CONVERTIBLE LOAN AND SECURITY AGREEMENT
This Convertible Loan and Security Agreement (the"Loan Agreement") is made as of November 12, 2002 (the"Effective Date"), by and betweenLifePoint, Inc., a Delaware corporation, having a principal place of business at 1205 South Dupont Street, Ontario, California 91761 ("Borrower"), andGeneral Conference Corporation of Seventh-day Adventists,a District of Columbia corporation having a principal place of business at 12501 Old Columbia Pike, Silver Spring, Maryland 20904 ("Lender").
Recitals
Whereas, Borrower and Lender have agreed to enter into this Loan Agreement pursuant to which Borrower may obtain credit from Lender, subject to the terms and conditions stated herein, for amounts up to the Loan Commitment; and
Whereas, Lender is willing to provide such credit to and in favor of Borrower, subject to the terms and conditions of this Loan Agreement.
Now, Therefore, in consideration of the foregoing recitals and the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:
Agreement
"Advance" means the amount advanced under the loan made, or to be made, pursuant toSection 2 of this Loan Agreement.
"Borrowing Date" means any date on which an Advance occurs.
"Borrowing Request" shall have the meaning set forth inSection 2.2.
"Business Day" means any day, other than a Saturday, Sunday, or federal holiday.
"Common Stock" means Borrower's common stock, par value $0.001 per share.
"Convertible Securities"means preferred stock or other stock, options, warrants, purchase rights or other securities convertible into or exchangeable for, shares of Common Stock.
"Due Dilligence" means Lender's review of the Borrower's business model (including, among other things, Borrower's market opportunities) and of the technical aspects of Borrower's business. Satisfactory conclusion of this review, as determined by Lender in its sole discretion, will result in the expansion of the Loan Commitment from $2,500,000 to a maximum of $10,000,000.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, including the rules and regulations promulgated thereunder.
"Event of Default" means any of those conditions or events listed inSection 11of this Loan Agreement.
"Expense Milestones" means those certain maximum operating expenses, below which Borrower is to be, as of certain dates, as such expenses and dates are specified onExhibit B attached hereto.
"GAAP" means United States generally accepted accounting principles (including principles of consolidation), in effect from time to time, consistently applied.
"Intellectual Property Collateral" means any intellectual property, in any medium, of any kind or nature whatsoever, now or hereafter owned or acquired or received by Borrower or in which Borrower now holds or hereafter acquires or receives any right or interest, and shall include, in any event, any Copyright, Trademark, Patent, trade secret, customer list, internet domain name (including any right related to the registration thereof), proprietary or confidential information, mask work, source, object or other programming code, invention (whether or not patented or patentable), technical information, procedure, design, knowledge, know-how, software, data base, data, skill, expertise, recipe, experience, process, model, drawing, material or record.
"Loan Commitment" means, initially, the principal amount of $2,500,000. After Due Diligence is successfully completed, "Loan Commitment" shall mean the principal amount of $10,000,000.
"Loan Documents" means collectively, this Loan Agreement, the Notes, the Warrants, and any other agreement or instrument executed pursuant to or in connection with the Obligations, as such documents may be amended, modified, supplemented or restated from time to time.
"Loan Increase Warrant" means a warrant in favor of Lender or its designee for the purchase of 4,500,000 shares of Common Stock of Borrower at a price equal to the Warrant Price and substantially in the form ofExhibit C attached hereto to be issued to Lender upon the successful completion of Due Diligence and the resulting increase in the Loan Commitment to $10,000,000 in the aggregate.
"Loan Warrant" meansa warrant in favor of Lender or its designee for the purchase of 1,500,000 shares of Common Stock of Borrower at a price equal to the Warrant Price and substantially in the form ofExhibit C attached hereto.
"Loan Conversion Shares" means collectively, the shares of Borrower Common Stock issued upon conversion of Obligations due under the Note(s) pursuant toSection 5 of this Loan Agreement.
"Maturity Date" means, unless earlier converted, the earlier to occur of (i) the date that is thirty (30) months from the Effective Date or (ii) a Sale of the Borrower.
"Notes" means the convertible promissory notes executed by Borrower and evidencing the Advances, substantially in the form ofExhibits A-1 andA-2attached hereto, each of which shall be referred to as a "Note" herein.
"Obligations" means all Advances, debts, liabilities, obligations, covenants and duties arising under this Loan Agreement or the Note(s) owing by Borrower to Lender whether direct or indirect, absolute or contingent.
"Patents" means all of the following in which Borrower now holds or hereafter acquires any interest: (a) all letters patent of the United States or any other country, all registrations and recordings thereof and all applications for letters patent of the United States or any other country, including, without limitation, registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state thereof, or any other country; (b) all reissues, divisions, continuations, renewals, continuations-in-part or extensions thereof; (c) all petty patents, divisionals and patents of addition; (d) all patents to issue in any such applications; (e) income, royalties, damages, claims and payments now and hereafter due and/or payable with respect to patents, including, without limitation, damages, claims and recoveries for past, present or future infringement; and (f) rights to sue for past, present and future infringements of any p atent.
