<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
Commission File Number: 0000-23721
LIFEPOINT, INC.
(Exact name of registrant as specified in its charter)
DELAWARE #33-0539168
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
10400 Trademark Street, Rancho Cucamonga, CA 91730
(Address of Principal Executive Offices) (Zip Code)
(909) 466-8047
Registrant's Telephone Number, Including Area Code
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
[x] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date.
As of November 10, 1999 - Common Stock, $.001 Par Value, 15,008,667 shares
</PAGE>
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
LIFEPOINT, INC.
(a Development Stage Enterprise)
BALANCE SHEET
September 30
1999
ASSETS
Current assets:
Cash and cash equivalents $3,057,925
Prepaid expenses and other current assets 50,382
-----------
Total current assets 3,108,307
Property and equipment, net 273,194
Patents and other assets, net 61,375
-----------
$3,442,876
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 183,141
Accrued expenses 270,000
Capital Lease -Short Term 31,960
-----------
Total current liabilities 485,101
Capital Lease - Long Term 43,315
Accrued Consulting - Long Term 148,253
-----------
676,669
Commitments and contingencies (Note 8)
Stockholders' equity:
Series A 10% Cumulative Convertible
Preferred Stock, $.001 par value,
600,000 shares authorized, 447,375 and
557,725 outstanding at September 30,
1999 and March 31, 1999 447
Common stock, $.001 par value;
50,000,000 shares authorized,
15,008,667 and 12,668,959 shares issued
and outstanding at September 30, 1999
and March 31, 1999, respectively 15,008
Additional paid-in capital 18,871,513
Deficit accumulated in the development stage (16,120,761)
-----------
Total stockholders' equity 2,766,207
-----------
$3,442,876
===========
</PAGE>
<PAGE>
LIFEPOINT, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
(Unaudited)
<S> <C> <C> <C>
Cumulative From
For the Three Months For the Six Months October 8, 1992
Ended September 30 Ended September 30 (Inception) to
------------------------- --------------------------- September 30,
1999 1998 1999 1998 1999
------------ ------------ ------------ ------------ ------------------
Revenues $ - $ - $ - $ - $ -
Costs and Expenses:
General and Administrative Expenses 389,212 474,082 689,876 657,491 4,757,559
Research and Development 559,707 294,491 1,042,893 558,193 7,879,780
Depreciation and Amortization 24,085 52,149 48,171 104,178 967,250
Interest Expense - Parent - - - - 95,790
Management Fees - Parent - - - - 2,089,838
Interest Expense - - - - 119,300
------------ ------------ ----------- ------------ -------------
Total Costs and Expenses 973,004 820,722 1,780,940 1,319,862 15,909,517
------------ ------------ ----------- ------------ -------------
Loss from Operations (973,004) (820,722) (1,780,940) (1,319,862) (15,909,517)
Other Income/(Expense) 44,263 - 71,960 23,796 (169,775)
------------ ------------ ----------- ------------ -------------
Net Loss $ (928,741) $ (820,722) $(1,708,980) $(1,296,066) $(16,079,292)
============ ============ ============ ============ =============
Earnings per Common Share:
Weighted Average Common Shares
Outstanding 15,003,145 11,697,597 14,483,992 11,223,632
Net Loss Per Common Share $ (0.06) $ (0.07) $ (0.12) $ (0.12)
Earnings per Common Share, Assuming
Dilution:
Weighted Average Common Shares
Outstanding 15,003,145 11,697,597 14,483,992 11,223,632
Net Loss Per Common Share, Assuming
Dilution $ (0.06) $ (0.07) $ (0.12) $ (0.12)
</TABLE>
</PAGE>
<PAGE>
LIFEPOINT, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
(Unaudited)
<S> <C> <C>
For the Six Months Ended Cumulative From
September 30 October 8, 1992
----------------------------------- (Inception) to
1999 1998 September 30, 1999
------------- ------------- -------------------
Cash flow from operating activities:
Net loss $(1,708,980) $(1,296,066) $(16,079,290)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 46,470 104,178 965,549
Consulting expense - 137,930 361,160
Loss on disposal of property and equipment - - 237,976
Loss on marketable securities - - 627,512
Amortization of bond discount - - (4,855)
Changes in operating assets and liabilities:
Change in prepaid expenses and other current assets (14,500) 48,650 74,019
Change in other assets 11,429 (9,792) (11,037)
Change in accounts payable (48,121) 60,480 237,500
Change in accrued expenses 19,793 5,980 (98,126)
------------ ------------- --------------
Net cash used by operating activities (1,693,909) (948,640) (13,689,592)
------------ ------------- --------------
Cash flow from investing activities:
Sale of marketable securities - - 3,285,625
Purchases of marketable securities - - (3,908,281)
Purchases of property and equipment (91,099) (6,197) (694,662)
Proceeds from sale of property and equipment - - 80,828
Patent costs - (5,170) (56,924)
------------ ------------- --------------
Cash used by investing activities (91,099) (11,367) (1,293,414)
------------ ------------- --------------
Cash flow from financing activities:
Sales of common stock 63,000 1,025,000 11,309,226
Expenses of common stock offering - (5,736) (1,681,586)
Sales of preferred stock - - 6,000,000
Expenses of preferred stock offering (18,374) - (738,451)
Exercise of stock options 1,875 - 22,473
Advances on note receivable - Parent - - (1,917,057)
Collection on note receivable - Parent - - 1,634,762
Proceeds of loan payable - Parent - - 4,715,067
Payment of loan payable - Parent - - (1,299,782)
Proceeds of capital leases - - 101,572
Payments of capital leases - - (105,293)
Proceeds of brokerage loan payable - - 2,674,683
Payments of brokerage loan payable - - (2,674,683)
------------ ------------ -------------
Net cash provided by financing activities 46,501 1,019,264 18,040,931
------------ ------------ -------------
Increase (decrease) in cash and cash equivalents (1,738,507) 59,257 3,057,925
Cash and cash equivalents - beginning of period 4,796,432 597,254 -
------------ ------------ -------------
Cash and cash equivalents - end of period $3,057,925 $ 656,511 $ 3,057,925
============ ============ =============
Supplemental disclosure of cash information:
Cash paid for interest $ 2,546 $ - $ 194,592
============ ============ =============
Non-cash operating activities:
Value of common stock for consulting services $ - $ (12,660) $ 203,340
============ ============ =============
Non-cash investing activities:
Value of assets transferred to lessor in
lieu of payment on capital leases $ - $ - $ 71,405
============ ============ =============
Non-cash financing activities:
Value of common stock issued and additional
paid-in capital for the transfer of assets
from Parent $ - $ - $ 781,060
============ ============ =============
Value of common stock issued to Parent and
additional paid-in capital for the
forgiveness of debt $ - $ - $ 3,160,502
============ ============ =============
Value of common stock warrants issued
for consulting services $ - $ 467,660 $ 187,500
============ ============ =============
Value of common stock issued and additional
paid-in capital issued as dividends
on preferred stock conversions $ 33,707 $ - $ 38,572
============ ============ =============
Value of common stock warrants issued
for preferred stock offering $ - $ - $ 133,559
============ ============ =============
Value of preferred stock converted to
common stock $ 2,207 $ - $ 3,053
============ ============ =============
</PAGE>
<PAGE>
LIFEPOINT, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(Unaudited)
NOTE 1 - Basis of Presentation
In the opinion of LifePoint, Inc. (the "Company"), the accompanying unaudited
financial statements reflect all adjustments (which include only normal
recurring adjustments except as disclosed below) necessary to present fairly
the financial position, results of operations and cash flows for the periods
presented. Results of operations for interim periods are not necessarily
indicative of the results of operations for a full year due to external
factors which are beyond the control of the Company. This Report should be
read in conjunction with the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1999 (the "Annual Report").
NOTE 2. - Continuing Operations and Liquidity
The Company has historically incurred recurring operating losses due to the
fact that it is still a development stage enterprise incurring research and
development expenses and deriving no revenues and has experienced an ongoing
deficiency in working capital. The Company financed its operations during
the quarter ended September 30, 1999 from the private placements of both
common and preferred stock completed in the fiscal year ended March 31, 1999,
with resulting gross proceeds of $7,025,000. As a result, management believes
that the Company has sufficient cash on hand to sustain operations through
March 31, 2000.
The Company has established a $500,000 revolving line of credit agreement
($500,000 available at September 30,1999) with City National Bank of Beverly
Hills, California. On July 14, 1999 the Company entered into an equipment
lease financing agreement for $300,000 with FirstCorp of Portland, Oregon
which is discussed further in Note 4.
The Company continues to pursue parallel paths to secure additional funding
including strategic partnering, additional private placements, and a possible
public offering. There can be no assurance that any of these additional
sources of financing will be available and, in such event, the Company would
not be able to complete the development, manufacturing and marketing of its
product on a timely basis. The Company will require additional capital to
continue the research, development and ultimate manufacture and marketing of
its product past prototype phase. Recovery of the Company's assets is
dependent upon future events, including completion of the development
program and ultimately achieving profitable operations. The outcome of these
events is undeterminable.
NOTE 3 - Property and Equipment
Property and equipment is summarized as follows:
September 30, 1999
Furniture and Fixtures $ 423,826
Test Equipment 425,768
Leasehold Improvements 245,991
-----------
1,095,585
Less: Accumulated Depreciation 822,391
-----------
$ 273,194
</PAGE>
<PAGE>
LIFEPOINT, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(Unaudited)
(Continued)
NOTE 4 - Commitments and Contingencies
Substance Abuse Technologies, Inc. ("SAT"), the former parent of the Company,
and the Department of the Navy on January 24, 1992 had entered into a ten-year
agreement granting SAT a partial exclusive patent license to products for drug
testing in the United States and certain foreign countries. This license was
transferred from SAT to the Company effective with the sale of SAT's majority
ownership of the Common Stock in October 1997.
In April 1999, the Company and the United States Navy ("USN") completed
negotiations for an expansion of the License Agreement. The new terms expand
the field-of-use from drugs of abuse and anabolic steroids on urine samples to
include all possible diagnostic uses for saliva and urine. In addition, the
royalty rate has been reduced to 3% on the technology-related portion of the
disposable cassette sales and 1% on instrument sales from the previous 10% on
all the Company's product sales. The minimum royalty payment has been reduced
to $50,000 in 2001 (anticipated first year of product sales) and $100,000 a
year thereafter versus the previous $100,000 per year. The Company is further
developing the USN-developed technology for application in its own proprietary
test system.
On July 14, 1999 the Company entered into an equipment lease financing
agreement with FirstCorp of Portland, Oregon. The agreement allows for a
credit line of $300,000 ($216,000 available at September 30, 1999) for the
purchase of capital equipment, with a minimum takedown size of $50,000 and a
soft cost allowance of up to 20%. The term of each takedown lease is thirty
months with an end of lease purchase option at not more than 10% of original
equipment cost.
NOTE 5 - Stockholders' Equity
During the quarter ended September 30, 1999, the Company issued 100,000
shares of Common Stock to holders who elected to convert their shares of the
Series A 10% Cumulative Convertible Preferred Stock. In addition, 2,136
shares of Common Stock were issued as dividends on the converted shares.
