EXHIBIT 10.34
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AMENDMENT NO. 3 TO
FINANCE AGREEMENT
This Amendment No. 3 to Finance Agreement (this "Amendment') dated as
of January 2, 2002, is made by and between Naturade, Inc., a Delaware
Corporation (the "Borrower") and Health Holdings & Botanicals, LLC, a California
limited liability company (the "Lender").
PRELIMINARY STATEMENT
A. This Amendment is made with reference to the Finance Agreement,
dated as of March 17, 1999 and amended as of June 1, 1999 and March 17, 2000 (as
so amended, the "Finance Agreement"), between Borrower and Lender (collectively,
the "Parties"). Capitalized terms used herein shall have the same meanings
ascribed to them in the Finance Agreement.
B. The Lender has heretofore received warrants under the Finance
Agreement to purchase Common Stock of the Borrower. Such warrants are identified
by (i) Certificate Number 001, dated March 19, 1999 for 120,000 shares, (ii)
Certificate Number 002, dated March 31, 1999 for 60,000 shares, (iii)
Certificate Number 003, dated April 21, 1999 for 60,000 shares, (iv) Certificate
Number 004, dated May 7, 1999 for 60,000 shares, (v) Certificate Number 005,
dated June 8, 1999 for 150,000 shares, (vi) Certificate Number 006, dated June
21, 1999 for 100,000 shares, and (vii) Certificate Number 007, dated June 29,
1999 for 50,000 shares.
C. The Borrower has entered into a Securities Purchase Agreement with
Westgate Equity Partners, L.P. ("Westgate") and, as to certain matters, with the
Lender, dated as of December 20, 2001, pursuant to which the Borrower and the
Lender have agreed to amend the modify the Finance Agreement and the Warrants as
set forth below.
AMENDMENT
In consideration of the premises, and of the mutual agreements made
herein, and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged by each Party, the Parties agree as follows:
Paragraph 1. Section 7.01 of the Finance Agreement is hereby reinstated,
and amended and restated to read in its entirety as follows:
"7.01 Grant of Warrants
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"(a) the Borrower hereby agrees to grant to
the Lender warrants (the "Warrants") to acquire an initial
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aggregate of 600,000 shares of non-voting common stock of the
Borrower (the "Non-Voting Common Stock") on the terms and
conditions set forth below. The Borrower acknowledges and
agrees that the grant of the Warrants to acquire the 600,000
shares of Non-Voting Common Stock is in replacement of all
warrants heretofore granted to the Borrower by the Lender
under this Agreement and that all such warrants are hereby
terminated and of no further force and effect.
"(b) the initial exercise price of the
Warrants shall be $1.00 per share, subject to adjustment as
provided herein (the "Exercise Price").
"(c) each of the Warrants shall expire on
the tenth anniversary of the date on which the warrant it
replaces was first issued."
Paragraph 2. Each reference in the Finance Agreement and the Warrants to
"Common Stock" is hereby amended to read "Non-Voting Common Stock" and shall
refer to the non-voting common stock of the Borrower, except as expressly
provided otherwise herein.
Paragraph 3. The first paragraph of the first Section 7.04 of the Finance
Agreement is hereby amended by deleting clause (iv) in its entirety.
Paragraph 4. The last paragraph of the first Section 7.04 of the Finance
Agreement is hereby amended and restated to read in its entirety as follows:
"Fair Market Value means, with respect to any date of
determination, the average closing price of the Borrower's
voting common stock (the "Voting Common Stock") on the
principal market or the facilities of the NASDAQ Bulletin
Board (or, if the Voting Common Stock shall then be listed on
the NASDAQ National Market or other national exchange, such
exchange) for the ten trading days (or, if no trades have
closed in any such trading day, the closing bid price for such
trading day) prior to such date of determination (or if the
Voting Common Stock is not listed on an exchange or on the
facilities of the NASDAQ National Market or the NASDAQ
Bulletin Board, the average of the closing bid and cash prices
for the ten trading days prior to such date of
determination)."
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Paragraph 5. The first sentence of Section 7.06 of the Finance Agreement
shall be amended to replace the phrase ", and the shares of Common Stock which
may be obtained by the Lender pursuant to its conversion rights under Article
III above (such Shares and other shares being referred to herein as the
"Registrable Securities")," with "(such Shares being referred to herein as the
"Registrable Securities"),".