"Payment Date"means any of the dates on which payment of accrued and unpaid interest is due as set forth inSection 3.1 hereof.
"Penalty Warrant" means a warrant in favor of Lender or its designee issued by Borrower pursuant to the terms outlined inSection 9.3 hereof for the purchase of a number shares of Common Stock of Borrower equal to the amount specified onExhibit B-1 orB-2attached hereto, as applicable, at a price equal to the Warrant Price and substantially in the form ofExhibit C attached hereto.
"Person" means any individual, sole proprietorship, partnership, limited liability company, joint venture, company association, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency.
"Revenue Milestones" means those certain minimum cumulative revenues that Borrower is to achieve on or prior to certain dates, as such revenues and dates are specified onExhibit B-1 andB-2 attached hereto.
"Sale of the Borrower" means any event or series of events or transaction or series of transactions whereby (a) any "person" or "group" (as such terms are used in Section 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of shares representing more than 50% of the combined voting power of the then outstanding securities entitled to vote generally in elections of directors of the Borrower ("Voting Stock"), (b) the Borrower consolidates with or merges into any other corporation, or any other corporation merges into the Borrower, and, in the case of any such transaction, the outstanding Common Stock of the Borrower is reclassified into or exchanged for any other property or security, unless the stockholders of the Borrower immediately before such transaction own, directly or indirectly immediately following such transaction, at least a majority of the combined voting power of the outstanding voting se curities of the corporation resulting from such transaction, or (c) the Borrower conveys, transfers or leases all or substantially all of the assets of the Borrower, unless such conveyance, transfer or lease is to a corporation and the stockholders of the Borrower immediately before such conveyance, transfer or lease own, directly or indirectly immediately following such transaction, at least a majority of the combined voting power of the corporation to which such assets are so conveyed, transferred or leased.
"SEC" means the United States Securities and Exchange Commission.
"Second Loan Commitment Fee" means the fee of $37,500 payable by Borrower to Lender upon the signing by Borrower of the Second Note (as defined inSection 2.1).
"Securities Act" means the Securities Act of 1933, as amended, including the rules and regulations promulgated thereunder.
"Trademarks" means any of the following in which Borrower now holds or hereafter acquires any interest: (a) any trademarks, tradenames, corporate names, company names, business names, trade styles, service marks, logos, other source or business identifiers, prints and labels on which any of the foregoing have appeared or appear, designs and general intangibles of like nature, now existing or hereafter adopted or acquired, all registrations and recordings thereof and any applications in connection therewith, including, without limitation, registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state thereof, or any other country (collectively, the "Marks"); (b) any reissues, extensions or renewals thereof; (c) the goodwill of the business symbolized by or associated with the Marks; (d) income, royalties, damages, claims and payments now and hereafter due and/or payable with respect to the M arks, including, without limitation, damages, claims and recoveries for past, present or future infringement; and (e) rights to sue for past, present and future infringements of the Marks.
"UCC"means the Uniform Commercial Code as the same may from time to time be in effect in the State of California;provided, however, in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of Lender's security interest in any Intellectual Property Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of California, the term "UCC" shall mean the Uniform Commercial Code (including the Articles thereof) as in effect at such time in such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of definitions related to such provisions.
"Warrants" means, collectively, the Loan Warrant, the Loan Increase Warrant and the Penalty Warrants, with each of the foregoing being a "Warrant."
"Warrant Price" means an exercise price equal to $3.00 per share.
Section 2. Amount and Terms of Credit
Upon Notice from Lender that it has successfully completed its Due Diligence, Borrower shall execute the Note attached hereto asExhibit A-2 (the "Second Note") and shall be entitled to request Advances in excess of the Initial Advance; provided that Borrower has remitted the Second Loan Commitment Fee to Lender. Subject to the terms and conditions of this Loan Agreement, Lender agrees to make additional Advances to Borrower from time to time following the execution of the Second Note until (but not including) the Maturity Date. The aggregate principal amount of all Advances shall not exceed the Loan Commitment. Advances shall be in a minimum amount of $500,000 each and integral multiples of $50,000 in excess of that minimum amount;provided that (a) Borrower may not request more than one Advance each calendar month, and (b) the aggregate principal amount of all Advances requested in any fiscal quarter of the Borrower shall not exceed $2,500,000.
Section 3. Interest and Payments
3.4 Optional Prepayments. Borrower may prepay the unpaid principal amount of any Advance in whole or in part without premium or penalty at any time and from time to time. Borrower's election to prepay any amount will not limit Borrower's ability to request subsequent Advances under this Loan Agreement.
