Exhibit 10.4


 





 


AGREEMENT
FOR EQUIPMENT LINE FACILITY


 


This Agreement for Equipment Line Facility (“Agreement”) is entered into as of November 4,
2004, by and between Natrol, Inc., a
Delaware corporation (“Borrower”) and City National Bank,
a national banking association (“CNB”).


 


1.            Equipment
Acquisition Loans. Prior to December 1, 2005
(“Termination Date”), and provided


no
Events of Default (as hereinafter defined) exist at the time of Borrower’s
request, CNB agrees to make loans (“Equipment Acquisition Loans”) to Borrower
from time to time from the date of this Agreement to, but not including, the
Termination Date, up to the amount of Five Hundred Thousand and
00/100 ($500,000.00), the proceeds of which shall be used to pay one
hundred percent (100%) of the purchase price of fixed assets, excluding sales
taxes, delivery and set-up charges. Each Equipment Acquisition Loan shall be
evidenced by a promissory note (“Note”) customarily utilized by CNB and shall
be in the minimum amount of $100,000.00.


 


1.1          Interest on
Equipment Acquisition Loans. Each Equipment Acquisition Loan shall
bear interest from the date of disbursement on the unpaid principal amount
thereof, until such amount shall become due and payable (whether at stated
maturity, by acceleration or otherwise) at an annual fluctuating rate equal to
the Prime Rate, as from time to time in effect, plus Three Quarters of One
percent (0.75%) per annum. Interest on each Equipment Acquisition Loan shall be
payable monthly, in arrears, on the 1st day of each month,
commencing on the first such date following disbursement and on the date each
Equipment Acquisition Loan is paid in full.


 


1.2          Procedure
for Equipment Acquisition Loans. Each Equipment Acquisition Loan
shall be made by CNB against delivery by Borrower to CNB of (a) an appropriate purchase invoice
evidencing the purchase of items of machinery and/or equipment, (b) a duly
executed Note, and (c) such further documents as shall be requested by CNB to
perfect a security interest of first priority in the assets being purchased in
favor of CNB.


 


1.3          Payment of
Equipment Acquisition Loans. The principal amount of each Equipment Acquisition
Loan shall be repaid in thirty-six (36) substantially equal, successive monthly
installments payable on the 1st day of each month. All unpaid
principal and interest shall be due and payable thirty-six (36) months after
the funding of an Equipment Acquisition Loan.


 


1.4          Documentation
Fee. Borrower shall pay to CNB on the date of the execution of each
Equipment Acquisition Loan, a  documentation fee (“Documentation
Fee”) equal to $350.00.


 


2.            Events
of Default. The occurrence of
any of the following with respect to Borrower or any guarantor of this
Equipment Acquisition Facility, shall constitute an “Event of Default”
hereunder.


 


2.1            Failure to
make any payment of principal, interest or fee when due hereunder or under any
Note executed in connection herewith;


 


2.2            Filing of a petition by or
against any of such parties under any provision of the Bankruptcy Code,


 


2.3           Appointment of a receiver or an
assignee for the benefit of creditors;


 


2.4           Commencement of dissolution or
liquidation proceedings or the disqualification (under any applicable law or
regulation) of any of such parties which is a corporation, partnership, joint
venture or any other type of entity;


 


2.5           Death or incapacity of any of such
parties which is an individual;


 


2.6           Revocation of any guaranty provided
in connection herewith or such guaranty shall become unenforceable with respect
to future advances;


 


2.7           Any financial statement provided by
any of such parties to CNB is false or misleading;


 





















 


2.8           Any material default
in the payment or performance of any obligation, or any default under any provision
of any contract or instrument pursuant to which any of such parties has
incurred any obligation for borrowed money, any purchase obligation or any
other liability of any kind to any person or entity, including CNB;


 


2.9           Any sale or transfer
of all or a substantial part of the assets of any of such parties other than in
the ordinary course of business; or


 


2.10         Any violation, breach
or default under, any letter agreement, guaranty, security agreement, deed of trust,
subordination agreement or any other contract or instrument executed in
connection with this Agreement or securing this Agreement.


 


3.             CNB’s
Remedies. Upon the occurrence of an Event of Default, at the sole
and exclusive option of CNB, CNB may (a) declare the principal of and accrued
interest on the Equipment Acquisition Loans immediately due and payable in full,
whereupon the same shall immediately become due and payable; (b) terminate this
Agreement as to any future liability or obligation of CNB, but without
affecting the obligations or liability owing by Borrower to CNB; and/or (c)
exercise its rights and remedies hereunder and under the Notes, any guaranties
or any security agreement or deed of trust executed in connection with this
Agreement, and in addition to the rights and remedies given it by this
Agreement, all of the rights and remedies afforded CNB as a matter of law.


 


4.             Miscellaneous.
Borrower agrees to pay all costs and expenses, including reasonable attorneys’ fees
(which counsel may be CNB employees), expended or incurred by CNB (or allocable
to CNB’s in-house counsel) in connection with the enforcement of this Agreement
or the collection of any sums due hereunder and irrespective of whether suit is
filed. This Agreement and all matters relating thereto, shall be governed by
the laws of the State of California.


 


	
  “Borrower

  	
  Natrol, Inc., a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Elliott Balbert

  	
   

  
	
   

  	
   

  	
  Elliott Balbert, President

  
	
   

  	
   

  	
   

  
	
  “CNB”

  	
  City National Bank, a national

  
	
   

  	
  banking association

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  David
  Alterman, Vice President