Promissory Note - Natrol Inc. and Dennis R. Jolicoeur
PROMISSORY NOTE
$562,500 Chatsworth, California
November 14, 1996
FOR VALUE RECEIVED, the undersigned ("Debtor") hereby promises to pay to
Natrol, Inc., a California corporation ("Payee"), at such place or places as may
be specified by Payee or any holder hereof, in legal tender of the United States
of America, the principal amount of $562,500 (the "Principal"), with interest at
the rate of 6.60% per annum, compounded annually, on the unpaid balance.
Interest shall be payable on each November 14 commencing November 14, 1997. The
Debtor shall pay to Payee, within ten (10) days after receipt thereof, the net
after-tax proceeds from all sales of the Debtor's shares of the Common Stock,
par value $.01 per share, of Natrol, Inc. in reduction of Principal until such
time as the Principal has been repaid in full, and in connection with each such
payment shall pay accrued but unpaid interest on the amount so prepaid. For
purposes hereof, net after-tax proceeds refers to the amount received by the
Debtor upon any sale of such shares, less brokerage commissions or underwriting
discounts, other expenses of every kind, including documentary, excise and other
taxes, if any, directly relating to the sale and an amount equal to the federal,
state and local taxes on any gain from such sale (as determined by multiplying
the amount of such gain by the combined maximum federal, state and local tax
rate applicable to the sale of such shares by the Debtor, taking into account
the holding period for such shares and any federal income tax deduction for
state and local income taxes). In any event, any principal then unpaid shall be
due and payable, with accrued interest thereon, on November 14, 2004 (the
"Repayment Date").
This Note is subject to the terms of and the payment hereof is secured by
a certain Pledge Agreement dated as of the date hereof by and between Debtor and
Payee (the "Pledge Agreement").
In case an Event of Default, as defined in the Pledge Agreement, shall
occur, the aggregate unpaid balance of Principal and accrued interest may be
declared to be due and payable in the manner and with the effect provided in the
Pledge Agreement. The obligation of the undersigned Debtor to pay the Recourse
Amount (as hereinafter defined) shall be absolute and unconditional, and the
Payee shall have full recourse against the Debtor's assets (including, but not
limited to, the collateral pledged pursuant to the Pledge Agreement) to recover
the Recourse Amount. The Recourse Amount as of any time shall mean $140,625
reduced by 25% of each payment of Principal made by or on behalf of the Debtor
from any source. Unless otherwise directed by the Debtor, all sums paid by the
Debtor or otherwise received by Payee on account of sums owing hereunder shall
first be applied to the Recourse Amount and only after the Recourse Amount is
paid in full, then to other sums owing
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hereunder. With respect to amounts due and payable hereunder in excess of the
Recourse Amount, the Payee shall have no recourse against the Debtor or any of
his assets other than the collateral pledged pursuant to the Pledge Agreement,
and Payee shall look only to its rights as provided in the Pledge Agreement for
the repayment of amounts in excess of the Recourse Amount.
Debtor may discharge the obligations undertaken hereby, at any time, by
repaying the outstanding principal balance, without penalty. Debtor may, without
penalty, make a partial prepayment of Principal and/or interest in any amount at
any time and may thereby reduce any required future payment hereunder by the
amount of such prepayment.
Debtor expressly waives presentment for payment, protest and demand,
notice of protest, demand and dishonor and expressly agrees that this Note may
be extended from time to time without in any way affecting the liability of
Debtor. No delay or omission on the part of Payee in exercising any right
hereunder shall operate as a waiver of such right or of any other right under
this Note.
This Note may from time to time be extended by Payee, with or without
notice to Debtor, and any related right may be waived, exchanged, surrendered or
otherwise dealt with, all without affecting the liability of Debtor, in each
case in the sole discretion of Payee.
This Note may not be changed, modified or terminated orally, but only by
an agreement in writing and signed by the Debtor and Payee. This Note shall be
governed by and construed in accordance with the laws of the State of
California, and shall be binding upon the successors and assigns of Debtor and
inure to the benefit of Payee and its heirs, successors, endorsees and assigns.
DEBTOR:
/s/ Dennis R. Jolicoeur
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Dennis Jolicoeur
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