EXHIBIT 4.2
LOAN AGREEMENT
OCTOBER 2003
This Loan Agreement ("Agreement") is made and entered into to be
effective upon execution by and among Utix Group, Inc. (fka Chantal Skin Care
Corporation), a Delaware corporation with an address at 000 Xxxxxxxxx Xxxxxx,
Xxxxxxxxxx, XX 00000-0000 (the "Borrower"), Corporate Sports Incentives Inc., a
New Hampshire corporation with an address at 000 Xxxxxxxxx Xxxxxx, Xxxxxxxxxx,
XX 00000-0000 ("CSI" or the "Guarantor"), and the lenders who are signatories
hereto, each with an address as set forth opposite their names on SCHEDULE A
attached hereto (each a "Lender" and collectively, the "Lenders"), as follows:
WHEREAS, the Borrower shall enter into a Share Exchange Agreement
with CSI, Xxxx Xxxxxxx, an individual ("Utix Principal Stockholder"), and the
stockholders of CSI (the "CSI Stockholders") (the "Share Exchange Agreement"),
whereby the CSI Stockholders will exchange their shares of CSI common stock for
shares of common stock of the Borrower (the "Share Exchange"); and
WHEREAS, as a condition precedent to effectuating the Share
Exchange, the Lenders have agreed to lend to Borrower the Loan (as defined
hereinafter) pursuant to the terms of this Agreement and the Notes (as defined
hereinafter).
NOW THEREFORE, for good and valuable consideration, the parties
hereto, intending to be legally bound, agree as follows
1. LOAN AGREEMENT. Subject to the closing of the Share Exchange,
Borrower agrees to borrow from each Lender, and each Lender agrees
to lend to Borrower, the amounts set forth opposite each Lender's
name in SCHEDULE A attached hereto pursuant to the terms and
conditions set forth hereunder and in the notes that are
substantially in the form attached hereto as EXHIBIT A (the
"Notes"), in an aggregate amount of up to One Million Dollars
($1,000,000) (the "Loan").
a. FUNDING. The Loan will be funded on the Closing Date (as
defined in the Share Exchange Agreement), which shall be
no later than November 10, 2003. The Lenders shall wire
the Loan in immediately-available funds to a Xxxxxxx
Xxxxx money market account designated in writing by the
Borrower.
b. EQUITY CONSIDERATION. In addition to the Note, each
Lender shall have the right, but not the obligation, for
every one dollar ($1.00) of principal that the Lender
loans to the Borrower, to purchase on the Closing Date
one share of common stock of the Borrower for $0.001 per
share.
2. TERMS.
a. INTEREST. The Loan shall bear interest at a rate of
seven percent (7%) per annum. Interest will be paid
quarterly, commencing on March 31, 2004 and on each June
30, September 30 and December 31 thereafter until the
principal amount and all accrued but unpaid interest has
been paid.
b. MATURITY. The Loan shall mature on the earlier of (i)
the one-year anniversary of the Effective Date (as
defined in the Share Exchange Agreement), (ii) the
occurrence of an Event of Default (as defined in the
Notes) in accordance with the procedures set forth in
the Notes, and (iii) the Borrower's completion of an
equity financing of at least $1.5 million, which such
financing shall be exclusive of the Rule 504 Offering
(as defined in Section 4.03(i) of the Share Exchange
Agreement)
c. GUARANTEE. CSI, which as a result of the Share Exchange
is a wholly-owned subsidiary of the Borrower, shall
unconditionally guarantee the Loan pursuant to a
guarantee substantially in the form attached hereto as
EXHIBIT B (the "Guarantee").
3. REPRESENTATIONS.
a. The Borrower represents and warrants to the Lenders as
follows:
(i) GOOD STANDING. Borrower is a corporation duly
organized, validly existing, and in good standing under
the laws of the State of Delaware, dully authorized to
conduct business and in good standing under the laws of
each jurisdiction where such qualification is material
to the conduct of business.
