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UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
FORM 8-K
CURRENT
REPORT
Pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported): January 7, 2025 (December
31, 2024)
LIFELOC TECHNOLOGIES,
INC.
(Exact name of registrant
as specified in its charter)
| Colorado |
|
000-54319 |
|
84-1053680 |
| (State or other jurisdiction of incorporation) |
|
(Commission File Number) |
|
(IRS Employer Identification Number) |
| 12441 West 49th Ave., Unit 4 |
|
|
| Wheat Ridge, CO |
|
80033 |
| (Address of Principal Executive Offices) |
|
(Zip Code) |
(303) 431-9500
(Registrant’s
telephone number, including area code)
Check the appropriate box below if the Form
8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425) |
| ☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered
pursuant to Section 12(b) of the Act:
| Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
| Common Stock |
LCTC |
N/A |
Indicate by check
mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this
chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company ☐
If an emerging
growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any
new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 1.01 | Entry into a Material Definitive Agreement. |
On December 31, 2024, Lifeloc
Technologies, Inc. (the "Company") entered into a Subordinated Debenture Purchase Agreement (the “Purchase Agreement”)
with Diamond Bridge Capital, LP (the “Lender”), pursuant to which the Company issued a Subordinated Debenture (the “Debenture”)
in the principal amount of $750,000 and a warrant (the “Warrant”) to purchase up to 62,500 shares of the Company’s common
stock.
The Debenture accrues interest
at a fixed annual rate of 8.25% and has a maturity date of December 31, 2030. The principal and accrued interest are due in full on the
maturity date, with quarterly interest-only payments through December 2025, followed by monthly payments of principal and interest beginning
January 2026, based on a 10-year amortization schedule. The Debenture is subordinated to the Company’s obligations to its general
and secured creditors and is not secured by any assets of the Company. The Company may prepay the Debenture, in whole or in part, without
penalty, upon 30 days’ prior notice.
The Warrant entitles the Lender
to purchase up to 62,500 shares of the Company’s common stock at an exercise price of $4.50 per share, subject to adjustment as
provided in the Warrant. The Warrant is exercisable at any time from the date of issuance until the earlier of December 31, 2031, or December
31, 2030, if all amounts under the Debenture are paid in full prior to that date. The Warrant also provides the holder with registration
rights, obligating the Company to file a registration statement with the Securities and Exchange Commission covering the resale of the
underlying shares of common stock upon the holder’s exercise of the Warrant.
The proceeds of the Debenture
will be used for general corporate purposes.
Copies of the Purchase Agreement,
the Debenture, and the Warrant are filed as Exhibits 10.1, 10.2, and 10.3 to this Current Report on Form 8-K and are incorporated herein
by reference. The foregoing descriptions of these documents are summaries and are qualified in their entirety by reference to the full
text of the agreements.
| Item 3.02 | Unregistered Sales of Equity Securities. |
See Item 1.01 above, which disclosures
are incorporated herein by reference in relation to the issuance of the Debenture. The offer and sale of these securities was completed
under the exemption provided by Rule 506 of Regulation D of the Securities Act of 1933 and/or Section 4(a)(2) of the Securities Act. The
Purchaser has represented that it is an accredited investor, as defined in Rule 501 of Regulation D, and that it is acquiring the securities
for its own account, and not with a view to the resale or distribution of any part thereof in violation of the Securities Act of 1933,
as amended.
| Item 7.01 | Regulation FD Disclosure. |
The Company issued a press release
on January 7, 2025. The press release is attached hereto as Exhibit 99.1.
The information
in this Item 7.01 and the exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor
shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, regardless of any general incorporation
language in such filing.
| Item 9.01 |
Financial Statements and Exhibits. |
(d) Exhibits.
SIGNATURES
Pursuant to the
requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
| Date: January 7, 2025 |
LIFELOC TECHNOLOGIES, INC. |
| |
|
|
| |
By: |
/s/ Vern D. Kornelsen |
| |
|
Chief Financial Officer and Secretary |
Exhibit 10.1
Subordinated
Debenture Purchase Agreement
This
Subordinated Debenture Purchase Agreement (this “Agreement”) is dated as of December 31, 2024, and is made
by and between Lifeloc Technologies, Inc., a Colorado corporation (“Borrower”),
and Diamond Bridge Capital, LP, a Delaware limited partnership (“Lender”).
