Exhibit 10.14
 
 

 

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Loan Agreement
 
 
 
Date of Agreement: October 29, 2014

 

Principal Amount:
$250,000.00
Account Number:
25-0001103705

 
Introduction. This Agreement dated and effective as of October 29, 2014, is
entered into between LIFELOC TECHNOLOGIES, INC. (the "Borrower") and Bank of
America, N.A. (the "Bank"). The Borrower agrees to the following terms and
conditions:
 

1.      LINE OF CREDIT

1.1    Line of Credit Amount.

(a) During the availability period described below, the Bank will provide a line
of credit to the Borrower (the "Line of Credit"). The amount of the Line of
Credit (the "Commitment") is Two Hundred Fifty Thousand and 00/100 Dollars
($250,000.00).

(b) This is a revolving line of credit. During the availability period, the
Borrower may repay principal amounts and reborrow them.

(c) The Borrower agrees not to permit the principal balance outstanding to
exceed the Commitment. If the Borrower exceeds this limit, the Borrower will
immediately pay the excess to the Bank upon the Bank's demand.

1.2    Availability Period. The Line of Credit is available between the date of
this Agreement and October 29, 2015, or such earlier date as the availability
may terminate as provided in this Agreement (the "Expiration Date").

The availability period for this Line of Credit will be considered renewed if
and only if the Bank has sent to the Borrower a written notice of renewal for
the Line of Credit (the "Renewal Notice"). If this Line of Credit is renewed, it
will continue to be subject to all the terms and conditions set forth in this
Agreement except as modified by the Renewal Notice. If this Line of Credit is
renewed, the term "Expiration Date" shall mean the date set forth in the Renewal
Notice as the Expiration Date, and all outstanding principal plus all accrued
interest shall be paid on the Expiration Date. The same process for renewal will
apply to any subsequent renewal of this Line of Credit. A renewal fee may be
charged at the Bank's option.  The amount of the renewal fee will be specified
in the Renewal Notice. If this Line of Credit is not renewed, the Bank in its
sole discretion may allow the outstanding balance to be repaid in installments
over a term specified by the Bank at the time. The Borrower specifically
understands that the interest rate applicable to the Line of Credit may be
increased upon term-out and that the new interest rate will apply to the entire
outstanding principal balance due hereunder. A transaction fee may be charged at
the Bank's option. If so, the amount will be specified in the term-out notice.

1.3    Repayment Terms.

(a) The Borrower will pay interest on November 29, 2014, and then on the last
day of each month thereafter until payment in full of any principal outstanding
under this Agreement.

(b) The Borrower will repay in full any principal, interest or other charges
outstanding under this Agreement no later than the Expiration Date.

1.4    Prepayments. The Borrower may prepay principal in full or in part at any
time without the payment of a prepayment fee or premium. The prepayment will be
applied to the most remote payment of principal due under this Agreement.

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1.5    Interest Rate.

(1)
The interest rate is a rate per year equal to the LIBOR Daily Floating Rate plus
2.5 percentage point(s).

(b) The LIBOR Daily Floating Rate is a fluctuating rate of interest which can
change on each banking day. The rate will be adjusted on each banking day to
equal the London Interbank Offered Rate (or a comparable or successor rate which
is approved by the Bank) for U.S. Dollar deposits for delivery on the date in
question for a one month term beginning on that date. The Bank will use the
London Interbank Offered Rate as published by Bloomberg (or other commercially
available source providing quotations of such rate as selected by the Bank from
time to time) as determined at approximately 11:00 a.m. London time two (2)
London Banking Days prior to the date in question, as adjusted from time to time
in the Bank's sole discretion for reserve requirements, deposit insurance
assessment rates and other regulatory costs. If such rate is not available at
such time for any reason, then the rate will be determined by such alternate
method as reasonably selected by the Bank. A "London Banking Day" is a day on
which banks in London are open for business and dealing in offshore dollars.

 
2.      COLLATERAL

2.1    Personal Property. The personal property listed below now owned or owned
in the future by the parties listed below will secure Borrower's obligations to
the Bank under this Agreement. The collateral is further defined in security
agreement(s) executed by the owners of the collateral. In addition, all personal
property collateral owned by the Borrower securing this Agreement shall also
secure all other present and future obligations of the Borrower to the Bank and
to any affiliate of the Bank (excluding any consumer credit covered by the
federal Truth in Lending law, unless the Borrower has otherwise agreed in
writing or received written notice thereof). All personal property collateral
securing any other present or future obligations of the Borrower to the Bank
shall also secure this Agreement.