As collateral security for the full, prompt, complete and final payment and performance when due (whether at the Maturity Date, by acceleration, or otherwise) of all the Obligations, and in order to induce Lender to enter into this Loan Agreement, Borrower hereby grants and pledges to Lender a first priority security interest in all of Borrower's assets including all right, title, and interest in, to and under the Intellectual Property Collateral (including without limitation those Copyrights, Patents, and Trademarks listed onSchedules A, B, and Chereto), and including without limitation all proceeds thereof (such as, by way of example but not by way of limitation, license royalties and proceeds of infringement suits), the right to sue for past, present and future infringements, all rights corresponding thereto throughout the world and all re-issues, divisions, renewals, extensions, continuations, and continuations-in-part thereof. For the term of this Loan Agreement, Borrower shall not sell any Intellectual Property without the permission of Lender, which shall not unreasonably be withheld. Additionally, Lender shall have a first right of refusal on any sale of any of the Intellectual Property during the term of this Loan Agreement. Lender hereby acknowledges that the first priority security interest granted by thisSection 4 does not apply to any of the tangible assets of Borrower currently subject to UCC filings, all of which are set forth onSchedule D hereto. The first priority security interest created by thisSection 4 will be released by Lender with respect to specific tangible assets identified by Borrower, which may include accounts receivable, inventory and equipment, that are required to be used to obtain usual and customary commercials lines of credit or capital equipment loans from time to time;provided, however, that the security interest created by thisSection 4 with respect to the Intellectual Property sha ll not be released without the prior written consent of Lender. Additionally, if the Lender does not increase the Loan Commitment to $10,000,000, then the Lender agrees to subordinate its entire security interest to any future senior debt of Borrower; provided that such senior debt of Borrower is for a principal amount of at least $5,000,000. Concurrently with the signing of this Loan Agreement, Borrower and Lender shall coordinate making the appropriate UCC and other filings in the State of Delaware and in the State of California, if necessary, and in any other jurisdiction (including filings with the United States Patent and Trademark Office) necessary to record this security interest;provided, however, that Borrower shall not be required to assign any of its assets, whether on a conditional basis or otherwise.
Section 6. Conditions Precedent
Section 7. Representations and Warranties of Borrower
Borrower hereby represents and warrants to Lender as of the Effective Date that:
7.1 Organization, Good Standing and Qualification. Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business. Borrower is duly qualified to transact business as a corporation and is in good standing in each jurisdiction in which the failure so to qualify would have a material adverse effect upon Borrower's ability to perform its obligations under any of the Loan Documents or the validity or enforceability of, or Lender's rights and remedies under, this Loan Agreement or any of the other Loan Documents.
7.2 Authorization; Due Execution. Borrower has the requisite corporate power and authority to enter into the Loan Documents and to perform its obligations under the terms of the Loan Documents and, at the time of a Conversion pursuant toSection 5 of this Loan Agreement, will have the requisite corporate power to sell the Loan Conversion Shares. All corporate action on the part of Borrower, its officers and directors necessary for the authorization, execution and delivery of the Loan Documents has been taken. The Loan Documents have been duly authorized by Borrower and, upon due execution and delivery by Borrower of the Loan Documents and of Lender of this Loan Agreement, the Loan Documents will each be a valid and binding agreement of Borrower, enforceable in accordance with its respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally or by equitable principles.
7.5 Governmental Consents. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state, local or provincial governmental authority on the part of Borrower is required in connection with the consummation of the transactions contemplated by this Loan Agreement, except for such notices required or permitted to be filed with certain state and federal securities commissions after the Effective Date and after the issuance of Loan Conversion Shares, which notices will be filed on a timely basis.
7.6 No Conflict. Borrower's execution, delivery and performance of each of the Loan Documents does not violate any provision of Borrower's Certificate of Incorporation or Bylaws, each as amended as of the date hereof.
Section 8. Representations and Warranties of Lender
Lender hereby represents and warrants to Borrower as of the Effective Date that:
8.2 Purchase as Trustee. The Lender is Trustee of several trusts created for the purpose of pooling, for investment purposes, SDA denominational funds and is entering into this Loan Agreement in its Trustee capacity. This Loan Agreement is made with Lender in reliance upon Lender's representation to Borrower, which by Lender's execution of this Loan Agreement it hereby confirms, that the Notes and the Loan Conversion Shares, if any, purchased by Lender will be acquired for investment, and not with a view to the resale or distribution of any part thereof, and that Lender has no present intention of selling or otherwise distributing the same.By executing this Loan Agreement, Lender further represents that it does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person except as unit holders of the fund(s) or to any third person, any interest in the Notes or any of the Loan Conversion Shares, if is sued.
8.3 Disclosure of Information. Lender has received all the information that it has requested and that it considers necessary or appropriate for deciding whether to enter into this Loan Agreement and to exercise its conversion rights underSection 5 of this Loan Agreement to acquire the Loan Conversion Shares. Lender further represents that it has had an opportunity to ask questions and receive answers from Borrower regarding the terms and conditions of the offering of the Notes and the Loan Conversion Shares.
8.4 Investment Experience. Lender is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear the economic risk of its investment and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Notes and the Loan Conversion Shares, if issued. Lender also represents it has not been organized solely for the purpose of acquiring the Notes or the Loan Conversion Shares.
