SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (the "Amendment"),
dated as of March 15, 2000, is among NUTRITION FOR LIFE INTERNATIONAL, INC., a
Texas corporation ("Leading Borrower"), NL ACQUISITION COMPANY, a Delaware
corporation ("NLAC"), AC ACQUISITION COMPANY, a Delaware corporation ("ASH"),
BACTOLAC PHARMACEUTICAL INC., a Delaware corporation (formerly known as BPI
Acquisition Company and herein "BPI" and Leading Borrower, ASH, NLAC, and BPI
being collectively referred to as "Borrowers" and each a "Borrower"), ADVANCED
NUTRACEUTICALS, INC, a Texas corporation ("Holding Co."), and GENERAL ELECTRIC
CAPITAL CORPORATION, a New York corporation ("Lender").
RECITALS:
A. Borrowers and Lender have entered into that certain Loan and Security
Agreement dated as of November 15, 1999 (as the same has been modified by that
that certain First Amendment to Loan and Security Agreement dated as of November
30, 1999 and as the same may hereafter be amended or otherwise modified, the
"Agreement").
B. Pursuant to Section 5(a)(i) of the Agreement, Leading Borrower is
allowed, if certain conditions have been met, to implement a Holding Co.
Restructure (as defined in the Agreement) in which Leading Borrower may merge
with a newly created corporation created to facilitate a holding company
structure under which the holding company will own 100% of Leading Borrower and
the existing shareholders of Leading Borrower will become shareholders of the
holding company.
C. Leading Borrower now desires to proceed with the Holding Co.
Restructure described under Section 5(a)(i) of the Agreement by forming a
subsidiary, Holding Co., which will in turn form a merger subsidiary, NFLI
Merger Sub, Inc., a Texas corporation (herein "Merger Sub"). Leading Borrower
will then be merged with Merger Sub with Leading Borrower surviving and the
shareholders of Leading Borrower exchanging their stock in Leading Borrower for
the same class and amount of stock of Holding Co.
D. As a result of the foregoing, Borrowers, Holding Co. and Lender now
desire to amend the Agreement as herein set forth.
NOW, THEREFORE, in consideration of the premises herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows effective as of the date
hereof unless otherwise indicated:
ARTICLE 1
Definitions
Section 1.01 Definitions. Capitalized terms used in this Amendment, to the
extent not otherwise defined herein, shall have the same meanings as in the
Agreement, as amended hereby.
ARTICLE 2
Noncompliance
Section 2.01 Noncompliance. Leading Borrower has failed to comply with the
covenants set forth in clauses (m), (t), (x), and (z) of Section 3.21 of the
Agreement requiring the delivery of certain of the documents prior to the date
of this Amendment (each covenant described above individually a "Violated
Covenant" and collectively herein, the "Violated Covenants").
Section 2.02 Waiver. The Lender agrees not to exercise any rights or
remedies available as a result of the past occurrences of Leading Borrower's
failure to comply with the Violated Covenants.
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Section 2.03 Waiver Limitation. The waiver specifically described herein
shall not constitute and shall not be deemed a waiver of any Default, whether
arising as a result of the further violation of the Violated Covenants (as
amended herein) or otherwise, or a waiver of any rights or remedies arising as a
result of such other Defaults. The failure to comply with the Violated
Covenants (as amended herein) for any date subsequent to this Amendment shall
constitute an Event of Default.
ARTICLE 3
Amendments
Section 3.01 Amendment to Section 3.2. Section 3.2 of the Agreement is
amended by deleting and replacing the first sentence of said section in its
entirety with following sentence:
The jurisdiction in which each Corporate Credit Party is organized is
correctly set forth in the introduction to this Agreement or, as to Holding
Co., is organized under the laws of the state of Texas.
Section 3.02 Amendment to Section 3.21. The phrases "within 30 days of
Closing Date" and "December 31, 1999" are hereby deleted from each place that
either such phrase appears in Section 3.21 of the Agreement and replaced with
the phrase "April 28, 2000".
Section 3.03 Amendment to Section 5.1(a)(i). Section 5.1(a)(i) of the
Agreement is amended in its entirety to read as follows:
(i) any time before May 31, 2000, Leading Borrower may merge with a
newly created corporation, NFLI Merger Sub, Inc., a Texas corporation,
created to facilitate a holding company structure under which a new
corporation, Advanced Nutraceuticals, Inc., a Texas corporation ("Holding
Co.") will own 100% of Leading Borrower and the existing shareholders of
Leading Borrower will become shareholders of Holding Co. (the "Holding Co.
