<PAGE>   1
                                                                     Exhibit 10A
                                 LOAN AGREEMENT

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BORROWER:  ZILA, INC., A DELAWARE CORPORATION      LENDER:  BANK ONE, ARIZONA, NA
           5227 NORTH 7TH STREET                            PHOENIX COMMERCIAL BANKING
           PHOENIX, AZ 85014-2800                           201 NORTH CENTRAL
                                                            PHOENIX, AZ 85004
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_______________________________________________________________________________

THIS LOAN AGREEMENT BETWEEN ZILA, INC., A DELAWARE CORPORATION ("BORROWER") AND
BANK ONE, ARIZONA, NA ("LENDER") IS MADE AND EXECUTED AS OF FEBRUARY 1, 1999.
THIS AGREEMENT GOVERNS ALL LOANS, CREDIT FACILITIES AND/OR OTHER FINANCIAL
ACCOMMODATIONS DESCRIBED HEREIN AND, UNLESS OTHERWISE AGREED TO IN WRITING BY
LENDER AND BORROWER, ALL OTHER PRESENT AND FUTURE LOANS, CREDIT FACILITIES AND
OTHER FINANCIAL ACCOMMODATIONS PROVIDED BY LENDER TO BORROWER. ALL SUCH LOANS,
OTHER FINANCIAL ACCOMMODATIONS, TOGETHER WITH ALL RENEWALS, EXTENSIONS AND
MODIFICATIONS THEREOF, ARE REFERRED TO IN THIS AGREEMENT INDIVIDUALLY AS THE
"LOAN" AND COLLECTIVELY AS THE "LOANS." BORROWER UNDERSTANDS AND AGREES THAT:
(a) IN GRANTING, RENEWING, OR EXTENDING ANY LOAN, LENDER IS RELYING UPON
BORROWER'S REPRESENTATIONS, WARRANTIES, AND AGREEMENTS, AS SET FORTH IN THIS
AGREEMENT; AND (b) ALL SUCH LOANS SHALL BE AND SHALL REMAIN SUBJECT TO THE
FOLLOWING TERMS AND CONDITIONS OF THIS AGREEMENT.

TERM.  This Agreement shall be effective as of FEBRUARY 1, 1999, and shall
continue thereafter until all Loans and other obligations owing by Borrower to
Lender hereunder have been paid in full and Lender has no commitments or
obligations to make further Advances under the Loans to Borrower.

DEFINITIONS.  The following words shall have the following meanings when used
in this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code as adopted in
the State of Arizona. All references to dollar amounts shall mean amounts in
lawful money of the United States of America.

         AGREEMENT. The word "Agreement" means this Loan Agreement, as may be
         amended or modified from time to time, together with all exhibits and
         schedules attached hereto from time to time.

         ACCOUNT. The word "Account" means a trade account receivable of
         Borrower for goods sold or leased or for services rendered by Borrower
         in the ordinary course of its business.

         ACCOUNT DEBTOR. The words "Account Debtor" mean the person or entity
         obligated upon an Account.

         ADVANCE. The word "Advance" means any advance or other disbursement of
         Loan proceeds under this Agreement.

         BORROWER. The word "Borrower" means ZILA, INC., a Delaware corporation.

         BORROWING BASE. The words "Borrowing Base" mean the sum of (i) 80.000%
         of the aggregate amount of Eligible Accounts, plus (ii) 50.000% of the
         aggregate amount of Eligible Inventory.

         COLLATERAL. The word "Collateral" means and includes without
         limitation all property and assets granted as collateral for any Loan,
         whether real or personal property, whether granted directly or
         indirectly, whether granted now or in the future, and whether granted
         in the form of a security interest, mortgage, deed of trust,
         assignment, pledge, chattel mortgage, chattel trust, factor's lien,
         equipment trust, conditional sale, trust receipt, lien, charge, lien
         or title retention contract, lease or consignment intended as a
         security device, or any other security or lien interest whatsoever,
         whether created by law, contract, or otherwise.

         COMMITTED SUM. The words "Committed Sum" mean an amount equal to
         $9,000,000.00.

         ELIGIBLE ACCOUNTS. The words "Eligible Accounts" mean, at any time,
         all of Borrower's Accounts which contain terms and conditions
         acceptable to Lender and in which Lender has a first lien security
         interest, less the amount of all returns, discounts, credits, and
         offsets of any nature; provided, however, unless otherwise agreed to
         by Lender in writing, Eligible Accounts do not include:

                  (a) Accounts with respect to which the Account Debtor is an
                  officer, an employee or agent of Borrower and to which the
                  Account Debtor is a subsidiary of, or affiliated with or
                  related to Borrower or its shareholders, officers, or
                  directors.

                  (b) All Accounts with respect to which Borrower has furnished
                  a payment and/or performance bond and that portion of any
                  Accounts for or representing retainage, if any, until all
                  prerequisites to the immediate payment of such retainage have
                  been satisfied.

                  (c) Accounts with respect to which goods are placed on
                  consignment or subject to a guaranteed sale or other terms by
                  reason of which the payment by the Account Debtor may be
                  conditional.

                  (d) Accounts with respect to which the Account Debtor is not
                  a resident of, or whose principal place of business is
                  located outside of, the United States or its territories,
                  except to the extent such Accounts are supported by
                  insurance, bonds or other assurances satisfactory to Lender
                  in its sole and absolute discretion.

                  (e) Accounts with respect to which Borrower is or may become
                  liable to the Account Debtor for goods sold or services
                  rendered by the Account Debtor to Borrower.

                  (f) Accounts which are subject to dispute, counterclaim, or
                  setoff.

                  (g) Accounts with respect to which all goods have not been
                  shipped or delivered, or all services have not been rendered,
                  to the Account Debtor.

                  (h) Accounts with respect to which Lender, in its sole
                  discretion, deems the creditworthiness or financial condition
                  of the Account Debtor to be unsatisfactory.

                  (i) Accounts of any Account Debtor who has filed or has had
                  filed against it a petition in bankruptcy or an application
                  for relief under any provision of any state or federal
                  bankruptcy, insolvency, or debtor-in-relief acts; or who has
                  had appointed a trustee, custodian, or receiver for the
                  assets of such Account Debtor; or who has made an assignment
                  for the benefit of creditors or has become insolvent or fails
                  generally to pay its debts (including its payrolls) as such
                  debts become due.

