**Exhibit 10-Ao**
**FIRST AMENDMENT TO CREDIT AND SECURITY AGREEMENT**
     This Amendment, as of August 17, 2004, is made by and between ZILANUTRACEUTICALS, INC., an Arizona corporation (“ZN”), ZILA BIOTECHNOLOGY, INC.,an Arizona corporation (“ZB”), ZILA PHARMACEUTICALS, INC., a Nevada corporation(“ZP”), ZILA SWAB TECHNOLOGIES, INC., an Arizona corporation (“ZS”), OXYCALLABORATORIES, INCORPORATED, an Arizona corporation (“Oxycal”) (collectively,jointly and severally the “Borrower”), and WELLS FARGO BUSINESS CREDIT, INC., aMinnesota corporation (the “Lender”).
Recitals
     The Borrower and the Lender are parties to a Credit and Security Agreementdated as of February 6, 2004 (the “Credit Agreement”). Capitalized terms usedin these recitals have the meanings given to them in the Credit Agreementunless otherwise specified.
     The Borrower has requested that certain amendments be made to the CreditAgreement, which the Lender is willing to make pursuant to the terms andconditions set forth herein.
     NOW, THEREFORE, in consideration of the premises and of the mutualcovenants and agreements herein contained, it is agreed as follows:
     1. Amendments. The Credit Agreement is hereby amended as follows:
          (a) The definition of “Book Net Worth” contained in Section 1.1 of theCredit Agreement is hereby deleted and replaced as follows:
“Book Net Worth” means the aggregate of the common andpreferred stockholders’ equity in the Guarantor, determinedin accordance with GAAP.
          (b) Romanette (vi) contained in the definition of “Eligible Accounts”contained in Section 1.1 of the Credit Agreement is hereby deleted and replacedas follows:
     (vi) Accounts owed by an account debtor (other thanAssociated National Brokerage) located outside the UnitedStates which are not (A) backed by a bank letter of creditnaming the Lender as beneficiary or assigned to the Lender,in the Lender’s possession or control, and with respect towhich a control agreement concerning the letter-of-creditrights is in effect, and acceptable to the Lender in allrespects, in its sole discretion, or (B)
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     covered by a foreign receivables insurance policy acceptableto the Lender in its sole discretion;
          (c) Sections 6.2(a) through 6.2(c) are hereby deleted and replaced asfollows:
(a) ***Quarterly Net Worth***. The Borrower covenantsthat as of December 31, 2003, the Guarantor hada Book Net Worth of not less than$50,000,000.00. The Borrower covenants that,commencing with the fiscal quarter ending July31, 2004 and continuing each quarter thereafter,the Guarantor shall not achieve a Book Net Worthdecrease of more than the amounts set forthbelow as measured from the last day of theimmediately preceding fiscal year.       **Maximum Net****Quarter Ending** **Worth Decrease**July 31, 2004 $6,000,000.00 October 31, 2004 $3,600,000.00 January 31, 2005 $6,200,000.00 April 30, 2005 $8,200,000.00 July 31, 2005 $7,200,000.00 
(b) ***Monthly Net Worth***. The Borrower covenantsthat commencing with the month ending July 31,2004 and continuing on the last day of eachmonth thereafter, the Guarantor’s Book Net Worthas of the last day of each such month shall notbe less than the amounts set forth below:     July 31, 2004 $47,000,000.00 August, 2004 through October, 2004 $46,000,000.00 November, 2004 through January, 2005 $43,500,000.00 February, 2005 through June, 2005 $41,000,000.00 July, 2005 $42,500,000.00 
(c) ***Capital Expenditures***. The Borrower and theGuarantor together will not incur or contract toincur Capital Expenditures of more than$1,700,000.00 in the aggregate during 2005fiscal year.
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          (d) Exhibit B of the Credit Agreement is hereby deleted and replaced withExhibit B attached hereto.
     2. No Other Changes. Except as explicitly amended by this Amendment, allof the terms and conditions of the Credit Agreement shall remain in full forceand effect and shall apply to any advance or letter of credit thereunder.
     3. Conditions Precedent. This Amendment shall be effective when theLender shall have received an executed original hereof, together with each ofthe following, each in substance and form acceptable to the Lender in its solediscretion:
          (a) The Acknowledgment and Agreement of Guarantor set forth at the end ofthis Amendment, duly executed by the Guarantor and Subordinated Creditor.
          (b) A Certificate of the Secretary of the Borrower certifying as to (i)the resolutions of the board of directors of the Borrower approving theexecution and delivery of this Amendment, (ii) the fact that the articles ofincorporation and bylaws of the Borrower, which were certified and delivered tothe Lender pursuant to the Certificate of Authority of the Borrower’s secretaryor assistant secretary dated as of February 6, 2004 continue in full force andeffect and have not been amended or otherwise modified except as set forth inthe Certificate to be delivered, and (iii) certifying that the officers andagents of the Borrower who have been certified to the Lender, pursuant to theCertificate of Authority of the Borrower’s secretary or assistant secretarydated as of February 6, 2004, as being authorized to sign and to act on behalfof the Borrower continue to be so authorized or setting forth the samplesignatures of each of the officers and agents of the Borrower authorized toexecute and deliver this Amendment and all other documents, agreements andcertificates on behalf of the Borrower.
          (c) Such other matters as the Lender may require.