(a)    Equipment and fixtures owned by the Borrower.
 
(b)    Inventory owned by the Borrower.
 
(c)    Receivables owned by the Borrower.

3.    LOAN ADMINISTRATION AND FEES

3.1    Fees.

(a)    The Borrower will pay to the Bank the fees set forth on Schedule A.

3.2    Collection of Payments.

(a) Payments will be made by debit to a deposit account, if direct debit is
provided for in this Agreement or is otherwise authorized by the Borrower. For
payments not made by direct debit, payments will be made by mail to the address
shown on the Borrower's statement, or by such other method as may be permitted
by the Bank.

(b) Each disbursement by the Bank and each payment by the Borrower will be
evidenced by records kept by the Bank which will, absent manifest error, be
conclusively presumed to be correct and accurate and constitute an account
stated between the Borrower and the Bank.

3.3    Borrower's Instructions.

(a) Subject to the terms, conditions and procedures stated elsewhere in this
Agreement, the Bank may honor instructions for advances or repayments and any
other instructions under this Agreement given by the Borrower (if an
individual), or by any one of the individuals the Bank reasonably believes is
authorized to sign loan agreements on behalf of the Borrower, or any other
individual(s) designated by any one of such authorized signers (each an
"Authorized Individual"). The Bank may honor any such instructions made by any
one of the Authorized Individuals, whether such instructions are given in
writing or by telephone, telefax or Internet and intranet websites designated by
the Bank with respect to separate products or services offered by the Bank.

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3.4    Direct Debit.

(a) The Borrower agrees that on the due date of any amount due under this
Agreement, the Bank will debit the amount due from deposit account number
CO 457023873333 owned by the Borrower, or such other of the Borrower's accounts
with the Bank as designated in writing by the Borrower (the "Designated
Account"). Should there be insufficient funds in the Designated Account to pay
all such sums when due, the full amount of such deficiency shall be immediately
due and payable by the Borrower.

(b) The Borrower may terminate this direct debit arrangement at any time by
sending written notice to the Bank. If the Borrower terminates this arrangement,
then the principal amount outstanding under this Agreement will at the option of
the Bank bear interest at a rate per annum which is one (1.0) percentage point
higher than the rate of interest otherwise provided under this Agreement and the
amount of each payment will be increased accordingly.

3.5    Banking Days. Unless otherwise provided in this Agreement, a banking day
is a day other than a Saturday, Sunday or other day on which commercial banks
are authorized to close, or are in fact closed, in the state where the Bank's
lending office is located, and, if such day relates to amounts bearing interest
at an offshore rate (if any), means any such day on which dealings in dollar
deposits are conducted among banks in the offshore dollar interbank market. All
payments and disbursements which would be due or which are received on a day
which is not a banking day will be due or applied, as applicable, to the credit
on the next banking day.

3.6    Interest Calculation. Except as otherwise stated in this Agreement, all
interest and fees, if any, will be computed on the basis of a 360-day year and
the actual number of days elapsed. This results in more interest or a higher fee
than if a 365-day year is used. Installments of principal which are not paid
when due under this Agreement shall continue to bear interest until paid.

3.7    Default Rate. Upon the occurrence of any default or after maturity or
after judgment has been rendered on any obligation under this Agreement, all
amounts outstanding under this Agreement, including any unpaid interest, fees,
or costs, will at the option of the Bank bear interest at a rate which is 6.0
percentage point(s) higher than the rate of interest otherwise provided under
this Agreement. This may result in compounding of interest. This will not
constitute a waiver of any default.

4.      CONDITIONS

Before the Bank is required to extend any credit to the Borrower under this
Agreement, it must receive any documents and other items it may reasonably
require, in form and content acceptable to the Bank, including any items
specifically listed below.

4.1    Authorizations. If the Borrower or any guarantor is anything other than a
natural person, evidence that the execution, delivery and performance by the
Borrower and/or such guarantor of this Agreement and any instrument or agreement
required under this Agreement have been duly authorized.

4.2    Governing Documents. If required by the Bank, a copy of the Borrower's
organizational documents.

4.3    Security Agreements. Signed original security agreements covering the
personal property collateral which the Bank requires.

