borrowers operations as a whole)
and Section 8.1(b)(ii) (Minimum Cash) of the Credit Agreement, for the fiscal months ending
April 30, 2006 and May 31, 2006, respectively.
3. Amendment to Section 2.3 of the Credit Agreement. Section 2.3 of the
Credit Agreement is hereby amended as of the First Amendment Effective Date by deleting the initial
exercise price of the Warrants in such Section 2.3 and substituting in lieu thereof the new
initial exercise price of “$3.14 per share”.
4. Amendment to Section 7.17 of the Credit Agreement. Section 7.17 of the
Credit Agreement is hereby amended as of the First Amendment Effective Date by deleting the proviso
in Section 7.17 in its entirety and substituting in lieu thereof the following new proviso
in such Section 7.17:
“provided, however, the Administrative Agent shall have
received a Mortgage on the Prescott Facility by not later than July 15, 2006.”
5. Amendment to Annex A of the Credit Agreement. Annex A of the Credit
Agreement is hereby amended as of the First Amendment Effective Date by adding the following new
definition to Annex A in appropriate alphabetical order:
“First Amendment Effective Date’ means the First Amendment to Credit
Agreement, dated as of June 6, 2006, among the Borrowers, the Administrative Agent and
the Lenders party thereto.”
6. Amendment to Section 8.6 of the Credit Agreement. Section 8.6 of the
Credit Agreement is hereby amended as of the First Amendment Effective Date by deleting Section
8.6 in its entirety and substituting in lieu thereof the following Section 8.6:
“Restricted Payments. Declare or pay any dividend (other than dividends
payable solely in common stock of the Person making such dividend) on, or make any payment
on account of, or set apart assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of, any Capital Stock of any Group
Member, whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in obligations of any
Borrower or any Subsidiary (collectively, “Restricted Payments”), except that (a)
any Subsidiary may make Restricted Payments to any Borrower or any Wholly Owned Subsidiary
Guarantor and (b) the Borrower may pay dividends on the Borrower’s Series B Convertible
Preferred Stock in accordance with the terms and conditions of the Borrower’s certificate of
incorporation as in effect on the Closing Date.”
7. Representations and Warranties. To induce the Administrative Agent and Lenders to
enter into this Amendment, the Borrowers executing this Amendment jointly and severally represent
and warrant that:
(a) Each Borrower has taken all necessary organizational action to authorize the execution,
delivery and performance of this Amendment. No consent or authorization of, filing with, notice to
or other act by or in respect of, any Governmental Authority or any other Person is required in
connection with the execution, delivery, performance, validity or enforceability of this Amendment,
except (i) consents, authorizations, filings and notices described in Schedule 5.4, which
consents, authorizations, filings and notices have been obtained or made and are in full force and
effect and (ii) the filings and recordings referred to in Section 5.19.
(b) This Amendment has been duly executed and delivered by or on behalf of each of the
Borrowers.
(c) This Amendment constitutes a legal, valid and binding obligation of each Borrower,
enforceable against each such Borrower in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors’ rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
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(d) No Default or Event of Default has occurred and is continuing after giving effect to this
Amendment.
(e) No litigation, investigation or proceeding of or before any arbitrator or Governmental
Authority is pending or, to the knowledge of any Borrower, threatened by or against any Group
Member or against any of their respective properties or revenues (a) with respect to any of the
Loan Documents or any of the transactions contemplated hereby or thereby, or (b) that could
reasonably be expected to have a Material Adverse Effect.
(f) The representations and warranties of each Borrower contained in the Credit Agreement and
each other Loan Document shall be true and correct on and as of the First Amendment Effective Date
with the same effect as if such representations and warranties had been made on and as of such
date, except that any such representation or warranty which is expressly made only as of a
specified date need be true only as of such date.
8. No Other Amendments/Waivers. Except as expressly provided herein, (a) the Credit
Agreement shall be unmodified and shall continue to be in full force and effect in accordance with
its terms and (b) this Amendment shall not be deemed a waiver of any term or condition of any Loan
Document and shall not be deemed to prejudice any right or rights which the Administrative Agent or
any Lender may now have or may have in the future under or in connection with any Loan Document or
any of the instruments or agreements referred to therein, as the same may be amended from time to
time.
