**EXHIBIT 10.3****FIRST AMENDMENT TO CREDIT AGREEMENT**          This FIRST AMENDMENT, dated as of June 6, 2006 (this “Amendment”), to the CreditAgreement referred to below is by and among (a) ZILA, INC., a Delaware corporation, ZILANUTRACEUTICALS, INC. (formerly known as Oxycal Laboratories Incorporated), an Arizona corporation,ZILA TECHNICAL, INC., an Arizona corporation, ZILA BIOTECHNOLOGY, INC., an Arizona corporation,ZILA PHARMACEUTICALS, INC., a Nevada corporation, and ZILA SWAB TECHNOLOGIES, INC., an Arizonacorporation (collectively, the “Borrowers”), (b) BLACK DIAMOND COMMERCIAL FINANCE, L.L.C.,a Delaware corporation, as administrative agent for Lenders (the “Administrative Agent”),and (c) the Required Lenders party to the Credit Agreement from time to time.WITNESSETH          WHEREAS, the Borrowers, the Lenders and the Administrative Agent are parties to that certainCredit Agreement, dated as of March 24, 2006 (including all annexes, exhibits and schedulesthereto, and as amended, supplemented or otherwise modified from time to time, the “CreditAgreement”); and          WHEREAS, the Administrative Agent and Required Lenders have agreed to amend the CreditAgreement, in the manner, and on the terms and conditions, provided for herein.          NOW THEREFORE, in consideration of the premises and for other good and valuable consideration,the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto agree asfollows:          1. Definitions. Capitalized terms not otherwise defined herein shall have themeanings ascribed to them in the Credit Agreement.          2. Limited Waiver. The Administrative Agent and the Required Lenders hereby waive,effective as of April 30, 2006, the Borrowers’ compliance with the Financial Covenants set forth inSection 8.1(a)(i) (Minimum LTM EBITDA with respect to the Nutraceuticals Business),Section 8.1(b)(i) (Minimum LTM EBITDA with respect to the Borrowers operations as a whole)and Section 8.1(b)(ii) (Minimum Cash) of the Credit Agreement, for the fiscal months endingApril 30, 2006 and May 31, 2006, respectively.          3. Amendment to Section 2.3 of the Credit Agreement. Section 2.3 of theCredit Agreement is hereby amended as of the First Amendment Effective Date by deleting the initialexercise price of the Warrants in such Section 2.3 and substituting in lieu thereof the newinitial exercise price of “$3.14 per share”.          4. Amendment to Section 7.17 of the Credit Agreement. Section 7.17 of theCredit Agreement is hereby amended as of the First Amendment Effective Date by deleting the provisoin Section 7.17 in its entirety and substituting in lieu thereof the following new provisoin such Section 7.17:  “provided, however, the Administrative Agent shall havereceived a Mortgage on the Prescott Facility by not later than July 15, 2006.”
 

 
          5. Amendment to Annex A of the Credit Agreement. Annex A of the CreditAgreement is hereby amended as of the First Amendment Effective Date by adding the following newdefinition to Annex A in appropriate alphabetical order:       “First Amendment Effective Date’ means the First Amendment to CreditAgreement, dated as of June 6, 2006, among the Borrowers, the Administrative Agent andthe Lenders party thereto.”          6. Amendment to Section 8.6 of the Credit Agreement. Section 8.6 of theCredit Agreement is hereby amended as of the First Amendment Effective Date by deleting Section8.6 in its entirety and substituting in lieu thereof the following Section 8.6:       “Restricted Payments. Declare or pay any dividend (other than dividendspayable solely in common stock of the Person making such dividend) on, or make any paymenton account of, or set apart assets for a sinking or other analogous fund for, the purchase,redemption, defeasance, retirement or other acquisition of, any Capital Stock of any GroupMember, whether now or hereafter outstanding, or make any other distribution in respectthereof, either directly or indirectly, whether in cash or property or in obligations of anyBorrower or any Subsidiary (collectively, “Restricted Payments”), except that (a)any Subsidiary may make Restricted Payments to any Borrower or any Wholly Owned SubsidiaryGuarantor and (b) the Borrower may pay dividends on the Borrower’s Series B ConvertiblePreferred Stock in accordance with the terms and conditions of the Borrower’s certificate ofincorporation as in effect on the Closing Date.”          7. Representations and Warranties. To induce the Administrative Agent and Lenders toenter into this Amendment, the Borrowers executing this Amendment jointly and severally representand warrant that:          (a) Each Borrower has taken all necessary organizational action to authorize the execution,delivery and performance of this Amendment. No consent or authorization of, filing with, notice toor other act by or in respect of, any Governmental Authority or any other Person is required inconnection with the execution, delivery, performance, validity or enforceability of this Amendment,except (i) consents, authorizations, filings and notices described in Schedule 5.4, whichconsents, authorizations, filings and notices have been obtained or made and are in full force andeffect and (ii) the filings and recordings referred to in Section 5.19.          (b) This Amendment has been duly executed and delivered by or on behalf of each of theBorrowers.          (c) This Amendment constitutes a legal, valid and binding obligation of each Borrower,enforceable against each such Borrower in accordance with its terms, except as enforceability maybe limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar lawsaffecting the enforcement of creditors’ rights generally and by general equitable principles(whether enforcement is sought by proceedings in equity or at law).