4.4    Perfection and Evidence of Priority. Evidence that the security interests
and liens in favor of the Bank are valid, enforceable, properly perfected in a
manner acceptable to the Bank and prior to all others' rights and interests,
except those the Bank consents to in writing. All title documents for motor
vehicles which are part of the collateral must show the Bank's interest.

4.5    Payment of Fees. Payment of all fees, expenses and other amounts due and
owing to the Bank. If any fee is not paid in cash, the Bank may, in its
discretion, treat the fee as a principal advance under this Agreement or deduct
the fee from the loan proceeds.

5.    REPRESENTATIONS AND WARRANTIES

When the Borrower signs this Agreement, and until the Bank is repaid in full,
the Borrower makes the following representations and warranties. Each request
for an extension of credit constitutes a renewal of these representations and
warranties as of the date of the request:

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5.1    Formation. If the Borrower is anything other than a natural person, it is
duly formed and existing under the laws of the state or other jurisdiction where
organized.

5.2    Authorization. This Agreement, and any instrument or agreement required
under this Agreement, are within the
Borrower's powers, have been duly authorized, and do not conflict with any of
its organizational papers.

5.3    Good Standing. In each state in which the Borrower does business, it is
properly licensed, in good standing, and, where required, in compliance with
fictitious name statutes.

5.4    Financial Information. All financial and other information that has been
or will be supplied to the Bank is sufficiently complete to give the Bank
accurate knowledge of the Borrower's (and any guarantor's) financial condition,
including all material contingent liabilities. Since the date of the most recent
financial statement provided to the Bank, there has been no material adverse
change in the business condition (financial or otherwise), operations,
properties or prospects of the Borrower (or any guarantor). If the Borrower is
comprised of the trustees of a trust, the above representations shall also
pertain to the trustor(s) of the trust.

5.5    Lawsuits. There is no lawsuit, tax claim or other dispute pending or
threatened against the Borrower which, if
lost, would impair the Borrower's financial condition or ability to repay the
loan, except as have been disclosed in writing to the Bank.

5.6        Other Obligations. The Borrower is not in default on any obligation
for borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation, except as have been disclosed in
writing to the Bank.

5.7    Tax Matters. The Borrower has no knowledge of any pending assessments or
adjustments of its income tax for any year and all taxes due have been paid,
except as have been disclosed in writing to the Bank.

5.8    No Event of Default. There is no event which is, or with notice or lapse
of time or both would be, a default under this Agreement.

5.9    Collateral. All collateral required in this Agreement is owned by the
grantor of the security interest free of any title defects or any liens or
interests of others, except those which have been approved by the Bank in
writing.

5.10     ERISA Plans.

(a) Each Plan (other than a multiemployer plan) is in compliance in all material
respects with ERISA, the Code and other federal or state law, including all
applicable minimum funding standards and there have been no prohibited
transactions with respect to any Plan (other than a multiemployer plan), which
has resulted or could reasonably be expected to result in a material adverse
effect.

(b) With respect to any Plan subject to Title IV of ERISA:

(i) No reportable event has occurred under Section 4043(c) of ERISA which
requires notice.

 

(ii) No action by the Borrower or any ERISA Affiliate to terminate or withdraw
from any Plan has been taken and no notice of intent to terminate a Plan has
been filed under Section 4041 or 4042 of ERISA.

(c) The following terms have the meanings indicated for purposes of this
Agreement: (i)"Code" means the Internal Revenue Code of 1986, as amended.

 

(ii) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

 

(iii) "ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Code.

 

(iv) "Plan" means a plan within the meaning of Section 3(2) of ERISA maintained
or contributed to by the Borrower or any ERISA Affiliate, including any
multiemployer plan within the meaning of Section 4001(a)(3) of ERISA.

 

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6.    COVENANTS

The Borrower agrees, so long as credit is available under this Agreement and
until the Bank is repaid in full:

6.1    Use of Proceeds. To use the proceeds of the credit only for business
purposes.

6.2    Financial Information. To provide the following financial information and
statements in form and content acceptable to the Bank, and such additional
information as requested by the Bank from time to time. The Bank reserves the
right, upon written notice to the Borrower, to require the Borrower to deliver
financial information and statements to the Bank more frequently than otherwise
provided below, and to use such additional information and statements to measure
any applicable financial covenants in this Agreement.

(a)    Within 120 days of Borrower's fiscal year end:

(i)        The annual financial statements of the Borrower, certified and dated
by an authorized financial officer. These financial statements must be audited
(with an opinion satisfactory to the Bank) by a Certified Public Accountant
acceptable to the Bank. The statements shall be prepared on a consolidated
basis.

