Zila Enters Into Merger Agreement With Tolmar

Zila, Inc. has entered into a definitive merger agreement with Tolmar Holding, Inc. Under terms of the agreement, Tolmar will acquire all of the outstanding shares of Zila for a cash purchase price of $0.38 per share, representing an approximate premium of 18% over the closing price of Zila’s shares on June 24, 2009. Total consideration paid by Tolmar includes the purchase of Zila’s existing $12 million senior secured convertible debt at a discount.

The proposed merger transaction is subject to customary closing conditions, including approval by Zila’s stockholders, but is not subject to any financing contingency.

David Bethune, Zila’s chairman and CEO, stated, “We are fortunate to have entered into this merger agreement with Tolmar, given Zila’s current financial condition and our inability to access the financial markets. The Board of Directors conducted a substantial and exhaustive review of Zila’s available alternatives, before concluding that this transaction was fair to and in the best interest of the company and its stockholders. I am gratified that we have found a way to both satisfy our debt obligations and provide value for our shareholders. This merger will provide the resources and platform for Zila’s dedicated employees to realize the true worldwide potential of Zila’s oral cancer screening and periodontal products."

Zila’s Board of Directors approved the merger agreement and resolved to recommend that Zila’s stockholders vote in favor of completing the proposed merger with Tolmar. Zila intends to hold a special meeting of its stockholders as soon as practicable, and the parties anticipate that the proposed merger will close in late August. Upon the completion of the proposed merger, Zila will no longer be a publicly traded company.

About Zila, Inc.
Zila, Inc., headquartered in Scottsdale, Arizona, is a diagnostic company dedicated to the prevention, detection and treatment of oral cancer and periodontal disease. Zila manufactures and markets ViziLite® Plus with TBlue® (“ViziLite® Plus”), the company’s flagship product for the early detection of oral abnormalities that could lead to cancer. ViziLite® Plus is an adjunctive medical device cleared by the FDA for use in a population at increased risk for oral cancer. In addition, Zila designs, manufactures and markets a suite of proprietary products sold exclusively and directly to dental professionals for periodontal disease, including the Rotadent® Professional Powered Brush, the Pro-Select Platinum® ultrasonic scaler and a portfolio of oral pharmaceutical products for both in-office and home-care use. All of Zila’s products are marketed and sold in the United States and Canada primarily through the company’s direct field sales force and telemarketing organization. The company’s products are marketed and sold in other international markets through the direct sales forces of third party distributors. Zila’s marketing programs reach most U.S. dental offices.

About Tolmar Holding, Inc.
Tolmar’s primary operating subsidiary is a Colorado-based pharmaceutical research, development, manufacturing and commercial operations company. Tolmar develops and manufacturers both proprietary and generic pharmaceutical products with specific focus in therapeutic areas of dental, dermatology, and oncology. The company’s strengths include a proven developmental, clinical, regulatory and manufacturing infrastructure with highly trained and experienced staff. Tolmar’s lead Dental product is ATRIDOX®, which is the only Locally Applied Antimicrobial that is clinically proven for all three of the following indications: gain in clinical attachment, reduction in probing depth, and reduction in bleeding on probing. Tolmar also manufactures and sells ATRISORB® FreeFlow™ and Atrisorb®-D FreeFlow™, which are bioabsorbable guided tissue regeneration barriers indicated for use in periodontal surgical procedures.