Document:

EX-10.1 Form of Escrow Agreement

 

Exhibit 10.1

FORM OF STOCK ESCROW AGREEMENT

     STOCK
ESCROW AGREEMENT, dated as of          , 2006 (“Agreement”), by
and among MBF HEALTHCARE ACQUISITION CORP., a Delaware corporation (“Company”), MBF
HEALTHCARE PARTNERS, L.P. (“Initial Stockholder”) and Continental Stock Transfer & Trust
Company (“Escrow Agent”).

     WHEREAS, the Company has entered into an Underwriting Agreement, dated          ,
2006 (“Underwriting Agreement”), with Merrill Lynch, Pierce, Fenner & Smith Incorporated
and Morgan Joseph & Co., Inc. (the “Underwriters”), pursuant to which, among other matters,
the Underwriters have agreed to purchase 18,750,000 units (“Units”) of the Company. Each
Unit consists of one share of the Company’s Common Stock, par value $.0001 per share, and one
Warrant to purchase one share of Common Stock, all as more fully described in the Company’s final
Prospectus, dated          , 2006 (“Prospectus”) comprising part of the Company’s
Registration Statement on Form S-1 (File No. 333-135610) under the Securities Act of 1933, as
amended (“Registration Statement”), declared effective on          , 2006
(“Effective Date”).

     WHEREAS, the Initial Stockholder has agreed as a condition of the sale of the Units to deposit
all of the units of the Company, shares of Common Stock of the Company and Warrants to purchase
Common Stock of the Company it owns as of the date hereof (“Escrow Securities”), in escrow
as hereinafter provided.

     WHEREAS, the Company and the Initial Stockholder desire that the Escrow Agent accept the
Escrow Securities, in escrow, to be held and disbursed as hereinafter provided.

     IT IS AGREED:

     1. Appointment of Escrow Agent. The Company and the Initial Stockholder
hereby appoint the Escrow Agent to act in accordance with and subject to the terms of this
Agreement and the Escrow Agent hereby accepts such appointment and agrees to act in accordance with
and subject to such terms.

     2. Deposit of Escrow Securities. On or before the Effective Date, the
Initial Stockholder shall deliver to the Escrow Agent a certificate representing its respective
Escrow Securities, to be held and disbursed subject to the terms and conditions of this Agreement.
The Initial Stockholder acknowledges that the certificate representing its Escrow Securities is
legended to reflect the deposit of such Escrow Securities under this Agreement.

     3. Disbursement of the Escrow Securities. The Escrow Agent shall hold the
Escrow Securities until the third anniversary of the Effective Date (“Escrow Period”), on
which date it shall, upon written instructions from Initial Stockholder, disburse the Initial
Stockholder’s Escrow Securities to the Initial Stockholder; provided, however, that if the Escrow
Agent is notified by the Company pursuant to Section 6.7 hereof that the Company is being
liquidated at any time during the Escrow Period, then the Escrow Agent shall promptly destroy the
certificates

 

 

representing the Escrow Securities; provided further, however, that if, after the Company
consummates a Business Combination (as such term is defined in the Registration Statement), it (or
the surviving entity) subsequently consummates a liquidation, merger, stock exchange or other
similar transaction which results in all of the stockholder of such entity having the right to
exchange their shares of Common Stock for cash, securities or other property, then the Escrow Agent
will, upon receipt of a certificate, executed by the Chief Executive Officer or Chief Operating
Officer of the Company, in form reasonably acceptable to the Escrow Agent, that such transaction is
then being consummated, and release the Escrow Securities to the Initial Stockholder upon
consummation of the transaction so that they can similarly participate. The Escrow Agent shall
have no further duties hereunder after the disbursement or destruction of the Escrow Securities in
accordance with this Section 3.

     4. Rights of Initial Stockholder in Escrow Securities.

          4.1. Voting Rights as a Stockholder. Subject to the terms of the Insider
Letter described in Section 4.4 hereof and except as herein provided, the Initial Stockholder shall
retain all of its rights as stockholder of the Company during the Escrow Period, including, without
limitation, the right to vote such shares.

          4.2. Dividends and Other Distributions in Respect of the Escrow Securities.
During the Escrow Period, all dividends payable in cash with respect to the Escrow Securities shall
be paid to the Initial Stockholder, but all dividends payable in stock or other non-cash property
(“Non-Cash Dividends”) shall be delivered to the Escrow Agent to hold in accordance with
the terms hereof. As used herein, the term “Escrow Securities” shall be deemed to include
the Non-Cash Dividends distributed thereon, if any.

