exv10w16



 





Exhibit 10.16









THIRD MODIFICATION TO CREDIT AGREEMENT




     This Third Modification to Credit Agreement (this “Modification”) is entered into by
and between MATRIXX INITIATIVES, INC., a Delaware corporation, and ZICAM, LLC, an Arizona
limited liability company (individually and collectively referred to herein as “Borrower”)
and COMERICA BANK (“Bank”), successor by merger with COMERICA BANK-CALIFORNIA, as of this 4th
day of August, 2004, at San Jose, California.



RECITALS




     This Modification is entered into upon the basis of the following facts and understandings
of the parties, which facts and understandings are acknowledged by the parties to be true
and accurate:



     Bank and Borrower previously entered into a Credit Agreement dated May 29, 2002, as
modified by a First Modification dated August 13, 2002, and a Second Modification dated May
15, 2003. The Credit Agreement and all subsequent Modifications shall be referred to herein
as the “Agreement.”



     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as set forth below.



AGREEMENT




     1. Incorporation
by Reference. The Recitals and the documents referred to
therein are incorporated herein by this reference. Except as otherwise noted, the terms not defined
herein shall have the meaning set forth in the Agreement.



     2. Modification
to the Agreement. The Agreement is hereby modified as
set forth below.




	 	A.  	In Section 1.1 of the Agreement, the following definition shall be added:
	 
	 	   	“Accounts” shall mean and includes all presently existing and
hereafter arising accounts, including without limitation all accounts
receivable, contract rights and other forms of right to payment for
monetary obligations or receivables for property sold or to be sold,
leased, licensed, assigned or otherwise disposed of, or for services
rendered or to be rendered (including without limitation all health-care-insurance receivables) owing to Borrower, and any supporting obligations,
credit insurance, guaranties or security therefor, irrespective of
whether earned by performance.
	 
	 	B.  	In Section 1.1 of the Agreement, the definition of
“Eligible Accounts” shall be deleted in its entirety.
	 
	 	C.  	In Section 1.1 of the Agreement, the definition
of “Eligible Accounts Amount” shall be deleted in its entirety.
	 
	 	D.  	In Section 1.1 of the Agreement, the definition
of “Quick Ratio” shall be modified by substituting the words Eligible Accounts with the word Accounts.





     3. Conditions Precedent to the Modification. The effectiveness of this
Modification is conditioned upon receipt by Bank of this Modification, and any other documents which
Bank may require to carry out the terms hereof, which shall include without limit:




	 	(a)  	A legal documentation fee of $250,
plus any Bank Expenses incurred
through the date of this Modification;
	 
	 	(b)  	such other documents and completion of such
other matters, as Bank may reasonably deem necessary or appropriate.





     4. Legal Effect. The effectiveness of this Modification is conditioned upon
receipt by Bank of this Modification, and any other documents which Bank may require to carry out the
terms hereof. Except as specifically set forth in this Modification, all of the terms and conditions of the
Agreement remain in full force and effect.



     5. Integration. This is an integrated Modification and supersedes all prior
negotiations and agreements regarding the subject matter hereof. All amendments hereto must be in
writing and signed by the parties.



     IN WITNESS WHEREOF, the parties have agreed as of the date first set forth above.