LOAN AGREEMENT
Dated as of August 31, 2000
NATURADE, INC., a Delaware corporation (the "Borrower"), on the one
hand, and HEALTH HOLDINGS AND BOTANICALS, LLC, a California limited liability
company ("HH"), and WALD HOLDINGS, LLC, a Missouri limited liability company
("Wald") (HH and Wald are from time to time collectively referred to as the
"Lender Group" and individually as a "Lender"), hereby agree as of the Effective
Date (defined in Section 7.12 below) as follows:
1. AMOUNTS AND TERMS OF THE ADVANCES.
1.1 THE ADVANCES. The Lender Group agrees, on the terms and
conditions hereinafter set forth, to consider making advances (the "Advances")
to the Borrower from time to time on any day of the year on which banks are not
required or authorized to close in San Francisco (a "Business Day") during the
period from the date hereof until the third anniversary of the date of the
initial Advance hereunder (such date, or the earlier date of termination of the
Commitment (as defined below) pursuant to Section 3.1, being the "Termination
Date") in an aggregate principal amount not to exceed Xxx Xxxxxxx Xxx Xxxxxxx
Xxxxxxxx Xxxxxx Xxxxxx Dollars ($1,200,000.00) (the "Commitment"). Each Advance
shall be in an amount not less than Two Hundred Thousand United States Dollars
($200,000) or an integral multiple thereof, EXCEPT that an Advance may be in an
amount equal to the entire unused Commitment. Anything to the contrary appearing
herein notwithstanding, amounts borrowed and repaid or prepaid hereunder may not
be reborrowed.
1.2 MAKING THE ADVANCES.
(a) Each Advance shall be made on notice, given not later than
11:00 A.M. (San Francisco time) on the third Business Day prior to the
date of the proposed Advance, by the Borrower to the Lender Group,
specifying the date and amount thereof (including the amounts requested to
be made by each Lender). Upon Lender Group's receipt of such notice,
Lender Group may determine in its sole and complete discretion to make or
not to make such requested Advance (and in the event Lender Group
determines to make such Advance, the amount of Advances by each Lender).
Lender Group shall notify Borrower whether Lender Group will make such
Advance within two Business Days of Lender Group's receipt of notice
requesting such Advance; provided,
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that if Lender Group shall not notify Borrower of Lender Group's agreement
to make such Advance within such period, the Lender Group shall be deemed
to have notified Borrower that Lender Group will not make such Advance,
and no further notice of Lender Group shall be required hereunder. If
Lender Group shall notify Borrower of Lender Group's agreement to make
such Advance requested by Borrower and upon fulfillment of the applicable
conditions set forth in Section 2, Lender Group will make such Advance
available to the Borrower in same day funds by wire transfer to the
Borrower's account for wire transfers.
(b) Each Advance made by a Lender shall be deemed to be made
by such Lender severally (and not jointly with other members of the Lender
Group) and shall be evidenced by a promissory note in favor of each such
member substantially in the form of EXHIBIT A hereto (each, a "Note"). All
other rights and obligations of "Lender Group" hereunder shall be deemed
to apply to each Lender severally (and not jointly) and all references to
"Lender Group" in this Agreement shall be so interpreted and construed.
(c) Each notice from the Borrower to the Lender Group
requesting an Advance shall be irrevocable and binding on the Borrower.
The Borrower shall indemnify the Lender Group against any loss, cost or
expense incurred by the Lender Group as a result of any failure to fulfill
on or before the date specified in such notice for such Advance the
applicable conditions set forth in Section 2, including, without
limitation, any loss, cost or expense incurred by reason of the
liquidation or reemployment of funds acquired by the Lender Group to fund
the Advance when the Advance, as a result of such failure, is not made on
such date.
1.3 REPAYMENT. The Borrower shall repay the aggregate unpaid
principal amount of all Advances, together with all amounts of interest then
accrued thereon, by no later than the Termination Date.
1.4 INTEREST. On the last Business Day of each calendar quarter
beginning after the date hereof, Borrower shall pay to Lender Group all amounts
of interest then accrued and unpaid with respect to the Advances as provided
below. The Borrower shall pay interest on the unpaid principal amount of each
Advance from the date of such Advance until such principal amount shall be paid
in full, at the rate of eight percent (8%) per annum; PROVIDED that any amount
of principal which is not paid when due (whether at stated maturity, by
acceleration or otherwise) shall bear interest, from the date on which such
amount is due until such amount is paid in full,
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payable on demand, at a rate per annum equal at all times to eleven percent
(11%) per annum.
