Exhibit F
CALL OPTION AND SUBORDINATION AGREEMENT
THIS CALL OPTION AND SUBORDINATION AGREEMENT (this "Agreement"), dated as of July 14, 2003, is made among LifePoint, Inc., a Delaware corporation (the "Company"), the purchasers of shares of Series D Convertible Preferred Stock (as defined below) named on the signature pages hereto (each a "Purchaser" and, collectively, the "Purchasers"), and General Conference Corporation of Seventh-Day Adventists, a District of Columbia corporation ("GCC") and Jonathan Pallin, an individual ("Mr. Pallin") (Mr. Pallin and GCC are each a "Lender" and, collectively, the "Lenders").
A. Pursuant to a Convertible Loan and Security Agreement dated as of November 12, 2002, as amended, between GCC and the Company (the "Convertible Loan and Security Agreement"), GCC has made certain advances to the Company in the aggregate principal sum of $2,500,000.
B. Pursuant to a Note and Warrant Purchase Agreement dated as of February 19, 2003, as amended, between Mr. Pallin and the Company (the "Note and Warrant Purchase Agreement"), Mr. Pallin has made certain advances to the Company in the aggregate principal sum of $1,120,000.
C. Pursuant to a Securities Purchase Agreement dated as of the date hereof (the "Securities Purchase Agreement"), the Purchasers have agreed to purchase on the date hereof shares of the Company's Series D Convertible Preferred Stock ("Series D Convertible Preferred Stock") and warrants to acquire shares of the Company's Common Stock ("Warrants") for an aggregate purchase price of $2,000,000, on the terms, and subject to the conditions, set forth therein.
D. To induce the Purchasers to consummate the transactions contemplated by the Securities Purchase Agreement, the parties desire to enter into this Agreement.
Accordingly, the parties hereby agree as follows:
"Advances" means any and all advances now or hereafter made under the Loan Documents.
"Assigned Interest" means, with respect to each Lender, all of such Lender's rights (but none of its obligations) under the Loan Documents in respect of a portion of each of its outstanding Advances in an aggregate principal sum equal to the amount set forth opposite such Lender's name onSchedule 1 hereto, including, without limitation, any such rights in and to all Collateral therefor.
"Business Day" means a day (i) other than Saturday or Sunday, and (ii) on which commercial banks are not required or authorized to be closed in the State of Delaware.
"Collateral" means all property and interests in property and proceeds thereof now owned or hereafter acquired by the Company or any of its subsidiaries in or upon which a Lien now or hereafter exists in favor of any Person securing all or any part of the Obligations.
"Exchange Rate" means one (1) share of Series D Convertible Preferred Stock for each $1,000 of unpaid principal amount of the Advances (subject to equitable adjustment to reflect stock splits, stock dividends, stock combinations, recapitalizations and other similar changes affecting the capital stock of the Company).
"Lien" means any mortgage, deed of trust, pledge, security interest, assignment, deposit arrangement, charge or encumbrance, lien, or other type of preferential arrangement.
"Loan Documents" means the Note and Warrant Purchase Agreement, the Convertible Loan and Security Agreement and all documents, instruments and agreements delivered to the Lenders in connection therewith, each as from time to time amended, supplemented or otherwise modified.
"Obligations" means the indebtedness, liabilities and other obligations of the Company to the Lenders under or in connection with the Loan Documents, including all unpaid principal of the Advances, all interest accrued thereon and all other amounts payable by the Company to the Lenders thereunder or in connection therewith, whether now existing or hereafter arising, and whether due or to become due, absolute or contingent, liquidated or unliquidated, determined or undetermined.
"Person" means an individual, corporation, partnership, joint venture, trust, unincorporated organization or other entity of whatever nature.
"Redemption Event" means a "Redemption Event" as such term is defined in the Company's Certificate of Designation, Preferences and Rights of Series D Convertible Preferred Stock.
"Required Purchasers" means one or more Purchasers holding at least 50% of the then outstanding shares of Series D Convertible Preferred Stock.