8.5 Accredited Investor. Lender is an "accredited investor" as such term is defined in Rule 501 of the General Rules and Regulations prescribed by the SEC pursuant to the Securities Act.
8.6 Restricted Securities. Except as provided inSection 9.4, Lender understands that (a) the Notes have not been, and that the Loan Conversion Shares will not be, registered under the Securities Act by reason of a specific exemption therefrom, that such securities must be held by it indefinitely and that the Lender must, therefore, bear the economic risk of such investment indefinitely, unless a subsequent disposition thereof is registered under the Securities Act or is exempt from such registration; and (b) each certificate representing the Loan Conversion Shares, if issued, and the Notes will be endorsed with the following legends:
and (c) Borrower will instruct any transfer agent not to register the transfer of the Notes or the Loan Conversion Shares (or any portion thereof) unless the conditions specified in the foregoing legends are satisfied, until such time as a transfer is made pursuant to the terms of this Loan Agreement and (A) in compliance with Rule 144, (B) pursuant to a registration statement, or (C) if the opinion of counsel referred to above is to the effect that such legend is not required in order to comply with the Securities Act and/or this Loan Agreement.
Subject to the foregoing, the Borrower shall file a Form S-3 registration statement covering the Registrable Securities as soon as practicable after receipt of the request of the Lender. Lender may not request a Demand Registration prior to 90 days following the initial Advance made in accordance with this Loan Agreement.
Section 10. Covenants
Borrower covenants and agrees that, so long as any of the Obligations remain outstanding under this Loan Agreement and so long as Lender is committed to make Advances under this Loan Agreement, it will:
Section 11. Events of Defaults
Section 12. Lender's Rights and Remedies
Section 13. Borrower's Rights and Remedies
Section 14 Standstill Agreement
[The signature page follows.]
Witnessthe due execution hereof as of the day and year first above written.
LifePoint, Inc. General Conference Corporation of
Seventh-day Adventists
By:/s/ Linda H. Masterson By:/s/ Steve Rose
Name: Linda Masterson Name: Steve Rose
Title: President and CEO Title: Associate Treasurer
Exhibit A-1
THIS CONVERTIBLE PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH RULE 144 UNDER SAID ACT OR AN EFFECTIVE REGISTRATION STATEMENT RELATED HERETO OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION.
CONVERTIBLE PROMISSORY NOTE
$2,500,000 Ontario, California
November 12, 2002
Lifepoint, Inc., a Delaware corporation ("Borrower"), for value received, hereby promises to pay to the order ofGeneral Conference Corporation of Seventh-day Adventists,a District of Columbia corporation ("Lender"), in lawful money of the United States of America, the principal amount of Two Million Five Hundred Thousand Dollars ($2,500,000), together with interest as provided for below, payable on the dates, in the amounts and in the manner set forth below.
1. Loan Agreement.This Convertible Promissory Note ("Note") is the note referred to in that certain Loan Agreement, dated as of the date hereof, by and between Borrower and Lender (as the same may be amended, supplemented, restated or otherwise modified from time to time, the "Loan Agreement"). Capitalized terms used herein without definitions shall have the meanings given to such terms in the Loan Agreement.
2. Principal Payments.Subject to the terms and conditions of the Loan Agreement, the total outstanding principal balance of this Note not earlier converted in accordance with the terms of the Loan Agreement shall be due and payable on the Maturity Date.
3. Interest. The sum of the daily unpaid principal balance of this Note shall accrue interest on each day from the date hereof until such balance shall have been repaid in full at the rate or ratesper annum set forth in the Loan Agreement.
4. Conversion. The outstanding principal balance and accrued interest of this Note is convertible into Borrower Common Stock in accordance with Section 5 of the Loan Agreement.
5. Payment on Non-Business Day. In the event that any payment of principal, interest, fees or any other amounts payable by Borrower under or pursuant to this Note shall become due on any day which is not a Business Day, such due date shall be extended to the next succeeding Business Day, without any additional interest accruing as to such payment during any such extension.
6. Default.Upon the occurrence of an Event of Default (as defined in the Loan Agreement), all unpaid principal, accrued interest and other amounts owing hereunder shall be collectible by Lender pursuant to the Loan Agreement.
7. Waivers.Borrower agrees that no extension or indulgence to Borrower or the release, substitution or nonenforcement of any security, or the release or substitution of Borrower, whether with or without notice, shall affect the obligations of Borrower.
8. Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of California.
Borrower:
LifePoint, Inc.
/s/ Linda H. Masterson
By: Linda H. Masterson
Its: President and Chief Executive Officer
Exhibit A-2
THIS CONVERTIBLE PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH RULE 144 UNDER SAID ACT OR AN EFFECTIVE REGISTRATION STATEMENT RELATED HERETO OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION.