Recitals
A.Borrower
has requested that Lender make a loan to Borrower of Seven Hundred Fifty Thousand Dollars ($750,000) in the form of subordinated debt
(the “Subordinated Debt”).
B.The
Subordinated Debt shall be evidenced by, and Lender is willing to purchase from Borrower, a subordinated debenture of Borrower substantially
in the form attached hereto as Exhibit A (the “Subordinated Debenture”), in an aggregate principal amount of
Seven Hundred Fifty Thousand Dollars ($750,000), in accordance with the terms, subject to the conditions and in reliance on, the recitals,
representations, warranties, covenants and agreements set forth herein and in the Subordinated Debenture.
C.In
connection with entry into this Agreement and the Debenture, and as a condition of Lender making the loan, Borrower is issuing to Lender
a warrant to purchase up to 62,500 shares of the Borrower’s common stock, no par value (the “Common Stock”),
pursuant to a warrant agreement substantially in the form attached hereto as Exhibit B (the “Warrant”).
C.The
proceeds of the Subordinated Debt shall be used by Borrower for general corporate purposes.
Therefore,
in consideration of the mutual covenants, conditions and agreements herein contained, the parties hereto hereby agree as follows:
Agreements
Section 1.Subordinated Debt.
Section 1.1Certain Terms.
Lender agrees to extend the Subordinated Debt to Borrower in accordance with the terms of, and subject to the conditions set forth in,
this Agreement, the Subordinated Debenture and any other Transaction Documents (as defined in Section 1.3). The Subordinated Debenture
shall bear interest at a fixed annual rate per annum of eight and one quarter percent (8.25%). The unpaid principal balance plus all accrued
but unpaid interest on the Subordinated Debt shall be due and payable on the sixth (6th) anniversary of the Closing Date
(the “Maturity Date”), or such earlier date on which such amount shall become due and payable on account of acceleration
by Lender in accordance with the terms of this Agreement. The Subordinated Debt shall be evidenced by the Subordinated Debenture and shall
be subordinated in accordance with the subordination provisions set forth therein. The obligations of Borrower to Lender under the Subordinated
Debenture shall be unsecured.
Section 1.2Maturity Date.
On the Maturity Date, all sums due and owing under this Agreement and the other Transaction Documents with respect to the Subordinated
Debenture shall be repaid in full. Borrower acknowledges and agrees that Lender has not made any commitments, either express or implied,
to extend the terms of the Subordinated Debt past the Maturity Date, and the Subordinated Debt shall not be extended unless Borrower and
Lender hereafter specifically otherwise agree in writing.
Section 1.3The Closing.
The execution and delivery of this Agreement, the Subordinated Debenture and the Warrant (collectively, the “Transaction Documents”),
and the full funding of the Subordinated Debt (all such actions being referred to as the “Closing”) will occur by virtual
exchange of signatures on December 31, 2024 (the “Closing Date”), or at such other place or time or on such other date
as the parties hereto may agree, by disbursing the proceeds of the Subordinated Debenture in accordance with any written instructions
received by Lender from Borrower at least one Business Day prior to Closing.
Section 1.4Computation
of Interest. Interest shall be computed on the basis of the actual number of days elapsed in the period during which interest
accrues and a year of 360 days. In computing interest, the date of funding shall be included and, subject to Section 1.5.2, the
date of payment shall be excluded.
Section 1.5Payments.
Section 1.5.1Manner
and Time of Payment. The Subordinated Debt shall be payable as follows: (a) Borrower shall make quarterly interest-only payments
in the amount of $15,468.75 per quarter on March 31, 2025, June 30, 2025, September 30, 2025, and December 31, 2025; (b) beginning January
31, 2026, Borrower shall make monthly payments in the amount of $9,198.95 per month, reflecting principal plus interest based on the amortization
schedule attached hereto as Exhibit C, calculated on the basis of a 10-year amortization period; provided that Borrower
shall have the right to make interest payments quarterly instead of monthly upon notice to Lender and provided that Borrower shall issue
to Lender additional Warrants to purchase up to 20,000 shares of Common Stock for each quarter in which payments are not made monthly,
up to a maximum of 62,000 Warrants issued under this provision in any first year that Borrower exercises that right and 7,800 Warrants
per quarter thereafter; and (c) the balance due on the Maturity Date. All payments of principal, interest and fees hereunder payable to
Lender shall be made, without condition or reservation of right and free of set-off or counterclaim, in U.S. dollars and by ACH transfer
(pursuant to Lender’s written transfer instructions) of immediately available funds delivered to Lender not later than 11:00 a.m.
