<PAGE>

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                          CREDIT AND SECURITY AGREEMENT

                                 BY AND BETWEEN

                                 NATURADE, INC.

                                       AND

                        WELLS FARGO BUSINESS CREDIT, INC.

                          Dated as of: January 27, 2000

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                                TABLE OF CONTENTS

<TABLE>
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                                                                                                         PAGE
<S>                                                                                                      <C>
ARTICLE I           DEFINITIONS...........................................................................1

     Section 1.1    Definitions...........................................................................1

     Section 1.2    Cross References......................................................................9

ARTICLE II          AMOUNT AND TERMS OF THE CREDIT FACILITY...............................................9

     Section 2.1    Revolving Advances....................................................................9

     Section 2.2    Interest; Minimum Interest Charge; Default Interest; Participations; Usury...........10

     Section 2.3    Fees.................................................................................11

     Section 2.4    Computation of Interest and Fees; When Interest Due and Payable......................12

     Section 2.5    Capital Adequacy.....................................................................12

     Section 2.6    Maturity Date........................................................................13

     Section 2.7    Voluntary Prepayment; Reduction of the Maximum Line; Termination of the Credit
                    Facility by the Borrower.............................................................13

     Section 2.8    Termination and Line Reduction fees; Waiver of Termination and Line Reduction Fees...13

     Section 2.9    Mandatory Prepayment.................................................................13

     Section 2.10   Payment..............................................................................14

     Section 2.11   Payment on Non-Baking Days...........................................................14

     Section 2.12   Use of Proceeds......................................................................14

     Section 2.13   Liability Records....................................................................14

ARTICLE III         SECURITY INTEREST; OCCUPANCY; SETOFF.................................................15

     Section 3.1    Grant of Security Interest...........................................................15

     Section 3.2    Notification of Account Debtors and Other Obligors...................................15

     Section 3.3    Assignment of Insurance..............................................................15

     Section 3.4    Occupancy............................................................................15

     Section 3.5    License..............................................................................16

     Section 3.6    Financing Statement..................................................................16

     Section 3.7    Setoff...............................................................................16

ARTICLE IV          CONDITIONS OF LENDING................................................................17

     Section 4.1    Conditions Precedent to the Initial Revolving Advance................................17

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                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                                                         PAGE
     Section 4.2    Conditions Precedent to All Advances.................................................19

ARTICLE V           REPRESENTATIONS AND WARRANTIES.......................................................20

     Section 5.1    Corporate Existence and Power; Name; Chief Executive Office; Inventory and
                    Equipment Locations; Tax Identification Number.......................................20

     Section 5.2    Authorization of Borrowing; No Conflict as to Law or Agreements......................20

     Section 5.3    Legal Agreements.....................................................................21

     Section 5.4    Subsidiaries.........................................................................21

     Section 5.5    Financial Condition; No Adverse Change...............................................21

     Section 5.6    Litigation...........................................................................21

     Section 5.7    Regulation U.........................................................................21

     Section 5.8    Taxes................................................................................21

     Section 5.9    Titles and Liens.....................................................................22

     Section 5.10   Plans................................................................................22

     Section 5.11   Default..............................................................................22

     Section 5.12   Environmental Matters................................................................22

     Section 5.13   Submissions to Lender................................................................23

     Section 5.14   Financing Statements.................................................................23

     Section 5.15   Rights to Payment....................................................................23

     Section 5.16   Bank Accounts........................................................................24

     Section 5.17   Financial Solvency...................................................................24

ARTICLE VI          BORROWER'S AFFIRMATIVE COVENANTS.....................................................24

     Section 6.1    Reporting Requirements...............................................................24

     Section 6.2    Books and Records; Inspection and Examination........................................27

     Section 6.3    Account Verification.................................................................27

     Section 6.4    Compliance with Laws.................................................................27

     Section 6.5    Payment of Taxes and Other Claims....................................................28

     Section 6.6    Maintenance of Properties............................................................28

     Section 6.7    Insurance............................................................................28

     Section 6.8    Preservation of Existence............................................................29

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                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                                                         PAGE
     Section 6.9    Delivery of Instruments, etc.........................................................29

     Section 6.10   Collateral Account...................................................................29

     Section 6.11   Performance by Lender................................................................29

     Section 6.12   Minimum Book net Worth Plus Subordinated Convertible Debt............................30

     Section 6.13   Minimum Net income...................................................................30

     Section 6.14   New Covenants Service Coverage Ratio.................................................30

ARTICLE VII         NEGATIVE COVENANTS...................................................................31

     Section 7.1    Liens................................................................................36

     Section 7.2    Indebtedness.........................................................................36

     Section 7.3    Guaranties...........................................................................36

     Section 7.4    Investments and Subsidiaries.........................................................37

     Section 7.5    Dividends............................................................................37

     Section 7.6    Sale or Transfer of Assets; Suspension of Business Operations........................37

     Section 7.7    Consolidation and Merger; Asset Acquisitions.........................................38

     Section 7.8    Sale and Leaseback...................................................................38

     Section 7.9    Restrictions on Nature of Business...................................................38

     Section 7.10   Capital Expenditures.................................................................38

     Section 7.11   Accounting...........................................................................38

     Section 7.12   Discounts, etc.......................................................................38

     Section 7.13   Defined Benefit Pension Plans........................................................38

     Section 7.14   Other Defaults.......................................................................38

     Section 7.15   Place of Business; Name..............................................................38

     Section 7.16   Organizational Documents; S Corporation Status.......................................39

     Section 7.17   Salaries.............................................................................39

     Section 7.18   Change in Ownership..................................................................39

ARTICLE VIII        EVENTS OF DEFAULT, RIGHTS AND REMEDIES...............................................39

     Section 8.1    Events of Default....................................................................39

     Section 8.2    Rights and Remedies..................................................................41

     Section 8.3    Certain Notices......................................................................42

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                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                                                         PAGE
ARTICLE IX          MISCELLANEOUS........................................................................42

     Section 9.1    No Waiver; Cumulative Remedies.......................................................42

     Section 9.2    Amendments, Etc......................................................................42

     Section 9.3    Addresses for Notices, Etc...........................................................42

     Section 9.4    [Servicing of Credit Facility........................................................43

     Section 9.5    Further Documents....................................................................44

     Section 9.6    Collateral...........................................................................44

     Section 9.7    Costs and Expenses...................................................................44

     Section 9.8    Indemnity............................................................................45

     Section 9.9    Participants.........................................................................45

     Section 9.10   Execution in Counterparts............................................................46

     Section 9.11   Binding Effect; Assignment; Complete Agreement; Exchanging Information...............46

     Section 9.12   Severability of Provisions...........................................................46

     Section 9.13   Headings.............................................................................46

     Section 9.14   Governing Law; Jurisdiction, Venue; Waiver of Jury Trial.............................46
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                                     -iv-

<PAGE>

                          CREDIT AND SECURITY AGREEMENT

                          Dated as of January 27, 2000

                  NATURADE, INC., a Delaware corporation (the "BORROWER"), and
WELLS FARGO BUSINESS CREDIT, INC., a Minnesota corporation (the "LENDER"),
hereby agree as follows:

                                   ARTICLE I

                                   DEFINITIONS

                  Section 1.1 DEFINITIONS. For all purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise requires:

                  (a)      the terms defined in this Article have the meanings
         assigned to them in this Article, and include the plural as well as the
         singular; and

                  (b)      all accounting terms not otherwise defined herein
         have the meanings assigned to them in accordance with GAAP.

                  "ACCOUNTS" means all of the Borrower's accounts, as such term
         is defined in the UCC, including without limitation the aggregate
         unpaid obligations of customers and other account debtors to the
         Borrower arising out of the sale or lease of goods or rendition of
         services by the Borrower on an open account or deferred payment basis.

                  "Adjusted Book Net Worth" means Minimum Book Net Worth plus
         Subordinated Convertible Debt.

                  "ADVANCE" means a Revolving Advance.

                  "AFFILIATE" or "AFFILIATES" means any Person controlled by,
         controlling or under common control with the Borrower, including
         (without limitation) any Subsidiary of the Borrower. For purposes of
         this definition, "CONTROL," when used with respect to any specified
         Person, means the power to direct the management and policies of such
         Person, directly or indirectly, whether through the ownership of voting
         securities, by contract or otherwise.

                  "AGREEMENT" means this Credit and Security Agreement, as
         amended, supplemented or restated from time to time.

                  "AVAILABILITY" means the difference of (i) the Borrowing Base
         and (ii) the then outstanding principal balance of the Revolving Note.

                  "AVAILABILITY RESERVE" means as of any date of determination,
         such amount or amounts as Lender may from time to time establish and
         revise in good faith reducing the


<PAGE>

         amount of Revolving Advances which would otherwise be available to
         Borrower under the lending formula(s) provided for herein: (a) to
         reflect events, conditions, contingencies or risks which, as determined
         by Lender in good faith, do or may affect either (i) the Collateral or
         its value, (ii) the assets, business or prospects of Borrower, or (iii)
         the security interests and other rights of Lender in the Collateral
         (including the enforceability, perfection and priority thereof), or (b)
         to reflect Lender's good faith belief that any collateral report or
         financial information furnished by or on behalf of Borrower to Lender
         is or may have been incomplete, inaccurate or misleading in any
         material respect, or (c) in respect of any state of facts which Lender
         determines in good faith constitutes an Event of Default or may, with
         notice or passage of time or both, constitute an Event of Default.

                  "BANKING DAY" means a day other than a Saturday, Sunday or
         other day on which banks are generally not open for business in
         Pasadena, California.

                  "BASE RATE" means the rate of interest publicly announced from
         time to time by Wells Fargo Bank, N.A., San Francisco, California, as
         its "prime rate" or, if such bank ceases to announce a rate so
         designated, any similar successor rate designated by the Lender.

                  "BOOK NET WORTH" means the aggregate of the common and
         preferred stockholders' equity in the Borrower, determined in
         accordance with GAAP.

                  "BORROWING BASE" means, at any time the lesser of:

                  (a)      the Maximum Line; or

                  (b)      subject to change from time to time in the Lender's
         sole discretion, the sum of:

                           (i)      seventy five percent (75%) of Eligible
                                    Accounts PLUS

                           (ii)     the lesser of One Million Two Hundred
                                    Thousand Dollars ($1,200,000) or fifty
                                    percent (50%) of Eligible Inventory, and
                                    MINUS

                           (iii)    any Availability Reserves.

                  "CAPITAL EXPENDITURES" for a period means any expenditure of
         money for the purchase or construction of assets, or for improvements
         or additions thereto, which are capitalized on the Borrower's balance
         sheet or for the lease, purchase or other acquisition of any capital
         asset, or for the lease of any other asset whether payable currently or
         in the future.

                  "COLLATERAL" means all current or hereafter acquired or
         arising Equipment, General Intangibles, Inventory, Receivables,
         Investment Property, deposit accounts, letters of


                                     -2-
<PAGE>

         credit, proceeds of letters of credit, chattel paper and all sums on
         deposit in any Collateral Account, and any items in any Lockbox;
         together with (i) all substitutions and replacements for and
         products of any of the foregoing; (ii) proceeds of any and all of
         the foregoing; (iii) in the case of all tangible goods, all
         accessions; (iv) all accessories, attachments, parts, equipment and
         repairs now or hereafter attached or affixed to or used in
         connection with any tangible goods; (v) all warehouse receipts,
         bills of lading and other documents of title now or hereafter
         covering such goods; and (vi) the Life Insurance Policy.

                  "COLLATERAL ACCOUNT" means the "Lender Account" as defined in
         the Lockbox Agreement.

                   "COMMITMENT" means the Lender's commitment to make Advances
         to or for the Borrower's account pursuant to Article II.

                  "CREDIT FACILITY" means the credit facility being made
         available to the Borrower by the Lender pursuant to Article II.

                  "CURRENT MATURITIES OF LONG TERM DEBT" as of a given date
         means the amount of the Borrower's long-term debt and capitalized
         leases which will become due during the period ending on the designated
         date.

                  "DEBT" of any Person means all items of indebtedness or
         liability which in accordance with GAAP would be included in
         determining total liabilities as shown on the liabilities side of a
         balance sheet of that Person as at the date as of which Debt is to be
         determined. For purposes of determining a Person's aggregate Debt at
         any time, "DEBT" shall also include the aggregate payments required to
         be made by such Person at any time under any lease that is considered a
         capitalized lease under GAAP.

                  "DEFAULT" means an event that, with giving of notice or
         passage of time or both, would constitute an Event of Default.

                  "DEFAULT PERIOD" means any period of time beginning on the
         first day of any month during which a Default or Event of Default has
         occurred and ending on the date the Lender notifies the Borrower in
         writing that such Default or Event of Default has been waived.

                  "DEFAULT RATE" means an annual rate equal to three percent
         (3%) over the Floating Rate, which rate shall change when and as the
         Floating Rate changes.

                  "ERISA" means the Employee Retirement Income Security Act of
         1974, as amended.

                  "ELIGIBLE ACCOUNTS" means all unpaid Accounts, net of any
         credits, except the following shall not in any event be deemed Eligible
         Accounts:

                                     -3-
<PAGE>

                           (i)      That portion of Accounts unpaid 90 days
                  or more after the invoice date or, if the Lender in its
                  discretion has determined that a particular dated Account
                  may be eligible, that portion of such Account which is
                  unpaid more than sixty (60) days past the stated due date
                  or more than one hundred fifty (150) days past the shipping
                  date;

                           (ii)     That portion of Accounts that is disputed
                  or subject to a claim of offset or a contra account;

                           (iii)    That portion of Accounts not yet earned
                  by the final delivery of goods or rendition of services, as
                  applicable, by the Borrower to the customer;

                           (iv)     Accounts owed by any federal unit of
                  government, whether foreign or domestic (provided, however,
                  that there shall be included in Eligible Accounts that
                  portion of Accounts owed by such units of government for
                  which the Borrower has provided evidence satisfactory to
                  the Lender that (A) the Lender has a first priority
                  perfected security interest and (B) such Accounts may be
                  enforced by the Lender directly against such unit of
                  government under all applicable laws, including, without
                  limitation, the Federal Assignment of Claims Act of 1940,
                  as amended, or any similar law);

                           (v)      Accounts owed by an account debtor
                  located outside the United States or Canada which are not
                  (A) backed by a bank letter of credit naming the Lender as
                  beneficiary or assigned to the Lender, in the Lender's
                  possession and acceptable to the Lender in all respects, in
                  its sole discretion, or (B) covered by a foreign
                  receivables insurance policy acceptable to the Lender in
                  its sole discretion;

                           (vi)     Accounts owed by an account debtor that
                  is insolvent, the subject of bankruptcy proceedings or has
                  gone out of business;

                           (vii)    Accounts owed by a shareholder,
                  Subsidiary, Affiliate, officer or employee of the Borrower;

                           (viii)   Accounts not subject to a duly perfected
                  security interest in the Lender's favor or which are
                  subject to any lien, security interest or claim in favor of
                  any Person other than the Lender including without
                  limitation any payment or performance bond;

                           (ix)     That portion of Accounts that has been
                  restructured, extended, amended or modified;

                           (x)      That portion of Accounts that constitutes
                  advertising, finance charges, service charges or sales or
                  excise taxes;

                                     -4-
<PAGE>

                           (xi)     Accounts owed by an account debtor,
                  regardless of whether otherwise eligible, if ten percent
                  (10%) or more of the total amount due under Accounts from
                  such debtor is ineligible under clauses (i), (ii) or (ix)
                  above, except such percentage shall be fifteen percent
                  (15%) as to Accounts owed by Tree of Life, Inc.;

                           (xii)    That portion of Accounts of a single
                  debtor or its affiliates which constitute more than fifteen
                  percent (15%) of all Accounts, except such percentage shall
                  be twenty five percent (25%) as to Accounts owed by Tree of
                  Life, Inc.; and

                           (xiii)   Accounts, or portions thereof, otherwise
                  deemed ineligible by the Lender in its sole discretion.