                  (j) Accounts with respect to which the Account Debtor is the
                  United States government or any department or agency of the
                  United States, except to the extent an acknowledgement of
                  assignment to Lender of any such Accounts in compliance with
                  the Federal Assignment of Claims Act and other applicable
                  laws has been received by Lender.

         ELIGIBLE INVENTORY. The words "Eligible Inventory" mean, at any time,
         the aggregate value of all of Borrower's Inventory as defined below
         except:

                  (a) Inventory which is not owned by Borrower free and clear
                  of all security interests, liens, encumbrances, and claims of
                  third parties, except Lender's security interest.

                  (b) Inventory which Lender, in its sole and absolute
                  discretion, deems to be obsolete, unsalable, damaged,
                  defective, or unfit for further processing.

                  (c) Inventory which has been returned or rejected.

                  (d) Inventory which is held by others on consignment, sale on
                  approval or otherwise not in Borrower's physical possession,
                  except upon the written consent of Lender.

                  (e) Inventory located outside the United States.

         For purposes of this Agreement, Eligible Inventory shall be valued at
         the lower of cost or market value.

         ERISA. The word "ERISA" means the Employee Retirement Income Security
         Act of 1974, as amended.

         GRANTOR. The word "Grantor" means and includes each and all of the
         persons or entities granting a Security Interest in any Collateral for
         any of the Loans.

         GUARANTOR. The word "Guarantor" means and includes without limitation,
         each and all of the guarantors, sureties, and accommodation parties
         for any of the Loans.

         INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced
         by the Note, including all principal and accrued interest thereon,
         together with all other liabilities; costs and expenses for which
         Borrower is responsible under this Agreement or under any of the
         Related Documents. In addition, the word "Indebtedness" includes all
         other obligations, debts and liabilities, plus any accrued interest

<PAGE>   2
                              LOAN AGREEMENT                             PAGE 2
                               (CONTINUED)
===============================================================================

     thereon, owing by Borrower, or any one or more of them, to Lender of any
     kind or character, now existing or hereafter arising, as well as all
     present and future claims by Lender against Borrower, or any one or more of
     them, and all renewals, extensions, modifications, substitutions and
     rearrangements of any of the foregoing; whether such Indebtedness arises by
     note, draft, acceptance, guaranty, endorsement, letter of credit,
     assignment, overdraft, indemnity agreement or otherwise; whether such
     Indebtedness is voluntary or involuntary, due or not due, direct or
     indirect, absolute or contingent, liquidated or unliquidated; whether
     Borrower may be liable individually or jointly with others; whether
     Borrower may be liable primarily or secondarily or as debtor, maker,
     comaker, drawer, endorser, guarantor, surety, accommodation party or
     otherwise.

     INVENTORY.  The word "Inventory" means all raw materials and all tangible
     personal property, goods, merchandise and other personal property now owned
     or hereafter acquired by Borrower which is held for sale or lease in the
     ordinary course of Borrower's business, excluding all work in progress,
     spare parts, packaging materials, supplies and any advertising costs
     capitalized into inventory.

     LENDER.  The word "Lender" means Bank One, Arizona, NA, its successors and
     assigns.

     LINE OF CREDIT.  The words "Line of Credit" mean the credit facility
     described in the Section titled "LINE OF CREDIT" below.

     NOTE.  The word "Note" means any and all promissory note or notes which
     evidence Borrower's Loans in favor of Lender, as well as any amendment,
     modification, renewal or replacement thereof.

     PERMITTED LIENS.  The words "Permitted Liens" mean: (a) liens and security
     interests securing Indebtedness owed by Borrower to Lender; (b) liens for
     taxes, assessments, or similar charges either (i) not yet due, or (ii)
     being contested in good faith by appropriate proceedings and for which
     Borrower has established adequate reserves; (c) purchase money liens or
     purchase money security interests upon or in any property acquired or held
     by Borrower in the ordinary course of business to secure any indebtedness
     permitted under this Agreement; and (d) liens and security interests which,
     as of the date of this Agreement, have been disclosed to and approved by
     the Lender in writing.

     RELATED DOCUMENTS.  The words "Related Documents" mean and include without
     limitation the Note and all credit agreements, loan agreements,
     environmental agreements, guaranties, security agreements, mortgages, deeds
     of trust, and all other instruments, agreements and documents, whether now
     or hereafter existing, executed in connection with the Note.

     SECURITY AGREEMENT.  The words "Security Agreement" mean and include
     without limitation any agreements, promises, covenants, arrangements,
     understandings or other agreements, whether created by law, contract, or
     otherwise, evidencing, governing, representing, or creating a Security
     Interest.

     SECURITY INTEREST.  The words "Security Interest" mean and include without
     limitation any type of security interest, whether in the form of a lien,
     charge, mortgage, deed of trust, assignment, pledge, chattel mortgage,
     chattel trust, factor's lien, equipment trust, conditional sale, trust
     receipt, lien or title retention contract, lease or consignment intended as
     a security device, or any other security or lien interest whatsoever,
     whether created by law, contract, or otherwise.

LINE OF CREDIT.  Subject to the other terms and conditions herein, Lender hereby
establishes a Line of Credit for Borrower through which Lender agrees to make
advances to Borrower from time to time from the effective date of this Agreement
until the maturity date of the Note evidencing the Line of Credit, provided the
aggregate amount of such advances outstanding at any time does not exceed the
lesser of the amount equal to the Borrowing Base or an amount equal to the
Committed Sum. Within the foregoing limits, Borrower may borrow, partially or
wholly prepay, and reborrow under this Agreement.

     BORROWING BASE COMPLIANCE.  If at any time the aggregate principal amount
     outstanding under the Line of Credit shall exceed the applicable Borrowing
     Base, Borrower shall pay to Lender an amount equal to the difference
     between the outstanding principal balance under the Line of Credit and the
     Borrowing Base.

     REPRESENTATIONS AND WARRANTIES CONCERNING ACCOUNTS.  With respect to the
     Accounts, Borrower represents and warrants to Lender: (a) Each Account
     represented by Borrower to be an Eligible Account for purposes of this
     Agreement conforms to the requirements of the definition of an Eligible
     Account; and (b) All Account information listed on reports and schedules
     delivered to Lender will be true and correct, subject to immaterial
     variance.

