EXHIBIT 3.7
BUSINESS LOAN AGREEMENT
JULY 2003
This Loan Agreement is made and entered into to be effective upon execution by
and between Corporate Sports Incentives, Inc. a New Hampshire Corporation, (the
"Borrower") and _________________, (the "Lender"), as follows:
1. LOAN AGREEMENT. The Borrower agrees to borrow from Lender, and the Lender
agrees to lend to the Borrower on the date hereof, subject to the terms and
conditions set forth hereunder and in the Loan, hereinafter described, the
sum of $_____________ (the "Loan"). The maximum amount of the Loan shall be
$1,000,000 with a minimum investment of $50,000 equaling one (1) unit
a. The Loan will be funded within ten (10) business days of execution
of this Agreement. Funds will be placed in a ▇▇▇▇▇▇▇ ▇▇▇▇▇ money
market account.
2. Terms.
a. Interest Rate - The Loan shall bear interest at a rate of nine
percent (9%) per annum. Interest will be paid semi-annually.
b. Maturity date of July 15, 2006
c. Conversion - Lender may convert Loan to twenty percent (20%) (pro
rata per $50,000 increments or 1.0% per unit = est. 1.2 shares of
120 total outstanding post capitalization) of the Company at
holder's request anytime after July 15, 2004 through maturity date.
Conversion pricing shall ratchet down in equal formulation with the
sale of any stock at a lower valuation prior to maturity date.
Company has right to prepay loan with a thirty notice with a 10%
premium prior to July 15, 2004.
d. Security. The Loan shall be secured (the "Security Interest") by all
of the assets of Borrower, including those acquired after the date
hereof (the "Collateral"), excluding selective receivable financing
on bundled retail products.
e. A Warrant to purchase one share (est. 0.83%) of Company for $50,000
shall be granted upon execution of $50,000 unit loan. The Warrant
expires July 15, 2008. In the event of a public merger the Warrant
shall equate to one share or 0.83% of the shares allocated to the
existing Company shareholders on a fully diluted basis at the time
of merger.
3. REPRESENTATIONS. The Borrower represents and warrants to the Lender as
follows:
a. Good Standing. Borrower is a corporation duly organized, validly
existing, and in good standing under the laws of the State of New
Hampshire, 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.
b. Corporate Authority. The Borrower has full power and authority to
enter into this Agreement, to borrow the funds, to execute and
delver 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.
c. Binding Agreement. This Agreement constitutes 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.
d. Collateral. Borrower has, and will have upon acquisition, good and
marketable title to the collateral.
4. Affirmative Covenants. Until the payment in full of the Loan and
performance of all obligations of the borrower hereunder, unless otherwise
indicated, the Borrower 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.
b. Insurance. Maintain insurance with insurance companies acceptable to
the Lender on such properties, in such amounts and against such
risks as is customarily maintained by similar businesses operating
within the same industry.
c. Maintenance. Maintain, preserve, and keep the Collateral in good
repair and working order and condition
d. Notice of Claims. Notify Lender of any claims made or legal
processes instituted against the properties or other assets of
Lender within Fifteen days of Borrower becoming aware of the
existence of such claim or legal process. Agree to diligently work
to resolve, in an efficient and cost effective manner.
5. Negative Covenants. Until payment in full of the Loan and the performance
of all other obligations of the Borrower hereunder, the Borrower shall not,
except with the prior written consent of the majority (51%) of the Lenders:
a. Loans. Make loans or advances to a person, firm or corporation,
except loans advances made in the ordinary course of business.
b. Additional Borrowing and Guaranty. Borrower will not 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 beyond the acknowledged
$1,000,000 Loan amount stated in this agreement and selective
receivable financing without prior written agreement from Lender.
6. Events of Default. The balance of all credit extensions hereunder to the
Borrower 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, Company has sixty (60) days
to cure prior to default.
a. Non-payment of the interest or principal under the Loan more than
thirty (30) business days after such payment shall have become due
and payable, whether at maturity or otherwise; or
b. Failure of a representation of Borrower to be true; or
c. Failure of Borrower to observe or perform any material term,
covenant, or agreement contained in any other paragraph of this
agreement; or the dissolution, termination of existence, or business
failure of the Borrower; or
d. The appointment of a custodian (including without limitation of a
receiver or trustee) of any material part of the property of the
Borrower; or
e. Institution by or against the Borrower of any proceeding under any
bankruptcy, arrangement, or reorganization, insolvency, or similar
law; or
f. The cessation of Borrower's business for more than thirty days
7. Assignment. No portion of the Loan shall be assignable to a third party
without the expressed written consent of the Borrower.