(ii) CORPORATE AUTHORITY. The Borrower has full power
and authority to enter into this Agreement, to borrow
the funds, to execute and deliver the Loan, and to incur
the obligations provided for herein, all of which have
been duly authorized by all proper and necessary
corporate action. No consent or approval of shareholders
or of any public authority is required as a condition to
the validity of this Agreement.
(iii) BINDING AGREEMENT. This Agreement and the Loan,
when issued and delivered pursuant hereto for value
received, shall constitute the legal, valid, and binding
obligation of the Borrower in accordance with its terms,
subject to bankruptcy and insolvency laws and any other
laws of general application affecting the rights and
remedies of creditors.
(b) The Guarantor represents and warrants to the Lenders as
follows:
(i) GOOD STANDING. Guarantor is a corporation duly
organized, validly existing, and in good standing
under the laws of the State of New Hampshire, duly
authorized to conduct business and in good
standing under the laws of each jurisdiction where
such qualification is material to the conduct of
business.
(ii) CORPORATE AUTHORITY. The Guarantor has full power
and authority to enter into this Agreement, to
guarantee the Loan, and to incur the obligations
provided for herein, all of which have been duly
authorized by all proper and necessary corporate
action. No consent or approval of shareholders or
of any public authority is required as a condition
to the validity of this Agreement.
(iii) BINDING AGREEMENT. This Agreement and the
Guarantee, when issued and delivered pursuant
hereto, shall constitute the legal, valid, and
binding obligation of the Guarantor in accordance
with its terms, subject to bankruptcy and
insolvency laws and any other laws of general
application affecting the rights and remedies of
creditors.
4. AFFIRMATIVE COVENANTS. Until the payment in full of the Loan and
performance of all obligations of the Borrower and Guarantor
hereunder, unless otherwise indicated, each of the Borrower and the
Guarantor shall:
a. TAXES. Pay and discharge all taxes, assessments, and
governmental charges upon it, its incomes, and its
properties prior to the date on which penalties are
attached thereto, unless and to the extent only that
such taxes shall be contested in good faith and by
appropriate proceedings by the Borrower or Guarantor, as
applicable.
b. INSURANCE. Maintain insurance with insurance companies
reasonably acceptable to the Lenders on such properties,
in such amounts and against such risks as is customarily
maintained by similar businesses operating within the
same industry.
c. NOTICE OF CLAIMS. Notify Lenders of any claims made or
legal processes instituted against the properties or
other assets of Borrower or Guarantor, as applicable,
within fifteen (15) days of Borrower or Guarantor, as
applicable, becoming aware of the existence of such
claim or legal process. Agree to diligently work to
resolve, in an efficient and cost effective manner, such
claims.
5. NEGATIVE COVENANTS. Until payment in full of the Loan and the
performance of all other obligations of the Borrower and Guarantor
hereunder, each of the Borrower and Guarantor shall not, except with
the prior written consent of a majority (51%) of the Lenders:
a. Make loans or advances to a person, firm or corporation,
except loans or advances made in the ordinary course of
business.
b. Other than pursuant to the terms of the Share Exchange
Agreement or this Agreement, issue, incur or assume any
indebtedness, nor become liable, whether as an endorser,
guarantor, surety, or otherwise for any debt or
obligation of any other person, firm, or corporation.
6. EVENTS OF DEFAULT. The amounts due hereunder shall become
immediately due and payable in full upon the occurrence of any one
or more of the following events of default (the "Events of
Default"). In all instances below, Borrower or Guarantor, as
applicable, has sixty (60) days to cure.
