Exhibit 10.1
AMENDMENT AGREEMENT
     AMENDMENT AGREEMENT, dated August 13, 2007 (this “Agreement”), is among
Zila, Inc., a Delaware corporation (the “Company”), Visium Balanced Offshore
Fund, Ltd., Visium Balanced Fund, LP, Visium Long Bias Offshore Fund, Ltd. and
Visium Long Bias Fund, LP (the “Visium Entities”), Atlas Master Fund, Ltd.
(“Atlas”) and Balyasny Asset Management, L.P. (“BAM” and, collectively with the
Visium Entities and Atlas, the “Investors”).
W I T N E S S E T H:
     WHEREAS, the Company entered into a Purchase Agreement, dated as of
November 13, 2006 (the “Note Purchase Agreement”), with the investors party
thereto pursuant to which, among other things, the Company issued (i) an
aggregate of 9,100,000 shares of the Company’s common stock, par value $0.001
per share (the “Common Stock”), (ii) $12,075,000 in aggregate principal amount
of the Company’s 12% Convertible Notes (the “Convertible Notes”) convertible
into shares of the Company’s common stock, par value $0.001 per share (the
“Common Stock”), at a conversion price of $1.75, (iii) Warrants (the “Initial
Warrants”) to acquire an aggregate of up to 5,403,000 shares of Common Stock at
an exercise price of $2.21 per share and (iv) Warrants (the “Additional
Warrants”) to acquire an aggregate of up to 3,105,000 shares of Common Stock at
an exercise price of $2.21 per share; and
     WHEREAS, pursuant to the terms of the Note Purchase Agreement, the Visium
Entities acquired (i) $5,000,000.25 in aggregate principal amount of the
Convertible Notes, (ii) Initial Warrants to acquire an aggregate of 428,569
shares of Common Stock and (iii) Additional Warrants to acquire an aggregate of
1,285,712 shares of Common Stock; and
     WHEREAS, in connection with the Note Purchase Agreement, the Company
entered into a Registration Rights Agreement, dated as of November 28, 2006 (the
“Note Registration Rights Agreement”), pursuant to which, among other things,
the Company agreed to provide certain registration rights with respect to the
shares of Common Stock issuable upon conversion of the Convertible Notes (the
“Note Conversion Shares”) and the shares of Common Stock issuable upon the
exercise of the Initial Warrants and the Additional Warrants (the “Note Warrant
Shares”) with the Securities and Exchange Commission (the “Commission”) for
resale pursuant to the Securities Act of 1933, as amended (the “Securities
Act”); and
     WHEREAS, the Company entered into a Purchase Agreement, dated as of
November 13, 2006 (the “Secured Note Purchase Agreement”), with the investors
party thereto pursuant to which, among other things, the Company issued (i) an
aggregate of $12,000,001.20 in principal amount of the Company’s 6% Senior
Secured Convertible Notes (the “Secured Notes”) convertible into shares of
Common Stock at a conversion price of $2.20 and (ii) Warrants (the “Secured Note
Warrants”) to acquire an aggregate of up to 1,909,089 shares of Common Stock at
an exercise price of $2.21 per share; and
     WHEREAS, pursuant to the terms of the Secured Note Purchase Agreement,
(A) the Visium Entities acquired (i) $7,500,000.20 in aggregate principal amount
of the Secured Notes and (ii) Secured Note Warrants to acquire an aggregate of
1,193,180 shares of Common Stock

 

