**EXHIBIT10.44**

 

**NINTHAMENDMENT TO CREDIT AND SECURITY AGREEMENT**

 

THIS NINTH AMENDMENT TOCREDIT AND SECURITY AGREEMENT (this “Amendment”), dated as ofMarch 29, 2004, is entered into between WELLS FARGO BUSINESS CREDIT, INC.,a Minnesota corporation (the “Lender”), and NATURADE, INC., a Delawarecorporation (the “Borrower”).

 

**RECITALS**

 

A.            The Borrower and theLender have entered into a Credit and Security Agreement dated as ofJanuary 27, 2000, as amended by that certain First Amendment to Credit andSecurity Agreement dated as of November 16, 2000, by that certain SecondAmendment to Credit and Security Agreement dated as of January 3, 2001, bythat certain Third Amendment to Credit and Security Agreement dated as of May14, 2001, that certain Fourth Amendment to Credit and Security Agreement datedas of December 20, 2001, that certain Fifth Amendment to Credit andSecurity Agreement dated as of September 19, 2002, that certain SixthAmendment to Credit and Security Agreement and Waiver dated as ofMarch 24, 2003, that certain Seventh Amendment to Credit and SecurityAgreement and Waiver dated as of April 15, 2003 and that certain EighthAmendment to Credit and Security Agreement dated as of November 6, 2003(as amended, the “Credit Agreement”). Capitalized terms used herein have the meanings given to them in theCredit Agreement unless otherwise specified.

 

B.            The Borrower and theLender now wish to further amend the Credit Agreement pursuant to the terms andconditions set forth herein.

 

C.            The Borrower is enteringinto this Amendment with the understanding and agreement that, except asspecifically provided herein, none of the Lender’s rights or remedies as setforth in the Credit Agreement is being waived or modified by the terms of thisAmendment.

 

**AGREEMENT**

 

NOW, THEREFORE, inconsideration of the foregoing and the mutual covenants herein contained, andfor other good and valuable consideration, the receipt and sufficiency of whichare hereby acknowledged, the parties hereby agree as follows:

 

1.             Amendments toCredit Agreement.

 

(a)           Section (b)(ii) ofthe definition of “Borrowing Base” set forth in Section 1.1 of the CreditAgreement is hereby amended and restated to read in its entirety as follows:

 

“(ii)         the lesser of (A) OneMillion Two Hundred Fifty Thousand Dollars ($1,250,000) or (B) fifty percent(50%) of Eligible Inventory, and minus”

 

----

 

(b)           The definition of“Maximum Line” set forth in Section 1.1 of the Credit Agreement is herebyamended and restated to read in its entirety as follows:

 

“ “MaximumLine” means Three Million Five Hundred Thousand Dollars ($3,500,000),unless said amount is reduced pursuant to Section 2.7, in which event itmeans the amount to which said amount is reduced.”

 

(c)           The first sentence ofSection 2.6 of the Credit Agreement is hereby amended and restated to readin its entirety as follows:

 

“This Agreement and theother Loan Documents shall become effective as of January 27, 2000 andshall continue in full force and effect for a term ending on March 31,2006 (the “Maturity Date”), unless earlier terminated by Lender orBorrower pursuant to the terms hereof.

 

(d)           Section 2.8(a) ofthe Credit Agreement is hereby amended and restated to read in its entirety asfollows:

 

“(a)         ***Termination and Line Reduction Fees. ***If the Credit Facility isterminated for any reason as of a date other than the Maturity Date, or theBorrower reduces the Maximum Line, the Borrower shall pay to the Lender a feein an amount equal to a percentage of the Maximum Line or the reductionthereof, as the case may be, as follows: (A) two percent (2.0%) if the termination or reduction occurs on orbefore March 31, 2005; and (B) one percent (1.0%) if the termination orreduction occurs on or after April 1, 2005 but on a date other thanMaturity Date.”