8. Miscellaneous
a. This agreement and all of the covenants, warranties, and
representations of the Borrower and all powers and rights of Lender
hereunder shall be in addition to and cumulative of all other
covenants, representations, and warranties of Borrower and all other
rights and powers of Lender contained in, or provided for in, any
other instrument or document now or hereafter executed and delivered
by Borrower to or in favor of Lender. No delay or failure on the
part of 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 tight and the rights and remedies of Lender
are cumulative to and not exclusive or remedies which it would
otherwise have. No waiver, consent or modification, or amendment
shall be effective as against Lender unless the same is in writing
and signed by Lender. 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 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. All communications and
notices provided for herein shall be in writing and shall be deemed
to have been given when delivered personally
or when deposited in the U.S. mail by registered or certified
postage prepaid, addressed to the parties at the address beside
their names below.
b. Borrower agrees to pay and reimburse Lender for all expenses and
damages paid or incurred by Lender, including court costs and
reasonable attorney's fees, arising out of a default hereunder
and/or the collection of the Loan or any other liability, or in
preserving or protecting the right of Lender hereunder or with
respect to any collateral or security for the Loan or other
liabilities including all of the foregoing incurred in any
bankruptcy arrangement, or reorganization proceeding involving
Borrower. Any or all indebtedness owing by Lender to Borrower may at
any time without notice or demand be offset and applied to any
indebtedness or liability of Borrower to Lender, whether or not the
due. c. This agreement shall be binding upon Borrower and its
successors and assigns, and shall inure to the benefit of Lender and
the benefit of its successors and assigns including any subsequent
holder or holders of the Note or any interest therein
d. Borrower herby expressly waives any presentment, demand, protest or
other notice of any kind
9. Governing Law. The laws of the State of New Hampshire 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
11. Executed at on the day and year first above 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: Corporate Sports Incentives, Inc.
By: ________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Date
Its: President and CEO
Lender:
By: _____________________________
Name: _______________________ Date
SSN: _________________
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. ___ $___________
UTIX GROUP, INC.
CONVERTIBLE PROMISSORY NOTE
November 13, 2003
Utix Group, Inc., a Delaware corporation formerly known as Chantal Skin
Care Corporation (the "Company") with an address at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, for value received hereby promises to pay to
_______________ (the "Holder"), or its registered assigns, the sum of
_________________ Dollars ($______), 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) _______, 2006, or (ii) when declared due and payable by the Holder
upon the occurrence of an Event of Default (as defined below) (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 pursuant to Section 1.01
of the Share Exchange Agreement, dated as of October 31, 2003, by and among the
Company, Corporate Sports Incentives, Inc., a New Hampshire corporation ("CSI"),
▇▇▇▇ ▇▇▇▇▇▇▇, an individual, and the stockholders of CSI (the "Share Exchange
Agreement"), in which it was agreed that each of the lenders, including the
Holder, under the Business Loan Agreement with CSI dated as of July 2003, as the
same may from time to time be amended, modified or supplemented (the "Loan
Agreement") shall cancel the debt owed to such lender by CSI under the Loan
Agreement in exchange for the issuance of a note by the Company for their
respective loan amounts. By accepting this Note, the Holder acknowledges and
agrees that the debt owed by CSI to such Holder under the Loan Agreement is
cancelled. 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. The Company shall pay interest at the rate of nine
percent (9%) 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. Said interest shall be paid semi-annually in arrears until all
outstanding principal and interest on this Note shall have been paid in full.
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 CSI, as guarantor (the
"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 in the Loan
Agreement to be true;
(iii) 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, as applicable, 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, as applicable, of any trustee, receiver or
liquidator of the Company or the Guarantor, as applicable, or of all or
any substantial part of the properties of the Company, or the
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 the Guarantor.
5. CONVERSION.
5.1 VOLUNTARY CONVERSION. The Holder of this Note has the
right, at the Holder's option, after December 31, 2004, to convert this Note, in
accordance with the provisions of Section 5.3 hereof, in whole or in part, into
fully paid and nonassessable shares of Common Stock of the Company (the "Common
Stock"). The number of shares of Common Stock into which this Note may be
converted ("Conversion Shares") shall be determined by multiplying the principal
amount of the Note by the Conversion Price (as defined below). The Conversion
Price shall be equal to (A) the quotient of (x) 1.2 divided by (y) 50,000
multiplied by (B) 96,794.609.
5.2 CONVERSION PROCEDURE.
5.2.1 NOTICE OF CONVERSION. Before the Holder shall
be entitled to convert this Note into shares of Common Stock, it shall surrender
this Note at the principal office of the Company and shall give written notice
by mail, postage prepaid, to the Company at its principal corporate office, of
the election to convert the same pursuant to Section 5.1, and shall state
therein the name or names in which the certificate or certificates for shares of
Common Stock are to be issued. The Company shall, as soon as practicable
thereafter, issue and deliver at such office to the Holder of this Note a
certificate or certificates for the number of shares of Common Stock to which
the Holder of this Note shall be entitled as aforesaid. Such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender of this Note, and the person or persons entitled to receive
the shares of Common Stock issuable upon such conversion shall be treated for
all purposes as the record holder or holders of such shares of Common Stock as
of such date.
5.3 DELIVERY OF STOCK CERTIFICATES. As promptly as
practicable after the conversion of this Note, the Company at its expense will
issue and deliver to the Holder of this Note a certificate or certificates for
the number of full shares of Common Stock issuable upon such conversion.