     REPRESENTATIONS AND WARRANTIES CONCERNING INVENTORY.  With respect to the
     Inventory, Borrower represents and warrants to Lender: (a) All Inventory
     represented by Borrower to be Eligible Inventory for purposes of this
     Agreement conforms to the requirements of the definition of Eligible
     Inventory; (b) All Inventory values listed on schedules delivered to Lender
     will be true and correct, subject to immaterial variance; (c) The value of
     the Inventory will be determined on a consistent accounting basis; (d)
     Except as reflected in the Inventory schedules delivered to Lender, all
     Eligible Inventory is now and at all times hereafter will be of good and
     merchantable quality, free from defects; and (e) Lender, its assigns, or
     agents shall have the right at any time and at Borrower's expense to
     inspect and examine the Inventory and to check and test the same as to
     quality, quantity, value, and condition.

REPRESENTATIONS AND WARRANTIES.  Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each request for an Advance, as
of the date of any renewal, extension or modification of any Loan, and at all
times any Loans or Lender's commitment to make Loans hereunder is outstanding:

     ORGANIZATION.  Borrower is a corporation which is duly organized, validly
     existing, and in good standing under the laws of the State of Delaware, is
     qualified to do business in the State of Arizona as a foreign corporation,
     and is duly qualified and in good standing in all other states in which
     Borrower is doing business. Borrower has the full power and authority to
     own its properties and to transact the businesses in which it is presently
     engaged or presently proposes to engage.

     AUTHORIZATION.  The execution, delivery, and performance of this Agreement
     and all Related Documents to which Borrower is a party have been duly
     authorized by all necessary action by Borrower; do not require the consent
     or approval of any other person, regulatory authority or governmental body;
     and do not conflict with, result in a violation of, or constitute a default
     under (a) any provision of its articles of incorporation or organization,
     or bylaws, or any agreement or other instrument binding upon Borrower or
     (b) any law, governmental regulation, court decree, or order applicable to
     Borrower. Borrower has all requisite power and authority to execute and
     deliver this Agreement and all other Related Documents to which Borrower is
     a party.

     FINANCIAL INFORMATION.  Each financial statement of Borrower supplied to
     Lender truly and completely discloses Borrower's financial condition as of
     the date of the statement, and there has been no material adverse change in
     Borrower's financial condition subsequent to the date of the most recent
     financial statement supplied to Lender. Borrower has no material contingent
     obligations except as disclosed in such financial statements.

     LEGAL EFFECT.  This Agreement and all other Related Documents to which
     Borrower is a party constitute legal, valid and binding obligations of
     Borrower enforceable against Borrower in accordance with their respective
     terms, except as limited by bankruptcy, insolvency or similar laws of
     general application relating to the enforcement of creditors' rights and
     except to the extent specific remedies may generally be limited by
     equitable principles.

     PROPERTIES.  Except for Permitted Liens, Borrower is the sole owner of, and
     has good title to, all of Borrower's properties free and clear of all
     Security Interests, and has not executed any security documents or
     financing statements relating to such properties. All of Borrower's
     properties are titled in Borrower's legal name, and Borrower has not used,
     or filed a financing statement under, any other name for at least the last
     six (6) years.

     COMPLIANCE.  Except as disclosed in writing to Lender (a) Borrower is
     conducting Borrower's businesses in material compliance with all applicable
     federal, state and local laws, statutes, ordinances, rules, regulations,
     orders, determinations and court decisions, including without limitation,
     those pertaining to health or environmental matters, and (b) Borrower
     otherwise does not have any known material contingent liability in
     connection with the release into the environment, disposal or the improper
     storage of any toxic or hazardous substance or solid waste.

     LITIGATION AND CLAIMS.  No litigation, claim, investigation, administrative
     proceeding or similar action (including those for unpaid taxes) against
     Borrower is pending or threatened, and no other event has occurred which
     may in any one case or in the aggregate materially adversely affect
     Borrower's financial condition or properties, other than litigation,
     claims, or other events, if any, that have been disclosed to and
     acknowledged by Lender in writing.

     TAXES.  All tax returns and reports of Borrower that are or were required
     to be filed, have been filed, and all taxes, assessments and other
     governmental charges have been paid in full, except those that have been
     disclosed in writing to Lender which are presently being or to be contested
     by Borrower in good faith in the ordinary course of business and for which
     adequate reserves have been provided.

     LIEN PRIORITY.  Unless otherwise previously disclosed to and approved by
     Lender in writing, Borrower has not entered into any Security Agreements,
     granted a Security Interest or permitted the filing or attachment of any
     Security Interests on or affecting any of the Collateral, except in favor
     of Lender.

     LICENSES, TRADEMARKS AND PATENTS.  Borrower possesses and will continue to
     possess all permits, licenses, trademarks, patents and rights thereto which
     are needed to conduct Borrower's business and Borrower's business does not
     conflict with or violate any valid rights of others with respect to the
     foregoing.
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                                 LOAN AGREEMENT                        Page 3
                                  (Continued)
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     COMMERCIAL PURPOSES. Borrower intends to use the Loan proceeds solely for
     business or commercial related purposes approved by Lender and such
     proceeds will not be used for the purchasing or carrying of "margin stock"
     as defined in Regulation U issued by the Board of Governors of the Federal
     Reserve System.

     INELIGIBLE SECURITIES. No portion or any advance or Loan made hereunder
     shall be used directly or indirectly to purchase ineligible securities, as
     defined by applicable regulations of the Federal Reserve Board,
     underwritten by Lender or any other affiliate of Banc One Corporation
     during the underwriting period and for 30 days thereafter.

     EMPLOYEE BENEFIT PLANS. Each employee benefit plan as to which Borrower may
     have any liability complies in all material respects with all applicable
     requirements of law and regulations, and (i) no Reportable Event nor
     Prohibited Transaction (as defined in ERISA) has occurred with respect to
     any such plan, (ii) Borrower has not withdrawn from any such plan or
     initiated steps to do so, (iii) no steps have been taken to terminate any
     such plan, and (iv) there are no unfunded liabilities other than those
     previously disclosed to Lender in writing.

     LOCATION OF BORROWER'S OFFICES AND RECORDS. Borrower's place of business,
     or Borrower's chief executive office if Borrower has more than one place of
     business, is located at 5227 North 7th Street, Phoenix, AZ 85014-2800.
     Unless Borrower has designated otherwise in writing this location is also
     the office or offices where Borrower keeps its records concerning the
     Collateral.

     INFORMATION. All information heretofore or contemporaneously herewith
     furnished by Borrower to Lender for the purposes of or in connection with
     this Agreement or any transaction contemplated hereby is, and all
     information hereafter furnished by or on behalf of Borrower to Lender will
     be, true and accurate in every material respect on the date as of which
     such information is dated or certified; and none of such information is or
     will be incomplete by omitting to state any material fact necessary to make
     such information not misleading.

     SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower understands and agrees
     that Lender, without independent investigation, is relying upon the above
     representations and warranties in extending the Loans to Borrower. Borrower
     further agrees that the foregoing representations and warranties shall be
     continuing in nature and shall remain in full force and effect during the
     term of this Agreement.

AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:

     LITIGATION. Promptly inform Lender in writing of (a) all material adverse
     changes in Borrower's financial condition, (b) all existing and all
     threatened litigation, claims, investigations, administrative proceedings
     or similar actions affecting Borrower or any Guarantor which could
     materially affect the financial condition of Borrower or the financial
     condition of any Guarantor, and (c) the creation, occurrence or assumption
     by Borrower of any actual or contingent liabilities not permitted under
     this Agreement.

     FINANCIAL RECORDS. Maintain its books and records in accordance with
     generally accepted accounting principles, applied on a consistent basis,
     and permit Lender to examine, audit and make and take away copies or
     reproductions of Borrower's books and records at all reasonable times. If
     Borrower now or at any time hereafter maintains any records (including
     without limitation computer generated records and computer software
     programs for the generation of such records) in the possession of a third
     party, Borrower, upon request of Lender shall notify such party to permit
     Lender free access to such records at all reasonable times and to provide
     Lender with copies of any records it may request, all at Borrower's
     expense.

     FINANCIAL STATEMENTS. Furnish Lender with, as soon as available, but in no
     event later than one hundred twenty (120) days after the end of each fiscal
     year, Borrower's balance sheet, income statement, and statement of changes
     in financial position for the year ended, audited by a certified public
     accountant satisfactory to Lender. All financial reports required to be
     provided under this Agreement shall be prepared in accordance with
     generally accepted accounting principles, applied on a consistent basis,
     and certified by Borrower as being true and correct.

     ADDITIONAL INFORMATION. Furnish such additional information and statements,
     lists of assets and liabilities, agings of receivables and payables,
     inventory schedules, budgets, forecasts, tax returns, and other reports
     with respect to Borrower's financial condition and business operations as
     Lender may request from time to time.

     FINANCIAL COVENANTS AND RATIOS. Comply at all times with the following
     covenants and ratios:

          WORKING CAPITAL. Maintain, at all times, Working Capital in excess of
          $10,000,000.00.

     For purposes of this Agreement and to the extent the following terms are
     utilized in this Agreement, the term "Tangible Net Worth" shall mean
     borrower's total assets excluding all intangible assets (including, without
     limitation, goodwill, trademarks, patents, copyrights, organization
     expenses, and similar intangible items) less total liabilities excluding
     Subordinated Debt. The term "Subordinated Debt" shall mean all indebtedness
     owing by Borrower which has been subordinated by written agreement to all
     indebtedness now or hereafter owing by Borrower to Lender, such agreement
     to be in form and substance acceptable to Lender. The term "Working
     Capital" shall mean Borrower's Liquid Assets plus inventory, less current
     liabilities. The term "Liquid Assets" shall mean borrower's unencumbered
     cash, marketable securities and accounts receivable net of reserves. The
     term "Cash Flow" shall mean net income after taxes, and exclusive of
     extraordinary items, plus depreciation and amortization. Except as provided
     above, all computations made to determine compliance with the requirements
     contained in this paragraph shall be made in accordance with generally
     accepted accounting principles, applied on a consistent basis, and
     certified by Borrower as being true and correct.

     INSURANCE. Maintain fire and other risk insurance, public liability
     insurance, and such other insurance as Lender may require with respect to
     Borrower's properties and operations, in form, amounts, coverages and with
     insurance companies reasonably acceptable to Lender. Borrower, upon request
     of Lender, will deliver to Lender from time to time the policies or
     certificates of insurance in form satisfactory to Lender, including
     stipulations that coverages will not be cancelled or diminished without at
     least thirty (30) days' prior written notice to Lender. In connection with
     all policies covering assets in which Lender holds or is offered a Security
     Interest for the Loans, Borrower will provide Lender with such loss payable
     or other endorsements as Lender may require.

     INSURANCE REPORTS. Furnish to Lender, upon request of Lender, reports on
     each existing insurance policy showing such information as Lender may
     reasonably request, including without limitation the following: (a) the
     name of the insurer; (b) the risks insured; (c) the amount of the policy;
     (d) the properties insured; (e) the then current property values on the
     basis of which insurance has been obtained, and the manner of determining
     those values; and (f) the expiration date of the policy.

     GUARANTIES. Prior to or contemporaneously with the execution of this
     Agreement, furnish to Lender guaranty agreements executed by the
     guarantors named below covering such Loans or other Indebtedness and
     otherwise being in form and substance satisfactory to Lender in its sole
     and absolute discretion:

               GUARANTORS
               ----------

               ZILA PHARMACEUTICALS, INC.
               CYGNUS IMAGING, INC.
               INTER-CAL CORPORATION, INC.
               OXYCAL LABORATORIES, INCORPORATED
               OXYCAL EXPORT, INC.
               INTEGRATED DENTAL TECHNOLOGIES, INC.
               RYKER DENTAL OF KENTUCKY, INC.
               BIO-DENTAL TECHNOLOGIES CORPORATION

     OTHER AGREEMENTS. Comply with all terms and conditions of all other
     agreements, whether now or hereafter existing, between Borrower and any
     other party and notify Lender immediately in writing of any default in
     connection with any other such agreements.

     LOAN FEES AND CHARGES. In addition to all other agreed upon fees and
     charges, pay the following: ONE TIME $35,000.00 COMMITMENT FEE PAYABLE UPON
     CLOSING.

     LOAN PROCEEDS. Use all Loan proceeds solely for Borrower's business
     operations, unless specifically consented to the contrary by Lender in
     writing.