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and (B) Atlas acquired (i) $4,500,001 in aggregate principal amount of the
Secured Notes and (ii) Secured Note Warrants to acquire an aggregate of 715,909
shares of Common Stock; and
     WHEREAS, in connection with the Secured Note Purchase Agreement, the
Company entered into a Registration Rights Agreement, dated as of November 28,
2006 (the “Secured Note Registration Rights Agreement”), pursuant to which,
among other things, the Company agreed to provide certain registration rights
with respect to the shares of Common Stock issuable upon conversion of the
Secured Notes (the “Secured Note Conversion Shares”) and the shares of Common
Stock issuable upon the exercise of the Secured Note Warrants (the “Secured Note
Warrant Shares”) with the Commission for resale pursuant to the Securities Act;
and
     WHEREAS, effective December 14, 2006, the Convertible Notes converted into
an aggregate of 6,900,000 shares of Common Stock; and
     WHEREAS, as of the date hereof, the Company has not registered the Note
Conversion Shares, the Additional Warrant Shares, the Secured Note Shares or the
Secured Warrant Shares beneficially owned by the Visium Entities and Atlas for
resale under the Securities Act; and
     WHEREAS, certain disputes have arisen among the Company and the Investors
regarding such failure; and
     WHEREAS, the parties hereto believe it is in their respective best interest
to settle such disputes as provided herein.
     NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and intending to be legally bound, the parties hereto agree as follows:
     Section 1. Equity Repurchase. At the Closing (as defined below), the
Company shall repurchase from the Visium Entities an aggregate of 932,832 Note
Conversion Shares in exchange for $1,249,994.88. The Note Conversion Shares to
be repurchased pursuant to this Section 1 are hereinafter referred to as the
“Repurchased Shares”. The Repurchased Shares shall be allocated among the Visium
Entities as they may determine in their sole discretion. The Investors hereby
irrevocably waive any Event of Default that might be deemed to have occurred
under the Secured Notes as a result of the repurchase of the Repurchased Shares
or the other transactions contemplated hereby.
     Section 2. Warrant Repurchase. At the Closing (as defined below), the
Company shall repurchase from the Visium Entities and Atlas a total of 227,270
Secured Note Warrants in exchange for $149,998.20 in cash. The Secured Note
Warrants to be repurchased pursuant to this Section 2 are hereinafter referred
to as the “Repurchased Warrants”. The Repurchased Warrants shall be allocated
among the Visium Entities and Atlas as they may determine in their sole
discretion. The Investors hereby irrevocably waive any Event of Default that
might be deemed to have occurred under the Secured Notes as a result of the
repurchase of the Repurchased Warrants.

 

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     Section 3. Note Amendment. Effective at the Closing, the Secured Notes
shall be amended and restated as provided in Exhibit A attached hereto (the
“Amended and Restated Notes”) (the “Note Amendment”). The Investors hereby
irrevocably consent to the Note Amendment. No later than the date of the Closing
(the “Closing Date”), the Visium Entities and Atlas shall surrender their
Secured Notes to the Company for cancellation. In exchange therefor, on the
Closing Date the Company shall issue the Amended and Restated Notes to the
Visium Entities and Atlas in the respective principal amounts specified in the
Secured Notes being surrendered. The Amended and Restated Notes shall be secured
by all of the assets of the Company as specified in the existing Pledge and
Security Agreement, dated as of November 28, 2006, among the Company, certain
subsidiaries of the Company and BAM, as collateral agent.
     Section 4. Registration Rights.
     (a) Effective at the Closing, the Note Registration Rights Agreement and
the Secured Note Registration Statement shall be terminated with respect to the
Visium Entities and Atlas only. Promptly following the date hereof, the Company
shall use its commercially reasonable best efforts to persuade the Commission
that the registration of the shares of Common Stock issued or issuable to the
Investors as a result of the transactions described above (as amended by this
Agreement) (collectively, the “Registrable Securities”) is a valid secondary
offering and not an offering “by or on behalf of the issuer” as defined in
Rule 415 and that none of the Investors is an “underwriter” with respect
thereto. The Visium Entities and Atlas shall have the right to participate or
have their counsel participate in any meetings or discussions with the
Commission regarding the Commission’s position and to comment or have their
counsel comment on any written submission made to the Commission with respect
thereto. No such written submission shall be made to the Commission to which
counsel for the Visium Entities or Atlas reasonably objects. The Company shall
pay the fees and disbursements of Lowenstein Sandler PC incurred in connection
with this Section 4 upon demand subject to an aggregate cap of $35,000.
     (b) Upon a final determination by the Commission, the Company shall notify
the Investors of such determination. The date of such determination is
hereinafter referred to as the “Restriction Termination Date.” On the
Restriction Termination Date, except as provided below, the new Registration
Rights Agreement in the form of Exhibit B attached hereto (the “New Registration
Rights Agreement”), shall become effective.
     (c) In the event that, despite the Company’s commercially reasonable
efforts and compliance with the terms of this Section 4, the Commission takes
the position that all or some portion of the Registrable Securities and the SF
Shares (as defined in the New Registration Rights Agreement) may not be
registered immediately without naming the holders as underwriters,
notwithstanding the provisions of the New Registration Rights Agreement, the
Company shall not be obligated to register the Registrable Securities and/or SF
Shares which the Commission has determined may not be registered without naming
the holders as underwriters (the “Cut Back Shares”) unless and until such time
as the Commission determines otherwise; provided, however, that the Company will
not be obligated to register any Cut Back Shares which are then eligible to be
sold by the holder of such shares under Rule 144(k). In no event shall the
Company shall agree to name any Visium Entity or Atlas as an “underwriter” in a
Registration Statement without their prior written consent. Any cut-back imposed
on the