                  "ELIGIBLE INVENTORY" means all Inventory of the Borrower,
         at the lower of cost or market value as determined in accordance
         with GAAP; provided, however, that the following shall not in any
         event be deemed Eligible Inventory:

                           (xiv)    Inventory that is: in-transit; located at
                  any warehouse, job site or premises other than Borrower's
                  Premises located in Irvine, California; located outside of
                  the states, or localities, as applicable, in which the
                  Lender has filed financing statements to perfect a first
                  priority security interest in such Inventory; covered by
                  any negotiable or non-negotiable warehouse receipt, bill of
                  lading or other document of title; on consignment from any
                  Person; on consignment to any Person or subject to any
                  bailment unless such consignee or bailee has executed an
                  agreement with the Lender;

                           (xv)     Supplies, packaging, parts or sample
                  Inventory;

                           (xvi)    Work-in-process Inventory;

                           (xvii)   Inventory that is damaged, obsolete, slow
                  moving or not currently saleable in the normal course of
                  the Borrower's operations;

                           (xviii)  Inventory that the Borrower has returned,
                  has attempted to return, is in the process of returning or
                  intends to return to the vendor thereof;

                           (xix)    Inventory that is perishable or live;

                           (xx)     Inventory purchased or manufactured by
                  the Borrower pursuant to a license;

                           (xxi)    Inventory that is subject to a security
                  interest in favor of any Person other than the Lender; and

                           (xxii)   Inventory otherwise deemed ineligible by
                  the Lender in its sole discretion.


                                     -5-
<PAGE>

                  "ENVIRONMENTAL LAWS" has the meaning specified in Section
         5.12.

                  "EQUIPMENT" means all of the Borrower's equipment, as such
         term is defined in the UCC, whether now owned or hereafter acquired,
         including but not limited to all present and future machinery,
         vehicles, furniture, fixtures, manufacturing equipment, shop
         equipment, office and recordkeeping equipment, parts, tools,
         supplies, and including specifically (without limitation) the goods
         described in any equipment schedule or list herewith or hereafter
         furnished to the Lender by the Borrower.

                  "EVENT OF DEFAULT" has the meaning specified in Section 8.1.

                  "FLOATING RATE" means an annual rate equal to the sum of
         the Base Rate plus one and one-half percent (1.5%), which annual
         rate shall change when and as the Base Rate changes; PROVIDED
         HOWEVER, if no Event of Default exists or has occurred and is
         continuing, such Floating Rate shall be reduced as follows: (a) if
         Borrower generates Net Income of not less than Zero Dollars ($0) for
         a consecutive three (3) month period, the Floating Rate shall be
         reduced to an annual rate equal to the sum of the Base Rate plus one
         and one-quarter percent (1.25%) and (b) if Borrower generates Net
         Income of One Hundred Thousand Dollars ($100,000) or more for a
         consecutive six (6) month period, the Floating Rate shall be reduced
         to an annual rate equal to the sum of the Base Rate plus one percent
         (1.0%). Each such reduction in the Floating Rate shall be effective
         as of the first day of the month following Lender's receipt of
         Borrower's monthly financial statements pursuant to Section 6.1(b)
         hereof reflecting such minimum Net Income amounts for the applicable
         periods.

                  "FUNDING DATE" has the meaning specified in Section 2.1.

                  "GAAP" means generally accepted accounting principles,
         applied on a basis consistent with the accounting practices applied
         in the financial statements described in Section 5.5, except for any
         change in accounting practices to the extent that, due to a
         promulgation of the Financial Accounting Standards Board changing or
         implementing any new accounting standard, the Borrower either (i) is
         required to implement such change, or (ii) for future periods will
         be required to and for the current period may in accordance with
         generally accepted accounting principles implement such change, for
         its financial statements to be in conformity with generally accepted
         accounting principles (any such change is herein referred to as a
         "REQUIRED GAAP CHANGE"), provided that (1) the Borrower shall fully
         disclose in such financial statements any such Required GAAP Change
         and the effects of the Required GAAP Change on the Borrower's
         income, retained earnings or other accounts, as applicable, and (2)
         the Borrower's financial covenants set forth in Sections 6.12, 6.13,
         and 7.10 shall be adjusted as necessary to reflect the effects of
         such Required GAAP Change.

                  "GENERAL INTANGIBLES" means all of the Borrower's general
         intangibles, as such term is defined in the UCC, whether now owned
         or hereafter acquired, including (without limitation) all present
         and future patents, patent applications, copyrights, trademarks,
         trade names, trade secrets, customer or supplier lists and
         contracts, manuals, operating


                                     -6-
<PAGE>

         instructions, permits, franchises, the right to use the Borrower's
         name, and the goodwill of the Borrower's business.

                  "HAZARDOUS SUBSTANCE" has the meaning specified in Section
         5.12.

                  "INVENTORY" means all of the Borrower's inventory, as such
         term is defined in the UCC, whether now owned or hereafter acquired,
         whether consisting of whole goods, spare parts or components,
         supplies or materials, whether acquired, held or furnished for sale,
         for lease or under service contracts or for manufacture or
         processing, and wherever located.

                  "INVESTMENT PROPERTY" means all of the Borrower's
         investment property, as such term is defined in the UCC, whether now
         owned or hereafter acquired, including but not limited to all
         securities, security entitlements, securities accounts, commodity
         contracts, commodity accounts, stocks, bonds, mutual fund shares,
         money market shares and U.S. Government securities.

                  "LOAN DOCUMENTS" means this Agreement, the Note, any
         Subordination Agreement and the Security Documents.

                  "LOCKBOX" has the meaning given in the Lockbox Agreement.

                  "LOCKBOX AGREEMENT" means the Lockbox and Collection
         Account Agreement by and among the Borrower, Wells Fargo Bank,
         National Association, Regulus West LLC and the Lender, of even date
         herewith.

                  "MATURITY DATE" has the meaning specified in Section 2.6.

                  "MAXIMUM LINE" means Three Million Dollars ($3,000,000),
         unless said amount is reduced pursuant to Section 2.7, in which
         event it means the amount to which said amount is reduced.

                  "MINIMUM INTEREST CHARGE" has the meaning specified in
         Section 2.2(a).

                  "NET INCOME" means fiscal year-to-date after-tax net
         income, DECREASED by the sum of any extraordinary, non-operating or
         non-cash income recorded by the Borrower and INCREASED by any
         extraordinary, non-cash or non-operating expense or loss recorded by
         the Borrower, as determined in accordance with GAAP.

                  "NOTE" means the Revolving Note.

                  "OBLIGATIONS" means the Note and each and every other debt,
         liability and obligation of every type and description which the
         Borrower may now or at any time hereafter owe to the Lender, whether
         such debt, liability or obligation now exists or is hereafter
         created or incurred, whether it arises in a transaction involving
         the Lender alone or in a transaction involving other creditors of
         the Borrower, and whether it is direct or indirect, due or to become
         due, absolute or contingent, primary or secondary, liquidated


                                     -7-
<PAGE>

         or unliquidated, or sole, joint, several or joint and several, and
         including specifically, but not limited to, all indebtedness of the
         Borrower arising under this Agreement, the Note or any other loan or
         credit agreement or guaranty between the Borrower and the Lender,
         whether now in effect or hereafter entered into.

                  "PERMITTED LIEN" has the meaning specified in Section 7.1.

                  "PERSON" means any individual, corporation, partnership,
         joint venture, limited liability company, association, joint-stock
         company, trust, unincorporated organization or government or any
         agency or political subdivision thereof.

                  "PLAN" means an employee benefit plan or other plan
         maintained for the Borrower's employees and covered by Title IV of
         ERISA.

                  "PREMISES" means all premises where the Borrower conducts
         its business and has any rights of possession, including (without
         limitation) the premises legally described in EXHIBIT C attached
         hereto.

                  "RECEIVABLES" means each and every right of the Borrower to
         the payment of money, whether such right to payment now exists or
         hereafter arises, whether such right to payment arises out of a
         sale, lease or other disposition of goods or other property, out of
         a rendering of services, out of a loan, out of the overpayment of
         taxes or other liabilities, or otherwise arises under any contract
         or agreement, whether such right to payment is created, generated or
         earned by the Borrower or by some other person who subsequently
         transfers such person's interest to the Borrower, whether such right
         to payment is or is not already earned by performance, and howsoever
         such right to payment may be evidenced, together with all other
         rights and interests (including all liens and security interests)
         which the Borrower may at any time have by law or agreement against
         any account debtor or other obligor obligated to make any such
         payment or against any property of such account debtor or other
         obligor; all including but not limited to all present and future
         accounts, contract rights, loans and obligations receivable, chattel
         papers, bonds, notes and other debt instruments, tax refunds and
         rights to payment in the nature of general intangibles.

                  "REPORTABLE EVENT" shall have the meaning assigned to that
         term in Title IV of ERISA.

                  "REVOLVING ADVANCE" has the meaning specified in Section
         2.1.

                  "REVOLVING NOTE" means the Borrower's revolving promissory
         note, payable to the order of the Lender in substantially the form
         of EXHIBIT A hereto, as the same may hereafter be amended,
         supplemented or restated from time to time, and any note or notes
         issued in substitution therefor, as the same may hereafter be
         amended, supplemented or restated from time to time and any note or
         notes issued in substitution therefor.


                                     -8-
<PAGE>

                  "SECURITY DOCUMENTS" means this Agreement, the Lockbox
         Agreement, Trademark Security Agreement, and any other document
         delivered to the Lender from time to time to secure the Obligations,
         as the same may hereafter be amended, supplemented or restated from
         time to time.

                  "SECURITY INTEREST" has the meaning specified in Section
         3.1.

                  "SUBORDINATION AGREEMENTS" means collectively the
         Subordination Agreement of even date herewith, executed by
         Performance Nutrition, Inc. and the Subordination Agreement of even
         date herewith, executed by Health Holdings and Botanicals, Inc.,
         both in the Lender's favor and acknowledged by the Borrower, and any
         other subordination agreement accepted by the Lender from time to
         time, as the same may hereafter be amended, supplemented or restated
         from time to time.

                  "SUBORDINATED CONVERTIBLE DEBT" means debt that is
         convertible into common stock of Borrower and is subordinated to
         indebtedness to financial institutions for borrowed money including
         Obligations.

                  "SUBORDINATED CREDITORS" means Performance Nutrition, Inc.
         and Health Holdings and Botanicals, Inc.

                  "SUBSIDIARY" means any corporation of which more than fifty
         percent (50%) of the outstanding shares of capital stock having
         general voting power under ordinary circumstances to elect a
         majority of the board of directors of such corporation, irrespective
         of whether or not at the time stock of any other class or classes
         shall have or might have voting power by reason of the happening of
         any contingency, is at the time directly or indirectly owned by the
         Borrower, by the Borrower and one or more other Subsidiaries, or by
         one or more other Subsidiaries.

                  "TERMINATION DATE" means the earliest of (i) the Maturity
         Date, (ii) the date the Borrower terminates the Credit Facility, or
         (iii) the date the Lender demands payment of the Obligations after
         an Event of Default pursuant to Section 8.2.

                  "TRADEMARK SECURITY AGREEMENT" means the Trademark Security
         Agreement by the Borrower in favor of the Lender of even date
         herewith.

                  "UCC" means the Uniform Commercial Code as in effect from
         time to time in the state designated in Section 9.13 as the state
         whose laws shall govern this Agreement, or in any other state whose
         laws are held to govern this Agreement or any portion hereof.

                  Section  1.2 CROSS REFERENCES. All references in this
Agreement to Articles, Sections and subsections, shall be to Articles, Sections
and subsections of this Agreement unless otherwise explicitly specified.


                                     -9-
<PAGE>

                                 ARTICLE II

                   AMOUNT AND TERMS OF THE CREDIT FACILITY

                  Section  2.1 REVOLVING ADVANCES. The Lender agrees, on the
terms and subject to the conditions herein set forth, to make advances to the
Borrower from time to time from the date all of the conditions set forth in
Section 4.1 are satisfied (the "FUNDING DATE") to the Termination Date (the
"REVOLVING ADVANCES"). The Lender shall have no obligation to make a Revolving
Advance if, after giving effect to such requested Revolving Advance, the sum of
the outstanding and unpaid Revolving Advances would exceed the Borrowing Base.
The Borrower's obligation to pay the Revolving Advances shall be evidenced by
the Revolving Note and shall be secured by the Collateral as provided in Article
III. Within the limits set forth in this Section 2.1, the Borrower may borrow,
prepay pursuant to Section 2.6 and reborrow. The Borrower agrees to comply with
the following procedures in requesting Revolving Advances under this Section
2.1:

                  (a)      The Borrower shall make each request for a Revolving
         Advance to the Lender before 10:30 a.m. (Los Angeles time) of the day
         of the requested Revolving Advance. Requests may be made in writing or
         by telephone, specifying the date of the requested Revolving Advance
         and the amount thereof. Each request shall be by (i) any officer of the
         Borrower; or (ii) any person designated as the Borrower's agent by any
         officer of the Borrower in a writing delivered to the Lender; or (iii)
         any person whom the Lender reasonably believes to be an officer of the
         Borrower or such a designated agent.

                  (b)      Upon fulfillment of the applicable conditions set
         forth in Article IV, the Lender shall disburse the proceeds of the
         requested Revolving Advance by crediting the same to the Borrower's
         demand deposit account maintained with Wells Fargo Bank, National
         Association, unless the Lender and the Borrower shall agree in writing
         to another manner of disbursement. Upon the Lender's request, the
         Borrower shall promptly confirm each telephonic request for an Advance
         by executing and delivering an appropriate confirmation certificate to
         the Lender. The Borrower shall repay all Advances even if the Lender
         does not receive such confirmation and even if the person requesting an
         Advance was not in fact authorized to do so. Any request for an
         Advance, whether written or telephonic, shall be deemed to be a
         representation by the Borrower that the conditions set forth in Section
         4.2 have been satisfied as of the time of the request.