          4.3. Restrictions on Transfer. During the Escrow Period, no sale, transfer
or other disposition may be made of any or all of the Escrow Securities except (i) by gift to a
member of Initial Stockholder’s immediate family or to a trust, the beneficiary of which is an
Initial Stockholder or a member of an Initial Stockholder’s immediate family, (ii) by virtue of the
laws of descent and distribution upon death of any Initial Stockholder, or (iii) pursuant to a
qualified domestic relations order; provided, however, that such permissive
transfers may be implemented only upon the respective transferee’s written agreement to be bound by
the terms and conditions of this Agreement and of the Insider Letter signed by the Initial
Stockholder transferring the Escrow Securities. During the Escrow Period, the Initial Stockholder
shall not pledge or grant a security interest in the Escrow Securities or grant a security interest
in their rights under this Agreement.

          4.4. Insider Letters. The Initial Stockholder has executed a letter
agreement with the Company, dated as indicated on Exhibit A hereto, and which is filed as
an exhibit to the Registration Statement (“Insider Letter”), respecting the rights and
obligations of the Initial Stockholder in certain events, including but not limited to the
liquidation of the Company.

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     5. Concerning the Escrow Agent.

          5.1. Good Faith Reliance. The Escrow Agent shall not be liable for any
action taken or omitted by it in good faith and in the exercise of its own best judgment, and may
rely conclusively and shall be protected in acting upon any order, notice, demand, certificate,
opinion or advice of counsel (including counsel chosen by the Escrow Agent), statement, instrument,
report or other paper or document (not only as to its due execution and the validity and
effectiveness of its provisions, but also as to the truth and acceptability of any information
therein contained) which is believed by the Escrow Agent to be genuine and to be signed or
presented by the proper person or persons. The Escrow Agent shall not be bound by any notice or
demand, or any waiver, modification, termination or rescission of this Agreement unless evidenced
by a writing delivered to the Escrow Agent signed by the proper party or parties and, if the duties
or rights of the Escrow Agent are affected, unless it shall have given its prior written consent
thereto.

          5.2. Indemnification. The Escrow Agent shall be indemnified and held
harmless by the Company from and against any expenses, including counsel fees and disbursements, or
loss suffered by the Escrow Agent in connection with any action, suit or other proceeding involving
any claim which in any way, directly or indirectly, arises out of or relates to this Agreement, the
services of the Escrow Agent hereunder, or the Escrow Securities held by it hereunder, other than
expenses or losses arising from the gross negligence or willful misconduct of the Escrow Agent.
Promptly after the receipt by the Escrow Agent of notice of any demand or claim or the commencement
of any action, suit or proceeding, the Escrow Agent shall notify the other parties hereto in
writing. In the event of the receipt of such notice, the Escrow Agent, in its sole discretion, may
commence an action in the nature of interpleader in an appropriate court to determine ownership or
disposition of the Escrow Securities or it may deposit the Escrow Securities with the clerk of any
appropriate court or it may retain the Escrow Securities pending receipt of a final, non-appealable
order of a court having jurisdiction over all of the parties hereto directing to whom and under
what circumstances the Escrow Securities are to be disbursed and delivered. The provisions of
Sections 5.2 and 5.7 shall survive in the event the Escrow Agent resigns or is discharged pursuant
to Sections 5.5 or 5.6 below.

          5.3. Compensation. The Escrow Agent shall be entitled to reasonable
compensation from the Company for all services rendered by it hereunder. The Escrow Agent shall
also be entitled to reimbursement from the Company for all expenses paid or incurred by it in the
administration of its duties hereunder including, but not limited to, all counsel, advisors’ and
agents’ fees and disbursements and all taxes or other governmental charges.

          5.4. Further Assurances. From time to time on and after the date hereof, the
Company and the Initial Stockholder shall deliver or cause to be delivered to the Escrow Agent such
further documents and instruments and shall do or cause to be done such further acts as the Escrow
Agent shall reasonably request to carry out more effectively the provisions and purposes of this
Agreement, to evidence compliance herewith or to assure itself that it is protected in acting
hereunder.

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          5.5. Resignation. The Escrow Agent may resign at any time and be discharged
from it duties as escrow agent hereunder by its giving the other parties hereto written notice and
such resignation shall become effective as hereinafter provided. Such resignation shall become
effective at such time that the Escrow Agent shall turn over to a successor escrow agent appointed
by the Company, the Escrow Share held hereunder. If no new escrow agent is so appointed within the
60 day period following the giving of such notice of resignation, the Escrow Agent may deposit the
Escrow Securities with any court it reasonably deems appropriate.