Restructure") if: (A) no Default exists at the time of, or will result
from, such transaction, (B) Holding Co. directly owns one-hundred percent
(100%) of the stock of Leading Borrower following the Holding Co.
Restructure, (C) Holding Co. becomes a Credit Party hereunder (pursuant to
such documentation as the Lender may require), pledging, among other
Collateral, all Stock in Leading Borrower to the Lender, simultaneous with
the closing of the Holding Co. Restructure, (D) Holding Co. guarantees all
Obligations pursuant to a guarantee to be in form and substance acceptable
to Lender, simultaneous with the closing of the Holding Co. Restructure;
and (E) Leading Borrower will be the surviving Person;
Section 3.04 Amendment to clause (A) of Section 5(i). Clause (A) of Section
5(i)(A) of the Agreement is amended in its entirety to read as follows:
(A) declare and pay regularly scheduled dividends to Holding Co.
(after giving effect to the Holding Co. Restructure) in order to allow
Holding Co. to declare and pay regularly scheduled dividends on account of
Holding Co.'s Series A Preferred Stock;
Section 3.05 Amendment to Section 5(i). Section 5(i) of the Agreement is
amended by adding the following sentence to the end of Section 5(i) of the
Agreement:
Holding Co. may declare and pay regularly scheduled dividends on
account of its Series A Preferred Stock from the corresponding dividends
received from Leading Borrower if such dividends from Leading Borrower were
declared and paid in accordance with this Agreement.
Section 3.06 Amendment to Section 6.1(b). Subclauses (i) and (ii) of clause
(y) of Section 6.1(b) of the Agreement are amended in their entirety to read
respectively as follows:
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(i) no delivery of the Stock of Nutrition for Life International
Philippines, Inc., a Philippines corporation, is required unless, as of
April 28, 2000, such Subsidiary has not been liquidated or dissolved at
that time; (ii) no delivery of the Stock of any other Subsidiary organized
under the laws of a jurisdiction outside the United States of America, of
QBI Acquisition Company or of UNC Acquisition Company is required until
April 28, 2000;
Section 3.07 Amendment to Attachment I of Schedule D. Attachment I of
Schedule D of the Agreement is amended in its entirety to read as set forth in
Attachment I of Schedule D attached hereto.
Section 3.08 Amendments to Disclosure Schedule 3.7. Disclosure Schedule 3.7
to the Agreement is each amended in its entirety to read as set forth on the
corresponding disclosures schedules attached hereto.
Section 3.09 Amendments to Additional Disclosure Schedules. The following
Disclosure Schedules to the Agreement are each amended by adding to the
respective schedules the information set forth on the corresponding disclosures
schedules attached hereto:
Disclosure Schedule (3.2)
Disclosure Schedule (3.6)
Disclosure Schedule (3.17)
Disclosure Schedule (3.18)
Disclosure Schedule (6.1).
Disclosure Schedule (6.1(a)).
ARTICLE 4
Joinder of Holding Co.
Section 4.01 Joinder. Holding Co., as the newly formed holding company of
Leading Borrower, is required to execute this Agreement pursuant to Section
5(a)(i) the Credit Agreement. In addition to all other covenants, promises,
agreements, requirements, conditions or other terms contained in this Amendment,
Holding Co. hereby agrees as follows:
(a) Holding Co. assumes all the obligations of a "Corporate Credit
Party" and a "Credit Party" under the Agreement and agrees that it is a
"Corporate Credit Party" and a "Credit Party" and bound as a "Corporate
Credit Party" and a "Credit Party" under the terms of the Agreement as if
it had been an original signatory thereto. In furtherance of the
foregoing, Holding Co. hereby assigns, pledges and grants to Lender a
security interest in all of its right, title and interest in and to Holding
Co.'s Collateral (as defined in the Agreement) to secure the Obligations
(as defined in the Agreement) under the terms of the Agreement;
(b) Holding Co. hereby confirms that the representations and
warranties set forth in Section 3 of the Credit Agreement applicable to it
and its Collateral are true and correct after giving effect to the
amendments to the Disclosure Schedules herein; and
(c) In furtherance of its obligations under Section 3.21 of the
Agreement but subject to Section 6.1(b) of the Agreement, Holding Co.
agrees to execute and deliver such UCC financing statements naming the
Holding Co. as debtor, the Lender as secured party and describing its
Collateral and such other documentation (including intellectual property
security agreements) as the Lender may require to evidence, protect and
perfect the Liens created by the Agreement as modified hereby.
