FIFTH AMENDMENT TO CREDIT AGREEMENT AND WAIVER
EXHIBIT 10.1
FIFTH AMENDMENT TO CREDIT AGREEMENT AND WAIVER
This FIFTH AMENDMENT, dated as of September 25, 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 Borrowers request that the Agent and Required Lenders amend certain terms under
the Credit Agreement and waive compliance with certain covenants; and
WHEREAS, the Administrative Agent and Required Lenders have agreed to the requested waiver and
amendments to 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. Amendments to Section 1 of the Credit Agreement. Section 1.1 of the
Credit Agreement, Definitions, is hereby amended by adding the following definitions in the
appropriate alphabetical order:
“Fifth Amendment”: that certain Fifth Amendment to Credit Agreement and Waiver dated
as of September 25 2006, by and among Borrowers, Administrative Agent and Required Lenders.
“Fifth Amendment Effective Date”: the date on which all conditions precedent to the
Fifth Amendment have been satisfied or waived by the Administrative Agent and Required Lenders.
3. Amendment to Section 7 Affirmative Covenants of the Credit Agreement. Section
7 of the Credit Agreement is hereby amended by deleting Section 7.1(d)(i) and replacing
it with the following Section 7.1(d)(i):
“(d) Financial Reporting:
(i) no later than October 16, 2006, the unaudited consolidated and
consolidating balance sheets of Holdings and its subsidiaries and the related
unaudited consolidated and consolidating statements of income and the related
unaudited consolidated statements of cash flows for the month ending September 30,
2006 and the portion of the fiscal year through such date, setting forth, in each
case in comparative form to the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material respects (subject to
normal year-end audit adjustments) and all documents and other certifications
required pursuant to Section 7.2(b) of the Credit Agreement;”
4. Amendment to Section 8 Negative Covenants of the Credit Agreement. Section
8 of the Credit Agreement is hereby amended by deleting Section 8.1(b)(iii) and
replacing it with the following Section 8.1(b)(iii):
“(iii) Minimum Unrestricted Cash. The Borrowers shall have, at
the end of each week set forth below, unrestricted book balances of
cash and Cash Equivalents for such week ended in an amount not less
than the amount set forth below opposite such week:
| Week Ending | Minimum Unrestricted Cash | |||
September 22, 2006 |
$2,750,000 | |||
September 29, 2006 and each week ended thereafter |
$3,500,000 | |||
5. Limited Waiver. Subject to the fulfillment of the conditions precedent to the
effectiveness of this Amendment set forth below, the Administrative Agent and the Required Lenders
hereby waive Borrowers’ compliance with the Financial Covenants set forth in Section
8.1(a)(i) (Minimum LTM EBITDA with respect to the Nutraceuticals Business) and Section
8.1(b)(i) (Minimum LTM EBITDA with respect to Borrowers) of the Credit Agreement for the fiscal
month ended August 31, 2006.
6. 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,
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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).
(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 Fifth 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.
7. 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.
8. Outstanding Indebtedness; Waiver of Claims. Each Borrower hereby acknowledges and
agrees that as of September 25, 2006, the aggregate outstanding principal amount of the Term Loan
is $19,951,724.12 (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
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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.
9. 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.
10. 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:
(a) Amendment. The Administrative Agent shall have received four (4) original copies
of this Amendment duly executed and delivered by the Administrative Agent, Required Lenders and
each of the Borrowers.
(b) Payment of Fees and Expenses. The Borrowers shall have paid to the Administrative
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).
(c) Amendment Fee. The Borrowers shall pay to the Administrative Agent, for the
benefit of the Administrative Agent, an amendment fee in the amount of $50,000.
(d) Warrant. The Borrowers shall have delivered an executed amended and restated
Warrant in form and substance acceptable to the Administrative Agent.
(e) 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 Fifth
Amendment Effective Date.
11. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
12. 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 Amendment has been duly executed as of the date first written above.
| BORROWERS: ZILA, INC. |
||||
| By: | /s/ Xxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | VP and CFO | |||
| ZILA TECHNICAL, INC. |
||||
| By: | /s/ Xxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | VP and CFO | |||
| ZILA BIOTECHNOLOGY, INC. |
||||
| By: | /s/ Xxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | VP and CFO | |||
| ZILA NUTRACEUTICALS, INC. |
||||
| By: | /s/ Xxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | VP and CFO | |||
| ZILA PHARMACEUTICALS, INC. |
||||
| By: | /s/ Xxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | VP and CFO | |||
| ADMINISTRATIVE AGENT: BLACK DIAMOND COMMERCIAL FINANCE, L.L.C. |
||||
| By: | /s/ Xxxxxx Xxxxxxxxx | |||
| Name: | Xxxxxx Xxxxxxxxx | |||
| Title: | President and CEO | |||
| LENDER: | ||||||
| BDC FINANCE, LLC | ||||||
| By: | Black Diamond Capital Management, L.L.C., its Investment Manager | |||||
| By: | /s/ Xxxxx X. Xxxxx | |||||
| Name: | Xxxxx X. Xxxxx, Xx. | |||||
| Title: | President & Managing Partner | |||||
| Black Diamond Capital | ||||||
| Management, L.L.C. | ||||||