(ii)        Each financial statement of the Borrower required above must be
accompanied by a certificate substantially in the form of the Compliance
Certificate required by the Bank, signed by the party submitting the information
or, if such party is a business entity, an authorized financial officer of the
party. The Compliance Certificate shall state whether there existed as of the
date of such financial statements, and whether there exists as of the date of
the certificate, any event of default under this Agreement and, if any such
default exists, specifying the nature thereof and the action the party is taking
and proposes to take with respect thereto.

6.3  Basic Fixed Charge Coverage Ratio. To maintain on a consolidated basis a
Basic Fixed Charge Coverage Ratio of at least 1.25:1.0.

"Basic Fixed Charge Coverage Ratio" means the ratio of (a) the sum of EBITDA
plus lease expense and rent expense, minus income tax, minus dividends,
withdrawals, and other distributions, to (b) the sum of interest expense, lease
expense, rent expense, the current portion of long term debt and the current
portion of capitalized lease obligations.

"EBITDA" means net income, less income or plus loss from discontinued operations
and extraordinary items, plus income taxes, plus interest expense, plus
depreciation, depletion, and amortization.

This ratio will be calculated at the end of each reporting period for which the
Bank requires financial statements, using the results of the twelve-month period
ending with that reporting period. The current portion of long-term liabilities
will be measured as of the last day of the calculation period.

6.4  Other Debts. Not to have outstanding or incur any direct or contingent
liabilities or lease obligations (other than those to the Bank or to any
affiliate of the Bank), or become liable for the liabilities of others, without
the Bank's written consent. This does not prohibit:

(a)  Acquiring goods, supplies, or merchandise on normal trade credit.

(b)  Liabilities, lines of credit and leases in existence on the date of this
Agreement disclosed in writing to the Bank. (c)If the Borrower is a natural
person, additional debts of the Borrower as an individual for consumer purposes.
 
6.5  Other Liens. Not to create, assume, or allow any security interest or lien
(including judicial liens) on property the Borrower now or later owns, except:

(a)  Liens and security interests in favor of the Bank or any affiliate of the
Bank.

(b)  Liens outstanding on the date of this Agreement disclosed in writing to the
Bank.

6.6  Maintenance of Assets.
 

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(a) Not to sell, assign, lease, transfer or otherwise dispose of any part of the
Borrower's business or the Borrower's assets except inventory sold in the
ordinary course of the Borrower's business.

(b) Not to sell, assign, lease, transfer or otherwise dispose of any assets for
less than fair market value, or enter into any agreement to do so.

(c) Not to enter into any sale and leaseback agreement covering any of its fixed
assets. (d)To maintain and preserve all rights, privileges, and franchises the
Borrower now has.

 

(d) To make any repairs, renewals, or replacements to keep the Borrower's
properties in good working condition.

 
6.7     Loans. Not to make any loans, advances or other extensions of credit to
any individual or entity except for extensions of credit in the nature of
accounts receivable or notes receivable arising from the sale or lease of goods
or services in the ordinary course of business to non-affiliated entities.

6.8     Change of Management. Not to make any substantial change in the present
executive or management personnel of the Borrower.

6.9     Change of Ownership. If the Borrower is anything other than a natural
person, not to cause, permit, or suffer any change in capital ownership such
that there is a material change, as determined by the Bank in its sole
discretion, in the direct or indirect capital ownership of the Borrower.

6.10  Additional Negative Covenants. Not to, without the Bank's written consent:

(a) Enter into any consolidation, merger, or other combination, or become a
partner in a partnership, a member of a joint venture, or a member of a limited
liability company.

(b) Acquire or purchase a business or its assets, if the purchase price is over
One Million Dollars ($1,000,000.00), in aggregate, from the date of this
agreement until the "Repayment Period".

 

(c) Engage in any business activities substantially different from the
Borrower's present business. (d)Liquidate or dissolve the Borrower's business

 
6.11  Notices to Bank. To promptly notify the Bank in writing of:

(a) Any event of default under this Agreement, or any event which, with notice
or lapse of time or both, would constitute an event of default.

(b) Any change in the Borrower's name, legal structure, principal residence, or
name on any driver's license or special identification card issued by any state
(for an individual), state of registration (for a registered entity), place of
business, or chief executive office if the Borrower has more than one place of
business.