Each Lender hereby represents and warrants to the Purchasers:
(a)Grant of Call Option. If a Redemption Event shall occur and be continuing, then the Purchasers shall have the right and option (the "Call Option"), subject to the terms and conditions contained herein, to require the Lenders to assign to the Purchasers (on a pro rata basis in accordance with the Purchasers' respective holdings of shares of Series D Convertible Preferred Stock) all or any portion of the Assigned Interests in exchange for the simultaneous assignment by the Purchasers to the Lenders (on a pro rata basis in accordance with the Lenders' respective holdings of the aggregate unpaid principal amounts of the Advances) of shares of Series D Convertible Preferred Stock at the Exchange Rate (the "Assigned Shares").
(b)Call Option Exercise. To exercise the Call Option, the Required Purchasers shall given written notice to the Lenders during the existence of a Redemption Event, specifying the date (the "Call Option Purchase Date") on which closing of the Call Option is to occur. The Call Option Purchase Date shall be not less than three (3) Business Days after the date of the Lenders' receipt of such notice.
(c)Prepayments of Advances. Prior to the Call Option Purchase Date, the Company shall not prepay any Advance to any Lender. In the event that any Lender shall receive any prepayment in violation of this Section 3(c), then such prepayment shall be held in trust as property of the Purchasers until the earlier to occur of (i) the Call Option Purchase Date or (ii) termination of this Agreement pursuant to Section 7(t) below. Upon the Call Option Purchase Date, all such prepayments shall be paid over in cash to the Purchasers (on a pro rata basis in accordance with the Purchasers' respective holdings of shares of Series D Convertible Preferred Stock) and the Assigned Interests shall be reduced on a dollar for dollar basis. Upon the termination of this Agreement pursuant to Section 7(t) below, all such prepayments shall be released to the Lenders.
(d)Closing. On the Call Option Purchase Date:
(i) each Purchaser shall deliver to each Lender certificates representing the Assigned Shares to be assigned by such Purchaser to such Lender, accompanied by stock powers executed in blank; and
(ii) each Lender shall deliver to each Purchaser (i) the amount of cash required to be delivered to such Purchaser pursuant to Section 3(c) above, if any, and (ii) an Assignment Agreement, in the form attached hereto asExhibit A, with respect to the Assigned Interest to be assigned by such Lender to such Purchaser (as such amount may be reduced pursuant to Section 3(c) above), and shall take such other action as the Purchasers shall reasonably request to effect the assignment of the Assigned Interests to the Purchasers.
(e)Payments.
(i) From and after the Call Option Purchase Date, the Company shall make all payments in respect of the Assigned Shares (including payments of dividends and other amounts) to the Purchasers for amounts which have accrued to but excluding the Call Option Purchase Date and to the Lenders for amounts which have accrued from and after the Call Option Purchase Date.
(ii) From and after the Effective Date, the Company shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Lenders for amounts which have accrued to but excluding the Call Option Purchase Date and to the Purchasers for amounts which have accrued from and after the Call Option Purchase Date.
(f)Company's Consent and Agreement. The Company consents to the terms of this Agreement and agrees not to challenge the rights and obligations of the Purchasers and the Lenders hereunder. In connection therewith, the Company hereby specifically consents to any assignment of the Assigned Interest by the Lenders to the Purchaser upon exercise of the Call Option. The Company will cooperate with the Purchasers and Lenders in effecting any transaction as contemplated by this Agreement.
(a)In General. From and after the Call Option Purchase Date and after giving effect to the assignment of the Assigned Interests pursuant to Section 3 above, to the extent and in the manner hereinafter set forth in this Section 4, the Obligations of the Company to the Lenders under the Loan Documents (the "Subordinated Obligations") are hereby expressly made subordinate and subject in right of payment to the prior payment in full of the Assigned Interests (the "Senior Obligations"). The Lenders hereby confirm that, regardless of the relative times of attachment or perfection thereof or the order of filing of financing statements, mortgages or other security documents by the Lenders, or anything in the Loan Documents to the contrary, the Liens granted or to be granted from time to time in the Collateral pursuant to the Loan Documents in favor of the Purchasers shall in all respects be first and senior Liens, superior to any Liens granted or to be granted in the Collateral to th e Lenders pursuant to the Loan Documents or otherwise.
