Document:

Credit Agreement

 Exhibit 10.11 
  
 CREDIT AGREEMENT 
  
 THIS AGREEMENT is entered into as of May 1, 2004, by and between NATURAL ALTERNATIVES INTERNATIONAL, INC., a Delaware corporation (“Borrower”), and WELLS FARGO
BANK, NATIONAL ASSOCIATION (“Bank”). 
  
 RECITALS

  
 Borrower has requested that Bank extend or continue credit to Borrower as
described below, and Bank has agreed to provide such credit to Borrower on the terms and conditions contained herein. 
  
 NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Bank and Borrower hereby agree as follows: 
  
 ARTICLE I 
 CREDIT TERMS 
  
 1.1
LINE OF CREDIT. 
  
 (a) Line of Credit. Subject to the terms and conditions
of this Agreement, Bank hereby agrees to make advances to Borrower from time to time up to and including November 1, 2006, not to exceed at any time the aggregate principal amount of Eight Million and 00/100 Dollars ($8,000,000.00) (“Line of
Credit”), the proceeds of which shall be used to finance Borrower’s working capital requirements. Borrower’s obligation to repay advances under the Line of Credit shall be evidenced by a promissory note dated as of May 1, 2004
(“Line of Credit Note”), all terms of which are incorporated herein by this reference. 
  
 (b) Limitation on Borrowings. Outstanding borrowings under the Line of Credit, to a maximum of the principal amount set forth above, shall not at any time exceed an aggregate of eighty-five percent (85%) of
Borrower’s eligible accounts receivable, plus fifty percent (50%) of the value of Borrower’s eligible inventory (exclusive of work in process and inventory which is obsolete, unsaleable or damaged), with value defined as the lower of cost
or market value; provided however, that outstanding borrowings against inventory shall not at any time exceed an aggregate of Three Million Dollars ($3,000,000.00). All of the foregoing shall be determined by Bank upon receipt and review of all
collateral reports required hereunder and such other documents and collateral information as Bank may from time to time require. Borrower acknowledges that said borrowing base was established by Bank with the understanding that, among other items,
the aggregate of all returns, rebates, discounts, credits and allowances for the immediately preceding three (3) months at all times shall be less than five percent (5%) of Borrower’s gross sales for said period. If such dilution of
Borrower’s accounts for the immediately preceding three (3) months at any time exceeds five percent (5%) of Borrower’s gross sales for said period, or if there at any time exists any other matters, events, conditions or contingencies which
Bank reasonably believes may affect payment of any portion of Borrower’s accounts, Bank, in its sole discretion, may reduce the foregoing advance rate against eligible accounts receivable to a percentage appropriate to reflect such additional
dilution and/or establish additional reserves against Borrower’s eligible accounts receivable. 
  
 As used herein, “eligible accounts receivable” shall consist solely of trade accounts created in the ordinary course of Borrower’s business, upon which Borrower’s right to receive payment is
absolute and not contingent upon the fulfillment of any condition whatsoever, and in which Bank has a perfected security interest of first priority, and shall not include: 
  
 (i) any account which is past due more than twice Borrower’s standard selling terms; 
  

					
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 (ii) that portion of any account for which there exists any right of setoff, defense or discount (except
regular discounts allowed in the ordinary course of business to promote prompt payment) or for which any defense or counterclaim has been asserted; 
  
 (iii) any account which represents an obligation of any state or municipal government or of the United States government or any political subdivision
thereof (except accounts which represent obligations of the United States government and for which the assignment provisions of the Federal Assignment of Claims Act, as amended or recodified from time to time, have been complied with to Bank’s
satisfaction); 
  
 (iv) any account which represents an
obligation of an account debtor located in a foreign country; 
  
 (v) any account which arises from the sale or lease to or performance of services for, or represents an obligation of, an employee, affiliate, partner, member, parent or subsidiary of Borrower; 
  
 (vi) that portion of any account, which represents interim or progress
billings or retention rights on the part of the account debtor; 
  
 (vii) any account which represents an obligation of any account debtor when twenty percent (20%) or more of Borrower’s accounts from such account debtor are not eligible pursuant to (i) above; 
  
 (viii) that portion of any account from an account debtor which represents
the amount by which Borrower’s total accounts from said account debtor exceeds twenty-five percent (25%) of Borrower’s total accounts, except that Borrower’s total accounts from account debtors Obesity Research, Fiber Thin and
Mannatech, Inc. shall not exceed thirty-five percent (35%) as determined by semi-monthly report pursuant to Section 4.3.(d) below; 
  
 (ix) any account deemed ineligible by Bank when Bank, in its sole discretion, deems the creditworthiness or financial condition of the account debtor, or
the industry in which the account debtor is engaged, to be unsatisfactory. 
  
 (c)
Letter of Credit Subfeature. As a subfeature under the Line of Credit, Bank agrees from time to time during the term thereof to issue or cause an affiliate to issue standby or commercial letters of credit for the account of Borrower (each, a
“Letter of Credit” and collectively, “Letters of Credit”); provided however, that the aggregate undrawn amount of all outstanding Letters of Credit shall not at any time exceed Five Hundred Thousand Dollars ($500,000.00). The
form and substance of each Letter of Credit shall be subject to approval by Bank, in its sole discretion. No Letter of Credit shall have an expiration date subsequent to the maturity date of the Line of Credit. The undrawn amount of all Letters of
Credit shall be reserved under the Line of Credit and shall not be available for borrowings thereunder. Each Letter of Credit shall be subject to the additional terms and conditions of the Letter of Credit agreements, applications and any related
documents required by Bank in connection with the issuance thereof. Each drawing paid under a Letter of Credit shall be deemed an advance under the Line of Credit and shall be repaid by Borrower in accordance with the terms and conditions of this
Agreement applicable to such advances; provided however, that if advances under the Line of Credit are not available, for any reason, at the time any drawing is paid, then Borrower shall immediately pay to Bank the full amount drawn, together with
interest thereon from the date such drawing is paid to the date such amount is fully repaid by Borrower, at the rate of interest applicable to advances under the Line of Credit. In such event Borrower agrees that Bank, in its sole discretion, may
debit any account maintained by Borrower with Bank for the amount of any such drawing. 
  
 (d) Borrowing and Repayment. Borrower may from time to time during the term of the Line of Credit borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of the limitations, terms and conditions
contained herein or in the Line of Credit Note; provided however, that the total 

  

					
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outstanding borrowings under the Line of Credit shall not at any time exceed the maximum principal amount available thereunder, as set forth above.

  
 1.2 TERM LOAN 1. 
  
 (a) Term Loan 1. Subject to the terms and conditions of this Agreement, Bank hereby agrees to make a loan to Borrower in the
principal amount of Seven Hundred Thousand and 00/100 Dollars ($700,000.00) (“Term Loan 1”), the proceeds of which shall be used for tenant improvements. Borrower’s obligation to repay Term Loan 1 shall be evidenced by a promissory
note dated as of May 1, 2004 (“Term Note 1”), all terms of which are incorporated herein by this reference. Bank’s commitment to grant Term Loan 1 shall terminate on June 1, 2004. 
  
 (b) Repayment. Principal and interest on Term Loan 1 shall be repaid in accordance
with the provisions of Term Note 1. 
  
 (c) Prepayment. Borrower may prepay
principal on Term Loan 1 solely in accordance with the provisions of Term Note 1. 
  
 1.3 TERM LOAN 2. 
  
 (a) Term Loan 2. Bank has made a loan to
Borrower in the original principal amount of One Million One Hundred Ten Thousand and 00/100 Dollars ($1,110,000,00) (“Term Loan 2”), on which the outstanding principal balance as of the date hereof is 683,988.27. Borrower’s
obligation to repay Term Loan 2 is evidenced by a promissory note dated as of May 2, 1996 (“Term Note 2”), all terms of which are incorporated herein by this reference. Any reference in Term Loan 2 to any prior loan agreement
between Bank and Borrower shall be deemed a reference to this Agreement. Subject to the terms and conditions of this Agreement, Bank hereby confirms that Term Loan 2 remains in full force and effect. In the event of any conflict between this
Agreement and Term Note 2, the terms of this Agreement shall control. 
  
 (b)
Repayment. The principal amount of Term Loan 2 shall be repaid in accordance with the provisions of Term Note 2. 
  
 (c) Prepayment. Borrower may prepay principal on Term Loan 2 solely in accordance with the provisions of Term Note 2. 
  
 1.4 FOREIGN EXCHANGE FACILITY. 
  
 (a) Foreign Exchange Facility. Subject to the terms and conditions of this Agreement, Bank hereby agrees to make available to
Borrower a facility {the “Foreign Exchange Facility”) under which Bank, from time to time up to and including May 1, 2005 will enter into foreign exchange contracts for the account of Borrower for the purchase and/or sale by Borrower in
United States dollars of foreign currencies designated by Borrower; provided however, that the contract limit shall not at any time exceed an aggregate of One Million Seven Hundred Thousand United States Dollars (US$1,700,000.00). No foreign
exchange contract shall be executed for a term which extends beyond May 1, 2006. Borrower shall have a “Delivery Limit” under the Foreign Exchange Facility not to exceed at any time the aggregate principal amount of Zero United States
Dollars (US$0.00) with PVD (“Payment versus Delivery”) which will require Borrower to provide funds before the currency is delivered and this will eliminate the 1 or 2 business day settlement period and mitigate settlement risk. All
foreign exchange transactions shall be subject to the additional terms of a Foreign Exchange Agreement, dated as of May 1, 2004 (“Foreign Exchange Agreement”), all terms of which are incorporated herein by this reference. 
  
 (b) Settlement. Each foreign exchange contract under the Foreign Exchange Facility
shall be settled on its maturity date by Bank’s debit to any deposit account maintained by Borrower with Bank. 
  

					
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 1.5 INTEREST/FEES. 
  
 (a) Interest. The outstanding principal balance of each credit subject hereto shall bear interest at the rate of interest set forth in each promissory note or
other instrument or document executed in connection therewith. 
  
 (b)
Computation and Payment. Interest shall be computed on the basis of a 360-day year, actual days elapsed. Interest shall be payable at the times and place set forth in each promissory note or other instrument or document required hereby.

  
 (c) Commitment Fee. Borrower shall pay to Bank a non-refundable
commitment fee for the Line of Credit equal to Twenty Thousand Dollars ($20,000.00) payable quarterly in the amount of $5,000.00 commencing June 1, 2004 until March 1, 2005 and a non-refundable commitment fee for the Term Loan 1 equal to Three
Thousand Five Hundred Dollars ($3,500.00), which fee shall be due and payable in full upon the execution of this Agreement. 
  
 (d) Letter of Credit Fees. Borrower shall pay to Bank fees upon the issuance of each Letter of Credit, upon the payment or negotiation of each drawing under any
Letter of Credit and upon the occurrence of any other activity with respect to any Letter of Credit (including without limitation, the transfer, amendment or cancellation of any Letter of Credit) determined in accordance with Bank’s standard
fees and charges then in effect for such activity. 
  
 1.6 COLLECTION OF PAYMENTS.
Borrower authorizes Bank to collect all principal, interest and fees due under each credit subject hereto by charging Borrower’s deposit account number 4159-355015 with Bank, or any other deposit account maintained by Borrower with Bank, for
the full amount thereof. Should there be insufficient funds in any such deposit account to pay all such sums when due, the full amount of such deficiency shall be immediately due and payable by Borrower. 
  
 1.7 COLLATERAL. 
  
 As security for all indebtedness of Borrower to Bank under the Line of Credit, Borrower hereby grants to Bank security interests of first
priority in all Borrower’s accounts receivable and other rights to payment, general intangibles, inventory and equipment. 
  
 As security for all indebtedness of Borrower to Bank under Term Loan 1, Borrower hereby grants to Bank a lien of not less than second priority on that certain real
property located at 1185 Linda Vista Drive, San Marcos, CA 92069. 
  
 As security
for all indebtedness of Borrower to Bank under the Term Loan 2, Borrower hereby grants to Bank a lien of not less than first priority on that certain real property located at 1185 Linda Vista Drive, San Marcos, CA 92069. 
  
 All of the foregoing shall be evidenced by and subject to the terms of such security
agreements, financing statements, deeds of trust and other documents as Bank shall reasonably require, all in form and substance satisfactory to Bank. Borrower shall reimburse Bank immediately upon demand for all costs and expenses incurred by Bank
in connection with any of the foregoing security, including without limitation, filing and recording fees and costs of appraisals, audits and title insurance. 
  

ARTICLE II 
 REPRESENTATIONS AND
WARRANTIES 
  
 Borrower makes the following representations and warranties to
Bank, which representations and warranties shall survive the execution of this Agreement and shall continue in full force and effect until the full and final payment, and satisfaction and discharge, of all obligations of Borrower to Bank subject to
this Agreement. 
  

					
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 2.1 LEGAL STATUS. Borrower is a corporation, duly organized and existing and in good standing under the laws of
the State of Delaware, and is qualified or licensed to do business (and is in good standing as a foreign corporation, if applicable) in all jurisdictions in which such qualification or licensing is required or in which the failure to so qualify or
to be so licensed could have a material adverse effect on Borrower. 
  
 2.2
AUTHORIZATION AND VALIDITY. This Agreement and each promissory note, contract, instrument and other document required hereby or at any time hereafter delivered to Bank in connection herewith (collectively, the “Loan Documents”) have been
duly authorized, and upon their execution and delivery in accordance with the provisions hereof will constitute legal, valid and binding agreements and obligations of Borrower or the party which executes the same, enforceable in accordance with
their respective terms. 
  
 2.3 NO VIOLATION. The execution, delivery and
performance by Borrower of each of the Loan Documents do not violate any provision of any law or regulation, or contravene any provision of the Articles of Incorporation or By-Laws of Borrower, or result in any breach of or default under any
contract, obligation, indenture or other instrument to which Borrower is a party or by which Borrower may be bound. 
  
 2.4 LITIGATION. There are no pending, or to the best of Borrower’s knowledge threatened, actions, claims, investigations, suits or proceedings by or before any
governmental authority, arbitrator, court or administrative agency which could have a material adverse effect on the financial condition or operation of Borrower other than those disclosed by Borrower to Bank in writing prior to the date hereof.

  
 2.5 CORRECTNESS OF FINANCIAL STATEMENT. The financial statement of Borrower
dated December 31, 2003, a true copy of which has been delivered by Borrower to Bank prior to the date hereof, (a) is complete and correct and presents fairly the financial condition of Borrower, (b) discloses all liabilities of Borrower that are
required to be reflected or reserved against under generally accepted accounting principles, whether liquidated or unliquidated, fixed or contingent, and (c) has been prepared in accordance with generally accepted accounting principles consistently
applied. Since the date of such financial statement there has been no material adverse change in the financial condition of Borrower, nor has Borrower mortgaged, pledged, granted a security interest in or otherwise encumbered any of its assets or
properties except in favor of Bank or as otherwise permitted by Bank in writing. 
  
 2.6 INCOME TAX RETURNS. Borrower has no knowledge of any pending assessments or adjustments of its income tax payable with respect to any year. 
  
 2.7 NO SUBORDINATION. There is no agreement, indenture, contract or instrument to which Borrower is a party or by which Borrower may be bound that requires the
subordination in right of payment of any of Borrower’s obligations subject to this Agreement to any other obligation of Borrower. 
  
 2.8 PERMITS, FRANCHISES. Borrower possesses, and will hereafter possess, all permits, consents, approvals, franchises and licenses required and rights to all trademarks,
trade names, patents, and fictitious names, if any, necessary to enable it to conduct the business in which it is now engaged in compliance with applicable law. 
  

2.9 ERISA. Borrower is in compliance in all material respects with all applicable provisions of the Employee Retirement Income Security Act of 1974, as amended or
recodified from time to time (“ERISA”); Borrower has not violated any provision of any defined employee pension benefit plan (as defined in ERISA) maintained or contributed to by Borrower (each, a “Plan”); no Reportable Event as
defined in ERISA has occurred and is continuing with respect to any Plan initiated by Borrower; Borrower has met its minimum funding requirements under ERISA with respect to each Plan; and each Plan will be able to fulfill its benefit obligations as
they come due in accordance with the Plan documents and under generally accepted accounting principles. 
  
 2.10 OTHER OBLIGATIONS. Borrower is not in default on any obligation for borrowed money, any purchase money obligation or any other material lease, commitment, contract, instrument or obligation, 
  

					
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 2.11 ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to Bank in writing prior to the date hereof, Borrower is in
compliance in all material respects with all applicable federal or state environmental, hazardous waste, health and safety statutes, and any rules or regulations adopted pursuant thereto, which govern or affect any of Borrower’s operations
and/or properties, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act of 1976,
and the Federal Toxic Substances Control Act, as any of the same may be amended, modified or supplemented from time to time. None of the operations of Borrower is the subject of any federal or state investigation evaluating whether any remedial
action involving a material expenditure is needed to respond to a release of any toxic or hazardous waste or substance into the environment. Borrower has no material contingent liability in connection with any release of any toxic or hazardous waste
or substance into the environment. 
  
 2.12 REAL PROPERTY COLLATERAL. Except as
disclosed by Borrower to Bank in writing prior to the date hereof, with respect to any real property collateral required hereby: 
  
 (a) All taxes, governmental assessments, insurance premiums, and water, sewer and municipal charges, and rents (if any) which previously became due and owing in respect
thereof have been paid as of the date hereof. 
  
 (b) There are no mechanics’
or similar liens or claims which have been filed for work, labor or material (and no rights are outstanding that under law could give rise to any such lien) which affect all or any interest in any such real property and which are or may be prior to
or equal to the lien thereon in favor of Bank. 
  
 (c) None of the improvements
which were included for purpose of determining the appraised value of any such real property lies outside of the boundaries and/or building restriction lines thereof, and no improvements on adjoining properties materially encroach upon any such real
property. 
  
 (d) There is no pending, or to the best of Borrower’s knowledge
threatened, proceeding for the total or partial condemnation of all or any portion of any such real property, and all such real property is in good repair and free and clear of any damage that would materially and adversely affect the value thereof
as security and/or the intended use thereof. 
  
 ARTICLE III

 CONDITIONS 
  
 3.1 CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of Bank to extend any credit contemplated by this Agreement is subject to the fulfillment to Bank’s
satisfaction of all of the following conditions: 
  
 (a) Approval of Bank
Counsel. All legal matters incidental to the extension of credit by Bank shall be satisfactory to Bank’s counsel. 
  
 (b) Documentation. Bank shall have received, in form and substance satisfactory to Bank, each of the following, duly executed: 
  

	 	(i)	This Agreement and each promissory note or other instrument or document required hereby. 

  

	 	(ii)	Certificate of Incumbency. 

  

	 	(iii)	Corporate Resolution: Borrowing. 

  

	 	(iv)	Continuing Security Agreement: Rights to Payment and Inventory. 

  

	 	(v)	Security Agreement: Equipment. 

  

	 	(vi)	Deed of Trust, Fixture Filing and Assignment of Rents. 

  

					
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	 	(vii)	Deed of Trust and Assignment of Rents and Leases. 

  

	 	(viii)	Waiver of Landlord or Mortgagee (Fixtures). 

  

	 	(ix)	Disbursement Order. 

  

	 	(x)	Escrow/title Instruction. 

  

	 	(xi)	Foreign Exchange Agreement. 

  

	 	(xii)	Authorization for Foreign Exchange Transactions. 

  

	 	(xiii)	Such other documents as Bank may require under any other Section of this Agreement. 

  
 (c) Financial Condition. There shall have been no material adverse change, as determined by Bank, in the financial condition or
business of Borrower or any guarantor hereunder, nor any material decline, as determined by Bank, in the market value of any collateral required hereunder or a substantial or material portion of the assets of Borrower or any such guarantor.

  
 (d) Insurance. Borrower shall have delivered to Bank evidence of
insurance coverage on all Borrower’s property, in form, substance, amounts, covering risks and issued by companies satisfactory to Bank, and where required by Bank, with loss payable endorsements in favor of Bank, including without limitation,
policies of fire and extended coverage insurance covering all real property collateral required hereby, with replacement cost and mortgagee loss payable endorsements, and such policies of insurance against specific hazards affecting any such real
property as may be required by governmental regulation or Bank. 
  
 (e)
Appraisals. Bank shall have obtained, at Borrower’s cost, an appraisal of all real property collateral required hereby, and all improvements thereon, issued by an appraiser acceptable to Bank and in form, substance and reflecting values
satisfactory to Bank, in its discretion. 
  
 (f) Title Insurance. Bank
shall have received an ALTA Policy of Title Insurance, with such endorsements as Bank may require, issued by a company and in form and substance satisfactory to Bank, in such amount as Bank shall require, insuring Bank’s lien on the real
property collateral required hereby to be of first and second priority, subject only to such exceptions as Bank shall approve in its discretion, with all costs thereof to be paid by Borrower. 
  
 (g) Tax Service Contract. Borrower shall have procured and delivered to Bank, at
Borrower’s cost, such tax service contract as Bank shall require for any real property collateral required hereby, to remain in effect as long as such real property secures any obligations of Borrower to Bank as required hereby. 
  