                  Section  2.2 INTEREST; MINIMUM INTEREST CHARGE; DEFAULT
INTEREST; PARTICIPATIONS; USURY.

                  (a)      REVOLVING NOTE. Except as set forth in Sections
         2.2(c) and 2.2(e), the outstanding principal balance of the Revolving
         Note shall bear interest at the Floating Rate.

                  (b)      MINIMUM INTEREST CHARGE. Notwithstanding the interest
         payable pursuant to Section 2.2(a), the Borrower shall pay to the
         Lender interest of not less than


                                     -10-
<PAGE>

         Twenty Thousand Dollars ($20,000) per calendar quarter (the "MINIMUM
         INTEREST CHARGE") during the term of this Agreement, and the
         Borrower shall pay any deficiency between the Minimum Interest
         Charge and the amount of interest otherwise calculated under
         Sections 2.2(a) and 2.2(d) quarterly in arrears on the first day of
         each calendar quarter and on the Termination Date and on the date
         and in the manner provided in Section 2.4.

                  (c)      DEFAULT INTEREST RATE. At any time during any Default
         Period, in the Lender's sole discretion and without waiving any of its
         other rights and remedies, the Obligations outstanding from time to
         time shall bear interest at the Default Rate, effective for any periods
         designated by the Lender from time to time during that Default Period.

                  (d)      PARTICIPATIONS. If any Person shall acquire a
         participation in the Advances under this Agreement, the Borrower shall
         be obligated to the Lender to pay the full amount of all interest
         calculated under Section 2.2(a), along with all other fees, charges and
         other amounts due under this Agreement, regardless if such Person
         elects to accept interest with respect to its participation at a lower
         rate than the Floating Rate, or otherwise elects to accept less than
         its prorata share of such fees, charges and other amounts due under
         this Agreement.

                  (e)      USURY. In any event no rate change shall be put into
         effect which would result in a rate greater than the highest rate
         permitted by law. Notwithstanding anything to the contrary contained in
         any Loan Document, all agreements which either now are or which shall
         become agreements between the Borrower and the Lender are hereby
         limited so that in no contingency or event whatsoever shall the total
         liability for payments in the nature of interest, additional interest
         and other charges exceed the applicable limits imposed by any
         applicable usury laws. If any payments in the nature of interest,
         additional interest and other charges made under any Loan Document are
         held to be in excess of the limits imposed by any applicable usury
         laws, it is agreed that any such amount held to be in excess shall be
         considered payment of principal hereunder, and the indebtedness
         evidenced hereby shall be reduced by such amount so that the total
         liability for payments in the nature of interest, additional interest
         and other charges shall not exceed the applicable limits imposed by any
         applicable usury laws, in compliance with the desires of the Borrower
         and the Lender. This provision shall never be superseded or waived and
         shall control every other provision of the Loan Documents and all
         agreements between the Borrower and the Lender, or their successors and
         assigns.

                  Section  2.3 FEES.

                  (a)      ORIGINATION FEE. The Borrower hereby agrees to pay
         the Lender a fully earned and non-refundable origination fee of Thirty
         Thousand Dollars ($30,000) due and payable upon the execution of this
         Agreement.

                  (b)      UNUSED LINE FEE. For the purposes of this Section
         2.3(b), "UNUSED AMOUNT" means the Maximum Line reduced by outstanding
         Revolving Advances . The Borrower agrees to pay to the Lender an unused
         line fee at the rate of one-quarter of one


                                     -11-
<PAGE>

         percent (0.25%) per annum on the average daily Unused Amount from
         the date of this Agreement to and including the Termination Date,
         due and payable quarterly in arrears on the first day of the
         calendar quarter and on the Termination Date.

                  (c)      AUDIT FEES. The Borrower hereby agrees to pay the
         Lender, on demand, audit fees in connection with any audits or
         inspections conducted by the Lender of any Collateral or the Borrower's
         operations or business at the rates established from time to time by
         the Lender as its audit fees (which fees are currently Seventy Five
         Dollars ($75) per hour per auditor), together with all actual
         out-of-pocket costs and expenses incurred in conducting any such audit
         or inspection.

                  Section  2.4 COMPUTATION OF INTEREST AND FEES; WHEN INTEREST
DUE AND PAYABLE. Interest accruing on the outstanding principal balance of the
Advances and fees hereunder outstanding from time to time shall be computed on
the basis of actual number of days elapsed in a year of 360 days. Interest shall
be due and payable in arrears on the first day of each month and on the
Termination Date.

                  Section  2.5 CAPITAL ADEQUACY. If any Related Lender
determines at any time that its Return has been reduced as a result of any Rule
Change, such Related Lender may require the Borrower to pay it the amount
necessary to restore its Return to what it would have been had there been no
Rule Change. For purposes of this Section 2.5:

                  (a)      "CAPITAL ADEQUACY RULE" means any law, rule,
         regulation, guideline, directive, requirement or request regarding
         capital adequacy, or the interpretation or administration thereof by
         any governmental or regulatory authority, central bank or comparable
         agency, whether or not having the force of law, that applies to any
         Related Lender. Such rules include rules requiring financial
         institutions to maintain total capital in amounts based upon
         percentages of outstanding loans, binding loan commitments and letters
         of credit.

                  (b)      "RETURN", for any period, means the return as
         determined by such Related Lender on the Advances based upon its total
         capital requirements and a reasonable attribution formula that takes
         account of the Capital Adequacy Rules then in effect. Return may be
         calculated for each calendar quarter and for the shorter period between
         the end of a calendar quarter and the date of termination in whole of
         this Agreement.

                  (c)      "RULE CHANGE" means any change in any Capital
         Adequacy Rule occurring after the date of this Agreement, but the term
         does not include any changes in applicable requirements that at the
         Closing Date are scheduled to take place under the existing Capital
         Adequacy Rules or any increases in the capital that any Related Lender
         is required to maintain to the extent that the increases are required
         due to a regulatory authority's assessment of the financial condition
         of such Related Lender.

                  (d)      "RELATED LENDER" includes (but is not limited to) the
         Lender, any parent corporation of the Lender and any assignee of any
         interest of the Lender hereunder and any participant in the loans made
         hereunder.


                                     -12-
<PAGE>

Certificates of any Related Lender sent to the Borrower from time to time
claiming compensation under this Section 2.5, stating the reason therefor and
setting forth in reasonable detail the calculation of the additional amount or
amounts to be paid to the Related Lender hereunder to restore its Return shall
be conclusive absent manifest error. In determining such amounts, the Related
Lender may use any reasonable averaging and attribution methods.

                  Section  2.6 MATURITY DATE. This Agreement and the other Loan
Documents shall become effective as of the date set forth on the first page
hereof and shall continue in full force and effect for a term ending on January
27, 2003 (the "MATURITY DATE"), unless earlier terminated by Lender or Borrower
pursuant to the terms hereof. Upon the Termination Date, Borrower shall
immediately pay to Lender, in full, all outstanding and unpaid Obligations and
shall furnish cash collateral to Lender in such amounts as Lender determines are
reasonably necessary to secure Lender from loss, cost, damage or expense,
including attorneys' fees and legal expenses, in connection with any contingent
Obligations, including checks and other payments provisionally credited to the
Obligations and/or as to which Lender has not yet received final and
indefeasible payment.

                  Section  2.7 VOLUNTARY PREPAYMENT; REDUCTION OF THE MAXIMUM
LINE; TERMINATION OF THE CREDIT FACILITY BY THE BORROWER. Except as otherwise
provided herein, the Borrower may prepay the Advances in whole at any time or
from time to time in part. The Borrower may terminate the Credit Facility or
reduce the Maximum Line at any time if it (i) gives the Lender at least thirty
(30) days' prior written notice and (ii) pays the Lender termination or line
reduction fees in accordance with Section 2.8. Any reduction in the Maximum Line
must be in an amount not less than Two Hundred Fifty Thousand Dollars ($250,000)
or an integral multiple thereof. If the Borrower reduces the Maximum Line to
zero, all Obligations shall be immediately due and payable. Upon termination of
the Credit Facility and payment and performance of all Obligations, the Lender
shall release or terminate the Security Interest and the Security Documents to
which the Borrower is entitled by law.

                  Section  2.8 TERMINATION AND LINE REDUCTION FEES; WAIVER OF
TERMINATION AND LINE REDUCTION FEES.

                  (a)      TERMINATION AND LINE REDUCTION FEES. If the Credit
         Facility is terminated for any reason as of a date other than the
         Maturity Date, or the Borrower reduces the maximum Line, the Borrower
         shall pay to the Lender a fee in an amount equal to a percentage of the
         Maximum Line or the reduction, as the case may be as follows: (A) three
         percent (3.0%) if the termination or reduction occurs on or before the
         first anniversary of the Funding Date; (B) two percent (2.0%) if the
         termination or reduction occurs after the first anniversary of the
         Funding Date but on or before the second anniversary of the Funding
         Date; and (C) one percent (1.0%) if the termination or reduction occurs
         after the second anniversary of the Funding Date.

                  (b)      WAIVER OF TERMINATION AND LINE REDUCTION FEES. The
         Borrower will not be required to pay the termination or line reduction
         fees otherwise due under this Section


                                     -13-
<PAGE>

         2.8 if such termination or line reduction is made because of
         refinancing by an affiliate of the Lender.

                  Section  2.9 MANDATORY PREPAYMENT. Without notice or demand,
if the outstanding principal balance of the Revolving Advances shall at any time
exceed the Borrowing Base, the Borrower shall immediately prepay the Revolving
Advances to the extent necessary to eliminate such excess. Any payment received
by the Lender under this Section 2.9 or under Section 2.6 may be applied to the
Obligations, in such order and in such amounts as the Lender, in its discretion,
may from time to time determine.

                  Section  2.10 PAYMENT. For purposes of calculating the amount
of Revolving Advances available to Borrower, each payment will be applied
(conditional upon final collection) to the outstanding principal balance of the
Revolving Note on the Banking Day of receipt by Lender of advices of deposit in
the Collateral Account, if such advices are received within sufficient time (in
accordance with Lender's usual and customary practices as in effect from time to
time) to credit Borrower's loan account on such day, and if not, then on the
next Banking Day. Such payment shall be applied in any order or manner of
application satisfactory to Lender. For purposes of calculating interest, Lender
shall be entitled to charge Borrower for one (1) Banking Day of clearance at the
Floating Rate on all payments deposited into the Collateral Account, whether or
not such payments are applied to reduce the outstanding principal balance of the
Revolving Note. This clearance charge is acknowledged to constitute an integral
part of the pricing of the loans and financial accommodations contemplated
herein, and shall apply whether or not the amount of payments deposited exceeds
the obligations outstanding. Notwithstanding anything in Section 2.1, the
Borrower hereby authorizes the Lender, in its discretion at any time or from
time to time without the Borrower's request and even if the conditions set forth
in Section 4.2 would not be satisfied, to make a Revolving Advance in an amount
equal to the portion of the Obligations from time to time due and payable. At
Lender's option, all principal, interest, fees, costs, expenses and other
charges provided for in this Agreement or the other Loan Documents may be
charged directly to the loan account(s) of Borrower.

                  Section  2.11 PAYMENT ON NON-BANKING DAYS. Whenever any
payment to be made hereunder shall be stated to be due on a day which is not a
Banking Day, such payment may be made on the next succeeding Banking Day, and
such extension of time shall in such case be included in the computation of
interest on the Advances or the fees hereunder, as the case may be.

                  Section  2.12 USE OF PROCEEDS. The Borrower shall use the
initial proceeds of Advances only for: (a) payment to each of the Persons listed
in the disbursement direction letter furnished by Borrower to Lender on or about
the date hereof and (b) costs, expenses and fees in connection with the
preparation, negotiation, execution and delivery of this Agreement and the other
Loan Documents. All other Advances made to Borrower shall be used by Borrower
only for general operating, working capital and other proper corporate purposes
of Borrower not otherwise prohibited by the terms hereof.


                                     -14-
<PAGE>

                  Section  2.13 LIABILITY RECORDS. The Lender may maintain from
time to time, at its discretion, liability records as to the Obligations. All
entries made on any such record shall be presumed correct until the Borrower
establishes the contrary. Upon the Lender's demand, the Borrower will admit and
certify in writing the exact principal balance of the Obligations that the
Borrower then asserts to be outstanding. Any billing statement or accounting
rendered by the Lender shall be conclusive and fully binding on the Borrower
unless the Borrower gives the Lender specific written notice of exception within
thirty (30) days after receipt.

                                  ARTICLE III

                      SECURITY INTEREST; OCCUPANCY; SETOFF

                  Section  3.1 GRANT OF SECURITY INTEREST. The Borrower hereby
pledges, assigns and grants to the Lender a security interest (collectively
referred to as the "SECURITY INTEREST") in the Collateral, as security for the
payment and performance of the Obligations.

                  Section  3.2 NOTIFICATION OF ACCOUNT DEBTORS AND OTHER
OBLIGORS. The Lender may at any time (whether or not a Default Period then
exists) notify any account debtor or other person obligated to pay the amount
due that such right to payment has been assigned or transferred to the Lender
for security and shall be paid directly to the Lender. The Borrower will join in
giving such notice if the Lender so requests. At any time after the Borrower or
the Lender gives such notice to an account debtor or other obligor, the Lender
may, but need not, in the Lender's name or in the Borrower's name, (a) demand,
sue for, collect or receive any money or property at any time payable or
receivable on account of, or securing, any such right to payment, or grant any
extension to, make any compromise or settlement with or otherwise agree to
waive, modify, amend or change the obligations (including collateral
obligations) of any such account debtor or other obligor; and (b) as the
Borrower's agent and attorney-in-fact, notify the United States Postal Service
to change the address for delivery of the Borrower's mail to any address
designated by the Lender, otherwise intercept the Borrower's mail, and receive,
open and dispose of the Borrower's mail, applying all Collateral as permitted
under this Agreement and holding all other mail for the Borrower's account or
forwarding such mail to the Borrower's last known address.

                  Section  3.3 ASSIGNMENT OF INSURANCE. As additional security
for the payment and performance of the Obligations, the Borrower hereby assigns
to the Lender any and all monies (including, without limitation, proceeds of
insurance and refunds of unearned premiums) due or to become due under, and all
other rights of the Borrower with respect to, any and all policies of insurance
now or at any time hereafter covering the Collateral or any evidence thereof or
any business records or valuable papers pertaining thereto, and the Borrower
hereby directs the issuer of any such policy to pay all such monies directly to
the Lender. At any time, whether or not a Default Period then exists, the Lender
may (but need not), in the Lender's name or in the Borrower's name, execute and
deliver proof of claim, receive all such monies, endorse checks and other
instruments representing payment of such monies, and adjust, litigate,
compromise or release any claim against the issuer of any such policy.