During the quarter ended September 30, 1999, stock options were granted to an
employee to purchase 15,000 shares of the Common Stock at $1.40 per share. On
April 16, 1999, the Board of Directors approved a compensation plan for outside
directors which stated that each non-employee, non-consultant director shall
receive as compensation a grant of an option pursuant to the stock option plan
and each grant shall be for the right to purchase 15,000 shares of the Common
Stock on an annual basis. Options to purchase 15,000 shares of the Common Stock
at $1.63 per share were granted to a director of the Company under the new
approved compensation plan during the quarter ended September 30, 1999. As
of September 30, 1999, there were outstanding, under the stock option plan,
incentive stock options to purchase an aggregate of 1,067,500 shares held by
a total of 18 employees and 3 directors.
During the quarter ended September 30, 1999, the Company issued warrants to
an outside party to purchase an aggregate of 125,000 shares of the common
stock at a priceof $1.07 per share as payment for services. As of September
30, 1999, there were warrants outstanding to purchase 2,662,314 shares of the
Common Stock.
</PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
General.
The Company is a late development stage company developing a unique product
- - the first product that will provide immediate, on-site diagnostic results
without the need to take blood or urine. The Company is focused on the
commercialization of the flow immunosensor technology licensed from the USN.
This proprietary technology, when used in conjunction with saliva as a
non-invasive test specimen using the Company's proprietary collection
technology, will allow the Company to develop a broadly applicable
non-invasive, rapid, on-site diagnostic test system. The product could be
used for rapid diagnostic testing, for screening, and therapeutic drug
monitoring in non-medical environments such as the workplace, home health
care, ambulances, pharmacies, and law enforcement. The first product under
development is for the simultaneous detection of drugs of abuse and alcohol.
The market potential for this product is estimated to be $750 million, and
growing to over $1 billion by 2002. Marketing is anticipated to begin not
earlier than the third quarter of 2000.
Liquidity and Capital Resources.
The Company is a development stage enterprise with no earnings history. Since
its inception, the Company has devoted substantially all of its resources to
research and development and has experienced an ongoing deficiency in working
capital. The Company does not anticipate generating revenue from product sales
until the third quarter of 2000 at the earliest. Because the Company has not
produced any revenues as a result of its being a development stage company, it
has been dependent, ever since gaining its independence from its former parent
SAT in October 1997, on the net proceeds derived from three private placements
pursuant to Regulation D under the Securities Act to fund its operations, as
described in the succeeding three paragraphs.
On January 21, 1999, the Company closed as to the sale of 600,000 shares of
the Series A preferred stock at $10.00 per share and the Company realized
$6,000,000 in gross proceeds. Finders' fees were paid to various consultants
and bankers for their assistance in helping the Company to complete this
private placement consisting of an aggregate of $592,078 in cash fees
(including $420,451 to Jonathon Pallin, a director of the Company) and Warrants
expiring January 20, 2004 to purchase an aggregate of 404,725 shares of the
Common Stock (net of a cancellation) at $2.41 per share.
Management believes that, with the net proceeds from the private placement
described in the preceding paragraph, the Company has sufficient funds to
complete the pre-production instrument for the testing product for drugs of
abuse and alcohol and that the pre-production instrument will be completed
not earlier than the first quarter of 2000. There can be no assurance that
management's estimate as to costs and timing will be correct. Any delays may
further increase the Company's costs of development.
Management has announced the establishment of two financing arrangements which
will help the Company to conserve cash. On July 2, 1999, the Company
established a $500,000 revolving line of credit agreement ($500,000 available
at September 30,1999) with City National Bank of Beverly Hills, California.
The line of credit is secured by funds and securities in the Company's SEI
Liquidity Management account at City National Bank. The interest rate on the
revolving line of credit is variable and set at the prime rate as declared
from time to time by City National Bank. The revolving line of credit will
renew annually in June, and does not require guarantors nor annual fees.
Additionally, the Company entered into an equipment lease financing agreement
with FirstCorp of Portland, Oregon totaling $300,000.
Management's latest estimate is that completion of the development and
launching of a saliva based drugs of abuse and alcohol testing product, after
the pre-production instrument, will require additional funding of approximately
$4,500,000, beyond the $6,000,000 raised in January 1999, and that the product
will not be launched earlier than the third quarter of 2000.
Since October 1997, management had been pursuing parallel paths for long-term
financing venture capital, strategic partnering, a public offering and/or a
private placement for all or part of the required funding.
</PAGE>
<PAGE>
Having successfully consummated three private placements pursuant to Regulation
D under the Securities Act since November 1997, the Company is currently
seeking to raise the additional required financing through this method. As
with a public offering, there can be no assurance that potential investors
would be receptive to a private placement by the Company at that time, either
because of general stock market conditions or conditions generally in the
substance abuse technology industry.
Management has also pursued the possibility of an underwritten public offering
and has received expressions of interest from several well-known small national
and large regional firms. At least one firm has offered to conduct a public
offering late 1999 or early 2000. There can be no assurance that stock market
conditions would be receptive to a public offering by the Company at that time.
In addition, competitive conditions in the substance abuse testing industry at
that time may make the Company less attractive to potential public investors.
Management has also been exploring the possibility of obtaining a strategic
partner(s) for the Company. To this end, the Company has an agreement with
the Venture Merchant Group to assist in the identification of potential
strategic partners for the Company. Several large pharmaceutical and
diagnostic corporations have expressed initial interest in partnering with
the Company. Management anticipates that one or more partnering agreements
may be completed prior to the end of this fiscal year. There can be no
assurance that the Company will be successful in securing additional
financing, whether through a strategic partner, a public offering or a
private placement.
If all of the Warrants to purchase an aggregate of 2,662,314 shares of the
Common Stock which are outstanding on September 30, 1999 were subsequently
exercised, the Company would realize $2,483,785 in gross proceeds. If all of
the Options to purchase an aggregate of 1,067,500 shares outstanding on
September 30, 1999 were subsequently exercised, the Company would realize
$870,465 in gross proceeds. However, there can be no certainty as to when
and if any of these securities may be exercised, especially as to the Options
and a Warrant which were not all currently exercisable as of
September 30, 1999. Accordingly, management believes that the Company cannot
rely on these exercises as a source of financing.
Results of Operations
Three Months Ended September 30, 1999 vs. September 30, 1998
During the quarter ended September 30, 1999, the Company spent $559,707 on
research and development and an additional $389,212 on general and
administrative expenses, as compared with $294,491 and $474,082, respectively,
during the three months ended September 30, 1998. The increase of $265,216, or
90.1%, in research and development in the 1999 period was due to increases in
staffing and related research materials. Staffing levels in research and
development have nearly tripled over the same period in 1998. General and
administrative expenses decreased $84,870, or 17.9%, during the quarter ended
September 30, 1999. General and administrative expenses for the three months
ended September 30, 1998 included corporate legal expenses that were higher
than usual due to timing and a significant royalty payment to the Navy, no m
inimum royalty payments are due the USN until fiscal 2001.
From inception on October 8, 1992 to September 30, 1999, the Company has spent
$7,879,780 on research and development and $4,757,559 on general and
administrative expenses. Management fees paid to SAT aggregated $2,089,838
during such period.
</PAGE>
<PAGE>
Six Months Ended September 30, 1999 vs. September 30, 1998
During the six months ended September 30, 1999, the Company spent $1,042,893
on research and development and an additional $689,876 on general and
administrative expenses, as compared with $558,193 and $657,491, respectively,
during the six months ended September 30, 1998. The research and development
expenses for the six months ended September 30, 1999 increased by $484,700, or
86.8%, over the same period during 1998 due to the nearly three-fold increase
in staffing levels and related research materials. General and administrative
expenses increased $32,385, or 4.9%, primarily as a result of increased
staffing levels.
Forward-Looking Statements
This Management's Discussion and Analysis of Financial Condition and Results
of Operations contains forward-looking statements which involve risk and
uncertainties. Such forward-looking statements reflect management's current
views that the necessary financing will be available, when needed, to complete
the research and development program, that the product will be developed at the
contemplated cost and within the projected timetable, that, during the interim
period before the Company begins marketing, competitors will not begin to
market a competitive saliva-based testing product and that the other risks
described in the Annual Report and other filings by the Company with the
Securities and Exchange Commission will not materially adversely affect the
Company's operations. Because there can be no assurance that management's
expectations will be realized, actual results may differ.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable.
</PAGE>
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Stockholders was held on August 20, 1999.
(b) At the Meeting, Peter S. Gold, Linda H. Masterson, Jonathan J. Pallin,
and Paul Sandler were re-elected as the sole directors of the Company.
(c) At the Meeting, votes were taken as to three proposals as follows:
(1) On the proposal to elect four directors:
Broker
Nominee For Withheld Non-Votes
Peter S. Gold 11,959,510 42,900 36,768
Linda H. Masterson 11,959,510 42,900 36,768
Jonathan J. Pallin 11,863,213 139,167 36,768
Paul Sandler 11,865,213 137,197 36,768
(2) On the proposal to ratify the appointment of Ernst & Young, LLC as
independent auditors for the fiscal year ending March 31, 2000:
Broker
For Against Withheld Non-Votes
11,885,180 62,484 34,746 36,768
(3) On the proposal to authorize a possible reverse split of the Common
Stock, in an amount which the Board of Directors deems appropriate, to be not
less than one-for-three nor more than one-for-five:
Broker
For Against Withheld Non-Votes
10,043,109 1,764,853 54,471 156,445
(4) On the proposal to authorize an increase in authorized shares of the
Common Stock if a reverse split is authorized and implemented:
Broker
For Against Withheld Non-Votes
11,735,088 193,236 54,086 36,768
(d) Not Applicable.
</PAGE>
<PAGE>
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10(l) Copy of Master Lease Agreement dated as of July 14, 1999
between LifePoint, Inc and FirstCorp
10(m) Copy of Line of Credit Agreement dated as of July 2, 1999
between LifePoint, Inc and City National Bank
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934,
the registrant has duly caused this Report to be signed on its behalf by the
undersigned therein to be duly authorized.
LIFEPOINT, INC.
(Registrant)
Date: November 13, 1999 By /s/ Michele A. Clark
Michele A. Clark
Controller and Chief
Accounting Officer
</PAGE>
</TABLE>
<PAGE>
Exhibit 10(l)
COMMERCIAL PLEDGE AND SECURITY AGREEMENT
Principal Loan Date Maturity Loan No Account Officer
$500,000.00 06-02-1999 06-02-2000 33473 639804 MTP
References in the shaded area are for Lender's use only and do not limit
the applicability of this document to any particular loan or item.
Borrower: Lender:
LIFEPOINT, INC., City National Bank,
a Delaware Corporation a National Banking Association
10400 TRADEMARK STREET Westside Commercial Banking
RANCHO CUCAMONGA, CA 91730 Center #067000
400 North Roxbury Drive, Third Floor
Beverly Hills, CA 90210
THIS COMMERCIAL PLEDGE AND SECURITY AGREEMENT is entered into between
LIFEPOINT, INC., A DELAWARE CORPORATION (referred to below as "Grantor"); and
City National Bank, a National Banking Association (referred to below as
"Lender").
GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to
Lender a security Interest in the Collateral to secure the Indebtedness and
agrees that Lender shall have the rights stated in this Agreement with
respect to the Collateral, in addition to all other rights which Lender may
have by law.
DEFINITIONS. The following words shall have the following meanings when used
in this Agreement:
Agreement. The word "Agreement" means this Commercial Pledge and Security
Agreement, as this Commercial Pledge and Security Agreement may be amended or
modified from time to time, together with all exhibits and schedules attached
to this Commercial Pledge and Security Agreement from time to time.
Collateral. The word "Collateral" means the following specifically described
property, which Grantor has delivered or agrees to deliver (or cause to be
delivered or appropriate book-entries made) immediately to Lender, together
with all Income and Proceeds as described below:
CITY NATIONAL BANK SEI LIQUIDITY MANAGEMENT ACCOUNT NUMBER 477232100 IN THE
NAME OF LIFEPOINT, INC., AND ALL SECURITIES AND OTHER PROPERTY HELD THEREIN,
TOGETHER WITH ALL PROCEEDS THEREOF INCLUDING INTEREST, AND ANY ADDITIONS
THERETO MADE AFTER THE DATE OF THIS AGREEMENT, UP TO $625.000.00. THE
REMAINING BALANCE OF THE ACCOUNT WILL BE AVAILABLE TO GRANTOR AT ANY TIME.
In addition, the word "Collateral" includes all property of Grantor (however
owned), in the possession of Lender (or in the possession of a third party
subject to the control of Lender), whether now or hereafter existing and
whether tangible or intangible in character, including without limitation
each of the following:
(a) All property to which lender acquires title or documents of title.
(b) All property assigned to Lender.
(c) All promissory notes, bills of exchange, stock certificates, bonds,
savings passbooks, time certificates of deposit, insurance policies, end all
other instruments and evidences of an obligation.
(d) All records relating to any of the property described in this Collateral
section, whether in the form of a writing, microfilm microfiche, or electronic
media.
Event of Default. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in section titled
"Events of Default."
Grantor. The word "Grantor" means LIFEPOINT, INC., A DELAWARE CORPORATION,
its successors and assigns.
Guarantor. The word "Guarantor" means and includes without limitation each
and all of the guarantors, sureties, and accommodation parties in connection
with the Indebtedness.
Income and Proceeds. The words "income and Proceeds" mean all present and
future income, proceeds, earnings, increases, Substitutions from or for the
Collateral of every kind and nature, including without limitation all payments,
interest, profits, distributions, benefits, rights, options, warrants,
dividends, stock dividends, stock splits, stock rights,
</PAGE>
<PAGE>
06-02-1999 COMMERCIAL PLEDGE AND SECURITY AGREEMENT Page 2
Loan No 33473 (Continued)
regulatory dividends, distributions, subscriptions monies, claims for money
due and to become due, proceeds of any insurance on the Collateral, shares of
stock of different par value or no , par value issued in substitution or
exchange for shares included in the Collateral, and all other property Grantor
is entitled to receive on account of such Collateral, including accounts,
documents, instruments, chattel paper, and general intangibles.
Indebtedness. The word "Indebtedness" means the indebtedness evidenced by the
Note, including all principal and interest, together with all other
indebtedness and costs and expenses for which Grantor is responsible under
this Agreement or under any of the Related Documents. In addition, the word
"Indebtedness" includes all other obligations, debts and liabilities, plus
interest thereon, of Grantor or any one or more of them, to Lender, as well
as all claims by Lender against Grantor, or any one or more of them, whether
existing now or later; whether they are voluntary or involuntary, due or not
due, direct or indirect, absolute or contingent, liquidated or unliquidated
whether Grantor may be liable individually or jointly with others; whether
Grantor may be obligated as guarantor, surety, accommodation party or
otherwise; whether recovery upon such indebtedness may be or hereafter may
become barred by any statute of limitations; and whether such indebtedness
may be or hereafter may become otherwise unenforceable.
Lender. The word "Lender" means City National Bank, a National Banking
Association, its successors and assigns.
Note. The word "Note" means the note or credit agreement dated June 2, 1999,
in the principal amount of $500,000.00 from LIFEPOINT INC., A DELAWARE
CORPORATION to Lender, together with all renewals of, extensions of,
modifications of, refinancing of consolidations of and substitutions for the
note or credit agreement.
Obligor. The word "Obligor" means and includes without limitation any and all
persons or entities obligated to pay money or to perform some other act under
the Collateral.
Related Documents. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds
of trust, and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the Indebtedness.
RIGHT OF SETOFF. Grantor hereby grants Lender a contractual security interest
in and hereby assigns, conveys, delivers, pledges, and transfers all of
Grantor's right, title and interest in and to Grantor's accounts with Lender
(whether checking, savings, or some other account), including all accounts
held jointly with someone else and all accounts Grantor may open in the future,
excluding, however, all IRA and Keogh accounts, and all trust accounts for
which the grant of a security interest would be prohibited by law. Grantor
authorizes Lender, to the extent permitted by applicable law, to charge or
setoff all Indebtedness against any and all such accounts.
GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL.
Grantor represents and warrants to Lender that:
Ownership. Grantor is the lawful owner of the Collateral free and clear of all
security interests, liens, encumbrances and claims of others except as
disclosed to and accepted by Lender in writing prior to execution of this
Agreement.
Right to Pledge. Grantor has the full right, power and authority to enter into
this Agreement and to pledge the Collateral.
Binding Effect. This Agreement is binding upon Grantor, as well as Grantor's
heirs, successors, representatives and assigns, and is legally enforceable in
accordance with its terms.
No Further Assignment. Grantor has not, and will not, sell, assign, transfer,
encumber or otherwise dispose of any of Grantor's rights in the Collateral
except as provided in this Agreement.
No Defaults. There are no defaults existing under the Collateral, and there
are no offsets or counterclaims to the same. Grantor will strictly and
promptly perform each of the terms, conditions, covenants and agreements
contained in the Collateral which are to be performed by Grantor, if any.
</PAGE>
<PAGE>
06-02-1999 COMMERCIAL PLEDGE AND SECURITY AGREEMENT Page 3
Loan No 33473 (Continued)
No Violation. The execution and delivery of this Agreement will not violate
any law or agreement governing Grantor or to which Grantor is a party, and
its certificate or articles of incorporation and bylaws do not prohibit any
term or condition of this Agreement.
LENDER'S RIGHTS AND OBLIGATIONS WITH RESPECT TO COLLATERAL. Lender may hold
the Collateral until all the Indebtedness has been paid and satisfied and
thereafter may deliver the Collateral to any Grantor. Lender shall have the
following rights in addition to all other rights it may have by law:
Maintenance and Protection of Collateral. Lender may, but shall not be
obligated to, take such steps as it deems necessary or desirable to protect,
maintain, insure, store, or care for the Collateral, including payment of any
liens or claims against the Collateral. Lender may charge any cost incurred
in so doing to Grantor.
Income and Proceeds from the Collateral. Lender may receive all Income and
Proceeds and add it to the Collateral. Grantor agrees to deliver to Lender
immediately upon receipt, in the exact form received and without commingling
with other property, all Income and Proceeds from the Collateral which may be
received by, paid, or delivered to Grantor or for Grantor's account, whether
as an addition to, in discharge of, in substitution of, or in exchange for
any of the Collateral.
Application of Cash. At Lender's option, Lender may apply any cash, whether
included in the Collateral or received as Income and Proceeds or through
liquidation, sale, or retirement, of the Collateral, to the satisfaction of
the Indebtedness or such portion thereof as Lender shall choose, whether or
not matured.
Transactions with Others. Lender may (a) extend time for payment or other
performance, (b) grant a renewal or change in terms or conditions, or (c)
compromise, compound or release any obligation, with any one or more Obligors,
endorsers, or Guarantors of the Indebtedness as Lender deems advisable,
without obtaining the prior written consent of Grantor, and no such act or
failure to act shall affect Lender's rights against Grantor or the Collateral.
All Collateral Secures Indebtedness. All Collateral shall be security for the
Indebtedness, whether the Collateral is located at one or more offices or
branches of Lender and whether or not the office or branch where the
Indebtedness is created is aware of or relies upon the Collateral.
Collection of Collateral. Lender, at Lender's option may, but need not,
collect directly from the Obligors on any of the Collateral all Income and
Proceeds or other sums of money and other property due and to become due under
the Collateral, and Grantor authorizes and directs the Obligors, if Lender
exercises such option, to pay and deliver to Lender all Income and
Proceeds and other sums of money and other property payable by the terms of
the Collateral and to accept Lender's receipt for the payments.
Power of Attorney. Grantor irrevocably appoints Lender as Grantor's
attorney-in-fact, with full power of substitution, (a) to demand, collect,
receive, receipt for, sue and recover all Income and Proceeds and other sums
of money and other property which may now or hereafter become due, owing or
payable from the Obligors in accordance with the terms of the Collateral;
(b) to execute, sign and endorse any and all instruments, receipts, checks,
drafts and warrants issued in payment for the Collateral; (c) to settle or
compromise any and all claims arising under the Collateral, and in the place
and stead of Grantor, execute and deliver Grantor's release and acquittance
for Grantor; (d) to file any claim or claims or to take any action or
institute or take part in any proceedings, either in Lender's own name or in
the name of Grantor, or otherwise, which in the discretion of Lender may seem
to be necessary or advisable; and (e) to execute in Grantor's name and to
deliver to the Obligors on Grantor's behalf, at the time and in the manner
specified by the Collateral, any necessary instruments or documents.
Perfection of Security Interest. Upon request of Lender, Grantor will
deliver to Lender any and all of the documents evidencing or constituting the
Collateral. When applicable law provides more than one method of perfection of
Lender's security interest, Lender may choose the method(s) to be used. Upon
request of Lender, Grantor will sign and deliver any writings necessary to
perfect Lender's security interest. If the Collateral consists of securities
for which no certificate has been issued, Grantor agrees, at Lender's option,
either to request issuance of an appropriate certificate or to execute
appropriate instructions on Lender's forms instructing the issuer, transfer
</PAGE>
<PAGE>
06-02-1999 COMMERCIAL PLEDGE AND SECURITY AGREEMENT Page 4
Loan No 33473 (Continued)
agent, mutual fund company, or broker, as the case may be, to record on its
books or records, by book-entry or otherwise, Lender's security interest in
the Collateral. Grantor hereby appoints Lender as Grantor's irrevocable
attorney-in-fact for the purpose of executing any documents necessary to
perfect or to continue the security interest granted in this Agreement. This
is a continuing Security Agreement and will continue in effect even though
all or any part of the Indebtedness is paid in full and even though for a
period of time Grantor may not be Indebted to Lender.
EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without
limitation all taxes, liens, security interests, encumbrances, and other
claims, at any time levied or placed on the Collateral. Lender also may (but
shall not be obligated to) pay all costs for insuring, maintaining and
preserving the Collateral. All such expenditures incurred or paid by Lender
for such purposes will then bear interest at the rate charged under the Note
from the date incurred or paid by Lender to the date of repayment by Grantor.