 3.2 CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of Bank to make each extension of
credit requested by Borrower hereunder shall be subject to the fulfillment to Bank’s satisfaction of each of the following conditions: 
  
 (a) Compliance. The representations and warranties contained herein and in each of the other Loan Documents shall be true on and as of the date of the signing of
this Agreement and on the date of each extension of credit by Bank pursuant hereto, with the same effect as though such representations and warranties had been made on and as of each such date, and on each such date, no Event of Default as defined
herein, and no condition, event or act which with the giving of notice or the passage of time or both would constitute such an Event of Default, shall have occurred and be continuing or shall exist. 
  
 (b) Documentation. Bank shall have received all additional documents which may be
required in connection with such extension of credit. 
  
 ARTICLE IV 
 AFFIRMATIVE COVENANTS 
  
 Borrower covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct
or contingent, liquidated or unliquidated) of Borrower to Bank under any of the 

  

					
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Loan Documents remain outstanding, and until payment in full of all obligations of Borrower subject hereto, Borrower shall, unless Bank otherwise consents in
writing: 
  
 4.1 PUNCTUAL PAYMENTS. Punctually pay all principal, interest, fees
or other liabilities due under any of the Loan Documents at the times and place and in the manner specified therein, and immediately upon demand by Bank, the amount by which the outstanding principal balance of any credit subject hereto at any time
exceeds any limitation on borrowings applicable thereto. 
  
 4.2 ACCOUNTING
RECORDS. Maintain adequate books and records in accordance with generally accepted accounting principles consistently applied, and permit any representative of Bank, at any reasonable time, to inspect, audit and examine such books and records, to
make copies of the same, and to inspect the properties of Borrower. 
  
 4.3
FINANCIAL STATEMENTS. Provide to Bank all of the following, in form and detail satisfactory to Bank: 
  
 (a) not later than 90 days after and as of the end of each fiscal year, a copy of 10K report filed with the Securities Exchange Commission, prepared by a certified public accountant acceptable to Bank; 
  
 (b) not later than 30 days after and as of the end of each fiscal year, annual financial
projections, prepared by Borrower on a quarterly basis, to include balance sheet, income statement and statement of cash flow; 
  
 (c) not later than 45 days after and as of the end of each fiscal quarter, a copy of 10Q report filed with the Securities Exchange Commission, prepared by a certified
public accountant acceptable to Bank; 
  
 (d) not later than 15 days after and as
of the end of each month, an inventory collateral report, an aged listing of accounts receivable and accounts payable, and a reconciliation of accounts; semi-monthly collateral report if Borrower elects to use 35% concentration allowance for Obesity
Research, Fiber Thin and Mannatech, Inc., and not later than 30 days after and as of the end of each April and October, a list of the names, addresses and contact phone numbers of all Borrower’s account debtors; 
  
 (e) from time to time such other information as Bank may reasonably request, including
without limitation, copies of rent rolls and other information with respect to any real property collateral required hereby. 
  
 4.4 COMPLIANCE. Preserve and maintain all licenses, permits, governmental approvals, rights, privileges and franchises necessary for the conduct of its business; and
comply with the provisions of all documents pursuant to which Borrower is organized and/or which govern Borrower’s continued existence and with the requirements of all laws, rules, regulations and orders of any governmental authority applicable
to Borrower and/or its business. 
  
 4.5 INSURANCE. Maintain and keep in force
insurance of the types and in amounts customarily carried in lines of business similar to that of Borrower, including but not limited to fire, extended coverage, public liability, flood, property damage and workers’ compensation, with all such
insurance carried with companies and in amounts satisfactory to Bank, and deliver to Bank from time to time at Bank’s request schedules setting forth all insurance then in effect. 
  
 4.6 FACILITIES. Keep all properties useful or necessary to Borrower’s business in good repair and condition, and from time to time make
necessary repairs, renewals and replacements thereto so that such properties shall be fully and efficiently preserved and maintained. 
  
 4.7 TAXES AND OTHER LIABILITIES. Pay and discharge when due any and all indebtedness, obligations, assessments and taxes, both real or personal, including without
limitation federal and state income taxes and state and local property taxes and assessments, except such (a) as Borrower may in good faith contest or as to which a bona fide dispute may arise, and (b) for which Borrower has made provision, to
Bank’s satisfaction, for eventual payment thereof in the event Borrower is obligated to make such payment. 
  

					
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 4.8 LITIGATION. Promptly give notice in writing to Bank of any litigation pending or threatened against Borrower.

  
 4.9 FINANCIAL CONDITION. Maintain Borrower’s financial condition as
follows using generally accepted accounting principles consistently applied and used consistently with prior practices (except to the extent modified by the definitions herein): 
  
 (a) Tangible Net Worth not at any time less than $20,000,000.00, with “Tangible Net Worth” defined as the aggregate of total
stockholders’ equity plus subordinated debt less any intangible assets. 
  
 (b) Total Liabilities divided by Tangible Net Worth not at any time greater than 1.0 to 1.0, with “Total Liabilities” defined as the aggregate of current liabilities and non-current liabilities less subordinated debt, and with
“Tangible Net Worth” as defined above. 
  
 (c) Net income after taxes
not less than $1.00 as of each fiscal quarter and not less than $750,000.00 on an annual basis, determined as of each fiscal year end. 
  
 (d) EBITDA Coverage Ratio not less than 1.75 to 1.0 as of each fiscal year end, with “EBITDA” defined as net profit before tax plus interest expense (net of
capitalized interest expense), depreciation expense and amortization expense, and with “EBITDA Coverage Ratio” defined as EBITDA divided by the aggregate of total interest expense plus the prior period current maturity of long-term debt
and the prior period current maturity of subordinated debt. 
  
 4.10 NOTICE TO
BANK. Promptly (but in no event more than five (5) days after the occurrence of each such event or matter) give written notice to Bank in reasonable detail of: (a) the occurrence of any Event of Default, or any condition, event or act which with the
giving of notice or the passage of time or both would constitute an Event of Default; (b) any change in the name or the organizational structure of Borrower; (c) the occurrence and nature of any Reportable Event or Prohibited Transaction, each as
defined in ERISA, or any funding deficiency with respect to any Plan; or (d) any termination or cancellation of any insurance policy which Borrower is required to maintain, or any uninsured or partially uninsured loss through liability or property
damage, or through fire, theft or any other cause affecting Borrower’s property. 
  
 ARTICLE V 
 NEGATIVE COVENANTS 
  
 Borrower further covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether
direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower subject hereto, Borrower will not without Bank’s prior written
consent: 
  
 5.1 USE OF FUNDS. Use any of the proceeds of any credit extended
hereunder except for the purposes stated in Article I hereof. 
  
 5.2 CAPITAL
EXPENDITURES. Make any additional investment in fixed assets in excess of an aggregate of $4,500,000.00 for fiscal year 2004 and $6,500,000.00 for fiscal year 2005. 
  
 5.3 LEASE EXPENDITURES. Incur operating lease expense in excess of an aggregate of $100,000.000 for fiscal year 2004 and $ 100,000.00 for
fiscal year 2005. 
  
 5.4 OTHER INDEBTEDNESS. Create, incur, assume or permit to
exist any indebtedness or liabilities resulting from borrowings, loans or advances, whether secured or unsecured, matured or unmatured, liquidated or unliquidated, joint or several, except (a) the liabilities of Borrower to Bank, and (b) any other
liabilities of Borrower existing as of, and disclosed to Bank prior to, the date hereof. 
  

					
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 5.5 MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Merge into or consolidate with any other entity; make any substantial
change in the nature of Borrower’s business as conducted as of the date hereof; acquire all or substantially all of the assets of any other entity; nor sell, lease, transfer or otherwise dispose of all or a substantial or material portion of
Borrower’s assets except in the ordinary course of its business. 
  
 5.6
GUARANTIES. Guarantee or become liable in any way as surety, endorser (other than as endorser of negotiable instruments for deposit or collection in the ordinary course of business), accommodation endorser or otherwise for, nor pledge or hypothecate
any assets of Borrower as security for, any liabilities or obligations of any other person or entity, except any of the foregoing in favor of Bank. 
  
 5.7 LOANS, ADVANCES, INVESTMENTS. Make any loans or advances to or investments in any person or entity, except any of the foregoing existing as of, and disclosed to Bank
prior to, the date hereof. 
  
 5.8 DIVIDENDS, DISTRIBUTIONS. Declare or pay any
dividend or distribution either in cash, stock or any other property on Borrower’s stock now or hereafter outstanding, nor redeem, retire, repurchase or otherwise acquire any shares of any class of Borrower’s stock now or hereafter
outstanding. 
  
 5.9 PLEDGE OF ASSETS. Mortgage, pledge, grant or permit to exist
a security interest in, or lien upon, all or any portion of Borrower’s assets now owned or hereafter acquired, except any of the foregoing in favor of Bank or which is existing as of, and disclosed to Bank in writing prior to, the date hereof.

  
 ARTICLE VI 
 EVENTS OF DEFAULT  
  
 6.1 The occurrence of any of the following shall constitute an “Event of Default” under this Agreement: 
  
 (a) Borrower shall fail to pay when due any principal, interest, fees or other amounts
payable under any of the Loan Documents. 
  
 (b) Any financial statement or
certificate furnished to Bank in connection with, or any representation or warranty made by Borrower or any other party under this Agreement or any other Loan Document shall prove to be incorrect, false or misleading in any material respect when
furnished or made. 
  
 (c) Any default in the performance of or compliance with
any obligation, agreement or other provision contained herein or in any other Loan Document (other than those referred to in subsections (a) and (b) above), and with respect to any such default which by its nature can be cured, such default shall
continue for a period of forty-five (45) days from its occurrence. 
  
 (d) Any
default in the payment or performance of any obligation, or any defined event of default, under the terms of any contract or instrument (other than any of the Loan Documents) pursuant To which Borrower, any guarantor hereunder, or any general
partner or joint venturer in any Borrower which is a partnership or a joint venture (with each such guarantor, general partner and/or joint venturer referred to herein as a “Third Party Obligor”) has incurred any debt or other liability to
any person or entity, including Bank. 
  
 (e) The filing of a notice of judgment
lien against Borrower or any Third Party Obligor, or the recording of any abstract of judgment against Borrower or any Third Party Obligor in any county in which Borrower or any Third Party Obligor has an interest in real property; or the service of
a notice of levy and/or of a writ of attachment or execution, or other like process, against the assets of Borrower or any Third Party Obligor; or the entry of a judgment against Borrower or any Third Party Obligor. 
  
 (f) Borrower or any Third Party Obligor shall become insolvent, or shall suffer or consent to
or apply for the appointment of a receiver, trustee, custodian or liquidator of itself or any of its property, or shall generally fail 

  

					
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to pay its debts as they become due, or shall make a general assignment for the benefit of creditors; Borrower or any Third Party Obligor shall file a
voluntary petition in bankruptcy, or seeking reorganization, in order to effect a plan or other arrangement with creditors or any other relief under the Bankruptcy Reform Act, Title 11 of the United States Code, as amended or recodified from time to
time (“Bankruptcy Code”), or under any state or federal law granting relief to debtors, whether now or hereafter in effect; or any involuntary petition or proceeding pursuant to the Bankruptcy Code or any other applicable state or federal
law relating to bankruptcy, reorganization or other relief for debtors is filed or commenced against Borrower or any Third Party Obligor, or Borrower or any Third Party Obligor shall file an answer admitting the jurisdiction of the court and the
material allegations of any involuntary petition; or Borrower or any Third Party Obligor shall be adjudicated a bankrupt, or an order for relief shall be entered against Borrower or any Third Party Obligor by any court of competent jurisdiction
under the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors. 
  
 (g) There shall exist or occur any event or condition which Bank believes impairs, or is substantially likely to impair, the prospect of payment or performance by
Borrower of its obligations under any of the Loan Documents. 
  
 (h) The death or
incapacity of any individual Borrower or Third Party Obligor. The dissolution or liquidation of any Borrower or Third Party Obligor which is a corporation, partnership, joint venture or other type of entity; or any such Borrower or Third Party
Obligor, or any of its directors, stockholders or members, shall take action seeking to effect the dissolution or liquidation of such Borrower or Third Party Obligor. 
  
 (i) Any change in ownership of an aggregate of twenty-five percent (25%) or more of the common stock in Borrower. 
  
 (j) The sale, transfer, hypothecation, assignment or encumbrance, whether voluntary,
involuntary or by operation of law, without Bank’s prior written consent, of all or any part of or interest in any real property collateral required hereby. 
  
 6.2 REMEDIES. Upon the occurrence of any Event of Default: (a) all indebtedness of Borrower under each of the Loan Documents, any term
thereof to the contrary notwithstanding, shall at Bank’s option and without notice become immediately due and payable without presentment, demand, protest or notice of dishonor, all of which are hereby expressly waived by each Borrower; (b) the
obligation, if any, of Bank to extend any further credit under any of the Loan Documents shall immediately cease and terminate; and (c) Bank shall have all rights, powers and remedies available under each of the Loan Documents, or accorded by law,
including without limitation the right to resort to any or all security for any credit subject hereto and to exercise any or all of the rights of a beneficiary or secured party pursuant to applicable law. All rights, powers and remedies of Bank may
be exercised at any time by Bank and from time to time after the occurrence of an Event of Default, are cumulative and not exclusive, and shall be in addition to any other rights, powers or remedies provided by law or equity. 
  
 ARTICLE VII 
 MISCELLANEOUS 
  
 7.1
NO WAIVER. No delay, failure or discontinuance of Bank in exercising any right, power or remedy under any of the Loan Documents shall affect or operate as a waiver of such right, power or remedy; nor shall any single or partial exercise of any such
right, power or remedy preclude, waive or otherwise affect any other or further exercise thereof or the exercise of any other right, power or remedy, Any waiver, permit, consent or approval of any kind by Bank of any breach of or default under any
of the Loan Documents must be in writing and shall be effective only to the extent set forth in such writing. 
  

					
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 7.2 NOTICES. All notices, requests and demands which any party is required or may desire to give to any other party under
any provision of this Agreement must be in writing delivered to each party at the following address: 
  

			
	 BORROWER:
	  	 Natural Alternatives International, Inc.
 1185 Linda
Vista Dr
 San Marcos, CA 92069-3823

		
	 BANK:
	  	 WELLS FARGO BANK, NATIONAL ASSOCIATION
 Carlsbad
LPO
 5857 Owens Avenue, Suite 106
 Carlsbad, CA
92008

  
 or to such other address as any party
may designate by written notice to all other parties. Each such notice, request and demand shall be deemed given or made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by mail, upon the earlier of the date of receipt or three
{3) days after deposit in the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy, upon receipt. 
  
 7.3 COSTS, EXPENSES AND ATTORNEYS’ FEES. Borrower shall pay to Bank immediately upon demand the full amount of all payments, advances, charges, costs and expenses,
including reasonable attorneys’ fees (to include outside counsel fees and all allocated costs of Bank’s in-house counsel), expended or incurred by Bank in connection with (a) the negotiation and preparation of this Agreement and the other
Loan Documents, Bank’s continued administration hereof and thereof, and the preparation of any amendments and waivers hereto and thereto, (b) the enforcement of Bank’s rights and/or the collection of any amounts which become due to Bank
under any of the Loan Documents, and (c) the prosecution or defense of any action in any way related to any of the Loan Documents, including without limitation, any action for declaratory relief, whether incurred at the trial or appellate level, in
an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Bank or any other person)
relating to any Borrower or any other person or entity. 
  
 7.4 SUCCESSORS,
ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the parties; provided however, that Borrower may not assign or transfer its interest
hereunder without Bank’s prior written consent. Bank reserves the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, Bank’s rights and benefits under each of the Loan Documents. In
connection therewith, Bank may disclose all documents and information which Bank now has or may hereafter acquire relating to any credit subject hereto, Borrower or its business, any guarantor hereunder or the business of such guarantor, or any
collateral required hereunder. 
  
 7.5 ENTIRE AGREEMENT; AMENDMENT. This Agreement
and the other Loan Documents constitute the entire agreement between Borrower and Bank with respect to each credit subject hereto and supersede all prior negotiations, communications, discussions and correspondence concerning the subject matter
hereof. This Agreement may be amended or modified only in writing signed by each party hereto. 
  
 7.6 NO THIRD PARTY BENEFICIARIES. This Agreement is made and entered into for the sole protection and benefit of the parties hereto and their respective permitted successors and assigns, and no other person or entity
shall be a third party beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any other of the Loan Documents to which it is not a party. 
  
 7.7 TIME. Time is of the essence of each and every provision of this Agreement and each other
of the Loan Documents. 
  
 7.8 SEVERABILITY OF PROVISIONS. If any provision of
this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or any remaining provisions of this
Agreement. 
  

					
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 7.9 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which when executed and delivered
shall be deemed to be an original, and all of which when taken together shall constitute one and the same Agreement. 
  
 7.10 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 
  
 7.11 ARBITRATION. 
  
 a) Arbitration. The parties hereto agree, upon demand by any party, to submit to binding arbitration all claims, disputes and
controversies between or among them (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract or otherwise arising out of or relating to in any way (i) the loan and related Loan Documents which are
the subject of this Agreement and its negotiation, execution, collateralization, administration, repayment, modification, extension, substitution, formation, inducement, enforcement, default or termination; or (ii) requests for additional credit.

  
 (b) Governing Rules. Any arbitration proceeding will (i) proceed in a
location in California selected by the American Arbitration Association (“AAA”); (ii) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the
documents between the parties; and (iii) be conducted by the AAA, or such other administrator as the parties shall mutually agree upon, in accordance with the AAA’s commercial dispute resolution procedures, unless the claim or counterclaim is
at least $1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which case the arbitration shall be conducted in accordance with the AAA’s optional procedures for large, complex commercial disputes (the commercial dispute
resolution procedures or the optional procedures for large, complex commercial disputes to be referred to, as applicable, as the “Rules”). If there is any inconsistency between the terms hereof and the Rules, the terms and procedures set
forth herein shall control. Any party who fails or refuses to submit to arbitration following a demand by any other party shall bear all costs and expenses incurred by such other party in compelling arbitration of any dispute. Nothing contained
herein shall be deemed to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar applicable state law. 
  
 (c) No Waiver of Provisional Remedies, Self-Help and Foreclosure. The arbitration requirement does not limit the right of any party
to (i) foreclose against real or personal property collateral; (ii) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or repossession; or (iii) obtain provisional or ancillary remedies such as replevin,
injunctive relief, attachment or the appointment of a receiver, before during or after the pendency of any arbitration proceeding. This exclusion does not constitute a waiver of the right or obligation of any party to submit any dispute to
arbitration or reference hereunder, including those arising from the exercise of the actions detailed in sections (i), (ii) and (iii) of this paragraph. 
  
 (d) Arbitrator Qualifications and Powers. Any arbitration proceeding in which the amount in controversy is $5,000,000.00 or less will be decided by a single
arbitrator selected according to the Rules, and who shall not render an award of greater than $5,000,000.00. Any dispute in which the amount in controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel of three arbitrators;
provided however, that all three arbitrators must actively participate in all hearings and deliberations. The arbitrator will be a neutral attorney licensed in the State of California or a neutral retired judge of the state or federal judiciary of
California, in either case with a minimum of ten years experience in the substantive law applicable to the subject matter of the dispute to be arbitrated. The arbitrator will determine whether or not an issue is arbitratable and will give effect to
the statutes of limitation in determining any claim. In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at the arbitrator’s discretion) any pre-hearing motions which are similar to motions to dismiss
for failure to state a claim or motions for summary adjudication. The arbitrator shall resolve all disputes in accordance with the substantive law of California and may grant any remedy or relief that a court of such state could order or grant
within the scope hereof and such ancillary relief as is necessary to make effective any award. The arbitrator shall also have the power to award recovery of all costs and fees, to impose sanctions and to take such other action as the arbitrator

  

					
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deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the California Rules of Civil Procedure or other
applicable law. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute
a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief. 
  
 (e) Discovery. In any arbitration proceeding discovery will be permitted in accordance with the Rules. All discovery shall be
expressly limited to matters directly relevant to the dispute being arbitrated and must be completed no later than 20 days before the hearing date and within 180 days of the filing of the dispute with the AAA. Any requests for an extension of the
discovery periods, or any discovery disputes, will be subject to final determination by the arbitrator upon a showing that the request for discovery is essential for the party’s presentation and that no alternative means for obtaining
information is available. 
  
 (f) Class Proceedings and Consolidations. The
resolution of any dispute arising pursuant to the terms of this Agreement shall be determined by a separate arbitration proceeding and such dispute shall not be consolidated with other disputes or included in any class proceeding. 
  
 (g) Payment Of Arbitration Costs And Fees. The arbitrator shall award all costs and
expenses of the arbitration proceeding. 
  
 (h) Real Property Collateral:
Judicial Reference. Notwithstanding anything herein to the contrary, no dispute shall be submitted to arbitration if the dispute concerns indebtedness secured directly or indirectly, in whole or in part, by any real property unless (i) the
holder of the mortgage, lien or security interest specifically elects in writing to proceed with the arbitration, or (ii) all parties to the arbitration waive any rights or benefits that might accrue to them by virtue of the single action rule
statute of California, thereby agreeing that all indebtedness and obligations of the parties, and all mortgages, liens and security interests securing such indebtedness and obligations, shall remain fully valid and enforceable. If any such dispute
is not submitted to arbitration, the dispute shall be referred to a referee in accordance with California Code of Civil Procedure Section 638 et seq., and this general reference agreement is intended to be specifically enforceable in accordance with
said Section 638. A referee with the qualifications required herein for arbitrators shall be selected pursuant to the AAA’s selection procedures. Judgment upon the decision rendered by a referee shall be entered in the court in which such
proceeding was commenced in accordance with California Code of Civil Procedure Sections 644 and 645. 
  