ARTICLE 5
Conditions Precedent
Section 5.01 Conditions. The effectiveness of this Amendment is subject to
the satisfaction of the following conditions precedent:
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(a) Lender shall have received all of the following, each dated
(unless otherwise indicated) the date of this Amendment, in form and
substance satisfactory to Lender:
(i) Secretary's Certificate. Each of Holding Co., Leading
Borrower and Merger Sub will provide a Secretary's Certificate to
Lender in the form of Exhibit A attached hereto;
(ii) Opinion of Counsel. A favorable opinion of legal counsel to
each Borrower, each other Credit Party and Merger Sub in the form of
Exhibit B attached hereto or otherwise acceptable to Lender;
(iii) Power of Attorney. A Power of Attorney duly executed by
Holding Co. in the form of Exhibit C attached hereto;
(iv) Holding Co. Guarantee - Pursuant to Section 5(a)(i) (D) of
the Agreement, the execution by Holding Co. of a guarantee in favor
of Lender in the form of Exhibit D attached hereto ( the "Holding Co.
Guarantee");
(v) Delivery of Certificated Stock. Pursuant to Section 6.1(b)
of the Agreement, the delivery by Holding Co. of the stock
certificates of Leading Borrower issued to Holding Co. along with
blank Stock Powers (in form and substance acceptable to Lender) for
each stock certificate delivered pursuant to this clause; and
(vi) Additional Information. Lender shall have received such
additional documentation and information as Lender or its legal
counsel, Jenkens & Xxxxxxxxx, a Professional Corporation, may request;
and
(b) The representations and warranties contained herein and in all
other Loan Documents, as amended hereby, shall be true and correct in all
material respects as of the date hereof as if made on the date hereof,
except for such representations and warranties limited by their terms to a
specific date;
(c) No Default or Event of Default shall have occurred and be
continuing; and
(d) All proceedings taken in connection with the transactions
contemplated by this Amendment and all documentation and other legal
matters incident thereto shall be satisfactory to Lender and its legal
counsel, Jenkens & Xxxxxxxxx, a Professional Corporation.
ARTICLE 6
Ratifications, Representations and Warranties
Section 6.01 Ratifications. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement and except as expressly modified and superseded by this
Amendment, the terms and provisions of the Agreement and the other Loan
Documents are ratified and confirmed and shall continue in full force and
effect. Each Credit Party and Lender agree that the Agreement as amended hereby
and the other Loan Documents are and shall continue to be legal, valid, binding
and enforceable against said parties in accordance with their respective terms.
Each Credit Party agrees and acknowledges that the Holding Co. Guarantee, after
giving effect to this Amendment, is a Loan Document under the Agreement.
Section 6.02 Representations and Warranties. Each Credit Party hereby
represents and warrants to Lender as follows: (a) after giving effect to this
Amendment, no Default has occurred and is continuing; (b) after giving effect to
this Amendment, the representations and warranties set forth in the Loan
Documents are true and correct in all material respects on and as of the date
hereof with the same effect as though made on and as of such date except with
respect to any representations and warranties limited by their terms to a
specific date; (c) the execution, delivery and performance of this Amendment has
been duly authorized by all necessary action on the part
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of each Borrower and each other Credit Party and does not and will not: (1)
violate any provision of law applicable to any Borrower or any other Credit
Party, the certificate of incorporation, bylaws, partnership agreement,
membership agreement, or other applicable governing document of any Borrower or
any other Corporate Credit Party or any order, judgment, or decree of any court
or agency of government binding upon any Credit Party; (2) conflict with, result
in a breach of or constitute (with due notice or lapse of time or both) a
default under any material contractual obligation of any Credit Party; (3)
result in or require the creation or imposition of any material lien upon any of
the assets of any Credit Party; or (4) require any approval or consent of any
Person under any material contractual obligation of any Credit Party; and (d)
the articles of incorporation, bylaws, partnership agreement, certificate of
limited partnership, membership agreement, articles of organization or other
applicable governing document of each Borrower and the resolutions of each
Borrower attached as an exhibit to the respective Certificate of Secretary of
each Borrower dated November 17, 1999 have not been modified or rescinded and
remain in full force and effect as of the date of this Amendment.