 

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Registrable Securities and the SF Shares pursuant to this Section 4(c) shall be
allocated among the Visium Entities, Atlas and SF on a pro rata basis unless the
Commission otherwise provides. Any cut-back imposed on the Visium Entities and
Atlas pursuant to this Section 4(c) shall be allocated among the Visium Entities
and Atlas on a pro rata basis and shall be allocated to the Investor Shares or
the PIK Shares (as defined in the Amended and Restated Notes) as the Visium
Entities and Atlas may determine in their sole discretion, unless the Commission
otherwise requires or provides. For purposes of the New Registration Rights
Agreement, the Restriction Termination Date shall not be deemed to have occurred
with respect to any Cut Back Shares until such time, if any, as the Company is
able to register such Cut Back Shares.
     (d) In the event that the provisions of Section 4(c) become applicable, the
Company shall continue to use commercially reasonable efforts to effect the
registration of all Cut Back Shares as promptly as possible.
     Section 5. Amendment Fee. At the Closing, the Company shall pay to the
Visium Entities and Atlas an amendment fee of $600,000 (the “Amendment Fee”).
The Amendment Fee shall be paid by wire transfer of immediately available funds
to one or more accounts specified by the Visium Entities and Atlas. The
Amendment Fee shall be allocated among the Visium Entities and Atlas as they may
determine in their sole discretion.
     Section 6. Termination of Side Letter. Effective as of the Closing, the
side letter, dated November 28, 2006, by and between the Company and BAM shall
be terminated and of no further force and effect.
     Section 7. Waiver of Antidilution Rights. Effective as of the Closing, each
of the Investors hereby irrevocably waive any right they may have pursuant to
Section 4 of the Amended and Restated Note and Section 8 of the Initial
Warrants, the Additional Warrants and/or the Secured Note Warrants, as
applicable, to an adjustment of the Warrant Price thereof as a result of the
transactions contemplated hereby, including, without limitation, the issuance of
any PIK Shares (as defined in the New Notes) (the “Antidilution Waiver”).
Notwithstanding the foregoing, the Antidilution Waiver shall not be effective
with respect to the Initial Warrants or the Additional Warrants, as applicable,
unless and until the Company obtains the written consent of the Majority Holders
of each of the Initial Warrants and the Additional Warrants, as applicable, in
accordance with Section 22 of each of such Warrants. Promptly following the date
hereof, the Company shall use its commercially reasonable best efforts to obtain
the consent of such Majority Holders to the Antidilution Waiver.
     Section 8. Mutual Releases.
     (a) Effective as of the Closing Date, the Company, on its own behalf and on
behalf of its affiliates, parents, subsidiaries, predecessors, successors,
assigns, legal representatives and any and all persons or entities claiming by
or through any of them (the “Company Parties”), hereby releases and forever
discharges each of the Investors and their respective partners, stockholders,
members, managers, investment advisers, directors, officers, employees, agents
and representatives, and any and all persons or entities claiming by or through
any of them (collectively, the “Investor Released Persons”) of and from any and
all manner of actions, causes