 (i) Miscellaneous. To the maximum extent practicable, the AAA, the arbitrators and the parties shall take all action required to conclude any arbitration proceeding within 180 days of the filing of the dispute
with the AAA. No arbitrator or other party to an arbitration proceeding may disclose the existence, content or results thereof, except for disclosures of information by a party required in the ordinary course of its business or by applicable law or
regulation. If more than one agreement for arbitration by or between the parties potentially applies to a dispute, the arbitration provision most directly related to the Loan Documents or the subject matter of the dispute shall control. This
arbitration provision shall survive termination, amendment or expiration of any of the Loan Documents or any relationship between the parties. 
  
 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first written above. 
  

			
	 Natural Alternatives International, Inc.

		
	By:	 	 /s/ John Reaves

	 	 	

	 	 	 John Reaves, Chief Financial Officer

		
	By:	 	 /s/ Randell Weaver

	 	 	

	 	 	 Randell Weaver, President

  

					
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	 WELLS FARGO BANK, NATIONAL ASSOCIATION

		
	By:	 	 /s/ Bernie Palmer

	 	 	

	 	 	 Bernie Palmer, Relationship Manager

  

					
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	 WELLS FARGO
	  	REVOLVING LINE OF CREDIT NOTE
	 	  	 
	 $8,000,000.00
	  	 Carlsbad, California
 May 1, 2004

  
 FOR VALUE RECEIVED, the undersigned
Natural Alternatives International, Inc. (“Borrower”) promises to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”) at its office at Carlsbad LPO, 5857 Owens Avenue, Suite 106, Carlsbad, CA 92008,
or at such other place as the holder hereof may designate, in lawful money of the United States of America and in immediately available funds, the principal sum of $8,000,000.00, or so much thereof as may be advanced and be outstanding,
with interest thereon, to be computed on each advance from the date of its disbursement as set forth herein. 
  

	1.	DEFINITIONS: 

  
 As used herein, the following terms shall have the meanings set forth after each, and any other term defined in this Note shall have the meaning set forth
at the place defined: 
  
 1.1 “Business Day” means any day except a
Saturday, Sunday or any other day on which commercial banks in California are authorized or required by law to close. 
  
 1.2 “Fixed Rate Term” means a period commencing on a Business Day and continuing for 1, 2, 3, 6 or 12 months, as designated by Borrower, during which all
or a portion of the outstanding principal balance of this Note bears interest determined in relation to LIBOR; provided however, that no Fixed Rate Term may be selected for a principal amount less than $100,000.00; and provided further, that
no Fixed Rate Term shall extend beyond the scheduled maturity date hereof. If any Fixed Rate Term would end on a day which is not a Business Day, then such Fixed Rate Term shall be extended to the next succeeding Business Day. 
  
 1.3 “LIBOR” means the rate per annum (rounded upward, if necessary, to the nearest
whole 1/8 of 1%) determined by dividing Base LIBOR by a percentage equal to 100% less any LIBOR Reserve Percentage. 
  
 (a) “Base LIBOR” means the rate per annum for United States dollar deposits quoted by Bank as the Inter-Bank Market Offered Rate, with the
understanding that such rate is quoted by Bank for the purpose of calculating effective rates of interest for loans making reference thereto, on the first day of a Fixed Rate Term for delivery of funds on said date for a period of time approximately
equal to the number of days in such Fixed Rate Term and in an amount approximately equal to the principal amount to which such Fixed Rate Term applies. Borrower understands and agrees that Bank may base its quotation of the Inter-Bank Market Offered
Rate upon such offers or other market indicators of the Inter-Bank Market as Bank in its discretion deems appropriate including, but not limited to, the rate offered for U.S. dollar deposits on the London Inter-Bank Market. 
  
 (b) “LIBOR Reserve Percentage” means the reserve percentage
prescribed by the Board of Governors of the Federal Reserve System (or any successor) for “Eurocurrency Liabilities” (as defined in Regulation D of the Federal Reserve Board, as amended), adjusted by Bank for expected changes in such
reserve percentage during the applicable Fixed Rate Term. 
  
 1.4 “Prime
Rate” means at any time the rate of interest most recently announced within Bank at its principal office as its Prime Rate, with the understanding that the Prime Rate is one of Bank’s base rates and serves as the basis upon which effective
rates of interest are calculated for those loans making reference thereto, and is evidenced by the recording thereof after its announcement in such internal publication or publications as Bank may designate. 
  

					
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	2.	INTEREST: 

  
 2.1 Interest. The outstanding principal balance of this Note shall bear interest (computed on the basis of a 360-day year, actual days elapsed) either (a) at a fluctuating rate per annum equal to the
Prime Rate in effect from time to time, or (b) at a fixed rate per annum determined by Bank to be 1.75000% above LIBOR in effect on the first day of the applicable Fixed Rate Term. When interest is determined in relation to the Prime Rate,
each change in the rate of interest hereunder shall become effective on the date each Prime Rate change is announced within Bank. With respect to each LIBOR selection option selected hereunder, Bank is hereby authorized to note the date, principal
amount, interest rate and Fixed Rate Term applicable thereto and any payments made thereon on Bank’s books and records (either manually or by electronic entry) and/or on any schedule attached to this Note, which notations shall be prima facie
evidence of the accuracy of the information noted. 
  
 2.2 Selection of
Interest Rate Options. At any time any portion of this Note bears interest determined in relation to LIBOR, it may be continued by Borrower at the end of the Fixed Rate Term applicable thereto so that all or a portion thereof bears interest
determined in relation to the Prime Rate or to LIBOR for a new Fixed Rate Term designated by Borrower. At any time any portion of this Note bears interest determined in relation to the Prime Rate, Borrower may convert all or a portion thereof so
that it bears interest determined in relation to LIBOR for a Fixed Rate Term designated by Borrower. At such time as Borrower requests an advance hereunder or wishes to select a LIBOR option for all or a portion of the outstanding principal balance
hereof, and at the end of each Fixed Rate Term, Borrower shall give Bank notice specifying: (a) the interest rate option selected by Borrower; (b) the principal amount subject thereto; and (c) for each LIBOR selection, the length of the applicable
Fixed Rate Term. Any such notice may be given by telephone (or such other electronic method as Bank may permit) so long as, with respect to each LIBOR selection, (i) if requested by Bank, Borrower provides to Bank written confirmation thereof not
later than 3 Business Days after such notice is given, and (ii) such notice is given to Bank prior to 10:00 a.m. on the first day of the Fixed Rate Term, or at a later time during any Business Day if Bank, at it’s sole option but without
obligation to do so, accepts Borrower’s notice and quotes a fixed rate to Borrower. If Borrower does not immediately accept a fixed rate when quoted by Bank, the quoted rate shall expire and any subsequent LIBOR request from Borrower shall be
subject to a redetermination by Bank of the applicable fixed rate. If no specific designation of interest is made at the time any advance is requested hereunder or at the end of any Fixed Rate Term, Borrower shall be deemed to have made a Prime Rate
interest selection for such advance or the principal amount to which such Fixed Rate Term applied. 
  
 2.3 Taxes and Regulatory Costs. Borrower shall pay to Bank immediately upon demand, in addition to any other amounts due or to become due hereunder, any and all (a) withholdings, interest equalization taxes,
stamp taxes or other taxes (except income and franchise taxes) imposed by any domestic or foreign governmental authority and related in any manner to LIBOR, and (b) future, supplemental, emergency or other changes in the LIBOR Reserve Percentage,
assessment rates imposed by the Federal Deposit Insurance Corporation, or similar requirements or costs imposed by any domestic or foreign governmental authority or resulting from compliance by Bank with any request or directive (whether or not
having the force of law) from any central bank or other governmental authority and related in any manner to LIBOR to the extent they are not included in the calculation of LIBOR. In determining which of the foregoing are attributable to any LIBOR
option available to Borrower hereunder, any reasonable allocation made by Bank among its operations shall be conclusive and binding upon Borrower. 
  
 2.4 Payment of Interest. Interest accrued on this Note shall be payable on the 1st day of each month, commencing June 1, 2004. 
  
 2.5 Default Interest. From and after the maturity date of this Note, or such earlier
date as all principal owing hereunder becomes due and payable by acceleration or otherwise, the outstanding principal balance of this Note shall bear interest until paid in full at an increased rate per annum (computed on the basis of a 360-day
year, actual days elapsed) equal to 4% above the rate of interest from time to time applicable to this Note. 
  

					
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	3.	BORROWING AND REPAYMENT: 

  
 3.1 Borrowing and Repayment. Borrower may from time to time during the term of this Note borrow, partially or wholly repay its outstanding borrowings, and
reborrow, subject to all of the limitations, terms and conditions of this Note and of the Credit Agreement between Borrower and Bank defined below; provided however, that the total outstanding borrowings under this Note shall not at any time exceed
the principal amount stated above. The unpaid principal balance of this obligation at any time shall be the total amounts advanced hereunder by the holder hereof less the amount of principal payments made hereon by or for any Borrower, which balance
may be endorsed hereon from time to time by the holder. The outstanding principal balance of this Note shall be due and payable in full on November 1, 2006. 
  
 3.2 Advances. Advances hereunder, to the total amount of the principal sum available hereunder, may be made by the holder at the oral
or written request of (a) John Reaves or Randell Weaver, any one acting alone, who are authorized to request advances and direct the disposition of any advances until written notice of the revocation of such authority is received by the
holder at the office designated above, or (b) any person, with respect to advances deposited to the credit of any deposit account of any Borrower, which advances, when so deposited, shall be conclusively presumed to have been made to or for the
benefit of each Borrower regardless of the fact that persons other than those authorized to request advances may have authority to draw against such account. The holder shall have no obligation to determine whether any person requesting an advance
is or has been authorized by any Borrower. 
  
 3.3 Application of Payments.
Each payment made on this Note shall be credited first, to any interest then due and second, to the outstanding principal balance hereof. All payments credited to principal shall be applied first, to the outstanding principal balance of this Note
which bears interest determined in relation to the Prime Rate, if any, and second, to the outstanding principal balance of this Note which bears interest determined in relation to LIBOR, with such payments applied to the oldest Fixed Rate Term
first. 
  

	4.	PREPAYMENT: 

  
 4.1 Prime Rate. Borrower may prepay principal on any portion of this Note which bears interest determined in relation to the Prime Rate at any time, in any amount and without penalty. 
  
 4.2 LIBOR. Borrower may prepay principal on any portion of this Note which bears
interest determined in relation to LIBOR at any time and in the minimum amount of $100,000.00; provided however, that if the outstanding principal balance of such portion of this Note is less than said amount, the minimum prepayment amount
shall be the entire outstanding principal balance thereof. In consideration of Bank providing this prepayment option to Borrower, or if any such portion of this Note shall become due and payable at any time prior to the last day of the Fixed Rate
Term applicable thereto by acceleration or otherwise, Borrower shall pay to Bank immediately upon demand a fee which is the sum of the discounted monthly differences for each month from the month of prepayment through the month in which such Fixed
Rate Term matures, calculated as follows for each such month: 
  
 (a) Determine the amount of interest which would have accrued each month on the amount prepaid at the interest rate applicable to such amount had it remained outstanding until the last day of the Fixed Rate Term applicable thereto.

  
 (b) Subtract from the amount determined in (a) above
the amount of interest which would have accrued for the same month on the amount prepaid for the remaining term of such Fixed Rate Term at LIBOR in effect on the date of prepayment for new loans made for such term and in a principal amount equal to
the amount prepaid. 
  
 (c) If the result obtained in (b) for any
month is greater than zero, discount that difference by LIBOR used in (b) above. 
  

					
	PROMNOTE.CA (01/03)	  	20040421030 / Page 3	  	 
	Revolving Line of Credit Note	  	 	  	 
	62596, #6411046333	  	 	  	 

 Each Borrower acknowledges that prepayment of such amount may result in Bank incurring additional costs, expenses and/or
liabilities, and that it is difficult to ascertain the full extent of such costs, expenses and/or liabilities. Each Borrower, therefore, agrees to pay the above-described prepayment fee and agrees that said amount represents a reasonable estimate of
the prepayment costs, expenses and/or liabilities of Bank. If Borrower fails to pay any prepayment fee when due, the amount of such prepayment fee shall thereafter bear interest until paid at a rate per annum 2.000% above the Prime Rate in
effect from time to time (computed on the basis of a 360-day year, actual days elapsed). Each change in the rate of interest on any such past due prepayment fee shall become effective on the date each Prime Rate change is announced within
Bank. 
  

	5.	EVENTS OF DEFAULT: 

  
 This Note is made pursuant to and is subject to the terms and conditions of that certain Credit Agreement between Borrower and Bank dated as of May 1,
2004, as amended from time to time (the “Credit Agreement”). Any default in the payment or performance of any obligation under this Note, or any defined event of default under the Credit Agreement, shall constitute an “Event of
Default” under this Note. 
  

	6.	MISCELLANEOUS: 

  
 6.1 Remedies. Upon the occurrence of any Event of Default, the holder of this Note, at the holder’s option, may declare all sums of principal and interest outstanding hereunder to be immediately due and
payable without presentment, demand, notice of nonperformance, notice of protest, protest or notice of dishonor, all of which are expressly waived by each Borrower, and the obligation, if any, of the holder to extend any further credit hereunder
shall immediately cease and terminate. Each Borrower shall pay to the holder immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including reasonable attorneys’ fees (to include outside counsel fees
and all allocated costs of the holder’s in-house counsel), expended or incurred by the holder in connection with the enforcement of the holder’s rights and/or the collection of any amounts which become due to the holder under this Note,
and the prosecution or defense of any action in any way related to this Note, including without limitation, any action for declaratory relief, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including
any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Bank or any other person) relating to any Borrower or any other person or
entity. 
  
 6.2 Obligations Joint and Several. Should more than one person
or entity sign this Note as a Borrower, the obligations of each such Borrower shall be joint and several. 
  
 6.3 Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of California. 
  

IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first written above. 
  

			
	Natural Alternatives International, Inc.
		
	By:	 	 /s/ John Reaves

	 	 	

	 	 	John Reaves, Chief Financial Officer
		
	By:	 	 /s/ Randell Weaver

	 	 	

	 	 	Randell Weaver, President

  

					
	PROMNOTE.CA (01/03)	  	20040421030 / Page 4	  	 
	Revolving Line of Credit Note	  	 	  	 
	62596, #6411046333	  	 	  	 

 TERM NOTE 
  

			
	 $700,000.00
	  	 Carlsbad, California

	 	  	May 1, 2004

  
 FOR VALUE RECEIVED,
the undersigned Natural Alternatives International, Inc. (“Borrower”) promises to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”) at its office at Carlsbad LPO, 5857 Owens Avenue, Suite 106, Carlsbad,
California, or at such other place as the holder hereof may designate, in lawful money of the United States of America and in immediately available funds, the principal sum of Seven Hundred Thousand Dollars ($700,000.00), with interest thereon as
set forth herein. 
  
 DEFINITIONS: 
  
 As used herein, the following terms shall have the meanings set forth after
each, and any other term defined in this Note shall have the meaning set forth at the place defined: 
  
 (a) “Business Day” means any day except a Saturday, Sunday or any other day on which commercial banks in California are authorized or required
by law to close. 
  
 (b) “Fixed Rate Term” means a
period of 1, 2, 3, 6 or 12 months, as designated by Borrower, during which the entire outstanding principal balance of this Note bears interest determined in relation to LIBOR, with the understanding that (i) the initial Fixed Rate Term shall
commence on the date this Note is disbursed, (ii) each successive Fixed Rate Term shall commence automatically, and without notice to or consent from Borrower, on the first Business Day following the date on which the immediately preceding Fixed
Rate Term matures, and (iii) if, on the first Business Day of the last Fixed Rate Term applicable hereto the remaining term of this Note is less than 1, 2, 3, 6 or 12 months, said Fixed Rate Term shall be in effect only until the scheduled maturity
date hereof. If any Fixed Rate Term would end on a day which is not a Business Day, then such Fixed Rate Term shall be extended to the next succeeding Business Day. 
  
 (c) “LIBOR” means the rate per annum (rounded upward, if necessary, to the nearest whole 1/8 of 1 %) and
determined pursuant to the following formula: 
  
 LIBOR =
                      Base
LIBOR                       
                   100% - LIBOR Reserve Percentage   
  
 (i) “Base LIBOR” means the rate per annum for United States dollar deposits quoted by Bank as the
Inter-Bank Market Offered Rate, with the understanding that such rate is quoted by Bank for the purpose of calculating effective rates of interest for loans making reference thereto, on the first day of a Fixed Rate Term for delivery of funds on
said date for a period of time approximately equal to the number of days in such Fixed Rate Term and in an amount approximately equal to the principal amount to which such Fixed Rate Term applies. Borrower understands and agrees that Bank may base
its quotation of the Inter-Bank Market Offered Rate upon such offers or other market indicators of the Inter-Bank Market as Bank in its discretion deems appropriate including, but not limited to, the rate offered for U.S. dollar deposits on the
London Inter-Bank Market. 
  

					
	 	 	-1-	 	 

 (ii) “LIBOR Reserve Percentage” means the reserve percentage prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for “Eurocurrency Liabilities” (as defined in Regulation D of the Federal Reserve Board, as amended), adjusted by Bank for expected changes in such reserve percentage
during the applicable Fixed Rate Term. 
  
 (d) “Prime
Rate” means at any time the rate of interest most recently announced within Bank at its principal office as its Prime Rate, with the understanding that the Prime Rate is one of Bank’s base rates and serves as the basis upon which effective
rates of interest are calculated for those loans making reference thereto, and is evidenced by the recording thereof after its announcement in such internal publication or publications as Bank may designate. 
  
 INTEREST: 
  
 (a) Interest. The outstanding principal balance of this Note shall
bear interest (computed an the basis of a 360-day year, actual days elapsed) at a fixed rate per annum determined by Bank to be two and one-quarter percent (2.25%) above LIBOR in effect on the first day of each Fixed Rate Term. With respect to each
Fixed Rate Term hereunder, Bank is hereby authorized to note the date and interest rate applicable thereto and any payments made thereon on Bank’s books and records (either manually or by electronic entry) and/or on any schedule attached to
this Note, which notations shall be prima facie evidence of the accuracy of the information noted. At the time this Note is disbursed and at the end of each Fixed Rate Term, Borrower shall give Bank notice specifying the length of the applicable
Fixed Rate Term. Any such notice may be given by telephone so long as (i) if requested by Bank, Borrower provides to Bank written confirmation thereof not later than three (3) Business Days after such notice is given, and (ii) such notice is given
to Bank prior to 10:00 a.m. on the first day of the Fixed Rate Term, or at a later time during any Business Day if Bank, at it’s sole option but without obligation to do so, accepts Borrower’s notice and quotes a fixed rate to Borrower. If
Borrower does not immediately accept a fixed rate when quoted by Bank, the quoted rate shall expire and any subsequent LIBOR request from Borrower shall be subject to a redetermination by Bank of the applicable fixed rate. If Bank has not received
such notice at the time principal is disbursed hereunder or at the end of any Fixed Rate Term, Borrower shall be deemed to have selected the shortest permitted Fixed Rate Term. 
  
 (b) Taxes and Regulatory Costs. Borrower shall pay to Bank immediately upon demand, in addition to any other amounts
due or to become due hereunder, any and all (i) withholdings, interest equalization taxes, stamp taxes or other taxes (except income and franchise taxes) imposed by any domestic or foreign governmental authority and related in any manner to LIBOR,
and (ii) future, supplemental, emergency or other changes in the LIBOR Reserve Percentage, assessment rates imposed by the Federal Deposit Insurance Corporation, or similar requirements or costs imposed by any domestic or foreign governmental
authority or resulting from compliance by Bank with any request or directive (whether or not having the force of law) from any central bank or other governmental authority and related in any manner to LIBOR to the extent they are not included in the
calculation of LIBOR. In determining which of the foregoing are attributable to any LIBOR option available to Borrower hereunder, any reasonable allocation made by Bank among its operations shall be conclusive and binding upon Borrower. 

 
 (c) Payment of Interest. Interest accrued on this Note shall be
payable on the 1st day of each month, commencing June 1, 2004. 
  

 -2- 

 (d) Default Interest. From and after the maturity date of this Note, or such earlier date as all
principal owing hereunder becomes due and payable by acceleration or otherwise, the outstanding principal balance of this Note shall bear interest until paid in full at an increased rate per annum (computed on the basis of a 360-day year, actual
days elapsed) equal to four percent (4%) above the rate of interest from time to time applicable to this Note. 
  
 REPAYMENT AND PREPAYMENT: 
  
 (a) Repayment. Principal shall be payable on the 1st day of each month in installments of Two Thousand Nine Hundred Twenty Dollars ($2,920.00)
each, commencing June 1, 2004, and continuing up to and including March 1, 2014, with a final installment consisting of all remaining unpaid principal due and payable in full on April 1, 2014. 
  