     TAXES, CHARGES AND LIENS.  Pay and discharge when due all of its
     indebtedness and obligations, including without limitation all assessments,
     taxes, governmental charges, levies and liens, of every kind and nature,
     imposed upon Borrower or its properties, income, or profits, prior to the
     date on which penalties would attach, and all lawful claims that, if
     unpaid, might become a lien or charge upon any of Borrower's properties,
     income, or profits; provided however, Borrower will not be required to pay
     and discharge any such assessment, tax, charge, levy, lien or claim so long
     as (a) the legality of the same shall be contested in good faith by
     appropriate proceedings, and (b) Borrower shall have established on its
     books adequate reserves with respect to such contested assessment, tax,
     charge, levy, lien, or claim in accordance with generally accepted
     accounting principles. Borrower, upon demand of Lender, will furnish to
     Lender evidence of payment of the assessments, taxes, charges, levies,
     liens and claims and will authorize the appropriate governmental  official
     to deliver to Lender at any time a written statement of any assessments,
     taxes, charges, levies, liens and claims against Borrower's properties,
     income, or profits.

     PERFORMANCE.  Perform and comply with all terms, conditions, and
     provisions set forth in this Agreement and in the Related Documents in a
     timely manner, and promptly notify Lender if Borrower learns of the
     occurrence of any event which constitutes an Event of Default under
<PAGE>   4
                                    LOAN AGREEMENT                        PAGE 4
                                      (CONTINUED)
================================================================================

   this Agreement or under any of the Related Documents.

   OPERATIONS. Conduct its business affairs in a reasonable and prudent manner
   and in compliance with all applicable federal, state and municipal laws,
   ordinances, rules and regulations respecting its properties, charters,
   businesses and operations, including without limitation, compliance with the
   Americans With Disabilities Act, all applicable environmental statutes,
   rules, regulations and ordinances and with all minimum funding standards and
   other requirements of ERISA and other laws applicable to Borrower's employee
   benefit plans.

   COMPLIANCE CERTIFICATE. Unless waived in writing by Lender, provide Lender
   forty five (45) days after each fiscal month with a certificate executed by
   Borrower's chief financial officer, or other officer or person acceptable to
   Lender, (a) certifying that the representations and warranties set forth in
   this Agreement are true and correct as of the date of the certificate and
   that, as of the date of the certificate, no Event of Default exists under
   this Agreement, and (b) demonstrating compliance with all financial covenants
   set forth in this Agreement.

   ENVIRONMENTAL COMPLIANCE AND REPORTS. Borrower shall comply in all respects
   with all federal, state and local environmental laws, statutes, regulations
   and ordinances; not cause or permit to exist, as a result of an intentional
   or unintentional action or omission on its part or on the part of any third
   party, on property owned and/or occupied by Borrower, any environmental
   activity where damage may result to the environment, unless such
   environmental activity is pursuant to and in compliance with the conditions
   of a permit issued by the appropriate federal, state or local governmental
   authorities; and furnish to Lender promptly and in any event within thirty
   (30) days after receipt thereof a copy of any notice, summons, lien,
   citation, directive, letter or other communication from any governmental
   agency or instrumentality concerning any intentional or unintentional action
   or omission on Borrower's part in connection with any environmental activity
   whether or not there is damage to the environment and/or other natural
   resources.

   BORROWING BASE CERTIFICATE. Within 45 days after each month, Borrower shall
   deliver to Lender a borrowing base certificate, in form and detail
   satisfactory to Lender, along with such supporting documentation as Lender
   may request, including without limitation, an accounts receivable aging
   report and/or a list or schedule of Borrower's accounts receivable, inventory
   and/or equipment.

   ADDITIONAL ASSURANCES. Make, execute and deliver to Lender such promissory
   notes, mortgages, deeds of trust, security agreements, financing statements,
   instruments, documents and other agreements as Lender or its attorneys may
   reasonably request to evidence and secure the Loans and to perfect all
   Security Interests.

NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent
of Lender:

   MAINTAIN BASIC BUSINESS. Engage in any business activities substantially
   different than those in which Borrower is presently engaged.

   CONTINUITY OF OPERATIONS. Cease operations, liquidate, dissolve or merge or
   consolidate with or into any other entity.

   LIENS. Mortgage, assign, pledge, grant a security interest in or otherwise
   encumber Borrower's assets, except as allowed as a Permitted Lien.

   TRANSFER OF ASSETS. Transfer, sell or otherwise dispose of any of Borrower's
   assets other than in the ordinary course of business.

   CHANGE IN MANAGEMENT. Permit a change in the senior executive or management
   personnel of Borrower.

   TRANSFER OF OWNERSHIP. Permit the sale, pledge or other transfer of any
   ownership interest in Borrower.

CONDITIONS PRECEDENT TO ADVANCES. Lender's obligation to make any Advances or
to provide any other financial accommodations to or for the benefit of Borrower
hereunder shall be subject to the conditions precedent that as of the date of
such advance or disbursement and after giving effect thereto (a) all
representations and warranties made to Lender in this Agreement and the Related
Documents shall be true and correct as of and as if made on such date, (b) no
material adverse change in the financial condition of Borrower or any Guarantor
since the effective date of the most recent financial statements furnished to
Lender, or in the value of any Collateral, shall have occurred and be
continuing, (c) no event has occurred and is continuing, or would result from
the requested advance or disbursement, which with notice or lapse of time, or
both, would constitute an Event of Default, (d) no Guarantor has sought,
claimed or otherwise attempted to limit, modify or revoke such Guarantor's
guaranty of any Loan, and (e) Lender has received all Related Documents
appropriately executed by Borrower and all other proper parties.

ADDENDUM. An addendum, titled "ADDENDUM", is attached to this document and by
this reference is made a part of this document just as if all the provisions,
terms and conditions of the ADDENDUM had been fully set forth in this document.

RIGHT OF SETOFF. Unless a lien would be prohibited by law or would render a
nontaxable account taxable, Borrower grants to Lender a contractual security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or any other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future. Borrower authorizes Lender, to the extent
permitted by applicable law, to charge or setoff all sums owing on the
Indebtedness against any and all such accounts.

EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:

   DEFAULT ON INDEBTEDNESS. Failure of Borrower to make any payment when due on
   any of the Indebtedness.

   OTHER DEFAULTS. Failure of Borrower, any Guarantor or any Grantor to comply
   with or to perform when due any other term, obligation, covenant or condition
   contained in this Agreement, the Note or in any of the other Related
   Documents, or failure of Borrower to comply with or to perform any other
   term, obligation, covenant or condition contained in any other agreement now
   existing or hereafter arising between Lender and Borrower.

   FALSE STATEMENTS. Any warranty, representation or statement made or furnished
   to Lender under this Agreement or the Related Documents is false or
   misleading in any material respect.

   DEFAULT TO THIRD PARTY. The occurrence of any event which permits the
   acceleration of the maturity of any indebtedness owing by Borrower, Grantor
   or any Guarantor to any third party under any agreement or undertaking.