 
6.12  Insurance
 

(a) General Business Insurance. To maintain insurance as is usual for the
business it is in

 

(b) Insurance Covering Collateral. To maintain all risk property damage
insurance policies (including without limitation windstorm coverage, and
hurricane coverage as applicable) covering the tangible property comprising the
collateral. Each insurance policy must be for the full replacement cost of the
collateral and include a replacement cost endorsement. The insurance must be
issued by an insurance company acceptable to the Bank and must include a
lender's loss payable endorsement in favor of the Bank in a form acceptable to
the Bank.

(c) Evidence of Insurance. Upon the request of the Bank, to deliver to the Bank
a copy of each insurance policy, or, if permitted by the Bank, a certificate of
insurance listing all insurance in force.

6.13  Compliance with Laws. To comply with the laws (including any fictitious or
trade name statute), regulations, and orders of any government body with
authority over the Borrower's business. The Bank shall have no obligation to
make any advance to the Borrower except in compliance with all applicable laws
and regulations and the Borrower shall fully cooperate with the Bank in
complying with all such applicable laws and regulations.
 
 

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6.14    Books and Records. To maintain adequate books and records.

6.15    Audits. To allow the Bank and its agents to inspect the Borrower's
properties and examine, audit, and make copies of books and records at any
reasonable time. If any of the Borrower's properties, books or records are in
the possession of a third party, the Borrower authorizes that third party to
permit the Bank or its agents to have access to perform inspections or audits
and to respond to the Bank's requests for information concerning such
properties, books and records.

6.16    Perfection of Liens. To help the Bank perfect and protect its security
interests and liens, and reimburse it for related costs it incurs to protect its
security interests and liens.

6.17    Cooperation. To take any action reasonably requested by the Bank to
carry out the intent of this Agreement.

6.18    Bank as Principal Depository. To maintain the Bank or one of its
affiliates as its principal depository bank, including for the maintenance of
business, cash management, operating and administrative deposit accounts.

7.        DEFAULT AND REMEDIES

If an event of default under Section 7 has occurred and is continuing beyond any
applicable cure period, without limiting any of the Bank's rights and remedies
in this Agreement, if any of the following events of default occurs, the Bank
may do one or more of the following without prior notice: declare the Borrower
in default, stop making any additional credit available to the Borrower, and
require the Borrower to repay its entire debt immediately. If an event which,
with notice or the passage of time, will constitute an event of default has
occurred and is continuing, the Bank has no obligation to make advances or
extend additional credit under this Agreement. In addition, if any event of
default occurs, the Bank shall have all rights, powers and remedies available
under any instruments and agreements required by or executed in connection with
this Agreement, as well as all rights and remedies available at law or in
equity. If an event of default occurs under the paragraph entitled
"Bankruptcy/Receivers," below, with respect to the Borrower, then the entire
debt outstanding under this Agreement will automatically be due immediately.
Notwithstanding the foregoing, it shall not be an event of default, and Bank
shall have no additional remedies unless and until Borrower has been provided a
thirty (30) day opportunity to cure any of 7.2, 7.3, 7.4, 7.9, 7.11 and 7.13
below.

7.1    Failure to Pay. If an event of default under Section 7 has occurred and
is continuing beyond any applicable cure period, the Borrower fails to make a
payment under the Agreement within ten (10) days of when due

7.2    Covenants.  If an event of default under Section 7 has occurred and is
continuing beyond any applicable cure period, any default in the performance of
or compliance with any obligation, agreement or other provision contained in
this Agreement (other than those specifically described as an event of default
in this Article).

7.3    Other Bank Agreements.  If an event of default under Section 7 has
occurred and is continuing beyond any applicable cure period, any default occurs
under any guaranty, subordination agreement, security agreement, deed of trust,
mortgage, or other document required by or delivered in connection with this
Agreement or any such document is no longer in effect, or any guarantor purports
to revoke or disavow the guaranty; or any representation or warranty made by any
guarantor is false when made or deemed to be made; or any default occurs under
any other agreement the Borrower (or any Obligor) has with the Bank or any
affiliate of the Bank. For purposes of this Agreement, "Obligor" shall mean any
guarantor, any party pledging collateral to the Bank, or, if the Borrower is
comprised of the trustees of a trust, any trustor.

7.4    Cross-default. If an event of default under Section 8 has occurred and is
continuing beyond any applicable cure period, any default occurs under any
agreement in connection with any credit the Borrower (or any Obligor) has
obtained from anyone else or which the Borrower (or any Obligor) or any of the
Borrower's related entities or affiliates has guaranteed.

