CREDIT AGREEMENT
Dated as of August 9, 1999
NATURADE, INC., a Delaware corporation (the "Borrower"), and HEALTH
HOLDINGS AND BOTANICALS, INC., a California corporation (the "Lender") hereby
agree as of the Effective Date (defined in Section 8.10 below) as follows:
ARTICLE I
AMOUNTS AND TERMS OF The Advance
SECTION 1.01. THE ADVANCEs. The Lender agrees, on the terms and conditions
hereinafter set forth, to make (i) a single advance (the "Initial Advance") to
the Borrower on the Effective Date in the aggregate principal amount of Three
Million Dollars ($3,000,000), (ii) from time to time and subject to the sole
and complete discretion of Lender, additional advances (the "Additional
Advances", and, together with the Initial Advance, the "Advances") in an
aggregate amount not exceeding One Million Dollars ($1,000,000) (the
"Commitment"). Anything to the contrary appearing herein notwithstanding,
amounts borrowed and repaid or prepaid hereunder may not be reborrowed.
SECTION 1.02. MAKING THE ADVANCES.
(a) Each Advance shall be made by Lender to the Borrower in same day
funds by wire transfer to the Borrower's account referred to in Section 8.02 for
wire transfers. Each Additional 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 Additional Advance, by the Borrower to the Lender, specifying
the date and amount thereof. Upon Lender's receipt of such notice, Lender may
determine in its sole and complete discretion to make of not to make such
requested Additional Advance. Lender shall notify Borrower whether Lender will
make such Additional Advance within two Business Days of Lender's receipt of
notice requesting such Advance; provided, that if Lender shall not notify
Borrower of Lender's agreement to make such Additional Advance within such
period, the Lender shall be deemed to have notified Borrower that Lender will
not make such Advance, and no further notice of Lender shall be required
hereunder. If Lender shall notify Borrower of Lender's agreement to make such
Additional Advance requested by Borrower and upon fulfillment of
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the applicable conditions set forth in Article II, the Lender will make such
Additional Advance available to the Borrower in same day funds by wire
transfer to the Borrower's account referred to in herein for wire transfers.
(b) Each notice from the Borrower to the Lender requesting an
Additional Advance shall be irrevocable and binding on the Borrower. The
Borrower shall indemnify the Lender against any loss, cost or expense incurred
by the Lender as a result of any failure to fulfill on or before the date
specified in such notice for such Additional Advance the applicable conditions
set forth in Article II, including, without limitation, any loss (including loss
of anticipated profits), cost or expense incurred by reason of the liquidation
or reemployment of funds acquired by the Lender to fund the Additional Advance
when the Additional Advance, as a result of such failure, is not made on such
date.
SECTION 1.03. REPAYMENT. The Borrower shall repay the aggregate unpaid
principal amount of all Advances, together with all amounts of interest then
accrued thereon, on July 31, 2004 (such date, or the earlier date on which the
Advance shall become due and payable in accordance with the terms hereof,
"Maturity Date").
SECTION 1.04. INTEREST. On the last Business Day of each calendar quarter
beginning after the date hereof, Borrower shall pay to Lender 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, payable on demand, at a rate
per annum equal at all times to eleven percent (11%) per annum. A "Business Day"
means a day on which banks are not required or authorized to close in San
Francisco.
SECTION 1.05. PREPAYMENTS. The Borrower may not, without the prior written
consent of Lender, prepay the outstanding principal amount of any Advance in
whole or in part, or accrued interest thereon.
SECTION 1.06. PAYMENTS AND COMPUTATIONS.
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(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 the
Lender at its address referred to in Section 8.02 in same day funds.
(b) All computations of interest shall be made by the Lender 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.
(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.
ARTICLE II
CONDITIONS OF LENDING
SECTION 2.01. CONDITION PRECEDENT TO ADVANCES. The Lender shall have no
obligation to make any Additional Advance hereunder until such time (if any) as
Lender has notified Borrower of Lender's agreement, in Lender's sole and
complete discretion, to make a requested Additional Advance as provided in
Article I above. The obligation of the Lender to make any Advance is subject to
the further condition precedent that the Lender shall have received on or before
the day of the Advance the following, each dated such day, in form and substance
satisfactory to the Lender:
(a) Certified copies of resolutions of the Board of Directors of the
Borrower approving this Agreement, and of all documents evidencing other
necessary corporate action and governmental approvals, if any, with respect to
this Agreement as the Lender may reasonably require.
