Exhibit 10.1

 

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Credit Agreement

 

 

 

dated as of February 28, 2014,

 

 

among

 

 

Reliv’ International, Inc.,

 

 

Reliv’, Inc.,

 

 

Reliv’ World Corporation, and

 

 

SL Technology, Inc., as Borrowers

 

 

and

 

 

BMO Harris Bank N.A.

 

 

 

 

 

 

 

 

SECTION 1.    Table of Contents

 

SECTION 1. DEFINITIONS; INTERPRETATION. 1         Section 1.1 Definitions 1  
Section 1.2 Interpretation 11   Section 1.3 Change in Accounting Principles.. 11
        SECTION 2. The Credit Facilities. 12         Section 2.1 Term Loan
Commitment.. 12   Section 2.2 Revolving Credit Commitment.. 12   Section 2.3
Letters of Credit. 12   Section 2.4 Applicable Interest Rates. 12   Section 2.5
Minimum Borrowing Amounts; Maximum Fixed Rate Loans.. 13   Section 2.6 Manner of
Borrowing Loans and Designating Applicable Interest Rates. 13   Section 2.7
Maturity of Loans. 13   Section 2.8 Prepayments. 14   Section 2.9 Default Rate.
16   Section 2.10 Evidence of Indebtedness. 16   Section 2.11 Fees 17   Section
2.12 Place and Application of Payments.. 17   Section 2.13 Commitment
Terminations. 17         SECTION 3. CHANGE IN CIRCUMSTANCES. 17         Section
3.1 Withholding Taxes 17   Section 3.2 Documentary Taxes.. 18   Section 3.3
Funding Indemnity. 18   Section 3.4 Change of Law.. 18   Section 3.5
Unavailability of Deposits or Inability to Ascertain, or Inadequacy of, LIBOR.
18   Section 3.6 Increased Cost and Reduced Return. 18   Section 3.7 Lending
Offices 19   Section 3.8 Discretion of Bank as to Manner of Funding.. 19        
SECTION 4. CONDITIONS PRECEDENT. 19   Section 4.1 Initial Credit Event 19  
Section 4.2 All Credit Events 21         SECTION 5. REPRESENTATIONS AND
WARRANTIES. 22         Section 5.1 Organization and Qualification.. 22   Section
5.2 Subsidiaries 22   Section 5.3 Authority and Validity of Obligations 23  
Section 5.4 Use of Proceeds; Margin Stock.. 23

 

 

2

 

 

  Section 5.5 Financial Reports.. 24   Section 5.6 No Material Adverse Change.
24   Section 5.7 Full Disclosure. 24   Section 5.8 Trademarks, Franchises, and
Licenses.. 24   Section 5.9 Governmental Authority and Licensing.. 24   Section
5.10 Good Title.. 25   Section 5.11 Litigation and Other Controversies.. 25  
Section 5.12 Taxes. 25   Section 5.13 Approvals.. 25   Section 5.14 Affiliate
Transactions.. 25   Section 5.15 Investment Company. 25   Section 5.16 ERISA. 25
  Section 5.17 Compliance with Laws. 26   Section 5.18 OFAC 26   Section 5.19
Other Agreements.. 27   Section 5.20 Solvency. 27   Section 5.21 No Default. 27
  Section 5.22 No Broker Fees.. 27         SECTION 6. AFFIRMATIVE COVENANTS. 27
        Section 6.1 Maintenance of Business.. 27   Section 6.2 Maintenance of
Properties.. 27   Section 6.3 Taxes and Assessments. 28   Section 6.4 Insurance.
28   Section 6.5 Financial Reports 29   Section 6.6 Inspection. 30   Section 6.7
ERISA.. 31   Section 6.8 Compliance with Laws. 31   Section 6.9 Compliance with
OFAC Sanctions Programs. 32   Section 6.10 Formation of Subsidiaries 32  
Section 6.11 Use of Proceeds; Margin Stock.. 32   Section 6.12 Guaranties and
Collateral 33         SECTION 7. NEGATIVE COVENANTS. 34         Section 7.1
Borrowings and Guaranties. 34   Section 7.2 Liens 35   Section 7.3 Investments,
Acquisitions, Loans and Advances 36   Section 7.4 Mergers, Consolidations and
Sales. 37   Section 7.5 Maintenance of Subsidiaries. 37   Section 7.6 Dividends
and Certain Other Restricted Payments 37   Section 7.7 Burdensome Contracts With
Affiliates 37   Section 7.8 No Changes in Fiscal Year 38   Section 7.9 Change in
the Nature of Business 38   Section 7.10 No Restrictions.. 38   Section 7.11
Subordinated Debt. 38

 

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  Section 7.12 Financial Covenants 38         SECTION 8. EVENTS OF DEFAULT AND
REMEDIES. 39         Section 8.1 Events of Default 39   Section 8.2 Non
Bankruptcy Defaults.. 40   Section 8.3 Bankruptcy Defaults.. 41   Section 8.4
Collateral for Undrawn Letters of Credit. 41         SECTION 9. MISCELLANEOUS.
41         Section 9.1 No Waiver, Cumulative Remedies.. 41   Section 9.2
Non-Business Days 41   Section 9.3 Survival of Representations. 41   Section 9.4
Survival of Indemnity and Certain Other Provisions. 41   Section 9.5 Notices 42
  Section 9.6 Counterparts 42   Section 9.7 Successors and Assigns 42   Section
9.8 Amendments, etc. 42   Section 9.9 Headings. 43   Section 9.10 Costs and
Expenses; Indemnification 43   Section 9.11 Set off.. 44   Section 9.12 Entire
Agreement. 44   Section 9.13 Governing Law.. 45   Section 9.14 Severability of
Provisions. 45   Section 9.15 Excess Interest 45   Section 9.16 Construction 46
  Section 9.17 Submission to Jurisdiction; Waiver of Venue; Service of Process.
46   Section 9.18 Waiver of Jury Trial.. 47   Section 9.19 USA Patriot Act. 47  
Section 9.20 Confidentiality 47        

 

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CREDIT AGREEMENT

 

This Credit Agreement is entered into as of February 28, 2014, by and among
Reliv’ International, Inc., a Delaware corporation, Reliv’, Inc., an Illinois
corporation, Reliv’ World corporation, an Illinois corporation, and SL
Technologies, Inc., a Missouri corporation (each a “Borrower” and collectively,
“Borrowers”), and BMO Harris Bank N.A., a national banking association (“Bank”).
All capitalized terms used herein without definition shall have the meanings
ascribed thereto in Section 1.1.

 

PRELIMINARY STATEMENT

 

Borrowers have requested, and Bank has agreed to extend, certain credit
facilities on the terms and conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the mutual agreements contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:

 

SECTION 1. DEFINITIONS; INTERPRETATION.

 

Section 1.1 Definitions. The following terms when used herein shall have the
following meanings:

 

“Account Debtor” means any Person obligated to make payment on any Receivable.

 

“Affiliate” means any Person directly or indirectly controlling or controlled
by, or under direct or indirect common control with, another Person. A Person
shall be deemed to control another Person for purposes of this definition if
such Person possesses, directly or indirectly, the power to direct, or cause the
direction of, the management and policies of the other Person, whether through
the ownership of voting securities, common directors, trustees or officers, by
contract or otherwise; provided that, in any event for purposes of this
definition, any Person that owns, directly or indirectly, 5% or more of the
securities having the ordinary voting power for the election of directors or
governing body of a corporation or 5% or more of the partnership or other
ownership interest of any other Person (other than as a limited partner of such
other Person) will be deemed to control such corporation or other Person.

 

“Agreement” means this Credit Agreement, as the same may be amended, modified,
restated or supplemented from time to time pursuant to the terms hereof.

 

“Application” is defined in Section 2.3(b).

 

“Authorized Representative” means those persons shown on the list of officers
provided by Borrowers pursuant to Section 4.2 or on any update of any such list
provided by any Borrower to Bank, or any further or different officers of any
Borrower so named by any Authorized Representative of such Borrower in a written
notice to Bank.

 

 

 

 

 

“Bank” is defined in the introductory paragraph of this Agreement.

 

 

“Borrower” is defined in the introductory paragraph of this Agreement and
“Borrowers” shall mean all of them.

 

“Borrowing” means the total of Loans of a single type advanced by Bank under a
Credit on a single date. A Borrowing is “advanced” on the day Bank advances
funds comprising such Borrowing to Borrowers, as determined pursuant to Section
2.6.

 

“Business Day” means any day (other than a Saturday or Sunday) on which banks
are not authorized or required to close in Chicago, Illinois and, if the
applicable Business Day relates to the advance or continuation of, or conversion
into, or payment of a Eurodollar Loan, on which banks are dealing in U.S. Dollar
deposits in the interbank eurodollar market in London, England and Nassau,
Bahamas.

 

“Capital Expenditures” means, with respect to any Person for any period, the
aggregate amount of all expenditures (whether paid in cash or accrued as a
liability) by such Person during that period for the acquisition or leasing
(pursuant to a Capital Lease) of fixed or capital assets or additions to
property, plant, or equipment (including replacements, capitalized repairs, and
improvements) which should be capitalized on the balance sheet of such Person in
accordance with GAAP.

 

“Capital Lease” means any lease of Property which in accordance with GAAP is
required to be capitalized on the balance sheet of the lessee.

 

“Capitalized Lease Obligation” means, for any Person, the amount of the
liability shown on the balance sheet of such Person in respect of a Capital
Lease determined in accordance with GAAP.

 

“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. §§9601 et seq., and any future
amendments.

 

“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (i) the adoption or taking effect of any law, rule, regulation
or treaty, (ii) any change in any law, rule, regulation or treaty or in the
administration, interpretation or application thereof by any Governmental
Authority or (iii) the making or issuance of any request, guideline or directive
(whether or not having the force of law) by any Governmental Authority; provided
that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall
Street Reform and Consumer Protection Act and all requests, rules, guidelines or
directives thereunder or issued in connection therewith and (y) all requests,
rules, guidelines or directives promulgated by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any successor or
similar authority) or the United States or foreign regulatory authorities, in
each case pursuant to Basel III, shall in each case be deemed to be a “Change in
Law”, regardless of the date enacted, adopted or issued.

 

2

 

 

“Change of Control” means any of (a) Reliv’ International, Inc. ceases to own,
legally and beneficially, 100% of the equity interests of each of Reliv’, Inc.,
Reliv’ World Corporation and SL Technology, Inc., (b) Reliv’ International, Inc.
fails to have the right to appoint a majority of the board of directors (or
similar governing body) of Reliv’, Inc. or Reliv’ World Corporation, (c) the
failure of individuals who are members of the board of directors (or similar
governing body) of Reliv’ International, Inc. on the Closing Date (together with
any new or replacement directors whose initial nomination for election was
approved by a majority of the directors who were either directors on the Closing
Date or previously so approved) to constitute a majority of the board of
directors (or similar governing body) of Reliv’ International, Inc., (d) or the
failure of Robert Montgomery to own legally or beneficially, 20% of the equity
interest of Reliv International, Inc., (e) any “Change of Control” (or words of
like import), as defined in any agreement or indenture relating to any issue of
Indebtedness for Borrowed Money of any Borrower or any Subsidiary of any
Borrower shall occur. Notwithstanding the foregoing, Change of Control shall not
mean the transfer of ownership for the sole purpose of estate planning purposes.

 

“Closing Date” means the date of this Agreement or such later Business Day upon
which each condition described in Section 4.2 shall be satisfied or waived in a
manner acceptable to Bank in its discretion.

 

“Code” means the Internal Revenue Code of 1986, as amended, and any successor
statute thereto.

 

“Collateral” means all properties, rights, interests, and privileges from time
to time subject to the Liens granted to Bank, or any security trustee therefor,
by the Collateral Documents.

 

“Collateral Account” is defined in Section 8.4(b).

 

“Collateral Documents” means the Mortgages, the Security Agreement, the Pledge
Agreement, and all other mortgages, deeds of trust, security agreements, pledge
agreements, assignments, financing statements and other documents as shall from
time to time secure or relate to the Obligations or any part thereof.

 

“Commitments” means the Revolving Credit Commitment and the Term Loan
Commitments.

 

“Controlled Group” means all members of a controlled group of corporations and
all trades or businesses (whether or not incorporated) under common control
which, together with any or all Borrowers, are treated as a single employer
under Section 414 of the Code.

 

“Credit” means any of the Revolving Credit or the Term Credit.

 

“Credit Event” means the advancing of any Loan, or the issuance of, or extension
of the expiration date or increase in the amount of, any Letter of Credit.

 

“Default” means any event or condition the occurrence of which would, with the
passage of time or the giving of notice, or both, constitute an Event of
Default.

 

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“Disposition” means the sale, lease, conveyance or other disposition of
Property, other than sales or other dispositions expressly permitted under
Sections 7.4(a), 7.4(b), or 7.4(c).

 

“Domestic Subsidiary” means a Subsidiary that is not a Foreign Subsidiary.

 

“EBITDA” means, with reference to any period, Net Income for such period plus
all amounts deducted in arriving at such Net Income amount in respect of (a)
Interest Expense for such period, (b) federal, state, and local income taxes for
such period, and (c) depreciation of fixed assets and amortization of intangible
assets for such period.

 

“Environmental Claim” means any investigation, notice, violation, demand,
allegation, action, suit, injunction, judgment, order, consent decree, penalty,
fine, lien, proceeding or claim (whether administrative, judicial or private in
nature) arising (a) pursuant to, or in connection with an actual or alleged
violation of, any Environmental Law, (b) in connection with any Hazardous
Material, (c) from any abatement, removal, remedial, corrective or response
action in connection with a Hazardous Material, Environmental Law or order of a
Governmental Authority or (d) from any actual or alleged damage, injury, threat
or harm to health, safety, natural resources or the environment.

 

“Environmental Law” means any current or future Legal Requirement pertaining to
(a) the protection of health, safety and the indoor or outdoor environment, (b)
the conservation, management or use of natural resources and wildlife, (c) the
protection or use of surface water or groundwater, (d) the management,
manufacture, possession, presence, use, generation, transportation, treatment,
storage, disposal, Release, threatened Release, abatement, removal, remediation
or handling of, or exposure to, any Hazardous Material or (e) pollution
(including any Release to air, land, surface water or groundwater), and any
amendment, rule, regulation, order or directive issued thereunder.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
or any successor statute thereto.

 

“Eurodollar Loan” means a Loan bearing interest at the rate specified in Section
2.4(b).

 

“Eurodollar Reserve Percentage” means the maximum reserve percentage, expressed
as a decimal, at which reserves (including any emergency, marginal, special, and
supplemental reserves) are imposed by the Board of Governors of the Federal
Reserve System (or any successor) on “eurocurrency liabilities”, as defined in
such Board’s Regulation D (or any successor thereto), subject to any amendments
of such reserve requirement by such Board or its successor, taking into account
any transitional adjustments thereto. For purposes of this definition, the
relevant Loans shall be deemed to be “eurocurrency liabilities” as defined in
Regulation D without benefit or credit for any prorations, exemptions or offsets
under Regulation D. The Eurodollar Reserve Percentage shall be adjusted
automatically on and as of the effective date of any change in any such reserve
percentage.

 

“Event of Default” means any event or condition identified as such in Section
8.1.

 

 

4

 

 

“Event of Loss” means, with respect to any Property, any of the following: (a)
any loss, destruction or damage of such Property or (b) any condemnation,
seizure, or taking, by exercise of the power of eminent domain or otherwise, of
such Property, or confiscation of such Property or the requisition of the use of
such Property.

 

“Fixed Charges” means, with reference to any period, the sum of (a) all payments
of principal made or to be made during such period with respect to Indebtedness
for Borrowed Money of each Borrower (excluding prepayments of the Term Loan),
(b) Interest Expense for such period and (c) unfinanced payments of principal
made during such period with respect to the Technology Licensing Agreement and
excluding any payments of principal made or scheduled to be made in respect of
the Technology Licensing Agreement during the year 2013, provided that, Fixed
Charges shall not include any principal, interest or other payment made in
repayment of the seller’s financing of approximately $223,645 of the purchase
price pertaining to that certain acquisition by Reliv International, Inc. of a
distributorship on or about August 2009.

 

“Foreign Subsidiary” means each Subsidiary which (a) is organized under the laws
of a jurisdiction other than the United States of America or any state thereof
or the District of Columbia, (b) conducts substantially all of its business
outside of the United States of America, and (c) has substantially all of its
assets outside of the United States of America.

 

“GAAP” means generally accepted accounting principles set forth from time to
time in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.

 

“Governmental Authority” means the government of the United States of America or
any other nation, or of any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government (including any supra-national bodies such as the European Union or
the European Central Bank).

 

“Hazardous Material” means any substance, chemical, compound, product, solid,
gas, liquid, waste, byproduct, pollutant, contaminant or material which is
hazardous or toxic, and includes (a) asbestos, polychlorinated biphenyls and
petroleum (including crude oil or any fraction thereof) and (b) any material
classified or regulated as “hazardous” or “toxic” or words of like import
pursuant to an Environmental Law.

 

“Hazardous Material Activity” means any activity, event or occurrence involving
a Hazardous Material, including the manufacture, possession, presence, use,
generation, transportation, treatment, storage, disposal, Release, threatened
Release, abatement, removal, remediation, handling of or corrective or response
action to any Hazardous Material.

