Document:

exv10w56

 

Exhibit 10.56

ELEVENTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT AND WAIVER

THIS ELEVENTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT AND WAIVER (this “Amendment”),
dated as of November 2, 2004, is entered into between WELLS FARGO BUSINESS CREDIT, INC., a
Minnesota corporation (the “Lender”), and NATURADE, INC., a Delaware corporation (the
“Borrower”).

RECITALS

A. The Borrower and the Lender have entered into a Credit and Security Agreement dated as of
January 27, 2000, as amended by that certain First Amendment to Credit and Security Agreement dated
as of November 16, 2000, by that certain Second Amendment to Credit and Security Agreement dated as
of January 3, 2001, by that certain Third Amendment to Credit and Security Agreement dated as of
May 14, 2001, that certain Fourth Amendment to Credit and Security Agreement dated as of December
20, 2001, that certain Fifth Amendment to Credit and Security Agreement dated as of September 19,
2002, that certain Sixth Amendment to Credit and Security Agreement and Waiver dated as of March
24, 2003, that certain Seventh Amendment to Credit and Security Agreement and Waiver dated as of
April 15, 2003, that certain Eighth Amendment to Credit and Security Agreement dated as of November
6, 2003, that certain Ninth Amendment to Credit and Security Agreement dated as of March 29, 2004,
and that certain Tenth Amendment to Credit and Security Agreement dated as of May 10, 2004 (as
amended, the “Credit Agreement”). Capitalized terms used herein have the meanings given to
them in the Credit Agreement unless otherwise specified.

B. Certain Events of Default have occurred and are continuing under the Credit Agreement due to:
(i) the Borrower’s failure to maintain, when measured for the months ending June 30, 2004, July 31,
2004, August 31, 2004 and September 30, 2004, the minimum Book Net Worth required under Section
6.12 of the Credit Agreement; and (ii) the Borrower’s failure to achieve, when measured for the
fiscal year-to-date period ending September 30, 2004, the minimum Net Income required under Section
6.13 of the Credit Agreement (collectively, the “Known Existing Defaults”).

C. The Borrower has requested that the Lender waive the Known Existing Defaults and amend the
Credit Agreement on the terms and conditions set forth herein.

D. The Borrower is entering into this Amendment with the understanding and agreement that, except
as specifically provided herein, none of the Lender’s rights or remedies as set forth in the Credit
Agreement is being waived or modified by the terms of this Amendment.

AGREEMENT

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

     1. Amendments to Credit Agreement.

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

“(ii) the lesser of (A) One Million Two Hundred Fifty Thousand Dollars ($1,250,000)
or (B) thirty-five percent (35%) of Eligible Inventory, and minus”

	 	(b)  	Section 6.12 of the Credit Agreement is hereby amended and restated to read
in its entirety as follows:
	 
	 	   	“Section 6.12 Minimum Book Net Worth. The Borrower will maintain its
Book Net Worth, calculated without giving effect to any fees (but net of, and
after giving effect to, any provisions for taxes made in connection with such
fees) paid to the Lender under the terms of Section 2.3(g) hereof, when
determined as of the dates set forth below, at an amount not less than the
amount set forth opposite such date:

	 	 	 	 
	Date	 	Minimum Book Net Worth
	October 31, 2004
	 	 	($4,225,000)
	November 30, 2004
	 	 	($3,260,000)
	December 31, 2004
	 	 	($2,925,000)
	January 31, 2005
	 	 	($3,115,000)
	February 28, 2005
	 	 	($3,300,000)
	March 31, 2005
	 	 	($3,550,000)”

	 	(c)  	Section 6.13 of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:
	 
	 	   	“Section 6.13 Minimum Net Income. The Borrower will achieve, when
measured as at the

 

 

	 	   	end of each fiscal quarter on a quarterly basis, Net Income of not less than
the amount set forth opposite such quarter-ending date:

	 	 	 	 	 
	Quarter Ending	 	Minimum Net Income	 
	December 31, 2004
	 	$	1,225,000	 
	March 31, 2005
	 	 	($490,000)”	 

	 	(d)  	Section 6.14 of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:
	 
	 	   	“Section 6.14 New Covenants. The Lender shall set new covenant levels for
Section 6.12 and Section 6.13 for periods thereafter based upon revised projections
delivered to the Lender by the Borrower. The new covenant levels shall be no less
stringent than the present levels.”
	 
	 	(e)  	Section 6.15 of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:
	 
	 	   	“Section 6.15 Minimum Cash. The Borrower shall maintain a minimum of Two
Hundred Thousand Dollars ($200,000) of unrestricted cash on hand at all times. Such
cash shall be held in a savings or CD blocked account opened for the benefit of
Lender with terms satisfactory to Lender in its sole discretion.”