CONVERTIBLE PROMISSORY NOTE
$7,500,000 Ontario, California
November __, 2002
Lifepoint, Inc., a Delaware corporation ("Borrower"), for value received, hereby promises to pay to the order ofGeneral Conference Corporation of Seventh-day Adventists,a District of Columbia corporation ("Lender"), in lawful money of the United States of America, the principal amount of Seven Million Five Hundred Thousand Dollars ($7,500,000) or the aggregate principal amount of all outstanding advances made hereunder (individually and collectively, the "Advances"), together with interest as provided for below, payable on the dates, in the amounts and in the manner set forth below.
Borrower:
LifePoint, Inc.
_____________________________________
By: Linda H. Masterson
Its: President and Chief Executive Officer
Schedule 1
SCHEDULE OF ADVANCES
Borrowing Date | Amount of Advance | Aggregate Amount Advanced |
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CONFIDENTIAL
Exhibit B-1
REVENUE AND EXPENSE MILESTONES
FOR $2.5 MILLION LOAN
(Confidential treatment requested on milestones)
Revenue Milestones |
| |||||
3 months ending | Cumulative Revenue Milestone | Penalty warrants if up to 20% below Milestone | Penalty warrants if over 20% below Milestone | |||
3/31/2003 | <<Confidential>> | 12,500 | 25,000 | |||
6/30/2003 | <<Confidential>> | 12,500 | 25,000 | |||
9/30/2003 | <<Confidential>> | 12,500 | 25,000 | |||
12/31/2003 | <<Confidential>> | 12,500 | 25,000 | |||
3/31/2004 | <<Confidential>> | 12,500 | 25,000 | |||
6/30/2004 | <<Confidential>> | 12,500 | 25,000 | |||
9/30/2004 | <<Confidential>> | 12,500 | 25,000 | |||
12/31/2004 | <<Confidential>> | 12,500 | 25,000 | |||
3/31/2005 | <<Confidential>> | 12,500 | 25,000 | |||
Maximum Penalty Warrants | 225,000 | |||||
Operating Expense Milestones |
|
| |||||
(Does not apply if sales are above milestones. Expenses will | |||||||
and should increase if sales are higher than budgeted). | |||||||
Operating expenses excluding cost of goods sold or stock | |||||||
associated charges such as dividends. | |||||||
3 months ending | Quarterly Operating Expense Milestone | Penalty warrants if up to 20% above Milestone | Penalty warrants If over 20% above Milestone | ||||
3/31/2003 | <<Confidential>> | 12,500 | 25,000 | ||||
6/30/2003 | <<Confidential>> | 12,500 | 25,000 | ||||
9/30/2003 | <<Confidential>> | 12,500 | 25,000 | ||||
12/31/2003 | <<Confidential>> | 12,500 | 25,000 | ||||
3/31/2004 | <<Confidential>> | 12,500 | 25,000 | ||||
6/30/2004 | <<Confidential>> | 12,500 | 25,000 | ||||
9/30/2004 | <<Confidential>> | 12,500 | 25,000 | ||||
12/31/2004 | <<Confidential>> | 12,500 | 25,000 | ||||
3/31/2005 | <<Confidential>> | 12,500 | 25,000 | ||||
Maximum Penalty Warrants | 225,000 | ||||||
CONFIDENTIAL
Exhibit B-2
REVENUE AND EXPENSE MILESTONES
FOR $7.5 MILLION LOAN
(Confidential treatment requested on milestones)
Revenue Milestones |
| |||||
3 months ending | Cumulative Revenue Milestone | Penalty warrants if up to 20% below Milestone | Penalty warrants If over 20% below Milestone | |||
3/31/2003 | <<Confidential>> | 37,500 | 75,000 | |||
6/30/2003 | <<Confidential>> | 37,500 | 75,000 | |||
9/30/2003 | <<Confidential>> | 37,500 | 75,000 | |||
12/31/2003 | <<Confidential>> | 37,500 | 75,000 | |||
3/31/2004 | <<Confidential>> | 37,500 | 75,000 | |||
6/30/2004 | <<Confidential>> | 37,500 | 75,000 | |||
9/30/2004 | <<Confidential>> | 37,500 | 75,000 | |||
12/31/2004 | <<Confidential>> | 37,500 | 75,000 | |||
3/31/2005 | <<Confidential>> | 37,500 | 75,000 | |||
Maximum Penalty Warrants | 675,000 | |||||
Operating Expense Milestones |
|
| |||||
(Does not apply if sales are above milestones. Expenses will | |||||||
and should increase if sales are higher than budgeted). | |||||||
Operating expenses excluding cost of goods sold or stock | |||||||
associated charges such as dividends. | |||||||
3 months ending | Quarterly Operating Expense Milestone | Penalty warrants if up to 20% above Milestone | Penalty warrants If over 20% above Milestone | ||||
3/31/2003 | <<Confidential>> | 37,500 | 75,000 | ||||
6/30/2003 | <<Confidential>> | 37,500 | 75,000 | ||||
9/30/2003 | <<Confidential>> | 37,500 | 75,000 | ||||
12/31/2003 | <<Confidential>> | 37,500 | 75,000 | ||||
3/31/2004 | <<Confidential>> | 37,500 | 75,000 | ||||
6/30/2004 | <<Confidential>> | 37,500 | 75,000 | ||||
9/30/2004 | <<Confidential>> | 37,500 | 75,,000 | ||||
12/31/2004 | <<Confidential>> | 37,500 | 75,000 | ||||
3/31/2005 | <<Confidential>> | 37,500 | 75,000 | ||||
Maximum Penalty Warrants | 675,000 | ||||||
Exhibit C
FORM OF WARRANT
Neither this Warrant nor the securities issuable upon exercise hereof have been registered under the Securities Act of 1933, as amended, or under any state securities laws and may not be transferred in violation of such act or laws, the rules and regulations thereunder and the provisions of this Warrant.
