Exhibit 10.38
SEVENTH AMENDMENT TO CREDIT
AGREEMENT
THIS AMENDMENT TO CREDIT AGREEMENT
(this “Amendment”) is entered into as of June 1,
2009, by and between NATURAL ALTERNATIVES INTERNATIONAL, INC., a
Delaware corporation (“Borrower”), and WELLS FARGO
BANK, NATIONAL ASSOCIATION (“Bank”).
RECITALS
WHEREAS, Borrower is currently
indebted to Bank pursuant 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 (“Credit
Agreement”).
WHEREAS, Bank and Borrower have
agreed to certain changes in the terms and conditions set forth in
the Credit Agreement and have agreed to amend the Credit Agreement
to reflect said changes.
NOW, THEREFORE, for valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree that the Credit Agreement
shall be amended as follows:
1. The first sentence of
Section 1.1.(b) is hereby deleted in its entirety, and the
following substituted therefor:
“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, thirty percent (30%) of the value of
Borrower’s eligible raw materials inventory, plus forty
percent (40%) of the value of Borrower’s eligible
finished goods 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inventory which is obsolete, unsaleable or damaged), with value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 Seven Hundred Fifty Thousand
Dollars ($3,750,000.00); and provided further, that outstanding
borrowings against such inventory shall not at any time exceed
eligible accounts receivable.”
2. Section 1.4.(a) is hereby
deleted in its entirety, and the following substituted
therefor:
“(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 November 1, 2010,
will enter into foreign exchange contracts for the account of
Borrower for the purchase and/or sale by
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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 Eight Hundred Thousand United States Dollars
(US$1,800,000.00). No foreign exchange contract shall be executed
for a term which extends beyond November 1, 2010. 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.”
3. Section 4.3 (d) is
hereby deleted in its entirety, and the following substituted
therefor:
“(d) not later than 15 days
after and as of the end of each month, an inventory collateral
report, Borrowing Base Certificate, an aged listing of accounts
receivable and accounts payable, and a reconciliation accounts; not
later than 15 days after and as of the 15th and last day of each
month, semi-monthly collateral report if Borrower elects to use 35%
concentration allowance for Mannatech, Inc. and a new account
debtor acceptable to Bank, and not later