1.5 PREPAYMENTS. The Borrower may, upon at least thirty (30)
calendar days' notice to the Lender Group stating the proposed date and
principal amount of the prepayment, and if such notice is given the Borrower
shall, prepay the outstanding principal amounts of the Advances in whole or in
part, together with accrued interest to the date of such prepayment on the
principal amount prepaid; PROVIDED, HOWEVER, that each partial prepayment shall
be in an aggregate principal amount not less than Xxx Xxxxxxx Xxxxxxxx Xxxxxx
Xxxxxx Dollars ($100,000).
1.6 PAYMENTS AND COMPUTATIONS.
(a) The Borrower shall make each payment hereunder not later
than 11:00 a.m. (San Francisco time) on the day when due in U.S. dollars
to each Lender at its address referred to in Section 7.2 in same day
funds.
(b) All computations of interest shall be made by the Lender
Group on the basis of a year of 365 or 366 days, as the case may be, in
each case for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest is
payable. Each determination by the Lender Group of any amount of interest
payable hereunder shall be conclusive and binding for all purposes, absent
manifest error.
(c) Whenever any payment hereunder shall be stated to be due
on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest.
1.7 GRANT OF SECURITY. The Borrower hereby assigns and pledges to
the Lender Group, and hereby grants to HH, as collateral agent for the Lender
Group (the "Collateral Agent"), a security interest in, the following
(collectively, the "Collateral"):
(a) all of the Borrower's right, title and interest, whether
now owned or hereafter acquired, in and to all equipment in all of its
forms, wherever located, now or hereafter existing, all fixtures and all
parts thereof and all accessions thereto (any and all such equipment,
fixtures, parts and accessions being the "Equipment");
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(b) all of the Borrower's right, title and interest, whether
now owned or hereafter acquired, in and to all inventory in all of its
forms, wherever located, now or hereafter existing (including, but not
limited to, (i) all raw materials and work in process therefor, finished
goods thereof and materials used or consumed in the manufacture or
production thereof, (ii) goods in which the Borrower has an interest in
mass or a joint or other interest or right of any kind (including, without
limitation, goods in which the Borrower has an interest or right as
consignee) and (iii) goods that are returned to or repossessed by the
Borrower), and all accessions thereto and products thereof and documents
therefor (any and all such inventory, accessions, products and documents
being the "Inventory");
(c) all of the Borrower's right, title and interest, whether
now owned or hereafter acquired, in and to all accounts, contract rights,
chattel paper, instruments, deposit accounts, general intangibles and
other obligations of any kind, now or hereafter existing, whether or not
arising out of or in connection with the sale or lease of goods or the
rendering of services, and all rights now or hereafter existing in and to
all security agreements, leases and other contracts securing or otherwise
relating to any such accounts, contract rights, chattel paper,
instruments, deposit accounts, general intangibles or obligations (any and
all such accounts, contract rights, chattel paper, instruments, deposit
accounts, general intangibles and obligations, to the extent not referred
to in clause (d), (e) or (f) below, being the "Receivables", and any and
all such leases, security agreements and other contracts being the
"Related Contracts");
(d) all of the Borrower's right, title and interest in and to
each of the agreements to which the Borrower is now or may hereafter
become a party, in each case as such agreements may be amended or
otherwise modified from time to time (collectively, the "Assigned
Agreements"), including, without limitation, (i) all rights of the
Borrower to receive moneys due and to become due under or pursuant to the
Assigned Agreements, (ii) all rights of the Borrower to receive proceeds
of any insurance, indemnity, warranty or guaranty with respect to the
Assigned Agreements, (iii) claims of the Borrower for damages arising out
of or for breach of or default under the Assigned Agreements and (iv) the
right of the Borrower to terminate the Assigned Agreements, to perform
thereunder and to compel performance and otherwise exercise all remedies
thereunder (all such Collateral being the "Agreement Collateral");
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(e) all of the following (collectively, the "Account
Collateral"): (i) all deposit accounts of the Borrower, all funds held
therein and all certificates and instruments, if any, from time to time
representing or evidencing such deposit accounts; (ii) all notes,
certificates of deposit, deposit accounts, checks and other instruments
from time to time hereafter delivered to or otherwise possessed by the
Lender Group for or on behalf of the Borrower in substitution for or in
addition to any or all of the then existing Account Collateral; and (iii)
all interest, dividends, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the then existing Account Collateral; and
(f) all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property of the
types described in clauses (a) - (e) of this Section 1.7) and, to the
extent not otherwise included, all (i) payments under insurance (whether
or not the Lender Group is the loss payee thereof), or any indemnity,
warranty or guaranty, payable by reason of any loss or damage to or
otherwise with respect to any of the foregoing Collateral and (ii) cash.