 (b) Application of Payments. Each payment made on this Note shall be
credited first, to any interest then due and second, to the outstanding principal balance hereof. 
  
 (c) Prepayment. Borrower may prepay principal on this Note at any time and in the minimum amount of One Hundred Thousand Dollars ($100,000.00);
provided however, that if the outstanding principal balance of this Note is less than said amount, the minimum prepayment amount shall be the entire outstanding principal balance hereof. In consideration of Bank providing this prepayment option to
Borrower, or if this Note shall become due and payable at any time prior to the last day of any Fixed Rate Term by acceleration or otherwise, Borrower shall pay to Bank immediately upon demand a fee which is the sum of the discounted monthly
differences for each month from the month of prepayment through the month in which such Fixed Rate Term matures, calculated as follows for each such month: 
  

	 	(i)	Determine the amount of interest which would have accrued each month on the amount prepaid at the interest rate applicable to such amount had it remained outstanding until
the last day of the Fixed Rate Term applicable thereto. 

  

	 	(ii)	Subtract from the amount determined in (i) above the amount of interest which would have accrued for the same month on the amount prepaid for the remaining term of such Fixed
Rate Term at LIBOR in effect on the date of prepayment for new loans made for such term and in a principal amount equal to the amount prepaid. 

  

	 	(iii)	If the result obtained in (ii) for any month is greater than zero, discount that difference by LIBOR used in (ii) above. 

  
 Each Borrower acknowledges that prepayment of such amount may result in Bank incurring
additional costs, expenses and/or liabilities, and that it is difficult to ascertain the full extent of such costs, expenses and/or liabilities. Each Borrower, therefore, agrees to pay the above-described prepayment fee and agrees that said amount
represents a reasonable estimate of the prepayment costs, expenses and/or liabilities of Bank. If Borrower fails to pay any prepayment fee when due, the amount of such prepayment fee shall thereafter bear interest until paid at a rate per annum two
percent (2%) above the Prime Rate in effect from time to time (computed on the basis of a 360-day year, actual days elapsed). 
  

 -3- 

 All prepayments of principal shall be applied on the most remote principal installment or installments
then unpaid. 
  
 EVENTS OF DEFAULT: 

 
 This Note is made pursuant to and is subject to the terms and conditions
of that certain Credit Agreement between Borrower and Bank dated as of May 1, 2004, as amended from time to time (the “Credit Agreement”). Any default in the payment or performance of any obligation under this Note, or any defined event of
default under the Credit Agreement, shall constitute an “Event of Default” under this Note. 
  
 MISCELLANEOUS: 
  
 (a) Remedies. Upon the sale, transfer, hypothecation, assignment or other encumbrance, whether voluntary, involuntary or by operation of law, of
all or any interest in any real property securing this Note, or upon the occurrence of any Event of Default, the holder of this Note, at the holder’s option, may declare all sums of principal and interest outstanding hereunder to be immediately
due and payable without presentment, demand, notice of nonperformance, notice of protest, protest or notice of dishonor, all of which are expressly waived by each Borrower. Each Borrower shall pay to the holder immediately upon demand the full
amount of all payments, advances, charges, costs and expenses, including reasonable attorneys’ fees (to include outside counsel fees and all allocated costs of the holder’s in-house counsel), expended or incurred by the holder in
connection with the enforcement of the holder’s rights and/or the collection of any amounts which become due to the holder under this Note, and the prosecution or defense of any action in any way related to this Note, including without
limitation, any action for declaratory relief, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without
limitation, any adversary proceeding, contested matter or motion brought by Bank or any other person) relating to any Borrower or any other person or entity. 
  
 (b) Obligations Joint and Several. Should more than one person or entity sign this Note as a Borrower, the obligations of each such Borrower shall
be joint and several. 
  
 (c) Governing Law. This Note
shall be governed by and construed in accordance with the laws of the State of California. 
  
 This Note is secured by, among other collateral, a Deed of Trust dated May 1, 2004. 
  

 -4- 

 IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first written above.

  

			
	 Natural Alternatives International, Inc.

		
	By:	 	 /s/ Randell Weaver

	 	 	

	 	 	 Randell Weaver
 President

  

			
	 
		
	By:	 	 /s/ John Reaves

	 	 	

	 	 	 John Reaves
 Chief Financial Officer

  

 -5- 

					
	

	  	 Wells Fargo Equipment Finance, Inc.
 733 Marquette Avenue Suite 700
 Minneapolis, MN 55402
	  	Promissory Note

  
 Contract Number
120423-700 dated as of May 4, 2004 
  
 For Value Received, the undersigned hereby
promises to pay to the order of Wells Fargo Equipment Finance, Inc. (the “Lender”) at its main office in Minneapolis, Minnesota, in lawful money of the United States of America, the principal sum of $1,800,750.00 together
with interest on the unpaid balance hereof from the date the loan proceeds are disbursed hereunder at an annual rate (computed on the basis of actual number of days elapsed in a 360-day year) determined as set forth below. 
  
 The interest rate in effect on the date the loan proceeds are disbursed hereunder shall be
the Index (as hereinafter defined) on the first business day of the month in which the loan proceeds are disbursed plus 2.10% and shall remain in effect through the last day of the calendar quarter in which the loan proceeds are disbursed hereunder.
The interest rate in effect for each calendar quarter thereafter during the term of this Note shall be the same percentage over the Index as in effect on the first day of such calendar quarter; provided, however, that notwithstanding any change in
the Index after the maturity of this Note, this Note shall bear the same rate of interest after maturity as it bore at maturity. 
  
 For purposes of this Note, the terms “Index” or “the Index” mean, as of the date of determination, the London interbank offered rate for deposits in
United States dollars having a maturity of three months which appears in the “Money Rates” section of the Wall Street Journal, published on the business day on, or immediately preceding, the first day of each calendar quarter. If the Index
is no longer available, Lender will choose an index that is based upon comparable information and will give the undersigned notice of such new “Index”. 
  
 The First Payment Due Date shall be the date that is one month after the date loan proceeds are disbursed hereunder. The undersigned agrees
that the date of the First Payment Due Date and of the Final Installment Due Date may be left blank when this Note is executed and hereby authorizes Lender to insert such dates based upon a 48-month term from the date the loan proceeds are
disbursed. 
  
 Principal and interest shall be payable in 47 consecutive equal
monthly installments of $40,081.62 each commencing on the First Payment Due Date and continuing on the same day of each month thereafter, and in a final installment of the entire unpaid balance of this Note on the Final Installment Due Date,
provided; however, that annual adjustment payments shall be made as set forth below. 
  
 The amount of each monthly installment hereunder other than the final installment is the amount necessary to amortize this Note in equal monthly installments from the First Payment Due Date through the Final Installment Due Date at an
interest rate of 3.28%. On each annual anniversary of the First Payment Due Date, the undersigned shall pay Lender or Lender shall credit to the next installment or installments in the order of maturity, as the case may be, an amount necessary to
make the unpaid principal balance of this Note on such anniversary date equal to what it would have been on such anniversary date had the interest rate hereon been the rate set forth in this paragraph throughout the previous 12 months. Payments
shall be applied first to interest and then to principal. 
  
 This Note may be
prepaid in whole at any time by paying to Lender the unpaid principal balance of this Note but only if accompanied by a prepayment premium of 2% of the unpaid principal balance, together with accrued but unpaid interest. 
  
 This Note may be prepaid in part but only as a result of a disposition of an item of
collateral which secures this Note. The amount of such prepayment shall be the product of the unpaid principal balance of this Note times a fraction, the numerator of which is the original advance made by the Lender with respect to the item of
collateral in question and the denominator of which is the original principal balance of this Note with respect to the existing collateral securing this Note, together with accrued but unpaid interest multiplied by the same fraction, plus a
prepayment premium equal to the percentage set forth in the preceding paragraph times the principal amount prepaid. Nothing contained in this paragraph shall be construed as an authorization by Lender to the undersigned to sell or otherwise dispose
of an item of collateral which secures this Note. Such sale or disposition of an item of collateral by the undersigned shall be made solely in accordance with the terms of the security agreement or other agreement pursuant to which the undersigned
pledged such item of collateral to Lender. 
  

 Promissory Note – floats over 90 day Libor 

 The undersigned may remit to Lender amounts in excess of an installment that is due hereunder and Lender shall apply such
amount to the next maturing installment or installments. Payment of amounts in excess of the installment that is due or installments prior to the due date thereof shall not be treated as a prepayment or result in a change to either the total number
of installments or the total sum of all installments payable under this Note. 
  
 Each of the following shall constitute an Event of Default hereunder: (a) failure to pay any installment or other payment hereunder when due; (b) the occurrence of an Event of Default as defined in any security agreement or mortgage
securing this Note; (c) the commencement of any bankruptcy or insolvency proceedings by or against the undersigned or any guarantor of this Note; and (d) any indebtedness the undersigned may now or hereafter owe to any affiliate of Lender shall be
accelerated following a default thereunder or, if any such indebtedness is payable on demand, payment thereof shall be demanded. Upon the occurrence of an Event of Default, Lender may do any one or more of the following as it may elect, provided,
however, that upon the occurrence of an Event of Default specified in (c) above, the entire unpaid balance of this Note shall automatically become and be due and payable without notice or demand of any kind: (i) upon written notice to the
undersigned, declare the entire unpaid balance of this Note to be immediately due and payable and the same shall thereupon become and be immediately due and payable; (ii) exercise any one or more of the rights and remedies available to it under any
security agreement or mortgage securing this Note or under any other agreement or by law. 
  
 The undersigned hereby waives presentment, notice of dishonor, and protest. The undersigned agrees to pay all costs of collection of this Note, including reasonable attorney’s fees. The holder hereof may change
the terms of payment of this Note by extension, renewal or otherwise, and release any security for, or party to, this Note and such action shall not release any accommodation maker, endorser, or guarantor from liability on this Note. 
  
 Notwithstanding anything to the contrary contained herein, if the rate of interest, late
payment fee, prepayment premium or any other charges or fees due hereunder are determined by a court of competent jurisdiction to be usurious, then said interest rate, fees and/or charges shall be reduced to the maximum amount permissible under
applicable law and any such excess amounts shall be applied towards the reduction of the principal balance of this Note. 
  
 This Note shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of Minnesota without regard to
conflicts of law rules. 
  
 If this Note is signed by more than one person as
Debtor, then the term “Debtor” shall refer to each of them separately and to all of them jointly, and each such person shall be liable hereunder individually in full and jointly with the others. 
  

			
	First Payment Due Date: __________________________	 	Final Installment Due Date: __________________________

  
 IN WITNESS WHEREOF the Debtor has
signed this Agreement as of the date first above written. 
  

			
	Natural Alternatives International, Inc.
		
	By:	 	 /s/ John Reaves

	 	 	

	 Title:
	 	 CFO

  

 Natural Alternatives Promissory Note - floats over 90 Day LIBORJBR.doc 

					
	

	  	 Wells Fargo Equipment Finance, Inc.
 733 Marquette Avenue Suite 700
 Minneapolis, MN 55402
	  	Promissory Note

  
 Contract Number
120423-701 dated as of May 5, 2004 
  
 For Value Received, the undersigned hereby
promises to pay to the order of Wells Fargo Equipment Finance, Inc. (the “lender”) at its main office in Minneapolis, Minnesota, in lawful money of the United States of America, the principal sum of $1,554,579.62 together with
interest on the unpaid balance hereof from the date the loan proceeds are disbursed hereunder at an annual rate (computed on the basis of actual number of days elapsed in a 360-day year) determined as set forth below. 
  
 The interest rate in effect on the date the loan proceeds are disbursed hereunder shall be
the Index (as hereinafter defined) on the first business day of the month in which the loan proceeds are disbursed plus 2.10% and shall remain in effect through the last day of the calendar quarter in which the loan proceeds are disbursed hereunder.
The interest rate in effect for each calendar quarter thereafter during the term of this Note shall be the same percentage over the Index as in effect on the first day of such calendar quarter; provided, however, that notwithstanding any change in
the Index after the maturity of this Note, this Note shall bear the same rate of interest after maturity as it bore at maturity. 
  
 For purposes of this Note, the terms “Index” or “the Index” mean, as of the date of determination, the London interbank offered rate for deposits in
United States dollars having a maturity of three months which appears in the “Money Rates” section of the Wall Street Journal, published on the business day on, or immediately preceding, the first day of each calendar quarter. If the Index
is no longer available, Lender will choose an index that is based upon comparable information and will give the undersigned notice of such new “Index”. 
  
 The First Payment Due Date shall be the date that is one month after the date loan proceeds are disbursed hereunder. The undersigned agrees
that the date of the First Payment Due Date and of the Final Installment Due Date may be left blank when this Note is executed and hereby authorizes Lender to insert such dates based upon a 60-month term from the date the loan proceeds are
disbursed. 
  
 Principal and interest shall be payable in 59 consecutive equal
monthly installments of $28,127.61 each commencing on the First Payment Due Date and continuing on the same day of each month thereafter, and in a final installment of the entire unpaid balance of this Note on the Final Installment Due Date,
provided; however, that annual adjustment payments shall be made as set forth below. 
  
 The amount of each monthly installment hereunder other than the final installment is the amount necessary to amortize this Note in equal monthly installments from the First Payment Due Date through the Final Installment Due Date at an
interest rate of 3.28%. On each annual anniversary of the First Payment Due Date, the undersigned shall pay Lender or Lender shall credit to the next installment or installments in the order of maturity, as the case may be, an amount necessary to
make the unpaid principal balance of this Note on such anniversary date equal to what it would have been on such anniversary date had the interest rate hereon been the rate set forth in this paragraph throughout the previous 12 months. Payments
shall be applied first to interest and then to principal. 
  
 This Note may be
prepaid in whole at any time by paying to Lender the unpaid principal balance of this Note but only if accompanied by a prepayment premium of 2% of the unpaid principal balance, together with accrued but unpaid interest. 
  
 This Note may be prepaid in part but only as a result of a disposition of an item of
collateral which secures this Note. The amount of such prepayment shall be the product of the unpaid principal balance of this Note times a fraction, the numerator of which is the original advance made by the Lender with respect to the item of
collateral in question and the denominator of which is the original principal balance of this Note with respect to the existing collateral securing this Note, together with accrued but unpaid interest multiplied by the same fraction, plus a
prepayment premium equal to the percentage set forth in the preceding paragraph times the principal amount prepaid. Nothing contained in this paragraph shall be construed as an authorization by Lender to the undersigned to sell or otherwise dispose
of an item of collateral which secures this Note. Such sale or disposition of an item of collateral by the undersigned shall be made solely in accordance with the terms of the security agreement or other agreement pursuant to which the undersigned
pledged such item of collateral to Lender. 
  

 Promissory Note – floats over 90 day Libor - dlh 

 The undersigned may remit to Lender amounts in excess of an installment that is due hereunder and Lender shall apply such
amount to the next maturing installment or installments. Payment of amounts in excess of the installment that is due or installments prior to the due date thereof shall not be treated as a prepayment or result in a change to either the total number
of installments or the total sum of all installments payable under this Note. 
  
 Each of the following shall constitute an Event of Default hereunder: (a) failure to pay any installment or other payment hereunder when due; (b) the occurrence of an Event of Default as defined in any security agreement or mortgage
securing this Note; (c) the commencement of any bankruptcy or insolvency proceedings by or against the undersigned or any guarantor of this Note; and (d) any indebtedness the undersigned may now or hereafter owe to any affiliate of Lender shall be
accelerated following a default thereunder or, if any such indebtedness is payable on demand, payment thereof shall be demanded. Upon the occurrence of an Event of Default, Lender may do any one or more of the following as it may elect, provided,
however, that upon the occurrence of an Event of Default specified in (c) above, the entire unpaid balance of this Note shall automatically become and be due and payable without notice or demand of any kind: (i) upon written notice to the
undersigned, declare the entire unpaid balance of this Note to be immediately due and payable and the same shall thereupon become and be immediately due and payable; (ii) exercise any one or more of the rights and remedies available to it under any
security agreement or mortgage securing this Note or under any other agreement or by law. 
  
 The undersigned hereby waives presentment, notice of dishonor, and protest. The undersigned agrees to pay all costs of collection of this Note, including reasonable attorney’s fees. The holder hereof may change
the terms of payment of this Note by extension, renewal or otherwise, and release any security for, or party to, this Note and such action shall not release any accommodation maker, endorser, or guarantor from liability on this Note. 
  
 Notwithstanding anything to the contrary contained herein, if the rate of interest, late
payment fee, prepayment premium or any other charges or fees due hereunder are determined by a court of competent jurisdiction to be usurious, then said interest rate, fees and/or charges shall be reduced to the maximum amount permissible under
applicable law and any such excess amounts shall be applied towards the reduction of the principal balance of this Note. 
  
 This Note shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of Minnesota without regard to
conflicts of law rules. 
  
 If this Note is signed by more than one person as
Debtor, then the term “Debtor” shall refer to each of them separately and to all of them jointly, and each such person shall be liable hereunder individually in full and jointly with the others. 
  

			
	First Payment Due Date:
                                        
                        	  	Final Installment Due Date:
                                        
            

  
 IN WITNESS WHEREOF the Debtor has
signed this Agreement as of the date first above written. 
  

			
	Natural Alternatives International, Inc.
		
	By:	 	/S/ JOHN REAVES
	 	 	

	 Title:
	 	CFO

  

					
	

	  	 Wells Fargo Equipment Finance, Inc.
 733 Marquette Avenue, Suite 700
 MAC N9306-070
 Minneapolis, MN 55402
	  	Security Agreement
		
	 Name and Address of Debtor:
 Natural Alternatives International, Inc.
 1185 Linda Vista Drive
 San Marcos, CA 92069
	  	Dated as of May 4, 2004

  

	1.	Security Interest and Collateral. To secure the payment and performance of each and every debt, liability and obligation of every type and
description which Debtor may now or at any time hereafter owe to Wells Fargo Equipment Finance, Inc. (“Secured Party”) (whether such debt, liability or obligation now exists or is hereafter created or incurred, whether it is currently contemplated by the Debtor and Secured Party, whether any documents evidencing it refer to the
Security Agreement, whether it arises with our without any documents (e.g. obligations to Secured Party created by checking overdrafts), and whether it is or may be direct or indirect, due or to become due, absolute or contingent, primary or
secondary, liquidated or unliquidated, or joint, several or joint and several; all such debts, liabilities and obligations being herein collectively referred to as the “Obligations”), Debtor hereby grants Secured Party a security interest
(herein called the “Security Interest”) in the following property (herein called the “Collateral”): 

  
 INVENTORY: 
  
 All inventory of Debtor, whether now owned or hereafter acquired and wherever located;  
  
 EQUIPMENT: 
  
 All equipment of Debtor, whether now owned or hereafter acquired,
including but not limited to all present and future machinery, vehicles, furniture, fixtures, manufacturing equipment, farm machinery and equipment, shop equipment, office and recordkeeping equipment, parts and tools, and the goods described in any
equipment schedule or list herewith or hereafter furnished to Secured Party by Debtor (but no such schedule or list need be furnished in order for the security interest granted therein to be valid as to all of Debtor’s equipment).

  
 ACCOUNTS AND OTHER RIGHTS TO PAYMENT:

  
 Each and every right of Debtor 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 by Debtor, out of a rendering of services by Debtor, out of a loan by
Debtor, out of the overpayment of taxes or other liabilities of Debtor, or otherwise arises under any contract or
agreement, 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 Debtor 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 of the property of such account debtor or other obligor, all, including but not limited to, present and future debt
instruments, chattel papers, accounts, loans and obligations receivable and tax refunds. 
  
 GENERAL INTANGIBLES: 
  
 All general intangibles of Debtor, whether now owned or hereafter acquired, including but not limited to, applications for patents, patents,
copyrights, trademarks, trade secrets, good will, tradenames, customers’ lists, permits and franchises, and the right to use Debtor’s name. 
  
 together with all substitutions and replacements for and products of any of the foregoing property not constituting consumer goods and together with
proceeds of any and all of the foregoing property and, in the case of all tangible Collateral, together with all accessions and, except in the case of consumer goods, together with (i) all accessories, attachments, parts, equipment and repairs now
or hereafter attached or affixed to or used in connection with any such goods, and (ii) all warehouse receipts, bills of lading and other documents of title now or hereafter covering such goods. 
  

	2.	Representations, Warranties and Agreements. Debtor represents, warrants and agrees that: 

  
 a) Authorization. If Debtor is a corporation, a
partnership or a limited liability company, the execution, delivery and performance of this Agreement has been duly authorized by all necessary action on the part of the Debtor and will not violate any provision of the Debtor’s articles of
incorporation or bylaws, partnership agreement or articles of organization or management agreement, as the case may be. 
  
 (b) Office Location. Debtor’s chief executive office (if Debtor is a corporation, a partnership or a limited liability
company) is located at the address for Debtor shown above. Debtor will not change the location of its chief executive office or his/her residence, as the case may be, without first giving Secured Party at least 10 days prior written notice of the
new location. 
  
 (c) Business Purpose; Lawful
Use. The Equipment will be used primarily for business purposes as opposed to personal, family or household purposes. Debtor will comply with all laws and regulations applicable to the Equipment and its use. 
  