All such expenses shall become a part of the Indebtedness and, at Lender's
option, will (a) be payable on demand, (b) be added to the balance of the
Note and be apportioned among and be payable with any installment payments to
become due during either (i) the term of any applicable insurance policy or
(ii) the remaining term of the Note, or (c) be treated as a balloon payment
which will be due and payable at the Note's maturity. This Agreement also
will secure payment of these amounts. Such right shall be in addition to all
other rights and remedies to which Lender may be entitled upon the occurrence
of an Event of Default.
LIMITATIONS ON OBLIGATIONS OF LENDER. Lender shall use ordinary reasonable
care in the physical preservation and custody of the Collateral in Lender's
possession, but shall have no other obligation to protect the Collateral or
its value. In particular, but without limitation, Lender shall have no
responsibility for (a) any depreciation in value of the Collateral or for the
collection or protection of any Income and Proceeds from the Collateral,
(b) preservation of rights against parties to the Collateral or against third
persons, (c) ascertaining any maturities, calls, conversions, exchanges,
offers, tenders, or similar matters relating to any of the Collateral, or
(d) informing Grantor about any of the above, whether or not Lender has or is
deemed to have knowledge of such matters. Except as provided above, Lender
shall have no liability for depreciation or deterioration of the Collateral.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:
Default on Indebtedness. Failure of Grantor to make any payment when due on
the Indebtedness.
Other Defaults. Failure of Grantor to comply with or to perform any other
term, obligation, covenant or condition contained in this Agreement or in any
of the Related Documents or in any other agreement between Lender and Grantor.
Default in Favor of Third Parties. Should Borrower or any Grantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's property or Borrower's or any
Grantor's ability to repay the Loans or perform their respective obligations
under this Agreement or any of the Related Documents.
False Statements. Any warranty, representation or statement made or furnished
to Lender by or on behalf of Grantor under this Agreement, the Note or the
Related Documents is false or misleading in any material respect, either now
or at the time made or furnished.
Defective Collateralization. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any collateral
documents to create a valid and perfected security interest or lien) at any
time and for any reason.
Insolvency. The dissolution or termination of Grantor's existence as a going
business, the insolvency of Grantor, the appointment of a receiver for any
part of Grantor's property, any assignment for the benefit of creditors, any
type of creditor workout, or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against Grantor.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Grantor or by any governmental agency
</PAGE>
<PAGE>
06-02-1999 COMMERCIAL PLEDGE AND SECURITY AGREEMENT Page 5
Loan No 33473 (Continued)
against the Collateral or any other collateral securing the Indebtedness.
This includes a garnishment of any of Grantor's deposit accounts with Lender.
Deterioration of Collateral Value. The market value of the Collateral falls
below a specified amount determined by Lender from time to time, and Grantor
does not, by the close of business on the next business day after Lender has
sent written notice to Grantor of the deterioration, either (a) reduce the
amount of the Indebtedness to the amount required by Lender or (b) increase
the cash value of Collateral to the amount required by Lender by lodging with
Lender additional collateral security acceptable to Lender.
Events Affecting Guarantor. Any of the preceding events occurs with respect
to any Guarantor of any of the Indebtedness or such Guarantor dies or becomes
incompetent.
Adverse Change. A material adverse change occurs in Grantor's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired.
Insecurity. Lender, in good faith, deems itself insecure.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender may exercise any one or more of the
following rights and remedies:
Accelerate Indebtedness. Declare all Indebtedness, including any prepayment
penalty which Grantor would be required to pay, immediately due and payable,
without notice of any kind to Grantor.
Collect the Collateral. Collect any of the Collateral and, at Lender's option
and to the extent permitted by applicable law, retain possession of the
Collateral while suing on the Indebtedness.
Sell the Collateral. Sell the Collateral, at Lender's discretion, as a unit
or in parcels, at one or more public or private sales. Unless the Collateral
is perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market, Lender shall give or mail to Grantor,
or any of them, notice at least ten (10) days in advance of the time and
place of any public sale, or of the date after which any private sale may be
made. Grantor agrees that any requirement of reasonable notice is satisfied
if Lender mails notice by ordinary mail addressed to Grantor, or any of them,
at the last address Grantor has given Lender in writing. If a public sale is
held, there shall be sufficient compliance with all requirements of notice to
the public by a single publication in any newspaper of general circulation in
the county where the Collateral is located, setting forth the time and place
of sale and a brief description of the property to be sold. Lender may be a
purchaser at any public sale.
Register Securities. Register any securities included in the Collateral in
Lender's name and exercise any rights normally incident to the ownership of
securities.
Sell Securities. Sell any securities included in the Collateral in a manner
consistent with applicable federal and state securities laws, notwithstanding
any other provision of this or any other agreement. If, because of
restrictions under such laws, Lender is or believes it is unable to sell the
securities in an open market transaction, Grantor agrees that Lender shall
have no obligation to delay sale until the securities can be registered, and
may make a private sale to one or more persons or to a restricted group of
persons, even though such sale may result in a price that is less favorable
than might be obtained in an open market transaction, and such a sale shall
be considered commercially reasonable. If any securities held as Collateral
are "restricted securities" as defined in the Rules of the Securities and
Exchange Commission (such as Regulation D or Rule 144) or state securities
departments under state "Blue Sky" laws, or if Grantor is an affiliate of the
issuer of the securities, Grantor agrees that neither Grantor nor any member
of Grantor's family will sell or dispose of any securities of such issuer
without obtaining Lender's prior written consent.
Foreclosure. Maintain a judicial suit for foreclosure and sale of the
Collateral.
Transfer Title. Effect transfer of title upon sale of all or part of the
Collateral. For this purpose, Grantor irrevocably appoints Lender as its
attorney-in-fact to execute endorsements, assignments and instruments in the
name of Grantor and each of them (if more than one) as shall be necessary or
reasonable.
</PAGE>
<PAGE>
06-02-1999 COMMERCIAL PLEDGE AND SECURITY AGREEMENT Page 6
Loan No 33473 (Continued)
Other Rights and Remedies. Have and exercise any or all of the rights and
remedies of a secured creditor under the provisions of the Uniform Commercial
Code, at law, in equity, or otherwise.
Application of Proceeds. Apply any cash which is part of the Collateral, or
which is received from the collection or sale of the Collateral, to
reimbursement of any expenses, including any costs for registration of
securities, commissions incurred in connection with a sale, attorney fees
as provided below, and court costs, whether or not there is a lawsuit and
including any fees on appeal, incurred by Lender in connection with the
collection and sale of such Collateral and to the payment of the Indebtedness
of Grantor to Lender, with any excess funds to be paid to Grantor as the
interests of Grantor may appear. Grantor agrees, to the extent permitted by
law, to pay any deficiency after application of the proceeds of the Collateral
to the Indebtedness.
Cumulative Remedies. All of Lender's rights and remedies, whether evidenced
by this Agreement or by any other writing, shall be cumulative and may be
exercised singularly or concurrently. Election by Lender to pursue any remedy
shall not exclude pursuit of any other remedy, and an election to make
expenditures or to take action to perform an obligation of Grantor under this
Agreement, after Grantor's failure to perform, shall not affect Lender's
right to declare a default and to exercise its remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Amendments. This Agreement, together with any Related Documents, constitutes
the entire understanding and agreement of the parties as to the matters set
forth in this Agreement. No alteration of or amendment to this Agreement
shall be effective unless given in writing and signed by the party or parties
sought to be charged or bound by the alteration or amendment.
Applicable Law. This Agreement has been delivered to Lender and accepted by
Lender in the State of California. If there is a lawsuit. Grantor agrees
upon Lender's request to submit to the jurisdiction of the courts of Los
Angeles County, the State of California. Agreement shall be governed by and
construed in accordance with the laws of the State of California.
Attorneys' Fees; Expenses. Grantor agrees to pay upon demand all of Lender's
costs and expenses, including attorneys' fees and Lender's legal expenses,
incurred in connection with the enforcement of this Agreement. Lender may
pay someone else to help enforce this Agreement, and Grantor shall pay the
costs and expenses of such enforcement. Costs and expenses include Lender's
attorneys' fees and legal expenses whether or not there is a lawsuit,
including attorneys' fees and legal expenses for bankruptcy proceedings
(and including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. Grantor also
shall pay all court costs and such additional fees as may be directed by the
court.
Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions of
this Agreement.
Multiple Parties; Corporate Authority. All obligations of Grantor under this
Agreement shall be joint and several, and all references to Grantor shall
mean each end every Grantor. This means that each of the persons signing
below is responsible for all obligations in this Agreement.
Notices. All notices required to be given under this Agreement shall be given
in writing, may be sent by telefacsimile (unless otherwise required by law),
and shall be effective when actually delivered or when deposited with a
nationally recognized overnight courier or deposited in the United States
mail, first class, postage prepaid, addressed to the party to whom the notice
is to be given at the address shown above. Any party may change its address
for notices under this Agreement by giving formal written notice to the other
parties, specifying that the purpose of the notice is to change the party's
address. To the extent permitted by applicable law, if there is more than
one Grantor, notice to any Grantor will constitute notice to all Grantors.
For notice purposes, Grantor will keep Lender informed at all times of
Grantor's current address(es).
Severability. If a court of competent jurisdiction finds any provision of this
Agreement to be invalid or unenforceable as to any person or circumstance,
such finding shall not render that provision invalid or unenforceable as to
any other persons or circumstances. If feasible, any such offending provision
shall be deemed to be modified to
</PAGE>
<PAGE>
06-02-1999 COMMERCIAL PLEDGE AND SECURITY AGREEMENT Page 7
Loan No 33473 (Continued)
be within the limits of enforceability or validity; however, if the offending
provision cannot be so modified, it shall be stricken and all other provisions
of this Agreement in all other respects shall remain valid and enforceable.
Successor Interests. Subject to the limitations set forth above on transfer of
the Collateral, this Agreement shall be binding upon and inure to the benefit
of the parties, their successors and assigns.
Waiver. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing end signed by Lender. No
delay or omission on the part of Lender in exercising any right shall operate
as a waiver of such right or any other right. A waiver by Lender of a
provision of this Agreement shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with that provision or
any other provision of this Agreement. No prior waiver by Lender, nor any
course of dealing between Lender and Grantor, shall constitute a waiver of
any of Lender's rights or of any of Grantor's obligations as to any future
transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall not
constitute continuing consent to subsequent instances where such consent is
required and in all cases such consent may be granted or withheld in the sole
discretion of Lender.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS PLEDGE AND
SECURITY AGREEMENT, AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED
JUNE 2, 1999.
GRANTOR:
LIFEPOINT. INC., A DELAWARE CORPORATION
By: /s/ Linda H. Masterson By: /s/ Michele A. Clark
Linda H. Masterson, PRESIDENT/CEO Michele A. Clark, CAO/CONTROLLER
</PAGE>
<PAGE>
PROMISSORY NOTE
Principal Loan Date Maturity Loan No Account Officer
$500,000.00 06-02-1999 06-02-2000 33473 639804 MTP
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to particular loan or item.