a. Default in the payment of the principal and unpaid
accrued interest of the Loan when due and payable,
whether at maturity or otherwise; or
b. Failure of a representation of Borrower or Guarantor to
be true; or
c. Failure of Borrower or Guarantor to observe or perform
any material term, covenant, or agreement contained in
this Agreement, or the dissolution, termination of
existence, or business failure of the Borrower or
Guarantor; or
d. The institution by the Borrower or Guarantor of
proceedings to be adjudicated as bankrupt or insolvent,
or the consent by it to institution of bankruptcy or
insolvency proceedings against it or the filing by it of
a petition or answer or consent seeking reorganization
or release under the federal Bankruptcy Act, or any
other applicable federal or state law, or the consent by
it to the filing of any such petition or the appointment
of a receiver, liquidator, assignee, trustee or other
similar official of the Borrower or Guarantor, or of any
substantial part of its property, or the making by it of
an assignment for the benefit of creditors, or the
taking of corporate action by the Borrower or Guarantor
in furtherance of any such action; or
e. If, within sixty (60) days after the commencement of an
action against the Borrower or Guarantor (and service of
process in connection therewith on the Borrower or
Guarantor) seeking any bankruptcy, insolvency,
reorganization, liquidation, dissolution or similar
relief under any present or future statute, law or
regulation, such action shall not have been resolved in
favor of the Borrower or Guarantor, as applicable, or
all orders or proceedings thereunder affecting the
operations or the business of the Borrower or Guarantor,
as applicable, stayed, or if the stay of any such order
or proceeding shall thereafter be set aside, or if,
within sixty (60) days after the appointment without the
consent or acquiescence of the
Borrower or Guarantor of any trustee, receiver or
liquidator of the Borrower or Guarantor, as applicable,
or of all or any substantial part of the properties of
the Borrower or Guarantor, as applicable, such
appointment shall not have been vacated; or
f. The cessation of Borrower's or Guarantor's business for
more than thirty (30) days.
7. ASSIGNMENT. No portion of the Loan shall be assignable to a third
party without the express written consent of the Borrower.
8. MISCELLANEOUS
a. This Agreement and all of the covenants, warranties, and
representations of the Borrower and Guarantor and all
powers and rights of Lenders hereunder shall be in
addition to and cumulative of all other covenants,
representations, and warranties of Borrower and
Guarantor, and all other rights and powers of Lenders
contained in, or provided for in, any other instrument
or document now or hereafter executed and delivered by
Borrower or Guarantor to or in favor of Lenders. No
delay or failure on the part of any Lender in the
exercise of any power or right shall operate as a waiver
thereof nor shall any single or partial exercise of the
same preclude any other or further exercise thereof or
the exercise of any other power or right, and the rights
and remedies of Lenders are cumulative to and not
exclusive of remedies which they would otherwise have.
No waiver, consent or modification, or amendment shall
be effective as against the Lenders unless the same is
in writing and signed by the holders of at least a
majority of the face amount of all then outstanding
Notes issued pursuant to this Agreement. No such
amendment, modification, wavier or consent shall extend
to or affect any obligation or right except to the
extent expressly provided for therein. All computations
and determinations of the assets and liabilities of
Borrower or Guarantor for the purpose of this Agreement
shall be made in accordance with generally accepted
accounting principles consistently applied, except as
may be otherwise specifically provided herein. Any
notice, request or other communication required or
permitted hereunder shall be in writing and shall be
deemed to have been duly given on the date of service if
personally served on the party to whom such notice is to
be given, on the date of transmittal of service via
telecopy to the party to whom notice is to be given
(with a confirming copy delivered within 24 hours
thereafter), or on the third day after mailing if mailed
to the party to whom notice is to be given, by first
class mail, registered or certified mail, postage
prepaid, or via a recognized overnight courier providing
a receipt for delivery and properly addressed to the
parties at the respective addresses of the parties as
set forth herein . Any party hereto may by notice so
given change its address for future notice hereunder.
b. This Agreement shall be binding upon Borrower and
Guarantor and their respective successors and assigns,
and shall inure to the benefit of the Lenders and the
benefit of their respective successors and assigns,
including any subsequent holder or holders of the Notes
or any interest therein.
c. Borrower herby expressly waives any presentment, demand,
protest or other notice of any kind.
9. GOVERNING LAW. The laws of the State of New York shall govern this
Agreement.
10. SURVIVABILITY. Should any portion of this Agreement be voided by a
court of competent jurisdiction, all remaining clauses in the
Agreement shall remain in full force and effect.