 

(e)           Section 6.12 ofthe Credit Agreement is hereby amended and restated to read in its entirety asfollows:

 

“Section 6.12         Minimum Book Net Worth.  The Borrower will maintain its Book NetWorth, calculated without giving effect to any fees (but net of, and aftergiving effect to, any provisions for taxes made in connection with such fees)paid to the Lender under the terms of Section 2.3(g) hereof, whendetermined as of the dates set forth below, at an amount not less than theamount set forth opposite such date:

 
| **Date**                 |   | **Minimum  Book Net Worth** |       |
|--------------------------|--------|-----------------------------|------------|
| February 29,  2004  |   | $                           | (3,411,000 | ) |
| March 31,  2004     |   | $                           | (3,475,000 | ) |
| April 30,  2004     |   | $                           | (3,631,000 | ) |
| May 31, 2004             |   | $                           | (3,724,000 | ) |
| June 30,  2004      |   | $                           | (3,725,000 | ) |
| July 31,  2004      |   | $                           | (3,860,000 | ) |
| August 31,  2004    |   | $                           | (3,953,000 | ) |
| September 30,  2004 |   | $                           | (4,000,000 | ) |
| October 31,  2004   |   | $                           | (4,115,000 | ) |
| November 30,  2004  |   | $                           | (4,234,000 | ) |
| December 31,  2004  |   | $                           | (3,600,000 | )” |

 

2

----

 

(f)            Section 6.13 ofthe Credit Agreement is hereby amended and restated to read in its entirety asfollows:

 

“Section 6.13         Minimum Net Income.  The Borrower will achieve, when measured ona fiscal year-to-date basis as of the end of each fiscal quarter set forthbelow, Net Income of not less than the amount set forth opposite suchquarter-ending date:

 
| **Quarter Ending**       |   | **Minimum  Net Income** |     |
|--------------------------|--------|-------------------------|----------|
| March 31,  2004     |   | $                       | (487,000 | ) |
| June 30,  2004      |   | $                       | (608,000 | ) |
| September 30,  2004 |   | $                       | (754,000 | ) |
| December 31,  2004  |   | $                       | (222,000 | ) |

 

(g)           The following provisionis hereby added to the Credit Agreement as Section 6.16 thereof:

 

“6.16       Capital Expenditures.  The Borrower will not incur or contract toincur Capital Expenditures of more than One Hundred Thousand Dollars ($100,000)in the aggregate during any fiscal year.”

 

2.             No Other Changes.  Except as explicitly amended by thisAmendment, all of the terms and conditions of the Credit Agreement shall remainin full force and effect and shall apply to any advance or letter of creditthereunder.

 

3.             Extension Fee.  In consideration of the extension of theCredit Facility provided for hereunder, the Borrower agrees to pay to theLender a non-refundable extension fee in the amount of Thirty-Five ThousandDollars ($35,000), which fee is fully-earned as of the date hereof and due andpayable on the earlier of (a) December 1, 2004 or (b) the date on whichthe Credit Facility is terminated (the “Extension Fee”).

 

4.             ConditionsPrecedent.  This Amendment shall beeffective when each of the following conditions is satisfied, as determined bythe Lender in its sole discretion:

 

(a)           The Lender has receivedthis Amendment executed by the Borrower and the Lender in a sufficient numberor original counterparts for distribution to the parties hereto;

 

(b)           The representations andwarranties set forth herein and in the Loan Agreement are true and correct; and

 

(c)           All other documents andlegal matters in connection with the transaction contemplated by this Amendmenthave been delivered or executed or recorded and are in form and substancesatisfactory to the Lender.

 

3

----

 

5.             Representationsand Warranties.  The Borrower herebyrepresents and warrants to the Lender as follows:

 

(a)           The Borrower has allrequisite power and authority to execute this Amendment and to perform all ofits obligations hereunder, and this Amendment has been duly executed anddelivered by the Borrower and constitutes the legal, valid and bindingobligation of the Borrower, enforceable in accordance with its terms.

 

(b)           The execution, deliveryand performance by the Borrower of this Amendment have been duly authorized byall necessary corporate action and do not (i) require any authorization,consent or approval by any governmental department, commission, board, bureau,agency or instrumentality, domestic or foreign, (ii) violate any provisionof any law, rule or regulation or of any order, writ, injunction or decreepresently in effect, having applicability to the Borrower, or the articles ofincorporation or by-laws of the Borrower, or (iii) result in a breach ofor constitute a default under any indenture or loan or credit agreement or anyother agreement, lease or instrument to which the Borrower is a party or bywhich it or its properties may be bound or affected.