(Eastern Standard Time) on the date due. Funds received by Lender after that time and date shall be deemed to have been paid on the next
succeeding Business Day.
Section 1.5.2Prepayment.
Borrower may, upon at least thirty (30) days’ notice to Lender, prepay, without penalty, all or a portion of the principal amount
outstanding under the Subordinated Debt.
Section 1.5.3Application
of Payments. All payments received by Lender from or on behalf of Borrower shall first be applied to amounts due to Lender to
pay Lender’s fees and reimburse Lender’s costs and expenses, including those pursuant to Section 4.4 of this Agreement,
second to accrued interest under the Subordinated Debenture, and third to principal amounts outstanding under the Subordinated Debenture.
No amount paid or prepaid on the Subordinated Debenture may be reborrowed.
Section 1.6Additional Debt. Lender acknowledges and agrees
that Borrower may issue additional debentures on substantially the same terms as the Debentures to the Lender and/or to other lenders.
Borrower hereby agrees that in the event Borrower issues additional debentures or other debt instruments on terms that are, considering
the applicable interest rate and warrant coverage and warrant price, more favorable to another lender than those contemplated in the Transaction
Documents, then Borrower shall notify Lender of such transaction and, upon Lender’s request (which must be made within thirty (30)
days of Lender’s receipt of such notice), adjust the interest rate under the Debentures and/or the warrant coverage and warrant
price contemplated by the Transaction Documents to match the terms of such subsequent transaction. In
the event that Borrower seeks to issue additional debentures or equity Lender shall have the right of first refusal to purchase said debentures
or equity. Borrower shall provide written notice of the offer to sell additional debentures or equity to Lender who shall have 30 days
to elect to exercise their right of first refusal; if not exercised, Borrower is free to sell to any third party on the offered terms.
Section 2.General Representations and Warranties.
Borrower hereby covenants, represents and warrants to Lender as follows:
Section 2.1Organization.
Borrower is a corporation duly organized and existing under the laws of the State of Colorado. Borrower has all requisite corporate
power and authority, and possesses all licenses necessary to conduct business and activities as presently conducted, to own its properties
and to perform its obligations under this Agreement.
Section 2.2Legal and Authorized.
The borrowing of the principal amount of the Subordinated Debt, the execution and performance of this Agreement, the Subordinated Debenture
and the other Transaction Documents and compliance by Borrower with all of the provisions of this Agreement and of the other Transaction
Documents are within the corporate powers of Borrower. Each of this Agreement, the Subordinated Debenture and the other Transaction Documents
has been duly authorized, executed and delivered and is the legal, valid and binding obligation of Borrower, and is enforceable in accordance
with its respective terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization or other laws and subject
to general principles of equity.
Section 2.3No Defaults
or Restrictions. Neither the execution, delivery or performance by Borrower of any of the Transaction Documents, nor compliance
by it with the terms and provisions hereof or thereof: (a) will contravene any provision of any applicable law, statute, rule or
regulation or any order, writ, injunction or decree of any court or governmental instrumentality; (b) will conflict with or result
in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any lien upon any of the property or assets of Borrower or any of its Subsidiaries
pursuant to the terms of any material indenture, mortgage, deed of trust, credit agreement, loan agreement or any other agreement, contract
or instrument to which Borrower or any of its Subsidiaries is a party or by which it or any of its property or assets is bound or to which
it may be subject; or (c) will violate any provision of the charter or bylaws of Borrower or the organizational documents, charter
or bylaws of any of its Subsidiaries. Neither Borrower nor any of its Subsidiaries is in material default in the performance, observance
or fulfillment of any of the terms, obligations, covenants, conditions or provisions contained in any indenture or other agreement creating,
evidencing or securing indebtedness of any kind or pursuant to which any such indebtedness is issued, or other agreement or instrument
to which Borrower or any of its Subsidiaries is a party or by which it or its properties may be bound or affected, which default would
reasonably be expected to have a material adverse effect on the financial condition, results of operations or business of Borrower and
its Subsidiaries, taken as a whole.