(b)No Payment Prior to Payment of Senior Obligations. Until such time as all Senior Obligations have been indefeasibly paid in full in cash, no payment or distribution of cash or property shall be made by or on behalf of the Company on account of the Subordinated Obligations.
(c)Payment Over of Proceeds Upon Dissolution, Etc.
(i) In the event of:
(A) any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding in connection therewith, relative to the Company, or to its assets;
(B) any proceeding for liquidation, dissolution or other winding up of the Company, whether voluntary or involuntary and whether or not involving insolvency or bankruptcy; or
(C) any assignment for the benefit of creditors or any other marshalling of assets and liabilities of the Company;
then and in any such event specified in clauses (A), (B) or (C) above (each such event, a "Proceeding"), the holders of Senior Obligations shall be entitled to receive indefeasible payment in full in cash of all amounts due in respect of all Senior Obligations before the holders of the Subordinated Obligations are entitled to receive any payment or distribution of cash or property on account of the Subordinated Obligations, and to that end the holders of Senior Obligations shall be entitled to receive, for application to the payment of the Senior Obligations, any payment or distribution of any kind or character which may be payable or deliverable in respect of the Subordinated Obligations in any such Proceeding, to the extent necessary to pay or provide for the payment of all Senior Obligations in full.
(ii) In the event that any holder of the Subordinated Obligations shall have received any payment or distribution of assets of the Company of any kind or character in violation of this Section 4, then and in such event such payment or distribution shall be paid over or delivered forthwith to holders of the Senior Obligations, or to the extent required by applicable law, to the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent, representative or other person making payment or distribution of assets of the Company, for application to the payment of all Senior Obligations remaining unpaid, to the extent necessary to pay or provide for the payment of all Senior Obligations in full, after giving effect to any concurrent payment or distribution to or for the holders of Senior Obligations.
(d)No Remedies Prior to Payment of Senior Obligations. In addition to the limitations set forth in Section 5 below, without the prior written consent of the Required Purchasers, until such time as all Senior Obligations have been indefeasibly paid in full in cash, no holder of Subordinated Obligations shall take any of the following actions (collectively, the "Enforcement Actions"): (i) accelerate or otherwise make due and payable prior to the original stated maturity thereof any Obligations or bring suit or institute any other actions or proceedings to enforce its rights or interests under or in respect of any Loan Document; (ii) exercise any right of set-off, counterclaim or other claim it may have against the Company, any of its subsidiaries or any other Person with respect to the Obligations; (iii) exercise any rights under or with respect to (A) guaranties of the Obligations, or (B) any Collateral, including causing or compelling the pledge or delivery of any Collateral, a ny attachment of, levy upon, execution against, foreclosure upon or the taking of other action against or institution of other proceedings with respect to any Collateral, notifying any account debtors of the Company and/or its subsidiaries or asserting any claim or interest in any insurance with respect to any Collateral; or (iv) commence, or cause to be commenced, or join with any creditor in commencing, any Proceeding. Notwithstanding anything to the contrary set forth herein, nothing in this paragraph (d) shall limit the rights of holders of Subordinated Obligations to file lawsuits or any proof of claim in any Proceeding solely to prevent the running of any applicable statute of limitations or other similar restriction on claims, but in each case only to the extent reasonably necessary to prevent such running, or from joining in any judicial proceeding or action (including a Proceeding) after it has commenced.
(e)Subrogation to Rights of Holders of Senior Obligations. After all Senior Obligations are indefeasibly paid in full in cash and until all the Subordinated Obligations are indefeasibly paid in full in cash, the holders of the Subordinated Obligations shall be subrogated to the rights of the holders of the Senior Obligations to receive payments and distributions applicable to the Senior Obligations.