 

(c)           All of therepresentations and warranties contained in the Credit Agreement are correct onand as of the date hereof as though made on and as of such date, except to theextent that such representations and warranties relate solely to an earlierdate.

 

(d)           This Amendment has beenentered into without force or duress, of the free will of Borrower.  Borrower’s decision to enter into thisAmendment is a fully informed decision and Borrower is aware of all legal andother ramifications of such decision. Borrower has read and understands this Amendment, has consulted with andbeen represented by legal counsel in connection herewith, and has been advisedby its counsel of its rights and obligations hereunder and thereunder.

 

6.             No Waiver.  The execution of this Amendment andacceptance of any other documents related hereto shall not be deemed to be awaiver of any Event of Defaultunder the Credit Agreement or breach, default or event of default under anyother Financing Agreement, whether or not known to the Lender and whether ornot existing on the date of this Amendment.

 

7.             Costs and Expenses.  The Borrower hereby reaffirms its agreementunder the Credit Agreement to pay or reimburse the Lender on demand for allcosts and expenses incurred by the Lender in connection with the Loan Documents,including without limitation all reasonable fees and disbursements of legalcounsel.  Without limiting thegenerality of the foregoing, the Borrower specifically agrees to pay all feesand disbursements of counsel to the Lender for the services performed by suchcounsel in connection with the preparation of this Amendment and the documentsand instruments incidental hereto.  TheBorrower hereby agrees that the Lender may, at any time or from time to time inits sole discretion and without further authorization by the Borrower, make aloan to the Borrower under the Credit Agreement, or apply the proceeds of anyloan, for the purpose of paying any such fees, disbursements, costs andexpenses.

 

4

----

 

8.             Integration.  This Amendment, together with the other LoanDocuments, incorporates all negotiations of the parties hereto with respect tothe subject matter hereof and is the final expression and agreement of theparties hereto with respect to the subject matter hereof.

 

9.             Choice of Law.  The validity of this Amendment, itsconstruction, interpretation and enforcement, the rights of the partieshereunder, shall be determined under, governed by, and construed in accordancewith the internal laws of the State of California governing contracts only tobe performed in that State.

 

10.           Reference to andEffect on the Loan Documents.

 

(a)           Upon and after theeffectiveness of this Amendment, each reference in the Credit Agreement to“this Agreement”, “hereunder”, “hereof” or words of like import referring tothe Credit Agreement, and each reference in all other documents or agreementsrelated thereto, including the other Loan Documents, to “the Credit Agreement”,“thereof” or words of like import referring to the Credit Agreement, shall meanand be a reference to the Credit Agreement as modified and amended hereby.

 

(b)           To the extent that anyterms and conditions in any of the Loan Documents or any documents oragreements related thereto shall contradict or be in conflict with any terms orconditions of the Credit Agreement, after giving effect to this Amendment, suchterms and conditions are hereby deemed modified or amended accordingly toreflect the terms and conditions of the Credit Agreement as modified or amendedhereby.

 

11.           Miscellaneous.  This Amendment and the acknowledgment attached hereto may be executed byfacsimile and in any number of counterparts, each of which when so executed anddelivered shall be deemed an original and all of which counterparts, taken together,shall constitute one and the same instrument.

 

[Signatures followon next page.]

 

5

----

 

IN WITNESS WHEREOF, theparties have entered into this Amendment as of the date first above written.

 
|   |   | NATURADE, INC.,                     |
|--------|--------|-------------------------------------|
|   |   | a Delaware corporation              |
|   |   |                                |
|   |   |                                |
|   |   | By:                                 | /s/ Bill D. Stewart |   |
|   |   | Name: Bill D. Stewart               |
|   |   | Title: Chief Executive  Officer     |
|   |   |                                |
|   |   |                                |
|   |   | WELLS FARGO BUSINESS  CREDIT, INC., |
|   |   | a Minnesota corporation             |
|   |   |                                |
|   |   |                                |
|   |   | By:                                 | /s/ Tom Makowski |   |
|   |   | Name: Tom Makowski                  |
|   |   | Title: Assistant Vice  President    |
|        |        |                                     |  |  |  |  |

 

6

----