(b) A certificate of the Secretary or an Assistant Secretary of the
Borrower certifying the names and true signatures of the officers of the
Borrower authorized to sign this Agreement and the other documents to be
delivered hereunder.
SECTION 2.02. FURTHER CONDITIONS PRECEDENT. Lender's obligation to make
each Advance shall be subject to the further conditions precedent that on the
date of the Advance
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(a) the following statements shall be true, and each of the giving of the
notice requesting the Advance and the acceptance by the Borrower of the
proceeds of the Advance shall constitute a representation and warranty by the
Borrower that on the date of the Advance such statements are true:
(i) The representations and warranties of the Borrower contained
in this Agreement are correct on and as of the date of the Advance, before and
after giving effect to the Advance and to the use of the proceeds thereof, as
though made on and as of such date, and
(ii) No event has occurred and is continuing, or would result
from the Advance or from the use of the proceeds thereof, which constitutes an
Event of Default (as defined in Section 5.01 hereof) or would constitute an
Event of Default but for the requirement that notice be given or time elapse or
both;
and (b) the Lender shall have received such approvals, opinions or documents as
the Lender may reasonably request.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Borrower
represents and warrants as follows as of each of the date hereof, the Effective
Date, the date of each Borrower request for any Additional Advance and the date
of each Advance:
(a) The Borrower is a corporation duly incorporated, validly existing
and in good standing under the laws of Delaware.
(b) The execution, delivery and performance by the Borrower of this
Agreement are within the Borrower's corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene
(i) the Borrower's charter or by-laws or (ii) any law or any contractual
restriction binding on or affecting the Borrower.
(c) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is
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required for the due execution, delivery and performance by the Borrower
of this Agreement.
(d) There are no conditions precedent to the effectiveness of this
Agreement as against Borrower that have not been satisfied or waived.
ARTICLE IV
COVENANTS OF THE BORROWER
SECTION 4.01. AFFIRMATIVE COVENANTS. So long as any 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 "Obligations") shall remain unpaid or the Lender shall have
any Commitment hereunder, the Borrower will, unless the Lender shall
otherwise consent in writing:
(a) COMPLIANCE WITH LAWS, ETC. Comply in all material respects
with all applicable laws, rules, regulations and orders, such compliance
to include, without limitation, paying before the same become delinquent
all taxes, assessments and governmental charges imposed upon it or upon
its property except to the extent contested in good faith.
(b) USE OF PROCEEDS. Use the proceeds of all Advances solely for
funding settlement of the PNI Case and working capital purposes of the
Borrower.
SECTION 4.02. NEGATIVE COVENANTS. So long as any Obligations shall
remain unpaid or the Lender shall have any Commitment hereunder, the
Borrower will not, without the written consent of the Lender:
(a) LIENS, ETC. Create or suffer to exist any lien, security
interest or other charge or encumbrance, or any other type of
preferential arrangement (collectively, "Liens"), upon or with respect
to any of its properties,
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whether now owned or hereafter acquired, or assign any right to receive
income, in each case to secure or provide for the payment of any Debt
(as defined in subsection (b) of this Section 4.02) of any person or
entity, other than (i) Liens securing Debt arising under agreements or
facilities now in effect or replacements or refundings thereof PROVIDED
such replacements or refundings are on terms and conditions reasonably
acceptable to Lender, (ii) additional Liens securing Debt in the
aggregate amount of not more than $400,000 or (iii) Liens solely
securing obligations of the Borrower to the Lender.
(b) DEBT. "DEBT" means (i) indebtedness for borrowed money, (ii)
obligations evidenced by bonds, debentures, notes or other similar
instruments, (iii) obligations to pay the deferred purchase price of
property or services, (iv) obligations as lessee under leases which
shall have been or should be, in accordance with generally accepted
accounting principles, recorded as capital leases, and (v) obligations
under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise
to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clause (i) through
(iv) above.