1.8 COLLATERAL AGENCY AND INTERCREDITOR PROVISIONS.
(a) "Required Combined Lenders" means at any time Lenders
whose Pro Rata Shares aggregate more than fifty percent (50%), as such
percentage is determined under the definition of Pro Rata Share set forth
below.
(b) "Pro Rata Share" means at any time, with respect to a
Lender, a fraction (expressed as a percentage), the numerator of which is
the aggregate outstanding principal amount of Advances then owing to such
Lender and the denominator of which is the aggregate outstanding principal
amount of Advances then owing to the Lender Group.
(c) Each of the Lenders hereby irrevocably appoints and
authorizes HH to act as Collateral Agent, and HH agrees to act as
Collateral Agent for such Lenders, pursuant to the terms of this
Agreement.
(d) Each of the Lenders agrees that no Lender shall have any
independent right of action against the Collateral or any part thereof
under the Notes or this Agreement, and that the rights and remedies of the
Collateral Agent hereunder shall only be exercised at the direction of the
Required
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Combined Lenders (notwithstanding the occurrence of any Event of Default
hereunder or acceleration of the obligations hereunder or under any Note).
The Collateral Agent hereby agrees (and each Lender acknowledges such
agreement) that it shall not enforce the security interests of any
individual Lender in the Collateral without the direction and consent of
the Required Combined Lenders. Notwithstanding the foregoing, but subject
to any subordination agreement to which a Lender may be a party, a Lender
shall have an independent right of action against the Collateral (and the
Collateral Agent shall take such actions as may be necessary to effectuate
such independent right of action) in the event that the Borrower has
failed to make interest payments on any Advance to such Lender in an
amount equal to or exceeding the equivalent of 12 months' interest on such
Advance.
(e) Each of the Lenders agrees that no Lender shall bring any
action against, or make any demand upon, the Borrower under any Note or
this Agreement without the prior written consent of the Required Combined
Lenders.
(f) Upon its receipt of any proceeds of the Collateral, the
Collateral Agent shall disburse such proceeds as follows:
(i) First, to the costs and expenses of the
Collateral Agent incurred in connection with the enforcement
of this Agreement;
(ii) Second, to the Lenders ratably in accordance
with their Pro Rata Shares until the obligations under the
Notes are satisfied; and
(iii) Finally, to the person or persons otherwise
legally entitled thereto.
(g) Each Lender shall promptly put in the custody, possession
or control of the Collateral Agent for disposition or distribution in
accordance with the provisions of this Section any Collateral, or proceeds
therefrom, over which such Lender obtains custody, control or possession.
Until such time as each Lender shall have complied with the provisions of
the immediately preceding sentence, such Lender shall be deemed to hold
such Collateral or proceeds in trust for the Lender Group.
(h) Nothing contained herein shall limit or restrict the
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independent right of any Lender to initiate an action or actions in any
proceeding under the Bankruptcy Code of the United States of America, as
amended from time to time, and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, or similar debtor relief laws from time to
time in effect affecting the rights of creditors generally ("Debtor Relief
Laws"), and to appear or be heard on any matter before the bankruptcy or
other applicable court in any such proceeding. The Collateral Agent is not
entitled to initiate such actions on behalf of any Lender or to appear and
be heard on any matter before the bankruptcy or other applicable court in
any such proceeding as the representative of any Lender, unless such
action or appearance has been approved in writing by such Lender. The
Collateral Agent is not authorized in any such proceeding to enter into
any agreement for, or give any authorization or consent with respect to,
the postpetition usage of Collateral, unless such agreement, authorization
or consent has been approved in writing by the Required Combined Lenders.
This Agreement shall survive the commencement of any proceeding under a
Debtor Relief Law.
(i) Each of the Lenders waives any right it may now or
hereafter have to require the Collateral Agent to marshal assets, to
exercise rights or remedies in a particular manner, or to forbear
exercising such rights and remedies in any particular manner or order.
1.9 SECURITY FOR OBLIGATIONS. This Agreement secures the repayment
of all obligations of the Borrower now or hereafter existing under this
Agreement and any other document or instrument delivered in connection herewith,
whether for principal, interest, fees, expenses or otherwise (all such
obligations being the "Secured Obligations"). Without limiting the generality of
the foregoing, this Agreement secures the payment of all amounts that constitute
part of the Secured Obligations and would be owed by the Borrower to the Lender
Group but for the fact that they are unenforceable or not allowable due to the
existence of a bankruptcy, reorganization or similar proceeding involving the
Borrower.