	3.	Additional Representations, Warranties and Agreements. Debtor represents, warrants and agrees that: 

  
 (a) Debtor has (or will have at the time Debtor acquires rights in
Collateral hereafter arising) absolute title to each item of Collateral free and clear of all security interests, liens and encumbrances, except the Security Interest and will defend the Collateral against all claims or demands of all persons other
than Secured Party. Debtor will not sell or otherwise dispose of the Collateral or any interest therein without the prior written consent of Secured Party, except that, until the occurrence of an Event of Default and the revocation by Secured Party
of Debtor’s right to do so, Debtor may sell any inventory constituting Collateral to buyers in the ordinary course of business and use and consume any farm products constituting Collateral in Debtor’s farming operation. If Debtor is a
corporation, this Agreement has been duly and validly authorized by all necessary corporate action, and, if Debtor is a partnership or a limited liability company, the partner(s) or manager(s) executing this Agreement has (have) authority to act for
the partnership or the limited liability company. 
  
 THIS AGREEMENT INCLUDES THE TERMS ON THE ATTACHED PAGE(S). 
  

			
	Natural Alternatives International, Inc.
	Debtor
		
	By	 	/s/ JOHN REAVES
	 	 	

	 Title
	 	CFO

  

 (b) Debtor will not permit any tangible Collateral to be located in any state (and, if county filing
is required, in any county) in which the financing statement covering such Collateral is required to be, but has not in fact been, filed in order to perfect the Security Interest. 
  
 (c) Each right to payment and each instrument, document, chattel paper and other agreement constituting or evidencing
Collateral is (or will be when arising or issued) the valid, genuine and legally enforceable obligation, subject to no defense, set-off or counterclaim (other than those arising in the ordinary course of business) of the account debtor or other
obligor named therein or in Debtor’s records pertaining thereto as being obligated to pay such obligation. Debtor will neither agree to any material modification or amendment nor agree to any cancellation of any such obligation without Secured
Party’s prior written consent, and will not subordinate any such right to payment to claims of other creditors of such account debtor or other obligor. 
  
 (d) Debtor will (i) keep all tangible Collateral in good repair, Working order and condition, normal depreciation
excepted, and will, from time to time, replace any worn, broken or defective parts thereof: (ii) promptly pay all taxes and other governmental charges levied or assessed upon or against any Collateral or upon or against the creation,
perfection or continuance of the Security Interest; (iii) keep all Collateral free and clear of all security interests, liens and encumbrances except the Security Interest; (iv) at all reasonable times, permit Secured Party or its
representatives to examine or inspect any Collateral, wherever located, and to examine, inspect and copy Debtor’s books and records pertaining to the Collateral and its business and financial condition and to discuss with account debtors and
other obligors requests for verifications of amounts owed to Debtor; (v) keep accurate and complete records pertaining to the Collateral and pertaining to Debtor’s business and financial condition and submit to Secured Party such periodic
reports concerning the Collateral and Debtor’s business and financial condition as Secured Party may from time to time reasonably request; (vi) promptly notify Secured Party of any loss of or material damage to any Collateral or of any adverse
change, known to Debtor, in the prospect of payment of any sums due or under any instrument, chattel paper, or account constituting Collateral; (vii) if Secured Party at any time so requests (whether the request is made before or after the
occurrence of an Event of Default), promptly deliver to Secured Party any instrument, document or chattle paper constituting Collateral, duly endorsed or assigned by Debtor; (viii) at all times keep all tangible Collateral insured against risks of
fire (including so-called extended coverage), then, collision (in case of Collateral consisting of motor vehicles) and such other risks and to such amounts as Secured Party may reasonably request, with any loss payable to Secured Party to the extent
of its interest, (ix) from time to time execute such financing statements as Secured Party may reasonably require in order to perfect the Security Interest and, if any Collateral consists of a motor vehicle, execute such documents as may be required
to have the Security Interest properly noted on a certificate of title; (x) pay when due or reimburse Secured Party on demand for all costs of collection of any of the Obligations and all other out-of-pocket expenses (including in each case all
reasonable attorneys’ fees) incurred by Secured Party in connection with the creation, perfection, satisfaction, protection, defence or enforcement of the Security Interest or the creation, continuance, protection, defense or enforcement of this Agreement or any or all of the Obligations, including expenses incurred in any litigation or bankruptcy or
insolvency proceedings; (xi) execute, deliver or endorse any and all instruments, documents, assignments, security agreements and other agreements and writings which Secured Party may at any time reasonably request in order to secure, protect,
perfect or enforce the Security Interest and Secured Party’s rights under this Agreement; (xii) not use or keep any Collateral, or permit it to be used or kept, for any unlawful purpose or in violation of any federal, state or local law,
statute or ordinance; (xiii) permit Secured Party at any time and from time to time to send requests (both before and after the occurrence of an Event of Default) to account debtors or other obligors for verification of amounts owed to Debtor; and
(xiv) not permit any tangible Collateral to become part of or to be affixed to any real property without first assuring to the reasonable satisfaction of Secured Party that the Security Interest will be prior and senior to any interest or lien then
held or thereafter acquired by any mortgagee of such real property or the owner or purchaser of any interest therein. If Debtor at any time fails to perform or observe any agreement contained in this Section 3(d), and if such failure shall continue
for a period of ten calendar days after Secured Party gives Debtor written notice thereof (or, in the case of the agreements contained in clauses (viii) and (ix) of this Section 3(d), immediately upon the occurrence of such failure, without notice
or lapse of time), Secured Party may (but need not) perform or observe such agreement on behalf and in the name, place and stead of Debtor (or, at Secured Party’s option, in Secured Party’s own name) and may (but need not) take any and all
other actions which Secured Party 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
under contracts or agreements with account debtors or other obligors, the procurement and maintenance of Insurance, the execution of financing statements, the endorsement of instruments, and the procurement of repairs, transportation or insurance);
and, except to the extent that the effect of such payment would be to render any loan or 
 forbearance of money usurious or
otherwise illegal under any applicable law Debtor shall thereupon pay Secured Party on demand the amount of all moneys expended and all costs and expenses (including reasonable attorneys’ fees) incurred by Secured Party in connection with or as
a result of Secured Party’s performing or observing such agreement or taking such actions, together with interest thereon from the date expended or incurred by Secured Party at the highest rate then applicable to any of the Obligations. To
facilitate the performance or observance by Secured Party of such agreements of Debtor, Debtor hereby irrevocably appoints (which appointment is coupled with an interest) Secured Party, or its delegate, as the attorney-in-fact of Debtor 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 Debtor, any and all instruments, documents, financing statements, applications for insurance and other
agreements and writings required to be obtained, executed, delivered or endorsed by Debtor under this Section 3. 
  

	4.	Assignment of Insurance. Debtor hereby assigns to Secured Party, as additional security for the payment of the Obligations, any and all moneys (including but not
limited to proceeds of insurance and refunds of unearned premiums) due or to become due under, and all other rights of Debtor under or with respect to, any and all policies of insurance covering the Collateral, and Debtor hereby directs the issuer
of any such policy to pay any such moneys directly to Secured Party. Both before and after the occurrence of an Event of default. Secured Party may (but need not), in its own name or in Debtor’s name, execute and deliver proofs of claim,
receive all such moneys, endorse checks and other instruments representing payment of such moneys, and adjust, litigate, compromise or release any claim against the issuer of any such policy. 

  

	5.	Events of Default. Each of the following occurrences shall constitute an event of default under this Agreement (herein called “Event of Default”): (i)
Debtor shall fail to pay any or all of the Obligations when due or (if payable on demand) on demand, or shall fail to observe or perform any covenant or agreement herein binding on it; (ii) any representation or warranty by Debtor set forth in the
Agreement or made to Secured Party in any financial statements or reports submitted to Secured Party by or on behalf of Debtor shall prove materially false or misleading; (iii) a garnishment, summons or a writ of attachment shall be issued against
or served upon the Secured Party for the attachment of any property of Debtor or any indebtness owing to Debtor; (iv) Debtor or any guarantor of any Obligation shall (A) be or become insolvent (however defined); or (B) voluntarily file, or have
filed against it involuntarily, a petition under the United States Bankruptcy Code; or (C) if a corporation, partnership, or organization, be dissolved or liquidated or, if a partnership, suffer the death of a partner or, if an individual, die; or
(D) go out of business; (v) an event of default shall occur under any indebtedness Debtor may now or hereafter owe to any affiliate of Secured Party; (vi) if Debtor is a corporation, more than 50% of the shares of voting stock of Debtor shall become
owned by a shareholder or shareholders who were not owners of voting stock of Debtor on the date of this Agreement or, if Debtor is a partnership, more than 50% of the partnership interests in the Debtor shall become owned by a partner
or partners who were not partners of Debtor on the date of this Agreement; or (vii) Debtor shall consolidate with or merge into, or sell all or substantially all of its assets to, any individual, corporation, or other entity.

  

	6.	Remedies upon Event of Default. Upon the occurrence of an Event of Default under Section 5 and at any time thereafter. Secured Party may exercise any one or more of
the following rights and remedies; (i) declare all unmatured Obligations to be immediately due and payable, and the same shall thereupon be immediately due and payable, without presentment or other notice or demand; (ii) exercise and enforce any or
all rights and remedies available upon default to a secured party under the Uniform Commercial Code, including but not limited to the right to take possession of any Collateral, proceeding without judicial process or by judicial process (without a
prior hearing or notice thereof, which Debtor hereby expressly waives), and the right to sell, lease or otherwise dispose of any or all of the Collateral, and in connection therewith. Secured Party may require Debtor to make the Collateral available
to Secured Party at a place to be designated by Secured Party which is reasonably convenient to both parties, and if notice to Debtor 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 8) at least 10 calendar days prior to the date of intended disposition or other action; (iii) exercise or enforce any or all other rights or
remedies available to Secured Party by law or agreement against the Collateral, against Debtor or against any other person or property. Upon the occurrence of the Event of Default described in Section 5(iv)(B), all Obligations shall be immediately
due and payable without demand or notice thereof. Secured Party is hereby granted a nonexclusive, worldwide and royalty-free license to use or otherwise exploit all trademarks, trade secrets, franchises, copyrights and patents of Debtor that Secured
Party deems necessary or appropriate to the disposition of any Collateral. 

  

	7.	Other Personal Property. Unless at the time Secured party takes possession of any tangible Collateral, or within seven days thereafter, Debtor gives written notice
to Secured Party of the existence of any goods, papers or other property of Debtor, not affixed to or constituting a part of such Collateral, but which are located or found upon or within such Collateral, describing such property, Secured Party
shall not be responsible or liable to Debtor for any action taken or omitted by or on behalf of Secured Party with respect to such property without actual knowledge of the existence of any such property or without actual knowledge that it was
located or to be found upon or within such Collateral. 

  

					
	Page 2 of 3 : SECAGRBL	  	 	  	Initials /s/ JR 
	 	  	 	  	 

	8.	Miscellaneous. This Agreement does not contemplate a sale of accounts, or chattel paper. Debtor agrees that each provision whose box is checked is part of this
Agreement. This Agreement can be waived, modified, amended, terminated or discharged, and the Security Interest can be released, only explicitly in a writing signed by Secured Party. A waiver signed by Secured Party shall be effective only in the
specific instance and for the specific purpose given. More delay or failure to act shall not preclude the exercise or enforcement of any of Secured Party’s rights or remedies. All rights and remedies of Secured Party shall be cumulative and may
be exercised singularly or concurrently, at Secured Party’s option, and the exercise or enforcement of any one such right or remedy shall neither be a condition to nor bar the exercise or enforcement of any other. All notices to be given to
Debtor shall be deemed sufficiently given if delivered or mailed by registered or certified mail, postage prepaid, to Debtor at its address set forth above or at the most recent address shown on Secured Party’s records. Secured Party’s
duty of care with respect to Collateral in its possession (as imposed by law) shall be deemed fulfilled if Secured Party exercises reasonable care in physically safekeeping 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 Secured Party need not otherwise preserve, protect, insure or care for any Collateral. Secured Party shall not be obligated to
reserve any rights Debtor 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 Collateral in any particular order of application. This Agreement shall be binding
upon and inure to the benefit of Debtor and Secured Party and their respective heirs, representatives, successors and assigns and shall take effect when signed by Debtor and delivered to Secured Party, and Debtor waves notice of Secured Party’s
acceptance hereof. Secured Party may execute this Agreement if appropriate for the purpose of filing, but the failure of Secured Party to execute this Agreement shall not affect or impair the validity or effectiveness of this Agreement. A carbon,
photographic or other reproduction of this Agreement or of any financing statement signed by the Debtor shall have the same force and effects as the original for all purposes of a financing statement. Except to the extent otherwise required by law,
this Agreement shall be governed by the internal laws of the State of Minnesota. If any provision or application of this Agreement is held unlawful or unenforceable in any respect, such illegality or unenforceabitity shall not affect other
provisions or applications which can be given effect, and this Agreement shall be construed as if the unlawful or unenforceable provision or application had never been contained herein or prescribed hereby. All representations and warranties
contained in this Agreement shall survive the execution, delivery and perfomance of this Agreement and the creation and payment of the Obligations. If this Agreement is signed by more than one person as Debtor, the term “Debtor” shall
refer to each of them separately and to both or all of them jointly; all such persons shall be bound both severally and jointly with the others); and the Obligations shall include all debts, liabilities and obligations owed to Secured Party by any
Debtor solely or by both or several or all Debtors jointly or jointly and severally, and all property described in Section 1 shall be included as part of the Collateral, whether it is owned jointly by both or all Debtors or is owned in whole or in
part by one (or more) of them. There shall be (1) counterpart of this Agreement and it will be marked “Original.” To the extent that this Agreement constitutes chattel paper (as defined by the Uniform Commercial Code), a security interest
only may be created in the Agreement marked “Original” DEBTOR HEREBY WAIVES ANY RIGHT TO A JURY TRIAL WITH RESPECT TO ANY MATTER UNDER OR IN CONNECTION WITH THE SECURITY AGREEMENT. 

  

 31 

					
	 

	  	 Wells Fargo Equipment Finance, Inc.
 733
Marquette Avenue, Suite 700
 MAC N9 306-070
 Minneapolis,
MN 55402
	  	Security Agreement
		
	 Name and Address of Debtor:
 Natural Alternatives International, Inc.
 1185 Linda Vista Drive
 San Marcos, CA 92069
	  	 Dated as of May 5, 2004
 Contract Number 120423-701

  

	1.	Security Interest and Collateral. To secure the payment and performance of each and every debt, liability and obligation of every type and description which Debtor
may now or at any time hereafter owe to Wells Fargo Equipment Finance, Inc. (“Secured Party”) (whether such debt, liability or obligation now exists or is hereafter created or incurred, whether it is currently contemplated by the Debtor
and Secured Party, whether any documents evidencing it refer to the Security Agreement, and whether it is or may be direct or indirect, due or to become due, absolute or contingent, primary or secondary, liquidated or unliquidated, or joint, several
or joint and several; all such debts, liabilities and obligations being herein collectively referred to as the “Obligations”), Debtor hereby grants Secured Party a security interest (herein called the “Security Interest”) in the
following property (herein called the “Collateral”): 

  
 The Equipment described on Schedule A attached here to and made a part hereof. 
 together
with all substitutions and replacements for and products of the Collateral, all proceeds, accessories, attachments, parts, equipment and repairs now or hereafter attached or affixed to or used in connection with the Collateral. 
  

	2.	Representations, Warranties and Agreements. Debtor represents, warrants and agrees that: 

  

	 	(a)	Authorization. If Debtor is a corporation, a partnership or a limited liability company, the execution, delivery and performance of this
Agreement has been duly authorized by all necessary action on the part of the Debtor and will not violate any provision of the Debtor’s articles of incorporation or bylaws, partnership agreement or articles of organization or management
agreement, as the case may be. 

  

	 	(b)	Office Location. Debtor’s chief executive office (if Debtor is a corporation, a partnership or a limited liability company) is located at the address
for Debtor shown above. Debtor will not change the location of its chief executive office or his/her residence, as the case may be, without first giving Secured Party at least 10 days prior written notice of the new location.

  

	 	(c)	Business Purpose; Lawful Use. The Equipment will be used primarily for business purposes as opposed to personal, family or household purposes. Debtor will
comply with all laws and regulations applicable to the Equipment and its use. 

  

	3.	Additional Representations, Warranties and Agreements. Debtor represents, warrants and agrees that: 

  

	 	(a)	Debtor has (or will have at the time Debtor acquires rights in Collateral hereafter arising) absolute title to each item of Collateral free and clear of all security interests,
liens and encumbrances, except the Security Interest and will defend the Collateral against all claims or demands of all persons other than Secured Party. Debtor will not sell or otherwise dispose of the Collateral or any interest therein without
the prior written consent of Secured Party. If Debtor is a corporation, this Agreement has been duly and validly authorized by all necessary corporate action, and, if Debtor is a partnership or a limited liability company, the partner(s) or
manager(s) executing this Agreement has (have) authority to act for the partnership or the limited liability company. 

  

	 	(b)	Debtor will not permit any Collateral to be located in any state (and, if county filing is required, in any county) in which the financing statement covering such Collateral is
required to be, but has not in fact been, filed in order to perfect the Security Interest. 

  

	 	(c)	Debtor will (i) keep all Collateral in good repair, working order and condition, normal depreciation excepted, and will, from time to time, replace any worn, broken or defective
parts thereof; (ii) promptly pay all taxes and other governmental charges levied or assessed upon or against any Collateral or upon or against the creation, perfection or continuance of the Security Interest; (iii) keep all Collateral free and clear
of all security interests, liens and encumbrances except the Security interest; (iv) at all reasonable times, permit Secured Party or its representatives to examine or inspect any Collateral, wherever located, and to examine, inspect and copy
Debtor’s books and records pertaining to the Collateral and its business and financial condition; (v) keep accurate and complete records pertaining to Debtor’s business and financial condition and submit to Secured Party such periodic
reports concerning Debetor’s bussiness and financial condition as Secured Party may from time to time reasonably request; (vi) promptly notify Secured Party of any loss of or material damage to any Collateral; (vii) at all times keep all
Collateral insured against risks of fire (including so-called extended coverage), theft, collision (in case of Collateral consisting of motor vehicles) and such other risks and in such amounts as Secured Party may reasonably request, with any loss
payable to Secured Party to the extent of its interest, (viii) from time to time execute such financing statements as Secured Party may reasonably require in order to perfect the Security Interest and, if any Collateral consists of a motor execute
such documents as may be required to have the Security Interest properly noted on a certificate of title; (ix) pay when due or reimburse Secured Party on demand for all costs of collection of any of the Obligations and all other out-of-pocket
expenses (including in each case all reasonable attorneys’ fees) incurred by Secured Party in connection with the creation, perfection, satisfaction, protection, defense or enforcement of the Security Interest or the creation, continuance,
protection, defense or enforcement of this Agreement or any or all of the Obligations, including expenses incurred in any litigation or bankruptcy or insolvency proceedings; (x) execute, deliver or endorse any and all instruments, documents,
assignment, security agreements and other agreements and writings which Secured Party may at any time reasonably request in order to secure, protect, perfect or enforce the Security Interest and Secured Party’s rights under this Agreement; (xi)
not use or keep any Collateral, or permit it to be used or kept, for any unlawful purpose or in violation of any federal, state or local law, statute or ordinance; and (xii) not permit any Collateral to become part of or to be affixed to any real
property without first assuring to the reasonable satisfaction of Secured Party that the Security Interest will be prior and senior to any interest or lien then held or thereafter acquired by any mortgagee of such real property or the owner or
purchaser of any interest therein. If Debtor at any time fails to perform or observe any agreement contained in this Section 3(c), and if such failure shall continue for a period of ten calendar days after Secured Party gives Debtor written notice
thereof (or, in the case of the agreements contained clauses (vii) and (viii) of this Section 3(c), immediately upon the occurrence of such failure, without notice or lapse of lime), Secured Party may (but need not) perform or observe such

  
 THIS AGREEMENT INCLUDES THE TERMS ON
THE ATTACHED PAGE(S). 
  

			
	Natural Alternatives International, Inc.
	Debtor
		
	 By:
	 	/s/ JOHN REAVES
	 	 	

	 Title
	 	CFO

  

					
	 	 	32	 	 

 agreement on behalf and in the name, place and stead of Debtor (or, at Secured Party’s option, in
Secured Party’s own name) and may (but need not) take any and all other actions which Secured Party 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 procurement and maintenance of Insurance, the execution of financing statements, the endorsement of instruments, and the procurement of repairs, transportation or insurance); and, except to the extent that the
effect of such payment would be to render any loan or forbearance of money usurious or otherwise illegal under any applicable law Debtor shall thereupon pay Secured Party on demand the amount of all moneys expended and all cost and expenses
(including reasonable attorneys’ fees) incurred by Secured Party in connection with or as a result of Secured Party’s performing or observing such agreement or taking such actions, together with interest thereon from the date expended or
incurred by Secured Party at the highest rate then applicable to any of the Obligations. To facilitate the performance or observance by Secured Party of such agreements of Debtor, Debtor hereby irrevocably appoints (which appointment is coupled with
an interest) Secured Party, or its delegate, as the attorney-in-fact of Debtor 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 Debtor, any and all
instruments, documents, financing statements, applications for insurance and other agreements and writings required to be obtained, executed, delivered or endorsed by Debtor under this Section 3. 
  