 

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of action, suits, account reckonings, covenants, agreements, damages, judgments,
claims and demands whatsoever, at law or in equity, whether known or unknown,
contingent or matured, and whether currently existing or hereafter arising,
which the Company Parties ever had, now have or may hereafter have
(collectively, “Claims”) against the Investor Released Persons arising on or
prior to the Closing Date; provided, however, that this release shall not cover
any Claims any of the Company Parties may have against any of the Investor
Released Persons (i) under this Agreement and the other Transaction Documents
and (ii) to the extent arising from any fraudulent act or omission (including
violations of Section 10(b) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) and Rule 10b-5 thereunder) by any Investor Released Person
not known to the Company Parties on the date hereof. None of the Company Parties
shall institute any action, claim or complaint of whatever kind or nature in any
federal, state or local court or other governmental agency or administrative
tribunal relating to any Claim which has been released hereby or any contract,
agreement, understanding or arrangement that has been canceled hereby.
     (b) Each of the Investors, on their own behalf and on behalf of their
respective partners, stockholders, members, managers, investment advisers,
directors, officers, employees, agents and representatives, and any and all
persons or entities claiming by or through any of them (the “Investor Parties”),
hereby release and forever discharge the Company and its affiliates, parents,
subsidiaries, predecessors, successors, assigns, legal representatives and any
and all persons or entities claiming by or through any of them (collectively,
the “Company Released Persons”) of and from any and all Claims against the
Company Released Persons arising on or prior to the Closing Date; provided,
however, that this release shall not cover any Claims any of the Investor
Parties may have against any of the Company Released Persons (i) under this
Agreement and the other Transaction Documents and (ii) to the extent arising
from any fraudulent act or omission (including violations of Section 10(b) of
the Exchange Act and Rule 10b-5 thereunder) by any Company Released Person not
known to the Investor Parties on the date hereof. None of the Investor Parties
shall institute any action, claim or complaint of whatever kind or nature in any
federal, state or local court or other governmental agency or administrative
tribunal relating to any Claim which has been released hereby or any contract,
agreement, understanding or arrangement that has been canceled hereby.
     Section 9. Company Representations. The Company hereby represents and
warrants to each of the Investors as follows:
     (a) The Company is duly organized, validly existing and in good standing
under the laws of the State of Delaware and has full power and authority to
execute and deliver this Agreement, the Amended and Restated Notes and the New
Registration Rights Agreement (collectively, the “Transaction Documents”) and to
perform its obligations hereunder, all of which have been duly authorized by all
requisite corporate action. Each of the Transaction Documents has been, or on
the Closing Date will be, duly authorized, executed and delivered by the Company
and constitutes a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms.
     (b) Neither the execution and delivery of this Agreement and the other
Transaction Documents by the Company nor the performance by the Company of its
obligations hereunder

 