1.10 BORROWER REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (a) the Borrower shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by the Lender Group of any of
the rights hereunder shall not release the Borrower from any of its duties or
obligations under the contracts and agreements included in the Collateral and
(c) the Lender Group shall have no
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obligation or liability under the contracts and agreements included in the
Collateral by reason of this Agreement, nor shall the Lender Group be obligated
to perform any of the obligations or duties of the Borrower thereunder or to
take any action to collect or enforce any claim for payment assigned hereunder.
1.11 FURTHER ASSURANCES.
(a) The Borrower agrees that from time to time, at the expense
of the Borrower, the Borrower will promptly execute and deliver all
further instruments and documents, and take all further action, that may
be necessary or desirable, or that the Collateral Agent, on behalf of the
Lender Group, may reasonably request, in order to perfect and protect any
pledge, assignment or security interest granted or purported to be granted
hereby or to enable the Collateral Agent on behalf of the Lender Group to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral.
(b) The Borrower hereby authorizes the Collateral Agent, on
behalf of the Lender Group, to file one or more financing or continuation
statements, and amendments thereto, relating to all or any part of the
Collateral without the signature of the Borrower where permitted by law.
Photocopy or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient
as a financing statement where permitted by law.
(c) The Borrower will furnish to the Collateral Agent from
time to time statements and schedules further identifying and describing
the Collateral and such other reports in connection with the Collateral as
the Collateral Agent may reasonably request, all in reasonable detail.
1.12 AS TO EQUIPMENT AND INVENTORY.
(a) The Borrower shall keep the Equipment and Inventory (other
than Inventory sold in the ordinary course of business) at the Borrower's
property at 00000 Xxxxxx Xxxx, Xxxxxx, Xxxxxxxxxx.
(b) The Borrower shall cause the Equipment to be maintained
and preserved in the same condition, repair and working order as when new,
ordinary wear and tear excepted, and in accordance with any manufacturer's
manual, and shall forthwith, or in the case of any material loss or damage
to any of the Equipment as quickly as practicable after the occurrence
thereof, make or
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cause to be made all repairs, replacements and other improvements in
connection therewith that are necessary or desirable to such end. The
Borrower shall promptly furnish to the Collateral Agent a statement
respecting any material loss or damage to any of the Equipment.
(c) The Borrower shall pay promptly when due all property and
other taxes, assessments and governmental charges or levies imposed upon,
and all claims (including claims for labor, materials and supplies)
against, the Equipment and Inventory. In producing the Inventory, the
Borrower shall comply with all requirements of the Fair Labor Standards
Act.
1.13 INSURANCE. The Borrower shall, at its own expense, maintain
insurance with respect to the Equipment and Inventory in such amounts, against
such risks, in such form and with such insurers, as shall be reasonably
satisfactory to the Collateral Agent from time to time. Further, the Borrower
shall, at the request of the Collateral Agent, duly exercise and deliver
instruments of assignment of such insurance policies to comply with the
requirements of this Agreement and cause the insurers to acknowledge notice of
such assignment.
1.14 THE COLLATERAL AGENT'S DUTIES. The powers conferred on the
Collateral Agent hereunder are solely to protect its and the Lender Group's
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the safe custody of any Collateral in its possession and
the accounting for moneys actually received by it hereunder, the Collateral
Agent shall have no duty as to any Collateral, or as to the taking of any
necessary steps to preserve rights against any parties or any other rights
pertaining to any Collateral.
1.15 CONTINUING SECURITY INTEREST. This Agreement shall create a
continuing security interest in the Collateral and shall (a) remain in full
force and effect until the later of the indefeasible cash payment in full of the
Secured Obligations and the Termination Date, (b) be binding upon the Borrower,
its successors and assigns and (c) inure, together with the rights and remedies
of the Collateral Agent on behalf of the Lender Group hereunder, to the benefit
of the Collateral Agent and the Lender Group, and their respective successors,
transferees and assigns.
1.16 RELEASE AND TERMINATION. Upon the later of indefeasible cash
payment in full of the Secured Obligations and the Termination Date, the pledge,
assignment and security interest granted hereby shall terminate and all rights
to the Collateral shall revert to the Borrower. Upon any such termination, the
Collateral Agent and the Lender Group will, at the Borrower's expense, execute
and deliver to the
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Borrower such documents as the Borrower shall reasonably request to evidence
such termination.