Borrower: Lender:
LIFEPOINT, INC., City National Bank,
a Delaware Corporation a National Banking Association
10400 TRADEMARK STREET Westside Commercial Banking
RANCHO CUCAMONGA, CA 91730 Center #067000
400 North Roxbury Drive, Third Floor
Beverly Hills, CA 90210
Principal Amount: $500,000.00 Initial Rate: 7.750%
Date of Note: June 2, 1999
PROMISE TO PAY. LIFEPOINT, INC., A DELAWARE CORPORATION ("Borrower") promises
to pay to City National Bank, a National Banking Association ("Lender"), or
order, in lawful money of the United States of America, the principal amount
of Five Hundred Thousand & 00/100 Dollar ($500.000.00) or so much as may be
outstanding, together with interest on the unpaid outstanding principal
balance of each advance. Interest shall be calculated from the data of each
advance until repayment of each advance.
PAYMENT. Borrower will pay this loan in one payment of all outstanding
principal plus all accrued unpaid interest on June 2, 2000. In addition,
Borrower will pay regular monthly payments of accrued unpaid interest
beginning July 2, 1999, and all subsequent interest payments are due on the
same day of each month after that. The annual interest rate for this Note is
computed on a 365/360 basis; that is, by applying the ratio of the annual
interest rate over a year of 360 days, multiplied by the outstanding principal
balance, multiplied by the actual number of days the principal balance is
outstanding. Borrower will pay Lender at Lender's address shown above or at
such other place as Lender may designate in writing. Unless otherwise agreed
or required by applicable law, payments will be applied first to accrued
unpaid interest, then to principal, and any remaining amount to any unpaid
collection costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an index which is the City National Bank
Prime Rate (the "Index"). Prime Rate shall mean the rate most recently
announced by Lender at its principal office in Beverly Hills, California, as
its "Prime Rate." Any change in the Prime Rate shall become effective on the
same business day on which the Prime Rate shall change, without prior notice
to Borrower. Lender will tell Borrower the current Index rate upon Borrower's
request. Borrower understands that Lender may make loans based on other rates
as wall. The interest rate change will not occur more often than each day.
The Index currently is 8.000%. The interest rate to be applied to the unpaid
principal balance of this Note will be at a rate equal to the index, resulting
in an initial rate of 7.750%. NOTICE: Under no circumstances will the interest
rate on this Note be more than the maximum rate allowed by applicable law.
PREPAYMENT; MINIMUM INTEREST CHARGE. In any event, even upon full prepayment
of this Note, Borrower understands that Lender is entitled to a minimum
interest charge of $100.00. Other than Borrower's obligation to pay any
minimum interest charge, Borrower may pay without penalty all or a portion
of the amount owed earlier than it is due. Early payments will not, unless
agreed to by Lender in writing, relieve Borrower of Borrower's obligation to
continue to make payments of accrued unpaid interest. Rather, they will
reduce the principal balance due.
DEFAULT: Borrower will be in default if any of the following happens:
(a) Borrower fails to make any payment when due.
(b) Borrower breaks any promise Borrower has made to Lender, or Borrower fails
to comply with or to perform when due any other term, obligation, covenant,
or condition contained in this Note or any agreement related to this Note,
or in any other agreement or loan Borrower has with Lender.
(c) Borrower defaults under any loan, extension of credit, security agreement,
purchase or sales agreement, or any other agreement, in favor of any other
creditor or person that may materially affect any of Borrower's property
or Borrower's ability to repay this Note or perform Borrower's obligations
under this Note or any of the Related Documents.
(d) Any representation or statement made or furnished to Lender by Borrower or
on Borrower's behalf is false or misleading in any material respect either
now or at the time made or furnished.
(e) Borrower becomes insolvent, a receiver is appointed for any part of
Borrower's property, Borrower makes an assignment for the benefit of
creditors, or any proceeding is commenced either by Borrower or against
Borrower under any bankruptcy or insolvency laws.
(f) Any creditor tries to take any of Borrower's property on or in which
Lender has a lien or security interest. This includes a garnishment of
any of Borrower's accounts with Lender.
(g) Any guarantor dies or any of the other events described in this default
section occurs with respect to any guarantor of this Note.
(h) A material adverse change occurs in Borrower's financial condition, or
Lender believes the prospect of payment or performance of the Indebtedness
is impaired.
(i) Lender in good faith deems itself insecure.
</PAGE>
<PAGE>
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon Borrower's failure to pay
all amounts declared due pursuant to this section, including failure to pay
upon final maturity, Lender, at its option, may also, if permitted under
applicable law, increase the variable interest rate on this Note 5.000
percentage points. Lender may hire or pay someone else to help collect this
Note if Borrower does not pay. Borrower also will pay Lender that amount.
This includes, subject to any limits under applicable law, Lender's attorneys'
fees and Lender's legal expenses whether or not there is a lawsuit, including
attorneys' fees and legal expenses for bankruptcy proceedings (including
efforts to modify or vacate any automatic stay or injunction), appeals, and
any anticipated post-judgment collection services. Borrower also will pay any
court costs, in addition to all other sums provided by law. This Note has been
delivered to Lender and accepted by Lender in the State of California. If
there is a lawsuit, Borrower agrees upon Lender's request to submit to the
jurisdiction of the courts of Los Angeles County, the State of California.
This Note shall be governed by and construed in accordance with the laws of
the State of California.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $10.00 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.
RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest in,
and hereby assigns, conveys, delivers, pledges, and transfers to Lender all
Borrower's right, title and interest in and to, Borrower's accounts with
Lender (whether checking, savings, or some other account), including without
limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on this Note against any
and all such accounts.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note may be requested either orally or in writing by Borrower or by an
authorized person. Lender may, but need not, require that all oral requests
be confirmed in writing. All communications, instructions, or directions by
telephone or otherwise to Lender are to be directed to Lender's office shown
above. Borrower agrees to be liable for all sums either: (a) advanced in
accordance with the instructions of an authorized person or (b) credited
to any of Borrower's accounts with Lender. The unpaid principal balance
owing on this Note at any time may be evidenced by endorsements on this Note
or by Lender's internal records, including daily computer print-outs. Lender
will have no obligation to advance funds under this Note if: (a) Borrower or
any guarantor is in default under the terms of this Note or any agreement
that Borrower or any guarantor has with Lender, including any agreement made
in connection with the signing of this Note; (b) Borrower or any guarantor
ceases doing business or is insolvent; (c) any guarantor seeks, claims or
otherwise attempts to limit, modify or revoke such guarantor's guarantee of
this Note or any other loan with Lender; (d) Borrower has applied funds
provided pursuant to this Note for purposes other than those authorized by
Lender; or (e) Lender in good faith deems itself insecure under this Note or
any other agreement between Lender and Borrower.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person
who signs, guarantees or endorses this Note, to the extent allowed by law,
waive any applicable statute of limitations, presentment, demand for payment,
protest and notice of dishonor. Upon any change in the terms of this Note, and
unless otherwise expressly stated in writing, no party who signs this Note,
whether as maker, guarantor, accommodation maker or endorser, shall be
released from liability. All such parties agree that Lender may renew or
extend (repeatedly and for any length of time) this loan, or release any
party or guarantor or collateral; or impair, fail to realize upon or perfect
Lender's security interest in the collateral; and take any other action deemed
necessary by Lender without the consent of or notice to anyone. All such
parties also agree that Lender may modify this loan without the consent of or
notice to anyone other than the party with whom the modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER
AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED
COPY OF THE NOTE.
BORROWER:
LIFEPOINT. INC., A DELAWARE CORPORATION
By: /s/ Linda H. Masterson By: /s/ Michele A. Clark
Linda H. Masterson, PRESIDENT/CEO Michele A. Clark, CAO/CONTROLLER
</PAGE>
<PAGE>
ADDENDUM TO COMMERCIAL PLEDGE AND SECURITY AGREEMENT FOR STOCK/BOND COLLATERAL
This Addendum is attached to, incorporated into, and supersedes any
inconsistent provisions of, the Commercial Pledge and Security Agreement of
even date herewith, between City National Bank ("CNB"), as the Secured Party,
the undersigned Borrower(s) and, if a Third Party Hypothecation, the
undersigned Owner(s) (the "Agreement").
1. Definitions. All terms used in the Addendum are defined in the Agreement,
unless defined below.
Advance Maintenance
Collateral Value Value
I. "Margin stock," as defined in Federal Reserve
Board Regulation U, as amended from time to time.
A) Loan not governed by Reg. U:
Shares Pledged Relative to
Price Per Share Average Daily Volume
$10.00 or more less than one times average 60% 70%
daily volume
$10.00 or more greater than or equal to one 50% 60%
times average daily volume but
less than two times average
daily volume
less than $10.00 less than one times average 30% 40%
daily volume
less than $10.00 greater than or equal to one not not
times average daily volume eligible eligible
B) Loan governed by Reg. U:
Shares Pledged Relative to
Price Per Share Average Daily Volume
$10.00 or more less than one times average 50% 70%
daily volume
$10.00 or more greater than or equal to one 50% 60%
times average daily volume but
less than two times average
daily volume
less than $10.00 less than one times average 30% 40%
daily volume
less than $10.00 greater than or equal to one not not
times average daily volume eligible eligible
II. Obligations of the U.S. Government.
A) U.S. Treasury bills, bonds or notes maturing 95% 95%
in one year or less.
B) U.S. Treasury bonds, or notes maturing in 90% 95%
one year or less, but not more than 5 years.
C) U.S. Treasury bonds or notes maturing 80% 95%
in more than 5 years.
III. Obligations of any state, U.S. territory or 80% 85%
commonwealth, and any municipal or other local
governmental subdivision or entity.
IV. Non-convertible corporate bonds fourth-rated or 80% 85%
higher by a nationally recognized agency such as
Moody's or Standard & Poors.
V. All other stocks and bonds. N/A % N/A %
</PAGE>
<PAGE>
2. Maximum Loan Value.
2.1 In the event that all or any portion of the principal amount secured
hereby is undisbursed, Borrower agrees that such amount will not be disbursed
if, as a result of such disbursement, the total outstanding principal amount
secured hereby would exceed the total Advance Value of all collateral in which
a security interest is granted hereby.
2.2 Borrower and Owner agree that in the event that the total of (i) all
outstanding principal amounts secured hereby, and (ii) all undisbursed amounts
that CNB has committed to lend to Borrower secured hereby, exceeds the total
Maintenance Value of all collateral in which a security interest is granted
hereby at any time while the Agreement remains in effect, Borrower will
promptly either (a) reduce the outstanding principal amount secured hereby,
or (b) provide additional collateral of the kind described above acceptable
to CNB, in either case such that the total of (i) and (ii) above, does not
thereafter exceed the Advance Value of such collateral.
2.3 In the event Paragraph 2.2 is not satisfied at any time, such failure
will constitute a default with respect to all obligations secured hereby,
entitling CNB without notice to exercise all remedies available in the
Agreement or any note, credit agreement or other instrument secured here for
non-performance thereof, including but not limited to the right to accelerate
the maturity of any outstanding indebtedness secured hereby and the right to
refuse to make any further advances secured hereby. Any such default will
continue notwithstanding the subsequent satisfaction of Paragraph 2.2.