                                     -15-
<PAGE>

                  Section  3.4 OCCUPANCY.

                  (a)      The Borrower hereby irrevocably grants to the Lender
         the right to take possession of the Premises at any time during a
         Default Period.

                  (b)      The Lender may use the Premises only to hold,
         process, manufacture, sell, use, store, liquidate, realize upon or
         otherwise dispose of goods that are Collateral and for other purposes
         that the Lender may in good faith deem to be related or incidental
         purposes.

                  (c)      The Lender's right to hold the Premises shall cease
         and terminate upon the earlier of (i) payment in full and discharge of
         all Obligations and termination of the Commitment, and (ii) final sale
         or disposition of all goods constituting Collateral and delivery of all
         such goods to purchasers.

                  (d)      The Lender shall not be obligated to pay or account
         for any rent or other compensation for the possession, occupancy or use
         of any of the Premises; provided, however, that if the Lender does pay
         or account for any rent or other compensation for the possession,
         occupancy or use of any of the Premises, the Borrower shall reimburse
         the Lender promptly for the full amount thereof. In addition, the
         Borrower will pay, or reimburse the Lender for, all taxes, fees,
         duties, imposts, charges and expenses at any time incurred by or
         imposed upon the Lender by reason of the execution, delivery,
         existence, recordation, performance or enforcement of this Agreement or
         the provisions of this Section 3.4.

                  Section  3.5 LICENSE. Without limiting the generality of the
Patent Security Agreement, Copyright Security Agreement, Trademark Security
Agreement, the Borrower hereby grants to the Lender a non-exclusive, worldwide
and royalty-free license to use or otherwise exploit all trademarks, franchises,
trade names, copyrights and patents of the Borrower for the purpose of selling,
leasing or otherwise disposing of any or all Collateral during any Default
Period.

                  Section  3.6 FINANCING STATEMENT. A carbon, photographic or
other reproduction of this Agreement or of any financing statements signed by
the Borrower is sufficient as a financing statement and may be filed as a
financing statement in any state to perfect the security interests granted
hereby. For this purpose, the following information is set forth:

                  Name and address of Debtor:

                  Naturade, Inc.
                  14370 Myford Rd.
                  Irvine, California 92606

                  Federal Tax Identification No. 23-2442709


                                     -16-
<PAGE>

                  Name and address of Secured Party:

                  Wells Fargo Business Credit, Inc.
                  245 South Los Robles Avenue, Suite 600
                  Pasadena, California  91101

                  Section  3.7 SETOFF. The Borrower agrees that the Lender may
at any time or from time to time, at its sole discretion and without demand and
without notice to anyone, setoff any liability owed to the Borrower by the
Lender, whether or not due, against any Obligation, whether or not due.

                                   ARTICLE IV

                              CONDITIONS OF LENDING

                  Section  4.1 CONDITIONS PRECEDENT TO THE INITIAL REVOLVING
ADVANCE. The Lender's obligation to make the initial Revolving Advance hereunder
shall be subject to the condition precedent that the Lender shall have received
all of the following, each in form and substance satisfactory to the Lender:

                  (a)      This Agreement, properly executed by the Borrower.

                  (b)      The Note, properly executed by the Borrower.

                  (c)      A true and correct copy of any and all leases
         pursuant to which the Borrower is leasing the Premises, together with a
         landlord's disclaimer and consent with respect to each such lease.

                  (d)      A true and correct copy of any and all mortgages
         pursuant to which the Borrower has mortgaged the Premises, together
         with a mortgagee's disclaimer and consent with respect to each such
         mortgage.

                  (e)      A true and correct copy of any and all agreements
         pursuant to which the Borrower's property is in the possession of any
         Person other than the Borrower, together with, in the case of any goods
         held by such Person for resale, (i) a consignee's acknowledgment and
         waiver of liens, (ii) UCC financing statements sufficient to protect
         the Borrower's and the Lender's interests in such goods, and (iii) UCC
         searches showing that no other secured party has filed a financing
         statement against such Person and covering property similar to the
         Borrower's other than the Borrower, or if there exists any such secured
         party, evidence that each such secured party has received notice from
         the Borrower and the Lender sufficient to protect the Borrower's and
         the Lender's interests in the Borrower's goods from any claim by such
         secured party.

                  (f)      An acknowledgment and waiver of liens from each
         warehouse in which the Borrower is storing Inventory.


                                     -17-
<PAGE>

                  (g)      A true and correct copy of any and all agreements
         pursuant to which the Borrower's property is in the possession of any
         Person other than the Borrower, together with, (i) an acknowledgment
         and waiver of liens from each subcontractor who has possession of the
         Borrower's goods from time to time, (ii) UCC financing statements
         sufficient to protect the Borrower's and the Lender's interests in such
         goods, and (iii) UCC searches showing that no other secured party has
         filed a financing statement covering such Person's property other than
         the Borrower, or if there exists any such secured party, evidence that
         each such secured party has received notice from the Borrower and the
         Lender sufficient to protect the Borrower's and the Lender's interests
         in the Borrower's goods from any claim by such secured party.

                  (h)      The Lockbox Agreement, properly executed by the
         Borrower, Wells Fargo Bank, National Association and Regulus West LLC.

                  (i)      Trademark Security Agreement, properly executed by
         the Borrower.

                  (j)      The Subordination Agreements properly executed by the
         Subordinated Creditors and acknowledged by Borrower.

                  (k)      Current searches of appropriate filing offices
         showing that (i) no state or federal tax liens have been filed and
         remain in effect against the Borrower, (ii) no financing statements or
         assignments of patents, trademarks or copyrights have been filed and
         remain in effect against the Borrower except those financing statements
         and assignments of patents, trademarks or copyrights relating to
         Permitted Liens or to liens held by Persons who have agreed in writing
         that upon receipt of proceeds of the Advances, they will deliver UCC
         releases and/or terminations and releases of such assignments of
         patents, trademarks or copyrights satisfactory to the Lender, and (iii)
         the Lender has duly filed all financing statements necessary to perfect
         the Security Interest, to the extent the Security Interest is capable
         of being perfected by filing.

                  (l)      A certificate of the Borrower's Secretary or
         Assistant Secretary certifying as to (i) the resolutions of the
         Borrower's directors and, if required, shareholders, authorizing the
         execution, delivery and performance of the Loan Documents, (ii) the
         Borrower's articles of incorporation and bylaws, and (iii) the
         signatures of the Borrower's officers or agents authorized to execute
         and deliver the Loan Documents and other instruments, agreements and
         certificates, including Advance requests, on the Borrower's behalf.

                  (m)      A current certificate issued by the Secretary of
         State of Delaware, certifying that the Borrower is in compliance with
         all applicable organizational requirements of the State of Delaware.

                  (n)      Evidence that the Borrower is duly licensed or
         qualified to transact business in all jurisdictions where the character
         of the property owned or leased or the nature of the business
         transacted by it makes such licensing or qualification necessary
         (except in those jurisdictions where the failure to so qualify will not
         have a materially


                                     -18-
<PAGE>

         adverse effect on the Borrower, its financial condition, or ability
         to repay the Obligations under this Agreement).

                  (o)      A certificate of an officer of the Borrower
         confirming, in his personal capacity, the representations and
         warranties set forth in Article V.

                  (p)      Receipt of background checks on Borrower's principals
         satisfactory to Lender at its sole discretion.

                  (q)      An opinion of counsel to the Borrower, addressed to
         the Lender.

                  (r)      Certificates of the insurance required hereunder,
         with all hazard insurance containing a lender's loss payable
         endorsement in the Lender's favor and with all liability insurance
         naming the Lender as an additional insured.

                  (s)      Evidence of the settlement of the action arising
         under the Performance Nutrition, Inc. bankruptcy on terms and
         conditions satisfactory to Lender, and completion of payments according
         to the terms of such settlement.

                  (t)      Payment of the fees and commissions due through the
         date of the initial Advance under Section 2.3 and expenses incurred by
         the Lender through such date and required to be paid by the Borrower
         under Section 9.6, including all legal expenses incurred through the
         date of this Agreement.

                  (u)      Evidence that Availability as of the Funding Date is
         not less than One Million Two Hundred Fifty Thousand Dollars
         ($1,250,000) after giving effect to the amount paid or to be paid to
         Borrower's prior lender to retire Borrower's line of credit with such
         prior lender and bringing all other obligations to a current status
         satisfactory to Lender.

                  (v)      At Borrower's cost, an appraisal of all Inventory,
         issued by an appraiser acceptable to Lender and in form, substance and
         reflecting values satisfactory to Lender in its sole discretion.

                  (w)      Completion of a field review of the books and records
         of Borrower and such other information with respect to the Collateral
         as Lender may require and a review of Borrower's projections, budgets,
         business plans, cash flows and such other financial information as
         Lender may require, the results of all of which shall be satisfactory
         to Lender in its sole discretion.

                  (x)      Evidence that there has been no material adverse
         change, as determined by Lender, in the financial condition or business
         of Borrower, nor any material decline, as determined by Lender, in the
         market value of any Collateral or a substantial or material portion of
         the assets of Borrower since the date of the latest financial
         statements of Borrower delivered to Lender prior to the Funding Date.


                                     -19-
<PAGE>

                  (y)      Evidence that Borrower has opened bank accounts of a
         type mutually acceptable to Borrower and Lender, including, without
         limitation, the Collateral Account and any other account contemplated
         by the Lockbox Agreement.

                  (z)      Such other documents as the Lender in its sole
         discretion may require.

                  Section  4.2 CONDITIONS PRECEDENT TO ALL ADVANCES. The
Lender's obligation to make each Advance shall be subject to the further
conditions precedent that on such date:

                  (a)      the representations and warranties contained in
         Article V are correct on and as of the date of such Advance as
         though made on and as of such date, except to the extent that such
         representations and warranties relate solely to an earlier date;

                  (b)      no material adverse change, as determined by
         Lender, shall have occurred in the financial condition or business
         of Borrower nor any material decline, as determined by Lender, in
         the market value of any Collateral or a substantial or material
         portion of the assets of Borrower since the date of the latest
         financial statements delivered to Lender prior to the Funding Date;
         and

                  (c)      no event has occurred and is continuing, or would
         result from such Advance which constitutes a Default or an Event of
         Default.

                                  ARTICLE V

                         REPRESENTATIONS AND WARRANTIES

         The Borrower represents and warrants to the Lender as follows:

                  Section  5.1 CORPORATE EXISTENCE AND POWER; NAME; CHIEF
EXECUTIVE OFFICE; INVENTORY AND EQUIPMENT LOCATIONS; TAX IDENTIFICATION NUMBER.
The Borrower is a corporation, duly organized, validly existing and in good
standing under the laws of the State of Delaware and is duly licensed or
qualified to transact business in all jurisdictions where the character of the
property owned or leased or the nature of the business transacted by it makes
such licensing or qualification necessary, except where the failure to so
qualify would not have a materially adverse effect on the Borrower, its
financial condition, or ability to repay the Obligations under this Agreement.
The Borrower has all requisite power and authority, corporate or otherwise, to
conduct its business, to own its properties and to execute and deliver, and to
perform all of its obligations under, the Loan Documents. During its existence,
the Borrower has done business solely under the names set forth in SCHEDULE 5.1
hereto. The Borrower's chief executive office and principal place of business is
located at the address set forth in SCHEDULE 5.1 hereto, and all of the
Borrower's records relating to its business or the Collateral are kept at that
location. All Inventory and Equipment is located at that location or at one of
the other locations set forth in SCHEDULE 5.1 hereto. The Borrower's tax
identification number is correctly set forth in Section 3.6 hereto.


                                     -20-
<PAGE>

                  Section  5.2 AUTHORIZATION OF BORROWING; NO CONFLICT AS TO LAW
OR AGREEMENTS. The execution, delivery and performance by the Borrower of the
Loan Documents and the borrowings from time to time hereunder have been duly
authorized by all necessary corporate action and do not and will not (i) require
any consent or approval of the Borrower's stockholders; (ii) require any
authorization, consent or approval by, or registration, declaration or filing
with, or notice to, any governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, or any third party, except such
authorization, consent, approval, registration, declaration, filing or notice as
has been obtained, accomplished or given prior to the date hereof; (iii) violate
any provision of any law, rule or regulation (including, without limitation,
Regulation X of the Board of Governors of the Federal Reserve System) or of any
order, writ, injunction or decree presently in effect having applicability to
the Borrower or of the Borrower's articles of incorporation or bylaws; (iv)
result in a breach of or constitute a default under any indenture or loan or
credit agreement or any other material agreement, lease or instrument to which
the Borrower is a party or by which it or its properties may be bound or
affected; or (v) result in, or require, the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest or other charge or
encumbrance of any nature (other than the Security Interest) upon or with
respect to any of the properties now owned or hereafter acquired by the
Borrower.

                  Section  5.3 LEGAL AGREEMENTS. This Agreement constitutes and,
upon due execution by the Borrower, the other Loan Documents will constitute the
legal, valid and binding obligations of the Borrower, enforceable against the
Borrower in accordance with their respective terms.

                  Section  5.4 SUBSIDIARIES. Except as set forth in SCHEDULE
5.4, the Borrower has no Subsidiaries.

                  Section  5.5 FINANCIAL CONDITION; NO ADVERSE CHANGE. The
Borrower has heretofore furnished to the Lender audited financial statements of
the Borrower for its fiscal year ended December 31, 1998 and unaudited financial
statements of the Borrower for the fiscal year-to-date period ended October 31,
1999, and those statements fairly present the Borrower's financial condition on
the dates thereof and the results of its operations and cash flows for the
periods then ended and were prepared in accordance with GAAP. Since the date of
the most recent financial statements, there has been no material adverse change
in the Borrower's business, properties or condition (financial or otherwise).

                  Section  5.6 LITIGATION. There are no actions, suits or
proceedings pending or, to the Borrower's knowledge, threatened against or
affecting the Borrower or the properties of the Borrower before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which, if determined adversely to the Borrower, would have
a material adverse effect on the financial condition, properties or operations
of the Borrower.

                  Section  5.7 REGULATION U. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of


                                     -21-
<PAGE>

Regulation U of the Board of Governors of the Federal Reserve System, as
amended), and no part of the proceeds of any Advance will be used to purchase
or carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock or to retire any indebtedness which
was originally incurred to purchase or carry any margin stock or for any
other purpose which might cause any of the Advances to be considered a
"purpose credit" within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System, as amended.

                  Section  5.8 TAXES. The Borrower has paid or caused to be paid
to the proper authorities when due all federal, state and local taxes required
to be withheld by each of them. The Borrower has filed all federal, state and
local tax returns which to the knowledge of the officers of the Borrower, are
required to be filed, and the Borrower has paid or caused to be paid to the
respective taxing authorities all taxes as shown on said returns or on any
assessment received by it to the extent such taxes have become due.