     4. Representations and Warranties. The Borrower hereby represents andwarrants to the Lender as follows:
          (a) The Borrower has all requisite power and authority to execute thisAmendment and to perform all of its obligations hereunder, and this Amendmenthas been duly executed and delivered by the Borrower and constitutes the legal,valid and binding obligation of the Borrower, enforceable in accordance withits terms.
          (b) The execution, delivery and performance by the Borrower of thisAmendment has been duly authorized by all necessary corporate action and do not(i) require any authorization, consent or approval by any governmentaldepartment, commission, board, bureau, agency or instrumentality, domestic orforeign, (ii) violate any provision of any law, rule or regulation or of anyorder, writ, injunction or decree presently in effect, having applicability tothe Borrower, or the articles of incorporation or by-laws of the Borrower, or(iii) result in a breach of or constitute a default under any
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indenture or loan or credit agreement or any other agreement, lease orinstrument to which the Borrower is a party or by which it or its propertiesmay be bound or affected.
          (c) All of the representations and warranties contained in Article V ofthe Credit Agreement are correct on and as of the date hereof as though made onand as of such date, except to the extent that such representations andwarranties relate solely to an earlier date.
     5. References. All references in the Credit Agreement to “this Agreement”shall be deemed to refer to the Credit Agreement as amended hereby; and any andall references in the Security Documents to the Credit Agreement shall bedeemed to refer to the Credit Agreement as amended hereby.
     6. No Waiver. The execution of this Amendment and acceptance of anydocuments related hereto shall not be deemed to be a waiver of any Default orEvent of Default or Default Period under the Credit Agreement or breach,default or event of default under any Security Document or other document heldby the Lender, whether or not known to the Lender and whether or not existingon the date of this Amendment.
     7. Release. The Borrower and each Guarantor by signing the Acknowledgmentand Agreement of Guarantor each hereby absolutely and unconditionally releasesand forever discharges the Lender, and any and all participants, parentcorporations, subsidiary corporations, affiliated corporations, insurers,indemnitors, successors and assigns thereof, together with all of the presentand former directors, officers, agents and employees of any of the foregoing,from any and all claims, demands or causes of action of any kind, nature ordescription, whether arising in law or equity or upon contract or tort or underany state or federal law or otherwise, which the Borrower or such Guarantor hashad, now has or has made claim to have against any such person for or by reasonof any act, omission, matter, cause or thing whatsoever arising from thebeginning of time to and including the date of this Amendment, whether suchclaims, demands and causes of action are matured or unmatured or known orunknown.
     8. Costs and Expenses. The Borrower hereby reaffirms its agreement underthe Credit Agreement to pay or reimburse the Lender on demand for all costs andexpenses incurred by the Lender in connection with the Loan Documents,including without limitation all reasonable fees and disbursements of legalcounsel. Without limiting the generality of the foregoing, the Borrowerspecifically agrees to pay all fees and disbursements of counsel to the Lenderfor the services performed by such counsel in connection with the preparationof this Amendment and the documents and instruments incidental hereto. TheBorrower hereby agrees that the Lender may, at any time or from time to time inits sole discretion and without further authorization by the Borrower, make aloan to the Borrower under the Credit Agreement, or apply the proceeds of anyloan, for the purpose of paying any such fees, disbursements, costs andexpenses.
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     9. Miscellaneous. This Amendment and the Acknowledgment and Agreement ofGuarantor may be executed in any number of counterparts, each of which when soexecuted and delivered shall be deemed an original and all of whichcounterparts, taken together, shall constitute one and the same instrument.
     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to beduly executed as of the date first written above.       ZILA NUTRACEUTICALS, INC., an Arizona corporation      By: /s/ Andrew S. Stevens       Vice President       ZILA BIOTECHNOLOGY, INC., an Arizona corporation      By: /s/ Andrew S. Stevens       Vice President       ZILA PHARMACEUTICALS, INC., a Nevada corporation      By: /s/ Andrew S. Stevens       Vice President       ZILA SWAB TECHNOLOGIES, INC., an Arizona corporation      By: /s/ Andrew S. Stevens       Vice President       OXYCAL LABORATORIES, INCORPORATED, an Arizona corporation      By: /s/ Andrew S. Stevens       Vice President       WELLS FARGO BUSINESS CREDIT, INC.      By: /s/ Darcy Della Flora       Vice President
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**ACKNOWLEDGMENT AND AGREEMENT OF GUARANTORS**
     The undersigned, a guarantor of the indebtedness of the Borrower, asdefined above (the “Borrower”) to Wells Fargo Business Credit, Inc**.**(the“Lender”) pursuant to a Guaranty dated as of February 6, 2004 (the “Guaranty”),hereby (i) acknowledges receipt of the foregoing Amendment; (ii) consents tothe terms (including without limitation the release set forth in paragraph 7 ofthe Amendment) and execution thereof; (iii) reaffirms his or its obligations tothe Lender pursuant to the terms of his or its Guaranty; and (iv) acknowledgesthat the Lender may amend, restate, extend, renew or otherwise modify theCredit Agreement and any indebtedness or agreement of the Borrower, or enterinto any agreement or extend additional or other credit accommodations, withoutnotifying or obtaining the consent of the undersigned and without impairing theliability of the undersigned under the Guaranty for all of the Borrower’spresent and future indebtedness to the Lender.       **ZILA, INC.**, a Delaware corporation      By: /s/ Andrew S. Stevens      Vice President
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