2. CONDITIONS OF LENDING.
2.1 CONDITION PRECEDENT TO INITIAL ADVANCE. The Lender Group shall
have no obligation to make any Advance hereunder until such time (if any) as
Lender Group has notified Borrower of Lender Group's agreement, in Lender
Group's sole and complete discretion, to make a requested Advance as provided in
Section 1 above. Upon Lender Group's agreement (if any) to make the initial
Advance, unless waived by Lender Group, the obligation of the Lender Group to
make such initial Advance is subject to the further condition precedent that the
Lender Group shall have received on or before the day of such Advance such
documents as the Lender Group shall reasonably request.
2.2 CONDITIONS PRECEDENT TO ALL ADVANCES. The Lender Group shall
have no obligation to make any Advance hereunder until such time (if any) as
Lender Group has notified Borrower of Lender Group's agreement, in Lender
Group's sole and complete discretion, to make a requested Advance as provided in
Section 1 above. Upon Lender Group's agreement (if any) to make an Advance
(including the initial Advance), Lender Group's obligation to make such Advance
shall be subject to the further condition precedent that on the date of such
Advance no event has occurred and is continuing, or would result from such
Advance or from the use of the proceeds thereof, which constitutes an Event of
Default (as defined in Section 3.1 hereof) or would constitute an Event of
Default but for the requirement that notice be given or time elapse or both.
3. EVENTS OF DEFAULT.
3.1 EVENTS OF DEFAULT. If any of the following events ("Events of
Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of, or
interest on, any Advance when the same becomes due and payable; or
(b) The Borrower shall fail to perform or observe any
material term, covenant or agreement contained in this Agreement
(other than those specified in Section 3.1(a)) on its part to be
performed or observed if such failure shall remain unremedied for 10
days after written notice thereof shall have been given to the
Borrower by the Collateral Agent; or
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(c) The Borrower shall generally not pay its debts as such
debts become due, or shall admit in writing its inability to pay its
debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the
Borrower seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar
official for it or for any substantial part of its property and, in
the case of any such proceeding instituted against it (but not
instituted by it), either such proceeding shall remain undismissed or
unstayed for a period of 30 days, or any of the actions sought in such
proceeding (including, without limitation, the entry of an order for
relief against, or the appointment of a receiver, trustee, custodian
or other similar official for, it or for any substantial part of its
property) shall occur; or the Borrower shall take any corporate action
to authorize any of the actions set forth above in this subsection
(c).
THEN, in any such event, the Lender Group upon written approval of
Required Combined Lenders, (i) may, by notice to the Borrower, declare its
obligation to make Advances to be terminated, whereupon the same shall forthwith
terminate, and (ii) may, by notice to the Borrower, declare the Advances, all
interest thereon and all other amounts payable under this Agreement to be
forthwith due and payable, whereupon the Advances, all such interest and all
such amounts shall become and be forthwith due and payable, without presentment,
demand, protest, or further notice of any kind, all of which are hereby
expressly waived by the Borrower; provided, however, that in the event of an
actual or deemed entry of an order for relief with respect to the Borrower under
the Federal Bankruptcy Code, (A) the obligation of the Lender Group to make
Advances shall automatically be terminated and (B) the Advances and all such
interest and all such amounts shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Borrower.
4. LENDER GROUP'S RIGHT TO CONVERT. Without limitation to any other right
or remedy Lender Group may have under this Agreement, applicable law, or
otherwise, any Lender may, at any time by notice to the Borrower in accordance
with Section 7.2, convert all or any part of the Advances into shares of common
stock of the Borrower ("Shares") at a conversion price equal to the lower of (i)
the average closing bid of Borrower's common stock for the ten trading days
prior to the making of an
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Advance, or (ii) the average closing bid of Borrower's common stock for the ten
trading days prior to the date of receipt of notice of conversion. Upon
Borrower's receipt of such notice, Borrower shall immediately cause to be issued
shares of common stock to such Lender as provided in such notice. Upon such
issuance the amount of the Secured Obligations shall be reduced by the amount
applied to such conversion.
5. REPRESENTATIONS BY LENDER GROUP.
(a) Each Lender (i) is a sophisticated investor with knowledge
and experience in business and financial matters, (ii) has received
certain information concerning the Borrower and has had the opportunity to
obtain additional information as desired in order to evaluate the merits
and risks inherent in the Shares, (iii) is able to bear the economic risk
in the Shares, and (iv) is an accredited investor as defined under Rule
501 of the 1933 Act.