[signature page follows]
Executed on the day and year below written. This Agreement may be executed in
any number of counterparts, each constituting an original, but altogether one
agreement. A facsimile or other copy of this Agreement shall be considered as
having the same effect and be equivalent to an original signed document.
Borrower:
Chantal Skin Care Corporation
By:
----------------------------
Name:
Title:
Date:
--------------------------
GUARANTOR:
Corporate Sports Incentives, Inc.
By:
----------------------------
Name:
Title:
Date:
--------------------------
LENDERS:
By:
----------------------------
Name:
Title:
Date:
--------------------------
SCHEDULE A
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LENDERS ADDRESS LOAN AMOUNT
Xxxxx Family Irrevocable 00 Xxxxxxxx Xxxxxxxxx, $112,500
Stock Trust Xxx Xxxxx, Xxx Xxxx 00000
Xxxx Xxxxxxxx 0 Xxxxx Xxx x00,000
Xxx Xxxxx, Xxx Xxxx 00000
Xxxxxx Xxxxxxxx 0000 Xxxxxxxx Xxxxxx x00,000
Xxxxxxxx, Xxx Xxxx 00000
Xxxxxxx Xxxxxxx Family 0 Xxxxxxx Xxxxx $112,500
Limited Partnership Xxxxxxxx, Xxx Xxxx 00000
Xxxxx Xxxxxx 000 Xxxxxxxxx Xxxxx Xxxx $50,000
Xxxxxxxxx, XX 00000
Xxxx Financial Group, Inc. $10,000
Xxxxxx Xxxxxxxxx One Clearview Drive $10,000
Xxxxxxxxxxxx, XX 00000
Xxxxx Xxxxxxxxx 0000 Xxxxx Xxxxx Xxxxxxxxx x00,000
#000, Xxxxxx Xxxxx, XX 00000
Xxxxxx Xxxxxx 5 Foxwood Cove $10,000
Xxxxxxxxx, XX 00000
Xxxx Xxxxxx 74 Captain Eames Circle $10,000
Xxxxxxx, XX 00000
Xxxx Xxxxxxx Ridge Road $25,000
Xxxxxx, XX 00000
Phil St. Germain 000 Xxx Xxxxxx $25,000
Xxxxxxxxxx, XX 00000
Xxxxxx Xxxxxx 000 Xxxxxxxx Xxxxxx $10,000
Xxxxxxxxx, XX 00000
Xxxx Xxxxx 0 Xxxxxxxxx Xxxx x00,000
Xxxxxx, XX 00000
Xxxxxxx Xxxx $45,000
Xxxxxx Xxxxxxxx $75,000
Xxxxxx Georgiafanids $10,000
EXHIBIT A
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THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), NOR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS
AND MAY NOT BE PLEDGED, SOLD, ASSIGNED OR TRANSFERRED UNLESS (I) A REGISTRATION
STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAW REQUIREMENTS HAVE BEEN MET OR (II) UTIX GROUP,
INC. RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO UTIX GROUP, INC.
THAT EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT AND
THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF APPLICABLE STATE SECURITIES
LAWS ARE AVAILABLE.
No. _____ $_________
UTIX GROUP, INC.
PROMISSORY NOTE
November __, 2003
UTIX GROUP, INC., a Delaware corporation formerly known as Chantal Skin
Care Corporation (the "Company") with an address at 000 Xxxxxxxxx Xxxxxx,
Xxxxxxxxxx, XX 00000-0000, for value received hereby promises to pay to
_____________________________________ (the "Holder"), or its registered assigns,
the sum of ______________ Dollars ($_______), or such lesser amount as shall
then be outstanding hereunder. The principal amount hereof and any unpaid
accrued interest hereon, as set forth below, shall be due and payable on the
earlier to occur of (i) November __, 2004, (ii) when declared due and payable by
the Holder upon the occurrence of an Event of Default (as defined below), or
(iii) the completion by the Company of an equity financing of at least $1.5
million, which such financing shall be exclusive of the Rule 504 Offering (as
defined in Section 4.03(i) of the Share Exchange Agreement) (the "Maturity
Date"). Payment for all amounts due hereunder shall be made by mail to the
registered address of the Holder. This Note is issued in connection with the
Loan Agreement between the Company and the Lenders who are signatories thereto,
dated October 2003, as the same may from time to time be amended, modified or
supplemented (the "Loan Agreement"). The holder of this Note is subject to
certain restrictions set forth in the Loan Agreement and shall be entitled to
certain rights and privileges set forth in the Loan Agreement. This Note is one
of the Notes referred to as the "Notes" in the Loan Agreement. Capitalized terms
used but not defined herein shall have the meanings assigned to them in the Loan
Agreement.