5.4 MECHANICS AND EFFECT OF CONVERSION. No fractional
shares of Common Stock shall be issued upon conversion of this Note. In lieu of
the Company issuing any fractional shares to the Holder upon the conversion of
this Note, the Company shall pay to the Holder the amount of outstanding
principal that is not so converted, such payment to be in the form as provided
below. Upon the conversion of this Note pursuant to Section 5.1 above, the
Holder shall surrender this Note, duly endorsed, at the principal office of the
Company. At its expense, the Company shall, as soon as practicable thereafter,
issue and deliver to such Holder at such principal office a certificate or
certificates for the number of shares of such Common Stock which the Holder
shall be entitled upon such conversion (bearing such legends as are required by
the Loan Agreement and applicable state and federal securities laws in the
opinion of counsel to the Company), together with any other securities and
property to which the Holder is entitled upon such conversion under the terms of
this Note, including a check payable to the Holder for any cash amounts payable
as described above. Upon conversion of this Note, the Company shall be forever
released from all of its obligations and liabilities under this Note.
6. CONVERSION PRICE ADJUSTMENTS.
6.2 ADJUSTMENTS FOR STOCK SPLITS AND SUBDIVISIONS. In the
event the Company should at any time or from time to time after the date of
issuance hereof fix a record date for the effectuation of a split or subdivision
of the outstanding shares of Common Stock, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as "Common Stock Equivalents") without payment of any consideration
by such holder for the additional shares of Common Stock or the Common Stock
Equivalents, then, as of such record date (or the date of such dividend
distribution, split or subdivision if no record date is fixed), the Conversion
Price of this Note shall be appropriately decreased so that the number of shares
of Common Stock issuable upon conversion of this Note shall be increased in
proportion to such increase of outstanding shares.
6.3 ADJUSTMENTS FOR REVERSE STOCK SPLITS. If the number
of shares of Common Stock outstanding at any time after the date hereof is
decreased by a combination of the outstanding shares of Common Stock, then,
following the record date of such combination, the Conversion Price for this
Note shall be appropriately increased so that the number of shares of Common
Stock issuable on conversion hereof shall be decreased in proportion to such
decrease in outstanding shares.
6.3 NOTICES OF RECORD DATE, ETC. In the event of:
6.3.1 Any taking by the Company of a record
of the holders of any class of securities of the Company for the purpose of
determining the holders thereof who are entitled to any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right; or
6.3.2 Any capital reorganization of the Company,
any reclassification or recapitalization of the capital stock of the Company or
any transfer of all or substantially all of the assets of the Company to any
other person or any consolidation or merger involving the Company; or
6.3.3 Any voluntary or involuntary dissolution,
liquidation or winding up of the Company, then the Company will mail to the
holder of this Note at least ten (10) business days prior to the earliest date
specified therein, a notice specifying:
6.3.3.1 The date on which any such record
is to be taken for the purpose of such right, and the amount and character of
such right; and
6.3.3.2 The date on which any such
reorganization, reclassification, transfer, consolidation, merger, dissolution,
liquidation or winding up is expected to become effective and the record date
for determining stockholders entitled to vote thereon.
6.4 RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The
Company shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock solely for the purpose of effecting the
conversion of the Note such number of its shares of Common Stock as shall from
time to time be sufficient to effect the conversion of the Note; and if at any
time the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of the entire outstanding principal amount
of this Note, in addition to such other remedies as shall be available to the
holder of this Note, the Company will use its best efforts to take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purposes.
7. TREATMENT OF NOTE. To the extent permitted by generally
accepted accounting principles, the Company will treat, account and report the
Note as debt and not equity for accounting purposes and with respect to any
returns filed with federal, state or local tax authorities.
8. NO STOCKHOLDER RIGHTS. Nothing contained in this Note shall be
construed as conferring upon the Holder or any other person the right to vote or
to consent or to receive notice as a stockholder in respect of meetings of
stockholders for the election of directors of the Company or any other matters
or any rights whatsoever as a stockholder of the Company; and no interest shall
be payable or accrued in respect of the Conversion Shares obtainable hereunder
until, and only to the extent that, this Note shall have been converted.
9. PREPAYMENT. Prior to ________, 2004, this Note may be prepaid
by the Company upon thirty (30) days' prior written notice to the Holder, in
whole or in part, by paying a ten percent (10%) premium.
10. ASSIGNMENT. Subject to the restrictions on transfer described
in Section 12 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.
11. 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.
12. 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 12 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.
13. 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.
14. 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.
15. 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 A
NOTICE OF CONVERSION
(To Be Signed Only Upon Conversion of Note)
The undersigned, the holder of the foregoing Note, hereby surrenders
such Note for conversion into shares of Common Stock of UTIX GROUP, INC., or its
successor-in-interest, to the extent of $__________ unpaid principal amount of
such Note, and requests that the certificates for such shares be issued
in the name of, and delivered to, _____________, whose address is
______________________
Dated:
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(Signature must conform in all respects to name
of holder as specified on the face of the Note)
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(Address)