   BANKRUPTCY OR INSOLVENCY. If the Borrower, Grantor or any Guarantor: (i)
   becomes insolvent, or makes a transfer in fraud of creditors, or makes an
   assignment for the benefit of creditors, or admits in writing its inability
   to pay its debts as they become due; (ii) generally is not paying its debts
   as such debts become due; (iii) has a receiver, trustee or custodian
   appointed for, or take possession of, all or substantially all of the assets
   of such party or any of the Collateral, either in a proceeding brought by
   such party or in a proceeding brought against such party and such appointment
   is not discharged or such possession is not terminated within sixty (60) days
   after the effective date thereof or such party consents to or acquiesces in
   such appointment or possession; (iv) files a petition for relief under the
   United States Bankruptcy Code or any other present or future federal or state
   insolvency, bankruptcy or similar laws (all of the foregoing hereinafter
   collectively called "APPLICABLE BANKRUPTCY LAW") or an involuntary petition
   for relief is filed against such party under any Applicable Bankruptcy Law
   and such involuntary petition is not dismissed within sixty (60) days after
   the filing thereof, or an order for relief naming such party is entered
   under any Applicable Bankruptcy Law, or any composition, rearrangement,
   extension, reorganization or other relief of debtors now or hereafter
   existing is requested or consented to by such party; (v) fails to have
   discharged within a period of sixty (60) days any attachment, sequestration
   or similar writ levied upon any property of such party; or (vi) fails to pay
   within thirty (30) days any final money judgment against such party.

   LIQUIDATION, DEATH AND RELATED EVENTS. If Borrower, Grantor or any Guarantor
   is an entity, the liquidation, dissolution, merger or consolidation of any
   such entity or, if any of such parties is an individual, the death or legal
   incapacity of any such individual.

   CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or forfeiture
   proceedings, whether by judicial proceeding, self-help, repossession or any
   other method, by any creditor of Borrower, any creditor of any Grantor
   against any collateral securing the Indebtedness, or by any governmental
   agency.

   VIOLATION OF LAW. Any of the Real Property and/or Improvements, or any use of
   any of the Real Property and/or Improvements violates any law, ordinance,
   regulation or rule (Federal, state or local).

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, Lender may,
at its option, without further notice or demand, (a) terminate all commitments
and obligations of Lender to make Loans to Borrower, if any, (b) declare all
Loans and any other Indebtedness immediately due and payable, (c) refuse to
advance any additional amounts under the Note or to provide any other financial
accommodations under this Agreement, or (d) exercise all the rights and
remedies provided in the Note or in any of the Related Documents or available
at law, in equity, or otherwise; provided, however, if any Event of Default of
the type described in the "Bankruptcy or Insolvency" subsection above shall
occur, all Loans and any other Indebtedness shall automatically become due and
payable, without any notice, demand or action by Lender. Except as may be
prohibited by applicable law, all of Lender's rights and remedies shall be
cumulative and may be exercised singularly or concurrently. Election by Lender
to pursue any remedy shall not exclude pursuit of any other remedy, and an
election to make expenditures or to take action to perform an obligation of
Borrower or of any Grantor shall not affect Lender's rights to declare a
default and to exercise its rights and remedies.

MISCELLANEOUS PROVISIONS.
<PAGE>   5
                              LOAN AGREEMENT                              PAGE 5
                                (CONTINUED)

================================================================================

AMENDMENTS. This Agreement, together with any Related Documents, constitutes the
entire understanding and agreement of the parties as to the matters set forth in
this Agreement. No alteration of or amendment to this Agreement shall be
effective unless given in writing and signed by the party or parties sought to
be charged or bound by the alteration or amendment.

APPLICABLE LAW. This Agreement has been delivered to Lender and accepted by
Lender in the State of Arizona. Subject to the provisions on arbitration, this
Agreement shall be governed by and construed in accordance with the laws of the
State of Arizona without regard to any conflict of laws or provisions thereof.

JURY WAIVER. THE UNDERSIGNED AND LENDER (BY ITS ACCEPTANCE HEREOF) HEREBY
VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE
A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT
OR OTHERWISE) BETWEEN OR AMONG THE UNDERSIGNED AND LENDER ARISING OUT OF OR IN
ANY WAY RELATED TO THIS DOCUMENT, AND ANY OTHER RELATED DOCUMENT, OR ANY
RELATIONSHIP BETWEEN LENDER AND THE BORROWER. THIS PROVISION IS A MATERIAL
INDUCEMENT TO LENDER TO PROVIDE THE FINANCING DESCRIBED HEREIN OR IN THE OTHER
RELATED DOCUMENTS.

ARBITRATION. Lender and Borrower agree that upon the written demand of either
party, whether made before or after the institution of any legal proceedings,
but prior to the rendering of any judgment in that proceeding, all disputes,
claims and controversies between them, whether individual, joint, or class in
nature, arising from this Agreement, any Related Document or otherwise,
including without limitation contract disputes and tort claims, shall be
resolved by binding arbitration pursuant to the Commercial Rules of the American
Arbitration Association ("AAA"). Any arbitration proceeding held pursuant to
this arbitration  provision shall be conducted in the city nearest the
Borrower's address having an AAA regional office, or at any other place selected
by mutual agreement of the parties. No act to take or dispose of any Collateral
shall constitute a waiver of this arbitration agreement or be prohibited by this
arbitration agreement. This arbitration provision shall not limit the right of
either party during any dispute, claim or controversy to seek, use, and employ
ancillary, or preliminary rights and/or remedies, judicial or otherwise, for the
purposes of realizing upon, preserving, protecting, foreclosing upon or
proceeding under forcible entry and detainer for possession of, any real or
personal property, and any such action shall not be deemed an election of
remedies. Such remedies include, without limitation, obtaining injuctive relief
or a temporary restraining order, invoking a power of sale under any deed of
trust or mortgage, obtaining a writ of attachment or imposition of a
receivership, or exercising any rights relating to personal property, including
exercising the right of set-off, or taking or disposing of such property with or
without judicial process pursuant to the Uniform Commercial Code. Any disputes,
claims, or controversies concerning the lawfulness or reasonableness of an act,
or exercise of any right or remedy, concerning any Collateral, including any
claim to rescind, reform, or otherwise modify any agreement relating to the
Collateral, shall also be arbitrated; provided, however that no arbitrator shall
have the right or the power to enjoin or restrain any act of either party.
Judgment upon any award rendered by any arbitrator may be entered in any court
having jurisdiction. The statute of limitations, estoppel, waiver, laches and
similar doctrines which would otherwise be applicable in an action brought by a
party shall be applicable in any arbitration proceeding, and the commencement of
an arbitration proceeding shall be deemed the commencement of any action for
these purposes. The Federal Arbitration Act (Title 9 of the United States Code)
shall apply to the construction, interpretation, and enforcement of this
arbitration provision.

CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not be used to interpret or define the provisions of this
Agreement.

CONSENT TO LOAN PARTICIPATION. Borrower agrees and consents to Lender's sale or
transfer, whether now or later, of one or more participation interests in the
Loans to one or more purchasers, whether related or unrelated to Lender. Lender
may provide, without any limitation whatsoever, to any one or more purchasers,
or potential purchasers, any information or knowledge Lender may have about
Borrower or about any other matter relating to the Loan, and Borrower hereby
waives any rights to privacy it may have with respect to such matters. Borrower
additionally waives any and all notices of sale of participation interests, as
well as all notices of any repurchase of such participation interests.

COSTS AND EXPENSES. Borrower agrees to pay upon demand all of Lender's expenses,
including attorneys' fees, incurred in connection with the preparation,
execution, enforcement, modification and collection of this Agreement or in
connection with the Loans made pursuant to this Agreement. Lender may hire one
or more attorneys to help collect the Indebtedness if Borrower does not pay, and
Borrower will pay Lender's reasonable attorneys' fees.

NOTICES. All notices required to be given under this Agreement shall be given in
writing, and shall be effective when actually delivered or when deposited with a
nationally recognized overnight courier or deposited in the United States mail,
first class, postage prepaid, addressed to the party to whom the notice is to be
given at the address shown above. Any party may change its address for notices
under this Agreement by giving formal written notice to the other parties,
specifying that the purpose of the notice is to change the party's address. To
the extent permitted by applicable law, if there is more than one Borrower,
notice to any Borrower will constitute notice to all Borrowers. For notice
purposes, Borrower will keep Lender informed at all times of Borrower's current
address(es).

SEVERABILITY. If a court of competent jurisdiction finds any provision of this
Agreement to be invalid or unenforceable as to any person or circumstance, such
finding shall not render that provision invalid or unenforceable as to any other
persons or circumstances. If feasible, any such offending provision shall be
deemed to be modified to be within the limits of enforceability or validity;
however, if the offending provision cannot be so modified, it shall be stricken
and all other provisions of this Agreement in all other respects shall remain
valid and enforceable.

COUNTERPARTS. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original and all of which together shall constitute
the same document. Signature pages may be detached from the counterparts to a
single copy of this Agreement to physically form one document.

SUCCESSORS AND ASSIGNS. All covenants and agreements contained by or on behalf
of Borrower shall bind its successors and assigns and shall inure to the benefit
of Lender, its successors and assigns. Borrower shall not, however, have the
right to assign its rights under this Agreement or any interest therein, without
the prior written consent of Lender.

SURVIVAL. All warranties, representations, and covenants made by Borrower in
this Agreement or in any certificate or other instrument delivered by Borrower
to Lender under this Agreement shall be considered to have been relied upon by
Lender and will survive the making of the Loan and delivery to Lender of the
Related Documents, regardless of any investigation made by Lender or on Lender's
behalf.

TIME IS OF THE ESSENCE. Time is of the essence in the performance of this
Agreement.

WAIVER. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No delay
or omission on the part of Lender in exercising any right shall operate as a
waiver of such right or any other right. A waiver by Lender of a provision of
this Agreement shall not prejudice or constitute a waiver of Lender's right
otherwise to demand strict compliance with that provision or any other provision
of this Agreement. No prior waiver by Lender, nor any course of dealing between
Lender and Borrower, or between Lender and any Grantor or Guarantor, shall
constitute a waiver of any of Lender's rights or of any obligations of Borrower
or of any Grantor as to any future transactions. Whenever the consent of Lender
is required under this Agreement, the granting of such consent by Lender in any
instance shall not constitute continuing consent in subsequent instances where
such consent is required, and in all cases such consent may be granted or
withheld in the sole discretion of Lender.

<PAGE>   6
                              LOAN AGREEMENT                          PAGE 6
                                (CONTINUED)
================================================================================

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS LOAN AGREEMENT,
AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS EXECUTED AS OF THE DATE SET
FORTH ABOVE.

BORROWER:

ZILA, INC., A DELAWARE CORPORATION

BY: /s/ Joseph Hines
   ---------------------------------
     JOSEPH HINES, PRESIDENT


LENDER:

BANK ONE, ARIZONA, NA

BY: /s/ Hope Berman Levin
   ---------------------------------
     AUTHORIZED OFFICER

================================================================================
<PAGE>   7
                                    ADDENDUM
--------------------------------------------------------------------------------

Borrower:   Zila, Inc., a Delaware       Lender:     Bank One, Arizona, NA
            corporation                              Commercial Banking Group
            5227 North 7th Street                    201 N. Central Avenue
            Phoenix, AZ  85014-2800                  Phoenix, AZ  85004

This ADDENDUM is attached to and by this reference is made a part of the
Business Loan Agreement dated February 1, 1999, and executed by Bank One,
Arizona, NA and ZILA, INC., a Delaware corporation.

BORROWING BASE. The definition of Borrowing Base is hereby deleted and the
following is inserted in its place: The words "Borrowing Base" mean the sum of
(i) 80.0% of the aggregate amount of Eligible Accounts, plus (ii) the lesser of
(a) 50.0% of the aggregate amount of Eligible Inventory or (b) 50.0% of the
aggregate amount of Eligible Accounts.

ADDITIONAL AFFIRMATIVE COVENANT - CERTAIN REPORTS. Notwithstanding any other
provision to the contrary herein or in the Related Documents, with each
borrowing base certificate to be delivered by Borrower to Lender hereunder,
Borrower shall deliver to Lender an aging and listing of all accounts
receivable, which itemizes each account debtor by name, states the total amount
payable to Borrower and contains a breakdown indicating future amounts due and
when due, current amounts due, amounts 30-59 days past due, 60-89 days past due,
and 90 or more days past due, and reflecting any credit adjustments, returns and
allowances.

