EXHIBIT 10.3

 

SUMMIT BANK

 

PROMISSORY NOTE

 

Principal

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   Loan Date

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   Maturity

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   Loan No.

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   Call/Coll

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   Account

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   Officer

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   Initials

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$400,000.00    12-05-2005    06-05-2009    14749502    4A/420         JBM     

 

References in the shaded area are for Lender’s use only and do not limited the
applicability of this document to any

particular loan or item. Any item above containing “***” has been omitted due to
text length limitations.

 

Borrower:   

Royal BodyCare, Inc.

2301 Crown Court

Irving, TX 75038-4305

   Lender:           

Summit Bank N.A.

Euless

350 Westpark Way, Suite 202

Euless, TX 76040

Principal Amount:    $400,000.00         Date of Note: December 5, 2005

 

PROMISE TO PAY. ROYAL BODYCARE, INC. (“Borrower”) promises to pay to SUMMIT BANK
N.A. (“Lender”), or order, in lawful money of the United States of America, the
principal amount of Four Hundred Thousand & 00/100 Dollars ($400,000.00),
together with interest on the unpaid principal balance from December 5, 2005,
until maturity.

 

PAYMENT. Borrower will pay this loan in full immediately upon Lender’s demand.
If no demand is made, Borrower will pay the loan in accordance with the
following payment schedule: 6 monthly consecutive interest payments, beginning
January 5, 2006, with interest calculated on the unpaid principal balances at an
interest rate of 7.960% per annum; 35 monthly consecutive principal and interest
payments of $12,549.52 each, beginning July 5, 2006, with interest calculated on
the unpaid principal balances at an interest rate of 7.960% per annum; and one
principal and interest payment of $12,549.58 on June 5, 2009, with interest
calculated on the unpaid principal balances at an interest rate of 7.960% per
annum. This estimated final payment is based on the assumption that all payments
will be made exactly as scheduled; the actual final payment will be for all
principal and accrued interest not yet paid, together with any other unpaid
amounts under this Note. Unless otherwise agreed or required by applicable law,
payments will be applied first to any accrued unpaid interest; then to
principal; and then to any unpaid collection costs. The annual interest rate for
this Note is computed on a 365/360 basis; that is, by applying the ratio of the
annual interest rate over a year of 360 days, multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal balance
is outstanding, unless such calculation would result in a usurious rate, in
which case interest shall be calculated on a per diem basis of a year of 365 or
366 days, as the case may be. Borrower will pay Lender at Lender’s address shown
above or at such other place as Lender may designate in writing.

 

PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges
are earned fully as of the date of the loan and will not be subject to refund
upon early payment (whether voluntary or as a result of default), except as
otherwise required by law. Except for the foregoing, Borrower may pay without
penalty all or a portion of the amount owed earlier than it is due. Prepayment
in full shall consist of payment of the remaining unpaid principal balance
together with all accrued and unpaid interest and all other amounts, costs and
expenses for which Borrower is responsible under this Note or any other
agreement with Lender pertaining to this loan, and in no event will Borrower
ever be required to pay any unearned interest. Early payments will not, unless
agreed to by Lender in writing, relieve Borrower of Borrower’s obligation to
continue to make payments under the payment schedule. Rather, early payments
will reduce the principal balance due and may result in Borrower’s making fewer
payments. Borrower agrees not to send Lender payments marked “paid in full”,
“without recourse”, or similar language. If Borrower sends such a payment,
Lender may accept it without losing any of Lender’s rights under this Note, and
Borrower will remain obligated to pay any further amount owed to Lender. All
written communications concerning disputed amounts, including any check or other
payment instrument that indicates that the payment constitutes “payment in full”
of the amount owed or that is tendered with other conditions or limitations or
as full satisfaction of a disputed amount must be mailed or delivered to: SUMMIT
BANK N.A., P0 BOX 2348 FORT WORTH, TX 76113.

 

POST MATURITY RATE. The Post Maturity Rate on this Note is the lesser of the
maximum rate allowed by law or 18.000% per annum. Borrower will pay interest on
all sums due after final maturity, whether by acceleration or otherwise, at that
rate.

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PROMISSORY NOTE

(Continued)

 

LENDER’S RIGHTS. Upon default, Lender may declare the entire indebtedness,
including the unpaid principal balance on this Note, all accrued unpaid
interest, and all other amounts, costs and expenses for which Borrower is
responsible under this Note or any other agreement with Lender pertaining to
this loan, immediately due, without notice, and then Borrower will pay that
amount.

 

ATTORNEYS’ FEES; EXPENSES. Lender may hire an attorney to help collect this Note
if Borrower does not pay, and Borrower will pay Lender’s reasonable attorneys’
fees. Borrower also will pay Lender all other amounts Lender actually incurs as
court costs, lawful fees for filing, recording, releasing to any public office
any instrument securing this Note; the reasonable cost actually expended for
repossessing, storing, preparing for sale, and selling any security; and fees
for noting a lien on or transferring a certificate of title to any motor vehicle
offered as security for this Note, or premiums or identifiable charges received
in connection with the sale of authorized insurance.

 

GOVERNING LAW. This Note will be governed by federal law applicable to Lender
and, to the extent not preempted by federal law, the laws of the State of Texas
without regard to its conflicts of law provisions. This Note has been accepted
by Lender in the State of Texas.

 

CHOICE OF VENUE. If there is a lawsuit, and if the transaction evidenced by this
Note occurred in TARRANT County, Borrower agrees upon Lender’s request to submit
to the jurisdiction of the courts of TARRANT County, State of Texas.

 

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrower’s accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any IRA or Keogh accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
indebtedness against any and all such accounts.

 

COLLATERAL. Borrower acknowledges this Note is secured by the following
collateral described in the security instruments listed herein: inventory,
chattel paper, accounts, equipment and general intangibles described in
commercial Security Agreements dated December 5, 2005.

 

SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and
upon Borrower’s heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Lender and its successors and assigns.

 

GENERAL PROVISIONS. NOTICE: Under no circumstances (and notwithstanding any
other provisions of this Note) shall the interest charged, collected, or
contracted for on this Note exceed the maximum rate permitted by law. The term
“maximum rate permitted by law” as used in this Note means the greater of
(a) the maximum rate of interest permitted under federal or other law applicable
to the indebtedness evidenced by this Note, or (b) the higher, as of the date of
this Note, of the ‘Weekly Ceiling” or the “Quarterly Ceiling” as referred to in
Sections 303.002, 303.003 and 303.005 of the Texas Finance Code. If any part of
this Note cannot be enforced, this fact will not affect the rest of the Note.
Borrower does not agree or intend to pay, and Lender does not agree or intend to
contract for, charge, collect, take, reserve or receive (collectively referred
to herein as “charge or collect”), any amount in the nature of interest or in
the nature of a fee for this loan, which would in any way or event (including
demand, prepayment, or acceleration) cause Lender to charge or collect more for
this loan than the maximum Lender would be permitted to charge or collect by
federal law or the law of the State of Texas (as applicable). Any such excess
interest or unauthorized fee shall, instead of anything stated to the contrary,
be applied first to reduce the principal balance of this loan, and when the
principal has been paid in full, be refunded to Borrower. The right to
accelerate maturity of sums due under this Note does not include the right to
accelerate any interest which has not otherwise accrued on the date of such
acceleration, and Lender does not intend to charge or collect any unearned
interest in the event of acceleration. All sums paid or agreed to be paid to
Lender for the use, forbearance or detention of sums due hereunder shall, to the
extant permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of the loan evidenced by this Note until payment in
full so that the rate or amount of interest on account of the loan evidenced
hereby does not exceed the applicable usury ceiling. Lender may delay or forgo
enforcing any of its rights or remedies under this Note without losing them.
Borrower and any other person who signs, guarantees or endorses this Note, to
the extent allowed by law, waive presentment, demand for payment, notice of
dishonor, notice of intent to accelerate the

 

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PROMISSORY NOTE

(Continued)

 

maturity of this Note, and notice of acceleration of the maturity of this Note.
Upon any change in the terms of this Note, and unless otherwise expressly stated
in writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All such
parties agree that Lender may renew or extend (repeatedly and for any length of
time) this loan or release any party or guarantor or collateral; or impair, fail
to realize upon or perfect Lender’s security interest in the collateral without
the consent of or notice to anyone. All such parties also agree that Lender may
modify this loan without the consent of or notice to anyone other than the party
with whom the modification is made. The obligations under this Note are joint
and several.

 

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE. BORROWER AGREES TO THE TERMS OF THE NOTE.

 

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

 

BORROWER: ROYAL BODYCARE, INC. By:   /s/    STEVEN E. BROWN             STEVEN
E. BROWN, VICE PRESIDENT - FINANCE     of ROYAL BODYCARE, INC.

 

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