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and thereunder will (i) contravene any provision contained in the Certificate of
Incorporation or Bylaws of the Company, (ii) violate or result in a breach (with
or without the lapse of time, the giving of notice or both) of or constitute a
default under (A) any material contract, agreement, commitment, indenture,
mortgage, lease, pledge, note, license, permit or other instrument or obligation
or (B) any judgment, order, decree, law, rule or regulation or other restriction
of any governmental authority, in each case to which the Company is a party or
by which the Company is bound or to which any of its assets or properties are
subject, (iii) result in the creation or imposition of any material lien, claim,
charge, mortgage, pledge, security interest, equity, restriction or other
encumbrance (collectively, “Encumbrances”) on any of the assets or properties of
the Company or any subsidiary, or (iv) result in the acceleration of, or permit
any person to accelerate or declare due and payable prior to its stated
maturity, any obligation of the Company or any subsidiary.
     (c) No notice to, filing with, or authorization, registration, consent or
approval of any governmental authority or other person is necessary for the
execution, delivery or performance of this Agreement and the other Transaction
Documents or the consummation of the transactions contemplated hereby or thereby
by the Company.
     (d) The shares of Common Stock issuable upon the conversion of the Amended
and Restated Notes (the “New Conversion Shares”) have been duly authorized and
reserved for issuance and upon issuance thereof upon the due conversion of the
Amended and Restated Notes, the New Conversion Shares shall be validly issued,
fully paid and nonassessable and subject to no Encumbrance, except those imposed
generally by applicable securities laws
     Section 10. Investor Representations. Each of the Investors hereby,
severally and not jointly, represents and warrants to the Company (as to itself
only) as follows:
     (a) It is duly organized, validly existing and in good standing under the
laws of its jurisdiction of formation and has full power and authority to
execute and deliver this Agreement and the other Transaction Documents and to
perform its obligations hereunder, all of which have been duly authorized by all
requisite corporate, partnership or limited liability company action, as
applicable. Each of the Transaction Documents to which it is a party has been,
or on the Closing Date will be, duly authorized, executed and delivered by it
and constitutes its valid and binding agreement, enforceable against it in
accordance with its terms.
     (b) Neither the execution and delivery of this Agreement and the other
Transaction Documents by it nor the performance by it of its obligations
hereunder and thereunder will (i) contravene any provision contained in its
organizational documents, (ii) violate or result in a breach (with or without
the lapse of time, the giving of notice or both) of or constitute a default
under (A) any material contract, agreement, commitment, indenture, mortgage,
lease, pledge, note, license, permit or other instrument or obligation or
(B) any judgment, order, decree, law, rule or regulation or other restriction of
any governmental authority, in each case to which it is a party or by which it
is bound or to which any of its assets or properties are subject, or
(iii) result in the creation or imposition of any material Encumbrances on the
Secured Notes, the Repurchased Shares or the Repurchased Warrants held by it.

 

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     (c) No notice to, filing with, or authorization, registration, consent or
approval of any governmental authority or other person is necessary for the
execution, delivery or performance of this Agreement and the other Transaction
Documents or the consummation of the transactions contemplated hereby or thereby
by it.
     (d) It is the legal owner of the Secured Notes, Repurchased Shares and/or
Repurchased Warrants held by it free and clear of any Encumbrances, except those
created pursuant to the Note Purchase Agreement, the Secured Note Purchase
Agreement, the Note Registration Rights Agreement and the Secured Note
Registration Rights Agreement and those imposed generally by applicable
securities laws. There are no voting trust arrangements, shareholder agreements
or other agreements granting any option, warrant, proxy or right of first
refusal with respect to the Secured Notes, Repurchased Shares and/or Repurchased
Warrants held by it to any person or entity. It has the absolute and
unrestricted right, power and capacity to sell the Repurchased Shares and the
Repurchased Warrants to the Company as contemplated hereby free and clear of any
Encumbrances (except for restrictions imposed generally by applicable securities
laws).
     Section 11. Conditions to Closing; Termination.
     (a) The obligations of each of the Investors hereunder are subject to the
fulfillment to such Investor’s satisfaction, on or prior to the Closing Date, of
the following conditions, any of which may be waived by it (as to itself only):
          (i) The representations and warranties made by the Company in
Section 9 hereof qualified as to materiality shall be true and correct at all
times prior to and on the Closing Date, except to the extent any such
representation or warranty expressly speaks as of an earlier date, in which case
such representation or warranty shall be true and correct as of such earlier
date, and, the representations and warranties made by the Company in Section 9
hereof not qualified as to materiality shall be true and correct in all material
respects at all times prior to and on the Closing Date, except to the extent any
such representation or warranty expressly speaks as of an earlier date, in which
case such representation or warranty shall be true and correct in all material
respects as of such earlier date. The Company shall have performed in all
material respects all obligations and covenants herein required to be performed
by it on or prior to the Closing Date.
          (ii) The Company shall have obtained any and all consents, permits,
approvals, registrations and waivers necessary or appropriate for consummation
of the transactions contemplated by the Transaction Documents, all of which
shall be in full force and effect.
          (iii) The Company shall have executed and delivered the New
Registration Rights Agreement and the Security Agreement.
          (iv) The Company shall have paid the Amendment Fee as provided herein.