IN ADDITION, TO INDUCE THE LENDER TO AGREE TO THE TERMS OF THIS AMENDMENT,
EACH CREDIT PARTY (BY ITS EXECUTION BELOW) REPRESENTS AND WARRANTS THAT AS OF
THE DATE OF ITS EXECUTION OF THIS AMENDMENT THERE ARE NO CLAIMS OR OFFSETS
AGAINST OR DEFENSES OR COUNTERCLAIMS TO ITS OBLIGATIONS UNDER THE LOAN DOCUMENTS
AND IN ACCORDANCE THEREWITH IT:
(a) WAIVER. WAIVES ANY AND ALL SUCH CLAIMS, OFFSETS, DEFENSES OR
COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN, ARISING PRIOR TO THE DATE OF
ITS EXECUTION OF THIS AMENDMENT AND
(b) RELEASE. RELEASES AND DISCHARGES LENDER, AND ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, SHAREHOLDERS, AFFILIATES AND ATTORNEYS
(COLLECTIVELY THE "RELEASED PARTIES") FROM ANY AND ALL OBLIGATIONS,
INDEBTEDNESS, LIABILITIES, CLAIMS, RIGHTS, CAUSES OF ACTION OR DEMANDS
WHATSOEVER, WHETHER KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED, IN LAW
OR EQUITY, WHICH ANY CREDIT PARTY EVER HAD, NOW HAS, CLAIMS TO HAVE OR
MAY HAVE AGAINST ANY RELEASED PARTY ARISING PRIOR TO THE DATE HEREOF
AND FROM OR IN CONNECTION WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY.
ARTICLE 7
Miscellaneous
Section 7.01 Survival of Representations and Warranties. All
representations and warranties made in this Amendment or any other Loan Document
including any Loan Document furnished in connection with this Amendment shall
survive the execution and delivery of this Amendment and the other Loan
Documents, and no investigation by Lender or any closing shall affect the
representations and warranties or the right of Lender to rely upon them.
Section 7.02 Reference to Agreement. Each of the Loan Documents, including
the Agreement and any and all other agreements, documents, or instruments now or
hereafter executed and delivered pursuant to the terms hereof or pursuant to the
terms of the Agreement as amended hereby, are hereby amended so that any
reference in such Loan Documents to the Agreement shall mean a reference to the
Agreement as amended hereby.
Section 7.03 Expenses of Lender. As provided in the Agreement, each Credit
Party agrees to pay on demand all costs and expenses incurred by Lender in
connection with the preparation, negotiation, and execution of this Amendment
and the other Loan Documents executed pursuant hereto, including without
limitation, the costs and fees of Lender's legal counsel.
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Section 7.04 Severability. Any provision of this Amendment held by a court
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
Section 7.05 Applicable Law. This Amendment and all other Loan Documents
executed pursuant hereto shall be governed by and construed in accordance with
the laws of the State of New York and the applicable laws of the United States
of America.
Section 7.06 Successors and Assigns. This Amendment is binding upon and
shall inure to the benefit of Lender and each Credit Party and their respective
successors and assigns, except no Credit Party may assign or transfer any of its
rights or obligations hereunder without the prior written consent of Lender.
Section 7.07 Counterparts. This Amendment may be executed in one or more
counterparts and on telecopy counterparts, each of which when so executed shall
be deemed to be an original, but all of which when taken together shall
constitute one and the same agreement.
Section 7.08 Effect of Waiver. No consent or waiver, express or implied, by
Lender to or for any breach of or deviation from any covenant, condition or duty
by any Credit Party shall be deemed a consent or waiver to or of any other
breach of the same or any other covenant, condition or duty.
Section 7.09 Headings. The headings, captions, and arrangements used in
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
Section 7.10 Complete Amendment; Modification of Amendment. This Amendment
and the other Loan Documents constitute the complete agreement between the
parties with respect to the subject matter hereof and thereof, supersede all
prior agreements, commitments, understandings or inducements (oral or written,
expressed or implied), and no Loan Document may be modified, altered or amended
except by a written agreement signed by Lender, and each other Credit Party a
party to such Loan Document.
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Executed as of the date first written above.
BORROWERS:
Nutrition for Life International, Inc.
By:
---------------------------------------
Xxxxx Xxxxxxxx
President
NL ACQUISITION COMPANY
AC ACQUISITION COMPANY
BACTOLAC PHARMACEUTICAL INC.
(formerly known as BPI Acquisition Company)
By:
---------------------------------------
Xxxx X. Xxxxx, Xx., Secretary of each company
HOLDING CO.:
Advanced Nutraceuticals, Inc.
By:
---------------------------------------
Xxxxx Xxxxxxxx
President
LENDER:
GENERAL ELECTRIC CAPITAL CORPORATION
By:
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Xxxxx X. Xxxxxx
Duly Authorized Signatory