 

“Indebtedness for Borrowed Money” means for any Person (without duplication) (a)
all indebtedness created, assumed or incurred in any manner by such Person
representing money borrowed (including by the issuance of debt securities), (b)
all indebtedness for the deferred purchase price of property or services (other
than trade accounts payable arising in the ordinary course of business which are
not more than ninety (90) days past due), (c) all indebtedness secured by any
Lien upon Property of such Person, whether or not such Person has assumed or
become liable for the payment of such indebtedness, (d) all Capitalized Lease
Obligations of such Person, (e) all obligations of such Person on or with
respect to letters of credit, bankers’ acceptances and other extensions of
credit whether or not representing obligations for borrowed money, and (f) the
Swap Termination Value under any Swap Contract; provided that, this definition
shall exclude obligations of each Borrower or any Subsidiary arising out of
insurance premium finance agreements entered into with financial institutions in
connection with bona fide insurance premium financing activities in the ordinary
course of business.

 

5

 

 

“Interest Expense” means, with reference to any period, the sum of all interest
charges (including imputed interest charges with respect to Capitalized Lease
Obligations and all amortization of debt discount and expense) of each Borrower
and its Subsidiaries for such period determined on a consolidated basis in
accordance with GAAP.

 

“Legal Requirement” means any treaty, convention, statute, law, regulation,
ordinance, license, permit, governmental approval, injunction, judgment, order,
consent decree or other requirement of any Governmental Authority, whether
federal, state, or local.

 

“Letter of Credit” is defined in Section 2.3(a).

 

“LIBOR Rate” means the one-month London Interbank Offered Rate (LIBOR) as
reported on Bloomberg Financial Market’s terminal screen entitled “Official BBA
LIBOR Fixings” as reported on the first (1st) Business Day of each month unless
such rate is no longer available or published, in which case such rate shall be
at a comparable index rate selected by Lender with notice to Borrowers. Bank
shall determine the interest rate applicable to the Loans based on the
foregoing, and its determination thereof shall be conclusive and binding except
in the case of manifest error. The interest rate payable under this Agreement
shall be subject, however, to the limitation that such interest rate shall never
exceed the highest rate which the Borrower may contract to pay under applicable
law.

 

 

“Lien” means any mortgage, lien, security interest, pledge, charge or
encumbrance of any kind in respect of any Property, including the interests of a
vendor or lessor under any conditional sale, Capital Lease or other title
retention arrangement.

 

“Loan” means any Revolving Loan or Term Loan.

 

“Loan Documents” means this Agreement, the Notes (if any), the Applications, the
Collateral Documents, the Guaranties, and each other instrument or document to
be delivered hereunder or thereunder or otherwise in connection therewith.

 

“Material Adverse Effect” means (a) a material adverse change in, or material
adverse effect upon, the operations, business, Property, condition (financial or
otherwise) or prospects of any Borrower or of any Borrower and its Subsidiaries
taken as a whole, (b) a material impairment of the ability of any Borrower or
any Subsidiary to perform its material obligations under any Loan Document or
(c) a material adverse effect upon (i) the legality, validity, binding effect or
enforceability against any Borrower or any Subsidiary of any Loan Document or
the rights and remedies of Bank thereunder or (ii) the perfection or priority of
any Lien granted under any Collateral Document.

 

6

 

 

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“Mortgaged Premises” means the real property of Reliv’ International, Inc.
commonly known as 112 & 136 Chesterfield Industrial Boulevard, Chesterfield,
Missouri, and all buildings and improvements thereon, and all rents, issues, and
profits therefrom.

 

“Mortgages” means, collectively, each Mortgage and Security Agreement with
Assignment of Rents and each Deed of Trust and Security Agreement with
Assignment of Rents between any Borrower or the relevant Subsidiary and Bank
relating to the Mortgaged Premises, and any other mortgages or deeds of trust
delivered to Bank pursuant to Section 6.12(c), as the same may be amended,
modified, supplemented or restated from time to time.

 

“Net Cash Proceeds” means, as applicable, (a) with respect to any Disposition by
a Person, cash and cash equivalent proceeds received by or for such Person’s
account, net of (i) reasonable direct costs relating to such Disposition and
(ii) sale, use or other transactional taxes paid or payable by such Person as a
direct result of such Disposition, (b) with respect to any Event of Loss of a
Person, cash and cash equivalent proceeds received by or for such Person’s
account (whether as a result of payments made under any applicable insurance
policy therefor or in connection with condemnation proceedings or otherwise),
net of reasonable direct costs incurred in connection with the collection of
such proceeds, awards or other payments, and (c) with respect to any offering of
equity securities of a Person or the issuance of any Indebtedness for Borrowed
Money by a Person, cash and cash equivalent proceeds received by or for such
Person’s account, net of reasonable legal, underwriting, and other fees and
expenses incurred as a direct result thereof.

 

“Net Income” means, with reference to any period, the net income (or net loss)
of Borrowers and their Subsidiaries for such period computed on a consolidated
basis in accordance with GAAP; provided that there shall be excluded from Net
Income (a) the net income (or net loss) of any Person accrued prior to the date
it becomes a Subsidiary of, or has merged into or consolidated with, any
Borrower or another Subsidiary, and (b) the net income (or net loss) of any
Person (other than a Subsidiary) in which any Borrower or any of its
Subsidiaries has an equity interest in, except to the extent of the amount of
dividends or other distributions actually paid to such Borrower or any of its
Subsidiaries during such period.

 

“Note” and “Notes” each is defined in Section 2.10(c).

 

“Obligations” means all obligations of each Borrower to pay principal and
interest on the Loans, all fees and charges payable hereunder, and all other
payment obligations of each Borrower or any of their Subsidiaries arising under
or in relation to any Loan Document, in each case whether now existing or
hereafter arising, due or to become due, direct or indirect, absolute or
contingent, and howsoever evidenced, held or acquired.

 

“OFAC” means the United States Department of Treasury Office of Foreign Assets
Control.

 

7

 

 

“OFAC Event” means the event specified in Section 6.9.

 

“OFAC Sanctions Programs” means all laws, regulations, and Executive Orders
administered by OFAC, including the Bank Secrecy Act, anti-money laundering laws
(including the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56 (a/k/a
the USA Patriot Act)), and all economic and trade sanction programs administered
by OFAC, any and all similar United States federal laws, regulations or
Executive Orders, and any similar laws, regulators or orders adopted by any
State within the United States.

 

“OFAC SDN List” means the list of the Specially Designated Nationals and Blocked
Persons maintained by OFAC.

 

“PBGC” means the Pension Benefit Guaranty Corporation or any Person succeeding
to any or all of its functions under ERISA.

 

“Person” means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization or any other entity or
organization, including a government or agency or political subdivision thereof.

 

“Plan” means any employee pension benefit plan covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Code that
either (a) is maintained by a member of the Controlled Group for employees of a
member of the Controlled Group or (b) is maintained pursuant to a collective
bargaining agreement or any other arrangement under which more than one employer
makes contributions and to which a member of the Controlled Group is then making
or accruing an obligation to make contributions or has within the preceding five
plan years made contributions.

 

“Pledge Agreement” means that certain Patent, Trademark and License Security
Agreement dated the date of this Agreement between SL Technology, Inc. and Bank,
as the same may be amended, modified, supplemented or restated from time to time
and that certain Patent, Trademark and License Security Agreement dated the date
of this Agreement between Reliv’ International, Inc. and Bank, as the same may
be amended, modified, supplemented or restated from time to time.

 

“Premises” means the real property owned or leased by any Borrower or any
Subsidiary of such Borrower, including the real property and improvements
thereon owned by such Borrower or any Subsidiary of such Borrower subject to the
Lien of the Mortgages or any other Collateral Documents.

 

“Property” means, as to any Person, all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in the
most recent balance sheet of such Person and its subsidiaries under GAAP.

 

“RCRA” means the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendments
of 1984, 42 U.S.C. §§ 6901 et seq., and any future amendments.

 

8

 

 

 

“Receivables” means all rights to the payment of a monetary obligation, now or
hereafter owing to any Borrower or any Subsidiary of such Borrower, evidenced by
accounts, instruments, chattel paper, or general intangibles.

 

“Reimbursement Obligation” means the obligation of any Borrower to reimburse
Bank for all drawings under a Letter of Credit.

 

“Release” means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, migration, dumping, or disposing
into the indoor or outdoor environment, including the abandonment or discarding
of barrels, drums, containers, tanks or other receptacles containing or
previously containing any Hazardous Material.

 

“Revolving Credit” means the credit facility for making Revolving Loans
described in Sections 2.2, and 2.3.

 

“Revolving Credit Adjusted LIBOR Rate” shall mean the LIBOR Rate plus the
Revolving Loan Margin.

 

“Revolving Credit Commitment” means the obligation of Bank to make Revolving
Loans in an aggregate principal or face amount at any one time outstanding not
to exceed $5,000,000.00.

 

“Revolving Credit Termination Date” means July 1, 2016, or such earlier date on
which the Revolving Credit Commitment is terminated in whole pursuant to Section
2.13, 8.2 or 8.3.

 

“Revolving Loan” is defined in Section 2.2.

 

“Revolving Loan Margin” shall mean One and 85/100 Percent (1.85%).

 

“Revolving Note” is defined in Section 2.10(c).

 

“S&P” means Standard & Poor’s Ratings Services Group, a division of The McGraw
Hill Companies, Inc.

 

“Security Agreement” means that certain Security Agreement dated the date of
this Agreement between each Borrower and Bank, as the same may be amended,
modified, supplemented or restated from time to time.

 

“Subordinated Debt” means Indebtedness for Borrowed Money which is subordinated
in right of payment to the prior payment of the Obligations pursuant to
subordination provisions approved in writing by Bank and is otherwise pursuant
to documentation that is, which is in an amount that is, and which contains
interest rates, payment terms, maturities, amortization schedules, covenants,
defaults, remedies and other material terms that are, in each case, in form and
substance satisfactory to Bank.

 

“Subsidiary” means, as to any particular parent corporation or organization, any
other corporation or organization more than 50% of the outstanding Voting Stock
of which is at the time directly or indirectly owned by such parent corporation
or organization or by any one or more other entities which are themselves
subsidiaries of such parent corporation or organization. Unless otherwise
expressly noted herein, the term “Subsidiary” means a Subsidiary of any Borrower
or of any of its direct or indirect Subsidiaries.

 

 

9

 

 

“Swap Contract” shall mean (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts or any other similar transactions
or any combination of any of the foregoing (including any options to enter into
any of the foregoing), whether or not any such transaction is governed by or
subject to any master agreement, and (b) any and all transactions of any kind,
and the related confirmations, which are subject to the terms and conditions of,
or governed by, any form of master agreement published by the International
Swaps and Derivatives Association, Inc., any International Foreign Exchange
Master Agreement, or any other master agreement (any such master agreement,
together with any related schedules, a “Master Agreement”), including any such
obligations or liabilities under any Master Agreement.

 

“Swap Termination Value” shall mean, in respect of any Swap Contract, after
taking into account the effect of any legally enforceable netting agreement
relating to such Swap Contract, (a) for any date on or after the date such Swap
Contract has been closed out and a termination value determined in accordance
therewith, such termination value and (b) for any date prior to the date
referenced in clause (a), the amount determined as the mark-to-market value for
such Swap Contract, as determined based upon one or more mid-market or other
readily available quotations provided by any recognized dealer in such Swap
Contract (which may include Bank or any affiliate of Bank).

 

“Tangible Net Worth” means, for any Person and at any time the same is to be
determined, total shareholder’s equity (including capital stock, additional paid
in capital, and retained earnings after deducting treasury stock; but, shall not
include goodwill and/or other intangibles) which would appear on the balance
sheet of such Person in accordance with GAAP.

 

“Technology Licensing Agreement” means, that certain Technology License
Agreement dated as of July 23, 2013, by and between SL Technology, Inc., a
Missouri corporation and Soy Labs, LLC, a Missouri limited liability company.

 

“Term Credit” means the credit facility for the Term Loans described in Section
2.1(a).

 

“Term Loan” is defined in Section 2.1(a).

 

“Term Loan Adjusted LIBOR Rate” shall mean the LIBOR Rate plus the Term Loan
Margin.

 

“Term Loan Commitment” means the obligation of Bank to make the Term Loan on the
Closing Date in the principal amount not to exceed $3,481,961.16.

 

“Term Loan Margin” shall mean Two Percent (2.0%).

 

“Term Note” is defined in Section 2.10(c).

 

 

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“Unfunded Vested Liabilities” means, for any Plan at any time, the amount (if
any) by which the present value of all vested nonforfeitable accrued benefits
under such Plan exceeds the fair market value of all Plan assets allocable to
such benefits, all determined as of the then most recent valuation date for such
Plan, but only to the extent that such excess represents a potential liability
of a member of the Controlled Group to the PBGC or the Plan under Title IV of
ERISA.

 

“Unused Revolving Credit Commitment” means, at any time, the difference between
the Revolving Credit Commitment then in effect and the aggregate outstanding
principal amount of Revolving Loans.

 

“U.S. Dollars” and “$” each means the lawful currency of the United States of
America.

 

“Voting Stock” of any Person means capital stock or other equity interests of
any class or classes (however designated) having ordinary power for the election
of directors or other similar governing body of such Person, other than stock or
other equity interests having such power only by reason of the happening of a
contingency.

 

“Welfare Plan” means a “welfare plan” as defined in Section 3(1) of ERISA.

 

“Wholly Owned Subsidiary” means a Subsidiary of which all of the issued and
outstanding shares of capital stock (other than directors’ qualifying shares as
required by law) or other equity interests are owned by any Borrower and/or one
or more Wholly Owned Subsidiaries within the meaning of this definition.

 

Section 1.2 Interpretation. The foregoing definitions are equally applicable to
both the singular and plural forms of the terms defined. The words “hereof”,
“herein”, and “hereunder” and words of like import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. The words “include,” “includes” and “including” shall be deemed
to be followed by the phrase “without limitation.” All references to time of day
herein are references to Chicago, Illinois, time unless otherwise specifically
provided. Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, it shall be done in accordance with GAAP except where such principles
are inconsistent with the specific provisions of this Agreement.

 

Section 1.3 Change in Accounting Principles. If, after the date of this
Agreement, there shall occur any change in GAAP from those used in the
preparation of the financial statements referred to in Section 5.5 and such
change shall result in a change in the method of calculation of any financial
covenant, standard or term found in this Agreement, either the Borrowers or the
Bank may by notice to the other require that the Borrowers and the Bank
negotiate in good faith to amend such covenants, standards, and terms so as
equitably to reflect such change in accounting principles, with the desired
result being that the criteria for evaluating the financial condition of the
Borrowers and their Subsidiaries shall be the same as if such change had not
been made. No delay by the Borrowers or the Bank in requiring such negotiation
shall limit their right to so require such a negotiation at any time after such
a change in accounting principles. Until any such covenant, standard, or term is
amended in accordance with this Section 1.3, financial covenants shall be
computed and determined in accordance with GAAP in effect prior to such change
in accounting principles. Without limiting the generality of the foregoing, the
Borrowers shall neither be deemed to be in compliance with any financial
covenant hereunder nor out of compliance with any financial covenant hereunder
if such state of compliance or noncompliance, as the case may be, would not
exist but for the occurrence of a change in accounting principles after the date
hereof.

 

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SECTION 2. The Credit Facilities.

 

Section 2.1 Term Loan Commitment. Subject to the terms and conditions hereof,
Bank agrees to make a loan (the “Term Loan”) in U.S. Dollars to Borrowers in the
amount of the Term Loan Commitment. The Term Loan shall be advanced in a single
Borrowing on the Closing Date, at which time the Term Loan Commitment shall
expire. The Term Loan shall bear interest as set forth in Section 2.6. No amount
repaid or prepaid on the Term Loan may be borrowed again.

 

Section 2.2 Revolving Credit Commitment. Subject to the terms and conditions
hereof, Bank agrees to make a loan or loans (individually a “Revolving Loan” and
collectively the “Revolving Loans”) in U.S. Dollars to Borrowers from time to
time on a revolving basis up to the amount of the Revolving Credit Commitment,
subject to any reductions thereof pursuant to the terms hereof, before the
Revolving Credit Termination Date. The sum of the aggregate principal amount of
Revolving Loans at any time outstanding shall not exceed the Revolving Credit
Commitment in effect at such time. The Revolving Loan shall bear interest as set
forth in Section 2.6. Revolving Loans may be repaid and the principal amount
thereof reborrowed before the Revolving Credit Termination Date, subject to the
terms and conditions hereof.

 

Section 2.3 [Reserved].

 

Section 2.4 Applicable Interest Rates.

 

(a) Revolving Credit Loans. So long as no Event of Default has occurred and is
continuing, each Revolving Credit Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Revolving Credit Loan
is made until it becomes due, at a rate per annum equal to the Revolving Credit
Adjusted LIBOR Rate. So long as any Event of Default has occurred and is
continuing, each Revolving Credit Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Revolving Loan is made
until it becomes due, at a rate per annum equal to Three Percent (3%) over and
above the Revolving Credit Adjusted LIBOR Rate. Such interest shall be payable
monthly in arrears on the last day of each month commencing on the first such
date after such Revolving Loan is made, and at the maturity of the Revolving
Note (whether by reason of acceleration or otherwise). From and after the
maturity of the Revolving Note, whether by reason of acceleration or otherwise,
each Revolving Loan shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to Three Percent (3%) over and above the
Revolving Credit Adjusted LIBOR Rate.

 

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(b) Term Loans. So long as no Event of Default has occurred and is continuing,
the Term Loan shall bear interest on the outstanding principal amount thereof
for each day until paid at a rate per annum equal to the Term Loan Adjusted
LIBOR Rate. So long as any Event of Default has occurred and is continuing, the
Term Loan shall bear interest on the outstanding principal amount thereof for
each day until paid at a rate per annum equal to Three Percent (3%) over and
above the Term Loan Adjusted LIBOR Rate. Such interest shall be payable monthly
in arrears on the 29th day of each month commencing March 29, 2014, and at the
maturity of the Term Note (whether by reason of acceleration or otherwise). From
and after the maturity of the Term Note, whether by reason of acceleration or
otherwise, the Term Loan shall bear interest, payable on demand, for each day
until paid at a rate per annum equal to Three Percent (3%) over and above the
Term Loan Adjusted LIBOR Rate.