                  Section  5.9 TITLES AND LIENS. The Borrower has good and
absolute title to all Collateral described in the collateral reports provided to
the Lender and all other Collateral, properties and assets reflected in the
latest financial statements referred to in Section 5.5 and all proceeds thereof,
free and clear of all mortgages, security interests, liens and encumbrances,
except for Permitted Liens. No financing statement naming the Borrower as debtor
is on file in any office except to perfect only Permitted Liens.

                  Section  5.10 PLANS. Except as disclosed to the Lender in
writing prior to the date hereof, the Borrower does not maintain or has not
maintained any Plan. The Borrower has not received any notice and has no
knowledge to the effect that it is not in full compliance with any of the
requirements of ERISA. No Reportable Event or other fact or circumstance which
may have an adverse effect on the Plan's tax qualified status exists in
connection with any Plan. The Borrower does not have:

                  (a)      Any accumulated funding deficiency within the meaning
         of ERISA; or

                  (b)      Any liability or knows of any fact or circumstances
         which could result in any liability to the Pension Benefit Guaranty
         Corporation, the Internal Revenue Service, the Department of Labor or
         any participant in connection with any Plan (other than accrued
         benefits which or which may become payable to participants or
         beneficiaries of any such Plan).

                  Section  5.11 DEFAULT. The Borrower is in compliance with all
provisions of all agreements, instruments, decrees and orders to which it is a
party or by which it or its property is bound or affected, the breach or default
of which could have a material adverse effect on the Borrower's financial
condition, properties or operations.

                  Section  5.12 ENVIRONMENTAL MATTERS.

                  (a)      DEFINITIONS. As used in this Agreement, the following
         terms shall have the following meanings:


                                     -22-
<PAGE>

                           (i)      "ENVIRONMENTAL LAW" means any federal,
                  state, local or other governmental statute, regulation, law
                  or ordinance dealing with the protection of human health
                  and the environment.

                           (ii)     "HAZARDOUS SUBSTANCES" means pollutants,
                  contaminants, hazardous substances, hazardous wastes,
                  petroleum and fractions thereof, and all other chemicals,
                  wastes, substances and materials listed in, regulated by or
                  identified in any Environmental Law.

                  (b)      To the Borrower's best knowledge, there are not
         present in, on or under the Premises any Hazardous Substances in such
         form or quantity as to create any liability or obligation for either
         the Borrower or the Lender under common law of any jurisdiction or
         under any Environmental Law, and no Hazardous Substances have ever been
         stored, buried, spilled, leaked, discharged, emitted or released in, on
         or under the Premises in such a way as to create any such liability.

                  (c)      To the Borrower's best knowledge, the Borrower has
         not disposed of Hazardous Substances in such a manner as to create any
         liability under any Environmental Law.

                  (d)      There are not and there never have been any requests,
         claims, notices, investigations, demands, administrative proceedings,
         hearings or litigation, relating in any way to the Premises or the
         Borrower, alleging liability under, violation of, or noncompliance with
         any Environmental Law or any license, permit or other authorization
         issued pursuant thereto. To the Borrower's best knowledge, no such
         matter is threatened or impending.

                  (e)      To the Borrower's best knowledge, the Borrower's
         businesses are and have in the past always been conducted in accordance
         with all Environmental Laws and all licenses, permits and other
         authorizations required pursuant to any Environmental Law and necessary
         for the lawful and efficient operation of such businesses are in the
         Borrower's possession and are in full force and effect. No permit
         required under any Environmental Law is scheduled to expire within 12
         months and there is no threat that any such permit will be withdrawn,
         terminated, limited or materially changed.

                  (f)      To the Borrower's best knowledge, the Premises are
         not and never have been listed on the National Priorities List, the
         Comprehensive Environmental Response, Compensation and Liability
         Information System or any similar federal, state or local list,
         schedule, log, inventory or database.

                  (g)      The Borrower has delivered to Lender all
         environmental assessments, audits, reports, permits, licenses and other
         documents describing or relating in any way to the Premises or
         Borrower's businesses.

                  Section  5.13 SUBMISSIONS TO LENDER. All financial and other
information provided to the Lender by or on behalf of the Borrower in connection
with the Borrower's


                                     -23-
<PAGE>

request for the credit facilities contemplated hereby is true and correct in
all material respects and, as to projections, valuations or pro forma
financial statements, present a good faith opinion as to such projections,
valuations and pro forma condition and results.

                  Section  5.14 FINANCING STATEMENTS. The Borrower has provided
to the Lender signed financing statements sufficient when filed to perfect the
Security Interest and the other security interests created by the Security
Documents. When such financing statements are filed in the offices noted
therein, the Lender will have a valid and perfected security interest in all
Collateral and all other collateral described in the Security Documents which is
capable of being perfected by filing financing statements. None of the
Collateral or other collateral covered by the Security Documents is or will
become a fixture on real estate, unless a sufficient fixture filing is in effect
with respect thereto.

                  Section  5.15 RIGHTS TO PAYMENT. Each right to payment and
each instrument, document, chattel paper and other agreement constituting or
evidencing Collateral or other collateral covered by the Security Documents is
(or, in the case of all future Collateral or such other collateral, will be when
arising or issued) the valid, genuine and legally enforceable obligation,
subject to no defense, setoff or counterclaim, of the account debtor or other
obligor named therein or in the Borrower's records pertaining thereto as being
obligated to pay such obligation.

                  Section  5.16 BANK ACCOUNTS. All of the deposit accounts,
investment accounts or other accounts in the name of or used by Borrower
maintained at any bank or other financial institution are set forth on SCHEDULE
5.16 hereto.

                  Section  5.17 FINANCIAL SOLVENCY. Both before and after giving
effect to all of the transactions contemplated in the Loan Documents, Borrower
will not:

                  (a)      be or was not insolvent, as that term is used and
         defined in Section 101(32) of the United States Bankruptcy Code and
         Section 2 of the Uniform Fraudulent Transfer Act;

                  (b)      have unreasonably small capital or is not engaged or
         about to engage in a business or a transaction for which any remaining
         assets of the Borrower are unreasonably small;

                  (c)      by executing, delivering or performing its
         obligations under the Loan Documents or other documents to which it is
         a party or by taking any action with respect thereto, intends to, nor
         believes that it will, incur debts beyond its ability to pay them as
         they mature;

                  (d)      by executing, delivering or performing its
         obligations under the Loan Documents or other documents to which it is
         a party or by taking any action with respect thereto, intends to
         hinder, delay or defraud either its present or future creditors; and


                                     -24-
<PAGE>

                  (e)      at this time contemplates filing a petition in
         bankruptcy or for an arrangement or reorganization or similar
         proceeding under any law any jurisdiction, nor, to the best knowledge
         of the Borrower, is the subject of any actual, pending or threatened
         bankruptcy, insolvency or similar proceedings under any law of any
         jurisdiction.

                                  ARTICLE VI

                        BORROWER'S AFFIRMATIVE COVENANTS

                  So long as the Obligations shall remain unpaid, or the Credit
Facility shall remain outstanding, the Borrower will comply with the following
requirements, unless the Lender shall otherwise consent in writing:

                  Section  6.1 REPORTING REQUIREMENTS. The Borrower will
deliver, or cause to be delivered, to the Lender each of the following, which
shall be in form and detail acceptable to the Lender:

                  (a)      as soon as available, and in any event within ninety
         (90) days after the end of each fiscal year of the Borrower, the
         Borrower's audited financial statements with the unqualified opinion of
         independent certified public accountants selected by the Borrower and
         acceptable to the Lender, which annual financial statements shall
         include the Borrower's balance sheet as at the end of such fiscal year
         and the related statements of the Borrower's income, retained earnings
         and cash flows for the fiscal year then ended, all in reasonable detail
         and prepared in accordance with GAAP, together with (i) copies of all
         management letters prepared by such accountants; (ii) a report signed
         by such accountants stating that in making the investigations necessary
         for said opinion they obtained no knowledge, except as specifically
         stated, of any Default or Event of Default hereunder and all relevant
         facts in reasonable detail to evidence, and the computations as to,
         whether or not the Borrower is in compliance with the requirements set
         forth in Sections 6.12, 6.13, and 7.10; and (iii) a certificate of the
         Borrower's chief financial officer stating that such financial
         statements have been prepared in accordance with GAAP and whether or
         not such officer has knowledge of the occurrence of any Default or
         Event of Default hereunder and, if so, stating in reasonable detail the
         facts with respect thereto;

                  (b)      as soon as available and in any event within twenty
         (20) days after the end of each month, an unaudited/internal balance
         sheet and statements of income and retained earnings of the Borrower as
         at the end of and for such month and for the year to date period then
         ended, in reasonable detail and stating in comparative form the figures
         for the corresponding date and periods in the previous year, all
         prepared in accordance with GAAP, subject to year-end audit
         adjustments; and accompanied by a certificate of the Borrower's chief
         financial officer, substantially in the form of Exhibit B hereto
         stating (i) that such financial statements have been prepared in
         accordance with GAAP, subject to year-end audit adjustments, (ii)
         whether or not such officer has knowledge of the occurrence of any
         Default or Event of Default hereunder not theretofore reported and


                                     -25-
<PAGE>

         remedied and, if so, stating in reasonable detail the facts with
         respect thereto, and (iii) all relevant facts in reasonable detail to
         evidence, and the computations as to, whether or not the Borrower is in
         compliance with the requirements set forth in Sections 6.12, 6.13, and
         7.10;

                  (c)      No later than Monday of each week, as of the end of
         the prior calendar week, or more frequently if the Lender so requires,
         reports of Borrower's sales, credit memos, collections, and other
         accounts receivable activity;

                  (d)      within fifteen (15) days after the end of each month
         or more frequently if the Lender so requires, agings of the Borrower's
         accounts receivable and its accounts payable, an inventory
         certification report, reports of inventory levels, and a calculation of
         the Borrower's Accounts, Eligible Accounts, Inventory and Eligible
         Inventory as at the end of such month or shorter time period;

                  (e)      at least thirty (30) days before the beginning of
         each fiscal year of the Borrower, the projected balance sheets and
         income statements for each month of such year, each in reasonable
         detail, representing the Borrower's good faith projections and
         certified by the Borrower's chief financial officer as being the most
         accurate projections available and identical to the projections used by
         the Borrower for internal planning purposes, together with such
         supporting schedules and information as the Lender may in its
         discretion require;

                  (f)      promptly upon knowledge thereof, notice in writing of
         all litigation and of all proceedings before any governmental or
         regulatory agency affecting the Borrower of the type described in
         Section 5.12 or which seek a monetary recovery against the Borrower in
         excess of Twenty Five Thousand Dollars ($25,000);

                  (g)      as promptly as practicable (but in any event not
         later than five business days) after an officer of the Borrower obtains
         knowledge of the occurrence of any breach, default or event of default
         under any Security Document or any event which constitutes a Default or
         Event of Default hereunder, notice of such occurrence, together with a
         detailed statement by a responsible officer of the Borrower of the
         steps being taken by the Borrower to cure the effect of such breach,
         default or event;

                  (h)      as soon as possible and in any event within thirty
         (30) days after the Borrower knows or has reason to know that any
         Reportable Event with respect to any Plan has occurred, the statement
         of the Borrower's chief financial officer setting forth details as to
         such Reportable Event and the action which the Borrower proposes to
         take with respect thereto, together with a copy of the notice of such
         Reportable Event to the Pension Benefit Guaranty Corporation;

                  (i)      as soon as possible, and in any event within ten (10)
         days after the Borrower fails to make any quarterly contribution
         required with respect to any Plan under Section 412(m) of the Internal
         Revenue Code of 1986, as amended, the statement of the Borrower's chief
         financial officer setting forth details as to such failure and the
         action


                                     -26-
<PAGE>

         which the Borrower proposes to take with respect thereto, together with
         a copy of any notice of such failure required to be provided to the
         Pension Benefit Guaranty Corporation;

                  (j)      promptly upon knowledge thereof, notice of (i) any
         disputes or claims by the Borrower's customers exceeding Twenty Five
         Thousand Dollars ($25,000) individually or Fifty Thousand Dollars
         ($50,000) in the aggregate during any fiscal year; (ii) credit memos;
         (iii) any goods returned to or recovered by the Borrower; and (iv) any
         change in the persons constituting the Borrower's officers and
         directors;

                  (k)      promptly upon knowledge thereof, notice of any loss
         of or material damage to any Collateral or other collateral covered by
         the Security Documents or of any substantial adverse change in any
         Collateral or such other collateral or the prospect of payment thereof;

                  (l)      promptly upon their distribution, copies of all
         financial statements, reports and proxy statements which the Borrower
         shall have sent to its stockholders;

                  (m)      promptly after the sending or filing thereof, copies
         of all regular and periodic reports which the Borrower shall file with
         the Securities and Exchange Commission or any national securities
         exchange;

                  (n)      promptly upon knowledge thereof, notice of the
         Borrower's violation of any law, rule or regulation, the non-compliance
         with which could materially and adversely affect the Borrower's
         business or its financial condition; and

                  (o)      from time to time, with reasonable promptness, any
         and all receivables schedules, collection reports, deposit records,
         equipment schedules, copies of invoices to account debtors, shipment
         documents and delivery receipts for goods sold, and such other
         material, reports, records or information as the Lender may request,
         including, without limitation, daily or weekly borrowing base
         certificates.

                  Section  6.2 BOOKS AND RECORDS; INSPECTION AND EXAMINATION.
The Borrower will keep accurate books of record and account for itself
pertaining to the Collateral and pertaining to the Borrower's business and
financial condition and such other matters as the Lender may from time to time
request in which true and complete entries will be made in accordance with GAAP
and, upon the Lender's request, will permit any officer, employee, attorney or
accountant for the Lender to audit, review, make extracts from or copy any and
all corporate and financial books and records of the Borrower at all times
during ordinary business hours, to send and discuss with account debtors and
other obligors requests for verification of amounts owed to the Borrower, and to
discuss the Borrower's affairs with any of its directors, officers, employees or
agents. The Borrower will permit the Lender, or its employees, accountants,
attorneys or agents, to examine and inspect any Collateral, other collateral
covered by the Security Documents or any other property of the Borrower at any
time during ordinary business hours.


                                     -27-
<PAGE>

                  Section  6.3 ACCOUNT VERIFICATION. The Lender may at any time
and from time to time send or require the Borrower to send requests for
verification of accounts or notices of assignment to account debtors and other
obligors. The Lender may also at any time and from time to time telephone
account debtors and other obligors to verify accounts.

                  Section  6.4 COMPLIANCE WITH LAWS.

                  (a)      The Borrower will (i) comply with the requirements of
         applicable laws and regulations, the non-compliance with which would
         materially and adversely affect its business or its financial condition
         and (ii) use and keep the Collateral, and require that others use and
         keep the Collateral, only for lawful purposes, without violation of any
         federal, state or local law, statute or ordinance.