Borrower:
Dated: June 2, 1999 LIFEPOINT, INC., a Delaware
corporation
By: /s/ Linda H. Masterson By: /s/ Michele A. Clark
Linda H. Masterson, PRESIDENT/CEO Michele A. Clark, CAO/CONTROLLER
</PAGE>
Exhibit 10(m) Lease Agreement dated July 14, 1999 between LifePoint and
FirstCorp
<PAGE>
FIRSTCORP
First In Equipment Leasing
First Portland Corporation
7145 SW Varns Street, Portland, OR 97223-8057
503.684.3417 800.247.3722 FAX 503.620.7677
MASTER LEASE AGREEMENT
NUMBER 913142
LESSEE NAME AND ADDRESS
LIFEPOINT, INC. A DELAWARE CORPORATION
10400 TRADEMARK STREET
RANCHO CUCAMONGA, CA 91730
Terms and Conditions
1. LEASE. LESSOR and LESSEE agree that the terms of
this Master Lease Agreement shall apply to and be incorporated
by reference in one or more Lease Schedules in substantially the
form of Exhibit A hereto (which reference(s) the Master Lease
Agreement Number indicated above). The word "LEASE" shall
mean any one of the individual Lease Schedules executed
hereunder, each of which shall incorporate the terms and
conditions of this Master Lease Agreement and shall be
evidenced by the original Lease Schedule and an attached copy of
its Master Lease Agreement. The word "EQUIPMENT" shall
mean the equipment which is the subject of any one of the
LEASES. Each Lease Schedule will include an EQUIPMENT
description, the EQUIPMENT location, the minimum lease term
and payment and security deposit information. Each LEASE
shall be enforceable upon execution by LESSEE and subsequent
counter-signature by LESSOR indicating acceptance.
</PAGE>
<PAGE>
2. RENTAL PAYMENTS. Unless otherwise agreed in
writing, each regular periodic payment of rent due during the
term of each LEASE shall be due on the first day of the month
(the billing date). The first billing date under each LEASE shall
be the first day of the month following LESSEE's acceptance of
the EQUIPMENT, or, if LESSEE's acceptance occurs after the
20th day of a month, then the first billing date shall be the first
day of the second month following LESSEE's acceptance.
LESSEE shall pay pro rated rent, together with applicable taxes,
from the date of acceptance of the EQUIPMENT until the first
billing date as interim rent. In addition, LESSEE shall pay to
LESSOR as additional interim rent an amount equal to one
thirtieth of the proportional monthly rental payment per day for
any amount funded by LESSOR prior to acceptance of the
EQUIPMENT by LESSEE. LESSEE agrees to pay rent for the
minimum term specified above following the interim rent period
and until the EQUIPMENT is returned to LESSOR on expiration
or earlier termination of the LEASE. Each periodic rental
installment shall be the sum set forth above or on an attached
schedule plus any applicable sales and/or use taxes, and shall, at
LESSOR's option, include a pro rata portion of that year's
property tax. Payments shall be made by LESSEE at LESSOR's
address set forth herein or as otherwise directed by LESSOR.
LESSEE shall not abate, set off, deduct any amount or reduce
any payment for any reason without the prior written consent of
LESSOR. Payments are delinquent if not in LESSOR's
possession by the due date.
3. COMMENCEMENT AND TERMINATION. The
LEASE term shall commence on acceptance of the EQUIPMENT
by LESSEE. The LEASE shall terminate on the expiration of its
minimum term in months as set forth in the Lease Schedule
following the first billing date and the fulfillment of all
obligations of LESSEE thereunder or upon notice by LESSOR in
the case of LESSEE default. In the event LESSEE retains part or
all of the EQUIPMENT beyond the term of the LEASE, then the
terms of the LEASE shall stay in effect during such hold-over
period, subject to LESSOR's right on default to terminate the
LEASE.
4. NO WARRANTIES BY LESSOR. LESSOR makes
no warranty, express, implied or statutory, as to any matter
whatsoever, including the condition of the EQUIPMENT, its
merchantability or its fitness for any particular purpose, and
as to LESSOR, LESSEE leases the EQUIPMENT "as is".
5. CHOICE OF LAW, VENUE AND JURISDICTION. The LEASE shall
be deemed to have been made and shall be construed in accordance
with the laws of the State of Oregon or breach of the LEASE must be
instituted and maintained in Multnomah County, State of Oregon, and
LESSEE expressly agrees to submit to personal jurisdiction in such venue.
</PAGE>
<PAGE>
6. ASSIGNMENT. Without LESSOR's prior written
consent, LESSEE shall not assign, transfer, pledge,
hypothecate or otherwise dispose of the LEASE, any interest
therein, or sublease or loan the EQUIPMENT or permit it to be
used by anyone other than LESSEE or LESSEE's qualified
employees. LESSOR may assign the LEASE and/or grant a
security interest in the EQUIPMENT, in whole or in part, to one
or more assignees, without notice to LESSEE. LESSOR's
assignee(s) and/or the secured party(ies) may reassign the
LEASE, and/or such security interest without notice to LESSEE.
Each such assignee and/or such secured party shall have all rights
of LESSOR under the LEASE, but no such assignee or secured
party shall be bound to perform any obligation of LESSOR.
LESSEE shall recognize each such assignment and shall not
assert against any assignee and/or secured party any defense,
counterclaim or setoff it may have against LESSOR. LESSEE
acknowledges that any assignment or transfer by LESSOR shall
not materially change LESSEE's duties or obligations under the
LEASE nor materially increase the burdens or risks imposed on
LESSEE.
7. SELECTION AND ACCEPTANCE OF
EQUIPMENT. LESSEE has selected both the EQUIPMENT
and the supplier(s) from whom LESSOR is to purchase the
EQUIPMENT. LESSEE shall arrange for transportation, delivery
and installation of the EQUIPMENT at LESSEE's expense.
LESSEE acknowledges that it has examined the EQUIPMENT as
fully as it desires. If the EQUIPMENT is not properly installed,
its delivery is delayed, it does not operate as represented by the
supplier(s) or it is unsatisfactory for any reason, LESSEE shall
make no claim on account thereof against LESSOR. LESSEE
authorizes LESSOR to insert in the LEASE or other documents
the serial numbers and other identification information for the
EQUIPMENT as determined by LESSOR.
8. SUPPLIER/BROKER NOT AGENT OF LESSOR.
LESSEE understands and agrees that neither the supplier(s), nor
any salesperson or agent of the supplier(s), is an agent of
LESSOR. LESSEE further agrees that if any transaction
hereunder is presented to LESSOR by a lease broker, that such
broker is acting as an agent of LESSEE and is not an agent of
LESSOR. No salesperson or agent of the supplier(s) or broker(s)
is authorized to waive or alter any term or condition of the
LEASE, and no representation as to the EQUIPMENT or any
matter by the supplier(s) or broker(s) shall in any way affect
LESSEE's duty to pay rent and perform its other obligations set
forth in the LEASE.
</PAGE>
<PAGE>
9. SECURITY DEPOSIT. Security deposits received by
LESSOR are to guarantee prompt and full payment of rent and
the faithful and timely performance of all provisions of the
LEASE by LESSEE. Security deposits secure all obligations of
LESSEE to LESSOR under the LEASE or otherwise. No interest
shall accrue on the security deposit to the account of LESSEE. If
LESSEE is not in default under any agreement with LESSOR,
the security deposit shall be returned to LESSEE at the end of the
LEASE term. In the event LESSEE defaults on any of its
obligations to LESSOR, LESSOR shall have the right, but shall
not be obligated, to apply the security deposit to cure such
default. LESSEE shall, within ten (10) days, restore the security
deposit to the full amount held by LESSOR prior to its
application to cure such default.
10. CANCELLATION FOR NON-DELIVERY. If,
within 30 days after the LEASE is signed by LESSEE, the
EQUIPMENT has not been delivered to and accepted by
LESSEE and if LESSOR has accepted the LEASE by signing,
LESSOR, by written notice to LESSEE, shall have the option at
any time thereafter to terminate LESSOR's obligation, if any, to
lease the subject EQUIPMENT to LESSEE.
11. RETURN OF EQUIPMENT. On the expiration or
earlier termination of the LEASE, or on LESSEE default if
LESSOR chooses, LESSEE, at its expense, freight prepaid with
full original value declared and insured, shall immediately return
the EQUIPMENT unencumbered to LESSOR in good repair,
condition and working order, ordinary wear and tear resulting
from proper use thereof alone excepted, by properly packing it
for shipment and delivering it to any place designated by
LESSOR.
12. OWNERSHIP. The EQUIPMENT shall at all times
remain the personal property of LESSOR. LESSEE will at all
times protect and defend, at its own cost and expense, the
ownership of LESSOR against all claims, liens and legal
processes of creditors of LESSEE and other persons, and keep
the EQUIPMENT free and clear from all such claims, liens and
processes. If the LEASE is deemed at any time to be one
intended as security or should LESSOR agree at any time to sell
the EQUIPMENT to LESSEE, LESSEE agrees that the
EQUIPMENT shall secure, in addition to the indebtedness set
forth in the LEASE, indebtedness at any time owing by LESSEE
to LESSOR. Notwithstanding any other terms and conditions of
the LEASE, in the event that the EQUIPMENT includes
computer software, LESSEE agrees that LESSOR has not had,
does not have, nor shall have any title to such computer software.
LESSEE may have executed or may execute a separate software
license agreement(s) and LESSEE agrees that LESSOR is not a
party to nor responsible for any performance with regard to such
license agreement(s).
13. LOCATION AND RIGHT OF INSPECTION. The
EQUIPMENT shall be kept at the location specified on the Lease
Schedule or, if none is specified, at LESSEE's address as set forth
therein, and shall not be removed therefrom without LESSOR's
prior written consent. LESSOR shall have the right at any time
during normal business hours and upon reasonable notice to
inspect the EQUIPMENT and for that purpose have access to the
location of the EQUIPMENT.
</PAGE>
<PAGE>
14. USE AND OPERATION. LESSEE shall use the
EQUIPMENT in a careful manner and shall comply with all laws
relating to its possession, use and maintenance. LESSEE
represents that the EQUIPMENT shall be used in its business or
commercial concern and that no item of EQUIPMENT will be
used for personal, family or household purposes.
15. REPAIRS AND ALTERATIONS. LESSEE shall at
its own expense maintain the EQUIPMENT in good repair,
appearance and functional order. LESSEE agrees to comply with
all maintenance schedules and procedures recommended by the
manufacturer of the EQUIPMENT and, if available, purchase or
otherwise enter into and adhere to dealer maintenance contracts.
LESSEE shall not make any alterations, additions or
improvements to the EQUIPMENT without LESSOR's prior
written consent. All alterations, additions or improvements made
to the EQUIPMENT shall belong to LESSOR.
16. LOSS AND DAMAGE. LESSEE shall bear the entire
risk of loss, theft, damage or destruction of the EQUIPMENT
from any cause whatsoever and, as between LESSOR and
LESSEE, unless otherwise agreed between the parties, LESSEE
shall bear that risk of loss during transportation and delivery, and
LESSEE shall arrange and pay for transportation and delivery.