WARRANT TO PURCHASE ___________ SHARES
OF COMMON STOCK OF
LIFEPOINT, INC.
Issued to
General Conference Corporation of Seventh-day Adventists
________________
Warrant No. #____
LIFEPOINT, INC.
(Incorporated under the laws of the State of Delaware)
This certifies that theGeneral Conference Corporation of Seventh-day Adventists (the "Warrant Holder") is the owner of a Warrant, subject to adjustment as provided in Section 3 hereof, which entitles the owner thereof to purchase, in whole or in part, and from time to time, as provided in Section 1 hereof,___________ fully paid and nonassessable shares of the no-par-value Common Stock (the "Common Stock") of LifePoint, Inc., a Delaware corporation (the "Company"), at the purchase price per share of $3.00 per share (the "Purchase Price"), subject to adjustment as provided in Section 3 hereof, payable in lawful money of the United States of America upon surrender of this Warrant at the principal office of the Company (currently 1205 Dupont Street, Ontario, California 91761) or at such other place as the Company may designate by written notice to the Warrant Holder.
The Warrant evidenced hereby shall become exercisable as to___________ shares of the Common Stock on[Issuance Date] and shall terminate (i) at 5:00 p.m., California time, on[Date 5 years after Issuance Date] or (ii) upon the Company's election of its right to terminate this Warrant pursuant to Section 13 of the Loan Agreement (as defined below) (the earlier of such events being referred to herein as the "Expiration Date"), provided, however, that in no event may any fractional share of the Common Stock be issued. In the event that a fractional share would otherwise be issued as a result of any adjustment made pursuant to Section 3 hereof or otherwise, payment of such fractional share shall be made on the basis of the Market Price on the date of exercise. For the purpose of this Section 1, the term "Market Price" shall mean (a) if the Common Stock is traded on a national securities exchange or on The Nasdaq Stock Market, Inc., the closing sales price (or, if no sales on th at day, the high bid price) or (b) if the Common Stock is not traded as provided in subsection (a), the closing bid price as reported in the OTC Bulletin Board of the National Association of Securities Dealers, Inc. or in the pink sheets as reported by an organization performing the services previously furnished by the National Quotation Bureau, Inc.
Upon any exercise of the Warrant evidenced hereby, the form of election to purchase set forth as Exhibit A hereto shall be properly completed, executed, and delivered to the Company, together with (a) a certified check, bank draft, or wire transfer in full payment to the Company of the Purchase Price for the shares as to which the Warrant is exercised or (b) authorization from the Warrant Holder to the Company to retain from the total number of shares of the Common Stock as to which the Warrant is exercised that number of shares having an average Market Price over the two-week period ending on the date of exercise equal to the product of the Purchase Price and the total number of shares as to which the Warrant is exercised (any balance to be paid as set forth in (a) above). In the event that there is only a partial exercise of the Warrant evidenced hereby, there shall be issued to the Warrant Holder a new Warrant Certificate, in all respects similar to this Warrant Certificate, evidencing the number of sh ares of the Common Stock still available for exercise.
Upon receipt of full payment and properly completed documentation, the Company shall then cause the Transfer Agent for the Common Stock to issue fully paid and nonassessable shares of the Common Stock as are represented by the exercise.
If this Warrant shall be surrendered upon exercise within any period during which the transfer books for the Common Stock are closed for any purpose, the Company shall not be required to make delivery of certificates for shares of the Common Stock until the date of the reopening of said transfer books.
The Warrant evidenced hereby may not be exercised after the Expiration Date with respect to the shares of the Common Stock as to which the Warrant may be exercised and, to the extent the Warrant has not been exercised as to any such shares by the Expiration Date, the Warrant evidenced hereby shall become void.