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          (d) No Default or Event of Default has occurred and is continuing after giving effect to thisAmendment.          (e) No litigation, investigation or proceeding of or before any arbitrator or GovernmentalAuthority is pending or, to the knowledge of any Borrower, threatened by or against any GroupMember or against any of their respective properties or revenues (a) with respect to any of theLoan Documents or any of the transactions contemplated hereby or thereby, or (b) that couldreasonably be expected to have a Material Adverse Effect.          (f) The representations and warranties of each Borrower contained in the Credit Agreement andeach other Loan Document shall be true and correct on and as of the First Amendment Effective Datewith the same effect as if such representations and warranties had been made on and as of suchdate, except that any such representation or warranty which is expressly made only as of aspecified date need be true only as of such date.          8. No Other Amendments/Waivers. Except as expressly provided herein, (a) the CreditAgreement shall be unmodified and shall continue to be in full force and effect in accordance withits terms and (b) this Amendment shall not be deemed a waiver of any term or condition of any LoanDocument and shall not be deemed to prejudice any right or rights which the Administrative Agent orany Lender may now have or may have in the future under or in connection with any Loan Document orany of the instruments or agreements referred to therein, as the same may be amended from time totime.          9. Outstanding Indebtedness; Waiver of Claims. Each Borrower hereby acknowledges andagrees that as of June 6, 2006, the aggregate outstanding principal amount of the Term Loan is$20,149,365.77 (collectively, the “Outstanding Obligations”), and that such principalamounts are payable pursuant to the Credit Agreement without defense, offset, withholding,counterclaim or deduction of any kind. Each Borrower hereby waives, releases, remises and foreverdischarges the Administrative Agent, Lenders and each other Indemnified Person from any and allclaims, suits, actions, investigations, proceedings or demands arising out of or in connection withthe Credit Agreement (collectively, “Claims”), whether based in contract, tort, implied orexpress warranty, strict liability, criminal or civil statute or common law of any kind orcharacter, known or unknown, which such Borrower ever had, now has or might hereafter have againstthe Administrative Agent or Lenders which relates, directly or indirectly, to any acts or omissionsof the Administrative Agent, Lenders or any other Indemnified Person on or prior to the datehereof, provided that, the Borrowers do not waive any Claim solely to the extent such Claimrelates to the Administrative Agent’s or any Lender’s gross negligence or willful misconduct.          10. Expenses. Each Borrower hereby reconfirms its obligations pursuant toSections 4.5 and 7.11 of the Credit Agreement to pay and reimburse theAdministrative Agent and Lenders for all reasonable costs and expenses (including, withoutlimitation, reasonable fees of counsel) incurred in connection with the negotiation, preparation,execution and delivery of this Amendment and all other documents and instruments delivered inconnection herewith.
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          11. Effectiveness. This Amendment shall become effective as of the date hereof onlyupon satisfaction in full in the judgment of the Administrative Agent of each of the followingconditions on or prior to June 6, 2006:          (a) Amendment. The Administrative Agent shall have received six (6) original copiesof this Amendment duly executed and delivered by the Administrative Agent, Required Lenders andeach of the Borrowers.          (b) Amendment to Warrant. The Borrower shall have executed and delivered to theAdministrative Agent an amended and restated Warrant reflecting the amendment to the initial issueprice described in Section 3 of this Amendment.          (c) Payment of Fees and Expenses. The Borrowers shall have paid to the AdministrativeAgent (i) a non-refundable cash amendment fee equal to $50,000 for the prorataaccount of Lenders, (ii) a non-refundable cash amendment fee equal to $150,000 for the sole accountof the Administrative Agent and (iii) all costs, fees and expenses invoiced and owing in connectionwith this Amendment and the other Loan Documents and due to the Administrative Agent (including,without limitation, reasonable legal fees and expenses).          (d) Representations and Warranties. The representations and warranties of or onbehalf of each Borrower in this Amendment shall be true and correct on and as of the FirstAmendment Effective Date.          12. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND INTERPRETED IN ACCORDANCEWITH, THE LAWS OF THE STATE OF NEW YORK.          13. Counterparts. This Amendment may be executed by the parties hereto on any numberof separate counterparts and all of said counterparts taken together shall be deemed to constituteone and the same instrument.(SIGNATURE PAGE FOLLOWS)
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     IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first written above.     BORROWERS:     **ZILA, INC.**     By: \s\ Andrew A. Stevens     Name: Andrew A. StevensTitle: VP   **ZILA TECHNICAL, INC.**     By: \s\ Andrew A. Stevens     Name: Andrew A. StevensTitle: VP   **ZILA BIOTECHNOLOGY, INC.**     By: \s\ Andrew A. Stevens     Name: Andrew A. StevensTitle: VP   **ZILA NUTRACEUTICALS, INC.**     By: \s\ Andrew A. Stevens     Name: Andrew A. StevensTitle: VP
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     **ZILA PHARMACEUTICALS, INC.**     By: \s\ Andrew A. Stevens     Name: Andrew A. StevensTitle: VP   **ZILA SWAB TECHNOLOGIES, INC.**     By: \s\ Andrew A. Stevens     Name: Andrew A. StevensTitle: VP
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     ADMINISTRATIVE AGENT:     **BLACK DIAMOND COMMERCIAL FINANCE, L.L.C.**     By: /s/ Stuart Armstrong     Name: Stuart Armstrong