 

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          (v) The Company shall have repurchased the Repurchased Shares and the
Repurchased Warrants as provided herein.
          (vi) No judgment, writ, order, injunction, award or decree of or by
any court, or judge, justice or magistrate, including any bankruptcy court or
judge, or any order of or by any governmental authority, shall have been issued,
and no action or proceeding shall have been instituted by any governmental
authority, enjoining or preventing the consummation of the transactions
contemplated hereby or by the other Transaction Documents.
          (vii) No stop order or suspension of trading shall have been imposed
by Nasdaq, the Commission or any other governmental or regulatory body with
respect to public trading in the Common Stock.
     (b) The obligations of the Company hereunder are subject to the fulfillment
to the Company’s satisfaction, on or prior to the Closing Date, of the following
conditions, any of which may be waived by it:
          (i) The representations and warranties made by the Investors in
Section 10 hereof shall be true and correct in all material respects when made,
and shall be true and correct in all material respects on the Closing Date with
the same force and effect as if they had been made on and as of said date. The
Investors shall have performed in all material respects all obligations and
covenants herein required to be performed by them on or prior to the Closing
Date.
          (ii) The Investors party thereto shall have executed and delivered the
New Registration Rights Agreement.
          (iii) The Investors shall have delivered to the Company (i) the
certificates representing the Repurchased Shares and (ii) the Repurchased
Warrants, in each case accompanied by such executed stock powers or other
transfer documents reasonably requested by the Company.
     (c) The obligations of the Company, on the one hand, and the Investors, on
the other hand, to effect the Closing shall terminate as follows:
          (i) Upon the mutual written consent of the Company and the Investors;
          (ii) By the Company if any of the conditions set forth in Section
11(b) shall have become incapable of fulfillment, and shall not have been waived
by the Company;
          (iii) By an Investor (with respect to itself only) if any of the
conditions set forth in Section 11(a) shall have become incapable of
fulfillment, and shall not have been waived by the Investor; or
          (iv) By either the Company or any Investor (with respect to itself
only) if the Closing has not occurred on or prior to August 20, 2007;

 

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provided, however, that, except in the case of clause (i) above, the party
seeking to terminate its obligation to effect the Closing shall not then be in
breach of any of its representations, warranties, covenants or agreements
contained in this Agreement or the other Transaction Documents if such breach
has resulted in the circumstances giving rise to such party’s seeking to
terminate its obligation to effect the Closing.
     (d) In the event of termination by the Company or any Investor of its
obligations to effect the Closing pursuant to this Section 11, written notice
thereof shall forthwith be given to the other Investors and the other Investors
shall have the right to terminate their obligations to effect the Closing upon
written notice to the Company and the other Investors. Nothing in this
Section 11 shall be deemed to release any party from any liability for any
breach by such party of the terms and provisions of this Agreement or the other
Transaction Documents or to impair the right of any party to compel specific
performance by any other party of its obligations under this Agreement or the
other Transaction Documents.
     Section 12. Closing. The Closing shall take place at the offices of
Lowenstein Sandler PC, 1251 Avenue of the Americas, 18th Floor, New York, New
York 10020, no later than the second Business Day after the conditions to
Closing set forth herein have been satisfied or waived, to the extent permitted
by applicable law, or at such other location and on such other date as the
Company and the Investors shall mutually agree.
     Section 13. Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto shall take, or cause to be taken, all
action, and to do, or cause to be done, all things reasonably necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement and the other
Transaction Documents. In the event that at any time hereafter any further
action is necessary to carry out the purposes of this Agreement, the parties
hereto shall take all such action without any further consideration therefor.
     Section 14. Equitable Remedies. Each of the parties hereto acknowledges
that the other parties hereto would suffer immediate and irreparable harm for
which an adequate remedy would not be available at law as a result of any breach
of this Agreement. Accordingly, in the event of any breach, or threatened
breach, of the provisions of this Agreement, each party hereto shall be entitled
to an order of specific performance or other injunctive relief against the
breaching party in addition to any other rights and remedies to which they may
be entitled, whether at law or in equity, and each party hereby irrevocably and
unconditionally consents to the entry of an order providing such relief in the
event of any breach or threatened breach of the terms hereof by such party. No
party shall be required to post any bond or other security in connection with
any such action for specific performance or other injunctive relief.
     Section 15. Successors and Assigns. This Agreement may not be assigned by a
party hereto without the prior written consent of the other parties hereto. The
provisions of this Agreement shall inure to the benefit of and be binding upon
the respective permitted successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,