Subject to the provisions of this Section 3, the Purchase Price and the shares of the Common Stock as to which the Warrant may be exercised shall be subject to adjustments from time to time as hereinafter set forth:
Nothing contained herein shall be construed as conferring upon the Warrant Holder the right to vote or to consent or to receive notice as a stockholder in respect of the meetings of stockholders for the election of directors of the Company or any other matter, or any other rights whatsoever as a stockholder of the Company; provided, however, that in the event that:
then, in any one or more of such cases, the Company shall, (x) at least 10 days prior to the date on which the books of the Company shall close or a record date shall be taken for such distribution or subscription rights or for determining rights to vote in respect of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, cause notice thereof to be sent to the Warrant Holder at the address appearing on the Warrant register of the Company and, (y) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, cause at least 10 days' prior written notice of the date when the same shall take place to be given to the Warrant Holder in the same manner. Such notice in accordance with the foregoing clause (x) shall also specify, in the case of any such distribution or subscription rights, the date on which the holders of the Common Stock shall be entitled thereto, and such notice in accordance with the foregoing clause (y) shall also specify the date on which the holders of the Common Stock shall be entitled to exchange their shares of the Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, as the case may be. Failure to give such notice or any defect therein shall not affect the legality or validity of any of the matters set forth in this Section 4 inclusive.
The Warrant Holder, by his, her, or its acceptance of this Warrant, acknowledges that neither the Warrant nor the shares of the Common Stock issuable upon exercise thereof have been registered under the Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, represents and warrants to the Company that he, she, or it is acquiring the Warrant for investment and not with a view to, or in connection with, any distribution thereof. The Warrant Holder further represents and warrants that, if a registration statement under the Securities Act is not effective with respect to the underlying shares of the Common Stock at the time of exercise, the Warrant Holder will acquire the shares of the Common Stock for investment and not with a view to, or in connection with, any distribution thereof.
The Company shall transfer, from time to time, any outstanding Warrant upon the books to be maintained by the Company for that purpose, upon surrender thereof for transfer properly endorsed or accompanied by appropriate instructions for transfer. Upon any such transfer, a new Warrant shall be issued to the transferee and the surrendered Warrant shall be canceled by the Company. The Warrant so canceled shall be delivered to the Company from time to time upon request. Warrants may be exchanged at the option of the holder thereof, when surrendered at the office of the Company, for another Warrant, or other Warrants of different denominations, of like tenor and representing in the aggregate the rights to purchase a like number of shares. Anything in this section 6 to the contrary notwithstanding, no transfer shall be made if such transfer would violate Section 5 of the Securities Act.
The Company will pay any documentary stamp taxes attributable to the initial issuance of the Common Stock issuable upon the exercise of the Warrant; provided, however, that the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issue or delivery of any certificates for the Common Stock in a name other than that of the registered holder of the Warrant in respect of which shares are issued, and in such case the Company shall not be required to issue or deliver any certificates for the Common Stock or any Warrant for remaining shares until the person requesting the same has paid to the Company the amount of such tax or has established to the Company's satisfaction that such tax has been paid.
In case the Warrant shall be mutilated, lost, stolen, or destroyed, the Company may in its discretion issue and deliver in exchange and substitution for, and upon cancellation of, the mutilated Warrant, or in lieu of, and in substitution for, the Warrant lost, stolen, or destroyed, a new Warrant of like tenor and representing an equivalent right or interest, but only upon receipt of evidence satisfactory to the Company of such loss, theft, or destruction of such Warrant. Applicants for such substitute Warrant shall also comply with such other reasonable regulations and pay such reasonable charges as the Company may prescribe.
The Company covenants and agrees that, from time to time, there will be authorized and available for delivery a sufficient number of its shares of the Common Stock or other securities into which the Warrant is then exercisable to permit the exercise of the Warrant at the time outstanding as and when the certificates shall, from time to time, be deliverable in accordance with Section 1 hereof. In the event that there are insufficient shares or other securities for such purpose, the Company shall use its best efforts to seek stockholder approval for an Amendment to the Company's Certificate of Incorporation and/or to take such other action as is necessary or appropriate to cause such shares or other securities to be authorized.
The Warrant evidenced hereby shall be construed and enforced in accordance with the laws of the State of Delaware applicable to contracts made and to be performed in that State, without giving effect to any principles of conflicts of laws.
IN WITNESS WHEREOF, LifePoint, Inc. has caused this Warrant to be signed manually by a duly authorized officer.
Dated: LIFEPOINT, INC.
By:
Linda H. Masterson, President
Exhibit A
ELECTION TO PURCHASE
To: LifePoint, Inc.
c/o:
(Name) (Taxpayer Number)
(Address)
and be delivered to (Name)
at (Address)
and delivered to the undersigned at the address below stated.
Date, 200_
Name of holder of Warrant Certificate:
(Name)
(Address)
(Signature)
Note: The above signature must correspond with the name as written upon the face of this Warrant Certificate in every particular, without alteration or enlargement or any change whatever.