 

(c) Rate Determinations. Bank shall determine each interest rate applicable to
the Loans hereunder, and its determination thereof shall be conclusive and
binding except in the case of manifest error.

 

Section 2.5 Minimum Borrowing Amounts. Each Borrowing of a Revolving Loan shall
be in an amount not less than $25,000.00.

 

Section 2.6 Manner of Borrowing Loans and Designating Applicable Interest Rates.

 

(a) Notice to Bank. Borrowers shall give notice to Bank by no later than 10:00
a.m.: (i) at least two (2) Business Days before the date on which Borrowers
request Bank to advance a Borrowing of Revolving Loans. The Loans included in
each Borrowing shall bear interest as provided for under Section 2.4. Borrower
shall give all such notices requesting an advance of a Borrowing to Bank by
telephone, telecopy, or other telecommunication device acceptable to Bank (which
notice shall be irrevocable once given and, if by telephone, shall be promptly
confirmed in writing), in a form acceptable to Bank. All such notices concerning
the advance, continuation or conversion of a Borrowing shall specify the date of
the requested advance, continuation or conversion of a Borrowing (which shall be
a Business Day), the amount of the requested Borrowing to be advanced, continued
or converted, the type of Loans to comprise such new, continued or converted
Borrowing. Each Borrower agrees that Bank may rely on any such telephonic,
telecopy or other telecommunication notice given by any person Bank in good
faith believes is an Authorized Representative without the necessity of
independent investigation, and in the event any such notice by telephone
conflicts with any written confirmation such telephonic notice shall govern if
Bank has acted in reliance thereon.

 

(b) [Reserved].

 

Section 2.7 Maturity of Loans.

 

(a) Scheduled Payments of Term Loans. Principal payments on the Term Loans shall
be due and payable in consecutive monthly installments as follows: equal
consecutive monthly installments in the amount of $41,451.92 each, due and
payable on the 29th day of each month, commencing with the calendar month ending
March 29, 2014, it being agreed that a final payment comprised of all principal
and interest then outstanding on the Term Loans shall be due and payable on July
1, 2016, the final maturity thereof.

 

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(b) Revolving Loans. Each Revolving Loan, both for principal and interest then
outstanding, shall mature and be due and payable by Borrowers on the Revolving
Credit Termination Date.

 

Section 2.8 Prepayments.

 

(a) Optional Prepayments. Borrowers may prepay in whole or in part (but, if in
part, then, in an amount such that the minimum amount required for a Borrowing
pursuant to Section 2.5 remains outstanding) any Borrowing at any time upon
notice delivered by Borrowers to Bank no later than 10:00 a.m. on the date of
prepayment (or, in any case, such shorter period of time then agreed to by
Bank), such prepayment, in each case, to be made by the payment of the principal
amount to be prepaid and, in the case of any Term Loans, accrued interest
thereon to the date fixed for prepayment plus any amounts due Bank under Section
3.3.

 

(b) Mandatory Prepayments.

 

(i) If Borrowers or any Subsidiary shall at any time or from time to time make
or agree to make a Disposition or shall suffer an Event of Loss with respect to
any Property, then such Borrower shall promptly notify Bank of such proposed
Disposition or Event of Loss (including the amount of the estimated Net Cash
Proceeds to be received by such Borrower or such Subsidiary in respect thereof)
and, promptly upon receipt by such Borrower or such Subsidiary of the Net Cash
Proceeds of such Disposition or Event of Loss, such Borrower shall prepay the
Obligations in an aggregate amount equal to 100% of the amount of all such Net
Cash Proceeds; provided that (x) so long as no Default or Event of Default then
exists, this subsection shall not require any such prepayment with respect to
Net Cash Proceeds received on account of an Event of Loss so long as such Net
Cash Proceeds are applied to replace or restore the relevant Property in
accordance with the relevant Collateral Documents, (y) this subsection shall not
require any such prepayment with respect to Net Cash Proceeds received on
account of Dispositions during any fiscal year of such Borrower not exceeding
$25,000.00 in the aggregate so long as no Default or Event of Default then
exists, and (z) in the case of any Disposition not covered by clause (y) above,
so long as no Default or Event of Default then exists, if such Borrower states
in its notice of such event that such Borrower or the relevant Subsidiary
intends to reinvest, within 90 days of the applicable Disposition, the Net Cash
Proceeds thereof in assets similar to the assets which were subject to such
Disposition, then such Borrower shall not be required to make a mandatory
prepayment under this subsection in respect of such Net Cash Proceeds to the
extent such Net Cash Proceeds are actually reinvested in such similar assets
with such 90 day period. Promptly after the end of such 90 day period, such
Borrower shall notify Bank whether such Borrower or such Subsidiary has
reinvested such Net Cash Proceeds in such similar assets, and, to the extent
such Net Cash Proceeds have not been so reinvested, such Borrower shall promptly
prepay the Obligations in the amount of such Net Cash Proceeds not so
reinvested. The amount of each such prepayment shall be applied first to the
outstanding Term Loans until paid in full and then to the Revolving Credit; If
Bank so requests, all proceeds of such Disposition or Event of Loss shall be
deposited with Bank (or its agent) and held by it in the Collateral Account to
be disbursed to or at Borrowers’ direction for application to or reimbursement
for the costs of replacing, rebuilding or restoring such Property.

 

14

 

 

(ii) If after the Closing Date any Borrower or any Subsidiary shall issue new
equity securities (whether common or preferred stock or otherwise), other than
equity securities issued in connection with the exercise of employee stock
options, such Borrower shall promptly notify Bank of the estimated Net Cash
Proceeds of such issuance to be received by or for the account of such Borrower
or such Subsidiary in respect thereof. Promptly upon receipt by any Borrower or
such Subsidiary of Net Cash Proceeds of such issuance, such Borrower shall
prepay the Obligations in an aggregate amount equal to 100% of the amount of
such Net Cash Proceeds. The amount of each such prepayment shall be applied
first to the outstanding Term Loans until paid in full and then to the Revolving
Credit. Each Borrower acknowledges that its performance hereunder shall not
limit the rights and remedies of Bank for any breach of Section 7.(5)
(Maintenance of Subsidiaries) or Section 8.1(i) (Change of Control) hereof or
any other terms of the Loan Documents.

 

(iii) If after the Closing Date any Borrower or any Subsidiary shall issue any
Indebtedness for Borrowed Money, other than Indebtedness for Borrowed Money
permitted by Section 7.1(a)-(i), such Borrower shall promptly notify Bank of the
estimated Net Cash Proceeds of such issuance to be received by or for the
account of such Borrower or such Subsidiary in respect thereof. Promptly upon
receipt by any Borrower or such Subsidiary of Net Cash Proceeds of such
issuance, such Borrower shall prepay the Obligations in an aggregate amount
equal to 100% of the amount of such Net Cash Proceeds. The amount of each such
prepayment shall be applied first to the outstanding Term Loans until paid in
full and then to the Revolving Credit. Each Borrower acknowledges that its
performance hereunder shall not limit the rights and remedies of Bank for any
breach of Section 7.1 or any other terms of the Loan Documents.

 

(iv) Borrowers shall, on each date the Revolving Credit Commitment is reduced
pursuant to Section 2.13, prepay the Revolving Loans by the amount, if any,
necessary to reduce the sum of the aggregate principal amount of Revolving Loans
outstanding to the amount to which the Revolving Credit Commitment has been so
reduced.

 

(v) If at any time the sum of the unpaid principal balance of the Revolving
Loans then outstanding shall be in excess of the Revolving Credit Commitment,
Borrower shall immediately and without notice or demand pay over the amount of
the excess to Bank as and for a mandatory prepayment on such Obligations, with
each such prepayment first to be applied to the Revolving Loans until paid.

 

(vi) Unless Borrower otherwise directs, prepayments of Loans under this Section
2.8(b) shall be applied first to Term Loans until payment in full thereof with
any balance applied to Revolving Credit Loans. Each prepayment of Loans under
this Section 2.8(b) shall be made by the payment of the principal amount to be
prepaid and, in the case of any Term Loans, accrued interest thereon to the date
of prepayment together with any amounts due Bank under Section 3.3.

 

15

 

 

(c) Any amount of Revolving Loans paid or prepaid before the Revolving Credit
Termination Date may, subject to the terms and conditions of this Agreement, be
borrowed, repaid and borrowed again. No amount of the Term Loans paid or prepaid
may be reborrowed, and, in the case of any partial prepayment, such prepayment
shall be applied to the remaining amortization payments on the relevant Loans in
the inverse order of maturity.

 

Section 2.9 Default Rate. Notwithstanding anything to the contrary contained
herein, if any Loan or any part thereof is not paid when due (whether by lapse
of time, acceleration, or otherwise), or at the election of Bank upon notice to
any Borrower during the existence of any other Event of Default, Borrowers shall
pay interest (after as well as before entry of judgment thereon to the extent
permitted by law) on the principal amount of all Loans, and letter of credit
fees at a rate per annum equal to:

 

(a) for any Revolving Credit Loan, the sum of 3.0% plus the Revolving Credit
Adjusted LIBOR Rate, from time to time in effect;

 

(b) for any Term Loan, the sum of 3.0% plus the Term Loan Adjusted LIBOR Rate,
from time to time in effect, from time to time in effect;

 

(c) for any Reimbursement Obligation, the sum of 3.0% plus the amounts due under
Section 2.3 with respect to such Reimbursement Obligation; and

 

(d) for any Letter of Credit, the sum of 3.0% plus the letter of credit fee due
under Section 2.11 with respect to such Letter of Credit.

 

Section 2.10 Evidence of Indebtedness.

 

(a) Bank shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of Borrowers hereunder, including the
amounts of principal and interest payable and paid to Bank from time to time
hereunder.

 

(b) The entries maintained in the account(s) maintained pursuant to paragraph
(a) above shall be prima facie evidence of the existence and amounts of the
Obligations therein recorded; provided, that the failure of Bank to maintain
such account(s) or any error therein shall not in any manner affect the
obligation of any Borrower to repay the Obligations in accordance with their
terms.

 

(c) Bank may request that the Loans be evidenced by a promissory note or notes
in the forms of Exhibit A-1 (in the case of its Term Loan and referred to herein
as a “Term Note”), or Exhibit A-2 (in the case of its Revolving Loans and
referred to herein as a “Revolving Note”), as applicable (the Term Notes and
Revolving Notes being hereinafter referred to collectively as the “Notes” and
individually as a “Note”). In such event, Borrowers shall prepare, execute and
deliver to Bank a Note payable to Bank or its registered assigns in the amount
of the relevant Term Loan or Revolving Credit Commitment, as applicable.

 

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Section 2.11 [Reserved]

 

 

Section 2.12 Place and Application of Payments. All payments of principal,
interest, fees, and all other Obligations payable under the Loan Documents shall
be made to Bank at its office at 111 West Monroe Street, Chicago, Illinois (or
at such other place as Bank may specify) no later than 1:00 p.m. on the date any
such payment is due and payable. Payments received by Bank after 1:00 p.m. shall
be deemed received as of the opening of business on the next Business Day. All
such payments shall be made in lawful money of the United States of America, in
immediately available funds at the place of payment, without set-off or
counterclaim and without reduction for, and free from, any and all present or
future taxes, levies, imposts, duties, fees, charges, deductions, withholdings,
restrictions, and conditions of any nature imposed by any government or any
political subdivision or taxing authority thereof (but excluding any taxes
imposed on or measured by the net income of Bank). All payments shall be applied
(i) first, towards payment of interest and fees then due hereunder and under the
other Loan Documents, and (ii) second, towards payment of principal. Unless
Borrowers otherwise direct, principal payments shall be applied first to the
Term Loan until payment in full thereof, with any balance applied to Revolving
Loan. Each Borrower hereby irrevocably authorizes Bank to (a) charge from time
to time any of each Borrower’s deposit accounts with Bank and/or (b) make
Revolving Loans from time to time hereunder (and any such Revolving Loan may be
made by Bank hereunder without regard to the provisions of Section 4 hereof), in
each case for payment of any Obligation then due and payable (whether such
Obligation is for interest then due on a Loan, a Reimbursement Obligation or
otherwise); provided that Bank shall not be under any obligation to charge any
such deposit account or make any such Revolving Loan under this Section, and
Bank shall incur no liability to any Borrower or any other Person for its
failure to do so.

 

Section 2.13 [Reserved].

 

 

SECTION 3. CHANGE IN CIRCUMSTANCES.

 

Section 3.1 Withholding Taxes. Except as otherwise required by law, each payment
by any Borrower under this Agreement or the other Loan Documents shall be made
without withholding for or on account of any present or future taxes (other than
overall net income taxes on the recipient) imposed by or within the jurisdiction
in which any Borrower is domiciled, any jurisdiction from which any Borrower
makes any payment, or (in each case) any political subdivision or taxing
authority thereof or therein. If any such withholding is so required, such
Borrower shall make the withholding, pay the amount withheld to the appropriate
Governmental Authority before penalties attach thereto or interest accrues
thereon, and forthwith pay such additional amount as may be necessary to ensure
that the net amount actually received by Bank free and clear of such taxes
(including such taxes on such additional amount) is equal to the amount that
Bank would have received had such withholding not been made. If Bank pays any
amount in respect of any such taxes, penalties or interest, Borrowers shall
reimburse Bank for that payment on demand in the currency in which such payment
was made. If any Borrower pays any such taxes, penalties or interest, it shall
deliver official tax receipts evidencing that payment or certified copies
thereof to Bank on or before the thirtieth day after payment.

 

17

 

 

 

Section 3.2 Documentary Taxes. Each Borrower agrees to pay on demand any
documentary, stamp or similar taxes payable in respect of this Agreement or any
other Loan Document, including interest and penalties, in the event any such
taxes are assessed, irrespective of when such assessment is made and whether or
not any credit is then in use or available hereunder.

 

Section 3.3 [Reserved].

 

Section 3.4 Change of Law. Notwithstanding any other provisions of this
Agreement or any other Loan Document, if at any time any Change in Law or
regulation or in the interpretation thereof makes it unlawful for Bank to make
or continue to maintain any Loans or to perform its obligations as contemplated
hereby, Bank shall promptly give notice thereof to Borrowers and Bank’s
obligations to make or maintain such Loans under this Agreement shall be
suspended until it is no longer unlawful for Bank to make or maintain such
Loans. Borrowers shall prepay on demand the outstanding principal amount of any
such affected Loans, together with all interest accrued thereon and all other
amounts then due and payable to Bank under this Agreement.

 

Section 3.5 [Reserved].

 

Section 3.6 Increased Cost and Reduced Return.

 

(a) If, on or after the date hereof, any Change in Law:

 

(i) shall subject Bank (or its lending branch) to any tax, duty or other charge
with respect to its Loans, its Notes, its Letter(s) of Credit or its obligation
to make Loans or issue a Letter of Credit, or shall change the basis of taxation
of payments to Bank (or its lending branch) of the principal of or interest on
its Loans or Letter(s) of Credit, or any other amounts due under this Agreement
or any other Loan Document in respect of its Loans or Letter(s) of Credit or its
obligation to make Loans, or issue a Letter of Credit (except for changes in the
rate of tax on the overall net income of Bank (or its lending branch) imposed by
the jurisdiction in which Bank’s principal executive office or lending branch is
located); or

 

(ii) shall impose, modify or deem applicable any reserve, special deposit or
similar requirement (including any such requirement imposed by the Board of
Governors of the Federal Reserve System, but excluding with respect to any Loans
any such requirement included in an applicable Eurodollar Reserve Percentage)
against assets of, deposits with or for the account of, or credit extended by,
Bank (or its lending branch) or shall impose on Bank (or its lending branch) or
on the interbank market any other condition affecting its Loans, its Notes, its
Letter(s) of Credit or its obligation to make Loans, or to issue a Letter of
Credit;

 

 

18

 

 

and the result of any of the foregoing is to increase the cost to Bank (or its
lending branch) of making or maintaining any Loan or issuing or maintaining a
Letter of Credit, or to reduce the amount of any sum received or receivable by
Bank (or its lending branch) under this Agreement or under any other Loan
Document with respect thereto, by an amount deemed by Bank to be material, then,
within 15 days after demand by Bank, Borrowers shall be obligated to pay to Bank
such additional amount or amounts as will compensate Bank for such increased
cost or reduction.

 

(b) If, after the date hereof, Bank shall have determined that any Change in Law
has had the effect of reducing the rate of return on Banks or such corporation’s
capital as a consequence of its obligations hereunder to a level below that
which Bank or such corporation could have achieved but for such Change in Law
(taking into consideration Bank’s or such corporation’s policies with respect to
capital adequacy) by an amount deemed by Bank to be material, then from time to
time, within 15 days after demand by Bank, Borrowers shall pay to Bank such
additional amount or amounts as will compensate Bank for such reduction.

 

(c) A certificate of Bank claiming compensation under this Section 3.6 and
setting forth the additional amount or amounts to be paid to it hereunder shall
be conclusive absent manifest error. In determining such amount, Bank may use
any reasonable averaging and attribution methods.

 

Section 3.7 Lending Offices. Bank may, at its option, elect to make its Loans
hereunder at the branch, office or affiliate specified on the appropriate
signature page hereof for each type of Loan available hereunder or at such other
of its branches, offices or affiliates as it may from time to time elect.