7.5    False Information. The Borrower or any Obligor has given the Bank false
or misleading information or representations.

7.6    Bankruptcy/Receivers. The Borrower, any Obligor, or any general partner
of the Borrower or of any Obligor files a bankruptcy petition, a bankruptcy
petition is filed against any of the foregoing parties and such petition is not
dismissed within a period of forty-five (45) days after the filing, or the
Borrower, any Obligor, or any general partner of the Borrower or of any Obligor
makes a general assignment for the benefit of creditors; or a receiver or
similar official is appointed for a substantial portion of Borrower's or any
Obligor's business; or the business is terminated, or such Obligor is liquidated
or dissolved.
 

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7.7    Revocation or Termination. If the Borrower is comprised of the trustee(s)
of a trust, the trust is revoked or otherwise terminated or all or a substantial
part of the Borrower's assets are distributed or otherwise disposed of.

7.8    Lien Priority. The Bank fails to have an enforceable first lien (except
for any prior liens to which the Bank has consented in writing) on or security
interest in any property given as security for this Agreement (or any guaranty).

7.9    Judgments.  If an event of default under Section 8 has occurred and is
continuing beyond any applicable cure period, any judgments or arbitration
awards are entered against the Borrower or any Obligor.

7.10       Death. If the Borrower or any Obligor is a natural person, the
Borrower or such Obligor dies or becomes legally incompetent; if the Borrower or
any Obligor is a trust, a trustor dies or becomes legally incompetent; if the
Borrower or any Obligor is a partnership, any general partner dies or becomes
legally incompetent.

7.11       Material Adverse Change. If an event of default under Section 7 has
occurred and is continuing beyond any applicable cure period, any material
adverse change occurs, or is reasonably likely to occur, in the Borrower's (or
any Obligor's) business condition (financial or otherwise), operations, or
properties, or ability to repay the credit.

7.12   Government Action. Any government authority takes action that the Bank
believes materially adversely affects the Borrower's or any Obligor's financial
condition or ability to repay.

7.13   ERISA Plans. If an event of default under Section 7 has occurred and is
continuing beyond any applicable cure period, a reportable event occurs under
Section 4043(c) of ERISA, or any Plan termination (or commencement of
proceedings to terminate a Plan) or the full or partial withdrawal from a Plan
under Section 4041 or 4042 of ERISA occurs; provided such event or events could
reasonably be expected, in the judgment of the Bank, to have a material adverse
effect.

8.    ENFORCING THIS AGREEMENT; MISCELLANEOUS

8.1    GAAP. Except as otherwise stated in this Agreement, all financial
information provided to the Bank and all financial covenants will be made under
generally accepted accounting principles, consistently applied or another basis
acceptable to the Bank.

8.2    Governing Law. Except to the extent that any law of the United States may
apply, this Agreement shall be governed and interpreted according to the laws of
Colorado (the "Governing Law State"), without regard to any choice of law, rules
or principles to the contrary. Nothing in this paragraph shall be construed to
limit or otherwise affect any rights or remedies of the Bank under federal law.

8.3    Venue and Jurisdiction. The Borrower agrees that any action or suit
against the Bank arising out of or relating to this Agreement shall be filed in
federal court or state court located in the Governing Law State. The Borrower
agrees that the Bank shall not be deemed to have waived its rights to enforce
this section by filing an action or suit against the Borrower in a venue outside
of the Governing Law State. If the Bank does commence an action or suit arising
out of or relating to this Agreement, the Borrower agrees that the case may be
filed in federal court or state court in the Governing Law State. The Bank
reserves the right to commence an action or suit in any other jurisdiction where
the Borrower, any Guarantor, or any collateral has any presence or is located.
The Borrower consents to personal jurisdiction and venue in such forum selected
by the Bank and waives any right to contest jurisdiction and venue and the
convenience of any such forum. The provisions of this section are material
inducements to the Bank's acceptance of this Agreement.

8.4    Successors and Assigns. This Agreement is binding on the Borrower's and
the Bank's successors and assignees. The Borrower agrees that it may not assign
this Agreement without the Bank's prior consent.

8.5   Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR
ANY OTHER THEORY). EACH PARTY HERETO (a) CERTIFIES THAT NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PERSON HAS

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REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (b) ACKNOWLEDGES THAT
IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
AND THE OTHER DOCUMENTS CONTEMPLATED HEREBY BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION AND (c) CERTIFIES THAT THIS WAIVER IS
KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE.