     2. Waiver of Known Existing Defaults. The Lender hereby waives enforcement
of its rights against the Borrower arising from the Known Existing Defaults; provided,
however, nothing herein shall be deemed a waiver with respect to any other failure of the
Borrower to comply fully with Section 6.12 and Section 6.13 of the Credit Agreement (as amended or
modified by this Amendment). This waiver shall be effective only for the specific defaults
comprising the Known Existing Defaults, and in no event shall this waiver be deemed to be a waiver
of enforcement of the Lender’s rights with respect to any other Events of Default now existing or
hereafter arising. Nothing contained in this Amendment nor any communications between the Borrower
and the Lender shall be a waiver of any rights or remedies Lender has or may have against Borrower,
except as specifically provided herein. Except as specifically provided herein, Lender hereby
reserves and preserves all of its rights and remedies against Borrower under the Credit Agreement
and the other Loan Documents.

     3. Release; Covenant Not to Sue.

	 	(a)  	The Borrower hereby absolutely and unconditionally releases and forever
discharges the Lender, and any and all participants, parent corporations, subsidiary
corporations, affiliated corporations, insurers, indemnitors, successors and assigns
thereof, together with all of the present and former directors, officers, agents and
employees of any of the foregoing (each a “Released Party”), from any and
all claims, demands or causes of action of any kind, nature or description, whether
arising in law or equity or upon contract or tort or under any state or federal law
or otherwise, which the Borrower has had, now has or has made claim to have against
any such person for or by reason of any act, omission, matter, cause or thing
whatsoever arising from the beginning of time to and including the date of this
Amendment, whether such claims, demands and causes of action are matured or
unmatured or known or unknown. It is the intention of the Borrower in providing
this release that the same shall be effective as a bar to each and every claim,
demand and cause of action specified, and in furtherance of this intention it waives
and relinquishes all rights and benefits under Section 1542 of the Civil Code of the
State of California, which provides:
	 
	 	   	“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY
HIM MIGHT HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”
	 
	 	(b)  	The Borrower acknowledges that it may hereafter discover facts different
from or in addition to those now known or believed to be true with respect to such
claims, demands, or causes of action and agree that this instrument shall be and
remain effective in all respects notwithstanding any such differences or additional
facts. The Borrower understands, acknowledges and agrees that the release set forth
above may be pleaded as a full and complete defense and may be used as a basis for
an injunction against any action, suit or other proceeding which may be instituted,
prosecuted or attempted in breach of the provisions of such release.
	 
	 	(c)  	The Borrower, on behalf of itself and its successors, assigns, and other
legal representatives, hereby absolutely, unconditionally and irrevocably, covenants
and agrees with and in favor of each Released Party above that it will not sue (at
law, in equity, in any regulatory proceeding or otherwise) any Released Party

 

 

	 	  	on the basis of any claim released, remised and discharged by the Borrower pursuant
to the above release. If the Borrower or any of its successors, assigns or other
legal representations violates the foregoing covenant, the Borrower, for itself and
its successors, assigns and legal representatives, agrees to pay, in addition to such
other damages as any Released Party may sustain as a result of such violation, all
attorneys’ fees and costs incurred by such Released Party as a result of such
violation.

     4. No Other Changes. Except as explicitly amended by this Amendment, all of
the terms and conditions of the Credit Agreement shall remain in full force and effect and shall
apply to any advance or letter of credit thereunder.

     5. Accommodation Fee. The Borrower shall pay the Lender an accommodation
fee in the amount of Ten Thousand Dollars ($10,000) in consideration of Lender’s execution of this
Amendment (the “Accommodation Fee”). The Accommodation Fee shall be fully earned,
non-refundable, and due and payable on the date hereof.

     6. Conditions Precedent. This Amendment shall be effective when each of the
following conditions is satisfied, as determined by the Lender in its sole discretion:

	 	(a)  	The Lender has received this Amendment executed by the Borrower and the
Lender in a sufficient number or original counterparts for distribution to the
parties hereto;
	 
	 	(b)  	The Lender has received the Accommodation Fee.
	 
	 	(c)  	The representations and warranties set forth herein and in the Credit
Agreement are true and correct; and
	 
	 	(d)  	All other documents and legal matters in connection with the transaction
contemplated by this Amendment have been delivered or executed or recorded and are
in form and substance satisfactory to the Lender.

     7. Representations and Warranties. The Borrower hereby represents and
warrants to the Lender as follows:

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

	 	(b)  	The execution, delivery and performance by the Borrower of this Amendment
have been duly authorized by all necessary corporate action and do not (i) require
any authorization, consent or approval by any governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, (ii) violate any
provision of any law, rule or regulation or of any order, writ, injunction or decree
presently in effect, having applicability to the Borrower, or the articles of
incorporation or by-laws of the Borrower, or (iii) result in a breach of or
constitute a default under any indenture or loan or credit agreement or any other
agreement, lease or instrument to which the Borrower is a party or by which it or
its properties may be bound or affected.
	 