No loss, theft, damage or destruction of the EQUIPMENT shall
relieve LESSEE of the obligation to pay rent or to comply with
any other obligation under the LEASE. In the event of damage to
any item of EQUIPMENT, LESSEE shall immediately place the
same in good repair at LESSEE's expense. If LESSOR
determines that any item of EQUIPMENT is lost, stolen,
destroyed or damaged beyond repair, LESSEE shall, at LESSEE's
option: (a) replace the same with like equipment in good repair,
acceptable to LESSOR; or (b) pay LESSOR a sum equal to (i) all
amounts due by LESSEE to LESSOR under the LEASE up to the
date of the loss, (ii) the unpaid balance of the total rent for the
remaining term under the LEASE which is attributable to said
item of EQUIPMENT, and (iii) an amount equal to eighteen
percent (18%) of the original cost of said item of EQUIPMENT,
which the parties agree shall represent the fair market value of
LESSOR's residual interest in said item of EQUIPMENT. The
amounts in (ii) and (iii) shall be discounted to present value at a
discount rate of six percent (6%) per annum.
</PAGE>
<PAGE>
17. INSURANCE. LESSEE shall provide and maintain
primary insurance against loss, theft, damage or destruction of
the EQUIPMENT in an amount not less than the full replacement
value of the EQUIPMENT, with loss payable to LESSOR. At
LESSOR's request, LESSEE also shall provide and maintain
primary comprehensive general all risk liability insurance. Such
insurance shall include, but shall not be limited to, product
liability coverage, insuring LESSOR and LESSEE, with a
severability of interest endorsement or its equivalent, against any
and all loss or liability for all damages, either to persons, property
or otherwise, which might result from or happen in connection
with the condition, use or operation of the EQUIPMENT, with
such limits and with an insurer satisfactory to LESSOR. Each
policy shall expressly provide that the insurance as to LESSOR
shall not be invalidated by any act, omission or neglect of
LESSEE and cannot be canceled without ten (10) days written
notice to LESSOR. As to each policy, LESSEE shall furnish to
LESSOR a certificate of insurance from the insurer evidencing
the insurance coverage required by this Section. If LESSEE fails
to procure or maintain such insurance, LESSOR shall have the
right, but shall not be obligated, to obtain such insurance as to
LESSOR's and/or LESSEE's interests. In that event, LESSEE
shall repay to LESSOR the cost thereof with the next payment of
rent, together with late charges as set forth in Section 23.
LESSEE irrevocably appoints LESSOR as LESSEE's
attorney-in-fact to make claim for, receive payment of, and
execute and endorse all documents, checks or drafts received in
payment for loss or damage under such insurance policy(ies). All
obligations of this Section shall extend throughout the term of the
LEASE and until the EQUIPMENT is returned to LESSOR.
18. LIENS AND TAXES. LESSEE shall keep the
EQUIPMENT free and clear of all levies, liens and
encumbrances. LESSEE shall pay LESSOR, on or before the due
date, all charges and taxes, local, state or federal, which may now
or hereafter be imposed upon the ownership, leasing, rental, sale,
purchase, possession or use of the EQUIPMENT, excluding,
however, all taxes on LESSOR's income. If LESSEE fails to pay
said charges or taxes to LESSOR when due, LESSOR shall have
the right, but shall not be obligated, to pay said charges or taxes,
and add the same to the next payment of rent, together with late
charges as set out in Section 23. LESSEE agrees to pay a
reasonable fee to LESSOR for the processing of property tax
payments.
</PAGE>
<PAGE>
19. INDEMNITY. LESSEE shall indemnify LESSOR
against, and hold LESSOR harmless from, any and all claims,
actions, proceedings, expenses, damages and liabilities, including
attorney fees, arising in connection with the EQUIPMENT,
including, without limitation, its manufacture, selection,
purchase, delivery, possession, use, operation or return and the
recovery of claims under insurance policies thereon. This
indemnity provision shall survive termination, cancellation or
breach of the LEASE.
20. MISCELLANEOUS REPRESENTATIONS OF
LESSEE. LESSEE and any guarantor of the LEASE shall
provide LESSOR with such corporate resolutions, financial
statements not less than quarterly, and all other documents
regarding the financial or credit condition of LESSEE or any
guarantor which LESSOR may request from time to time.
LESSEE represents and warrants that all credit and financial
information submitted to LESSOR in connection with the
LEASE is true and correct in all respects. LESSEE agrees that
LESSOR and/or its assigns may at any time investigate the
credit-worthiness of LESSEE using all available means.
21. UNIFORM PERSONAL PROPERTY LEASING
ACT. To the extent permitted by applicable law, and to the
extent the LEASE is governed by the law of a jurisdiction which
has adopted a version of the Uniform Personal Property Leasing
Act (also known as "Uniform Commercial Code - Leases"), the
parties hereto agree that: (1) the provisions thereof conferring
remedies upon a LESSEE or imposing obligations upon a
LESSOR shall not apply to the LEASE, its interpretation, or its
enforcement; and (2) the LEASE is a Finance Lease as defined
by Uniform Commercial Code - Section 2A-103(g). LESSEE
acknowledges that LESSEE has reviewed and approved any
written Supply Contract(s) covering the EQUIPMENT purchased
from the Supplier(s) for lease to LESSEE. LESSEE further
acknowledges that LESSOR has informed or advised LESSEE, in
writing, either previously or in the LEASE, of the following: (a)
the identity of the Supplier(s); (b) that the LESSEE may have
rights under the Supply Contract(s); and (c) that the LESSEE
may contact the Supplier(s) for a description of any such rights
LESSEE may have under the Supply Contract(s).
22. FINANCING STATEMENTS. At the request of
LESSOR, LESSEE will join LESSOR in executing financing
statements pursuant to the Uniform Commercial Code. Lessee
hereby authorizes Lessor or its agents or assigns to execute
financing statements on LESSEE's behalf, and to file such
financing statements in all jurisdictions where such execution and
filing is permitted. It is agreed that a carbon or photocopy of any
financing statement may be filed in place of the original and that
a copy hereof may be filed as a financing statement.
</PAGE>
<PAGE>
23. LATE CHARGES AND INTEREST. If LESSEE
fails to pay LESSOR any amount when due or, in the case of an
amount due to one other than LESSOR, if LESSOR pays an
amount on LESSEE's behalf, then LESSEE shall pay LESSOR a
late charge of $29, plus five percent (5%) of such amount or $5,
whichever is greater, for each calendar month or part thereof for
which rent or other sum shall be delinquent or shall have been
paid by LESSOR on LESSEE's behalf. If LESSEE fails to pay or
fails to perform other LEASE obligations, LESSEE agrees to pay
LESSOR $19 for each contact necessitated because of such
failure. LESSEE also agrees to pay LESSOR the sum of $29 for
each check of LESSEE's returned uncollectable by LESSEE's
bank. The amount of any charges assessed hereunder shall be
added to and become part of the next rental payment or shall be
separately invoiced, at LESSOR's option. Interest shall accrue on
any unpaid or unreimbursed amounts at the maximum rate
allowable by law or eighteen percent (18%), whichever is less,
from the due date until paid by LESSEE.
24. TIME OF THE ESSENCE. Time is of the essence of
the LEASE. This provision shall not be waived by the acceptance
on occasion of late or defective performance.
25. DEFAULT. LESSEE shall be in default if (a) LESSEE
shall fail to pay rent or any other amount provided for under the
LEASE within five (5) days after the same becomes due and
payable; or (b) LESSEE fails to observe, keep or perform any
other provision of the LEASE or of any other agreement with
LESSOR, and such failure shall continue for a period of ten (10)
days; or (c) LESSEE shall abandon the EQUIPMENT; or (d)
except as inconsistent with Federal Bankruptcy Law, any
proceeding in bankruptcy, receivership or insolvency shall be
commenced against LESSEE or its property or any guarantor or
such guarantor's property, LESSEE or any guarantor files
voluntarily for bankruptcy or reorganization, or LESSEE or any
guarantor makes an assignment for the benefit of its creditors; or
(e) LESSEE or any guarantor makes any misrepresentation or
false statement as to its credit or financial standing in connection
with the execution or the further performance of the LEASE; or
(f) any attachment or execution be levied on any of LESSEE's
property; or (g) LESSEE permits any other entity or person to use
the EQUIPMENT without the prior written consent of LESSOR;
or (h) in the business and affairs of LESSEE or any guarantor
there occurs a material change which shall impair the security of
the EQUIPMENT or increase LESSOR's credit risk involved in
the LEASE.
</PAGE>
<PAGE>
26. REMEDIES. In the event of LESSEE default,
LESSOR shall have the right and option, but shall not be
obligated, to exercise any one or more of the following remedies,
which remedies or any of them may be exercised by LESSOR
without notice to LESSEE and without any election of remedies
by LESSOR and, if the obligations of LESSEE are guaranteed by
a guarantor or guarantors, LESSOR shall not be obligated to
proceed against any such guarantor or guarantors before resorting
to its remedies against LESSEE under the LEASE: (a) to the
extent permitted under applicable law, LESSOR and/or its agents
may, without notice or legal process, enter onto any premises of
or under control of LESSEE or any agent of LESSEE where the
EQUIPMENT may be or is believed to be located and repossess
the EQUIPMENT, disconnecting and separating all thereof from
any other property, using all means necessary or permitted by
law, LESSEE hereby expressly waiving any right of action of any
kind whatsoever against LESSOR arising out of such access to or
removal, repossession or retention of the EQUIPMENT; (b)
LESSOR may declare all sums due and to become due under the
LEASE immediately due and payable and institute litigation to
collect the same; (c) LESSOR may institute litigation to collect
all rents and other amounts due as of the date of such default
together with any sums that may accrue up to the date of trial; (d)
LESSOR may institute litigation to specifically enforce the terms
of the LEASE; (e) LESSOR may terminate the LEASE; (f)
LESSOR may require LESSEE to return the EQUIPMENT
pursuant to Section 11; and/or (g) LESSOR may pursue any other
remedy now, or hereafter, existing in law or equity. However,
damages for any future rentals and/or LESSOR's residual value in
the EQUIPMENT shall be discounted to present value at a
discount rate equal to six percent (6%) per annum. In the event of
any default by LESSEE under the LEASE, LESSOR may at its
sole discretion, although it shall not be obligated to do so, sell the
EQUIPMENT at a private or public, cash or credit sale, or may
re-let the EQUIPMENT for a term and a rental which may be
equal to, greater than, or less than provided in the LEASE. Any
proceeds of sale or any rental payments received under the new
lease - less LESSOR's expenses of taking possession, reasonable
attorney fees and/or collection fees, storage and/or reconditioning
costs, the costs of sale or re-letting, and less LESSOR's fair
market residual value in the EQUIPMENT - shall be applied to
LESSEE's obligations under the LEASE, and LESSEE shall
remain liable for the balance. LESSEE's liability shall not be
reduced by reason of any failure of LESSOR to sell or re-let.
</PAGE>
<PAGE>
27. EXPENSES OF ENFORCEMENT, ATTORNEY
FEES. In the event of any default, LESSEE shall pay LESSOR a
sum equal to all expenses, including attorney fees, if any,
incurred by LESSOR in connection with the enforcement of any
of LESSOR's remedies and all expenses of repossessing, storing,
repairing, and selling or re-letting the EQUIPMENT together
with interest on such amount at the maximum rate allowable by
law or eighteen percent (18%), whichever is less, from the date
such amount is paid by LESSOR. In the event litigation is
instituted to enforce any of the terms of the LEASE, the
prevailing party shall be entitled to recover from the other party
such sum as the court may judge reasonable as attorney fees at
trial and upon appeal, in addition to all other sums provided for
by law.