(c) LEASE OBLIGATIONS. Create or suffer to exist any obligations
for the payment of rental for any property under leases or agreements to
lease having a term of one year or more which would cause the direct or
contingent liabilities of the Borrower in respect of all such
obligations to exceed $600,000 payable in any period of 12 consecutive
calendar months.
(d) SUBSIDIARIES. Form, or acquire any interest in, any
subsidiary.
ARTICLE V
EVENTS OF DEFAULT
SECTION 5.01. EVENTS OF DEFAULT. If any of the following events
("Events of Default") shall occur and be continuing:
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(a) The Borrower shall fail to pay any principal of, or interest
on, any Advance within five (5) Business Days after the same becomes due
and payable; or
(b) Any representation or warranty made by the Borrower herein or
by the Borrower (or any of its officers) in connection with this
Agreement shall prove to have been incorrect in any material respect
when made; or
(c) The Borrower shall fail to perform or observe any material
term, covenant or agreement contained in this Agreement (other than
those specified in Section 5.01(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
Lender; or
(d) The Borrower shall fail to pay any principal of or premium or
interest on any Debt (as defined in Section 4.02(b)) (but excluding Debt
evidenced hereby) of the Borrower, when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), and such failure shall continue after the
applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; or any other event shall occur or
condition shall exist under any agreement or instrument relating to any
such Debt and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event
or condition is to accelerate, or to permit the acceleration of, the
maturity of such Debt; or any such Debt shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled
required prepayment), redeemed, purchased or defeased, or an offer to
prepay, redeem, purchase or defease such Debt shall be required to be
made, in each case prior to the stated maturity thereof UNLESS such
failure is cured prior to notice to Borrower by Lender thereof; or
(e) 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,
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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 (e); or
(f) This Agreement shall at any time fail to be the legal, valid
and binding obligations of the Borrower enforceable against the Borrower
in accordance with its terms in any material respect, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium and other
laws of general application relating to or affecting the enforcement of
creditors' rights and the exercise of judicial discretion in accordance
with general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law); or
(g) Any balance sheet of the Borrower included in any of
Borrower's filings with the Securities and Exchange Commission filed on
or after January 1, 1999 ("SEC Filings") and the related statements of
income and retained earnings of the Borrower for the applicable fiscal
period shall, in any material respect, fail to fairly represent the
financial condition of the Borrower as at the date thereof and the
results of the operations of the Borrower for the period ended on such
date, all in accordance with generally accepted accounting principles
consistently applied, or since January 1, l999, there has been a
material adverse change in such condition or operations other than the
judgment entered against the Borrower in the PNI Case (defined below)
prior to the date hereof; or
(h) Except for PERFORMANCE NUTRITION, INC., DEBTOR, XXXXXXX X.
XXXX, TRUSTEE, PLAINTIFF VS. XXXXXXX CAPITAL MANAGEMENT, INC., ET. AL
(U.S.B.C.N.D.T.), case No. 97-30566-HCA-7 ; Ad. No.397-3452 (the "PNI
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Case"), there is at any time a pending action or proceeding affecting the
Borrower before any court, governmental agency or arbitrator which, if
adversely determined, would materially and adversely affect the
financial condition or operations of the Borrower, or which purports to
affect the legality, validity or enforceability of this Agreement, which
action or proceeding is not withdrawn or dismissed within sixty (60)
days of the commencement thereof; or
(i) A judgment or order for the payment of money in excess of
$100,000 is at any time rendered against the Borrower other than the
judgment entered against the Borrower in the PNI Case prior to the date
hereof, regardless of whether enforcement proceedings shall have been
commenced by any creditor upon such judgment or order UNLESS there shall
be any stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise; or
(j) Any of the representations and warranties of Borrower
contained in this Agreement or otherwise made by the Borrower to the
Lender, or the statements and information contained in the SEC Filings,
contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and information
contained in this Agreement or such SEC Filing not misleading at the
time such representation or warranty is made or such SEC Filing is
filed;
THEN, and in any such event, the Lender (i) may, by notice to the Borrower,
declare its obligation to make or consider making Advances to be terminated,
whereupon the same shall forthwith terminate, and (ii) may, by notice to the
Borrower, declare the Advance, all interest thereon and all other amounts
payable under this Agreement to be forthwith due and payable, whereupon the
Advance, 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 to make Advances shall automatically be terminated and
(B) the Advance 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.