ADDITIONAL AFFIRMATIVE COVENANT - QUARTERLY FINANCIAL STATEMENTS. Borrower
further covenants and agrees with Lender that, while this Agreement is in
effect, Borrower will furnish Lender with, as soon as available, but in no event
later than forty-five (45) days after the end of each fiscal quarter, Borrower's
Form 10Q Financial Report.

ADDITIONAL AFFIRMATIVE COVENANT - CONSOLIDATING INTERIM FINANCIAL STATEMENTS.
Borrower further covenants and agrees with Lender that, while this Agreement is
in effect, Borrower will furnish Lender with, as soon as available, but in no
event later than SIXTY (60) days after the end of each fiscal quarter, the
balance sheet, income statement and statement of changes in financial position
of Borrower and each of its subsidiaries on a consolidating basis for the
quarter then ended, prepared and certified, subject to year end review
adjustments, as correct to the best knowledge and belief by Borrower's chief
financial officer or other officer or person acceptable to Lender.

ADDITIONAL AFFIRMATIVE COVENANT - TANGIBLE NET WORTH. Borrower further covenants
and agrees with Lender that, while this Agreement is in effect, Borrower will
comply at all times with the following covenant: Maintain, as of the end of each
fiscal quarter, a minimum Tangible Net Worth plus convertible preferred series A
stock of Borrower of not less than $18,000,000.00.

ADDITIONAL AFFIRMATIVE COVENANT - CURRENT RATIO. Borrower further covenants and
agrees with Lender that, while this Agreement is in effect, Borrower will comply
at all times with the following covenant: Maintain, as of the end of each fiscal
quarter, a ratio of current assets to current liabilities in excess of 2.0 to
1.0 (if the Line of Credit is classified as a long term debt), or 1.5 to 1.0 (if
the Line of Credit is classified as a current liability).

ADDITIONAL AFFIRMATIVE COVENANT - DEBT SERVICE COVERAGE RATIO. Borrower further
covenants and agrees with Lender that, while this Agreement is in effect,
Borrower will comply at all times with the following covenant: Maintain on a
consolidated basis, as of the end of each fiscal quarter, a ratio of (a) net
income plus Depreciation and Amortization plus nonrecurring merger related
expenses for the twelve month period then ending, to (b) current maturities of
long term debt for the same such twelve month period, of not less than 1.20 to
1.0.

AVAILABILITY FEE. Borrower shall pay to Lender an availability fee
("Availability Fee") with respect to each calendar quarter during the term of
the Note, based on the unused amount of the Note. The Availability Fee shall be
an amount equal to A x (B-C) x (D / E), where A equals thirty-five hundredths of
a percent (.35%); B equals the original amount of the Note; C equals the average
daily outstanding principal balance of the Line of Credit during the calendar
quarter; D equals the actual number of days elapsed during the calendar quarter;
and E equals 360. Each Availability Fee shall be due and payable to Lender
quarterly in arrears, within fifteen (15) days after Borrower's receipt of an
invoice for the Availability Fee from Lender.

ADDITIONAL NEGATIVE COVENANT - USE OF PROCEEDS. Borrower further covenants and
agrees with Lender that while this Agreement is in effect, Borrower shall not
use proceeds of the Line of Credit to purchase more than $2,500,000.00 of its
preferred stock.
<PAGE>   8
ADDITIONAL NEGATIVE COVENANT - CAPITAL EXPENDITURES. Borrower further covenants
and agrees with Lender that while this Agreement is in effect, Borrower and all
of its subsidiaries (excluding Oxycal Laboratories, Incorporated) shall not,
without the prior written consent of Lender, make or contract to make capital
expenditures, including leasehold improvements, during any fiscal year in excess
of $1,000,000.00, and Oxycal Laboratories, Incorporated shall not, without the
prior written consent of Lender, make or contract to make capital expenditures,
including leasehold improvements, during the two (2) fiscal year period ending
July 31, 2000 in excess of $5,000,000.00. This limitation is to be measured as
follows: current period net fixed assets plus 12 months depreciation expense
less prior period net fixed assets less gain (plus loss) on sale of assets less
capitalized interest.

ADDITIONAL NEGATIVE COVENANT - INDEBTEDNESS. Borrower further covenants and
agrees with Lender that while this Agreement is in effect, Borrower and all of
its subsidiaries shall not, without the prior written consent of Lender, create,
incur or assume additional indebtedness for borrowed money, including capital
leases, or guaranty any indebtedness owing by others, other than (A) current
unsecured trade debt incurred in the ordinary course of business, (B)
indebtedness owing to Lender, (C) borrowings outstanding as of the date hereof
and disclosed to Lender in writing, (D) operating lease indebtedness of up to
$600,000.00 (excluding operating leases from Bank One) in the aggregate, and (E)
borrowings from others approved by Lender in writing.

ADDITIONAL NEGATIVE COVENANT - ACQUISITIONS. Borrower further covenants and
agrees with Lender that while this Agreement is in effect Borrower shall not,
without the prior written consent of Lender, purchase or otherwise acquire any
interest in (a) any other enterprise or entity, or (b) any assets of any other
enterprise or entity, unless (i) the purchase price is less than $1,000,000.00,
(ii) such enterprise or entity is in the same line of business as Borrower or
its subsidiaries, (iii) Borrower has, at the time of such purchase or
acquisition, a ratio of total liabilities to Tangible Net Worth of less than 2.0
to 1.0, (iv) Borrower has, as of the end of the most recent fiscal quarter, a
ratio of (1) net income plus Depreciation and Amortization plus non-recurring
merger related expenses for the twelve month period ending with such fiscal
quarter to (2) current maturities of long term debt for the same such twelve
month period, of not less than 1.2 to 1.0; and (v) Borrower has, at the time of
such purchase or acquisition, a ratio of Liquid Assets plus inventory to current
liabilities either (1) in excess of 2.0 to 1.0 (if the Line of Credit is
classified as a long term debt), or (2) in excess of 1.5 to 1 (if the Line of
Credit is classified as a current liability).

ADDITIONAL EVENT OF DEFAULT. The occurrence of any event which permits the
acceleration of the maturity of any indebtedness owing by Oxycal Laboratories,
Incorporated to Lender under any agreement or undertaking shall constitute an
Event of Default under this Agreement.


Borrower:

ZILA, INC., a Delaware corporation

BY: /s/ Joseph Hines
   --------------------------------
Joseph Hines, President


Lender:

Bank One, Arizona, NA

BY: /s/ Hope Berman Levin
   -------------------------------
Hope Berman Levin, Vice President