9. Outstanding Indebtedness; Waiver of Claims. Each Borrower hereby acknowledges and
agrees that as of June 6, 2006, the aggregate outstanding principal amount of the Term Loan is
$20,149,365.77 (collectively, the “Outstanding Obligations”), and that such principal
amounts are payable pursuant to the Credit Agreement without defense, offset, withholding,
counterclaim or deduction of any kind. Each Borrower hereby waives, releases, remises and forever
discharges the Administrative Agent, Lenders and each other Indemnified Person from any and all
claims, suits, actions, investigations, proceedings or demands arising out of or in connection with
the Credit Agreement (collectively, “Claims”), whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute or common law of any kind or
character, known or unknown, which such Borrower ever had, now has or might hereafter have against
the Administrative Agent or Lenders which relates, directly or indirectly, to any acts or omissions
of the Administrative Agent, Lenders or any other Indemnified Person on or prior to the date
hereof, provided that, the Borrowers do not waive any Claim solely to the extent such Claim
relates to the Administrative Agent’s or any Lender’s gross negligence or willful misconduct.
10. Expenses. Each Borrower hereby reconfirms its obligations pursuant to
Sections 4.5 and 7.11 of the Credit Agreement to pay and reimburse the
Administrative Agent and Lenders for all reasonable costs and expenses (including, without
limitation, reasonable fees of counsel) incurred in connection with the negotiation, preparation,
execution and delivery of this Amendment and all other documents and instruments delivered in
connection herewith.
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11. Effectiveness. This Amendment shall become effective as of the date hereof only
upon satisfaction in full in the judgment of the Administrative Agent of each of the following
conditions on or prior to June 6, 2006:
(a) Amendment. The Administrative Agent shall have received six (6) original copies
of this Amendment duly executed and delivered by the Administrative Agent, Required Lenders and
each of the Borrowers.
(b) Amendment to Warrant. The Borrower shall have executed and delivered to the
Administrative Agent an amended and restated Warrant reflecting the amendment to the initial issue
price described in Section 3 of this Amendment.
(c) Payment of Fees and Expenses. The Borrowers shall have paid to the Administrative
Agent (i) a non-refundable cash amendment fee equal to $50,000 for the pro rata
account of Lenders, (ii) a non-refundable cash amendment fee equal to $150,000 for the sole account
of the Administrative Agent and (iii) all costs, fees and expenses invoiced and owing in connection
with this Amendment and the other Loan Documents and due to the Administrative Agent (including,
without limitation, reasonable legal fees and expenses).
(d) Representations and Warranties. The representations and warranties of or on
behalf of each Borrower in this Amendment shall be true and correct on and as of the First
Amendment Effective Date.
12. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
13. Counterparts. This Amendment may be executed by the parties hereto on any number
of separate counterparts and all of said counterparts taken together shall be deemed to constitute
one and the same instrument.
(SIGNATURE PAGE FOLLOWS)
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first written above.
BORROWERS: |
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ZILA, INC. |
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By:
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\s\ Xxxxxx X. Xxxxxxx | |||
| Name: Xxxxxx X. Xxxxxxx Title: VP |
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ZILA TECHNICAL, INC. |
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By:
|
\s\ Xxxxxx X. Xxxxxxx | |||
| Name: Xxxxxx X. Xxxxxxx Title: VP |
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ZILA BIOTECHNOLOGY, INC. |
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By:
|
\s\ Xxxxxx X. Xxxxxxx | |||
| Name: Xxxxxx X. Xxxxxxx Title: VP |
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ZILA NUTRACEUTICALS, INC. |
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By:
|
\s\ Xxxxxx X. Xxxxxxx | |||
| Name: Xxxxxx X. Xxxxxxx Title: VP |
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ZILA PHARMACEUTICALS, INC. |
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By:
|
\s\ Xxxxxx X. Xxxxxxx | |||
| Name: Xxxxxx X. Xxxxxxx Title: VP |
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XXXX XXXX TECHNOLOGIES, INC. |
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By:
|
\s\ Xxxxxx X. Xxxxxxx | |||
| Name: Xxxxxx X. Xxxxxxx Title: VP |
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ADMINISTRATIVE AGENT: |
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BLACK DIAMOND COMMERCIAL FINANCE, L.L.C. |
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By:
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/s/ Xxxxxx Xxxxxxxxx | |||
| Name: Xxxxxx Xxxxxxxxx Title: President and CEO |
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LENDER: |
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BDC FINANCE, LLC |
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By:
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/s/ Xxxxx X. Xxxxx, Xx. | |
| Name: Xxxxx X. Xxxxx, Xx. Title: President & Managing Partner Black Diamond Capital Management, LLC |
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