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ARTICLE VI
CONVERSION
SECTION 6.01. LENDER'S RIGHT TO CONVERT. Without limitation to any
other right or remedy Lender may have under this Agreement, applicable law,
or otherwise, the Lender may at any time, by notice to the Borrower in
accordance with Section 8.02, convert all or any part of the Advances and
other Obligations into common stock of the Borrower ("Common Stock") at a
conversion price equal to the lower of (i) $0.75 per share (as adjusted in
accordance with Section 6.02 below, the "Maximum Conversion Price") or (b)
the Fair Market Value of the Borrower's common stock determined with respect
to the date of such notice. Upon Borrower's receipt of such notice, Borrower
shall immediately issue shares of common stock to the Lender as provided in
such notice. Upon such issuance the amount of the Obligations shall be
reduced by the amount applied to such conversion. Shares of Common Stock
which may be obtained by the Lender pursuant to its conversion rights under
this Agreement are referred to herein as "Shares".
"Fair Market Value" means, with respect to any date of determination,
the average closing price of the Common Stock on the principal market or the
facilities of the NASDAQ Bulletin Board (or if the Common Stock shall then be
listed on the NASDAQ National Market or other national exchange, such
exchange) for the thirty 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 Common Stock is not listed on an exchange or
on the facilities of NASDAQ National Market or the NASDAQ Bulletin Board, the
average of the closing bid and cash prices for the thirty trading days prior
to such date of determination).
SECTION 6.02 ADJUSTMENTS OF MAXIMUM CONVERSION PRICE. In the event of
any change in the Common Stock by reason of any stock dividend,
recapitalization, reorganization, merger, consolidation, split-up,
combination, or exchange of shares (collectively, "Dilution Events"), in each
case occurring after the date hereof, the Maximum Conversion Price shall be
adjusted automatically and without the act of the Borrower or any other
person, so that the percentage of all of the Borrower's outstanding Common
Stock (as determined on a fully diluted basis) which may be acquired after
the Dilution Event for the Maximum Conversion Price is the same following
such Dilution Event as it was immediately preceding such Dilution Event;
PROVIDED, HOWEVER, anything to the contrary appearing herein notwithstanding,
this Section 6.02 shall in no event apply to any Dilution Event arising on
account of the Borrower's
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satisfaction of obligations existing before the date of this Agreement,
including, without limitation, the Borrower's issuance of Shares pursuant to
exercise of any options or contract rights outstanding on the date hereof.
SECTION 6.03 NO RIGHTS AS SHAREHOLDERS. Neither the Lender nor any
transferee thereof shall be, or have any rights or privileges of, a shareholder
of the Borrower concerning the Shares, unless, until and to the extent such
Shares have been issued upon due exercise of Lender's conversion rights in
accordance with this Agreement.
SECTION 6.04 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 (including, without
limitation the anti-dilution provisions of Section 6.02 hereof) and, upon
exercise of its conversion rights under this Agreement , the Lender shall, at
no additional cost, be entitled to receive, in lieu of the number of Shares
which may be obtained by the Lender pursuant to its conversion rights under
this Agreement, the number and class of shares of stock or other
consideration to which the Lender would have been entitled pursuant to the
terms of the merger, consolidation or acquisition if immediately prior
thereto the Lender had been the Lender of record of the number of shares of
Common Stock equal to the number of Shares which may be obtained by the
Lender pursuant to its conversion rights under this Agreement.