8.6    Severability; Waivers. If any part of this Agreement is not enforceable,
the rest of the Agreement may be enforced. The Bank retains all rights, even if
it makes a loan after default. If the Bank waives a default, it may enforce a
later default. Any consent or waiver under this Agreement must be in writing.

8.7    Expenses.

(a) The Borrower shall pay to the Bank immediately upon demand the full amount
of all payments, advances, charges, costs and expenses, including reasonable
attorneys' fees, expended or incurred by the Bank in connection with (i) the
negotiation and preparation of this Agreement and any related agreements, the
Bank's continued administration of this Agreement and such related agreements,
and the preparation of any amendments and waivers related to this Agreement or
such related agreements, (ii) filing, recording and search fees, appraisal fees,
field examination fees, title report fees, and documentation fees with respect
to any collateral and books and records of the Borrower or any Obligor, (iii)
the Bank's costs or losses arising from any changes in law which are allocated
to this Agreement or any credit outstanding under this Agreement, and (iv) costs
or expenses required to be paid by the Borrower or any Obligor that are paid,
incurred or advanced by the Bank.

(b) The Borrower will indemnify and hold the Bank harmless from any loss,
liability, damages, judgments, and costs of any kind relating to or arising
directly or indirectly out of (i) this Agreement or any document required
hereunder, (ii) any credit extended or committed by the Bank to the Borrower
hereunder, and (iii) any litigation or proceeding related to or arising out of
this Agreement, any such document, or any such credit, including, without
limitation, any act resulting from the Bank complying with instructions the Bank
reasonably believes are made by any Authorized Individual. This paragraph will
survive this Agreement's termination, and will benefit the Bank and its
officers, employees, and agents.

 

(c) The Borrower shall reimburse the Bank for any reasonable costs and
attorneys' fees incurred by the Bank in connection with (i) the enforcement or
preservation of the Bank's rights and remedies and/or the collection of any
obligations of the Borrower which become due to the Bank and in connection with
any "workout" or restructuring, and (ii) the prosecution or defense of any
action in any way related to this Agreement, the credit provided hereunder or
any related agreements, including without limitation, any action for declaratory
relief, whether incurred at the trial or appellate level, in an arbitration
proceeding or otherwise, and including any of the foregoing incurred in
connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by the Bank or any
other person) relating to the Borrower or any other person or entity.

8.8    Individual Liability. If the Borrower is a natural person, the Bank may
proceed against the Borrower's business and non-business property in enforcing
this and other agreements relating to this loan. If the Borrower is a
partnership, the Bank may proceed against the business and non-business property
of each general partner of the Borrower in enforcing this and other agreements
relating to this loan.

8.9    Joint and Several Liability. If two or more Borrowers sign this
Agreement, each Borrower agrees that it is jointly and severally liable to the
Bank for the payment of all obligations arising under this Agreement, and that
such liability is independent of the obligations of the other Borrowers.

8.10    Set-Off. Upon and after the occurrence of an event of default under this
Agreement, (a) the Borrower hereby authorizes the Bank, at any time and from
time to time, without notice, which is hereby expressly waived by the Borrower,
and whether or not the Bank shall have declared any credit subject hereto to be
due and payable in accordance with the terms hereof, to set off against, and to
appropriate and apply to the payment of, the Borrower's Obligations (whether
matured or unmatured, fixed or contingent, liquidated or unliquidated), any and
all amounts owing by the Bank to the Borrower (whether payable in U.S. dollars
or any other currency, whether matured or unmatured, and in the case of
deposits, whether general or special (except trust and escrow accounts), time or
demand and however evidenced), and (b) pending any such action, to the extent
necessary, to hold such amounts as collateral to secure such Obligations and to
return as unpaid for insufficient funds any and all checks and other items drawn
against any deposits so held as the Bank, in its sole discretion, may elect. The
Borrower hereby grants to the Bank a security interest in all deposits and
accounts maintained with the Bank to secure the payment of all Obligations of
the Borrower to the Bank under this Agreement and all agreements, instruments
and documents related to this Agreement. "Obligations" means all obligations,
now or hereafter existing, of the Borrower to the Bank under this Agreement and
under any other agreement or instrument executed in connection with this
Agreement.