                  (b)      Without limiting the foregoing undertakings, the
         Borrower specifically agrees that it will comply with all applicable
         Environmental Laws and obtain and comply with all permits, licenses and
         similar approvals required by any Environmental Laws, and will not
         generate, use, transport, treat, store or dispose of any Hazardous
         Substances in such a manner as to create any liability or obligation
         under the common law of any jurisdiction or any Environmental Law.

                  Section  6.5 PAYMENT OF TAXES AND OTHER CLAIMS. The Borrower
will pay or discharge, when due, (a) all taxes, assessments and governmental
charges levied or imposed upon it or upon its income or profits, upon any
properties belonging to it (including, without limitation, the Collateral) or
upon or against the creation, perfection or continuance of the Security
Interest, prior to the date on which penalties attach thereto, (b) all federal,
state and local taxes required to be withheld by it, and (c) all lawful claims
for labor, materials and supplies which, if unpaid, might by law become a lien
or charge upon any properties of the Borrower; provided, that the Borrower shall
not be required to pay any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings and for which proper reserves have been made.

                  Section  6.6 MAINTENANCE OF PROPERTIES.

                  (a)      The Borrower will keep and maintain the Collateral,
         the other collateral covered by the Security Documents and all of its
         other properties necessary or useful in its business in good condition,
         repair and working order (normal wear and tear excepted) and will from
         time to time replace or repair any worn, defective or broken parts;
         provided, however, that nothing in this Section 6.6 shall prevent the
         Borrower from discontinuing the operation and maintenance of any of its
         properties if such discontinuance is, in the Lender's judgment,
         desirable in the conduct of the Borrower's business and not
         disadvantageous in any material respect to the Lender.

                  (b)      The Borrower will defend the Collateral against all
         claims or demands of all persons (other than the Lender) claiming the
         Collateral or any interest therein.


                                     -28-
<PAGE>

                  (c)      The Borrower will keep all Collateral and other
         collateral covered by the Security Documents free and clear of all
         security interests, liens and encumbrances except Permitted Liens.

                  Section  6.7 INSURANCE. The Borrower will obtain and at all
times maintain insurance with insurers believed by the Borrower to be
responsible and reputable, in such amounts and against such risks as may from
time to time be required by the Lender, but in all events in such amounts and
against such risks as is usually carried by companies engaged in similar
business and owning similar properties in the same general areas in which the
Borrower operates. Without limiting the generality of the foregoing, the
Borrower will at all times maintain business interruption insurance including
coverage for force majeure and keep all tangible Collateral insured against
risks of fire (including so-called extended coverage), theft, collision (for
Collateral consisting of motor vehicles) and such other risks and in such
amounts as the Lender may reasonably request, with any loss payable to the
Lender to the extent of its interest, and all policies of such insurance shall
contain a lender's loss payable endorsement for the Lender's benefit acceptable
to the Lender. All policies of liability insurance required hereunder shall name
the Lender as an additional insured.

                  Section  6.8 PRESERVATION OF EXISTENCE. The Borrower will
preserve and maintain its existence and all of its rights, privileges and
franchises necessary or desirable in the normal conduct of its business and
shall conduct its business in an orderly, efficient and regular manner.

                  Section  6.9 DELIVERY OF INSTRUMENTS, ETC. Upon request by the
Lender, the Borrower will promptly deliver to the Lender in pledge all
instruments, documents and chattel papers constituting Collateral, duly endorsed
or assigned by the Borrower.

                  Section  6.10 COLLATERAL ACCOUNT.

                  (a)      If, notwithstanding the instructions to debtors to
         make payments to the Lockbox, the Borrower receives any payments on
         Receivables, the Borrower shall deposit such payments into the
         Collateral Account. Until so deposited, the Borrower shall hold all
         such payments in trust for and as the property of the Lender and shall
         not commingle such payments with any of its other funds or property.

                  (b)      Amounts deposited in the Collateral Account shall not
         bear interest and shall not be subject to withdrawal by the Borrower,
         except after full payment and discharge of all Obligations. All
         deposits in the Collateral Account shall constitute proceeds of
         Collateral and shall not constitute payment of the Obligations.

                  (c)      All items deposited in the Collateral Account shall
         be subject to final payment. If any such item is returned uncollected,
         the Borrower will immediately pay the Lender, or, for items deposited
         in the Collateral Account, the bank maintaining such account, the
         amount of that item, or such bank at its discretion may charge any
         uncollected item to the Borrower's commercial account or other account.
         The Borrower


                                     -29-
<PAGE>

         shall be liable as an endorser on all items deposited in the Collateral
         Account, whether or not in fact endorsed by the Borrower.

                  Section  6.11 PERFORMANCE BY THE LENDER. If the Borrower at
any time fails to perform or observe any of the foregoing covenants contained in
this Article VI or elsewhere herein, and if such failure shall continue for a
period of ten (10) calendar days after the Lender gives the Borrower written
notice thereof (or in the case of the agreements contained in Sections 6.7 and
6.10, immediately upon the occurrence of such failure, without notice or lapse
of time), the Lender may, but need not, perform or observe such covenant on
behalf and in the name, place and stead of the Borrower (or, at the Lender's
option, in the Lender's name) and may, but need not, take any and all other
actions which the Lender may reasonably deem necessary to cure or correct such
failure (including, without limitation, the payment of taxes, the satisfaction
of security interests, liens or encumbrances, the performance of obligations
owed to account debtors or other obligors, the procurement and maintenance of
insurance, the execution of assignments, security agreements and financing
statements, and the endorsement of instruments); and the Borrower shall
thereupon pay to the Lender on demand the amount of all monies expended and all
costs and expenses (including reasonable attorneys' fees and legal expenses)
incurred by the Lender in connection with or as a result of the performance or
observance of such agreements or the taking of such action by the Lender,
together with interest thereon from the date expended or incurred at the
Floating Rate. To facilitate the Lender's performance or observance of such
covenants of the Borrower, the Borrower hereby irrevocably appoints the Lender,
or the Lender's delegate, acting alone, as the Borrower's attorney in fact
(which appointment is coupled with an interest) with the right (but not the
duty) from time to time to create, prepare, complete, execute, deliver, endorse
or file in the name and on behalf of the Borrower any and all instruments,
documents, assignments, security agreements, financing statements, applications
for insurance and other agreements and writings required to be obtained,
executed, delivered or endorsed by the Borrower under this Section 6.11.

                  Section  6.12 MINIMUM BOOK NET WORTH PLUS SUBORDINATED
CONVERTIBLE DEBT. The Borrower will maintain, during each period described
below, its Book Net Worth plus Subordinated Convertible Debt ("Adjusted Book Net
Worth"), determined as at the end of each month, at an amount not less than the
amount set forth opposite such period:

<TABLE>
<CAPTION>
                   Period                             Adjusted Book Net Worth
                   ------                             -----------------------
<S>                                                  <C>
             through 1/31/2000                                  $0
        2/29/2000 through 3/31/2000                         ($225,000)
        4/30/2000 through 6/30/2000                         ($450,000)
        7/31/2000 through 9/30/2000                         ($475,000)
       10/31/2000 through 12/31/2000                 ($500,000) and thereafter
</TABLE>

                  Section  6.13 MINIMUM NET INCOME. The Borrower will maintain
during each period described below, Minimum Net Income determined as at the end
of each calendar quarter measured on a year-to-date basis, of not less than the
amount set forth opposite such period:


                                     -30-
<PAGE>

<TABLE>
<CAPTION>
               Quarter Ending                           Minimum Net Income
               --------------                           ------------------
<S>                                                     <C>
                 3/31/2000                                  ($675,000)
                 6/30/2000                                  ($900,000)
                 9/30/2000                                  ($925,000)
                 12/31/2000                                 ($950,000)
</TABLE>

                  Section  6.14 NEW COVENANTS. On or before January 1 of each
year Lender shall set new covenant levels for Sections 6.12, 6.13, and 7.10 for
periods after such date. The new covenant levels will be based on the Borrower's
projections for such periods received by Lender pursuant to Section 6.1(e) and
shall be no less stringent than the present levels.

                                  ARTICLE VII

                               NEGATIVE COVENANTS

         So long as the Obligations shall remain unpaid, or the Credit Facility
shall remain outstanding, the Borrower agrees that, without the Lender's prior
written consent:

                  Section  7.1 LIENS. The Borrower will not create, incur or
suffer to exist any mortgage, deed of trust, pledge, lien, security interest,
assignment or transfer upon or of any of its assets, now owned or hereafter
acquired, to secure any indebtedness; EXCLUDING, HOWEVER, from the operation of
the foregoing, the following (collectively, "PERMITTED LIENS"):

                  (a)      in the case of any of the Borrower's property which
         is not Collateral or other collateral described in the Security
         Documents, covenants, restrictions, rights, easements and minor
         irregularities in title which do not materially interfere with the
         Borrower's business or operations as presently conducted;

                  (b)      mortgages, deeds of trust, pledges, liens, security
         interests and assignments in existence on the date hereof and listed in
         SCHEDULE 7.1 hereto;

                  (c)      the Security Interest and liens and security
         interests created by the Security Documents; and

                  (d)      purchase money security interests relating to the
         acquisition of machinery and equipment of the Borrower not exceeding
         the cost or fair market value thereof, not exceeding Fifty Thousand
         Dollars ($50,000) for any one purchase or One Hundred Thousand Dollars
         ($100,000) in the aggregate during any fiscal year and so long as no
         Default Period is then in existence and none would exist immediately
         after such acquisition.

                  Section  7.2 INDEBTEDNESS. The Borrower will not incur,
create, assume or permit to exist any indebtedness or liability on account of
deposits or advances or any


                                     -31-
<PAGE>

indebtedness for borrowed money or letters of credit issued on the Borrower's
behalf, or any other indebtedness or liability evidenced by notes, bonds,
debentures or similar obligations, except:

                  (a)      indebtedness arising hereunder;

                  (b)      indebtedness of the Borrower in existence on the date
         hereof and listed in SCHEDULE 7.2 hereto; and

                 (c)      indebtedness relating to liens permitted in
         accordance with Section 7.1.

                  Section  7.3 GUARANTIES. The Borrower will not assume,
guarantee, endorse or otherwise become directly or contingently liable in
connection with any obligations of any other Person, except:

                  (a)      the endorsement of negotiable instruments by the
         Borrower for deposit or collection or similar transactions in the
         ordinary course of business; and

                  (b)      guaranties, endorsements and other direct or
         contingent liabilities in connection with the obligations of other
         Persons, in existence on the date hereof and listed in SCHEDULE 7.2
         hereto.

                  Section  7.4 INVESTMENTS AND SUBSIDIARIES.

                  (a)      The Borrower will not purchase or hold beneficially
         any stock or other securities or evidences of indebtedness of, make or
         permit to exist any loans or advances to, or make any investment or
         acquire any interest whatsoever in, any other Person, including
         specifically but without limitation any partnership or joint venture,
         except:

                           (i)      investments in direct obligations of the
                  United States of America or any agency or instrumentality
                  thereof whose obligations constitute full faith and credit
                  obligations of the United States of America having a
                  maturity of one year or less, commercial paper issued by
                  U.S. corporations rated "A-1" or "A-2" by Standard & Poors
                  Corporation or "P-1" or "P-2" by Moody's Investors Service
                  or certificates of deposit or bankers' acceptances having a
                  maturity of one year or less issued by members of the
                  Federal Reserve System having deposits in excess of One
                  Hundred Million Dollars ($100,000,000) (which certificates
                  of deposit or bankers' acceptances are fully insured by the
                  Federal Deposit Insurance Corporation);

                           (ii)     travel advances or loans to the
                  Borrower's officers and employees not exceeding at any one
                  time an aggregate of Ten Thousand Dollars ($10,000); and

                           (iii)    advances in the form of progress
                  payments, prepaid rent not exceeding three (3) months or
                  security deposits.


                                     -32-
<PAGE>

                  (b)      The Borrower will not create or permit to exist any
         Subsidiary.

                  Section  7.5 DIVIDENDS. Except as set forth below, the
Borrower will not declare or pay any dividends (other than dividends payable
solely in stock of the Borrower) on any class of its stock or make any payment
on account of the purchase, redemption or other retirement of any shares of such
stock or make any distribution in respect thereof, either directly or
indirectly.

                  Section  7.6 SALE OR TRANSFER OF ASSETS; SUSPENSION OF
BUSINESS OPERATIONS. The Borrower will not sell, lease, assign, transfer or
otherwise dispose of (i) the stock of any Subsidiary, (ii) all or a substantial
part of its assets, or (iii) any Collateral or any interest therein (whether in
one transaction or in a series of transactions) to any other Person other than
the sale of Inventory in the ordinary course of business and will not liquidate,
dissolve or suspend business operations. The Borrower will not in any manner
transfer any property without prior or present receipt of full and adequate
consideration.

                  Section  7.7 CONSOLIDATION AND MERGER; ASSET ACQUISITIONS. The
Borrower will not consolidate with or merge into any Person, or permit any other
Person to merge into it, or acquire (in a transaction analogous in purpose or
effect to a consolidation or merger) all or substantially all the assets of any
other Person.

                  Section  7.8 SALE AND LEASEBACK. The Borrower will not enter
into any arrangement, directly or indirectly, with any other Person whereby the
Borrower shall sell or transfer any real or personal property, whether now owned
or hereafter acquired, and then or thereafter rent or lease as lessee such
property or any part thereof or any other property which the Borrower intends to
use for substantially the same purpose or purposes as the property being sold or
transferred.

                  Section  7.9 RESTRICTIONS ON NATURE OF BUSINESS. The Borrower
will not engage in any line of business materially different from that presently
engaged in by the Borrower and will not purchase, lease or otherwise acquire
assets not related to its business.

                  Section  7.10 CAPITAL EXPENDITURES. The Borrower will not
incur or contract to incur Capital Expenditures of more than One Hundred
Thousand Dollars ($100,000) in the aggregate during any fiscal year, or more
than Fifty Thousand Dollars ($50,000) in any one transaction.

                  Section  7.11 ACCOUNTING. The Borrower will not adopt any
material change in accounting principles other than as required by GAAP. The
Borrower will not adopt, permit or consent to any change in its fiscal year.

                  Section  7.12 DISCOUNTS, ETC. The Borrower will not, after
notice from the Lender, grant any discount, credit or allowance to any customer
of the Borrower or accept any return of goods sold, or at any time (whether
before or after notice from the Lender) modify, amend, subordinate, cancel or
terminate the obligation of any account debtor or other obligor of the Borrower
(collectively referred to herein as "Discounts"); provided, however, that
Borrower


                                     -33-
<PAGE>

may grant such Discounts in manner and amount which are in accordance with
Borrower's past practice.

                 Section  7.13 DEFINED BENEFIT PENSION PLANS. The Borrower will
not adopt, create, assume or become a party to any defined benefit pension plan,
unless disclosed to the Lender pursuant to Section 5.10.