ARTICLE VII
REGISTRATION RIGHTS
SECTION 7.01 REGISTRATION OF THE SHARES. The Borrower agrees that it
will, within a reasonable time after the later to occur of (a) the date on
which Borrower shall be eligible to register its stock on Form S-3 (or the
then equivalent form) and (b) Lender's written notice to Borrower requesting
registration of the Shares under this Section 7.01 and stating that
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Lender it is Lender's good faith belief that it may wish to exercise rights
hereunder within a reasonable time following such notice; PROVIDED, that the
giving of any such notice shall impose no obligation on Lender to exercise
its conversion rights, register at the Borrower's expense on Form S-3 (or the
then equivalent form) (the "S-3 Registration"), and maintain at all times the
effectiveness of such S-3 Registration of the Shares, so that such Shares may
be publicly sold by the Lender and transferees thereof. During any period in
which the S-3 Registration of the Shares is not effective, or if it is
determined by the Borrower that Form S-3 (or the then equivalent form) is not
available under applicable rules to effect the registration of the Shares for
resale, then at any time the Borrower proposes to file a registration
statement to register securities under the Securities Act of 1933, as amended
("1933 Act"), it shall, at least 30 days prior to each such filing, give
written notice of such proposed filing to the Lender, each transferee thereof
and each Lender of Shares at their respective addresses as they appear on the
records of the Borrower, and shall offer to include and shall include in such
filing any proposed disposition of the Shares, upon receipt by the Borrower,
not less than 10 days prior to the proposed filing date, of a request
therefor setting forth the facts with respect to such proposed disposition
and all other requested information with respect to such person reasonably
necessary to be included in such Registration Statement (the "Request
Securities"). In the event that the managing underwriter for said offering
advises the Borrower in writing that the inclusion of all or any portion of
such Request Securities in the offering would be detrimental to the offering,
or that the disposition of all or a portion of the Request Securities should
be held back for a period of not more than 90 days following the
effectiveness of such registration statement, such Request Securities shall
not be included in the Registration Statement, or shall be held back, as the
case may be, provided that if any securities held by persons with similar
rights (a) are to be included in the Registration Statement, the Request
Securities shall be included on a pro rata basis and (b) are not to be held
back, the Request Securities shall not be held back on a pro rata basis.
Until such registration, the Lender understands that the Shares are
restricted securities subject to the provisions of this Agreement.
SECTION 7.02. REPRESENTATIONS BY LENDER. (a) The 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, and (iii) is able to bear
the economic risk in the Securities, (iv) is an accredited investor as defined
under Rule 501 of the 1933 Act.
(b) By entering into this Agreement, the Lender acknowledges that any
and all Shares purchased under this Agreement shall be acquired for investment
and not for
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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
agrees (if the issuance of the Shares under this Agreement has not previously
been registered under the 0000 Xxx) to execute a certificate to such effect
at the time of such conversion; and the Lender 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 understands that the certificates
evidencing such Shares will (if the sale of the Shares has not previously
been registered under the 0000 Xxx) 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 acknowledges and understands that the Lender may have
to bear the economic risk associated with the purchase 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.
ARTICLE VIII
MISCELLANEOUS
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
instance and for the specific purpose for which given.
SECTION 8.02. NOTICES, ETC. All notices and other communications provided
for hereunder shall be in writing (including telecopier communication) and
mailed, telecopied or delivered, if to the Borrower, at its address at
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NATURADE, INC.
00000 Xxxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: President
Fax: 000-000-0000
with a copy to:
CASE, XXXXXXXX, XXXXXXX & XXXXXX LLP
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xx Xxxxxxx, Esq.
Fax: 000-000-0000
and if to the Lender, at its address at:
HEALTH HOLDINGS AND BOTANICALS, INC.
c/o Doyle & Xxxxxxxxx LLC
000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000;
with a copy to:
CHRISTENSEN, MILLER, FINK, JACOBS,
XXXXXX, WEIL & XXXXXXX, LLP
2121 Avenue of the Stars
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. XxXxxxx, Esq.
Fax: 000-000-0000
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.
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SECTION 8.03. NO WAIVER; REMEDIES. No failure on the part of the Lender 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.
SECTION 8.04. 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 financial
statements referred to in Section 3.01(e). The term "to the best knowledge of"
means, when modifying a representation, warranty or other statement of any
person, that the fact or situation described therein is known by the person or,
in the case a person other than a natural person, known by a director, officer
or consultant of such person, or with the exercise of reasonable due diligence
under the circumstances (in accordance with the standard of what a reasonable
person in similar circumstances would have done) would have been known by the
person or director, officer or consultant. As used herein the term "including"
shall be construed to mean "including, without limitation", unless expressly
stated to the contrary.