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8.11    One Agreement. This Agreement and any related security or other
agreements required by this Agreement constitute the entire agreement between
the Borrower and the Bank with respect to each credit subject hereto and
supersede all prior negotiations, communications, discussions and correspondence
concerning the subject matter hereof.

In the event of any conflict between this Agreement and any other agreements
required by this Agreement, this Agreement will prevail.

8.12    Notices. Unless otherwise provided in this Agreement or in another
agreement between the Bank and the Borrower, all notices required under this
Agreement shall be personally delivered or sent by first class mail, postage
prepaid, or by overnight courier to the addresses on the signature page of this
Agreement, or to such other addresses as the Bank and the Borrower may specify
from time to time in writing. Notices and other communications shall be
effective (i) if mailed, upon the earlier of receipt or five (5) days after
deposit in the U.S. mail, first class, postage prepaid, or (ii) if
hand-delivered, by courier or otherwise (including telegram, lettergram or
mailgram), when delivered.

8.13    Headings. Article and paragraph headings are for reference only and
shall not affect the interpretation or meaning of any provisions of this
Agreement.

8.14    Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when so executed, shall be deemed to be an
original, and all of which when taken together shall constitute one and the same
Agreement. Delivery of an executed counterpart of this Agreement (or of any
agreement or document required by this Agreement and any amendment to this
Agreement) by telecopy or other electronic imaging means shall be as effective
as delivery of a manually executed counterpart of this Agreement; provided,
however, that the telecopy or other electronic image shall be promptly followed
by an original if required by the Bank.

8.15    Borrower Information; Reporting to Credit Bureaus. The Borrower
authorizes the Bank at any time to verify or check any information given by the
Borrower to the Bank, check the Borrower's credit references, verify employment,
and obtain credit reports. The Borrower agrees that the Bank shall have the
right at all times to disclose and report to credit reporting agencies and
credit rating agencies such information pertaining to the Borrower and/or all
guarantors as is consistent with the Bank's policies and practices from time to
time in effect.

8.16    Customary Advertising Material. The Borrower and each Obligor consent to
the publication by the Bank of customary advertising material relating to the
transactions contemplated hereby using the name, product photographs, logo or
trademark of the Borrower or such Obligor.

8.17    Amendments. This Agreement may be amended or modified only in writing
signed by each party hereto. This Agreement is executed as of the date stated at
the top of the first page.
 
Bank:

Bank of America, N.A.

By: /s/ Kirk R. Fronckiewics
Kirk R. Fronckiewicz, Senior Vice President

Borrower:

LIFELOC TECHNOLOGIES, INC.
 
By: /s/ Barry Knott
Barry Knott, President/CEO
 
 

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Address where notices to LIFELOC TECHNOLOGIES, INC. are to be sent:
Address where notices to the Bank are to be sent:
 
 
12441 West 49th Ave Unit 4
Wheat Ridge, CO 80033
US
 
Telephone:303-431-9500
Bank of America, N.A.
Doc Retention Center
CT2-515-BB-03
70 Batterson Park Road
Farmington, CT 06032
 
Facsimile: 
866-255-9922

Federal law requires Bank of America, N.A. (the "Bank") to provide the following
notice. The notice is not part of the foregoing agreement or instrument and may
not be altered. Please read the notice carefully.

(1) USA PATRIOT ACT NOTICE

Federal law requires all financial institutions to obtain, verify and record
information that identifies each person who opens an account or obtains a loan.
The Bank will ask for the Borrower's legal name, address, tax ID number or
social security number and other identifying information. The Bank may also ask
for additional information or documentation or take other actions reasonably
necessary to verify the identity of the Borrower, guarantors or other related
persons.
 
 

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SCHEDULE A
FEES
 

(a) Waiver Fee. If the Bank, at its discretion, agrees to waive or amend any
terms of this Agreement, the Borrower will, at the Bank's option, pay the Bank a
fee for each waiver or amendment in an amount advised by the Bank at the time
the Borrower requests the waiver or amendment. Nothing in this paragraph shall
imply that the Bank is obligated to agree to any waiver or amendment requested
by the Borrower. The Bank may impose additional requirements as a condition to
any waiver or amendment.

(b) Late Fee. To the extent permitted by law, the Borrower agrees to pay a late
fee in an amount not to exceed four percent (4%) of any payment that is more
than fifteen (15) days late. The imposition and payment of a late fee shall not
constitute a waiver of the Bank's rights with respect to the default.