          5.6. Discharge of Escrow Agent. The Escrow Agent shall resign and be
discharged from its duties as escrow agent hereunder if so requested in writing at any time by the
Company and the Initial Shareholder, jointly, provided, however, that such resignation shall become
effective only upon acceptance of appointment by a successor escrow agent as provided in Section
5.5.

          5.7. Liability. Notwithstanding anything herein to the contrary, the Escrow
Agent shall not be relieved from liability hereunder for its own gross negligence or its own
willful misconduct.

          5.8. Trust Fund Waiver. The Escrow Agent has no right, title, interest, or
claim of any kind (“Claim”) in or to any monies in the Trust Account (as defined in that
certain Investment Management Trust Agreement, dated as of the date hereof, by and between the
Company and Continental Stock Transfer & Trust Company, as trustee of the Trust Account), and
hereby waives any Claim it may have in the future in or to any monies in the Trust Account, and
hereby agrees not to seek recourse, reimbursement, payment or satisfaction for any Claim against
the Trust Account for any reason whatsoever.

     6. Miscellaneous.

          6.1. Governing Law. This Agreement shall for all purposes be deemed to be
made under and shall be construed in accordance with the laws of the State of New York.

          6.2. Third Party Beneficiaries. The Initial Stockholder hereby acknowledges
that the Underwriters are third party beneficiaries of this Agreement and this Agreement may not be
modified or changed without the prior written consent of the Underwriters.

          6.3. Entire Agreement. This Agreement contains the entire agreement of the
parties hereto with respect to the subject matter hereof and, except as expressly provided herein,
may not be changed or modified except by an instrument in writing signed by the party to be
charged.

          6.4. Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any the meaning or interpretation thereof.

          6.5. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the respective parties hereto and their legal representatives, successors and assigns.

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          6.6. Notices. Any notice or other communication required or which may be
given hereunder shall be in writing and either be delivered personally or be mailed, certified or
registered mail, or by private national courier service, return receipt requested, postage prepaid,
and shall be deemed given when so delivered personally or, if mailed, two days after the date of
mailing, as follows:

If to the Company, to:

MBF HEALTHCARE ACQUISITION CORP.

121 Alhambra Plaza, Suite 1100

Coral Gables, Florida 33134

If to the Initial Stockholder, to:

MBF HEALTHCARE PARTNERS, L.P.

121 Alhambra Plaza, Suite 1100

Coral Gables, Florida 33134

and if to the Escrow Agent, to:

CONTINENTAL STOCK TRANSFER & TRUST COMPANY

17 Battery Place

New York, NY 10004

Attn: Chairman

A copy of any notice sent hereunder shall be sent to:

AKERMAN SENTERFITT

One Southeast Third Avenue

Suite 2700

Miami, Florida 33131

Attn: Teddy Klinghoffer, Esq.

     The parties may change the persons and addresses to which the notices or other communications
are to be sent by giving written notice to any such change in the manner provided herein for giving
notice.

          6.7. Liquidation of Company. The Company shall give the Escrow Agent written
notification of the liquidation and dissolution of the Company in the event that the Company fails
to consummate a Business Combination within the time period(s) specified in the Prospectus.

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     WITNESS the execution of this Agreement as of the date first above written:

	 	 	 	 	 
	 	MBF HEALTHCARE ACQUISITION CORP.

 	 
	 	By:  	 	 
	 	 	Miguel B. Fernandez, Chief Executive 	 
	 	 	Officer 	 
	 
	 
	 	INITIAL STOCKHOLDER:

MBF HEALTHCARE ADVISORS I, L.P.	 
	 	By:  	MBF Healthcare Advisors, LLC
 	 
	 	Its: General Partner

 	 
	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 
	 	CONTINENTAL STOCK TRANSFER & TRUST COMPANY

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

6

 

	 	 	 	 	 

EXHIBIT A<PAGE>

                                                                    EXHIBIT 10.1

                                                                  EXECUTION COPY

                 THIRD AMENDMENT TO CREDIT AGREEMENT AND WAIVER

      This THIRD AMENDMENT, dated as of August 18, 2006 (this "Amendment"), to
the Credit Agreement referred to below is by and among (a) ZILA, INC., a
Delaware corporation, ZILA NUTRACEUTICALS, 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 Arizona corporation (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 certain Credit Agreement, dated as of March 24, 2006 (including
all annexes, exhibits and schedules thereto, and as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"); and