(b) By accepting Shares, the Lender Group acknowledges that
such Shares shall be acquired for investment and not for distribution, as
that term is used in the 1933 Act, unless in the opinion of legal counsel
to the Borrower such distribution is in compliance with or exempt from the
registration requirements of the 1933 Act, and the Lender Group further
acknowledges and understands that the Shares may have to be held
indefinitely unless they have been or are subsequently registered under
the 1933 Act or an exemption from such registration is available; the
Lender Group understands that the certificates evidencing such Shares will
be imprinted with a legend substantially as follows:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"). These shares have been acquired for investment and not
with a view to distribution or resale, and may not be sold,
mortgaged, pledged, hypothecated or otherwise transferred
without an effective registration statement for such shares
under the Act, or unless an exemption from registration is
available with respect to any proposed sale or transfer."
(c) The Lender Group acknowledges and understands that the
Lender Group may have to bear the economic risk associated with the
purchase
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of the Shares for an indefinite period of time because the Shares have not
been registered under the 1933 Act and, therefore, cannot be sold unless
they are so registered or an exemption from registration is available with
respect to any proposed sale or transfer.
(d) NO RIGHTS AS SHAREHOLDERS. Neither the Lender Group nor
any transferee thereof shall be, or have any rights or privileges of, a
shareholders of the Borrower concerning the Shares unless, until and to
the extent the Advances have been converted in accordance with this
Agreement.
6. CERTAIN CORPORATE TRANSACTIONS. Nothing in this Agreement shall in any
way prohibit the Borrower from merging with or consolidating into another
corporation, or from selling or transferring all or substantially all of its
assets, or from distributing all or substantially all of its assets to its
shareholders in liquidation, or from dissolving and terminating its corporate
existence. In the event the Borrower merges or consolidates with another
corporation, or all or substantially all of the Borrower's capital stock or
assets are acquired by or are subject to a tender offer of another corporation,
entity or person (collectively, together with each event described in the
immediately preceding sentence, "Control Events"), and the surviving or
acquiring corporation, person or entity issues shares of stock or other
consideration to the Borrower's stockholders in connection with the merger,
consolidation or acquisition, the surviving or acquiring corporation shall adopt
this Agreement and, upon the conversion of the Advances, the Lender Group shall,
at no additional cost, be entitled to receive, in lieu of the number of shares
of common stock of Borrower ("Common Stock") to which such Advances are then
convertible, the number and class of shares of stock or other consideration to
which the Lender Group would have been entitled pursuant to the terms of the
merger, consolidation or acquisition if immediately prior thereto the Lender
Group had been holder of record of the number of shares of Common Stock equal to
the number of shares of Common Stock for which the Advances shall then be
convertible.
7. MISCELLANEOUS.
7.1 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
Group, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
7.2 NOTICES, ETC. All notices and other communications provided for
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hereunder shall be in writing (including telecopier communication) and mailed,
telecopied or delivered, if to the Borrower, at its address at
NATURADE, INC.
00000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
with a copy to
Sheppard, Mullin, Xxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
Fax: 000-000-0000
and if to HH, at its address at:
HEALTH HOLDINGS AND BOTANICALS, LLC
c/o Doyle & Xxxxxxxxx LLC
000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
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with a copy to:
MBV Law LLP
000 Xxxxxxx Xx.
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
and if to Wald, at its address at:
WALD Holdings, LLC
0000 Xxxxxxxxxx Xxx
Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000
Fax: 000-000-0000
and
Xxxxx Xxxx
0000 Xxxxxxxxx Xxxx
Xxxx 000
Xxxxxx, Xxxxxxx 00000
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party. All such notices and communications
shall effective when actually received by the party notified.
7.3 NO WAIVER; REMEDIES. No failure on the part of the Lender Group
to exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
7.4 CERTAIN TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles consistent with those applied in the preparation of the Borrower's
financial statements. As used herein the term "including" shall be construed to
mean "including, without limitation", unless expressly stated to the contrary.
7.5 UNCERTAINTY AND CONFLICT. In the event that the Borrower
receives
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inconsistent instructions from members of the Lender Group or determines in its
sole discretion that it is uncertain as to its duties or actions hereunder or
has received any instruction or notice from a member of the Lender Group which,
in the sole opinion of the Borrower, is in conflict with any of the provisions
of this Agreement or with any instructions or notices from the other parties
hereto, Borrower shall be entitled to decline to take any further action until
the Borrower receives a joint written direction from all members of the Lender
Group or an order of a court of competent jurisdiction directing the Borrower to
take action in accordance with such written direction or order.