The following is a statement of the rights of the Holder of this Note and
the conditions to which this Note is subject, and to which the Holder hereof, by
the acceptance of this Note, agrees:
1. DEFINITIONS. As used in this Note, the following terms, unless the
context otherwise requires, have the following meanings:
(i) "Company" includes any corporation which shall succeed to or
assume the obligations of the Company under this Note.
(ii) "Holder," when the context refers to a holder of this Note,
shall mean any person who shall at the time be the registered holder of
this Note.
2. INTEREST. Commencing on March 31, 2004, and on each June 30,
September 30 and December 31 thereafter until all outstanding principal and
interest on this Note shall have been paid in full, the Company shall pay
interest at the rate of seven percent (7%) per annum (the "Interest Rate") on
the principal of this Note outstanding during the period beginning on the date
of issuance of this Note and ending on the date that the principal amount of
this Note becomes due and payable.
3. EVENTS OF DEFAULT. If any of the events specified in this Section 3
shall occur (herein individually referred to as an "Event of Default"), the
Holder of the Note may, so long as such condition exists, declare the entire
principal and unpaid accrued interest hereon immediately due and payable. In all
instances below, the Company or Guarantor, as applicable, has sixty (60) days to
cure.
(i) Default in the payment of the principal and unpaid accrued
interest of this Note when due and payable, whether at maturity or
otherwise;
(ii) Failure of a representation of the Company or the Guarantor in
the Loan Agreement to be true;
(iii) Failure of the Company or the Guarantor to observe or perform
any material term, covenant, or agreement contained in the Loan Agreement,
or the dissolution, termination of existence, or business failure of the
Company or the Guarantor;
(iv) The institution by the Company or the Guarantor of proceedings
to be adjudicated as bankrupt or insolvent, or the consent by it to
institution of bankruptcy or insolvency proceedings against it or the
filing by it of a petition or answer or consent seeking reorganization or
release under the federal Bankruptcy Act, or any other applicable federal
or state law, or the consent by it to the filing of any such petition or
the appointment of a receiver, liquidator, assignee, trustee or other
similar official of the Company or the Guarantor, or of any substantial
part of its property, or the making by it of an assignment for the benefit
of creditors, or the taking of corporate action by the Company or the
Guarantor in furtherance of any such action; or
(v) If, within sixty (60) days after the commencement of an action
against the Company or the Guarantor (and service of process in connection
therewith on the Company or the Guarantor) seeking any bankruptcy,
insolvency, reorganization, liquidation, dissolution or similar relief
under any present or future statute, law or regulation, such action shall
not have been resolved in favor of the Company or the Guarantor, as
applicable, or all orders or proceedings thereunder affecting the
operations or the business of the Company or the Guarantor, as applicable,
stayed, or if the stay of any such order or proceeding shall thereafter be
set aside, or if, within sixty (60) days after the appointment without the
consent or acquiescence of the Company or the Guarantor of any trustee,
receiver or liquidator of the Company or the Guarantor, as applicable, of
all or any substantial part of the properties of the Company or Guarantor,
as applicable, such appointment shall not have been vacated; or
(vi) The cessation of the Company's or Guarantor's business for
more than thirty (30) days.
4. GUARANTEE. The indebtedness evidenced by this Note is
unconditionally guaranteed by Corporate Sports Incentives, Inc., a wholly-owned
subsidiary of the Company ("CSI").