 

Section 3.8 Discretion of Bank as to Manner of Funding. Notwithstanding any
other provision of this Agreement, Bank shall be entitled to fund and maintain
its funding of all or any part of its Loans in any manner it sees fit.

 

 

SECTION 4. CONDITIONS PRECEDENT.

 

Section 4.1 Initial Credit Event. The obligation of Bank to participate in any
initial Credit Event hereunder is subject to satisfaction or waiver by Bank of
the following conditions precedent:

 

(a) Bank shall have received each of the following, in each case (i) duly
executed by all applicable parties, (ii) dated a date satisfactory to Bank and
(iii) in form and substance satisfactory to Bank:

 

i. this Agreement duly executed by each Borrower [and its Subsidiaries] and
Bank;

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ii. if requested by Bank, duly executed Notes of each Borrower dated the date
hereof and otherwise in compliance with the provisions of Section 2.10;

 

iii. the Mortgage and Security Agreements and each of the other Collateral
Documents required by Bank, together with (i) UCC financing statements to be
filed against each Borrower, as debtor, in favor of Bank, as secured party, (ii)
patent, trademark, and copyright collateral agreements to the extent requested
by Bank, and (iii) deposit account, securities account, and commodity account
control agreements to the extent requested by Bank;

 

iv. evidence of all insurance required to be maintained under the Loan
Documents;

 

v. copies of each Borrower’s articles of incorporation and bylaws (or comparable
organizational documents) and any amendments thereto, certified in each instance
by its Secretary or Assistant Secretary;

 

vi. copies of resolutions of each Borrower’s Board of Directors (or similar
governing body) authorizing the execution, delivery and performance of this
Agreement and the other Loan Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby, together with
specimen signatures of the persons authorized to execute such documents on such
Borrower’s behalf, all certified in each instance by its Secretary or Assistant
Secretary;

 

vii. copies of the certificates of good standing for each Borrower (dated no
earlier than 30 days prior to the date hereof) from the office of the secretary
of the state of its incorporation or organization and of each state in which it
is qualified to do business as a foreign corporation or organization;

 

viii. a list of each Borrower’s Authorized Representatives;

 

ix. a mortgagee’s title insurance policy (or a prepaid binding commitment
therefor) in form and substance acceptable to Bank from a title insurance
company acceptable to Bank in the aggregate amount of $6,100,000.00 insuring the
Lien of the Mortgages to be valid first priority Liens subject to no defects or
objections which are unacceptable to Bank, together with such endorsements as
Bank may require;

 

x. a survey prepared by a licensed surveyor on each parcel of real property
subject to the Lien of the Mortgages, which survey shall also state whether or
not any portion of the real property is in a federally designated flood hazard
area;

 

xi. a report of an independent firm of environmental engineers acceptable to
Bank concerning the environmental hazards and matters with respect to the
parcels of real property subject to the Lien of the Mortgages, together with a
reliance letter thereon acceptable to Bank;

 

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xii. an appraisal report prepared for Bank by a state certified appraiser
selected by Bank, which appraisal report describes the fair market value of the
property subject to the Lien of the Mortgages and otherwise meets the
requirements of applicable law for appraisals prepared for federally insured
depository institutions;

 

xiii. such evaluations and certifications as it may reasonably require in order
to satisfy itself as to the value of the Collateral, the financial condition of
each Borrower and their Subsidiaries, and the lack of material contingent
liabilities of each Borrower and their Subsidiaries;

 

xiv. financing statement, tax, and judgment lien search results against the
Property of each Borrower evidencing the absence of Liens on its Property except
as permitted by Section 7.2;

 

xv. pay off and lien release letters from secured creditors of each Borrower
setting forth, among other things, the total amount of indebtedness outstanding
and owing to them (or outstanding letters of credit issued for the account of
any Borrower or any Subsidiary) and containing an undertaking to cause to be
delivered to Bank UCC termination statements and any other lien release
instruments necessary to release their Liens on the assets of such Borrower;

 

xvi. evidence reasonably satisfactory to Bank that all indebtedness to creditors
referenced in the preceding paragraph has been (or concurrently with the initial
Borrowing will be) paid in full, and that all agreements and instruments
governing indebtedness and that all Liens securing such indebtedness have been
(or concurrently with the initial Borrowing will be) terminated.

 

xvii. a fully executed Internal Revenue Service Form W-9 for each Borrower; and

 

xviii. such other agreements, instruments, documents, certificates, and opinions
as Bank may reasonably request.

 

(b) Bank shall have received the initial fees called for by Section 2.11,
together with all other fees, costs and expenses required to be paid by
Borrowers before closing; and

 

(c) the capital and organizational structure of Borrowers and their Subsidiaries
shall be satisfactory to Bank.

 

Section 4.2 All Credit Events. The obligation of Bank to participate in any
Credit Event (including any initial Credit Event) hereunder is subject to the
following conditions precedent:

 

(a) each of the representations and warranties set forth herein and in the other
Loan Documents shall be and remain true and correct as of said time, except to
the extent the same expressly relate to an earlier date, in which case such
representations and warranties shall be and remain true and correct as of such
earlier date;

 

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(b) no Default or Event of Default shall have occurred and be continuing or
would occur as a result of such Credit Event;

 

(c) in the case of a Borrowing, Bank shall have received the notice required by
Section 2.6;

 

(d) after giving effect to such Credit Event, the sum of the aggregate principal
amount of Revolving Loans at any time outstanding shall not exceed the Revolving
Credit Commitment in effect at such time; and

 

(e) such Credit Event shall not violate any order, judgment or decree of any
court or other authority or any provision of law or regulation applicable to
Bank (including Regulation U of the Board of Governors of the Federal Reserve
System) as then in effect.

 

Each request for a Borrowing hereunder shall be deemed to be a representation
and warranty by each Borrower on the date on such Credit Event as to the facts
specified in subsections (a) through (e) of this Section; provided that Bank may
continue to make advances under the Revolving Credit, in the sole discretion of
Bank, notwithstanding the failure of any Borrower to satisfy one or more of the
conditions set forth above and any such advances so made shall not be deemed a
waiver of any Default or Event of Default or other condition set forth above
that may then exist.

 

 

SECTION 5. REPRESENTATIONS AND WARRANTIES.

 

Each Borrower represents and warrants to Bank as follows:

 

Section 5.1 Organization and Qualification. Such Borrower is (a) duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
organization, (b) has full and adequate power to own its Property and conduct
its business as now conducted, and (c) is duly licensed or qualified and in good
standing in each jurisdiction in which the nature of the business conducted by
it or the nature of the Property owned or leased by it requires such licensing
or qualifying, except, with respect to this clause (c), where the failure to do
so would not have a Material Adverse Effect.

 

Section 5.2 Subsidiaries. Each Subsidiary (a) is duly organized, validly
existing, and in good standing under the laws of the jurisdiction in which it is
organized, (b) has full and adequate power to own its Property and conduct its
business as now conducted, and (c) is duly licensed or qualified and in good
standing in each jurisdiction in which the nature of the business conducted by
it or the nature of the Property owned or leased by it requires such licensing
or qualifying, except, with respect to this clause (c), where the failure to do
so would not have a Material Adverse Effect. Schedule 5.2 hereto identifies each
Subsidiary, the jurisdiction of its organization, the percentage of issued and
outstanding shares of each class of its capital stock or other equity interests
owned by each Borrower and the other Subsidiaries and, if such percentage is not
100% (excluding directors’ qualifying shares as required by law), a description
of each class of its authorized capital stock and other equity interests and the
number of shares of each class issued and outstanding. All of the outstanding
shares of capital stock and other equity interests of each Subsidiary are
validly issued and outstanding and fully paid and non-assessable and all such
shares and other equity interests indicated on Schedule 5.2 as owned by each
Borrower or another Subsidiary are owned, beneficially and of record, by such
Borrower or such Subsidiary free and clear of all Liens other than the Liens
granted in favor of Bank pursuant to the Collateral Documents. There are no
outstanding commitments or other obligations of any Subsidiary to issue, and no
options, warrants or other rights of any Person to acquire, any shares of any
class of capital stock or other equity interests of any Subsidiary.

 

 

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Section 5.3 Authority and Validity of Obligations. Each Borrower has full right
and authority to enter into this Agreement and the other Loan Documents executed
by it, to make the borrowings herein provided for, to grant to Bank the Liens
described in the Collateral Documents executed by such Borrower, and to perform
all of its obligations hereunder and under the other Loan Documents executed by
it. Each Subsidiary has full right and authority to enter into the Loan
Documents executed by it, to guarantee the Obligations, to grant to Bank the
Liens described in the Collateral Documents executed by such Person, and to
perform all of its obligations under the Loan Documents executed by it. The Loan
Documents delivered by each Borrower and their Subsidiaries have been duly
authorized, executed, and delivered by such Persons and constitute valid and
binding obligations of such Borrower and their Subsidiaries enforceable against
them in accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance or similar laws affecting
creditors’ rights generally and general principles of equity (regardless of
whether the application of such principles is considered in a proceeding in
equity or at law); and this Agreement and the other Loan Documents do not, nor
does the performance or observance by each Borrower or any Subsidiary of any of
the matters and things herein or therein provided for, (a) contravene or
constitute a default under any provision of law or any judgment, injunction,
order or decree binding upon any Borrower or any Subsidiary or any provision of
the organizational documents (e.g., charter, certificate or articles of
incorporation and bylaws, certificate or articles of association and operating
agreement, partnership agreement, or other similar organizational documents) of
any Borrower or any Subsidiary, (b) conflict with, contravene or constitute a
default under any material indenture or agreement of or affecting any Borrower
or any Subsidiary or any of their Property, or (c) result in the creation or
imposition of any Lien on any Property of any Borrower or any Subsidiary other
than the Liens granted in favor of Bank pursuant to the Collateral Documents.

 

Section 5.4 Use of Proceeds; Margin Stock. Borrowers shall use the proceeds of
the Term Loans to refinance their existing Term Loan with Bank and repay a
portion of their existing Revolving Credit with Bank relating to the purchase of
the Lunasin license agreement; and Borrowers shall use the proceeds of the
Revolving Credit for its general working capital purposes and for such other
legal and proper purposes as are consistent with all applicable laws. Neither
any Borrower nor any Subsidiary is engaged, principally or as one of its
important activities, in the business of purchasing or carrying margin stock or
in the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System), and no part of the proceeds of any Loan or any
other extension of credit made hereunder will be used to purchase or carry any
such margin stock or to extend credit to others for the purpose of purchasing or
carrying any such margin stock. Margin stock (as hereinabove defined)
constitutes less than 25% of the assets of any Borrower and its Subsidiaries
which are subject to any limitation on sale, pledge or other restriction
hereunder.

 

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Section 5.5 Financial Reports. The consolidated balance sheet of Borrowers and
their Subsidiaries as at December 31, 2012, and the related consolidated
statements of income, retained earnings and cash flows of Borrowers and their
Subsidiaries for the fiscal year then ended, and accompanying notes thereto,
which financial statements are accompanied by the audit report of Ernst & Young,
independent public accountants, and the unaudited interim consolidated balance
sheet of Borrowers and their Subsidiaries as at September 30, 2013, and the
related consolidated statements of income and cash flows of Borrowers and their
Subsidiaries for the 9 months then ended, heretofore furnished to Bank, fairly
present the consolidated financial condition of Borrowers and their Subsidiaries
as at said dates and the consolidated results of their operations and cash flows
for the periods then ended in conformity with GAAP applied on a consistent
basis. Neither any Borrower nor any Subsidiary has contingent liabilities which
are material to it other than as indicated on such financial statements or, with
respect to future periods, on the financial statements furnished pursuant to
Section 6.5.

 

Section 5.6 No Material Adverse Change. Since September 30, 2013, there has been
no change in the condition (financial or otherwise) or business prospects of any
Borrower or any Subsidiary except those occurring in the ordinary course of
business, none of which individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect.

 

Section 5.7 Full Disclosure. The statements and information furnished to Bank in
connection with the negotiation of this Agreement and the other Loan Documents
and the commitments by Bank to provide all or part of the financing contemplated
hereby do not contain any untrue statements of a material fact or omit a
material fact necessary to make the statements contained herein or therein not
misleading, Bank acknowledging that as to any projections furnished to Bank,
each Borrower only represents that the same were prepared on the basis of
information and estimates such Borrower believed to be reasonable.

 

Section 5.8 Trademarks, Franchises, and Licenses. Each Borrower and such
Borrower’s Subsidiaries own, possess, or have the right to use all necessary
patents, licenses, franchises, trademarks, trade names, trade styles,
copyrights, trade secrets, know how, and confidential commercial and proprietary
information to conduct their businesses as now conducted, without known conflict
with any patent, license, franchise, trademark, trade name, trade style,
copyright or other proprietary right of any other Person.

 

Section 5.9 Governmental Authority and Licensing. Each Borrower and such
Borrower’s Subsidiaries have received all licenses, permits, and approvals of
all Governmental Authorities, if any, necessary to conduct their businesses, in
each case where the failure to obtain or maintain the same could reasonably be
expected to have a Material Adverse Effect. No investigation or proceeding
which, if adversely determined, could reasonably be expected to result in
revocation or denial of any material license, permit or approval is pending or,
to the knowledge of any Borrower, threatened.

 

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Section 5.10 Good Title. Each Borrower and such Borrower’s Subsidiaries have
good and defensible title (or valid leasehold interests) to their assets as
reflected on the most recent consolidated balance sheet of Borrowers and their
Subsidiaries furnished to Bank (except for sales of assets in the ordinary
course of business), subject to no Liens other than such thereof as are
permitted by Section 7.2.

 

Section 5.11 Litigation and Other Controversies. There is no litigation or
governmental or arbitration proceeding or labor controversy pending, nor to the
knowledge of any Borrower threatened, against any Borrower or any Subsidiary or
any of their Property which if adversely determined, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect except
as set forth on Schedule 5.11 attached hereto.

 

Section 5.12 Taxes. All tax returns required to be filed by each Borrower and
each Subsidiary in any jurisdiction have, in fact, been filed, and all taxes,
assessments, fees, and other governmental charges upon each Borrower and each
Subsidiary or upon any of their Property, income or franchises, which are shown
to be due and payable in such returns, have been paid, except such taxes,
assessments, fees and governmental charges, if any, as are being contested in
good faith and by appropriate proceedings which prevent enforcement of the
matter under contest and as to which adequate reserves established in accordance
with GAAP have been provided and except as set forth on Schedule 5.12 attached
hereto. No Borrower knows of any proposed additional tax assessment against it
or its Subsidiaries for which adequate provisions in accordance with GAAP have
not been made on their accounts except as set forth on Schedule 5.12 attached
hereto. Adequate provisions in accordance with GAAP for taxes on the books of
each Borrower and each Subsidiary have been made for all open years, and for its
current fiscal period.

 

Section 5.13 Approvals. No authorization, consent, license or exemption from, or
filing or registration with, any court or governmental department, agency or
instrumentality, nor any approval or consent of any other Person, is or will be
necessary to the valid execution, delivery or performance by each Borrower and
each Subsidiary of each Loan Document, except for such approvals which have been
obtained prior to the date of this Agreement and remain in full force and
effect.

 

Section 5.14 Affiliate Transactions. Neither any Borrower nor any Subsidiary is
a party to any contracts or agreements with any of its Affiliates (other than
with Wholly Owned Subsidiaries) on terms and conditions which are less favorable
to such Borrower or such Subsidiary than would be usual and customary in similar
contracts or agreements between Persons not affiliated with each other.

 

Section 5.15 Investment Company. Neither any Borrower nor any Subsidiary is an
“investment company” or a company “controlled” by an “investment company” within
the meaning of the Investment Company Act of 1940, as amended.

 

Section 5.16 ERISA. Each Borrower and each other member of its Controlled Group
has fulfilled its obligations under the minimum funding standards of and is in
compliance in all material respects with ERISA and the Code to the extent
applicable to it and has not incurred any liability to the PBGC or a Plan under
Title IV of ERISA other than a liability to the PBGC for premiums under Section
4007 of ERISA. Neither any Borrower nor any Subsidiary has any contingent
liabilities with respect to any post-retirement benefits under a Welfare Plan,
other than liability for continuation coverage described in article 6 of Title I
of ERISA.

 

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Section 5.17 Compliance with Laws.

 

(a) Each Borrower and such Borrower’s Subsidiaries are in compliance with the
requirements of all federal, state and local laws, rules and regulations
applicable to or pertaining to their Property or business operations (including
the Occupational Safety and Health Act of 1970, the Americans with Disabilities
Act of 1990, and laws and regulations establishing quality criteria and
standards for air, water, land and toxic or hazardous wastes and substances),
where any such noncompliance, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.