                  Section  7.14 OTHER DEFAULTS. The Borrower will not permit any
breach, default or event of default to occur under any note, loan agreement,
indenture, lease, mortgage, contract for deed, security agreement or other
contractual obligation binding upon the Borrower.

                  Section  7.15 PLACE OF BUSINESS; NAME. The Borrower will not
transfer its chief executive office or principal place of business, or move,
relocate, close or sell any business location. The Borrower will not permit any
tangible Collateral or any records pertaining to the Collateral to be located in
any state or area in which, in the event of such location, a financing statement
covering such Collateral would be required to be, but has not in fact been,
filed in order to perfect the Security Interest. The Borrower will not change
its name.

                  Section  7.16 ORGANIZATIONAL DOCUMENTS; S CORPORATION STATUS.
The Borrower will not amend its certificate of incorporation, articles of
incorporation or bylaws. The Borrower will not become an S Corporation.

                  Section  7.17 SALARIES. The Borrower will not pay excessive or
unreasonable salaries, bonuses, commissions, consultant fees or other
compensation; or increase the salary, bonus, commissions, consultant fees or
other compensation of any director, officer or consultant, or any member of
their families, by more than ten percent (10%) in any one year, either
individually or for all such persons in the aggregate, or pay any such increase
from any source other than profits earned in the year of payment.

                  Section  7.18 CHANGE IN OWNERSHIP. The Borrower will not issue
or sell any stock of the Borrower in amounts so that Health Holdings and
Botanicals, Inc. ceases to own in excess of fifty percent (50%) of the issued
and outstanding shares of common stock of the Borrower.

                  Section  7.19 TRANSACTIONS WITH AFFILIATES. Borrower shall not
enter into any transaction for the purchase, sale or exchange of property or the
rendering of any service to or by any Affiliate, except in the ordinary course
of and pursuant to the reasonable requirements of Borrower's business and upon
fair and reasonable terms no less favorable to Borrower than Borrower would
obtain in a comparable arms length transaction with an unaffiliated Person.

                  Section  7.20 ADDITIONAL BANK ACCOUNTS. Borrower shall not,
directly or indirectly, open, establish or maintain any deposit account,
investment account or any other account with any bank or other financial
institution, other than the Collateral Account and the accounts set forth in
SCHEDULE 5.16 hereto.


                                     -34-
<PAGE>

                                 ARTICLE VIII

                     EVENTS OF DEFAULT, RIGHTS AND REMEDIES

                  Section  8.1 EVENTS OF DEFAULT. "EVENT OF DEFAULT", wherever
used herein, means any one of the following events, which Event of Default shall
exist or continue or be continuing until such Event of Default is waived in
accordance with Section 9.2 hereof:

                  (a)      Default in the payment of the Obligations when they
         become due and payable;

                  (b)      Default in the payment of any fees, commissions,
         costs or expenses required to be paid by the Borrower under this
         Agreement;

                  (c)      Borrower shall fail to comply with any covenant or
         agreement of the Borrower contained in this Agreement and such failure
         shall continue for five (5) days; provided, that, such five (5) day
         period shall not apply in the case of: (i) any failure to observe any
         such covenant or agreement which is not capable of being cured at all
         or within such five (5) day period or which has been the subject of a
         prior failure within a twelve (12) month period or (ii) an intentional
         breach of Borrower of any such covenant or agreement;

                  (d)      The Borrower or any Guarantor shall be or become
         insolvent, or admit in writing its or his inability to pay its or his
         debts as they mature, or make an assignment for the benefit of
         creditors; or the Borrower or any Guarantor shall apply for or consent
         to the appointment of any receiver, trustee, or similar officer for it
         or him or for all or any substantial part of its or his property; or
         such receiver, trustee or similar officer shall be appointed without
         the application or consent of the Borrower or such Guarantor, as the
         case may be; or the Borrower or any Guarantor shall institute (by
         petition, application, answer, consent or otherwise) any bankruptcy,
         insolvency, reorganization, arrangement, readjustment of debt,
         dissolution, liquidation or similar proceeding relating to it or him
         under the laws of any jurisdiction; or any such proceeding shall be
         instituted (by petition, application or otherwise) against the Borrower
         or any such Guarantor; or any judgment, writ, warrant of attachment or
         execution or similar process shall be issued or levied against a
         substantial part of the property of the Borrower or any Guarantor;

                  (e)      A petition shall be filed by or against the Borrower
         or any Guarantor under the United States Bankruptcy Code naming the
         Borrower or such Guarantor as debtor;

                  (f)      The Life Insurance Policy shall be terminated, by the
         Borrower or otherwise; or the Life Insurance Policy shall be scheduled
         to terminate within thirty (30) days and the Borrower shall not have
         delivered a satisfactory renewal thereof to the Lender; or the Borrower
         shall fail to pay any premium on the Life Insurance Policy when due; or
         the Borrower shall take any other action that impairs the value of the
         Life Insurance Policy.


                                     -35-
<PAGE>

                  (g)      Any representation or warranty made by the Borrower
         in this Agreement, by any Guarantor in any guaranty delivered to the
         Lender, or by the Borrower (or any of its officers) or any Guarantor in
         any agreement, certificate, instrument or financial statement or other
         statement contemplated by or made or delivered pursuant to or in
         connection with this Agreement or any such guaranty shall prove to have
         been incorrect in any material respect when deemed to be effective;

                  (h)      The rendering against the Borrower of a final
         judgment, decree or order for the payment of money in excess of Fifty
         Thousand Dollars ($50,000) (not covered by insurance or for which an
         insurer has reserved its rights) and, absent procurement of a stay of
         execution, such judgment, decree or order unsatisfied and in effect for
         any period of thirty (30) consecutive days without a stay of execution;

                  (i)      A default under any bond, debenture, note or other
         evidence of indebtedness of the Borrower owed to any Person other than
         the Lender, or under any indenture or other instrument under which any
         such evidence of indebtedness has been issued or by which it is
         governed, or under any lease of any of the Premises, and the expiration
         of the applicable period of grace, if any, specified in such evidence
         of indebtedness, indenture, other instrument or lease;

                  (j)      Any Reportable Event, which the Lender determines in
         good faith might constitute grounds for the termination of any Plan or
         for the appointment by the appropriate United States District Court of
         a trustee to administer any Plan, shall have occurred and be continuing
         thirty (30) days after written notice to such effect shall have been
         given to the Borrower by the Lender; or a trustee shall have been
         appointed by an appropriate United States District Court to administer
         any Plan; or the Pension Benefit Guaranty Corporation shall have
         instituted proceedings to terminate any Plan or to appoint a trustee to
         administer any Plan; or the Borrower shall have filed for a distress
         termination of any Plan under Title IV of ERISA; or the Borrower shall
         have failed to make any quarterly contribution required with respect to
         any Plan under Section 412(m) of the Internal Revenue Code of 1986, as
         amended, which the Lender determines in good faith may by itself, or in
         combination with any such failures that the Lender may determine are
         likely to occur in the future, result in the imposition of a lien on
         the Borrower's assets in favor of the Plan;

                  (k)      An event of default shall occur under any Security
         Document or under any other security agreement, mortgage, deed of
         trust, assignment or other instrument or agreement securing any
         obligations of the Borrower hereunder or under any note;

                  (l)      The Borrower shall liquidate, dissolve, terminate or
         suspend its business operations or otherwise fail to operate its
         business in the ordinary course, or sell all or substantially all of
         its assets, without the Lender's prior written consent;

                  (m)      The Borrower shall fail to pay, withhold, collect or
         remit any tax or tax deficiency when assessed or due (other than any
         tax deficiency which is being contested in good faith and by proper
         proceedings and for which it shall have set aside on its books


                                     -36-
<PAGE>

         adequate reserves therefor) or notice of any state or federal tax liens
         shall be filed or issued;

                  (n)      Default in the payment of any amount owed by the
         Borrower to the Lender other than any indebtedness arising hereunder;

                  (o)      Any Guarantor shall repudiate, purport to revoke or
         fail to perform any such Guarantor's obligations under such Guarantor's
         guaranty in favor of the Lender, any individual Guarantor shall die or
         any other Guarantor shall cease to exist;

                  (p)      The Borrower shall take or participate in any action
         which would be prohibited under the provisions of any Subordination
         Agreement or make any payment on the Subordinated Indebtedness (as
         defined in the Subordination Agreement) that any Person was not
         entitled to receive under the provisions of the Subordination
         Agreement;

                  Section  8.2 RIGHTS AND REMEDIES. During any Default Period,
the Lender may exercise any or all of the following rights and remedies:

                  (a)      the Lender may, by notice to the Borrower, declare
         the Commitment to be terminated, whereupon the same shall forthwith
         terminate;

                  (b)      the Lender may, by notice to the Borrower, declare
         the Obligations to be forthwith due and payable, whereupon all
         Obligations shall become and be forthwith due and payable, without
         presentment, notice of dishonor, protest or further notice of any kind,
         all of which the Borrower hereby expressly waives;

                  (c)      the Lender may, without notice to the Borrower and
         without further action, apply any and all money owing by the Lender to
         the Borrower to the payment of the Obligations;

                  (d)      the Lender may exercise and enforce any and all
         rights and remedies available upon default to a secured party under the
         UCC, including, without limitation, the right to take possession of
         Collateral, or any evidence thereof, proceeding without judicial
         process or by judicial process (without a prior hearing or notice
         thereof, which the Borrower hereby expressly waives) and the right to
         sell, lease or otherwise dispose of any or all of the Collateral, and,
         in connection therewith, the Borrower will on demand assemble the
         Collateral and make it available to the Lender at a place to be
         designated by the Lender which is reasonably convenient to both
         parties;

                  (e)      the Lender may exercise and enforce its rights and
         remedies under the Loan Documents; and

                  (f)      the Lender may exercise any other rights and remedies
         available to it by law or agreement.


                                     -37-
<PAGE>

Notwithstanding the foregoing, upon the occurrence of an Event of Default
described in subsections (d) or (e) of Section 8.1, the Obligations shall be
immediately due and payable automatically without presentment, demand, protest
or notice of any kind.

                  Section  8.3 CERTAIN NOTICES. If notice to the Borrower of any
intended disposition of Collateral or any other intended action is required by
law in a particular instance, such notice shall be deemed commercially
reasonable if given (in the manner specified in Section 9.3) at least ten (10)
calendar days before the date of intended disposition or other action.

                                   ARTICLE IX

                                  MISCELLANEOUS

                  Section  9.1 NO WAIVER; CUMULATIVE REMEDIES. No failure or
delay by the Lender in exercising any right, power or remedy under the Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy under the
Loan Documents. The remedies provided in the Loan Documents are cumulative and
not exclusive of any remedies provided by law.

                  Section  9.2 AMENDMENTS, ETC. No amendment, modification,
termination or waiver of any provision of any Loan Document or consent to any
departure by the Borrower therefrom or any release of a Security Interest shall
be effective unless the same shall be in writing and signed by the Lender, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given. No notice to or demand on the Borrower
in any case shall entitle the Borrower to any other or further notice or demand
in similar or other circumstances.

                  Section  9.3 ADDRESSES FOR NOTICES, ETC. Except as otherwise
expressly provided herein, all notices, requests, demands and other
communications provided for under the Loan Documents shall be in writing and
shall be (a) personally delivered, (b) sent by first class United States mail,
(c) sent by overnight courier of national reputation, or (d) transmitted by
telecopy, in each case addressed or telecopied to the party to whom notice is
being given at its address or telecopier number as set forth below:

                  If to the Borrower:
                  Naturade, Inc.
                  14370 Myford Rd.
                  Irvine, California 92606
                  Telecopier: (714) 573-4816
                  Attention:  Larry Batina


                                     -38-
<PAGE>

                  If to the Lender:

                  Wells Fargo Business Credit, Inc.
                  245 South Los Robles Avenue, Suite 600
                  Pasadena, California  91101
                  Telecopier: (626) 844-9063
                  Attention:  Tom Makowski

or, as to each party, at such other address or telecopier number as may
hereafter be designated by such party in a written notice to the other party
complying as to delivery with the terms of this Section. All such notices,
requests, demands and other communications shall be deemed to have been given on
(a) the date received if personally delivered, (b) when deposited in the mail if
delivered by mail, (c) the date sent if sent by overnight courier, or (d) the
date of transmission if delivered by telecopy, except that notices or requests
to the Lender pursuant to any of the provisions of Article II shall not be
effective until received by the Lender.

                  Section  9.4 FURTHER DOCUMENTS. The Borrower will from time to
time execute and deliver or endorse any and all instruments, documents,
conveyances, assignments, security agreements, financing statements and other
agreements and writings that the Lender may reasonably request in order to
secure, protect, perfect or enforce the Security Interest or the Lender's rights
under the Loan Documents (but any failure to request or assure that the Borrower
executes, delivers or endorses any such item shall not affect or impair the
validity, sufficiency or enforceability of the Loan Documents and the Security
Interest, regardless of whether any such item was or was not executed, delivered
or endorsed in a similar context or on a prior occasion).

                  Section  9.5 COLLATERAL. This Agreement does not contemplate a
sale of accounts, contract rights or chattel paper, and, as provided by law, the
Borrower is entitled to any surplus and shall remain liable for any deficiency.
The Lender's duty of care with respect to Collateral in its possession (as
imposed by law) shall be deemed fulfilled if it exercises reasonable care in
physically keeping such Collateral, or in the case of Collateral in the custody
or possession of a bailee or other third person, exercises reasonable care in
the selection of the bailee or other third person, and the Lender need not
otherwise preserve, protect, insure or care for any Collateral. The Lender shall
not be obligated to preserve any rights the Borrower may have against prior
parties, to realize on the Collateral at all or in any particular manner or
order or to apply any cash proceeds of the Collateral in any particular order of
application.

                  Section  9.6 COSTS AND EXPENSES. The Borrower agrees to pay on
demand all costs and expenses, including (without limitation) attorneys' fees,
incurred by the Lender in connection with the Obligations, this Agreement, the
Loan Documents, and any other document or agreement related hereto or thereto,
and the transactions contemplated hereby, including without limitation all such
costs, expenses and fees incurred in connection with the negotiation,
preparation, execution, amendment, administration, performance, collection and
enforcement of the Obligations and all such documents and agreements and the
creation, perfection, protection, satisfaction, foreclosure or enforcement of
the Security Interest.