 

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remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
     Section 16. Counterparts; Faxes. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may also
be executed via facsimile, which shall be deemed an original.
     Section 17. Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
     Section 18 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given as hereinafter described (i) if given by personal delivery,
then such notice shall be deemed given upon such delivery, (ii) if given by
telex or telecopier, then such notice shall be deemed given upon receipt of
confirmation of complete transmittal, (iii) if given by mail, then such notice
shall be deemed given upon the earlier of (A) receipt of such notice by the
recipient or (B) three days after such notice is deposited in first class mail,
postage prepaid, and (iv) if given by an internationally recognized overnight
air courier, then such notice shall be deemed given one Business Day after
delivery to such carrier. All notices shall be addressed to the party to be
notified at the address as follows, or at such other address as such party may
designate by ten days’ advance written notice to the other party:
If to the Company:
Zila, Inc.
5227 North 7th Street
Phoenix, Arizona 85014-2800
Attention: Frank Bellizzi
Fax: (602) 230-8418
If to the Investors:
to the addresses set forth on the signature pages hereto.
     Section 19. Expenses. The parties hereto shall pay their own costs and
expenses in connection herewith except that the Company shall pay the reasonable
fees and expenses of Lowenstein Sandler PC not to exceed $35,000. Such expenses
shall be paid not later than the Closing. The Company shall reimburse the
Investors upon demand for all reasonable out-of-pocket expenses incurred by the
Investors, including without limitation reimbursement of attorneys’ fees and
disbursements for one counsel on behalf of the Investors, in connection with any
amendment, modification or waiver of this Agreement or the other Transaction
Documents requested by the Company. In the event that legal proceedings are
commenced by any party to this Agreement against another party to this Agreement
in connection with this Agreement or the other Transaction Documents, the party
or parties which do not prevail in such proceedings shall severally, but not
jointly, pay their pro rata share of the reasonable attorneys’ fees and other

 

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reasonable out-of-pocket costs and expenses incurred by the prevailing party in
such proceedings.
     Section 20. Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Investors.
     Section 21. Publicity. No public release or announcement concerning the
transactions contemplated hereby shall be issued by the Company or the Investors
without the prior consent of the Company (in the case of a release or
announcement by the Investors) or the Investors (in the case of a release or
announcement by the Company) (which consents shall not be unreasonably
withheld), except that the Company may issue a press release describing the
terms of the Transaction Documents; provided that the Visium Entities shall have
the right to comment on such release prior to its publication. Notwithstanding
the foregoing, the Investors acknowledge that the Company shall be permitted to
file a Current Report on Form 8-K to report the transactions contemplated by the
Transaction Documents if the Company determines that such filing is necessary or
advisable to comply with its reporting obligations under applicable securities
laws.
     Section 22. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof but shall be interpreted as if it
were written so as to be enforceable to the maximum extent permitted by
applicable law, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereby
waive any provision of law which renders any provision hereof prohibited or
unenforceable in any respect.
     Section 23. Entire Agreement. This Agreement, including the Exhibits, and
the other Transaction Documents constitute the entire agreement among the
parties hereof with respect to the subject matter hereof and thereof and
supersede all prior agreements and understandings, both oral and written,
between the parties with respect to the subject matter hereof and thereof.
     Section 24. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.
This Agreement shall be governed by, and construed in accordance with, the
internal laws of the State of New York without regard to the choice of law
principles thereof. Each of the parties hereto irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York located in New
York County and the United States District Court for the Southern District of
New York for the purpose of any suit, action, proceeding or judgment relating to
or arising out of this Agreement and the transactions contemplated hereby.
Service of process in connection with any such suit, action or proceeding may be
served on each party hereto anywhere in the world by the same methods as are
specified for the giving of notices under this Agreement. Each of the parties
hereto irrevocably consents to the jurisdiction of any such court in any such
suit, action or proceeding and to the laying of venue in such court. Each party
hereto irrevocably waives any objection to the laying of venue of any such suit,
action or proceeding brought in such courts and