28. SUCCESSOR INTERESTS. Subject to any
prohibition against assignment contained herein, the LEASE shall
be binding upon and inure to the benefit of the heirs, successors
and assigns of the parties. As used in the LEASE, the term
"LESSOR" shall include any assignee or secured party of
LESSOR where appropriate.
29. MULTIPLE LESSEES. If more than one LESSEE is
named herein, the reference to LESSEE refers to each and the
liability of each shall be joint and several.
30. NOTICES. Any written notice or demand under the
LEASE may be given to a party by mail at its address set forth on
the Lease Schedule or at such address as the party may provide in
writing from time to time. Notice and demand so made shall be
effective when deposited in the United States mail duly addressed
with postage prepaid.
31. WAIVER. Failure of LESSOR at any time to require
performance of any provision of the LEASE shall not limit any
right of LESSOR to enforce that provision, nor shall any waiver
by LESSOR of any breach of any provision be a waiver of any
succeeding breach of that provision or a waiver of that provision
itself or any other provision.
</PAGE>
<PAGE>
32. NUMBER AND CAPTIONS. As used herein, the
singular shall include the plural, and the plural the singular. All
captions used herein are intended solely for convenience of
reference and shall in no way limit or explain any of the
provisions of the LEASE.
33. DUPLICATE ENFORCEABLE AS ORIGINAL.
LESSEE hereby consents to the use of the original Lease
Schedule, along with a photocopy of the fully executed Master
Lease Agreement, for all purposes including, but not limited to,
evidence in litigation or any other judicial proceeding.
34. SEVERABILITY. If any provision of the LEASE is
held invalid, such invalidity shall not affect other provisions
which can be given effect without the invalid provision.
35. ENTIRE AGREEMENT. This Master Lease
Agreement and the Lease Schedule, represent the entire, final and
complete agreement of the parties pertaining to the lease of the
EQUIPMENT and supersede or replace all written and oral
agreements heretofore made or existing by and between the
parties of their representatives insofar as the lease of the
EQUIPMENT is concerned, and no modification or addition to
the LEASE shall be binding unless agreed by a corporate officer,
against whom enforcement is sought.
- - Please Request Any Changes Desired -
LESSEE ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS ALL OF THE TERMS AND
CONDITIONS CONTAINED IN THIS MASTER LEASE AGREEMENT AND THAT THESE TERMS AND
CONDITIONS SHALL GOVERN EACH LEASE ENTERED INTO BY THE PARTIES.
LESSOR Date
FIRSTCORP July 16, 1999
BY: /s/ Leonard Ludwig, CEO
THIS MASTER LEASE AGREEMENT WILL NOT BIND
LESSOR OR BECOME EFFECTIVE UNTIL AND UNLESS
LESSOR ACCEPTS IT BY SIGNING ABOVE.
LESSEE Date
LIFEPOINT, INC. A DELAWARE July 14, 1999
CORPORATION
Full Legal Name Of Lessee
BY: /s/ Linda H. Masterson PRESIDENT/CE0
LINDA H. MASTERSON (TITLE)
BY: /s/ Thomas J. Foley SR. V.P., RESEARCH & DEVELOPMENT
DR. THOMAS J. FOLEY (TITLE)
BY: /s/ Michele A. Clark Controller/CAO
(TITLE)
Michele A. Clark, CAO
Witness
</PAGE>
<PAGE>
LEASE RENTAL AGREEMENT/LEASE SCHEDULE NUMBER: 91314201
SECURITY DEPOSIT RECEIPT AND ADDENDUM
FIRSTCORP ("Lessor") hereby acknowledges its receipt of TEN THOUSAND FOUR
HUNDRED SIXTY-TWO AND 41/100 ($10,462.41) from the undersigned Lessee pursuant
to the terms and conditions of the above referenced Lease Rental Agreement or
Lease Schedule (the "Lease"). Lessor shall hold this sum subject to the
provision of the Lease entitled Security Deposit, except as otherwise provided
herein.
So long as Lessee fully and timely performs as required under the Lease and
any other obligations to Lessor, and submits its financial statements to Lessor
on a regular basis with such financial statements being acceptable to Lessor in
Lessor's own discretion, then the security deposit amount shall accrue interest
at THREE AND ONE HALF percent (3.5%) per annum on the balance of the security
deposit amount at any time held by Lessor, and Lessor shall release the
Security Deposit amount in increments and on the time line indicated below.
1. $5,231.20 after Lessee has made monthly lease rental payments.
2. Lessor will release the balance of the security deposit amount, along with
any accrued interest thereon, at the end of the original Lease term.
In the event Lessee does not fully and timely perform as required under the
Lease and any other obligations to Lessor, and/or Lessee fails to submit its
financial statements to Lessor as required or such financial statements are
not acceptable to Lessor, interest shall cease to accrue in relation to the
security deposit amount, Lessor shall not release the security deposit amount
until such time, if ever, as all terms and conditions of the Lease and any
other obligations to Lessor have been satisfied in full, and Lessor shall have
no obligation to pay Lessee any accrued interest in relation to the security
deposit amount.
In the event the security deposit is in the form of a Certificate of Deposit,
Lessor shall not be liable to Lessee for any interest reduction or other
penalties in the event of early redemption. Lessee agrees to reimburse Lessor
for any costs (including penalties in excess of earned interest) incurred by
Lessor in relation to such redemption.
Except as otherwise expressly provided herein, the terms and conditions of the
Lease, and specifically the provisions regarding the security deposit, shall
remain in full force and effect.
WHEREFORE, Lessor and Lessee hereby execute this Security Deposit Receipt and
Addendum on the dates indicated below.
LESSOR: LESSEE:
FIRSTCORP LIFEPOINT, INC. A DELAWARE CORPORATION
By: /s/ Leonard Ludwig By: /s/ Linda H. Masterson
LINDA MASTERSON, PRESIDENT/CEO
Title: CEO
By: /s/ Thomas J. Foley
DR. THOMAS J. FOLEY,
SR. V.P., RESEARCH & DEVELOPMENT
Date: 7/16/99 Date: July 14, 1999
</PAGE>
<PAGE>
Lease Schedule 01
to Master Lease Agreement Number 913142
FIRSTCORP
First In Equipment Leasing
First Portland Corporation
7145 SW Varns Street Portland, OR 97223-8057
503.684.3417 800.247.3722 FAX 503.620.7677
LESSEE NAME AND ADDRESS EQUIPMENT LOCATION
LIFEPOINT, INC. A DELAWARE CORPORATION 10400 TRADEMARK STREET
10400 TRADEMARK STREET RANCHO CUCAMONGA, CA 91730
RANCHO CUCAMONGA, CA 91730
LESSEE MAY HAVE RIGHTS UNDER THE SUPPLY CONTRACT WITH THE SUPPLIER OF THE
EQUIPMENT AND MAY CONTACT THE SUPPLIER FOR A DESCRIPTION OF SUCH RIGHTS.
PERIODIC RENTAL PAYMENTS MINIMUM LEASE ADVANCE RENTALS RECEIPTED SECURITY
(Subject to TERM IN MONTHS FOR APPLY TO FIRST AND DEPOSIT
Applicable Taxes) LAST 1 PAYMENTS
$ 3,348.00 30 $ 6,696.00 $ 10,462.41
LESSEE HEREBY LEASES FROM LESSOR THE EQUIPMENT DESCRIBED IN AN ATTACHED
SCHEDULE "A" HERETO ON THE TERMS SET FORTH ABOVE. THIS SCHEDULE INCORPORATES
AND IS SUBJECT TO ALL OF THE TERMS AND CONDITIONS OF THE MASTER LEASE AGREEMENT
REFERENCED ABOVE, WHICH LESSEE ACKNOWLEDGES IT HAS READ AND UNDERSTANDS IN ITS
ENTIRETY.
IN ADDITION TO THE UNDERSIGNED, MICHELE A. CLARK IS HEREBY AUTHORIZED TO
EXECUTE THE FOLLOWING "NOTICE OF ACCEPTANCE."
LESSOR Date 7/16/99 LESSEE Date July 14, 1999
FIRSTCORP LIFEPOINT, INC. A DELAWARE CORPORATION
Full Legal Name Of Lessee
BY: /s/Leonard Ludwig, CEO BY: /s/Linda H. Masterson
(TITLE) LINDA MASTERSON, PRESIDENT/CEO
BY: /s/Thomas J. Foley
DR. THOMAS J. FOLEY,
SR. VP OF RESEARCH & DEVELOPMENT
</PAGE>
<PAGE>
NOTICE OF ACCEPTANCE
LESSEE acknowledges that (1) it has selected both the supplier and the
Equipment without recommendation of LESSOR; (2) it has fully inspected the
Equipment, which has been delivered by supplier to LESSEE on the date set forth
below; (3) the Equipment fully conforms with the terms of the Lease; (4) the
Equipment has not been installed on a trial basis; (5) the Equipment is in good
repair, condition, and working order; and (6) it accepts the Equipment as-is
and where-is.
LESSEE FURTHER ACKNOWLEDGES THAT LESSOR HAS MADE NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, DESIGN, CONDITION, WORKMANSHIP OR OTHERWISE WITH REGARD
TO THE EQUIPMENT, AND AS TO LESSOR, LESSEE LEASES THE EQUIPMENT "AS-IS" AND
"WITH ALL FAULTS."
LESSEE understands and agrees that neither the supplier nor any of its
sales personnel or agents is an agent of LESSOR, and any broker involved in
this transaction is an agent of LESSEE and not LESSOR. No sales person nor
agent of either supplier or broker is authorized to waive or alter any term
or condition of the Lease and no representation as to the Equipment or any
other matter by supplier or broker shall in any way relieve or lessen LESSEE's
duty to pay rent or perform its other obligations under the Lease.
THE UNDERSIGNED ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THIS ACCEPTANCE
When executed, this document acknowledges
full delivery of and Lessee's complete satisfaction
with the equipment
LESSEE Date July 14, 1999
LIFEPOINT, INC. A DELAWARE CORPORATION
Full Legal Name Of Lessee
BY: /s/ Linda H. Masterson
LINDA MASTERSON, PRESIDENT/CEO
BY: /s/ Thomas J. Foley
DR. THOMAS J. FOLEY, SR. V.P. RESEARCH &
DEVELOPMENT
</PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Balance
Sheet and related Statements of Operations of LifePoint, Inc. as of September
30, 1999, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> SEP-30-1999
<CASH> 3,057,925
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,108,307
<PP&E> 1,095,585
<DEPRECIATION> 822,391
<TOTAL-ASSETS> 3,442,876
<CURRENT-LIABILITIES> 485,101
<BONDS> 0
0
447
<COMMON> 15,008
<OTHER-SE> 2,750,752
<TOTAL-LIABILITY-AND-EQUITY> 3,442,876
<SALES> 0
<TOTAL-REVENUES> 44,263
<CGS> 0
<TOTAL-COSTS> 970,458
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,546
<INCOME-PRETAX> (928,741)
<INCOME-TAX> 0
<INCOME-CONTINUING> (928,741)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (928,741)
<EPS-BASIC> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