 

(b) Without limiting the representations and warranties set forth in Section
5.17(a) above, except for such matters, individually or in the aggregate, which
could not reasonably be expected to result in a Material Adverse Effect, each
Borrower represents and warrants that: (i) such Borrower and its Subsidiaries,
and each of the Premises, comply in all material respects with all applicable
Environmental Laws; (ii) such Borrower and its Subsidiaries have obtained all
governmental approvals required for their operations and each of the Premises by
any applicable Environmental Law; (iii) such Borrower and its Subsidiaries have
not, and such Borrower has no knowledge of any other Person who has, caused any
Release, threatened Release or disposal of any Hazardous Material at, on, about,
or off any of the Premises in any material quantity and, to the knowledge of
each Borrower, none of the Premises are adversely affected by any Release,
threatened Release or disposal of a Hazardous Material originating or emanating
from any other property; (iv) none of the Premises contain and have contained
any: (1) underground storage tank, (2) material amounts of asbestos containing
building material, (3) landfills or dumps, (4) hazardous waste management
facility as defined pursuant to RCRA or any comparable state law, or (5) site on
or nominated for the National Priority List promulgated pursuant to CERCLA or
any state remedial priority list promulgated or published pursuant to any
comparable state law; (v) such Borrower and its Subsidiaries have not used a
material quantity of any Hazardous Material and have conducted no Hazardous
Material Activity at any of the Premises; (vi) such Borrower and its
Subsidiaries have no material liability for response or corrective action,
natural resource damage or other harm pursuant to CERCLA, RCRA or any comparable
state law; (vii) such Borrower and its Subsidiaries are not subject to, have no
notice or knowledge of and are not required to give any notice of any
Environmental Claim involving any Borrower or any Subsidiary or any of the
Premises, and there are no conditions or occurrences at any of the Premises
which could reasonably be anticipated to form the basis for an Environmental
Claim against any Borrower or any Subsidiary or such Premises; (viii) none of
the Premises are subject to any, and such Borrower has no knowledge of any
imminent restriction on the ownership, occupancy, use or transferability of the
Premises in connection with any (1) Environmental Law or (2) Release, threatened
Release or disposal of a Hazardous Material; and (ix) there are no conditions or
circumstances at any of the Premises which pose an unreasonable risk to the
environment or the health or safety of Persons.

 

Section 5.18 OFAC. (a) Each Borrower is in compliance with the requirements of
all OFAC Sanctions Programs applicable to it, (b) each Subsidiary of each
Borrower is in compliance with the requirements of all OFAC Sanctions Programs
applicable to such Subsidiary, (c) each Borrower has provided to Bank all
information regarding such Borrower and such Borrower’s Affiliates and
Subsidiaries necessary for Bank to comply with all applicable OFAC Sanctions
Programs, and (d) to the best of each Borrower’s knowledge, neither any Borrower
nor any of such Borrower’s Affiliates or Subsidiaries is, as of the date hereof,
named on the current OFAC SDN List.

 

26

 

 

Section 5.19 Other Agreements. Neither any Borrower nor any Subsidiary is in
default under the terms of any covenant, indenture or agreement of or affecting
such Person or any of its Property, which default if uncured could reasonably be
expected to have a Material Adverse Effect.

 

Section 5.20 Solvency. Each Borrower and such Borrower’s Subsidiaries are
solvent, able to pay their debts as they become due, and have sufficient capital
to carry on their business and all businesses in which they are about to engage.

 

Section 5.21 No Default. No Default or Event of Default has occurred and is
continuing.

 

Section 5.22 No Broker Fees. No broker’s or finder’s fee or commission will be
payable with respect hereto or any of the transactions contemplated hereby; and
each Borrower hereby agrees to indemnify Bank against, and agree that they will
hold Bank harmless from, any claim, demand, or liability for any such broker’s
or finder’s fees alleged to have been incurred in connection herewith or
therewith and any expenses (including reasonable attorneys’ fees) arising in
connection with any such claim, demand, or liability.

 

SECTION 6. AFFIRMATIVE COVENANTS.

 

Each Borrower agrees that, so long as any credit is available to or in use by
any Borrower hereunder:

 

Section 6.1 Maintenance of Business. Each Borrower shall, and shall cause each
Subsidiary to, preserve and maintain its existence. Each Borrower shall, and
shall cause each Subsidiary to, preserve and keep in force and effect all
licenses, permits, franchises, approvals, patents, trademarks, trade names,
trade styles, copyrights, and other proprietary rights necessary to the proper
conduct of its business where the failure to do so could reasonably be expected
to have a Material Adverse Effect.

 

Section 6.2 Maintenance of Properties. Each Borrower shall, and shall cause each
Subsidiary to, maintain, preserve, and keep its property, plant, and equipment
in good repair, working order and condition (ordinary wear and tear excepted),
and shall from time to time make all needful and proper repairs, renewals,
replacements, additions, and betterments thereto so that at all times the
efficiency thereof shall be fully preserved and maintained, except to the extent
that, in the reasonable business judgment of such Person, any such Property is
no longer necessary for the proper conduct of the business of such Person.

 

 

27

 

 

Section 6.3 Taxes and Assessments. Each Borrower shall duly pay and discharge,
and shall cause each Subsidiary to duly pay and discharge, all taxes, rates,
assessments, fees, and governmental charges upon or against it or its Property,
in each case before the same become delinquent and before penalties accrue
thereon, unless and to the extent that the same are being contested in good
faith and by appropriate proceedings which prevent enforcement of the matter
under contest and adequate reserves are provided therefor.

 

Section 6.4 Insurance. Each Borrower shall insure and keep insured, and shall
cause each Subsidiary to insure and keep insured, with good and responsible
insurance companies, all insurable Property owned by it which is of a character
usually insured by Persons similarly situated and operating like Properties
against loss or damage from such hazards and risks (including flood insurance
with respect to any improvements on real Property consisting of building or
parking facilities in an area designated by a governmental body as having
special flood hazards), and in such amounts, as are insured by Persons similarly
situated and operating like Properties, but in no event at any time in an amount
less than the replacement value of the Collateral. Each Borrower shall also
maintain, and shall cause each Subsidiary to maintain, insurance with respect to
the business of such Borrower and its Subsidiaries, covering commercial general
liability, statutory worker’s compensation and occupational disease, statutory
structural work act liability, and business interruption and such other risks
with good and responsible insurance companies, in such amounts and on such terms
as Bank shall reasonably request, but in any event as and to the extent usually
insured by Persons similarly situated and conducting similar businesses. Each
Borrower shall in any event maintain insurance on the Collateral to the extent
required by the Collateral Documents. All such policies of insurance shall
contain satisfactory lender's loss payable endorsements, naming Bank as a loss
payee, assignee or additional insured, as appropriate, as its interest may
appear, and showing only such other loss payees, assignees and additional
insureds as are satisfactory to Bank. Each policy of insurance or endorsement
shall contain a clause requiring the insurer to give not less than 30 days'
prior written notice to Bank in the event of cancellation of the policy for any
reason whatsoever and a clause specifying that the interest of Bank shall not be
impaired or invalidated by any act or neglect of any Borrower, any of such
Borrower’s Subsidiaries, or the owner of the premises or Property or by the
occupation of the premises for purposes more hazardous than are permitted by
said policy. Borrowers shall deliver to Bank (a) on the date of this Agreement,
and at such other times as Bank shall reasonably request, certificates
evidencing the maintenance of insurance required hereunder, (b) prior to the
termination of any such policies, certificates evidencing the renewal thereof,
and (c) promptly following request by Bank, copies of all insurance policies of
each Borrower and such Borrower’s Subsidiaries. Each Borrower also agrees to
deliver to Bank, promptly as rendered, true copies of all reports made in any
reporting forms to insurance companies. UNLESS BORROWERS PROVIDE EVIDENCE OF THE
INSURANCE COVERAGE REQUIRED UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS,
BANK MAY PURCHASE INSURANCE AT BORROWERS’ EXPENSE TO PROTECT BANK’S INTEREST IN
THE COLLATERAL. THIS INSURANCE MAY, BUT NEED NOT, PROTECT BORROWERS’ INTERESTS.
THE COVERAGE THAT BANK PURCHASES MAY NOT PAY ANY CLAIM THAT BORROWERS MAY MAKE
OR ANY CLAIM THAT IS MADE AGAINST BORROWERS IN CONNECTION WITH THE COLLATERAL.
BORROWERS MAY LATER CANCEL ANY INSURANCE PURCHASED BY BANK, BUT ONLY AFTER
PROVIDING EVIDENCE THAT BORROWERS HAVE OBTAINED INSURANCE AS REQUIRED BY THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS. IF BANK PURCHASES INSURANCE FOR THE
COLLATERAL, BORROWERS WILL BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE,
INCLUDING THE INSURANCE PREMIUM, INTEREST AND ANY OTHER CHARGES BANK MAY IMPOSE
IN CONNECTION WITH THE PLACEMENT OF INSURANCE, UNTIL THE EFFECTIVE DATE OF THE
CANCELLATION OR EXPIRATION OF THE INSURANCE. THE COSTS OF THE INSURANCE MAY BE
ADDED TO BORROWERS’ OBLIGATIONS. THE COSTS OF THE INSURANCE MAY BE MORE THAN THE
COST OF INSURANCE BORROWERS MAY BE ABLE TO OBTAIN ON THEIR OWN.

 

 

28

 

 

Section 6.5 Financial Reports. Each Borrower shall, and shall cause each
Subsidiary to, maintain a standard system of accounting in accordance with GAAP
and shall furnish to Bank and its duly authorized representatives such
information respecting the business and financial condition of such Borrower and
each Subsidiary as Bank may reasonably request; and without any request, shall
furnish to Bank:

 

(a) as soon as available, and in any event no later than 45 days after the last
day of each fiscal quarter of Borrowers, excluding the fiscal quarter ending on
the last day of the fiscal year of Borrowers, a copy of the consolidated balance
sheet of each Borrower and its Subsidiaries as of the last day of such period
and the consolidated statements of income and cash flows of each Borrower and
its Subsidiaries for the fiscal quarter then ended and the fiscal year-to-date
period then ended, each in reasonable detail showing in comparative form the
figures for the corresponding date and period in the previous fiscal year,
prepared by each Borrower in accordance with GAAP and certified to by each
Borrower’s chief financial officer or such other officer acceptable to Bank;

 

(b) as soon as available, and in any event within 120 days after the last day of
each fiscal year of Borrowers, a copy of the consolidated balance sheet of
Borrowers and their Subsidiaries as of the close of such period and the
consolidated statements of income, retained earnings, and cash flows of
Borrowers and their Subsidiaries for such period, and accompanying notes
thereto, each in reasonable detail showing in comparative form the figures for
the previous fiscal year, accompanied by an unqualified opinion thereon of an
independent public accountant of recognized standing, selected by Borrowers and
satisfactory to Bank, to the effect that the financial statements have been
prepared in accordance with GAAP and present fairly in accordance with GAAP the
consolidated financial condition of Borrowers and their Subsidiaries as of the
close of such fiscal year and the results of their operations and cash flows for
the fiscal year then ended and that an examination of such accounts in
connection with such financial statements has been made in accordance with
generally accepted auditing standards and, accordingly, such examination
included such tests of the accounting records and such other auditing procedures
as were considered necessary in the circumstances;

 

(c) within the period provided in subsection (b) above, the written statement of
the accountants who certified the audit report thereby required that in the
course of their audit they have obtained no knowledge of any Default or Event of
Default, or, if such accountants have obtained knowledge of any such Default or
Event of Default, they shall disclose in such statement the nature and period of
the existence thereof;

 

29

 

 

(d) promptly after receipt thereof, any additional written reports, management
letters or other detailed information contained in writing concerning
significant aspects of such Borrower’s or any Subsidiary’s operations and
financial affairs given to it by its independent public accountants;

 

(e) promptly after the sending or filing thereof, copies of each financial
statement, report, notice or proxy statement sent by such Borrower or any
Subsidiary to its stockholders or other equity holders, and copies of each
regular, periodic or special report, registration statement or prospectus
(including all Form 10 K, Form 10 Q and Form 8 K reports) filed by such Borrower
or any Subsidiary with any securities exchange or the Securities and Exchange
Commission or any successor agency;

 

(f) promptly after receipt thereof, a copy of each audit made by any regulatory
agency of the books and records of such Borrower or any Subsidiary or of notice
of any material noncompliance with any applicable law, regulation or guideline
relating to such Borrower or any Subsidiary, or its business;

 

(g) promptly after knowledge thereof shall have come to the attention of any
responsible officer of such Borrower, written notice of (i) any threatened or
pending litigation or governmental or arbitration proceeding or labor
controversy against such Borrower or any Subsidiary or any of their Property
which, if adversely determined, could reasonably be expected to have a Material
Adverse Effect or (ii) the occurrence of any Default or Event of Default
hereunder; and

 

(h) with each of the financial statements delivered pursuant to subsections (a)
and (b) above, a written certificate in the form attached hereto as Exhibit B
signed by the chief financial officer of such Borrower or another officer of
such Borrower acceptable to Bank to the effect that to the best of such
officer’s knowledge and belief no Default or Event of Default has occurred
during the period covered by such statements or, if any such Default or Event of
Default has occurred during such period, setting forth a description of such
Default or Event of Default and specifying the action, if any, taken by such
Borrower or any Subsidiary to remedy the same. Such certificate shall also set
forth the calculations supporting such statements in respect of Section 7.12
(Financial Covenants).

 

Section 6.6 Inspection. Each Borrower shall, and shall cause each Subsidiary to,
permit Bank and its duly authorized representatives and agents to visit and
inspect any of its Property, corporate books, and financial records, to examine
and make copies of its books of accounts and other financial records, and to
discuss its affairs, finances, and accounts with, and to be advised as to the
same by, its officers, employees and independent public accountants (and by this
provision each Borrower hereby authorizes such accountants to discuss with Bank
the finances and affairs of such Borrower and its Subsidiaries) at such
reasonable times and intervals as Bank may designate.

 

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Section 6.7 ERISA. Each Borrower shall, and shall cause each Subsidiary to,
promptly pay and discharge all obligations and liabilities arising under ERISA
of a character which if unpaid or unperformed could reasonably be expected to
result in the imposition of a Lien against any of its Property. Each Borrower
shall, and shall cause each Subsidiary to, promptly notify Bank of: (a) the
occurrence of any reportable event (as defined in ERISA) with respect to a Plan,
(b) receipt of any notice from the PBGC of its intention to seek termination of
any Plan or appointment of a trustee therefor, (c) its intention to terminate or
withdraw from any Plan, and (d) the occurrence of any event with respect to any
Plan which would result in the incurrence by any Borrower or any Subsidiary of
any material liability, fine or penalty, or any material increase in the
contingent liability of such Borrower or any Subsidiary with respect to any post
retirement Welfare Plan benefit.

 

Section 6.8 Compliance with Laws.

 

(a) Each Borrower shall, and shall cause each Subsidiary to, comply in all
respects with the requirements of all federal, state, and local laws, rules,
regulations, ordinances and orders applicable to or pertaining to its Property
or business operations, where any such non- compliance, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect or
result in a Lien upon any of its Property.

 

(b) Without limiting the agreements set forth in Section 6.8(a) above, each
Borrower shall, and shall cause each Subsidiary to, at all times, do the
following to the extent the failure to do so, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect: (i) comply in
all material respects with, and maintain each of the Premises in compliance in
all material respects with, all applicable Environmental Laws; (ii) require that
each tenant and subtenant, if any, of any of the Premises or any part thereof
comply in all material respects with all applicable Environmental Laws; (iii)
obtain and maintain in full force and effect all material governmental approvals
required by any applicable Environmental Law for operations at each of the
Premises; (iv) cure any material violation by it or at any of the Premises of
applicable Environmental Laws; (v) not allow the presence or operation at any of
the Premises of any (1) landfill or dump or (2) hazardous waste management
facility or solid waste disposal facility as defined pursuant to RCRA or any
comparable state law; (vi) not manufacture, use, generate, transport, treat,
store, release, dispose or handle any Hazardous Material at any of the Premises
except in the ordinary course of its business and in de minimis amounts; (vii)
within ten (10) Business Days notify Bank in writing of and provide any
reasonably requested documents upon learning of any of the following in
connection with any Borrower or any Subsidiary or any of the Premises: (1) any
material liability for response or corrective action, natural resource damage or
other harm pursuant to CERCLA, RCRA or any comparable state law; (2) any
material Environmental Claim; (3) any material violation of an Environmental Law
or material Release, threatened Release or disposal of a Hazardous Material; (4)
any restriction on the ownership, occupancy, use or transferability arising
pursuant to any (x) Release, threatened Release or disposal of a Hazardous
Material or (y) Environmental Law; or (5) any environmental, natural resource,
health or safety condition, which could reasonably be expected to have a
Material Adverse Effect; (viii) conduct at its expense any investigation, study,
sampling, testing, abatement, cleanup, removal, remediation or other response
action necessary to remove, remediate, clean up or abate any material Release,
threatened Release or disposal of a Hazardous Material as required by any
applicable Environmental Law, (ix) abide by and observe any restrictions on the
use of the Premises imposed by any Governmental Authority as set forth in a deed
or other instrument affecting any Borrower’s or any Subsidiary’s interest
therein; (x) promptly provide or otherwise make available to Bank any reasonably
requested environmental record concerning the Premises which any Borrower or any
Subsidiary possesses or can reasonably obtain; and (xi) perform, satisfy, and
implement any operation or maintenance actions required by any Governmental
Authority or Environmental Law, or included in any no further action letter or
covenant not to sue issued by any Governmental Authority under any Environmental
Law.

 

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Section 6.9 Compliance with OFAC Sanctions Programs.

 

(a) Each Borrower shall at all times comply with the requirements of all OFAC
Sanctions Programs applicable to such Borrower and shall cause each of its
Subsidiaries to comply with the requirements of all OFAC Sanctions Programs
applicable to such Subsidiary.

 

(b) Each Borrower shall provide Bank any information regarding such Borrower,
its Affiliates, and its Subsidiaries necessary for Bank to comply with all
applicable OFAC Sanctions Programs; subject however, in the case of Affiliates,
to such Borrower’s ability to provide information applicable to them.