(f)Obligations of the Company Unconditional. The provisions of this Section 4 are and are intended solely for the purpose of defining the relative rights of the holders of the Subordinated Obligations on the one hand and the holders of Senior Obligations on the other hand. Nothing contained in this Section 4 is intended to or shall (i) impair, as among the Company, its creditors other than holders of Senior Obligations and the holders of the Subordinated Obligations, the obligation of the Company, which is absolute and unconditional, to pay the Subordinated Obligations to the holders thereof as and when the same shall become due and payable in accordance with their terms and the terms of the Loan Documents; or (ii) affect the relative rights against Company of the holders of the Subordinated Obligations and the creditors of Company other than the holders of Senior Obligations.
The Company shall, unconditionally upon demand, pay or reimburse the Purchasers for, and indemnify and save the Purchasers, and their respective affiliates, officers, directors, employees, agents, attorneys, shareholders, partners and consultants (collectively, "Indemnitees") harmless against, any and all liabilities, losses, costs, expenses, claims and/or charges (including without limitation fees and disbursements of legal counsel) imposed on, incurred by or asserted against such Indemnitees (whether direct, indirect or consequential and whether based on any federal, state, or local laws and regulations, under common law or at equity, or on contract, tort or otherwise) and arising out of, relating to or connected with:
[Signature page follows.]
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written.
COMPANY:
LifePoint, Inc.
By:
Name: Linda Masterson
Title: Chairman, President and CEO
Address:
1205 South Dupont Street
Ontario, California 91761
Attn: President or CEO Facsimile No.: 909-418-3003
PURCHASERS:
[Names of Purchasers]
By:
Name: ________________________
Title: _________________________
Address: _______________________
_______________________________
_______________________________ Attn: _________________________
Telephone: ______________________
Facsimile No.: ___________________
E-mail: _________________________
[Signatures continued on next page.]
LENDERS:
Jonathan Pallin, in his capacity
as an individual
Address: _______________________
_______________________________
_______________________________ Attn: _________________________
Telephone: ______________________
Facsimile No.: ___________________
E-mail: _________________________
General Conference Corporation of
Seventh-Day Adventists
By:
Name: Roy E. Ryan
Title: Associate Treasurer
Address:
12501 Old Columbia Pike
Silver Spring, MD 20904
Attn:
Telephone: ______________________
Facsimile No.: ___________________
E-mail: _________________________
SCHEDULE 1
LenderAmount
Mr. Pallin $ 618,785
GCC $1,381,215
Total $2,000,000
EXHIBIT A
FORM OF
ASSIGNMENT AGREEMENT
This Assignment Agreement (the "Assignment") is dated as of the Effective Date set forth below and is entered into by and between [Insert name of the Lender](the "Assignor") and [Insert name of the Purchaser](collectively, the "Assignee"). The Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment as if set forth herein in full.
Pursuant to the Call Option and Subordination Agreement, dated as of July ___, 2003, by and among LifePoint, Inc. (the "Company"), the purchasers of shares of the Company's Series D Convertible Preferred Stock party thereto, General Conference Corporation of Seventh-Day Adventists and Jonathan Pallin, (the "Agreement"), the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and accepts from the Assignor, subject to and in accordance with the Terms and Conditions, all of the Assignor's rights (but none of its obligations) under the [Insert name of Loan Document] (the "Loan Agreement") and any other documents or instruments delivered pursuant thereto in respect of a portion of each of its outstanding advances under the Loan Agreement in an aggregate principal sum equal to $[Insert amount of Assigned Interest], including, without limitation, any such rights in and to all collateral therefor (the "Assigned Interest"). Upon the execution and delivery of this Assignment, (i) the Assignee shall be a party to the Loan Agreement and, to the extent provided in this Assignment, have the rights (but none of the obligations) of a Lender thereunder, and (ii) the Assignor shall, to the extent provided in this Assignment, relinquish its rights under the Loan Agreement.
Effective Date: _____________ __, 20__
The terms set forth in this Assignment are hereby agreed to:
ASSIGNOR
[NAME OF ASSIGNOR]
By:__________________________
Title:
ASSIGNEE
[NAME OF ASSIGNEE]
By:__________________________
Title:
ANNEX 1
TERMS AND CONDITIONS FOR
ASSIGNMENT AGREEMENT