SECTION 8.05. COSTS, EXPENSES AND TAXES.
(a) The Borrower agrees to pay on demand all reasonable 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 Lender with
respect thereto and with respect to advising the Lender as to its rights and
responsibilities under this Agreement. The Borrower further agrees to pay on
demand all reasonable 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 8.05(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 Lender harmless
from and against any and all liabilities with respect to or resulting from
any delay in paying or omission to pay such taxes.
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(b) The Borrower agrees to indemnify the Lender 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 Lender's gross
negligence or willful misconduct as determined by a final judgment of a court
of competent jurisdiction.
(c) The Borrower will upon demand pay to the Lender 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 Lender 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 any collateral, (iii) the exercise or enforcement of
any of the rights of the Lender hereunder or (iv) the failure by the Borrower
to perform or observe any of the provisions hereof.
SECTION 8.06. RIGHT OF SET-OFF. Upon the occurrence and during the
continuance of any Event of Default the Lender 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 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 shall have
made any demand under this Agreement and although such obligations may be
unmatured. The Lender 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 under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the Lender may
have.
SECTION 8.07. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the Borrower and the Lender 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. Without limitation to any other right of Lender,
Lender may sell participations in this Agreement to third parties in such
amounts and on such terms and conditions as Lender shall determine in its
sole and complete discretion.
SECTION 8.08. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California.
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SECTION 8.09. 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.
SECTION 8.10 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 by Lender of an effective consent of South Bay Bank
to this Agreement and the transactions contemplated hereby in form and substance
satisfactory to Lender (such date of effectiveness is referred to herein as the
"Effective Date").
SECTION 8.11. ARBITRATION; LOCATION OF ACTIONS. All claims, actions
or disputes arising out of or relating to this Agreement or the transactions
contemplated hereby (collectively, "Disputes") including any Disputes
concerning the construction, validity, performance, and interpretation of
this Section or any other provision of this Agreement, shall be exclusively
resolved by arbitration pursuant to the Federal Arbitration Act, as provided
below. Either party hereto may elect to compel arbitration of any Dispute by
notifying the other party hereto of such election. Each Dispute shall be
promptly adjudicated by a panel of three arbitrators. Each party shall each
select an arbitrator for such panel within ten (10) Business Days of the date
of the notice of election to compel arbitration described above. The two
arbitrators so selected shall immediately meet and attempt to appoint a third
arbitrator, who shall be of good reputation and character. If the two
arbitrators shall not have appointed such third arbitrator within thirty (30)
days of the date of the notice of election to compel arbitration described
above, either party hereto may elect to cause such third arbitrator to be
appointed by a California office of the American Arbitration Association, as
soon as practicable. Arbitration shall be conducted by such panel in Los
Angeles, California, pursuant to the commercial rules of the American
Arbitration Association. The arbitration panel shall meet to consider the
Dispute within ten business days of the appointment of its three members, and
shall endeavor to resolve and adjudicate such Dispute in not more than ninety
(90) days after its first meeting. Costs, fees and expenses of the
arbitrators and the American Arbitration Association shall be paid by the
non-prevailing party to such Dispute. Without limitation of any other right
or power of the arbitration panel, such panel shall have the right and power
to grant remedies in the form of an order for specific performance or other
equitable relief. The parties hereby submit exclusively to the jurisdiction
of the Courts of the State of California, and the Federal Courts of the
United States, located in Los Angeles County in any action to compel
arbitration hereunder or to enforce any order, decision or judgment of the
arbitrators. If either party hereto commences any action or proceeding
against the other to enforce any of
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the terms hereof, or to recover damages for or prevent the breach of this
Agreement, including any arbitration proceedings, the prevailing party shall
be entitled to recover such party's reasonable attorneys' fees, costs of
investigation and costs of suit incurred in connection with said action or
proceeding.
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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: /s/ Xxxx X. Xxxxxxx /s/ Xxxxxxxx X. Xxxxxx
------------------------- -------------------------
Title: CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER
HEALTH HOLDINGS AND
BOTANICALS, INC.
By /s/ Xxxxxx X. Boisseire, Jr.
-----------------------------
Title: PRESIDENT
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