 

(c) If any Borrower obtains actual knowledge or receives any written notice that
any Borrower, any Affiliate or any Subsidiary is named on the then current OFAC
SDN List (such occurrence, an “OFAC Event”), such Borrower shall promptly (i)
give written notice to Bank of such OFAC Event, and (ii) comply with all
applicable laws with respect to such OFAC Event (regardless of whether the party
included on the OFAC SDN List is located within the jurisdiction of the United
States of America), including the OFAC Sanctions Programs, and each Borrower
hereby authorizes and consents to Bank taking any and all steps Bank deems
necessary, in its sole discretion, to avoid violation of all applicable laws
with respect to any such OFAC Event, including the requirements of the OFAC
Sanctions Programs (including the freezing and/or blocking of assets and
reporting such action to OFAC).

 

Section 6.10 Formation of Subsidiaries. No Borrower shall, nor shall it permit
any Subsidiary to, form or acquire any other Subsidiary, without the prior
written consent of Bank and in such case Borrower shall timely comply with the
requirements of Section 6.12 (at which time Schedule 5.2 shall be deemed amended
to include reference to such Subsidiary). Except for Foreign Subsidiaries
existing on the Closing Date and identified on Schedule 5.2, No Borrower, nor
any Subsidiary of such Borrower, other than Reliv’ World Corporation shall be
permitted to form or acquire any Foreign Subsidiary, provided that, after
written notice is provided to Bank in writing, a Borrower or Subsidiary of such
Borrower may hold a minority interest in such Foreign Subsidiary formed or
acquired by Reliv’ World Corporation, but only if such ownership is required
pursuant to the laws governing such Foreign Subsidiary and only to the extent
that such ownership is required.

 

Section 6.11 Use of Proceeds; Margin Stock. Each Borrower shall use the credit
extended under this Agreement solely for the purposes set forth in, or otherwise
permitted by, Section 5.4. Neither any Borrower nor any Subsidiary will engage,
principally or as one of its important activities, in the business of purchasing
or carrying margin stock or in the business of extending credit for the purpose
of purchasing or carrying margin stock (within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System), and no part of the
proceeds of any Loan or any other extension of credit made hereunder will be
used to purchase or carry any such margin stock or to extend credit to others
for the purpose of purchasing or carrying any such margin stock.

 

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Section 6.12 Collateral.

 

(a) [Reserved].

 

(b) Collateral. The Obligations shall be secured by valid, perfected, and
enforceable Liens on all right, title, and interest of each Borrower in all of
their accounts, chattel paper, instruments, documents, general intangibles,
letter of credit rights, supporting obligations, deposit accounts, investment
property, inventory, equipment, fixtures, commercial tort claims, real estate
and certain other Property, whether now owned or hereafter acquired or arising,
and all proceeds thereof; provided that: (i) until a Default or Event of Default
has occurred and is continuing and thereafter until otherwise required by Bank,
Liens on local petty cash and payroll accounts maintained by Borrower and the
Subsidiaries in proximity to their operations need not be perfected provided
that each Borrower’s accounts maintained and utilized at Bank as of the Closing
Date shall continue to be maintained and utilized at Bank throughout the term of
this Credit Agreement, (ii) until a Default or Event of Default has occurred and
is continuing and thereafter until otherwise required by Bank, Liens on vehicles
which are subject to a certificate of title law need not be perfected, and (iii)
unless otherwise required by Bank during the existence of any Event of Default,
Liens on the Voting Stock of a Foreign Subsidiary which, if granted, would cause
a material adverse effect on Borrower’s federal income tax liability shall be
limited to 66% of the total outstanding Voting Stock of such Foreign Subsidiary.
Each Borrower acknowledges and agrees that the Liens on the Collateral shall be
valid and perfected first priority Liens subject, however, to the proviso
appearing at the end of the preceding sentence, in each case pursuant to one or
more Collateral Documents from such Persons, each in form and substance
satisfactory to Bank.

 

(c) Liens on Real Property. The Obligations shall be secured by a valid and
enforceable first priority lien on the Mortgaged Premises pursuant to the
Mortgages. In the event that any Borrower or any Subsidiary owns or hereafter
acquires any real property, such Borrower shall, or shall cause such Subsidiary
to, execute and deliver to Bank a mortgage or deed of trust acceptable in form
and substance to Bank for the purpose of granting to Bank (or a security trustee
therefor) a Lien on such real property to secure the Obligations, shall pay all
taxes, costs, and expenses incurred by Bank in recording such mortgage or deed
of trust, and shall supply to Bank at such Borrower’s cost and expense a survey,
environmental report, hazard insurance policy, appraisal report, and a
mortgagee’s policy of title insurance from a title insurer acceptable to Bank
insuring the validity of such mortgage or deed of trust and its status as a
first Lien (subject to Liens expressly permitted by this Agreement) on the real
property encumbered thereby and such other instrument, documents, certificates,
and opinions reasonably required by Bank in connection therewith.

 

 

33

 

 

(d) Further Assurances. Each Borrower agrees that it shall, and shall cause each
Subsidiary to, from time to time at the request of Bank, execute and deliver
such documents and do such acts and things as Bank may reasonably request in
order to provide for or perfect or protect Bank’s Liens on the Collateral.

 

 

SECTION 7. NEGATIVE COVENANTS.

 

Section 7.1 Borrowings and Guaranties. No Borrower shall, nor shall any Borrower
permit any Subsidiary to, issue, incur, assume, create or have outstanding any
Indebtedness for Borrowed Money, or incur liabilities for interest rate,
currency, or commodity cap, collar, swap, or similar hedging arrangements, or be
or become liable as endorser, guarantor, surety or otherwise for any debt,
obligation or undertaking of any other Person, or otherwise agree to provide
funds for payment of the obligations of another, or supply funds thereto or
invest therein or otherwise assure a creditor of another against loss, or apply
for or become liable to the issuer of a letter of credit which supports an
obligation of another, or subordinate any claim or demand it may have to the
claim or demand of any other Person; provided that the foregoing shall not
restrict nor operate to prevent:

 

(a) the Obligations of each Borrower and its Subsidiaries owing to Bank under
the Loan Documents and other indebtedness and obligations of such Persons owing
to Bank;

 

(b) purchase money indebtedness and Capitalized Lease Obligations of Borrower
and its Subsidiaries in an amount not to exceed $100,000.00 in the aggregate at
any one time outstanding;

 

(c) obligations of each Borrower or any Subsidiary arising out of interest rate,
foreign currency, and commodity hedging agreements entered into with financial
institutions in connection with bona fide hedging activities in the ordinary
course of business and not for speculative purposes;

 

(d) endorsement of items for deposit or collection of commercial paper received
in the ordinary course of business;

 

(e) indebtedness from time to time owing by any Subsidiary to any Borrower in
the ordinary course of business to finance working capital needs;

 

(f) indebtedness of SL Technology, Inc. arising pursuant to the Technology
Licensing Agreement outstanding on the Closing Date, as reduced by permitted
payments thereon;

 

(g) the obligations of Reliv’ International, Inc. arising out of that certain
guaranty made pursuant to the Technology Licensing Agreement;

 

(h) obligations of each Borrower or any Subsidiary arising out of insurance
premium finance agreements entered into with financial institutions in
connection with bona fide insurance premium financing activities in the ordinary
course of business;

 

(i) unsecured indebtedness of each Borrower and its Subsidiaries not otherwise
permitted by this Section in an amount not to exceed $50,000.00 in the aggregate
at any one time outstanding.

 

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Section 7.2 Liens. No Borrower shall, nor shall any Borrower permit any
Subsidiary to, create, incur or permit to exist any Lien of any kind on any
Property owned by any such Person; provided that the foregoing shall not apply
to nor operate to prevent:

 

(a) Liens arising by statute in connection with worker’s compensation,
unemployment insurance, old age benefits, social security obligations, taxes,
assessments, statutory obligations or other similar charges (other than Liens
arising under ERISA), good faith cash deposits in connection with tenders,
contracts or leases to which any Borrower or any Subsidiary is a party or other
cash deposits required to be made in the ordinary course of business; provided
in each case that the obligation is not for borrowed money and that the
obligation secured is not overdue or, if overdue, is being contested in good
faith by appropriate proceedings which prevent enforcement of the matter under
contest and adequate reserves have been established therefor;

 

(b) mechanics’, workmen’s, materialmen’s, landlords’, carriers’ or other similar
Liens arising in the ordinary course of business with respect to obligations
which are not due or which are being contested in good faith by appropriate
proceedings which prevent enforcement of the matter under contest;

 

(c) judgment liens and judicial attachment liens not constituting an Event of
Default under Section 8.1(g) and the pledge of assets for the purpose of
securing an appeal, stay or discharge in the course of any legal proceeding;
provided that the aggregate amount of such judgment liens and attachments and
liabilities of any Borrower and its Subsidiaries secured by a pledge of assets
permitted under this subsection, including interest and penalties thereon, if
any, shall not be in excess of $25,000.00 at any one time outstanding;

 

(d) Liens on equipment of Borrower or any Subsidiary created solely for the
purpose of securing indebtedness permitted by Section 7.1(b), representing or
incurred to finance the purchase price of such Property; provided that no such
Lien shall extend to or cover other Property of Borrower or such Subsidiary
other than the respective Property so acquired, and the principal amount of
indebtedness secured by any such Lien shall at no time exceed the purchase price
of such Property, as reduced by repayments of principal thereon;

 

(e) any interest or title of a lessor under any operating lease;

 

(f) easements, rights of way, restrictions, and other similar encumbrances
against real property incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not materially detract
from the value of the Property subject thereto or materially interfere with the
ordinary conduct of the business of Borrower or any Subsidiary; and

 

(g) Liens granted in favor of Bank pursuant to the Collateral Documents.

 

35

 

 

Section 7.3 Investments, Acquisitions, Loans and Advances. No Borrower shall,
nor shall they permit any Subsidiary to, directly or indirectly, make, retain or
have outstanding any investments (whether through purchase of stock or
obligations or otherwise) in, or loans or advances to (other than for travel
advances and other similar cash advances made to employees in the ordinary
course of business), any other Person, or acquire all or any substantial part of
the assets or business of any other Person or division thereof; provided that
the foregoing shall not apply to nor operate to prevent:

 

(a) investments in direct obligations of the United States of America or of any
agency or instrumentality thereof whose obligations constitute full faith and
credit obligations of the United States of America, provided that any such
obligations shall mature within one year of the date of issuance thereof;

 

(b) investments in commercial paper rated at least P-1 by Moody’s and at least
A-1 by S&P maturing within one year of the date of issuance thereof;

 

(c) investments in certificates of deposit issued by Bank or by any United
States commercial bank having capital and surplus of not less than $100,000,000
which have a maturity of one year or less;

 

(d) investments in repurchase obligations with a term of not more than 7 days
for underlying securities of the types described in subsection (a) above entered
into with any bank meeting the qualifications specified in subsection (c) above,
provided all such agreements require physical delivery of the securities
securing such repurchase agreement, except those delivered through the Federal
Reserve Book Entry System;

 

(e) investments in money market funds that invest solely, and which are
restricted by their respective charters to invest solely, in investments of the
type described in the immediately preceding subsections (a), (b), (c), and (d)
above;

 

(f) any Borrower’s investment existing on the date of this Agreement in its
Subsidiaries or any Borrower’s investments from time to time in its
Subsidiaries, and investments made from time to time by a Subsidiary in one or
more of its Subsidiaries;

 

(g) intercompany advances made from time to time from any Borrower to any one or
more Subsidiaries in the ordinary course of business to finance working capital
needs;

 

(h) other investments, loans, and advances in addition to those otherwise
permitted by this Section in an amount not to exceed $50,000.00 in the aggregate
at any one time outstanding;

 

(i) Advances made to vendors under the terms of a purchase order or similar
commitment made in the normal course of business; and

 

(j) That certain promissory note and mortgage on certain properties located in
Wyoming and Idaho, purchased in March 2012 for an original purchase price of $2
million, secured by, among other things, the borrower’s Reliv distributorship
business.

 

36

 

 

In determining the amount of investments, acquisitions, loans, and advances
permitted under this Section, investments and acquisitions shall always be taken
at the original cost thereof (regardless of any subsequent appreciation or
depreciation therein), and loans and advances shall be taken at the principal
amount thereof then remaining unpaid.

 

Section 7.4 Mergers, Consolidations and Sales. No Borrower shall, nor shall they
permit any Subsidiary to, be a party to any merger or consolidation, or sell,
transfer, lease or otherwise dispose of all or any part of its Property,
including any disposition of Property as part of a sale and leaseback
transaction, or in any event sell or discount (with or without recourse) any of
its notes or accounts receivable; provided that this Section shall not apply to
nor operate to prevent:

 

(a) the sale or lease of inventory in the ordinary course of business;

 

(b) the sale, transfer or other disposition of any tangible personal property
that, in the reasonable business judgment of such Borrower or its Subsidiary,
has become obsolete or worn out, and which is disposed of in the ordinary course
of business; and

 

(c) the sale, transfer, lease or other disposition of Property of any Borrower
or any Subsidiary (including any disposition of Property as part of a sale and
leaseback transaction) aggregating for all Borrowers and their Subsidiaries with
a net book value of not more than $100,000.00 during any fiscal year of
Borrowers.

 

Section 7.5 Maintenance of Subsidiaries. No Borrower shall assign, sell or
transfer, nor shall they permit any Subsidiary to issue, assign, sell or
transfer, any shares of capital stock or other equity interests of a Subsidiary;
provided that the foregoing shall not operate to prevent (a) Liens on the
capital stock or other equity interests of Subsidiaries granted to Bank pursuant
to the Collateral Documents, (b) the issuance, sale, and transfer to any person
of any shares of capital stock of a Subsidiary solely for the purpose of
qualifying, and to the extent legally necessary to qualify, such person as a
director of such Subsidiary, and (c) any transaction permitted by Section 7.4(c)
above.

 

Section 7.6 Dividends and Certain Other Restricted Payments. So long as no
Default or Event of Default has occurred and is continuing, Borrowers shall be
permitted to, (a) declare or pay any dividends on or make any other
distributions in respect of any class or series of its capital stock or other
equity interests (other than dividends or distributions payable solely in its
capital stock or other equity interests), and (b) directly or indirectly
purchase, redeem, or otherwise acquire or retire any of its capital stock or
other equity interests or any warrants, options, or similar instruments to
acquire the same. Other than inter-company management fees, no Borrower shall,
nor shall it permit any Subsidiary to, directly or indirectly pay any management
fees (collectively referred to herein as “Restricted Payments”).

 

Section 7.7 Burdensome Contracts With Affiliates. No Borrower shall, nor shall
such Borrower permit any Subsidiary to, enter into any contract, agreement or
business arrangement with any of its Affiliates on terms and conditions which
are less favorable to such Borrower or such Subsidiary than would be usual and
customary in similar contracts, agreements or business arrangements between
Persons not affiliated with each other.

 

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Section 7.8 No Changes in Fiscal Year. The fiscal year of Borrowers and their
Subsidiaries ends on December 31st of each year; and no Borrower shall, nor
shall any Borrower permit any Subsidiary to, change its fiscal year from its
present basis.

 

Section 7.9 Change in the Nature of Business. No Borrower shall, nor shall any
Borrower permit any Subsidiary to, engage in any business or activity if as a
result the general nature of the business of such Borrower or any such
Subsidiary would be changed in any material respect from the general nature of
the business engaged in by it as of the Closing Date.

 

Section 7.10 No Restrictions. Except as provided herein, no Borrower shall, nor
shall such Borrower permit any Subsidiary to, directly or indirectly create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of such Borrower or any
such Subsidiary to: (a) pay dividends or make any other distribution on any such
Subsidiary’s capital stock or other equity interests owned by such Borrower or
any other Subsidiary, (b) pay any indebtedness owed to such Borrower or any
other Subsidiary, (c) make loans or advances to such Borrower or any other
Subsidiary, (d) transfer any of its Property to such Borrower or any other
Subsidiary, or (e) guarantee the Obligations and/or grant Liens on its assets to
Bank as required by the Loan Documents.

 

Section 7.11 Subordinated Debt. No Borrower shall, nor shall such Borrower
permit any Subsidiary to, (a) amend or modify any of the terms or conditions
relating to Subordinated Debt, (b) make any voluntary prepayment of Subordinated
Debt or effect any voluntary redemption thereof, or (c) make any payment on
account of Subordinated Debt which is prohibited under the terms of any
instrument or agreement subordinating the same to the Obligations.
Notwithstanding the foregoing, Borrowers may agree to a decrease in the interest
rate applicable thereto or to a deferral of repayment of any of the principal of
or interest on the Subordinated Debt beyond the current due dates therefor.

 

Section 7.12 Financial Covenants.

 

(a) Tangible Net Worth. Borrowers shall at all times maintain Net Worth of
Borrowers and their Subsidiaries determined on a consolidated basis in an amount
not less than (i) $11,000,000.00.

 

(b) Fixed Charge Coverage Ratio. As of the last day of each fiscal quarter of
Borrowers, Borrowers shall maintain a ratio of (i) EBITDA for the four fiscal
quarters of Borrower then ended, plus non-cash contributions of treasury shares
to such Borrower’s employee stock ownership plan, plus non-cash stock based
compensation, less unfinanced Capital Expenditures of Borrowers and Subsidiaries
for such period less dividends paid in cash by Borrowers during such period less
distributions paid in cash during by Borrowers such period less federal, state
and local income taxes paid by Borrowers during such period, to (ii) Fixed
Charges for the same four fiscal quarters then ended of not less than 1.15 to
1.0.

  

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SECTION 8. EVENTS OF DEFAULT AND REMEDIES.