	4.	Assignment of Insurance. Debtor hereby assigns to Secured Party, as additional security for the payment of the Obligations, any and all moneys (including but not
limited to proceeds of insurance and refunds of unearned premiums) due or to become due under, and all other rights of Debtor under or with respect to, any and all policies of insurance covering the Collateral, and Debtor hereby directs the issuer
of any such policy to pay any such moneys directly to Secured Party. Both before and after the occurrence of an Event of default, Secured Party may (but need not), in its own name or in Debtor’s name, execute and deliver proofs of claim,
receive all such moneys, endorse checks and other instruments representing payment of such moneys, and adjust, litigate, compromise or release any claim against the issuer of any such policy. 

  

	5.	Events of Default. Each of the following occurrences shall constitute an event of default under this Agreement (herein called “Event of Default”): (i)
Debtor shall fail to pay any or all of the Obligations when due or (if payable on demand) on demand, or shall fail to observe or perform any covenant or agreement herein binding on it; (ii) any representation or warranty by Debtor set forth in the
Agreement or made to Secured Party in any financial statements or reports submitted to Secured Party by or on behalf of Debtor shall prove materially false or misleading; (iii) a garnishment, summons or a writ of attachment shall be issued against
or served upon the Secured Party for the attachment of any property of Debtor or any indebtedness owing to Debtor; (iv) Debtor or any guarantor of any Obligation shall (A) be or become insolvent (however defined); or (B) voluntarily file, or have
filed against it involuntarily, a petition under the United States Bankruptcy Code; or (C) if a corporation, partnership, or organization, be dissolved or liquidated or, if a partnership, suffer the death of a partner or, if an Individual, die; or
(D) go out of business; (v) an event of default shall occur under any indebtedness Debtor may now or hereafter owe to any affiliate of Secured Party; (vi) if Debtor is a corporation, more than 50% of the shares of voting stock of Debtor shall become
owned by a shareholder or shareholders who were not owners of voting stock of Debtor on the date of this Agreement or, if Debtor is a partnership, more than 50% of the partnership interests in the Debtor shall become owned by a partner or partners
who were not partners of Debtor on the date of this Agreement; or (vii) Debtor shall consolidate with or merge into, or sell all or substantially all of its assets to, any individual, corporation, or other entity. 

  

	6.	Remedies upon Event of Default. Upon the occurrence of an Event of Default under Section 5 and at any time thereafter, Secured Party may exercise any one or more of
the following rights and remedies; (i) declare all unmatured Obligations to be immediately due and payable, and the same shall thereupon be immediately due and payable, without presentment or other notice or demand; (ii) exercise and enforce any or
all rights and remedies available upon default to a secured party under the Uniform Commercial Code, including but not limited to the right to take possession of any Collateral, proceeding without judicial process or by judicial process (without a
prior hearing or notice thereof, which Debtor hereby expressly waives), and the right to sell, lease or otherwise dispose of any or all of the Collateral, and in connection therewith, Secured Party may require Debtor to make the Collateral available
to Secured Party at a place to be designated by Secured Party which is reasonably convenient to both parties, and if notice to Debtor 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 7) at least 10 calendar days prior to the dale of intended disposition or other action; (iii) exercise or enforce any or all other rights or remedies
available to Secured Party by law or agreement against the Collateral, against Debtor or against any other person or property. Upon the occurrence of the Event of Default described in Section 5(iv)(B), all Obligations shall be immediately due and
payable without demand or notice thereof. 

  

	7.	Miscellaneous. This Agreement can be waived, modified, amended, terminated or discharged, and the Security Interest can be released, only explicitly in a writing
signed by Secured Party. A waiver signed by Secured Party shall be effective only in the specific instance and for the specific purpose given. Mere delay or failure to act shall not preclude the exercise or enforcement of any of Secured Party’s
rights or remedies. All rights and remedies of Secured Party shall be cumulative and may be exercised singularly or concurrently, at Secured Party’s option, and the exercise or enforcement of any one such right or remedy shall neither be a
condition to nor bar the exercise or enforcement of any other. All notices to be given to Debtor shall be deemed sufficiently given if delivered or mailed by registered or certified mail, postage prepaid, to Debtor at its address set forth above or
at the most recent address shown on Secured Party’s records. Secured Party’s duty of care with respect to Collateral in its possession (as imposed by law) shall be deemed fulfilled if Secured Party exercises reasonable care in physically
safekeeping 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 Secured Party need not otherwise preserve,
protect, insure or care for any Collateral. Secured Party shall not be obligated to reserve any rights Debtor 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
Collateral in any particular order of application. This Agreement shall be binding upon and inure to the benefit of Debtor and Secured Party and their respective heirs, representatives, successors and assigns and shall take effect when signed by
Debtor and delivered to Secured Party, and Debtor waves notice of Secured Party’s acceptance hereof. Secured Party may execute this Agreement if appropriate for the purpose of filing, but the failure of Secured Party to execute this Agreement
shall not affect or impair the validity or effectiveness of this Agreement. A carbon, photographic or other reproduction of this Agreement or of any financing statement signed by the Debtor shall have the same force and effects as the original for
all purposes of a financing statement. Except to the extent otherwise required by law, this Agreement shall be governed by the internal laws of the State of Minnesota. If any provision or application of this Agreement is held unlawful or
unenforceable in any respect, such illegality or unenforceability shall not affect other provisions or applications which can be given effect, and this Agreement shall be construed as if the unlawful or unenforceable provision or application had
never been contained herein or prescribed hereby. All representations and warranties contained in this Agreement shall survive the execution, delivery and performance of this Agreement and the creation and payment of the Obligations. If this
Agreement is signed by more than one person as Debtor, the term “Debtor” shall refer to each of them separately and to both or all of them jointly; all such persons shall be bound both severally and jointly with the other(s); and the
Obligations shall include all debts, liability and obligations owed to Secured Party by any Debtor solely or by both or several or all Debtors jointly or jointly and severally, and all property described in Section 1 shall be included as part of the
Collateral, whether it is owned jointly by both or all Debtors or is owned in whole or in part by one (or more) of them. There shall be (1) counterpart of this Agreement and it will be marked “Original.” To the extent that this Agreement
constitutes chattel paper (as that term is defined by the Uniform Commercial Code), a security interest only may be created in the Agreement marked “Original.” DEBTOR HEREBY WAIVES ANY RIGHT TO A JURY TRIAL WITH RESPECT TO ANY MATTER UNDER
OR IN CONNECTION WITH THE SECURITY AGREEMENT. 

  

					
	Page 2 of 2 : SECAGREQ	 	 	 	Initials /s/ JR. 

					
	 

	  	 Wells Fargo Equipment Finance, Inc.
 2030 Main Street
 9th
Floor
 Irvine. CA 92614-7255
	  	Schedule A

  
 Contract Number
120423-701 dated as of May 5, 2004 
  

			
	 Debtor:
	  	Natural Alternatives International, Inc.

  

			
	 Vendor Name

	  	 Invoice/Quote Number and Date

	 Prime Business Systems
	  	Quote #8488 dated 9/12/03
	 	  	Invoice#17749 dated 11/10/03 & Invoice#18374 dated 12/6/03
	 Xerox Corporation
	  	Invoice#097401348 & 097401350 dated 8/21/03
		
	 Consiliant Technologies
	  	Invoice#25 dated 2/10/04
	 AmeriComp
	  	Invoice#21646 dated 2/5/04
	 AmeriComp
	  	Invoice#21851 dated 3/23/04
	 AmeriComp
	  	Invoice#22217 dated 3/23/04
	 AmeriComp
	  	Invoice#21647 dated 2/5/04
	 AmeriComp
	  	Invoice#21852 dated 2/20/04
	 SE Technologies
	  	Schedule A to Professional Services Agreement dated 7/10/03
	 Consiliant Technologies
	  	Invoice#25 dated 2/10/04
	 IMA
	  	Invoice#IM18673-IN dated 12/26/02
	 Markem
	  	Invoice#848225 dated 2/5/03
	 Pack West
	  	Invoice#13788 dated 3/28/03
	 Ron Preston Prom.
	  	Invoice#033-31-dated 4/14/03
	 EuipNet Direct
	  	Invoice# 12732 dated 4/24/03
	 Sunset Packaging Co.
	  	Invoice#NA62605 dated 6/26/03
	 Alltech
	  	Invoice#898124 dated 6/30/04
	 Dl Pharma Tech
	  	Invoice#2235 dated 6/23/03
	 Agilent Technologies
	  	Invoice# 100808044 dated 6/25/03
	 Merritt-Pac
	  	Invoice#30234 dated 4/25/03
	 Scottish Ent.
	  	Invoice#2089 dated 5/19/03
	 PDC International
	  	Invoice#NA62605 dated 8/31/03
	 Marburg Ind.
	  	Invoice#9951 dated 11/4/03
	 IMA
	  	Invoice#IM27009-IN dated 10/31/03
	 IMA
	  	Invoice#IM27462-IN dated 11/19/03
	 Bran+Luebbe
	  	Invoice#32396 dated 11/6/03
	 Kaps-All
	  	Invoice#39206 dated 12/3/03
	 Kaps-All
	  	Invoice# 39198 dated 11/26/03
	 San Diego Crane
	  	Invoice#5436 dated 11/4/03
	 Ron Preston Prom.
	  	Invoice#219 dated 1/5/04
	 Advanced Air
	  	Invoice#11286 dated 2/19/04
	 Dynamold Int.
	  	Invoice#275-729 dated 11/12/02
	 Dynamold Int.
	  	Invoice#275-730 dated 11/12/02
	 Dynamold Int.
	  	Invoice#275-732 dated 11/1/02
	 Dynamold Int.
	  	Invoice#275-733 dated 11/1/02
	 Dynamold Int.
	  	Invoice#275-836 dated 7/17/03
	 Heat and Control
	  	Invoice#90100940 dated 3/12/04
	 SBC
	  	Invoice#276-235114 dated 11/13/03
	 SBC
	  	Invoice#276-146761 dated 3/8/04
	 SBC
	  	Invoice#276-138275 dated 12/17/03
	 SBC
	  	Invoice#276-138446 dated 12/18/03
	 Ken Grody Ford
	  	Quote from Ken Grody dated 11/21/03 referencing One(1) Used 2002 Ford Truck
	 John Wayne
	  	BOS dated 2/10/04 referecing One (1) 1997 Used Ford Truck

  

 Debtor hereby authorizes Secured Party to insert factual information regarding the Equipment, most specifically the
Serial Number or VIN, into this Equipment Description. 
  
 Dated: May 10,
2004 
  

			
	Debtor: Natural Alternatives International, Inc.
		
	By:	 	/s/ JOHN REAVES
	 	 	

	 Its:
	 	CFO

  

			
	WELLS FARGO	  	 SECURITY AGREEMENT
 EQUIPMENT AND FIXTURES

  
 1. GRANT OF SECURITY INTEREST. For
valuable consideration, the undersigned Natural Alternatives International, Inc., or any of them (“Debtor”), hereby grants and transfers to WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”) a security interest in all goods,
tools, machinery, furnishings, furniture and other equipment and fixtures, now or at any time hereafter, and prior to the termination hereof, owned or acquired by Debtor, wherever located, whether in the possession of Debtor or any other person and
whether located on Debtor’s property or elsewhere, and all improvements, replacements, accessions and additions thereto and embedded software included therein (collectively called “Collateral”), and including all of the foregoing
which are now or hereafter affixed or to be affixed to, and whether or not severed and removed from, the real property described on Schedule 1 attached hereto and incorporated herein by this reference, together with whatever is receivable or
received when any of the Collateral or proceeds thereof are sold, leased, collected, exchanged or otherwise disposed of, whether such disposition is voluntary or involuntary, including without limitation, (a) all accounts, contract rights, chattel
paper (whether electronic or tangible), instruments, promissory notes, documents, general intangibles, payment intangibles and other rights to payment of every kind now or at any time hereafter arising from any such sale, lease, collection, exchange
or other disposition of any of the foregoing, (b) all rights to payment, including returned premiums, with respect to any insurance relating to any of the foregoing, and (c) all rights to payment with respect to any claim or cause of action
affecting or relating to any of the foregoing (hereinafter called “Proceeds”). 
  
 2. OBLIGATIONS SECURED. The obligations secured hereby are the payment and performance of: (a) all present and future Indebtedness of Debtor to Bank; (b) all obligations of Debtor and rights of Bank under this
Agreement; and (c) all present and future obligations of Debtor to Bank of other kinds. The word “Indebtedness” is used herein in its most comprehensive sense and includes any and all advances, debts, obligations and liabilities of Debtor,
or any of them, heretofore, now or hereafter made, incurred or created, whether voluntary or involuntary and however arising, whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined, and whether Debtor
may be liable individually or jointly, or whether recovery upon such Indebtedness may be or hereafter becomes unenforceable. 
  
 3. TERMINATION. This Agreement will terminate upon the performance of all obligations of Debtor to Bank, including without limitation, the payment of all Indebtedness of
Debtor to Bank, and the termination of all commitments of Bank to extend credit to Debtor, existing at the time Bank receives written notice from Debtor of the termination of this Agreement. 
  
 4. OBLIGATIONS OF BANK. Bank has no obligation to make any loans hereunder. Any money
received by Bank in respect of the Collateral may be deposited, at Bank’s option, into a non-interest bearing account over which Debtor shall have no control, and the same shall, for all purposes, be deemed Collateral hereunder. 
  
 5. REPRESENTATIONS AND WARRANTIES. Debtor represents and warrants to Bank that: (a)
Debtor’s legal name is exactly as set forth on the first page of this Agreement, and all of Debtor’s organizational documents or agreements delivered to Bank are complete and accurate in every respect; (b) Debtor is the owner and has
possession or control of the Collateral and Proceeds; (c) Debtor has the exclusive right to grant a security interest in the Collateral and Proceeds; (d) all Collateral and Proceeds are genuine, free from liens, adverse claims, setoffs, default,
prepayment, defenses and conditions precedent of any kind or character, except the lien created hereby or as otherwise agreed to by Bank, or heretofore disclosed by Debtor to Bank, in writing; (e) all statements contained herein are true and
complete in all material respects; (f) no financing statement covering any of the Collateral or Proceeds, and naming any secured party other than Bank, is on file in any public office; and (g) Debtor is not in the business of selling goods of the
kind included within the Collateral subject to this Agreement, and Debtor acknowledges that no sale or other disposition of any Collateral, including without limitation, any Collateral which Debtor may deem to be surplus, has been or shall be
consented to or acquiesced in by Bank, except as specifically set forth in writing by Bank. 
  

					
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 6. COVENANTS OF DEBTOR. 
  
 6.1 Debtor Agrees in general: (a) to pay Indebtedness secured hereby when due; (b) to indemnify Bank against all losses, claims, demands, liabilities and expenses of
every kind caused by property subject hereto; (c) to pay all costs and expenses, including reasonable attorneys’ fees, incurred by Bank in the perfection and preservation of the Collateral or Bank’s interest therein and/or the realization,
enforcement and exercise of Bank’s rights, powers and remedies hereunder; (d) to permit Bank to exercise its powers; (e) to execute and deliver such documents as Bank deems necessary to create, perfect and continue the security interests
contemplated hereby; (f) not to change its name, and as applicable, its chief executive office, its principal residence or the jurisdiction in which it is organized and/or registered without giving Bank prior written notice thereof; (g) not to
change the places where Debtor keeps any Collateral or Debtor’s records concerning the Collateral and Proceeds without giving Bank prior written notice of the address to which Debtor is moving same; and (h) to cooperate with Bank in perfecting
all security interests granted herein and in obtaining such agreements from third parties as Bank deems necessary, proper or convenient in connection with the preservation, perfection or enforcement of any of its rights hereunder. 
  
 6.2 Debtor agrees with regard to the Collateral and Proceeds, unless Bank agrees otherwise in
writing: (a) that Bank is authorized to file financing statements in the name of Debtor to perfect Bank’s security interest in Collateral and Proceeds; (b) to insure the Collateral with Bank named as loss payee, in form, substance and amounts,
under agreements, against risks and liabilities, and with insurance companies satisfactory to Bank; (c) to operate the Collateral in accordance with all applicable statutes, rules and regulations relating to the use and control thereof, and not to
use the Collateral for any unlawful purpose or in any way that would void any insurance required to be carried in connection therewith; (d) not to permit any security interest in or lien on the Collateral or Proceeds, including without limitation,
liens arising from repairs to or storage of the Collateral, except in favor of Bank; (e) to pay when due all license fees, registration fees and other charges in connection with any Collateral; (f) not to remove the Collateral from Debtor’s
premises unless the Collateral consists of mobile goods as defined in the California Uniform Commercial Code, in which case Debtor agrees not to remove or permit the removal of the Collateral from its state of domicile for a period in excess of 30
calendar days; (g) not to sell, hypothecate or otherwise dispose of, nor permit the transfer by operation of law of, any of the Collateral or Proceeds or any interest therein; (h) not to rent, lease or charter the Collateral; (i) to permit Bank to
inspect the Collateral at any time; (j) to keep, in accordance with generally accepted accounting principles, complete and accurate records regarding all Collateral and Proceeds, and to permit Bank to inspect the same and make copies thereof at any
reasonable time; (k) if requested by Bank, to receive and use reasonable diligence to collect Proceeds, in trust and as the property of Bank, and to immediately endorse as appropriate and deliver such Proceeds to Bank daily in the exact form in
which they are received together with a collection report in form satisfactory to Bank; (l) not to commingle Proceeds or collections thereunder with other property; (m) to give only normal allowances and credits and to advise Bank thereof
immediately in writing if they affect any Collateral or Proceeds in any material respect; (n) in the event Bank elects to receive payments of Proceeds hereunder, to pay all expenses incurred by Bank in connection therewith, including expenses of
accounting, correspondence, collection efforts, reporting to account or contract debtors, filing, recording, record keeping and expenses incidental thereto; and (o) to provide any service and do any other acts which may be necessary to maintain,
preserve and protect all Collateral and, as appropriate and applicable, to keep the Collateral in good and saleable condition and repair, to deal with the Collateral in accordance with the standards and practices adhered to generally by owners of
like property, and to keep all Collateral and Proceeds free and clear of all defenses, rights of offset and counterclaims. 
  
 7. POWERS OF BANK. Debtor appoints Bank its true attorney-in-fact to perform any of the following powers, which are coupled with an interest, are irrevocable until
termination of this Agreement and may be exercised from time to time by Bank’s officers and employees, or any of them, whether or not Debtor is in default: (a) to perform any obligation of Debtor hereunder in Debtor’s name or otherwise;
(b) to give notice to account debtors or others of Bank’s rights in the Collateral and Proceeds, to enforce or forebear from enforcing the same and make extension or modification agreements with respect thereto; (c) to release persons liable on
Proceeds and to give receipts and acquittances and compromise disputes in connection therewith; (d) to release or substitute security; (e) to resort to security in any order; (f) to prepare, execute, file, record or deliver notes, assignments,
schedules, designation statements, financing statements, 

  

					
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	62596, #6411046333	  	 	  	 

 
continuation statements, termination statements, statements of assignment, applications for registration or like papers to perfect, preserve or release
Bank’s interest in the Collateral and Proceeds; (g) to receive, open and read mail addressed to Debtor; (h) to take cash, instruments for the payment of money and other property to which Bank is entitled; (i) to verify facts concerning the
Collateral and Proceeds by inquiry of obligors thereon, or otherwise, in its own name or a fictitious name; (j) to endorse, collect, deliver and receive payment under instruments for the payment of money constituting or relating to Proceeds; (k) to
prepare, adjust, execute, deliver and receive payment under insurance claims, and to collect and receive payment of and endorse any instrument in payment of loss or returned premiums or any other insurance refund or return, and to apply such amounts
received by Bank, at Bank’s sole option, toward repayment of the Indebtedness or replacement of the Collateral; (l) to exercise all rights, powers and remedies which Debtor would have, but for this Agreement, with respect to all Collateral and
Proceeds subject hereto; (m) to enter onto Debtor’s premises in inspecting the Collateral; and (n) to do all acts and things and execute all documents in the name of Debtor or otherwise, deemed by Bank as necessary, proper and convenient in
connection with the preservation, perfection or enforcement of its rights hereunder. 
  
 8. PAYMENT OF PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS. Debtor agrees to pay, prior to delinquency, all insurance premiums, taxes, charges, liens and assessments against the Collateral and Proceeds, and upon the failure of Debtor to
do so, Bank at its option may pay any of them and shall be the sole judge of the legality or validity thereof and the amount necessary to discharge the same. Any such payments made by Bank shall be obligations of Debtor to Bank, due and payable
immediately upon demand, together with interest at a rate determined in accordance with the provisions of this Agreement, and shall be secured by the Collateral and Proceeds, subject to all terms and conditions of this Agreement. 
  