      WHEREAS, the Borrowers request that the Agent and Required Lenders amend
certain terms under the Credit Agreement and waive compliance with certain
covenants; and

      WHEREAS, the Administrative Agent and Required Lenders have agreed to the
requested waiver and amendments to the Credit Agreement, 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 as follows:

      1. Definitions. Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Credit Agreement.

      2. Amendments to Section 1 of the Credit Agreement. Section 1.1 of the
Credit Agreement, Definitions, is hereby amended by adding the following
definitions in the appropriate alphabetical order:

            "Third Amendment": that certain Third Amendment to Credit Agreement
and Waiver dated as of August 18, 2006, by and among Borrowers, Administrative
Agent and Required Lenders.

            "Third Amendment Effective Date": the date on which all conditions
precedent to the Third Amendment have been satisfied or waived by the
Administrative Agent and Required Lenders.

<PAGE>

      3. Amendments to Section 8 Negative Covenants of the Credit Agreement.
Section 8 of the Credit Agreement is hereby amended as follows:

      (a) Section 8.l(b)(iii) of the Credit Agreement is hereby amended by
deleting section 8.1(b)(iii) in its entirety and replacing it with the following
Section 8.1(b)(iii):

            "(iii) Minimum Unrestricted Cash. The Borrowers shall have, at the
end of each week, unrestricted book balances of cash and Cash Equivalents for
such week ended in an amount not less than $3,000,000."

      (b) Section 8.9 Optional Payments and Modifications of Certain Debt
Instruments is hereby amended by inserting the following new section 8.9(iii) at
the end of Section 8.9 (ii) as follows:

            "or (iii) such prepayment is in conjunction with the Stock Purchase
Agreement by and between NBTY, Inc. and Zila, Inc. dated as of August 13, 2006."

      4. Amendment to Section 9. Events of Default of the Credit Agreement.
Section 9(c) of the Credit Agreement is hereby amended by adding clause (c)(iv)
to the end of Section 9(c)(iii) as follows:

      "(iv) termination of that certain Stock Purchase Agreement by and between
NBTY, Inc. and Zila, Inc. dated as of August 13, 2006 on or before October 31,
2006; or "

      5. Limited Waiver. Subject to the fulfillment of the conditions precedent
to the effectiveness of this Amendment set forth below, the Administrative Agent
and the Required Lenders hereby waive Borrowers' compliance with the Financial
Covenant set forth in Section 8.1(b)(iii) Minimum Unrestricted Cash for the week
ended August 11, 2006.

      6. Representations and Warranties. To induce the Administrative Agent and
Lenders to enter into this Amendment, the Borrowers executing this Amendment
jointly and severally represent and 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 to or other act by or in respect of,
any Governmental Authority or any other Person is required in connection with
the execution, delivery, performance, validity or enforceability of this
Amendment, except (i) consents, authorizations, filings and notices described in
Schedule 5.4, which consents, authorizations, filings and notices have been
obtained or made and are in full force and effect 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 the Borrowers.

      (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 may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by

                                      -2-
<PAGE>

general equitable principles (whether enforcement is sought by proceedings in
equity or at law).

      (d) No Default or Event of Default has occurred and is continuing after
giving effect to this Amendment.

      (e) No litigation, investigation or proceeding of or before any arbitrator
or Governmental Authority is pending or, to the knowledge of any Borrower,
threatened by or against any Group Member or against any of their respective
properties or revenues (a) with respect to any of the Loan Documents or any of
the transactions contemplated hereby or thereby, or (b) that could reasonably be
expected to have a Material Adverse Effect.

      (f) The representations and warranties of each Borrower contained in the
Credit Agreement and each other Loan Document shall be true and correct on and
as of the Third Amendment Effective Date with the same effect as if such
representations and warranties had been made on and as of such date, except that
any such representation or warranty which is expressly made only as of a
specified date need be true only as of such date.

      7. No Other Amendments/Waivers. Except as expressly provided herein, (a)
the Credit Agreement shall be unmodified and shall continue to be in full force
and effect in accordance with its terms and (b) this Amendment shall not be
deemed a waiver of any term or condition of any Loan Document and shall not be
deemed to prejudice any right or rights which the Administrative Agent or any
Lender may now have or may have in the future under or in connection with any
Loan Document or any of the instruments or agreements referred to therein, as
the same may be amended from time to time.