 

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irrevocably waives any claim that any such suit, action or proceeding brought in
any such court has been brought in an inconvenient forum. EACH OF THE PARTIES
HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH
RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED
SPECIFICALLY AS TO THIS WAIVER.
     Section 25. Independent Nature of Investors’ Obligations and Rights. The
obligations of each Investor under any Transaction Document are several and not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Investor pursuant thereto,
shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents. Each
Investor acknowledges that no other Investor has acted as agent for such
Investor in connection herewith and that no Investor will be acting as agent of
such Investor in connection with monitoring its investment in the Company or
enforcing its rights under the Transaction Documents. Each Investor shall be
entitled to independently protect and enforce its rights, including, without
limitation, the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Investor to
be joined as an additional party in any proceeding for such purpose.
     Section 26. No Strict Construction. Each of the parties hereto acknowledge
that this Agreement has been prepared jointly by the parties hereto, and shall
not be strictly construed against any party.
[signature page follows]

 

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          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.

                  ZILA, INC.
 
           
 
  By:   /s/ Gary V. Klinefelter    
 
           
 
  Name:   Gary V. Klinefelter    
 
  Title:   Vice President and Secretary    

 

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                  ATLAS MASTER FUND, LTD.
 
           
 
  By:   /s/ Scott Schroeder    
 
           
 
  Name:   Scott Schroeder    
 
  Title:   Authorized Signatory           Address for Notice:    
 
                Balyasny Asset Management, L.P.
181 West Madison
Suite 3600
Chicago, Illinois 60602    
 
                BALYASNY ASSET MANAGEMENT, L.P.    
 
           
 
  By:   /s/ Scott Schroeder    
 
           
 
  Name:   Scott Schroeder    
 
  Title:   Authorized Signatory    
 
                Address for Notice:    
 
                Balyasny Asset Management, L.P.
181 West Madison
Suite 3600
Chicago, Illinois 60602    

 

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                  VISIUM BALANCED OFFSHORE FUND, LTD.    
 
           
 
  By:   /s/ Mark Gottlieb    
 
           
 
  Name:   Mark Gottlieb    
 
  Title:   CCO           Address for Notice:    
 
                Visium Asset Management, LLC
950 Third Avenue
New York, New York 10022    
 
                VISIUM LONG BIAS FUND, LP    
 
           
 
  By:   /s/ Mark Gottlieb    
 
           
 
  Name:   Mark Gottlieb    
 
  Title:   CCO    
 
                  Address for Notice:    
 
                Visium Asset Management, LLC
950 Third Avenue
New York, New York 10022           VISIUM LONG BIAS OFFSHORE FUND, LTD.    
 
           
 
  By:   /s/ Mark Gottlieb    
 
           
 
  Name:   Mark Gottlieb    
 
  Title:   CCO           Address for Notice:    
 
                Visium Asset Management, LLC
950 Third Avenue
New York, New York 10022    

 

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                  VISIUM BALANCED FUND, LP    
 
           
 
  By:   /s/ Mark Gottlieb    
 
           
 
  Name:   Mark Gottlieb    
 
  Title:   CCO    
 
                Address for Notice:    
 
                Visium Asset Management, LLC
950 Third Avenue
New York, New York 10022