 9. EVENTS OF DEFAULT. The occurrence of any of the following shall constitute an “Event
of Default” under this Agreement: (a) any default in the payment or performance of any obligation, or any defined event of default, under (i) any contract or instrument evidencing any Indebtedness, or (ii) any other agreement between Debtor and
Bank, including without limitation any loan agreement, relating to or executed in connection with any Indebtedness; (b) any representation or warranty made by Debtor herein shall prove to be incorrect, false or misleading in any material respect
when made; (c) Debtor shall fail to observe or perform any obligation or agreement contained herein; (d) any impairment of the rights of Bank in any Collateral or Proceeds or any attachment or like levy on any property of Debtor; and (e) Bank, in
good faith, believes any or all of the Collateral and/or Proceeds to be in danger of substantial misuse, dissipation, commingling, loss, theft, damage or destruction, or otherwise in substantial jeopardy or materially unsatisfactory in character or
value. 
  
 10. REMEDIES. Upon the occurrence of any Event of Default, Bank shall
have the right to declare immediately due and payable all or any Indebtedness secured hereby and to terminate any commitments to make loans or otherwise extend credit to Debtor. Bank shall have all other rights, powers, privileges and remedies
granted to a secured party upon default under the California Uniform Commerical Code or otherwise provided by law, including without limitation, the right (a) to contact all persons obligated to Debtor on any Collateral or Proceeds and to instruct
such persons to deliver all Collateral and/or Proceeds directly to Bank, and (b) to sell, lease, license or otherwise dispose of any or all Collateral. All rights, powers, privileges and remedies of Bank shall be cumulative. No delay, failure or
discontinuance of Bank in exercising any right, power, privilege or remedy hereunder shall affect or operate as a waiver of such right, power, privilege or remedy; nor shall any single or partial exercise of any such right, power, privilege or
remedy preclude, waive or otherwise affect any other or further exercise thereof or the exercise of any other right, power, privilege or remedy. Any waiver, permit, consent or approval of any kind by Bank of any default hereunder, or any such waiver
of any provisions or conditions hereof, must be in writing and shall be effective only to the extent set forth in writing. It is agreed that public or private sales or other dispositions, for cash or on credit, to a wholesaler or retailer or
investor, or user of property of the types subject to this Agreement, or public auctions, are all commercially reasonable since differences in the prices generally realized in the different kinds of dispositions are ordinarily offset by the
differences in the costs and credit risks of such dispositions. 
  
 While an Event
of Default exists: (a) Debtor will deliver to Bank from time to time, as requested by Bank, current lists of all Collateral and Proceeds; (b) Debtor will not dispose of any Collateral or Proceeds except on 

  

					
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terms approved by Bank; (c) at Bank’s request. Debtor will assemble and deliver all Collateral and Proceeds, and books and records pertaining thereto,
to Bank at a reasonably convenient place designated by Bank; and (d) Bank may, without notice to Debtor, enter onto Debtor’s premises and take possession of the Collateral. Debtor further agrees that Bank shall have no obligation to process or
prepare any Collateral for sale or other disposition. 
  
 11. DISPOSITION OF
COLLATERAL AND PROCEEDS; TRANSFER OF INDEBTEDNESS. In disposing of Collateral hereunder, Bank may disclaim all warranties of title, possession, quiet enjoyment and the like. Any proceeds of any disposition of any Collateral or Proceeds, or any part
thereof, may be applied by Bank to the payment of expenses incurred by Bank in connection with the foregoing, including reasonable attorneys’ fees, and the balance of such proceeds may be applied by Bank toward the payment of the Indebtedness
in such order of application as Bank may from time to time elect. Upon the transfer of all or any part of the Indebtedness, Bank may transfer all or any part of the Collateral or Proceeds and shall be fully discharged thereafter from all liability
and responsibility with respect to any of the foregoing so transferred, and the transferee shall be vested with all rights and powers of Bank hereunder with respect to any of the foregoing so transferred; but with respect to any Collateral or
Proceeds not so transferred Bank shall retain all rights, powers, privileges and remedies herein given. 
  
 12. STATUTE OF LIMITATIONS. Until all Indebtedness shall have been paid in full and all commitments by Bank to extend credit to Debtor have been terminated, the power of sale or other disposition and all other rights,
powers, privileges and remedies granted to Bank hereunder shall continue to exist and may be exercised by Bank at any time and from time to time irrespective of the fact that the Indebtedness or any part thereof may have become barred by any statute
of limitations, or that the personal liability of Debtor may have ceased, unless such liability shall have ceased due to the payment in full of all Indebtedness secured hereunder. 
  
 13. MISCELLANEOUS. When there is more than one Debtor named herein: (a) the word “Debtor” shall mean all or any one or more of
them as the context requires; (b) the obligations of each Debtor hereunder are joint and several; and (c) until all Indebtedness shall have been paid in full, no Debtor shall have any right of subrogation or contribution, and each Debtor hereby
waives any benefit of or right to participate in any of the Collateral or Proceeds or any other security now or hereafter held by Bank. Debtor hereby waives any right to require Bank to (i) proceed against Debtor or any other person, (ii) proceed
against or exhaust any security from Debtor or any other person, (iii) perform any obligation of Debtor with respect to any Collateral or Proceeds, and (d) make any presentment or demand, or give any notice of nonpayment or nonperformance, protest,
notice of protest or notice of dishonor hereunder or in connection with any Collateral or Proceeds. Debtor further waives any right to direct the application of payments or security for any Indebtedness of Debtor or indebtedness of customers of
Debtor. 
  
 14. NOTICES. All notices, requests and demands required under this
Agreement must be in writing, addressed to Bank at the address specified in any other loan documents entered into between Debtor and Bank and to Debtor at the address of its chief executive office (or principal residence, if applicable) specified
below or to such other address as any party may designate by written notice to each other party, and shall be deemed to have been given or made as follows: (a) if personally delivered, upon delivery; (b) if sent by mail, upon the earlier of the date
of receipt or 3 days after deposit in the U. S. mail, first class and postage prepaid; and (c) if sent by telecopy, upon receipt. 
  
 15. COSTS, EXPENSES AND ATTORNEYS’ FEES. Debtor shall pay to Bank immediately upon demand the full amount of all payments, advances, charges, costs and expenses,
including reasonable attorneys’ fees (to include outside counsel fees and all allocated costs of Bank’s in-house counsel), expended or incurred by Bank in exercising any right, power, privilege or remedy conferred by this Agreement or in
the enforcement thereof, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Bank or any other person) relating to Debtor or in any way affecting any of the Collateral or Bank’s ability to exercise any of its rights or remedies with 

  

					
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	62596, #6411046333	  	 	  	 

 
respect thereto. All of the foregoing shall be paid by Debtor with interest from the date of demand until paid in full at a rate per annum equal to the
greater of ten percent (10%) or Bank’s Prime Rate in effect from time to time. 
  
 16. SUCCESSORS; ASSIGNS; AMENDMENT. This Agreement shall be binding upon and inure to the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the parties, and may be amended or modified only in
writing signed by Bank and Debtor. 
  
 17. OBLIGATIONS OF MARRIED PERSONS. Any
married person who signs this Agreement as Debtor hereby expressly agrees that recourse may be had against his or her separate property for all his or her Indebtedness to Bank secured by the Collateral and Proceeds under this Agreement. 

 
 18. SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall be held to be
prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or any remaining provisions of this Agreement. 

 
 19. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with
the laws of the State of California. 
  
 Debtor warrants that Debtor is an
organization registered under the laws of the State of Delaware. 
  
 Debtor
warrants that its chief executive office (or principal residence, if applicable) is located at the following address: 1185 Linda Vista Drive, San Marcos, CA 92069 
  
 Debtor warrants that the Collateral (except goods in transit) is located or domiciled at the following additional addresses: 1211-C Park
Center Drive, Vista, CA 92083; 1215 Park Center Drive, Vista, CA 92083 
  
 IN
WITNESS WHEREOF, this Agreement has been duly executed as of May 1, 2004.  
  

			
	Natural Alternatives International, Inc.
		
	By:	 	 /s/ John Reaves

	 	 	

	 	 	 John Reaves, Chief Financial Officer

		
	By:	 	 /s/ Randell Weaver

	 	 	

	 	 	 Randell Weaver, President

  

					
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 /s/ JR 
 ---------------- 
 Please Initial 
 /s/ RW 
  
 SCHEDULE 1

 TO 
 SECURITY
AGREEMENT 
  
 This Schedule 1 is attached to and made a part of that certain
Security Agreement dated as of May 1, 2004, executed by Natural Alternatives International, Inc. (“Debtor”) for the benefit of WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”). 
  
 DESCRIPTION OF REAL PROPERTY: 
  
 1185 Linda Vista Drive; San Marcos, CA 92069 
  
 PARCEL 1: 
  
 AN UNDIVIDED 37.11 % INTEREST IN AND TO LOT 1 OF SAN MARCOS TRACT 255, IN THE CITY OF SAN MARCOS, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO
MAP THEREOF NO. 10841, AS FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, ON FEBRUARY 10, 1984. 
  
 EXCEPTING THEREFROM ALL UNITS AS SHOWN ON THAT CERTAIN CONDOMINIUM PLAN ENTITLED “OLD MILL PARK SAN MARCOS II” RECORDED APRIL 3, 1984 AS FILE
NO. 84-122110, OFFICIAL RECORDS AND DEFINED IN THE DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS RECORDED MARCH 16, 1984 AS FILE NO. 84-097363, OFFICIAL RECORDS. 
  
 PARCEL 2: 
  
 UNITS 5B, 6A, 6B, 7A, 7B, 8A AND 8B AS SHOWN ON THAT CERTAIN CONDOMINIUM PLAN REFERRED TO IN PARCEL 1 ABOVE. 
  
 PARCEL 3: 
  
 A RECIPROCAL ACCESS EASEMENT FOR INGRESS, EGRESS AND INCIDENTAL PURPOSES
THERETO OVER THE WESTERLY 14.00 FEET OF, PARCEL 2 OF PARCEL MAP NO. 12792, IN THE CITY OF SAN MARCOS; COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, JULY 6, 1983 AS FILE NO. 83-229209,
OFFICIAL RECORDS. 
  
 1211-C Park Center Dr.; Vista, CA & 1215
Park Center Dr. Vista, CA 92083 
  
 PARCEL 1: 
  
 PARCEL B OF PARCEL MAP NO. 16047, IN THE CITY OF VISTA, COUNTY OF SAN DIEGO,
STATE OF CALIFORNIA, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, APRIL 10, 1990 AS FILE NO. 90-193067 OF OFFICIAL RECORDS. 
  
 PARCEL 2: 
  
 PARCEL C-1 OF PARCEL MAP NO. 17010, IN THE CITY OF VISTA, COUNTY OF SAN . DIEGO, STATE OF CALIFORNIA, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN
DIEGO COUNTY ON DECEMBER 2, 1992 AS FILE NO. 1992-0774240 OF OFFICIAL RECORDS. 
  

			
	WELLS FARGO	  	 CONTINUING SECURITY AGREEMENT
 RIGHTS TO PAYMENT AND INVENTORY

  
 1. GRANT OF SECURITY INTEREST. For
valuable consideration, the undersigned Natural Alternatives International, Inc., or any of them (“Debtor”), hereby grants and transfers to WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”) a security interest in all
accounts, deposit accounts, chattel paper (whether electronic or tangible), instruments, promissory notes, documents, general intangibles, payment intangibles, software, letter of credit rights, health-care insurance receivables and other rights to
payment (collectively called “Rights to Payments”), now existing or at any time hereafter, and prior to the termination hereof, arising (whether they arise from the sale, lease or other disposition of inventory or from performance of
contracts for service, manufacture, construction, repair or otherwise or from any other source whatsoever), including all securities, guaranties, warranties, indemnity agreements, insurance policies, supporting obligations and other agreements
pertaining to the same or the property described therein, and in all goods returned by or repossessed from Debtor’s customers, together with a security interest in all inventory, goods held for sale or lease or to be furnished under contracts
for service, goods so leased or furnished, raw materials, component parts and embedded software, work in process or materials used or consumed in Debtor’s business and all warehouse receipts, bills of lading and other documents evidencing goods
owned or acquired by Debtor, and all goods covered thereby, now or at any time hereafter, and prior to the termination hereof, owned or acquired by Debtor, wherever located, and all products thereof (collectively called “Inventory”),
whether in the possession of Debtor, warehousemen, bailees or any other person, or in process of delivery and whether located at Debtor’s places of business or elsewhere (with all Rights to Payment and Inventory referred to herein collectively
as the “Collateral”), together with whatever is receivable or received when any of the Collateral or proceeds thereof are sold, leased, collected, exchanged or otherwise disposed of, whether such disposition is voluntary or involuntary,
including without limitation, all rights to payment, including returned premiums, with respect to any insurance relating to any of the foregoing, and all rights to payment with respect to any claim or cause of action affecting or relating to any of
the foregoing (hereinafter called “Proceeds”). 
  
 2. OBLIGATIONS
SECURED. The obligations secured hereby are the payment and performance of: (a) all present and future Indebtedness of Debtor to Bank; (b) all obligations of Debtor and rights of Bank under this Agreement; and (c) all present and future obligations
of Debtor to Bank of other kinds. The word “Indebtedness” is used herein in its most comprehensive sense and includes any and all advances, debts, obligations and liabilities of Debtor, or any of them, heretofore, now or hereafter made,
incurred or created, whether voluntary or involuntary and however arising, whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined, and whether Debtor may be liable individually or jointly, or whether
recovery upon such Indebtedness may be or hereafter becomes unenforceable. 
  
 3.
TERMINATION. This Agreement will terminate upon the performance of all obligations of Debtor to Bank, including without limitation, the payment of all Indebtedness of Debtor to Bank, and the termination of all commitments of Bank to extend credit to
Debtor, existing at the time Bank receives written notice from Debtor of the termination of this Agreement. 
  
 4. OBLIGATIONS OF BANK. Bank has no obligation to make any loans hereunder. Any money received by Bank in respect of the Collateral may be deposited, at Bank’s option, into a non-interest bearing account over
which Debtor shall have no control, and the same shall, for all purposes, be deemed Collateral hereunder. 
  
 5. REPRESENTATIONS AND WARRANTIES. Debtor represents and warrants to Bank that: (a) Debtor’s legal name is exactly as set forth on the first page of this Agreement, and all of Debtor’s organizational
documents or agreements delivered to Bank are complete and accurate in every respect; (b) Debtor is the owner and has possession or control of the Collateral and Proceeds; (c) Debtor has the exclusive right to grant a security interest in the
Collateral and Proceeds; (d) all Collateral and Proceeds are genuine, free from liens, adverse claims, setoffs, default, prepayment, defenses and conditions precedent of any kind or character, 

  

					
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except the lien created hereby or as otherwise agreed to by Bank, or heretofore disclosed by Debtor to Bank, in writing; (e) all statements contained herein
and, where applicable, in the Collateral are true and complete in all material respects; (f) no financing statement covering any of the Collateral or Proceeds, and naming any secured party other than Bank, is on file in any public office; (g) all
persons appearing to be obligated on Rights to Payment and Proceeds have authority and capacity to contract and are bound as they appear to be; (h) all property subject to chattel paper has been properly registered and filed in compliance with law
and to perfect the interest of Debtor in such property; and (i) all Rights to Payment and Proceeds comply with all applicable laws concerning form, content and manner of preparation and execution, including where applicable Federal Reserve
Regulation Z and any State consumer credit laws. 
  
 6. COVENANTS OF DEBTOR.

  
 6.1 Debtor Agrees in general: (a) to pay Indebtedness secured hereby when due;
(b) to indemnify Bank against all losses, claims, demands, liabilities and expenses of every kind caused by property subject hereto; (c) to pay all costs and expenses, including reasonable attorneys’ fees, incurred by Bank in the perfection and
preservation of the Collateral or Bank’s interest therein and/or the realization, enforcement and exercise of Bank’s rights, powers and remedies hereunder; (d) to permit Bank to exercise its powers; (e) to execute and deliver such
documents as Bank deems necessary to create, perfect and continue the security interests contemplated hereby; (f) not to change its name, and as applicable, its chief executive office, its principal residence or the jurisdiction in which it is
organized and/or registered without giving Bank prior written notice thereof; (g) not to change the places where Debtor keeps any Collateral or Debtor’s records concerning the Collateral and Proceeds without giving Bank prior written notice of
the address to which Debtor is moving same; and (h) to cooperate with Bank in perfecting all security interests granted herein and in obtaining such agreements from third parties as Bank deems necessary, proper or convenient in connection with the
preservation, perfection or enforcement of any of its rights hereunder. 
  
 6.2
Debtor agrees with regard to the Collateral and Proceeds, unless Bank agrees otherwise in writing: (a) that Bank is authorized to file financing statements in the name of Debtor to perfect Bank’s security interest in Collateral and Proceeds;
(b) to insure Inventory and, where applicable, Rights to Payment with Bank named as loss payee, in form, substance and amounts, under agreements, against risks and liabilities, and with insurance companies satisfactory to Bank; (c) not to use any
Inventory for any unlawful purpose or in any way that would void any insurance required to be carried in connection therewith; (d) not to remove Inventory from Debtor’s premises, except for deliveries to buyers in the ordinary course of
Debtor’s business and except Inventory which consists of mobile goods as defined in the California Uniform Commercial Code, in which case Debtor agrees not to remove or permit the removal of the Inventory from its state of domicile for a period
in excess of 30 calendar days; (e) not to permit any security interest in or lien on the Collateral or Proceeds, including without limitation, liens arising from the storage of Inventory, except in favor of Bank; (f) not to sell, hypothecate or
otherwise dispose of, nor permit the transfer by operation of law of, any of the Collateral or Proceeds or any interest therein, except sales of Inventory to buyers in the ordinary course of Debtor’s business; (g) to furnish reports to Bank of
all acquisitions, returns, sales and other dispositions of the Inventory in such form and detail and at such times as Bank may require; (h) to permit Bank to inspect the Collateral at any time; (i) to keep, in accordance with generally accepted
accounting principles, complete and accurate records regarding all Collateral and Proceeds, and to permit Bank to inspect the same and make copies thereof at any reasonable time; (j) if requested by Bank, to receive and use reasonable diligence to
collect Rights to Payment and Proceeds, in trust and as the property of Bank, and to immediately endorse as appropriate and deliver such Rights to Payment and Proceeds to Bank daily in the exact form in which they are received together with a
collection report in form satisfactory to Bank; (k) not to commingle Rights to Payment, Proceeds or collections thereunder with other property; (l) to give only normal allowances and credits and to advise Bank thereof immediately in writing if they
affect any Rights to Payment or Proceeds in any material respect; (m) on demand, to deliver to Bank returned property resulting from, or payment equal to, such allowances or credits on any Rights to Payment or Proceeds or to execute such documents
and do such other things as Bank may reasonably request for the purpose of perfecting, preserving and enforcing its security interest in such returned property; (n) from time to time, when requested by Bank, to prepare and deliver a schedule of all
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to Bank all accounts, contracts, leases and other chattel paper, instruments, documents and other evidences thereof; (o) in the event Bank elects to receive
payments of Rights to Payment or Proceeds hereunder, to pay all expenses incurred by Bank in connection therewith, including expenses of accounting, correspondence, collection efforts, reporting to account or contract debtors, filing, recording,
record keeping and expenses incidental thereto; and (p) to provide any service and do any other acts which may be necessary to maintain, preserve and protect all Collateral and, as appropriate and applicable, to keep all Collateral in good and
saleable condition in accordance with the standards and practices adhered to generally by users and manufacturers of like property, and to keep all Collateral and Proceeds free and clear of all defenses, rights of offset and counterclaims.

  
 7. POWERS OF BANK. Debtor appoints Bank its true attorney-in-fact to perform
any of the following powers, which are coupled with an interest, are irrevocable until termination of this Agreement and may be exercised from time to time by Bank’s officers and employees, or any of them, whether or not Debtor is in default:
(a) to perform any obligation of Debtor hereunder in Debtor’s name or otherwise; (b) to give notice to account debtors or others of Bank’s rights in the Collateral and Proceeds, to enforce or forebear from enforcing the same and make
extension or modification agreements with respect thereto; (c) to release persons liable on Proceeds and to give receipts and acquittances and compromise disputes in connection therewith; (d) to release or substitute security; (e) to resort to
security in any order; (f) to prepare, execute, file, record or deliver notes, assignments, schedules, designation statements, financing statements, continuation statements, termination statements, statements of assignment, applications for
registration or like papers to perfect, preserve or release Bank’s interest in the Collateral and Proceeds; (g) to receive, open and read mail addressed to Debtor; (h) to take cash, instruments for the payment of money and other property to
which Bank is entitled; (i) to verify facts concerning the Collateral and Proceeds by inquiry of obligors thereon, or otherwise, in its own name or a fictitious name; (j) to endorse, collect, deliver and receive payment under instruments for the
payment of money constituting or relating to Proceeds; (k) to prepare, adjust, execute, deliver and receive payment under insurance claims, and to collect and receive payment of and endorse any instrument in payment of loss or returned premiums or
any other insurance refund or return, and to apply such amounts received by Bank, at Bank’s sole option, toward repayment of the Indebtedness or replacement of the Collateral; (l) to exercise all rights, powers and remedies which Debtor would
have, but for this Agreement, with respect to all Collateral and Proceeds subject hereto; (m) to enter onto Debtor’s premises in inspecting the Collateral; (n) to make withdrawals from and to close deposit accounts or other accounts with any
financial institution, wherever located, into which Proceeds may have been deposited, and to apply funds so withdrawn to payment of the Indebtedness; (o) to preserve or release the interest evidenced by chattel paper to which Bank is entitled
hereunder and to endorse and deliver any evidence of title incidental thereto; and (p) to do all acts and things and execute all documents in the name of Debtor or otherwise, deemed by Bank as necessary, proper and convenient in connection with the
preservation, perfection or enforcement of its rights hereunder. 
  