	 	(c)  	All of the representations and warranties contained in the Credit Agreement
are correct on and as of the date hereof as though made on and as of such date,
except to the extent that such representations and warranties relate solely to an
earlier date.
	 
	 	(d)  	This Amendment has been entered into without force or duress, of the free
will of the Borrower. The Borrower’s decision to enter into this Amendment is a
fully informed decision and the Borrower is aware of all legal and other
ramifications of such decision. The Borrower has read and understands this
Amendment, has consulted with and been represented by legal counsel in connection
herewith, and has been advised by its counsel of its rights and obligations
hereunder and thereunder.

     8. No Waiver. Other than as expressly set forth herein, the execution of
this Amendment and acceptance of any other documents related hereto shall not be deemed to be a
waiver of any Event of Default under the Credit Agreement or breach, default or event of default
under any other Financing Agreement, whether or not known to the Lender and whether or not existing
on the date of this Amendment.

 

 

     9. Costs and Expenses. The Borrower hereby reaffirms its agreement under
the Credit Agreement to pay or reimburse the Lender on demand for all costs and expenses incurred
by the Lender in connection with the Loan Documents, including without limitation all reasonable
fees and disbursements of legal counsel. Without limiting the generality of the foregoing, the
Borrower specifically agrees to pay all fees and disbursements of counsel to the Lender for the
services performed by such counsel in connection with the preparation of this Amendment and the
documents and instruments incidental hereto. The Borrower hereby agrees that the Lender may, at
any time or from time to time in its sole discretion and without further authorization by the
Borrower, make a loan to the Borrower under the Credit Agreement, or apply the proceeds of any
loan, for the purpose of paying any such fees, disbursements, costs and expenses.

     10. Integration. This Amendment, together with the other Loan Documents,
incorporates all negotiations of the parties hereto with respect to the subject matter hereof and
is the final expression and agreement of the parties hereto with respect to the subject matter
hereof.

     11. Choice of Law. The validity of this Amendment, its construction,
interpretation and enforcement, the rights of the parties hereunder, shall be determined under,
governed by, and construed in accordance with the internal laws of the State of California
governing contracts only to be performed in that State.

     12. Reference to and Effect on the Loan Documents.

	 	(a)  	Upon and after the effectiveness of this Amendment, each reference in the
Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import
referring to the Credit Agreement, and each reference in all other documents or
agreements related thereto, including the other Loan Documents, to “the Credit
Agreement”, “thereof” or words of like import referring to the Credit Agreement,
shall mean and be a reference to the Credit Agreement as modified and amended
hereby.
	 
	 	(b)  	To the extent that any terms and conditions in any of the Loan Documents or
any documents or agreements related thereto shall contradict or be in conflict with
any terms or conditions of the Credit Agreement, after giving effect to this
Amendment, such terms and conditions are hereby deemed modified or amended
accordingly to reflect the terms and conditions of the Credit Agreement as modified
or amended hereby.

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

[Signatures follow on next page.]

 

 

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

	 	 	 
	

	 	NATURADE, INC.,

a Delaware corporation
	 
	 	 
	

	 	By:/s/Stephen M. Kasprisin                    
	

	 	Name: Stephen M. Kasprisin                    
	

	 	Title: Chief Financial Officer                    
	 
	 	 
	

	 	WELLS FARGO BUSINESS CREDIT, INC.,

a Minnesota corporation
	 
	 	 
	

	 	By: /s/Gary Harrigian                    
	

	 	Name: Gary Harrigian                    
	

	 	Title: Vice Presidentexv10w57

 

Exhibit 10.57

FIRST AMENDMENT TO

SECURED PROMISSORY NOTE

THIS FIRST AMENDMENT TO SECURED PROMISSORY NOTE (this “Amendment”), dated as of January 26,
2005, is entered into between Health Holdings & Botanicals, LLC (the “Lender”), and
NATURADE, INC., a Delaware corporation (the “Borrower”).

RECITALS

A. The Borrower and the Lender have entered into a SECURED PROMISSORY NOTE dated as of April 13,
2003 (the “Loan Agreement”). Capitalized terms used herein have the meanings given to them
in the Loan Agreement unless otherwise specified.

B. The Borrower has requested that the Lender amend the payment provisions of the Loan Agreement.

AMENDMENT

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

     1. Amendments to Loan Agreement.

	 	a.  	Effective January 26, 2005 payments on the Loan Agreement will be
amended as follows:

	 	i.  	On or before December 31, 2005 Borrower will
pay principal of $400,000 plus accrued interest
	 
	 	ii.  	No cash interest will be paid until principal
is paid in full.
	 
	 	iii.  	Interest will be compounded on a quarterly
basis.

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

 Naturade, Inc.

/s/Stephen M. Kasprisin

Stephen M. Kasprisin

Chief Operating Officer

Health Holdings & Botanicals, LLC

/s/ Lionel Boissiere

By: Lionel Boissiere

Its: General Partner

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