Paragraph 6. The penultimate sentence of Section 7.06 of the Finance
Agreement shall be amended and restated to read in its entirety as follows:
"If the managing underwriter or underwriters
of any such offering have informed the Lender in writing that
it is their opinion that the total number of shares which the
Lender and any other persons participating in such
registration intend to include in such offering is such as to
materially and adversely affect the success of such offering,
then (i) the number of shares to be offered for the account of
all persons (other than the Lender and "Holders" as defined in
that certain Registration Rights Agreement between Borrower
and Westgate Equity Partners, L.P. dated as of December 20,
2001 (the "Westgate Holders") who have requested inclusion of
their shares in the registration) participating in such
registration other than pursuant to demand registration rights
shall be reduced or limited (to zero if necessary) pro rata in
proportion to the respective number of shares requested to be
registered by such persons to the extent necessary to reduce
the total number of shares requested to be included in such
offering to the number of shares, if any, recommended by such
managing underwriter or underwriters and (ii) if such managing
underwriter or underwriters recommend a further reduction in
the number of shares in the offering, then the number of
shares to be offered for the account of the Lender and the
Westgate Holders shall be reduced or limited (to zero if
necessary) pro rata in proportion to the respective number of
shares requested to be registered by the Lender and the
Westgate Holders, to the extent necessary to reduce the total
number of shares requested to be included in such offering to
the number of shares, if any, recommended by such managing
underwriter or underwriters."
Paragraph 7. Section 7.08(a) of the Finance Agreement is amended and
restated in its entirety to read as follows:
"(a) If the Company shall split, subdivide
or combine the Common Stock and Voting Common Stock
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(collectively, the "Common Equity Securities") into a
different number of securities, or declare a dividend payable
in Common Equity Securities (a "Stock Dividend"), the number
of shares purchasable under each Warrant shall be
proportionally increased in the case of a split, subdivision
or Stock Dividend, and decreased in the case of a combination,
and the Exercise Price shall be proportionately decreased in
the case of a split, subdivision or Stock Dividend, and
increased in the case of a combination. If the Company, by
reclassification of securities or otherwise, shall change its
shares of Nonvoting Common Stock into the same or different
number of securities of any other class or classes, each
Warrant shall thereafter represent the right to acquire the
number and kind of securities as would have been issuable to a
record holder of the number of shares of Nonvoting Common
Stock purchasable under the Warrant at the effective time of
such reclassification or other change, and the Exercise Price
shall be appropriately adjusted. If holders of Common Equity
Securities become entitled to receive, for no additional
consideration, additional securities of the Borrower with
respect to their shares (other than a Stock Dividend payable
in Common Equity Securities as provided for above), each
Warrant shall represent the right to acquire, in addition to
the number of shares of Nonvoting Common Stock receivable upon
exercise of the Warrant, and without payment of any additional
consideration therefor, the amount of such other additional
securities as would be received by a record holder of the
number of shares of Nonvoting Common Stock purchasable under
such Warrant at the time of determination of the holders
entitled to receive such additional securities."
Paragraph 8. Section 7.08(b) of the Finance Agreement is hereby deleted in
its entirety.
Paragraph 9. Section 8.01 of the Finance Agreement is hereby reinstated,
and amended and restated read in its entirety as follows:
"SECTION 8.01. Amendments, Etc. No amendment
or waiver of any provision of this Agreement, nor consent to
any departure by the Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by
the Lender, and then such waiver or consent shall be effective
only in the specific interest and for the specific purpose for
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which given. In addition, neither this Agreement nor the
Warrants may be amended without the written consent of
Westgate."
Paragraph 10. The outstanding Warrant certificates shall be exercisable for
the Nonvoting Common Stock rather than the Voting Common Stock, and shall be
deemed otherwise modified in all respects necessary to reflect the terms and
provisions of this Amendment and the Finance Agreement (as amended by this
Amendment), and all references in the Warrant certificates to the Finance
Agreement shall be deemed to refer to the Finance Agreement as amended by this
Amendment. Upon surrender of any outstanding Warrant certificate to the
Borrower, the Borrower agrees to issue a new Warrant certificate of like tenor
reflecting the Warrant terms set forth in the Financing Agreement as hereby
amended.
The next page is the signature page.
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In witness whereof, this Amendment No. 3 to the Finance
Agreement is executed by the Borrower and Lender as of the date first set forth
above.
Borrower: NATURADE, INC.
By /s/ Xxxxxxxx X. Xxxxxx
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Xxxxxxxx X. Xxxxxx
Chief Financial Officer
Lender: HEALTH HOLDINGS & BOTANICALS, LLC
By /s/ Xxxxxx X. Xxxxxxxxx, Xx.
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Xxxxxx X. Xxxxxxxxx, Xx.
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(Name)
President
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(Title)
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