 

Section 8.1 Events of Default. Any one or more of the following shall constitute
an “Event of Default” hereunder:

 

(a) default in the payment when due of all or any part of any Obligation payable
by any Borrower hereunder or under any other Loan Document (whether at the
stated maturity thereof or at any other time provided for in this Agreement), or
default shall occur in the payment when due of any other indebtedness or
obligation (whether direct, contingent or otherwise) of any Borrower owing to
Bank;

 

(b) default in the observance or performance of any covenant set forth in
Sections 6.1, 6.4, 6.5, 6.6, 6.11, or 7 or of any provision in any Loan Document
dealing with the use, disposition or remittance of the proceeds of Collateral or
requiring the maintenance of insurance thereon;

 

(c) default in the observance or performance of any other provision hereof or of
any other Loan Document which is not remedied within 10 days after the earlier
of (i) the date on which such failure shall first become known to any officer of
any Borrower or (ii) written notice thereof is given to any Borrower by Bank;

 

(d) any representation or warranty made herein or in any other Loan Document or
in any certificate furnished to Bank pursuant hereto or thereto or in connection
with any transaction contemplated hereby or thereby proves untrue in any respect
(or in any material respect if such representation, warranty, certification or
statement is not by its terms already qualified as to materiality) as of the
date of the issuance or making or deemed making thereof;

 

(e) any event occurs or condition exists (other than those described in
subsections (a) through (d) above) which is specified as an event of default
under any of the other Loan Documents, or any of the Loan Documents shall for
any reason not be or shall cease to be in full force and effect or is declared
to be null and void, or any of the Collateral Documents shall for any reason
fail to create a valid and perfected first priority Lien in favor of Bank in any
Collateral purported to be covered thereby except as expressly permitted by the
terms thereof, or any Subsidiary takes any action for the purpose of
terminating, repudiating or rescinding any Loan Document executed by it or any
of its obligations thereunder;

 

(f) default shall occur under any Indebtedness for Borrowed Money issued,
assumed or guaranteed by any Borrower or any Subsidiary, or under any indenture,
agreement or other instrument under which the same may be issued, and such
default shall continue for a period of time sufficient to permit the
acceleration of the maturity of any such Indebtedness for Borrowed Money
(whether or not such maturity is in fact accelerated), or any such Indebtedness
for Borrowed Money shall not be paid when due (whether by demand, lapse of time,
acceleration or otherwise);

 

(g) any judgment or judgments, writ or writs or warrant or warrants of
attachment, or any similar process or processes, shall be entered or filed
against any Borrower or any Subsidiary, or against any of its Property (except
to the extent fully covered by insurance pursuant to which the insurer has
accepted liability therefor in writing), and which remains undischarged,
unvacated, unbonded or unstayed for a period of 30 days;

 

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(h) any Borrower or any Subsidiary, or any member of its Controlled Group, shall
fail to pay when due an amount or amounts which it shall have become liable to
pay to the PBGC or to a Plan under Title IV of ERISA; or notice of intent to
terminate a Plan or Plans (collectively, a “Material Plan”) shall be filed under
Title IV of ERISA by any Borrower or any Subsidiary, or any other member of its
Controlled Group, any plan administrator or any combination of the foregoing; or
the PBGC shall institute proceedings under Title IV of ERISA to terminate or to
cause a trustee to be appointed to administer any Material Plan or a proceeding
shall be instituted by a fiduciary of any Material Plan against any Borrower or
any Subsidiary, or any member of its Controlled Group, to enforce Section 515 or
4219(c)(5) of ERISA and such proceeding shall not have been dismissed within 30
days thereafter; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any Material Plan must be
terminated;

 

(i) any Change of Control shall occur;

 

(j) any Borrower or any Subsidiary shall (i) have entered involuntarily against
it an order for relief under the United States Bankruptcy Code, as amended, (ii)
not pay, or admit in writing its inability to pay, its debts generally as they
become due, (iii) make an assignment for the benefit of creditors, (iv) apply
for, seek, consent to or acquiesce in, the appointment of a receiver, custodian,
trustee, examiner, liquidator or similar official for it or any substantial part
of its Property, (v) institute any proceeding seeking to have entered against it
an order for relief under the United States Bankruptcy Code, as amended, to
adjudicate it insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors or fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (vi) take any corporate
action in furtherance of any matter described in parts (i) through (v) above, or
(vii) fail to contest in good faith any appointment or proceeding described in
Section 8.1(k);

 

(k) a custodian, receiver, trustee, examiner, liquidator or similar official
shall be appointed for any Borrower or any Subsidiary, or any substantial part
of any of its Property, or a proceeding described in Section 8.1(j)(v) shall be
instituted against any Borrower or any Subsidiary, and such appointment
continues undischarged or such proceeding continues undismissed or unstayed for
a period of 60 days; or

 

(l) a default shall occur under the Technology Licensing Agreement, including,
but not limited to, any default in the payment when due of all or any part of
any Obligation of any Borrower thereunder.

 

Section 8.2 Non Bankruptcy Defaults. When any Event of Default (other than those
described in Section 8.1(j) or (k) with respect to any Borrower) has occurred
and is continuing, Bank may, by written notice to any Borrower: (a) terminate
the remaining Commitments and all other obligations of Bank hereunder on the
date stated in such notice (which may be the date thereof); (b) declare the
principal of and the accrued interest on all outstanding Loans to be forthwith
due and payable and thereupon all outstanding Loans, including both principal
and interest thereon, shall be and become immediately due and payable together
with all other amounts payable under the Loan Documents without further demand,
presentment, protest or notice of any kind; and (c) demand that Borrowers
immediately pay to Bank the full amount then available for drawing under each or
any Letter of Credit, and each Borrower agrees to immediately make such payment
and acknowledges and agrees that Bank would not have an adequate remedy at law
for failure by any Borrower to honor any such demand and that Bank shall have
the right to require each Borrower to specifically perform such undertaking
whether or not any drawings or other demands for payment have been made under
any Letter of Credit.

 

 

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Section 8.3 Bankruptcy Defaults. When any Event of Default described in Section
8.1(j) or (k) with respect to any Borrower has occurred and is continuing, then
all outstanding Loans together with all other amounts payable under the Loan
Documents shall immediately become due and payable without presentment, demand,
protest or notice of any kind, the obligation of Bank to extend further credit
pursuant to any of the terms hereof shall immediately terminate, each Borrower
acknowledging and agreeing that Bank would not have an adequate remedy at law
for failure by any Borrower to honor any such demand and that Bank shall have
the right to require each Borrower to specifically perform such undertaking.

 

Section 8.4 [Reserved].

 

SECTION 9. MISCELLANEOUS.

 

Section 9.1 No Waiver, Cumulative Remedies. No delay or failure on the part of
Bank in the exercise of any power or right under any Loan Document shall operate
as a waiver thereof or as an acquiescence in any default, nor shall any single
or partial exercise of any power or right preclude any other or further exercise
thereof or the exercise of any other power or right. The rights and remedies
hereunder of Bank are cumulative to, and not exclusive of, any rights or
remedies which Bank would otherwise have.

 

Section 9.2 Non-Business Days. If any payment hereunder becomes due and payable
on a day which is not a Business Day, the due date of such payment shall be
extended to the next succeeding Business Day on which date such payment shall be
due and payable . In the case of any payment of principal falling due on a day
which is not a Business Day, interest on such principal amount shall continue to
accrue during such extension at the rate per annum then in effect, which accrued
amount shall be due and payable on the next scheduled date for the payment of
interest.

 

Section 9.3 Survival of Representations. All representations and warranties made
herein or in any other Loan Document or in certificates given pursuant hereto or
thereto shall survive the execution and delivery of this Agreement and the other
Loan Documents, and shall continue in full force and effect with respect to the
date as of which they were made as long as any credit is in use or available
hereunder.

 

Section 9.4 Survival of Indemnity and Certain Other Provisions. All indemnity
provisions and other provisions relative to reimbursement to Bank of amounts
sufficient to protect the yield of Bank with respect to the Loans, including,
but not limited to, Sections 3.3, 3.6, and 9.10, shall survive the payment and
satisfaction of all Obligations and the termination of this Agreement and the
other Loan Documents, and shall remain in force beyond the expiration of any
applicable statute of limitations and payment or satisfaction in full of any
single claim thereunder. All such indemnity and other provisions shall be
binding upon the successors and assigns of each Borrower and shall inure to the
benefit of each applicable Indemnitee and its successors and assigns.

 

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Section 9.5 Notices. Except as otherwise specified herein, all notices hereunder
and under the other Loan Documents shall be in writing (including notice by
telecopy) and shall be given to the relevant party at its address or telecopier
number set forth below, or such other address or telecopier number as such party
may hereafter specify by notice to the other given by courier, by United States
certified or registered mail, by telecopy or by other telecommunication device
capable of creating a written record of such notice and its receipt. Notices
under the Loan Documents shall be addressed:

 

to Borrowers:

 

Reliv’, Inc.

136 Chesterfield Industrial Blvd.

Chesterfield, Missouri 63006

Attention: Steven Albright

Telephone: (636) 733-1305

Telecopy: (636) 489-4135

to Bank:

 

BMO Harris Bank N.A.

13205 Manchester Road

St. Louis, Missouri 63131

Attention: Kyle R. Rosborg

Telephone: (314) 543-3378

Telecopy: (314) 543-3377

 

 

Each such notice, request or other communication shall be effective (i) if given
by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section and a confirmation of such telecopy has been received
by the sender, (ii) if given by mail, 5 days after such communication is
deposited in the mail, certified or registered with return receipt requested,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the addresses specified in this Section; provided that any notice given pursuant
to Section 2 shall be effective only upon receipt.

 

Section 9.6 Counterparts. This Agreement may be executed in any number of
counterparts, and by the different parties hereto on separate counterpart
signature pages, each of which shall constitute an original, and all such
counterparts taken together shall be deemed to constitute one and the same
instrument.

 

Section 9.7 Successors and Assigns. This Agreement shall be binding upon each
Borrower and each Borrower’s successors and assigns, and shall inure to the
benefit of Bank and its successors and assigns, including any subsequent holder
of any of the Obligations. No Borrower may assign any of its rights or
obligations under any Loan Document without the written consent of Bank.

 

Section 9.8 Amendments, etc. No amendment, modification, termination or waiver
of any provision of this Agreement or of any other Loan Document, nor consent to
any departure by any Borrower therefrom, shall in any event be effective unless
the same shall be in writing and signed by each Borrower and Bank. No notice to
or demand on any Borrower in any case shall entitle any Borrower to any other or
further notice or demand in similar or other circumstances.

 

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Section 9.9 Headings. Article and Section headings used in this Agreement are
for reference only and shall not affect the construction of this Agreement.

 

Section 9.10 Costs and Expenses; Indemnification.

 

(a) Each Borrower agrees to pay all costs and expenses of Bank in connection
with the preparation, negotiation, execution, delivery, and administration of
the Loan Documents, including the reasonable fees and disbursements of counsel
to Bank, in connection with the preparation and execution of the Loan Documents
and in connection with the transactions contemplated hereby or thereby, and any
amendment, waiver or consent related thereto, whether or not the transactions
contemplated herein are consummated, together with any fees and charges suffered
or incurred by Bank in connection with periodic environmental audits, fixed
asset appraisals, title insurance policies, collateral filing fees and lien
searches. Each Borrower agrees to pay to Bank all costs and expenses incurred or
paid by Bank, including reasonable attorneys’ fees and disbursements and court
costs, in connection with any Default or Event of Default hereunder or in
connection with the enforcement of any of the Loan Documents (including all such
costs and expenses incurred in connection with any proceeding under the United
States Bankruptcy Code involving any Borrower or any Subsidiary as a debtor
thereunder). Each Borrower further agrees to indemnify Bank, and any security
trustee therefor, and their respective directors, officers, employees, agents,
financial advisors, and consultants (each such Person being called an
“Indemnitee”) against all losses, claims, damages, penalties, judgments,
liabilities and expenses (including all reasonable fees and disbursements of
counsel for any such Indemnitee and all reasonable expenses of litigation or
preparation therefor, whether or not the Indemnitee is a party thereto, or any
settlement arrangement arising from or relating to any such litigation) which
any of them may pay or incur arising out of or relating to any Loan Document or
any of the transactions contemplated thereby or the direct or indirect
application or proposed application of the proceeds of any Loan or Letter of
Credit, other than those which arise from the gross negligence or willful
misconduct of the party claiming indemnification. Each Borrower, upon demand by
Bank at any time, shall reimburse Bank for any legal or other expenses
(including all reasonable fees and disbursements of counsel for any such
Indemnitee) incurred in connection with investigating or defending against any
of the foregoing (including any settlement costs relating to the foregoing)
except if the same is directly due to the gross negligence or willful misconduct
of the party to be indemnified. To the extent permitted by applicable law, no
Borrower shall assert or cause any Subsidiary to assert, and hereby waives, any
claim against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or the
other Loan Documents or any agreement or instrument contemplated hereby or
thereby, the transactions contemplated hereby or thereby, any Loan or Letter of
Credit or the use of the proceeds thereof.

 

(b) Each Borrower unconditionally agrees to forever indemnify, defend and hold
harmless, and covenants not to sue for any claim for contribution against, each
Indemnitee for any damages, costs, loss or expense, including, response,
remedial or removal costs and all fees and disbursements of counsel for any such
Indemnitee, arising out of any of the following: (i) any presence, release,
threatened release or disposal of any hazardous or toxic substance or petroleum
by any Borrower or any Subsidiary or otherwise occurring on or with respect to
its Property (whether owned or leased), (ii) the operation or violation of any
environmental law, whether federal, state, or local, and any regulations
promulgated thereunder, by any Borrower or any Subsidiary or otherwise occurring
on or with respect to its Property (whether owned or leased), (iii) any claim
for personal injury or property damage in connection with any Borrower or any
Subsidiary or otherwise occurring on or with respect to its Property (whether
owned or leased), and (iv) the inaccuracy or breach of any environmental
representation, warranty or covenant by any Borrower or any Subsidiary made
herein or in any other Loan Document evidencing or securing any Obligations or
setting forth terms and conditions applicable thereto or otherwise relating
thereto, except for damages arising from the willful misconduct or gross
negligence of the relevant Indemnitee.

 

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Section 9.11 Set off. In addition to any rights now or hereafter granted under
the Loan Documents or applicable law and not by way of limitation of any such
rights, upon the occurrence of any Event of Default, Bank and each of its
affiliates is hereby authorized by each Borrower at any time or from time to
time, without notice to any Borrower, or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate and to apply any
and all deposits (general or special, including, but not limited to,
indebtedness evidenced by certificates of deposit, whether matured or unmatured,
and in whatever currency denominated, but not including trust accounts) and any
other indebtedness at any time held or owing by Bank or that affiliate, to or
for the credit or the account of any Borrower, whether or not matured, against
and on account of the Obligations of any Borrower to Bank under the Loan
Documents, including, but not limited to, all claims of any nature or
description arising out of or connected with the Loan Documents, irrespective of
whether or not (a) Bank shall have made any demand hereunder or (b) the
principal of or the interest on the Loans and other amounts due hereunder shall
have become due and payable pursuant to Section 8 and although said obligations
and liabilities, or any of them, may be contingent or unmatured.

 

Section 9.12 Entire Agreement. The Loan Documents constitute the entire
understanding of the parties thereto with respect to the subject matter thereof
and any prior agreements, whether written or oral, with respect thereto are
superseded hereby.

 

This notice is provided pursuant to Section 432.047, R.S.Mo. As used herein,
“creditor” means Bank, the “credit agreement” means this Credit Agreement, and
“this writing” means the Credit Agreement, the Notes, the other Loan Documents,
all guaranties executed by any other obligors, and any other agreement executed
in connection herewith or therewith. ORAL OR UNEXECUTED AGREEMENTS OR
COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT
OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE,
REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED THAT IS IN ANY WAY RELATED
TO THE CREDIT AGREEMENT. TO PROTECT YOU (BORROWER(S)) AND US (CREDITOR) FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH
MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE
STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING
TO MODIFY IT. This Agreement embodies the entire agreement and understanding
between the parties hereto and supersedes all prior agreements and
understandings (oral or written) relating to the subject matter hereof.

 

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Section 9.13 Governing Law. This Agreement and the other Loan Documents (except
as otherwise specified therein), and any claim, controversy, dispute or cause of
action (whether in contract, tort or otherwise) based upon, arising out of or
relating to this Agreement or any Loan Document, and the rights and duties of
the parties hereto, shall be governed by and construed and determined in
accordance with the internal laws of the State of Missouri.

 

Section 9.14 Severability of Provisions. Any provision of any Loan Document that
is unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such unenforceability without invalidating the
remaining provisions hereof or affecting the enforceability of such provision in
any other jurisdiction. All rights, remedies and powers provided in this
Agreement and the other Loan Documents may be exercised only to the extent that
the exercise thereof does not violate any applicable mandatory provisions of
law, and all the provisions of this Agreement and other Loan Documents are
intended to be subject to all applicable mandatory provisions of law which may
be controlling and to be limited to the extent necessary so that they will not
render this Agreement or the other Loan Documents invalid or unenforceable.