Exhibit D
ADDITIONAL ADJUSTMENT UPON ISSUANCE OF WARRANTS
In the event that Borrower issues warrants to purchase shares of its Common Stock (the "New Warrants") in connection with a Qualified Financing, which Qualified Financing triggers an adjustment to the Warrant Price, then (in addition to any adjustment to the Warrant Price that is made) the Company will issue additional warrants (the "Additional GCC Warrants") to the Lender as calculated below; provided, however, that the provisions of this paragraph shall not apply if (i) the New Warrants represent less than 30% warrant coverage in the Qualified Financing or (ii) the New Warrants have an exercise price that is in excess of the then-effective Warrant Price (after giving effect to the Qualified Financing). The Additional GCC Warrants issued to Lender will have the same exercise price as the New Warrants
The number of Additional GCC Warrants issuable in these circumstances to the Lender by Borrower shall be calculated based on the number of outstanding Warrants issued to Lender under the terms of the Loan Agreement and the fully-diluted capitalization of the Borrower prior to the Qualified Financing. The number of Warrants then outstanding pursuant to the terms of the Loan Agreement, divided by the fully-diluted capitalization (the "Fully Diluted Capitalization") of the Borrower (giving effect to the conversion of all outstanding shares of Preferred Stock into Common Stock and the exercise of all outstanding warrants (including the Warrants) and all outstanding options to purchase shares of the Borrower's capital stock (each, on an as if converted to Common Stock basis)) shall equal the "Fixed Percentage." The number of additional warrants to be issued to the Lender by Borrower shall be equal to the difference of (A) the Fixed Percentage multiplied by the sum of (x) the Fully Diluted Capitalizat ion and (y) the number of New Warrants, less (B) the number of Warrants then outstanding pursuant to the terms of the Loan Agreement. An example of this calculation is set forth below.
(If Borrower sells shares of its Common Stock in a $5 million equity offering subject toSection 9.1 for $2.00 per share (2,5 million shares), with 50% warrant coverage (1,250,000 shares) at $2.50 per share, the Warrant Price for any outstanding Warrants would be adjusted to $2.00 per share and Additional GCC Warrants would be issued as follows):
Assume:
57,000,000 Fully Diluted Capitalization
6,000,000 Warrants issued and outstanding
6,000,000
--------------- = 10.5%
57,000,000
(57,000,000 + 1,250,000) x 10.5% = 6,131,580 shares or an additional 131,580 warrants at $2.50
Schedule A
COPYRIGHTS
Description | Registration/Application Number | Registration/Application Date |
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NONE |
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Schedule B
PATENTS
Description | Registration/Application Number | Registration/Application Date |
|
|
|
License to US Navy Patent "Flow Immunosensor Method and Apparatus" | 5,183,740 | February 2,1993 |
ISSUED: | ||
Jointly owned Patent with the US Navy "Lyophilized Ligand-Receptor Complexes for Assay and Sensors" | 5,354,654 | October 11, 1994 |
Device and Method for Automatic Collection of Whole Saliva | 6,022,326 | February 8, 2000 |
Device for Detecting Analytes Related to Sample Ph | 6,391,261 | May 21, 2002 |
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|
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PENDING: |
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Composition and methods for synthesis of novel tracers for detecting amphetamine and methamphetamine in samples | 09/730,095 | December 4, 2000 |
Novel reagents for detecting cannabinoids | 09/805,469 | March 12, 2001 |
System and Method for Automated Identification of Analytes and Oral Fluids | 60/336,596 | December 5, 2001 |
Method and Device for Detecting the Presence and Concentration of Analytes While Simultaneously Preventing Analyte Adsorption to Solid Materials (expected to result in 13 - 20 patents) | 09/640,615 | August 8, 2000 |
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Schedule C
TRADEMARKS
Description | Registration/ Application Number | Registration/ Application Date |
|
|
|
LifePoint | 2615624 | September 3, 2002 |
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IMPACT | 2626593 | September 24, 2002 |
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ARIS | 78004404 | April 17, 2000 |
Schedule D
PROPERTY CURRENTLY SUBJECT TO UCC FILINGS
1) All of the equipment and personal property described on Schedule A to that certain Master Lease Agreement No. S7970 dated August 28, 2000, by and between Borrower and Finova Capital Corporation. (UCC1 financing statement 0068034 filed on October 11, 2000, with the Delaware Secretary of State)
2) All of the equipment and personal property described on Lease Schedule Number 91314201 to that certain Lease Rental Agreement by and between Borrower and Firstcorp. (UCC1 financing statement 1105159 3 filed on August 29, 2001, with the Delaware Secretary of State.)
3) All of the equipment and personal property described on Lease Schedule Number 91314202 to that certain Lease Rental Agreement by and between Borrower and Centennial Bank. (UCC1 financing statement 1105182 3 filed on August 29, 2001, with the Delaware Secretary of State.)
4) All of the equipment and personal property described on that certain UCC1 financing statement 2081984 1 with Agilent Financial Services, Inc. as Secured Party and Borrower as Debtor filed on March 11, 2002, with the Delaware Secretary of State as amended by that certain UCC3 financing statement 2172391 9 filed on June 14, 2002, with the Delaware Secretary of State.
5) All of the equipment and personal property subject to that certain "in lieu" UCC1 financing statement 2132644 0 with Finova Capital Corporation as Secured Party and Borrower as Debtor filed on May 29, 2002, with the Delaware Secretary of State.
6) All of the equipment and personal property described on that certain UCC1 financing statement 0022160895 with IOS Capital, Inc. as Secured Party and Borrower as Debtor filed on August 2, 2000, with the California Secretary of State
