Exhibit 10.39
FIRST MODIFICATION TO PROMISSORY
NOTE
THIS MODIFICATION TO PROMISSORY NOTE
(this “Modification”) is entered into as of
June 1, 2009, by and between NATURAL ALTERNATIVES
INTERNATIONAL, INC. (“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 Revolving Line of Credit Note in the maximum principal
amount of $7,500,000.00, executed by Borrower and payable to the
order of Bank, dated as of November 1, 2008 (the
“Note”), which Note is subject to the terms and
conditions of a loan agreement between Borrower and Bank dated as
of May 1, 2004, as amended from time to time (the “Loan
Agreement”), which Note incorporates the terms of an Addendum
to Promissory Note dated as of the same date (the
“Addendum”).
WHEREAS, Bank and Borrower have
agreed to certain changes in the terms and conditions set forth in
the Note, and have agreed to modify the Note to reflect said
changes.
NOW, THEREFORE, for valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree that the Note shall be
modified as follows:
1. Paragraph (b) under the
section “DEFINITIONS” is hereby deleted in its entirety
and the following substituted therefor:
“(b) Daily Three Month
LIBOR” means, for any day, the rate of interest equal to
LIBOR then in effect for delivery for a three (3) month
period.”
2. Paragraph (d)(i)(B) under the
section “DEFINITIONS” is hereby deleted in its entirety
and the following substituted therefor.
“(B) for the purpose of
calculating effective rates of interest for loans making reference
to the Daily Three Month LIBOR Rate, as the Inter-Bank Market
Offered Rate in effect for time to time for delivery of funds for
three (3) months in amounts approximately equal to the
principal amount of such loans.”
3. Paragraph (a) under the
section “INTEREST” is hereby deleted in its entirety
and the following substituted therefor:
“(a) Interest . The
outstanding principal balance of this Note shall bear interest
(computed on the basis of a 360-day year, actual days elapsed)
either (i) at a fluctuating rate per annum determined by Bank
to be two and three-quarters percent (2.75%) above the Daily
Three Month LIBOR Rate in effect from time to time, or (ii) at
a fixed rate per annum determined by Bank to be two and one-half
percent (2.50%) above LIBOR in effect on the first day of the
applicable Fixed Rate Term. When interest is determined in relation
to the Daily Three Month LIBOR Rate, each change in the interest
rate shall become effective each Business Day that the Bank
determines that the Daily Three Month LIBOR Rate has changed. Bank
is hereby authorized to
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note the date, principal amount 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.”
4. Paragraph (b) under the
section “INTEREST” is hereby deleted in its entirety
and the following substituted therefor:
“(b) Selection of Interest
Rate Options . At any time any portion of this Note bears
interest determined in relation to LIBOR for a Fixed Rate Term, 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 Daily Three Month LIBOR 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 Daily Three Month LIBOR Rate, Borrower may at any time 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 an interest rate determined in relation to the Daily Three
Month LIBOR Rate or a Fixed Rate Term 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: (i) the
interest rate option selected by Borrower; (ii) the principal
amount subject thereto; and (iii) for each LIBOR selection for
a Fixed Rate Term, 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 for a Fixed Rate Term, (A) if requested by Bank,
Borrower provides to Bank written confirmation thereof not later
than three (3) Business Days after such notice is given, and
(B) 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 its 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
desig