7.6 COSTS, EXPENSES AND TAXES.
(a) The Borrower agrees to pay on demand all costs and
expenses in connection with the preparation, execution, delivery,
administration, modification and amendment of this Agreement and the other
documents to be delivered hereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Collateral
Agent and the Lender Group with respect thereto and with respect to
advising the Lender Group as to its rights and responsibilities under this
Agreement. The Borrower further agrees to pay on demand all costs and
expenses, if any (including reasonable counsel fees and expenses), in
connection with the enforcement (whether through negotiations, legal
proceedings or otherwise) of this Agreement and the other documents to be
delivered hereunder, including, without limitation, reasonable counsel
fees and expenses in connection with the enforcement of rights under this
Section 7.6(a). In addition, the Borrower shall pay any and all stamp and
other taxes payable or determined to be payable in connection with the
execution and delivery of this Agreement and the other documents to be
delivered hereunder, and agrees to save the Collateral Agent and the
Lender Group harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such
taxes.
(b) The Borrower agrees to indemnify the Collateral Agent and
the Lender Group from and against any and all claims, losses and
liabilities growing out of or resulting from this Agreement (including,
without limitation, enforcement of this Agreement), except claims, losses
or liabilities resulting from the Collateral Agent and the Lender Group's
gross negligence or willful misconduct as determined by a final judgment
of a court of competent jurisdiction, and except to the extent arising
from matters contemplated by Section 7.5 above.
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(c) The Borrower will upon demand pay to the Collateral Agent
and the Lender Group the amount of any and all reasonable expenses,
including the reasonable fees and expenses of its counsel and of any
experts and agents, that the Collateral Agent and the Lender Group may
incur in connection with (i) the administration of this Agreement, (ii)
the custody, preservation, use or operation of, or the sale of, collection
from or other realization upon, any of the Collateral, (iii) the exercise
or enforcement of any of the rights of the Collateral Agent and the Lender
Group hereunder or (iv) the failure by the Borrower to perform or observe
any of the provisions hereof.
7.7 RIGHT OF SET-OFF. Upon the occurrence and during the continuance
of any Event of Default the Lender Group, upon prior written consent of Required
Combined Lenders, is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all amounts at any
time held and other indebtedness at any time owing by the Lender Group to or for
the credit or the account of the Borrower against any and all of the obligations
of the Borrower now or hereafter existing under this Agreement, whether or not
the Lender Group shall have made any demand under this Agreement and although
such obligations may be unmatured. The Lender Group agrees promptly to notify
the Borrower after any such set-off and application, PROVIDED that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of the Lender Group under this Section are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) which the Lender Group may have.
7.8 BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of the Borrower and the Collateral Agent and the Lender Group and
their respective successors and assigns, except that the Borrower shall not have
the right to assign its rights hereunder or any interest herein without the
prior written consent of the Lender Group.
7.9 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California.
7.10 USURY. Anything to the contrary appearing in this Agreement
notwithstanding, if any return, interest payment, or other charge payable under
this Agreement shall at any time exceed the maximum amount chargeable by
applicable law, then the applicable rate of return or interest shall be the
maximum rate permitted by applicable law.
7.11 SUBORDINATION. The Borrower's obligation under this Agreement
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shall in all respects be subject and subordinate to the Borrower's obligations
to Xxxxx Fargo Business Credit ("Bank"). Lender Group hereby agrees that (i)
upon Bank's request, Lender Group will in good faith negotiate and enter into a
reasonable subordination agreement with Bank respecting the Secured Obligations
created hereby, and (ii) upon approval of the Lenders holding a majority in
interest in Advances made at any time hereunder (whether or not such Advances
hereafter have been converted pursuant to Section 4 above), each Lender will in
good faith negotiate and enter into a reasonable subordination agreement
respecting the Secured Obligations created hereby with such other lenders to the
Borrower which propose to extend additional credit to the Borrower from time to
time provided that the terms of such additional credit provide that (a) any such
lender will have a first priority lien on the assets of the Borrower, and (ii)
any such lender does not receive an equity interest or equity participation in
the Borrower in connection with extending such credit to Borrower.
7.12 EFFECTIVE DATE. This Agreement shall become effective and
binding on the parties hereto upon the execution and delivery hereof by the
parties hereto and receipt any necessary consents to this Agreement and the
transactions contemplated hereby (such date of effectiveness is referred to
herein as the "Effective Date").
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
NATURADE, INC.
By:
-------------------------------------
Title:
-------------------------------------
HEALTH HOLDINGS AND
BOTANICALS, LLC, as a Lender and as
Collateral Agent
By:
-------------------------------------
Title:
-------------------------------------
WALD HOLDINGS, LLC
By:
-------------------------------------
Title:
-------------------------------------
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EXHIBIT A
CONVERTIBLE SECURED PROMISSORY NOTE
$XXXX Irvine, California
Date
FOR VALUE RECEIVED, NATURADE, INC., a Delaware corporation
("Obligor"), hereby promises to pay to the order of (Investor) ("Payee"), in
lawful money of the United States at the address of Payee set forth below, the
amount of (Insert dollar amount), together with interest on the unpaid principal
amount hereof.