 8. PAYMENT OF
PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS. Debtor agrees to pay, prior to delinquency, all insurance premiums, taxes, charges, liens and assessments against the Collateral and Proceeds, and upon the failure of Debtor to do so, Bank at its
option may pay any of them and shall be the sole judge of the legality or validity thereof and the amount necessary to discharge the same. Any such payments made by Bank shall be obligations of Debtor to Bank, due and payable immediately upon
demand, together with interest at a rate determined in accordance with the provisions of this Agreement, and shall be secured by the Collateral and Proceeds, subject to all terms and conditions of this Agreement. 
  
 9. EVENTS OF DEFAULT. The occurrence of any of the following shall constitute an “Event
of Default” under this Agreement: (a) any default in the payment or performance of any obligation, or any defined event of default, under (i) any contract or instrument evidencing any Indebtedness, or (ii) any other agreement between Debtor and
Bank, including without limitation any loan agreement, relating to or executed in connection with any Indebtedness; (b) any representation or warranty made by Debtor herein shall prove to be incorrect, false or misleading in any material respect
when made; (c) Debtor shall fail to observe or perform any obligation or agreement contained herein; (d) any impairment of the rights of Bank in any Collateral or Proceeds or any attachment or like levy on any property of Debtor; and (e) Bank, in
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all of the Collateral and/or Proceeds to be in danger of substantial misuse, dissipation, commingling, loss, theft, damage or destruction, or otherwise in
substantial jeopardy or materially unsatisfactory in character or value. 
  
 10.
REMEDIES. Upon the occurrence of any Event of Default, Bank shall have the right to declare immediately due and payable all or any Indebtedness secured hereby and to terminate any commitments to make loans or otherwise extend credit to Debtor. Bank
shall have all other rights, powers, privileges and remedies granted to a secured party upon default under the California Uniform Commercial Code or otherwise provided by law, including without limitation, the right (a) to contact all persons
obligated to Debtor on any Collateral or Proceeds and to instruct such persons to deliver all Collateral and/or Proceeds directly to Bank, and (b) to sell, lease, license or otherwise dispose of any or all Collateral. All rights, powers, privileges
and remedies of Bank shall be cumulative. No delay, failure or discontinuance of Bank in exercising any right, power, privilege or remedy hereunder shall affect or operate as a waiver of such right, power, privilege or remedy; nor shall any single
or partial exercise of any such right, power, privilege or remedy preclude, waive or otherwise affect any other or further exercise thereof or the exercise of any other right, power, privilege or remedy. Any waiver, permit, consent or approval of
any kind by Bank of any default hereunder, or any such waiver of any provisions or conditions hereof, must be in writing and shall be effective only to the extent set forth in writing. It is agreed that public or private sales or other dispositions,
for cash or on credit, to a wholesaler or retailer or investor, or user of property of the types subject to this Agreement, or public auctions, are all commercially reasonable since differences in the prices generally realized in the different kinds
of dispositions are ordinarily offset by the differences in the costs and credit risks of such dispositions. 
  
 While an Event of Default exists: (a) Debtor will deliver to Bank from time to time, as requested by Bank, current lists of all Collateral and Proceeds; (b) Debtor will not dispose of any Collateral or Proceeds except
on terms approved by Bank; (c) at Bank’s request, Debtor will assemble and deliver all Collateral and Proceeds, and books and records pertaining thereto, to Bank at a reasonably convenient place designated by Bank; and (d) Bank may, without
notice to Debtor, enter onto Debtor’s premises and take possession of the Collateral. With respect to any sale by Bank of any Collateral subject to this Agreement, Debtor hereby expressly grants to Bank the right to sell such Collateral using
any or all of Debtor’s trademarks, trade names, trade name rights and/or proprietary labels or marks. Debtor further agrees that Bank shall have no obligation to process or prepare any Collateral for sale or other disposition. 
  
 11. DISPOSITION OF COLLATERAL AND PROCEEDS; TRANSFER OF INDEBTEDNESS. In disposing of
Collateral hereunder, Bank may disclaim all warranties of title, possession, quiet enjoyment and the like. Any proceeds of any disposition of any Collateral or Proceeds, or any part thereof, may be applied by Bank to the payment of expenses incurred
by Bank in connection with the foregoing, including reasonable attorneys’ fees, and the balance of such proceeds may be applied by Bank toward the payment of the Indebtedness in such order of application as Bank may from time to time elect.
Upon the transfer of all or any part of the Indebtedness, Bank may transfer all or any part of the Collateral or Proceeds and shall be fully discharged thereafter from all liability and responsibility with respect to any of the foregoing so
transferred, and the transferee shall be vested with all rights and powers of Bank hereunder with respect to any of the foregoing so transferred; but with respect to any Collateral or Proceeds not so transferred Bank shall retain all rights, powers,
privileges and remedies herein given. 
  
 12. STATUTE OF LIMITATIONS. Until all
Indebtedness shall have been paid in full and all commitments by Bank to extend credit to Debtor have been terminated, the power of sale or other disposition and all other rights, powers, privileges and remedies granted to Bank hereunder shall
continue to exist and may be exercised by Bank at any time and from time to time irrespective of the fact that the Indebtedness or any part thereof may have become barred by any statute of limitations, or that the personal liability of Debtor may
have ceased, unless such liability shall have ceased due to the payment in full of all Indebtedness secured hereunder. 
  
 13. MISCELLANEOUS. When there is more than one Debtor named herein: (a) the word “Debtor” shall mean all or any one or more of them as the context requires; (b)
the obligations of each Debtor hereunder are joint and several; and (c) until all Indebtedness shall have been paid in full, no Debtor shall have any right of 

  

					
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subrogation or contribution, and each Debtor hereby waives any benefit of or right to participate in any of the Collateral or Proceeds or any other security
now or hereafter held by Bank. Debtor hereby waives any right to require Bank to (i) proceed against Debtor or any other person, (ii) proceed against or exhaust any security from Debtor or any other person, (iii) perform any obligation of Debtor
with respect to any Collateral or Proceeds, and (d) make any presentment or demand, or give any notice of nonpayment or nonperformance, protest, notice of protest or notice of dishonor hereunder or in connection with any Collateral or Proceeds.
Debtor further waives any right to direct the application of payments or security for any Indebtedness of Debtor or indebtedness of customers of Debtor. 
  
 14. NOTICES. All notices, requests and demands required under this Agreement must be in writing, addressed to Bank at the address specified in any other loan documents
entered into between Debtor and Bank and to Debtor at the address of its chief executive office (or principal residence, if applicable) specified below or to such other address as any party may designate by written notice to each other party, and
shall be deemed to have been given or made as follows: (a) if personally delivered, upon delivery; (b) if sent by mail, upon the earlier of the date of receipt or 3 days after deposit in the U. S. mail, first class and postage prepaid; and (c) if
sent by telecopy, upon receipt. 
  
 15. COSTS, EXPENSES AND ATTORNEYS’ FEES.
Debtor shall pay to Bank immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including reasonable attorneys’ fees (to include outside counsel fees and all allocated costs of Bank’s in-house
counsel), expended or incurred by Bank in exercising any right, power, privilege or remedy conferred by this Agreement or in the enforcement thereof, whether incurred at the trial or appellate level, in an arbitration proceeding or
otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Bank or any other person) relating to Debtor or in any
way affecting any of the Collateral or Bank’s ability to exercise any of its rights or remedies with respect thereto. All of the foregoing shall be paid by Debtor with interest from the date of demand until paid in full at a rate per annum
equal to the greater of ten percent (10%) or Bank’s Prime Rate in effect from time to time. 
  
 16. SUCCESSORS; ASSIGNS; AMENDMENT. This Agreement shall be binding upon and inure to the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the parties, and may be
amended or modified only in writing signed by Bank and Debtor. 
  
 17. OBLIGATIONS
OF MARRIED PERSONS. Any married person who signs this Agreement as Debtor hereby expressly agrees that recourse may be had against his or her separate property for all his or her Indebtedness to Bank secured by the Collateral and Proceeds under this
Agreement. 
  
 18. SEVERABILITY OF PROVISIONS. If any provision of this Agreement
shall be held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or any remaining provisions of this
Agreement. 
  
 19. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California. 
  
 Debtor
warrants that Debtor is an organization registered under the laws of the State of Delaware. 
  
 Debtor warrants that its chief executive office (or principal residence, if applicable) is located at the following address: 1185 Linda Vista Drive, San Marcos, CA 92069 
  
 Debtor warrants that the Collateral (except goods in transit) is located or domiciled at the
following additional addresses: 1211-C Park Center Drive, Vista, CA 92083; 1215 Park Center Drive, Vista, CA 92083 
  

					
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 IN WITNESS WHEREOF, this Agreement has been duly executed as of May 1, 2004. 
  

			
	Natural Alternatives International, Inc.
		
	By:	 	 /s/ John Reaves

	 	 	

	 	 	 John Reaves, Chief Financial Officer

		
	By:	 	 /s/ Randell Weaver

	 	 	

	 	 	 Randell Weaver, President

  

					
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	62596, #6411046333First Amendment and Waiver to Amended and Restated Credit Agreement

 EXHIBIT 10.21 
  
 FIRST AMENDMENT AND WAIVER TO 
 AMENDED AND RESTATED CREDIT AGREEMENT 
  
 THIS FIRST AMENDMENT AND WAIVER TO AMENDED AND RESTATED CREDIT AGREEMENT (the “Amendment”) is made and dated as of April 1, 2004 by and among OSI SYSTEMS, INC., a California corporation (the
“Company”), the Lenders currently party to the Credit Agreement referred to below, the L/C Issuing Bank, the FX Lender and BANK OF THE WEST, as agent for the Lenders (in such capacity, the “Agent”). 
  
 RECITALS 
  
 A. Pursuant to that certain Amended and Restated Credit Agreement dated as of December 1, 2003 by and among the Company, the
Lenders, the L/C Issuing Bank, the FX Lender and the Agent (as amended, extended and replaced from time to time, the “Credit Agreement,” and with capitalized terms used herein and not otherwise defined used with the meanings given such
terms in the Credit Agreement), the Lenders agreed to extend credit to the Company on the terms and subject to the conditions set forth therein. 
  
 B. Following the Effective Date of the Credit Agreement, the Company has acquired the following new Subsidiaries: OSI Defense Systems, LLC, a Florida
limited liability company, Advanced Research & Applications Corp., a California corporation (“ARACOR”), and Spacelabs Medical, Inc., a Delaware corporation (collectively, the “New Subsidiaries”). 
  
 C. The Company has asked the Agent and the Lenders to: (1) modify the Credit
Agreement in certain respects, and (2) waive the Event of Default deemed to have occurred by virtue of the acquisition of ARACOR to have been in compliance with the provisions set forth in Paragraph 11(d) of the Credit Agreement when made,
and the Agent and the Lenders have agreed to do so on the terms and subject to the conditions set forth herein. 
  
 NOW, THEREFORE, in consideration of the foregoing Recitals and for other good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows: 
  
 AGREEMENT 
  
 1. Financial Covenants. To
reflect the agreement of the parties hereto to modify certain of the financial covenants applicable to the Company under the Credit Agreement, as of the First Amendment Effective Date (as defined in Paragraph 5 below), Paragraph 11(i)
of the Credit Agreement is hereby amended to read in its entirety as follows: 
  
 “11(i) Financial Covenants. 
  
 (1) Permit the Company’s consolidated Effective Tangible Net Worth as of any date to be less than $120,000,000.00. 
  
 (2) Permit the Company’s consolidated Effective Tangible Net Worth for any fiscal year of the Company to increase by less than
seventy five percent (75%) of the Company’s net profit for such fiscal year. 
  
 (3) Permit as of the end of any fiscal quarter, the Company’s ratio of Funded Debt to EBITDA on a consolidated basis, as of the end
of such fiscal quarter and the immediately preceding three fiscal quarters, to be greater than 2.50:1.00. 

 (4) Permit as of any date the Company’s ratio of consolidated current assets to
consolidated current liabilities, determined in accordance with GAAP, to be less than 1.25:1.00. 
  
 (5) Permit as of the end of any fiscal quarter, the Company’s net profit after taxes for such fiscal quarter determined in accordance
with GAAP (and in any event, excluding any extraordinary non-cash expenses that have no impact of future cash flows), to be less than $1.00. 
  
 (6) Permit the aggregate amount of Revolving Loans outstanding during any twelve (12) month period to fail to be reduced to $0 for less
than thirty (30) consecutive days during such period. 
  
 (7) Permit as of the end of any fiscal quarter, the ratio of: (i) the consolidated EBITDA of the Company for such fiscal quarter and the immediately preceding three fiscal quarters, to (ii) interest expense, determined in accordance with
GAAP plus the consolidated current portion of long term debt plus the current portion of capitalized leases determined in accordance with the Company’s balance sheet for such fiscal quarter and the immediately preceding three fiscal quarters,
to be less than 1.50:1.00. 
  
 (8) Permit as of
any date, intangibles shown on the Company’s balance sheet to exceed the total of intangibles shown on the Company’s balance sheet as of the fiscal year ended June 30, 2003 plus $35,000,000.00.” 
  
 2. Loan Request. To reflect the agreement of the parties hereto to
modify certain requirements applicable to requests for Revolving Loans under the Credit Agreement, the definition of the term “Loan Request” set forth in Paragraph 15 of the Credit Agreement is hereby amended to read in its entirety
as follows: 
  
 “‘Loan
Request’ shall mean a request for a Revolving Loan in form satisfactory to the Agent, which in any event will include a certificate executed by a Responsible Financial Officer of the Company stating the reason, source of repayment and
expected repayment date of such Revolving Loan.” 
  
 3.
Schedule of Guarantors; Schedule of Subsidiaries. To reflect the acquisition by the Company of the New Subsidiaries, Annex 4 and Schedule 9(i) to the Credit Agreement are hereby respectively replaced by Replacement Annex
4 and Replacement Schedule 9(i) attached hereto. 
  
 4. Waiver of Event of Default. The Agent and the Lenders hereby waive the Event of Default which arose under Paragraph 11(d) of the Credit Agreement upon the acquisition by the Company of ARACOR for a purchase price of
approximately $19,700,000 during the fiscal year ending December 31, 2003 (such acquisition causing the Company to be out of compliance with the restriction on acquisitions by the Company in any fiscal year to an amount not to exceed $15,000,000).
The Company acknowledges and agrees that such waiver is given on a one time basis and that nothing contained herein shall in any manner or to any extent constitute any agreement of the Agent or the Lenders: (a) to waive any other Event of Default or
Potential Default existing at the date hereof, whether of not the Agent and/or the Lenders knew or should have known of the existence of such Event of Default or Potential Default or (b) to waive any Event of Default occurring following the
execution and delivery of this Amendment, whether under Paragraph 11(d) of the Credit Agreement or otherwise. 
  

 2 

 5. Effective Date. This Amendment shall be effective as of the date first written above (the
“First Amendment Effective Date”) upon the date that the Agent shall have received: 
  
 (a) This Amendment, duly executed by all parties signatory hereto; 
  
 (b) From each of the New Subsidiaries, a Guaranty and a Guarantor Security Agreement, duly executed by all
parties signatory thereto; and 
  
 (c) Such
corporate resolutions, incumbency certificates and other authorizing documentation for the Company and the Guarantors, including, without limitation, the New Subsidiaries, as the Agent may request. 
  
 6. Reaffirmation of the Loan Documents. The Company and each of the
Guarantors, by executing this Amendment as provided below, hereby affirms and agrees that: (a) the execution and delivery by it of and the performance of its obligations under this Amendment shall not in any way amend, impair, invalidate or
otherwise affect any of its obligations under the Loan Documents to which it is party except to the extent expressly amended hereby, (b) the terms “Obligations” and “Guaranteed Obligations” as used in the Loan Documents include,
without limitation, the Obligations of Company under the Credit Agreement as amended by this Amendment, (c) except as expressly amended and waived hereby, the Loan Documents remain in full force and effect as written, and (d) each of the
representations and warranties set forth in Paragraph 9 of the Credit Agreement are true and correct as of the date of this Amendment. 
  
 7. Additional Representations and Warranties. The Company and each of the Guarantors, by executing this Amendment as provided below, hereby
represents and warrants to the Agent and the Lenders that: 
  
 (a) It has the requisite power and authority and the legal right to execute, deliver and perform this Amendment and has taken all necessary corporate action to authorize the execution, delivery and performance of this
Amendment. 
  
 (b) This Amendment has been duly
executed and delivered on its behalf and constitutes its legal, valid and binding obligation enforceable against it in accordance with its terms. 
  
 (c) There does not exist a Event of Default or Potential Default (other than any Event of Default which has been expressly waived by this
Amendment). 
  
 (d) Such Person has no existing
claims, counterclaims, defenses, personal or otherwise, or rights of setoff whatsoever with respect to any of the Loan Documents, and the Loan Documents to which such Person is party, as amended hereby, constitute valid, legal, binding and
enforceable obligations of such Person. 
  
 8. No Other
Amendment. Except as expressly amended hereby, the Credit Agreement and other Loan Documents shall remain in full force and effect as written. 
  
 9. Counterparts. This Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and
all of which when taken together shall constitute one and the same agreement. 
  
 [Signatures Page Following] 
  

 3 

 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the day and year
first above written. 
  

			
	 OSI SYSTEMS, INC., a California corporation

		
	 By:
	 	 
	 	 	

	 Name:
	 	 
	 	 	

	 Title:
	 	 
	 	 	

  

			
	 BANK OF THE WEST, as Agent, the L/C Issuing
 Bank, the FX Lender, and as the sole Lender

		
	By:	 	 
	 	 	

	 Name:
	 	 
	 	 	

	 Title:
	 	 
	 	 	

  

			
	 ACKNOWLEDGED AND AGREED TO
 as of the day and year first above written:
  
  
 UDT SENSORS, INC., as
a Guarantor

		
	By:	 	 
	 	 	

	 Name:
	 	 
	 	 	

	 Title:
	 	 
	 	 	

  

			
	 FERSON OPTICS, INC., as a Guarantor

		
	By:	 	 
	 	 	

	 Name:
	 	 
	 	 	

	 Title:
	 	 
	 	 	

  

 4 

			
	 RAPISCAN SECURITY PRODUCTS (U.S.A.),
 INC., as a Guarantor

		
	 By:
	 	 
	 	 	

	 Name:
	 	 
	 	 	

	 Title:
	 	 
	 	 	

  

			
	 METOREX SECURITY PRODUCTS, INC., as a
 Guarantor

		
	By:	 	 
	 	 	

	 Name:
	 	 
	 	 	

	 Title:
	 	 
	 	 	

  

			
	 OSI FIBERCOMM, INC., as a Guarantor

		
	By:	 	 
	 	 	

	 Name:
	 	 
	 	 	

	 Title:
	 	 
	 	 	

  
  

			
	 DOLPHIN MEDICAL, INC., as a Guarantor

		
	By:	 	 
	 	 	

	 Name:
	 	 
	 	 	

	 Title:
	 	 
	 	 	

  

			
	 OSTEOMETER MEDITECH, INC., as a Guarantor

		
	By:	 	 
	 	 	

	 Name:
	 	 
	 	 	

	 Title:
	 	 
	 	 	

  

 5 

			
	 CENTRO VISION, as a Guarantor

		
	 By:
	 	 
	 	 	

	 Name:
	 	 
	 	 	

	 Title:
	 	 
	 	 	

  

			
	 RAPITEC, INC., as a Guarantor

		
	 By:
	 	 
	 	 	

	 Name:
	 	 
	 	 	

	 Title:
	 	 
	 	 	

  

			
	 OSI ELECTRONICS, INC., as a Guarantor

		
	 By:
	 	 
	 	 	

	 Name:
	 	 
	 	 	

	 Title:
	 	 
	 	 	

  

			
	 ANCORE CORPORATION, as a Guarantor

		
	 By:
	 	 
	 	 	

	 Name:
	 	 
	 	 	

	 Title:
	 	 
	 	 	

  

					
	OSI DEFENSE SYSTEMS, LLC, as a Guarantor
		
	By:	 	OSI SYSTEMS, INC., its Manager
			
	 	 	 By:
	 	 
	 	 	 	 	

	 	 	Name:	 	 
	 	 	 	 	

	 	 	Title:	 	 
	 	 	 	 	

  

 6 

  

			
	 ADVANCED RESEARCH & APPLICATIONS
 CORP., as a Guarantor

		
	 By:
	 	 
	 	 	

	 Name:
	 	 
	 	 	

	 Title:
	 	 
	 	 	

  

			
	 SPACELABS MEDICAL, INC., as a Guarantor

		
	 By:
	 	 
	 	 	

	 Name:
	 	 
	 	 	

	 Title:
	 	 
	 	 	

  

 7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00066-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00066-of-00352.parquet"}]]