      8. Outstanding Indebtedness; Waiver of Claims. Each Borrower hereby
acknowledges and agrees that as of August 18, 2006, the aggregate outstanding
principal amount of the Term Loan is $19,884,172.41 (collectively, the
"Outstanding Obligations"), and that such principal amounts are payable pursuant
to the Credit Agreement without defense, offset, withholding, counterclaim or
deduction of any kind. Each Borrower hereby waives, releases, remises and
forever discharges the Administrative Agent, Lenders and each other Indemnified
Person from any and all claims, suits, actions, investigations, proceedings or
demands arising out of or in connection with the Credit Agreement (collectively,
"Claims"), whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law of any kind or character,
known or unknown, which such Borrower ever had, now has or might hereafter have
against the Administrative Agent or Lenders which relates, directly or
indirectly, to any acts or omissions of the Administrative Agent, Lenders or any
other Indemnified Person on or prior to the date hereof, provided that, the
Borrowers do not waive any Claim solely to the extent such Claim relates to the
Administrative Agent's or any Lender's gross negligence or willful misconduct.

      9. Expenses. Each Borrower hereby reconfirms its obligations pursuant to
Sections 4.5 and 7.11 of the Credit Agreement to pay and reimburse the
Administrative Agent and Lenders for all reasonable costs and expenses
(including, without limitation, reasonable fees of counsel) incurred in
connection with the negotiation, preparation, execution and delivery of this
Amendment and all other documents and instruments delivered in connection
herewith.

                                      -3-
<PAGE>

      10. Effectiveness. This Amendment shall become effective as of the date
hereof only upon satisfaction in full in the judgment of the Administrative
Agent of each of the following conditions on or prior to August 18, 2006 (such
date, the "Third Amendment Effective Date"):

      (a) Amendment. The Administrative Agent shall have received six (6)
original copies of this Amendment duly executed and delivered by the
Administrative Agent, Required Lenders and each of the Borrowers.

      (b) Payment of Fees and Expenses. The Borrowers shall have paid to the
Administrative all costs, fees and expenses invoiced and owing in connection
with this Amendment and the other Loan Documents and due to the Administrative
Agent (including, without limitation, reasonable legal fees and expenses).

      (c) Amendment Fee. The Borrowers shall have paid to the Administrative
Agent, for the pro-rata account of the Lenders, an amendment fee in the amount
of $50,000.

      (d) Representations and Warranties. The representations and warranties of
or on behalf of each Borrower in this Amendment shall be true and correct on and
as of the Third Amendment Effective Date.

      11. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

      12. Counterparts. This Amendment may be executed by the parties hereto on
any number of separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.

                            (SIGNATURE PAGE FOLLOWS)

                                      -4-
<PAGE>

      IN WITNESS WHEREOF, this Amendment has been duly executed as of the date
first written above.

                               BORROWERS:

                               ZILA, INC.

                               By: /s/ Andrew A. Stevens
                                   ---------------------------------------------
                                   Name:  Andrew A. Stevens
                                   Title:  VP and CFO

                               ZILA TECHNICAL, INC.

                               By: /s/ Andrew A. Stevens
                                   ---------------------------------------------
                                   Name:  Andrew A. Stevens
                                   Title: VP and CFO

                               ZILA BIOTECHNOLOGY, INC.

                               By: /s/ Andrew A. Stevens
                                   ---------------------------------------------
                                   Name:  Andrew A. Stevens
                                   Title:  VP and CFO

                               ZILA NUTRACEUTICALS, INC.

                               By: /s/ Andrew A. Stevens
                                   ---------------------------------------------
                                   Name:  Andrew A. Stevens
                                   Title:  VP and CFO

                               ZILA PHARMACEUTICALS, INC.

                               By: /s/ Andrew A. Stevens
                                   ---------------------------------------------
                                   Name:  Andrew A. Stevens
                                   Title: VP and CFO

<PAGE>

                               ADMINISTRATIVE AGENT:

                               BLACK DIAMOND COMMERCIAL FINANCE, L.L.C.

                               By: /s/ Stuart Armstrong
                                   ---------------------------------------------
                                   Name:  Stuart Armstrong
                                   Title: President & CEO

<PAGE>

                               LENDER:

                               BDC FINANCE, LLC

                               BY: BLACK DIAMOND CAPITAL MANAGEMENT,
                               L.L.C., AS ITS INVESTMENT MANAGER

                               By: /s/ James J. Zenni
                                   ---------------------------------------------
                                   Name:  James J. Zenni, Jr.
                                   Title: President & Managing Partner
                                          Black Diamond Capital Management, LLC.

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