5. PREPAYMENT. Prior to the Maturity Date, this Note may be prepaid by
the Company, without prepayment penalty, upon twenty (20) days' prior written
notice to the Holder, at any time, in whole or in part.
6. ASSIGNMENT. Subject to the restrictions on transfer described in
Section 8 below, the rights and obligations of the Company and the Holder of
this Note shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.
7. WAIVER AND AMENDMENT. Any provision of this Note may be amended,
waived or modified upon the written consent of the Company and the holders of at
least a majority of the face amount of all then outstanding Notes issued
pursuant to the Loan Agreement.
8. TRANSFER OF THIS NOTE. With respect to any offer, sale or other
disposition of this Note, the Holder will give written notice to the Company
prior thereto, describing briefly the manner thereof, together with a written
opinion of such Holder's counsel reasonably acceptable to the Company, to the
effect that such offer, sale or other distribution may be effected without
registration or qualification (under any federal or state law then in effect).
Promptly upon receiving such written notice and reasonably satisfactory opinion,
if so requested, the Company shall notify such Holder that such Holder may sell
or otherwise dispose of this Note, all in accordance with the terms of the
notice delivered to the Company. If a determination has been made pursuant to
this Section 8 that the opinion of counsel for the Holder is not reasonably
satisfactory to the Company, the Company shall so notify the Holder promptly
after such determination has been made. Each Note thus transferred and each
certificate representing the securities thus transferred shall bear a legend as
to the applicable restrictions on transferability in order to ensure compliance
with the Securities Act, unless in the opinion of counsel for the Company such
legend is not required. The Company may issue stop transfer instructions to its
transfer agent in connection with such restrictions.
9. NOTICES. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given on the date of service if personally served on the party to whom such
notice is to be given, on the date of transmittal of service via telecopy to the
party to whom notice is to be given (with a confirming copy delivered within 24
hours thereafter), or on the third day after mailing if mailed to the party to
whom notice is to be given, by first class mail, registered or certified mail,
postage prepaid, or via a recognized overnight courier providing a receipt for
delivery and properly addressed at the respective addresses of the parties as
set forth herein. Any party hereto may by notice so given change its address for
future notice hereunder.
10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, excluding that body of law
relating to conflict of laws.
11. HEADING; REFERENCES. All headings used herein are used for
convenience only and shall not be used to construe or interpret this Note.
Except where otherwise indicated, all references herein to Sections refer to
Sections hereof.
IN WITNESS WHEREOF, the Company has caused this Note to be issued this
_____ day of November, 2003.
UTIX GROUP, INC. (fka Chantal Skin Care Corporation)
By:
-------------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
Name of Holder:
-----------------------------
Address:
------------------------------------
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EXHIBIT B
---------
GUARANTEE
Corporate Sports Incentives, Inc., a New Hampshire corporation
("Guarantor"), hereby guarantees the prompt payment of the principal of and
interest on the promissory notes of Utix Group, Inc. (fka Chantal Skin Care
Corporation), a Delaware corporation (Maker"), dated November __, 2003, that are
issued pursuant to the Loan Agreement, dated October 2003, by and among Maker,
Guarantor and the lenders who are signatories thereto (the "Loan Agreement"), in
an aggregate principal amount of up to One Million Dollars ($1,000,000) (the
"Notes").
This Guarantee is issued pursuant to the Loan Agreement, and is
subject to the terms and conditions of the Loan Agreement, including, without
limitation, the obligation of the Guarantor to satisfy this Guarantee.
Guarantor agrees that it shall not be necessary for the holder of
the Notes to proceed in any manner against Maker for the payment of the Notes as
a condition precedent to enforcing this Guarantee.
Guarantor hereby waives notice of acceptance.
IN WITNESS WHEREOF, Guarantor has executed this Guarantee on the
_____ day of November, 2003.
CORPORATE SPORTS INCENTIVES, INC.
By:
-------------------------------------
Name:
Title:
