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EXHIBIT 10.03
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "Agreement") is made to be
effective as of the ___ day of March, 2001 (the "Effective Date"), by ROYAL
BODYCARE, INC., a Nevada Corporation ("RBC") to XXXXXXX X. XXXXXX ("Xxxxxx") and
MY GARDEN, LTD., a Texas limited partnership ("MGL").
RECITALS
(a). On or about August 21, 2000, RBC entered into a Purchase and Sale
Agreement, as amended (the "Contract") with CIIF Associates II Limited
Partnership ("CIIF"), to acquire from CIIF improved real property
described on EXHIBIT A attached hereto and incorporated herein (the
"Property"), for a total purchase price of $3,400,000. CIIF agreed to
finance the sum of $250,000 thereof, based upon the full recourse
guaranty of Xxxxxx and/or MGL of such amount (the "CIIF Guaranty") and
the pledge by MGL to CIIF of shares of stock in RBC (the "CIIF
Pledge").
(b). In order for RBC to acquire the Property, Allstate Life Insurance
Company ("Allstate") has agreed to loan the sum of $3,000,000 to RBC,
secured by a first lien deed of trust and other documents encumbering
the Property, based, in part, upon Xxxxxx'x execution and delivery of a
Mortgage Note to Allstate, as a co-maker with RBC (the "Allstate
Note").
(c). Compass Bank, N.A. ("Compass") has agreed to additionally loan a
sum not to exceed $350,000 to RBC, secured, in part, by the full
recourse guaranty of Xxxxxx (the "Compass Guaranty").
(d). To induce Xxxxxx to execute the CIIF Guaranty (if applicable) and
Compass Guaranty, and execute the Allstate Note, and to induce MGL to
execute the CIIF Guaranty (if applicable) and pledge RBC shares as
required in the CIIF Pledge, RBC has offered to compensate Xxxxxx as
hereinafter provided, and to fully indemnify Xxxxxx and MGL (the
"Indemnified Parties") from any loss, claim, damage, or expense.
NOW THEREFORE, FOR A VALUABLE CONSIDERATION, the receipt and
sufficiency of which is expressly acknowledged, RBC, for itself and its
successors and assigns, agrees, acknowledges, warrants and covenants to the
Indemnified Parties, Xxxxxx'x spouse, estate and heirs, and each of their
respective successors and assigns, as follows:
1. COMPENSATION. If Xxxxxx'x employment with RBC is terminated for any
reason (the "Employment Termination Date"), or if Xxxxxx'x annual
compensation paid or payable by RBC is reduced for any reason to a sum
that is less than the amount of annual compensation paid to Xxxxxx as
of the Effective Date (the "Compensation Reduction Date"), then
immediately upon the earlier of the Employment Termination Date and the
Compensation Reduction Date, and on each consecutive annual anniversary
of such date (each of such dates is an "Anniversary Date"), RBC shall
pay to Xxxxxx or his estate, as applicable, a sum equal to one-half of
one percent (0.50%) of the then-outstanding balance on each Anniversary
Date, of principal and all accrued interest and other amounts owing by
RBC to CIIF, Allstate and Compass, their successors and assigns, with
respect to the purchase by RBC of the Property and the partial
financing of the acquisition price by CIIF, Allstate and Compass (the
"Xxxxxx Compensation"). RBC shall
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prepare and submit to Xxxxxx, together with each annual installment
payment, an accounting of the amount of principal and interest that is
owing as of each Anniversary Date; such accounting shall be executed by
the chief financial officer of RBC. The Xxxxxx Compensation shall be
due and payable without advance notice or demand, and if the Xxxxxx
Compensation is not actually received by Xxxxxx at his address
hereinafter stated, within ten (10) days after RBC's receipt of written
demand thereof, such installment shall accrue interest at the rate of
twelve percent (12%) per annum until paid in full.
2. INDEMNITY. The Indemnified Parties agree that they shall not cause a
default with regard to the loans identified above, owing by RBC to
CIIF, Allstate and Compass (collectively, the "Lenders"). Subject to
and induced by the foregoing, RBC does fully and completely indemnify
and hold harmless the Indemnified Parties, Xxxxxx'x spouse, estate and
heirs, and each of their respective successors and assigns from any and
all demands, claims, expenses, payments, attorneys fees, court costs,
interest payments, principal payments, late charges, penalties, fines,
post-default interest, tax payments, and every other fee, sum, cost,
amount paid or payable by the Indemnified Parties to all or any of the
Lenders, or to any creditor of RBC (the "Indemnity"), by virtue of and
relative to the CIIF Guaranty, CIIF Pledge, Allstate Note and Compass
Guaranty (collectively, the "RBC Obligations"). If RBC fails to pay,
and the Indemnified Parties consequently pay any sum, as and when due
and in accordance with the terms of the RBC Obligations, to any of the
Lenders or other third parties on behalf of RBC and due to the RBC
Obligations, then the Indemnified Parties shall promptly issue written
notice thereof to RBC at its address hereinafter stated. Reasonable
evidence of the Indemnified Parties' payment shall accompany such
notice. RBC shall reimburse the respective Indemnified Parties, in
full, for each and all amounts so paid by the Indemnified Parties,
respectively, within fifteen (15) days after RBC's receipt of the
Indemnified Parties' notice and evidence of payment. If such
reimbursement is not actually received by the Indemnified Parties at
their respective addresses hereinafter stated, within fifteen (15) days
after RBC's receipt of written demand thereof together with reasonable
evidence of the Indemnified Parties' payment, such amount shall accrue
interest at the rate of twelve percent (12%) per annum until paid in
full.
3. SECURITY. As security for the Indemnity, RBC shall on the date hereof
execute and deliver to the Indemnified Parties a Deed of Trust to
Secure Indemnification Agreement (the "IP Deed of Trust") subordinate
and inferior to the Deed of Trust and security instruments of Allstate,
therein containing a power of sale in accordance with Texas law. RBC
shall pay for all attorney's fees and costs incurred by the Indemnified
Parties to prepare this Agreement and the IP Deed of Trust; further,
RBC shall furnish to the Indemnified Parties a mortgagee title policy
in form and content reasonably satisfactory to the Indemnified Parties,
at the expense of RBC, in the amount of $3,600,000, to be delivered to
the Indemnified Parties promptly after RBC's acquisition of the
Property.
4. CORPORATE APPROVAL. By execution hereof, RBC warrants and represents to
the Indemnified Parties that RBC has obtained approval for RBC to
execute and perform the terms of this Agreement and the IP Deed of
Trust.
5. AMENDMENT. RBC shall not extend or increase the amounts of the Allstate
Note, CIIF loan or Compass loan, or any other indebtedness owing by RBC
to Allstate, CIIF or Compass, without the prior written consent of the
Indemnified Parties. The Indemnified Parties agree that they xxxx
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not extend or increase the amounts of the Allstate Note, CIIF Guaranty
and Compass Guaranty, or any other indemnity obligation hereunder,
without the prior written consent of RBC.
6. DEFAULT. RBC's default hereof shall entitle the Indemnified Parties to
exercise such rights and remedies as the Indemnified Parties may be
entitled pursuant to Texas law, in addition to the rights and remedies
conferred by the IP Deed of Trust.
7. WAIVER. Except as provided herein and in the IP Deed of Trust, RBC
waives all demand for payment, presentation for payment, notice of
intention to accelerate maturity, notice of acceleration of maturity,
protest, and notice of protest, to the extent permitted by law.
8. INTEREST. Interest on any amounts owing to the Indemnified Parties will
not exceed the maximum amount of nonusurious interest that may be
contracted for, taken, reserved, charged, or received under law. Any
interest in excess of that maximum amount will be credited to RBC or,
if that has been paid, refunded. This provision overrides any
conflicting provisions in this and all other instruments concerning
this Agreement.
9. ADDRESSES; NOTICES. All notices shall be in writing, sent to the
addresses provided for RBC and the Indemnified Parties below, by
overnight courier service with proof of receipt, or by certified or
registered pre-paid mail, return receipt requested, and shall be deemed
to be effective upon receipt or refusal to accept receipt. Any party
may change its address by issuing written notice thereof to the other
party, in compliance with this section.
10. CHOICE OF LAW. Texas law shall govern this transaction; venue for all
disputes shall be solely in Dallas County, Texas.
IN WITNESS WHEREOF, this Agreement has been executed in Dallas County,
Texas, as of the Effective Date.
ROYAL BODYCARE, INC., INDEMNIFIED PARTIES:
a Nevada Corporation ("RBC")
By:
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Name: Xxxxxxx X. Xxxxxx ("Xxxxxx")
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Title: Address:
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Address: 0000 Xxxxx Xxxxx
Xxxxxx, Xxxxx 00000
MY GARDEN, LTD. ("MGL")
By:
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Xxxxxxx X. Xxxxxx, Managing Partner
Address:
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STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on March _____, 2001, by
Xxxxxxx X. Xxxxxx.
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Notary Public's Signature
Notary's Printed Name:
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My Commission Expires:
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STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on March _____, 2001, by
Xxxxxxx X. Xxxxxx, Managing Partner of My Garden, Ltd., a Texas limited
partnership, on behalf of said partnership.
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Notary Public's Signature
Notary's Printed Name:
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My Commission Expires:
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STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on March _____, 2001, by
__________________________________, _________________________ of Royal BodyCare,
Inc., a Nevada corporation, on behalf of said corporation.
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Notary Public's Signature
Notary's Printed Name:
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My Commission Expires:
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EXHIBIT A
PROPERTY DESCRIPTION
Xxx 0 xx Xxxxx 0, XXX XXXXXXX, XXXXXX XXXX DISTRIBUTION CENTER, FOURTH
INSTALLMENT, an Addition to the City of Irving, Dallas County, Texas, according
to the plat recorded in Volume 77097, Page 406, of the Deed Records of Dallas
County, Texas.
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