 

Section 9.15 Excess Interest. Notwithstanding any provision to the contrary
contained herein or in any other Loan Document, no such provision shall require
the payment or permit the collection of any amount of interest in excess of the
maximum amount of interest permitted by applicable law to be charged for the use
or detention, or the forbearance in the collection, of all or any portion of the
Loans or other obligations outstanding under this Agreement or any other Loan
Document (“Excess Interest”). If any Excess Interest is provided for, or is
adjudicated to be provided for, herein or in any other Loan Document, then in
such event (a) the provisions of this Section shall govern and control, (b)
neither any Borrower nor any guarantor or endorser shall be obligated to pay any
Excess Interest, (c) any Excess Interest that Bank may have received hereunder
shall, at the option of Bank, be (i) applied as a credit against the then
outstanding principal amount of Obligations hereunder and accrued and unpaid
interest thereon (not to exceed the maximum amount permitted by applicable law),
(ii) refunded to Borrowers, or (iii) any combination of the foregoing, (d) the
interest rate payable hereunder or under any other Loan Document shall be
automatically subject to reduction to the maximum lawful contract rate allowed
under applicable usury laws (the “Maximum Rate”), and this Agreement and the
other Loan Documents shall be deemed to have been, and shall be, reformed and
modified to reflect such reduction in the relevant interest rate, and (e)
neither any Borrower nor any guarantor or endorser shall have any action against
Bank for any damages whatsoever arising out of the payment or collection of any
Excess Interest. Notwithstanding the foregoing, if for any period of time
interest on any of the Obligations is calculated at the Maximum Rate rather than
the applicable rate under this Agreement, and thereafter such applicable rate
becomes less than the Maximum Rate, the rate of interest payable on the
Obligations shall remain at the Maximum Rate until Bank have received the amount
of interest which Bank would have received during such period on the Obligations
had the rate of interest not been limited to the Maximum Rate during such
period.

 

45

 

 

 

Section 9.16 Construction. The parties acknowledge and agree that the Loan
Documents shall not be construed more favorably in favor of any party hereto
based upon which party drafted the same, it being acknowledged that all parties
hereto contributed substantially to the negotiation of the Loan Documents. The
provisions of this Agreement relating to Subsidiaries shall only apply during
such times as any Borrower has one or more Subsidiaries. Nothing contained
herein shall be deemed or construed to permit any act or omission which is
prohibited by the terms of any Collateral Document, the covenants and agreements
contained herein being in addition to and not in substitution for the covenants
and agreements contained in the Collateral Documents.

 

Section 9.17 Submission to Jurisdiction; Waiver of Venue; Service of Process.

 

(a) EACH BORROWER IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS
PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF MISSOURI
SITTING IN ST. LOUIS COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE
EASTERN DISTRICT OF MISSOURI, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF
THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH
STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH
FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY
SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT
THAT BANK MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY BORROWER OR ITS PROPERTY IN THE
COURTS OF ANY OTHER JURISDICTION.

 

(b) EACH BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH
(a) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

46

 

 

 

(a) EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER
PROVIDED FOR NOTICES IN SECTION 9.5. NOTHING IN THIS AGREEMENT WILL AFFECT THE
RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
APPLICABLE LAW.

 

Section 9.18 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

Section 9.19 USA Patriot Act. Bank hereby notifies each Borrower that pursuant
to the requirements of the USA Patriot Act (Title III of Pub. L. 107 56 (signed
into law October 26, 2001)) (the “Act”), it is required to obtain, verify, and
record information that identifies each Borrower, which information includes the
name and address of such Borrower and other information that will allow Bank to
identify such Borrower in accordance with the Act.

 

Section 9.20 Confidentiality. Bank agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates’ directors, officers, employees and agents, including
accountants, legal counsel and other advisors to the extent any such Person has
a need to know such Information (it being understood that the Persons to whom
such disclosure is made will first be informed of the confidential nature of
such Information and instructed to keep such Information confidential), (b) to
the extent requested by any regulatory authority (including any self-regulatory
authority, such as the National Association of Insurance Commissioners), (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party hereto, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any suit,
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to (A)
any assignee of or participant in, or any prospective assignee of or participant
in, any of its rights or obligations under this Agreement or (B) any actual or
prospective counterparty (or its advisors) to any swap or derivative transaction
relating to any Borrower or any Subsidiary and its obligations, (g) with the
prior written consent of Borrowers, (h) to the extent such Information (A)
becomes publicly available other than as a result of a breach of this Section or
(B) becomes available to Bank or any of its Affiliates on a non-confidential
basis from a source other than any Borrower or any Subsidiary or any of their
directors, officers, employees or agents, including accountants, legal counsel
and other advisors, or (i) to rating agencies if requested or required by such
agencies in connection with a rating relating to the Loans or Commitments
hereunder; provided that only basic information about the pricing and structure
of the transaction evidenced hereby may be disclosed pursuant to this subsection
(j). For purposes of this Section, “Information” means all information received
from any Borrower or any of the Subsidiaries or from any other Person on behalf
of any Borrower or any Subsidiary relating to such Borrower or any Subsidiary or
any of their respective businesses, other than any such information that is
available to Bank on a non-confidential basis prior to disclosure by such
Borrower or any of its Subsidiaries or from any other Person on behalf of such
Borrower or any of the Subsidiaries; provided that, in the case of information
received from any Borrower or any Subsidiary, or on behalf of any Borrower or
any Subsidiary, after the date hereof, such information is clearly identified at
the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.

 

[Signature Pages to Follow]

 

47

 

 

 

This Credit Agreement is entered into between us for the uses and purposes
hereinabove set forth as of the date first above written.

 

  “Borrowers”       RELIV’ INTERNATIONAL, INC.           By: /s/ Steven D.
Albright   Name: Steven D. Albright   Title: Chief Financial Officer      
RELIV’, INC.           By: /s/ Steven D. Albright   Name: Steven D. Albright  
Title: Chief Financial Officer       RELIV’ WORLD CORPORATION           By: /s/
Steven D. Albright   Name: Steven D. Albright   Title: Chief Financial Officer  
    SL TECHNOLOGY, INC.           By: /s/ Steven D. Albright   Name: Steven D.
Albright   Title: Chief Financial Officer       “Bank”       BMO Harris Bank
N.A.           By:   Name:   Title:

 

Signature Page to Credit Agreement

 

 

 

 

Exhibit A-1

 

Term Note

 

U.S. $3,481,961.16  St. Louis, Missouri    February 28, 2014

 

For Value Received, the undersigned, Reliv’ International, Inc., a Delaware
corporation, Reliv’, Inc., an Illinois corporation, Reliv’ World corporation, an
Illinois corporation, and SL Technologies, Inc., a Missouri corporation (each a
“Borrower” and collectively, “Borrowers”), hereby promises to pay to BMO Harris
Bank N.A. (“Bank”) at the principal office of Bank in Chicago, Illinois (or such
other location as Bank may designate to Borrower), in immediately available
funds, the principal sum of Three Million Five Hundred Fifty Thousand Six
Hundred Ninety-Nine and 11/100 Dollars ($3,550,699.11) or, if less, the
aggregate unpaid principal amount of all Term Loans made or maintained by Bank
to Borrower pursuant to the Credit Agreement, in installments in the amounts
called for by Section 2.7(a) of the Credit Agreement, commencing on March 29,
2014, together with interest on the principal amount of such Term Loan from time
to time outstanding hereunder at the rates, and payable in the manner and on the
dates, specified in the Credit Agreement.

 

This Note is the Term Note referred to in the Credit Agreement dated as of
February 28, 2014, among Borrowers and Bank (as extended, renewed, amended or
restated from time to time, the “Credit Agreement”), and this Note and the
holder hereof are entitled to all the benefits and security provided for thereby
or referred to therein, to which Credit Agreement reference is hereby made for a
statement thereof. All defined terms used in this Note, except terms otherwise
defined herein, shall have the same meaning as in the Credit Agreement. This
Note shall be governed by and construed in accordance with the internal laws of
the State of Missouri.

 

Voluntary prepayments may be made hereon, certain prepayments are required to be
made hereon, and this Note may be declared due prior to the expressed maturity
hereof, all in the events, on the terms and in the manner as provided for in the
Credit Agreement.

 

 

 

 

 

 

Borrower hereby waives demand, presentment, protest or notice of any kind
hereunder.

 

  RELIV’ INTERNATIONAL, INC.           By: /s/ Steven D. Albright   Name: Steven
D. Albright   Title: Chief Financial Officer       RELIV’, INC.           By:
/s/ Steven D. Albright   Name: Steven D. Albright   Title: Chief Financial
Officer       RELIV’ WORLD CORPORATION           By: /s/ Steven D. Albright  
Name: Steven D. Albright   Title: Chief Financial Officer           SL
TECHNOLOGY, INC.           By: /s/ Steven D. Albright   Name: Steven D. Albright
  Title: Chief Financial Officer

 

 

2

 

 

 

Exhibit A-2

 

Revolving Note

 

U.S. $5,000,000.00  St. Louis, Missouri    February 28, 2014

 

For Value Received, the undersigned, Reliv’ International, Inc., a Delaware
corporation, Reliv’, Inc., an Illinois corporation, Reliv’ World corporation, an
Illinois corporation, and SL Technologies, Inc., a Missouri corporation (each a
“Borrower” and collectively, “Borrowers”) (“Borrower”), hereby promises to pay
to BMO Harris Bank N.A. (“Bank”) at the principal office of Bank in Chicago,
Illinois (or such other location as Bank may designate to Borrower), in
immediately available funds, the principal sum of Five Million and 00/100
Dollars ($5,000,000.00) or, if less, the aggregate unpaid principal amount of
all Revolving Loans made by Bank to Borrower pursuant to the Credit Agreement,
together with interest on the principal amount of each Revolving Loan from time
to time outstanding hereunder at the rates, and payable in the manner and on the
dates, specified in the Credit Agreement.

 

This Note is one of the Revolving Notes referred to in the Credit Agreement
dated as of February 28, 2014, among Borrower and Bank (as extended, renewed,
amended or restated from time to time, the “Credit Agreement”), and this Note
and the holder hereof are entitled to all the benefits and security provided for
thereby or referred to therein, to which Credit Agreement reference is hereby
made for a statement thereof. All defined terms used in this Note, except terms
otherwise defined herein, shall have the same meaning as in the Credit
Agreement. This Note shall be governed by and construed in accordance with the
internal laws of the State of Missouri.

 

Voluntary prepayments may be made hereon, certain prepayments are required to be
made hereon, and this Note may be declared due prior to the expressed maturity
hereof, all in the events, on the terms and in the manner as provided for in the
Credit Agreement.

 

 

 

 

 

 

Borrower hereby waives demand, presentment, protest or notice of any kind
hereunder.

 

  RELIV’ INTERNATIONAL, INC.           By: /s/ Steven D. Albright   Name: Steven
D. Albright   Title: Chief Financial Officer       RELIV’, INC.           By:
/s/ Steven D. Albright   Name: Steven D. Albright   Title: Chief Financial
Officer       RELIV’ WORLD CORPORATION           By: /s/ Steven D. Albright  
Name: Steven D. Albright   Title: Chief Financial Officer       SL TECHNOLOGY,
INC.           By: /s/ Steven D. Albright   Name: Steven D. Albright   Title:
Chief Financial Officer

 

 

 

2

 

 

Exhibit B

 

Reliv’ International, Inc.,

Reliv’, Inc.

Reliv’ World Corporation

 

Compliance Certificate

 

To: BMO Harris Bank N.A.

 

This Compliance Certificate is furnished to BMO Harris Bank N.A. (“Bank”)
pursuant to that certain Credit Agreement dated as of February ___, 2014, by and
among Reliv’ International, Inc., a Delaware corporation, Reliv’, Inc., an
Illinois corporation, Reliv’ World corporation, an Illinois corporation, and SL
Technologies, Inc., a Missouri corporation and Bank (the “Credit Agreement”).
Unless otherwise defined herein, the terms used in this Compliance Certificate
have the meanings ascribed thereto in the Credit Agreement.

 

The Undersigned hereby certifies that:

 

1. I am the duly elected _____________________________________ of each Borrower;

 

2. I have reviewed the terms of the Credit Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of each Borrower and their Subsidiaries during the accounting
period covered by the attached financial statements;

 

3. The examinations described in paragraph 2 did not disclose, and I have no
knowledge of, the existence of any condition or the occurrence of any event
which constitutes a Default or Event of Default during or at the end of the
accounting period covered by the attached financial statements or as of the date
of this Certificate, except as set forth below;

 

4. The financial statements required by Section 6.5 of the Credit Agreement and
being furnished to you concurrently with this certificate are, to the best of my
knowledge, true, correct and complete as of the dates and for the periods
covered thereby; and

 

5. The Attachment hereto sets forth financial data and computations evidencing
each Borrower’s compliance with certain covenants of the Credit Agreement, all
of which data and computations are, to the best of my knowledge, true, complete
and correct and have been made in accordance with the relevant Sections of the
Credit Agreement.

 

 

 

 

 

Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which each Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:

 

 

 

 

 

 

 

 

 

 

The foregoing certifications, together with the computations set forth in the
Attachment hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this _________ day of
__________________, ___.

 

  RELIV’ INTERNATIONAL, INC.           By:   Name:   Title:       RELIV’, INC.  
        By:   Name:   Title:       RELIV’ WORLD CORPORATION           By:  
Name:   Title:           SL TECHNOLOGY, INC.           By:                Name:
  Title:

 

 

2

 

 

 

Schedule I

to Compliance Certificate

 

Reliv’ International, Inc.,

Reliv’, Inc.

Reliv’ World Corporation

SL Technology, Inc.

 

Compliance Calculations

for Credit Agreement dated as of February ___, 2014

 

Calculations as of _____________, _______

 

 

  

A. Tangible Net Worth (Section 7.12(b))     1. Net Worth for such period
$___________   2. Goodwill for such period $___________   3. Intangibles for
such period $___________   4. Tangible Net Worth (Line A1 less the sum of line
A2 and A3)         $___________   2. Line A4 shall not be less than $___________
  3. Borrowers are in compliance (circle yes or no) yes/no         B. Fixed
Charge Coverage Ratio (Section 7.12(c))     1. Net Income for past 4 quarters
$___________   2. Interest Expense for past 4 quarters $___________   3. Income
taxes for past 4 quarters $___________   4. Depreciation and Amortization
Expense for past 4 quarters $___________   5. Sum of lines B1, B2, B3, and B4
(“EBITDA”) $___________   6. Non-cash contributions of treasury shares to ESOP
$___________   7. Non-cash stock based compensation $___________   8. Sum of
lines B6 and B7 $___________   9 Unfinanced Capital Expenditures for the past 4
quarters $___________   10 Dividends paid in cash for the past 4 quarters
$___________   11 Distributions paid in cash for the past 4 quarters
$___________   12 Cash taxes paid for the past 4 quarters $___________   13. Sum
of lines B9, B10, B11 and B12 $___________   14. Line B5 plus line B8 less Line
B13 (Adjusted EBITDA) $___________   15. Principal payments for past 4 quarters
$___________   16. Interest Expense for past 4 quarters $___________   17.
Technology Licensing Agreement payments for past 4 quarters         $___________
  18. Sum of Lines B15, B16 and B17 $___________   19. Ratio of Line B14 to Line
B18 ____:1.0   20. Line B19 ratio must not be less than 1.15:1.0   21. Borrowers
are in compliance (circle yes or no) yes/no

 

 

 

 

Schedule 5.2

 

Subsidiaries

 

 

Name Jurisdiction of Organization Percentage Ownership Owner Nutrition 2000,
Inc. Delaware 100% Reliv International, Inc. Reliv, Inc. Illinois 100% Reliv
International, Inc. Reliv World Corporation Illinois 100% Reliv
International.Inc. SL Technology, Inc. Missouri 100% Reliv International, Inc.
Reliv Europe, Inc. Illinois 100% Reliv International, Inc. Reliv Australia, Pty
Australia 100% Reliv World Corp. Reliv New Zealand, Ltd. New Zealand 100% Reliv
World Corp. Reliv Now de Mexico, S.de R.L. de C.V. Mexico 100% Reliv World Corp.
Reliv Philippines, Inc. Philippines 100% Reliv World Corp. Reliv Canada Company
Canada 100% Reliv World Corp. Reliv International Sdn Bhd. Malaysia 100% Reliv
World Corp Reliv Singapore Pte Ltd. Singapore 100% Reliv World Corp Reliv Europe
Limited United Kingdom 100% Reliv World Corp Reliv Sdn. Bhd. Brunei 100% Reliv
World Corp PT Reliv Indonesia Indonesia 100% Reliv World Corp.

 

 

 

 

 

 

Schedule 5.11

 

Litigation and Other Controversies

 

1.One of the Company’s foreign subsidiaries, Reliv Philippines, Inc., is
presently under local country audit for alleged deficiencies (totaling
approximately $800,000 plus interest at 20% per annum) in value-added tax (VAT)
and withholding tax for the years 2004 through 2006. Reliv International, Inc.,
in consultation with its legal counsel, believes that there are strong legal
grounds that it should not be liable to pay the majority of the alleged tax
deficiencies. As of December 31, 2010, management estimated and reserved
approximately $185,000 for resolution of this matter and recorded this amount
within Selling, General, and Administrative expense in the 2010 Consolidated
Statement of Income. In 2011, Reliv International, Inc. has made good faith
deposits to the local tax authority under the tax agency’s administrative
judicial resolution process. As of December 31, 2012, management’s estimated
reserve (net of deposits) for this matter is approximately $70,000.

 

 

 

 

Schedule 5.11

 

 

Taxes

 

1.One of the Company’s foreign subsidiaries, Reliv Philippines, Inc.,, is
presently under local country audit for alleged deficiencies (totaling
approximately $800,000 plus interest at 20% per annum) in value-added tax (VAT)
and withholding tax for the years 2004 through 2006. Reliv International, Inc.,
in consultation with its legal counsel, believes that there are strong legal
grounds that it should not be liable to pay the majority of the alleged tax
deficiencies. As of December 31, 2010, management estimated and reserved
approximately $185,000 for resolution of this matter and recorded this amount
within Selling, General, and Administrative expense in the 2010 Consolidated
Statement of Income. In 2011, Reliv International, Inc. has made good faith
deposits to the local tax authority under the tax agency’s administrative
judicial resolution process. As of December 31, 2012, management’s estimated
reserve (net of deposits) for this matter is approximately $70,000.