Interest shall be paid quarterly in arrears, from the date hereof
until paid in full, at the rate of eight percent (8.00%) per annum, with the
first payment of interest due on (Insert date). Unpaid principal together with
all accrued interest shall be due and payable on (Insert date). Capitalized
terms not otherwise defined in this Note shall have the meanings assigned to
them in the Loan Agreement (as defined below).
This Note may be prepaid, in whole or in part, upon at least thirty
calendar days' notice to Payee, as further provided in the Loan Agreement.
Payments by Obligor shall be applied first to any and all accrued interest
through the payment date and second to the principal remaining due hereunder.
Upon payment in full of all principal and interest payable hereunder, this Note
shall be surrendered to Obligor for cancellation.
If any payment of principal or interest on this Note shall become
due on a Saturday, Sunday, or a public holiday under the laws of the State of
California, such payment shall be made on the next succeeding business day and
such extension of time shall be included in computing interest in connection
with such payment.
This Note is issued pursuant to and entitled to the benefits of the
Loan Agreement and related agreements by and between Obligor and Payee dated
August 31, 2000 ("Loan Agreement"), and reference thereto is hereby made for a
more complete statement of the terms under which the loan evidenced hereby is to
be repaid, including the fact that the loan is subject to acceleration and the
loan is subject to Payee's right to convert, all as set forth in the Loan
Agreement. This Note is secured by certain collateral, more specifically
described in the Loan Agreement.
Obligor waives presentment, demand for performance, notice of
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nonperformance, protest, notice of protest, and notice of dishonor. No delay on
the part of Payee in exercising any right hereunder shall operate as a waiver of
such right under this Note. This Note is being delivered in the State of
California. This Note shall be governed in all respects by the laws of the State
of California as it applies to contracts between California residents, which are
made and to be performed in California.
If the indebtedness represented by this Note or any part thereof is
collected at law or in equity or in bankruptcy, receivership or other judicial
proceedings or if this Note is placed in the hands of attorneys for collection
after default, Obligor agrees to pay, in addition to the principal and interest
payable herein, reasonable attorneys' fees and costs incurred by Payee.
The Obligor and the Payee intend to comply at all times with
applicable usury laws. If at any time such laws would render usurious any
amounts due under this Note, then it is the Obligor's and the Payee's express
intention that the Obligor not be required to pay interest on this Note at a
rate in excess of the maximum lawful rate, that the provisions of this paragraph
shall control over all other provisions of this Note which may be in apparent
conflict hereunder, that such excess amount shall be immediately credited to the
principal balance of this Note (or, if this Note has been fully paid, refunded
by the Payee to the Obligor), and the provisions hereof shall be immediately
reformed and the amounts thereafter collectible under this Note reduced, without
the necessity of the execution of any further documents, so as to comply with
the then applicable usury law, but so as to permit the recovery of the fullest
amount otherwise due under this Note. Any such crediting or refund shall not
cure or waive any default by the Obligor under this Note. The term "applicable
law" as used in this Note shall mean the laws of the State of California or the
laws of the United States, whichever laws allow the greater rate of interest, as
such laws now exist or may be changed or amended or come into effect in the
future.
No modification, amendment or waiver of any provision of this Note
shall be effective unless approved in a writing specifically referring to this
Note and signed by the party against whom enforcement of the amendment is
sought. In the event that Obligor fails to make payment on the date for payment
hereinabove specified of all principal and interest due hereunder on such date,
then this Note shall accrue interest at the highest rate permitted by law, until
paid in full.
Each notice or other communication required or permitted hereunder
(except payment) shall be in writing and shall be deemed given or made (a) on
the day delivered if delivered in person to the party to whom it is directed, or
by overnight
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courier, (b) on the day delivery is confirmed by the recipient's
signature if deposited in the United States Mail, registered or certified,
return receipt requested, (c) on the day confirmed by the receiving facsimile
machine if sent by facsimile during regular business hours, in each case
addressed to the party to whom it is directed at the address set forth in the
Loan Agreement. Either party may, by notice given at any time or from time to
time, require that subsequent notices be given at a different address. Any
payment shall be deemed made upon receipt by Payee.
IN WITNESS WHEREOF, Obligor has caused this Note to be executed and
delivered by its duly authorized officer as of the date and at the place first
written above.
OBLIGOR: NATURADE, INC.,
a Delaware corporation
By:
----------------------------
Its:
---------------------------
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