                                     -39-
<PAGE>

                  Section  9.7 INDEMNITY. In addition to the payment of
expenses pursuant to Section  9.6, the Borrower agrees to indemnify, defend
and hold harmless the Lender, and any of its participants, parent
corporations, subsidiary corporations, affiliated corporations, successor
corporations, and all present and future officers, directors, employees,
attorneys and agents of the foregoing (the "INDEMNITEES") from and against
any of the following (collectively, "INDEMNIFIED LIABILITIES"):

                           (i)      any and all transfer taxes, documentary
                  taxes, assessments or charges made by any governmental
                  authority by reason of the execution and delivery of the
                  Loan Documents or the making of the Advances;

                           (ii)     any claims, loss or damage to which any
                  Indemnitee may be subjected if any representation or
                  warranty contained in Section 5.12 proves to be incorrect
                  in any respect or as a result of any violation of the
                  covenant contained in Section 6.4(b); and

                           (iii)    any and all other liabilities, losses,
                  damages, penalties, judgments, suits, claims, costs and
                  expenses of any kind or nature whatsoever (including,
                  without limitation, the reasonable fees and disbursements
                  of counsel) in connection with the foregoing and any other
                  investigative, administrative or judicial proceedings,
                  whether or not such Indemnitee shall be designated a party
                  thereto, which may be imposed on, incurred by or asserted
                  against any such Indemnitee, in any manner related to or
                  arising out of or in connection with the making of the
                  Advances and the Loan Documents or the use or intended use
                  of the proceeds of the Advances.

If any investigative, judicial or administrative proceeding arising from any of
the foregoing is brought against any Indemnitee, upon such Indemnitee's request,
the Borrower, or counsel designated by the Borrower and satisfactory to the
Indemnitee, will resist and defend such action, suit or proceeding to the extent
and in the manner directed by the Indemnitee, at the Borrower's sole costs and
expense. Each Indemnitee will use its best efforts to cooperate in the defense
of any such action, suit or proceeding. If the foregoing undertaking to
indemnify, defend and hold harmless may be held to be unenforceable because it
violates any law or public policy, the Borrower shall nevertheless make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. The Borrower's obligation
under this Section 9.7 shall survive the termination of this Agreement and the
discharge of the Borrower's other obligations hereunder.

                  Section  9.8 PARTICIPANTS. The Lender and its participants,
if any, are not partners or joint venturers, and the Lender shall not have
any liability or responsibility for any obligation, act or omission of any of
its participants. All rights and powers specifically conferred upon the
Lender may be transferred or delegated to any of the Lender's participants,
successors or assigns.

                  Section  9.9 EXECUTION IN COUNTERPARTS. This Agreement and
other Loan Documents may be executed in any number of counterparts, each of
which when so executed and


                                     -40-
<PAGE>

delivered shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same instrument.

                  Section  9.10 BINDING EFFECT; ASSIGNMENT; COMPLETE
AGREEMENT; EXCHANGING INFORMATION. The Loan Documents shall be binding upon
and inure to the benefit of the Borrower and the Lender and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights thereunder or any interest therein without the Lender's
prior written consent. This Agreement, together with the Loan Documents,
comprises the complete and integrated agreement of the parties on the subject
matter hereof and supersedes all prior agreements, written or oral, on the
subject matter hereof. Lender agrees to hold any confidential information
that it may receive from the Borrower in confidence, except for disclosure:
(1) to affiliates of lender; (b) to legal counsel and accountants for the
Lender; (c) to professional advisors to the Lender; (d) to another financial
institution in connection with a disposition or proposed disposition to that
financial institution of all or part of Lender's interests hereunder or a
participation interest in the Revolving note, provided that the recipient has
accepted such information subject to a confidentiality agreement
substantially similar to this Section; (e) to regulatory officials having
jurisdiction over Lender; and (f) as required by law or legal process.

                  Section  9.11 SEVERABILITY OF PROVISIONS. Any provision of
this Agreement which is prohibited or unenforceable shall be ineffective to
the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.

                  Section  9.12 HEADINGS. Article and Section headings in
this Agreement are included herein for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose.

                  Section  9.13 GOVERNING LAW; JURISDICTION, VENUE; WAIVER OF
JURY TRIAL. This Agreement and the other Loan Documents shall be governed by
and construed in accordance with the substantive laws (other than conflict
laws) of the State of California. The Guaranty shall be governed by and
construed in accordance with the substantive laws (other than conflict laws)
of the State of California. Each of the parties hereto hereby (i) consents to
the personal jurisdiction of the state and federal courts located in the
State of California in connection with any controversy related to this
Agreement or the other Loan Documents; (ii) waives any argument that venue in
any such forum is not convenient, (iii) agrees that any litigation initiated
by the Lender or the Borrower in connection with this Agreement or the other
Loan Documents shall be venued in either the State Courts of the County of
Los Angeles, State of California, or the United States District Court for the
Central District of California; and (iv) agrees that a final judgment in any
such suit, 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. THE PARTIES WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED ON OR PERTAINING TO THIS AGREEMENT.

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written.


                                     -41-
<PAGE>

WELLS FARGO BUSINESS CREDIT, INC.,             NATURADE, INC.
a Minnesota corporation                        a Delaware corporation

By                                             By
  ---------------------------------              ------------------------------
Name:                                          Name:
     ------------------------------                 ---------------------------
     Its                                            Its
        ---------------------------                    ------------------------





                                     -42-
<PAGE>

                         TABLE OF EXHIBITS AND SCHEDULES

      Exhibit A              Form of Revolving Note

      Exhibit B              Compliance Certificate

      Exhibit C              Premises

      -------------------------------------------------------------------------

      Schedule 5.1           Trade Names, Chief Executive Office, Principal
                             Place of Business, and Locations of Collateral

      Schedule 5.4           Subsidiaries

      Schedule 5.16          Bank Accounts

      Schedule 7.1           Permitted Liens

      Schedule 7.2           Permitted Indebtedness and Guaranties



<PAGE>

                                     Exhibit A to Credit and Security Agreement

                                 REVOLVING NOTE

$3,000,000                                                 Pasadena, California
                                                               January 27, 2000

          For value received, the undersigned, NATURADE, INC., a Delaware
corporation (the "BORROWER"), hereby promises to pay on the Termination Date
under the Credit Agreement (defined below), to the order of WELLS FARGO
BUSINESS CREDIT, INC., a Minnesota corporation (the "LENDER"), at its main
office in Pasadena, California, or at any other place designated at any time
by the holder hereof, in lawful money of the United States of America and in
immediately available funds, the principal sum of Three Million Dollars
($3,000,000) or, if less, the aggregate unpaid principal amount of all
Revolving Advances made by the Lender to the Borrower under the Credit
Agreement (defined below) together with interest on the principal amount
hereunder remaining unpaid from time to time, computed on the basis of the
actual number of days elapsed and a 360-day year, from the date hereof until
this Note is fully paid at the rate from time to time in effect under the
Credit and Security Agreement of even date herewith (as the same may hereafter
be amended, supplemented or restated from time to time, the "CREDIT
AGREEMENT") by and between the Lender and the Borrower. The principal hereof
and interest accruing thereon shall be due and payable as provided in the
Credit Agreement. This Note may be prepaid only in accordance with the Credit
Agreement.

          This Note is issued pursuant, and is subject, to the Credit
Agreement, which provides, among other things, for acceleration hereof. This
Note is the Revolving Note referred to in the Credit Agreement. This Note is
secured, among other things, pursuant to the Credit Agreement and the Security
Documents as therein defined, and may now or hereafter be secured by one or
more other security agreements, mortgages, deeds of trust, assignments or
other instruments or agreements.

          The Borrower hereby agrees to pay all costs of collection, including
attorneys' fees and legal expenses in the event this Note is not paid when
due, whether or not legal proceedings are commenced.

          Presentment or other demand for payment, notice of dishonor and
protest are expressly waived.

                                        NATURADE, INC.,
                                        a Delaware corporation

                                        By:
                                           --------------------------------
                                        Its:
                                            -------------------------------


                                     A-1
<PAGE>

                                     Exhibit B to Credit and Security Agreement

                             COMPLIANCE CERTIFICATE

To:
          ----------------------------------------------
          Wells Fargo Business Credit, Inc.

Date:     __________________, 200__

Subject:  Naturade, Inc.
          Financial Statements
          --------------------

          In accordance with our Credit and Security Agreement dated as
of January 27, 2000 (the "CREDIT AGREEMENT"), attached are the financial
statements of NATURADE, INC. (the "BORROWER") as of and for ________________,
200__ (the "REPORTING Date") and the year-to-date period then ended (the
"CURRENT FINANCIALS"). All terms used in this certificate have the meanings
given in the Credit Agreement.

          I certify that the Current Financials have been prepared in
accordance with GAAP, subject to year-end audit adjustments, and fairly
present the Borrower's financial condition and the results of its operations
as of the date thereof.

          Events of Default.  (Check one):

          |_|      The undersigned does not have knowledge of the
                   occurrence of a Default or Event of Default under the
                   Credit Agreement.

          |_|      The undersigned has knowledge of the occurrence of a
                   Default or Event of Default under the Credit
                   Agreement and attached hereto is a statement of the
                   facts with respect to thereto.

          I hereby certify to the Lender as follows:

          |_|      The Reporting Date does not mark the end of one of
                   the Borrower's fiscal quarters, hence I am completing
                   only paragraph __ below.

          |_|      The Reporting Date marks the end of one of the
                   Borrower's fiscal quarters, hence I am completing all
                   paragraphs below except paragraph __.

          |_|      The Reporting Date marks the end of the Borrower's
                   fiscal year, hence I am completing all paragraphs
                   below.

          FINANCIAL COVENANTS.  I further hereby certify as follows:

            1.   MINIMUM BOOK NET WORTH PLUS SUBORDINATED CONVERTIBLE DEBT.
     Pursuant to Section 6.12 of the Credit Agreement, as of the Reporting
     Date, the Borrower's Minimum

                                     B-1
<PAGE>

     Book Net Worth Plus Subordinated Convertible Debt ("Adjusted Book Net
     Worth") was ___________ which |_| satisfies |_| does not satisfy the
     requirement that such amount be no less than ________ as set forth in the
     table below:

                   Period                             Adjusted Book Net Worth
                   ------                             -----------------------
                  through                                    $________
                  through                                    $________
                  through                                    $________
                  through                                    $________
                  through                                    $________

            2.   MINIMUM NET INCOME. Pursuant to Seciton 6.13 of the Credit
     Agreement, as of the Reporting Date, the Borrower's Net Income was
     __________ which |_| satisfies |_| does not satisfy the requirement that
     such amount be not less than $________ as set forth in the table below:

               Quarter Ending                           Minimum Net Income
               --------------                           ------------------
                                                             $--------
                                                             $--------
                                                             $--------
                                                             $--------

            3.   CAPITAL EXPENDITURES. Pursuant to Section 7.10 of the Credit
     Agreement, for the year-to-date period ending on the Reporting Date, the
     Borrower has expended or contracted to expend during the _____________
     year ended ______________, 199___, for Capital Expenditures,
     $__________________ in the aggregate and at most $______________ in any
     one transaction, which |_| satisfies |_| does not satisfy the requirement
     that such expenditures not exceed $__________ in the aggregate and
     $___________ for any one transaction during such year.

            4.   SALARIES. As of the Reporting Date, the Borrower |_| is |_| is
     not in compliance with Section 7.17 of the Credit Agreement concerning
     salaries.

                  Attached hereto are all relevant facts in reasonable detail to
evidence, and the computations of the financial covenants referred to above.
These computations were made in accordance with GAAP.

                                          NATURADE, INC.,
                                          a Delaware corporation

                                          By
                                            -------------------------------

Its Chief Financial Officer

                                     B-2
<PAGE>

                                      Exhibit C to Credit and Security Agreement

                                    PREMISES

          The Premises referred to in the Credit and Security Agreement are
legally described as follows:

                            Parcel Number: 432-391-46


<PAGE>
                                   Schedule 5.1 to Credit and Security Agreement

            TRADE NAMES, CHIEF EXECUTIVE OFFICE, PRINCIPAL PLACE OF
                     BUSINESS, AND LOCATIONS OF COLLATERAL

                                   TRADE NAMES

                             Naturade Products, Inc.
                              Scientific Botanicals

                                    Pure Life

                            Health Life Products Ltd.

                        FORMER CORPORATE NAME OF BORROWER:

                            Springton Capital Corp.

              (changed by amendment to Borrower's Certificate of
                         Incorporation on April 13, 1989)
      ----------------------------------------------------------------------


               CHIEF EXECUTIVE OFFICE/PRINCIPAL PLACE OF BUSINESS

          14370 Myford Rd.
          Irvine, California 92606

                     OTHER INVENTORY AND EQUIPMENT LOCATIONS

      Inventory not to exceed One Hundred Fifty Thousand Dollars ($150,000)
            at any one time may be from time to time turned over to
              various co-packers and processors for the Borrower.


                                 Schedule 5.1
<PAGE>

                                  Schedule 5.4 to Credit and Security Agreement

                                  SUBSIDIARIES






                                 Schedule 5.1
<PAGE>

                                 Schedule 5.16 to Credit and Security agreement

                                  BANK ACCOUNTS

          Bank                        Purpose                    Account
          ----                        -------                    -------
     South Bay Bank                General Account              0002-110946

     South Bay Bank                401K                         0002-118602

     South Bay Bank                Payroll Account              0002-110954

     Wells Fargo Bank              Money Market                 2202102139

     Pacific Century Bank          Petty Cash                   0213070535


                                 Schedule 5.1
<PAGE>

                                  Schedule 7.1 to Credit and Security Agreement

                                 PERMITTED LIENS

  Creditor       Collateral       Jurisdiction       Filing Date      Filing No.
  --------       ----------       ------------       -----------      ----------

                     See attached UCC Financing Statements.




                                 Schedule 7.1 - 1
<PAGE>

                                  Schedule 7.2 to Credit and Security Agreement

                      PERMITTED INDEBTEDNESS AND GUARANTIES

                                  INDEBTEDNESS

<TABLE>
<CAPTION>
      Creditor             Principal Amount   Maturity Date    Monthly Payment         Collateral
      --------             ----------------   -------------    ---------------         ----------
<S>                        <C>                <C>              <C>                 <C>
Health Holdings Secured     $1,467,362;        3/7/00: $1M;     8% Interest:       Substantially all of
Debt with Warrants          monthly debt                                           the Company's assets
                            discount amort     5/31/00: $600K   $10,900
                            of $34k. Will
                            cap out at
                            $1.6M by 4/00

Health Holdings             $3,650,000         July 31, 2004    8% Interest;       Unsecured
Convertible Debt                                                $24,500 (approx)

PNI Trustee                 $282,666          August 1, 2000    $36,500            Substantially all of
                                                                                   the Company's assets

Thelma Becker               $143,434          February 2005     8% Interest;       Unsecured
                                                                $2,832

Crown Credit Co.            $14,135           March 2002        9.5%; 603          Equipment

Crown Credit Co.            $2,534            March 2001        11.5%              Equipment
</TABLE>

                                   GUARANTIES

<TABLE>
<CAPTION>
                            Amount and Description of
     Primary Obligor          Obligation Guaranteed          Beneficiary of Guaranty
     ---------------        -------------------------        -----------------------
<S>                         <C>                              <C>
                                     None
</TABLE>



                                  Schedule 7.2