Section 2.4Governmental
Consent. No order, consent, approval, license, authorization or validation of, or filing, recording or registration with (except
as have been obtained or made prior to the date of this Agreement), or exemptive action by, any governmental or public body or authority,
or any subdivision thereof, is required to authorize, or is required in connection with: (a) the execution, delivery and performance
by Borrower of this Agreement, the Subordinated Debenture or any of the other Transaction Documents; or (b) the legality, validity,
binding effect or enforceability of any of the Transaction Documents.
Section 2.5Pending Litigation.
There are no actions, suits, proceedings or written agreements pending, or, to the best knowledge of Borrower, threatened against Borrower
or any of its Subsidiaries at law or in equity or before or by any federal, state, municipal, or other governmental department, commission,
board, or other administrative agency, domestic or foreign that if adversely determined would reasonably be expected to have a material
adverse effect on the financial condition, results of operations or business of Borrower and its Subsidiaries taken as a whole; and none
of Borrower nor any of its Subsidiaries is in default with respect to any material order, writ, injunction, or decree of, or any written
agreement with, any court, commission, board or agency, domestic or foreign.
Section 3.General Covenants, Conditions
and Agreements. Borrower hereby further covenants and agrees with Lender as follows:
Section 3.1Negative Covenants.
Borrower agrees that until it satisfies all of its obligations to Lender, including its obligations to pay in full all principal, interest
and other amounts due in accordance with the terms of this Agreement, the Subordinated Debenture and the other Transaction Documents,
it shall not take any of the actions set forth below in this Section 3.1, without the prior written consent of Lender, which consent
may not be unreasonably withheld.
Section 3.1.1Merger,
Consolidation and Sale of Assets. Borrower shall not consolidate with or merge with, or sell, lease or otherwise transfer all
or substantially all of its assets to, any Person unless: (a) the successor entity which results from such consolidation or merger,
if not Borrower, or the Person which is the transferee of all or substantially all of Borrower’s assets, as the case may be (the
“Surviving Entity”), shall have executed and delivered to the holder of the Subordinated Debenture its assumption of
the due and punctual payment of the principal of and premium, if any, and interest on the Subordinated Debenture, and the due and punctual
performance and observation of all of the covenants in the Subordinated Debenture, this Agreement and any other Transaction Document to
be performed or observed by Borrower and shall furnish to such holder an opinion of counsel to the effect that the instrument of assumption
has been duly authorized, executed and delivered and constitutes the legal, valid and binding contract and agreement of the Surviving
Entity enforceable in accordance with its terms, except as enforcement of such terms may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles.
Section 3.1.2Restricted
Payments. If an Event of Default has occurred and is continuing, Borrower shall not: (a) pay any dividends or make any other
distributions to its shareholders; (b) redeem or repurchase any of its outstanding capital stock or other securities; (c) make
any payments of interest, principal or premium on, or repay, repurchase or redeem (i) any indebtedness of Borrower payable to any
of its Affiliates except the Bank with respect to shared expenses of Borrower that is owing to the Bank pursuant to Borrower’s and
Bank’s intercompany policies, or (ii) any other indebtedness of Borrower that ranks equally with or junior to the Subordinated
Debenture; or (d) make any guarantee payments on any obligations ranking pari passu with or junior to the Subordinated Debenture.
Section 3.2Affirmative
Covenants. Borrower agrees that until it satisfies all of its obligations to Lender, including its obligations to pay in full
all principal, interest and other amounts due in accordance with the terms of this Agreement, the Subordinated Debenture and the other
Transaction Documents, it shall perform the covenants set forth below in this Section 3.2.
Section 3.2.1Corporate
Existence. Subject to Section 3.1.1, Borrower shall at all times preserve and maintain its corporate existence, rights,
and privileges.
Section 3.2.2Financial
Statements. Borrower shall at all times maintain a system of accounting, on the accrual basis of accounting and in accordance
with generally accepted accounting principles in effect in the United States (“GAAP”), and shall furnish to Lender
or Lender’s Representatives upon request quarterly unaudited consolidated financial statements and audited consolidated financial
statements at the same time that such information is made available to the public; provided, that Borrower shall not be required
to provide audited financial statements of the Bank as a stand-alone entity separate from Borrower.
Section 3.2.3Notice
of Default. Borrower shall promptly after becoming aware of the commencement thereof, give notice to Lender in writing of the
occurrence of an Event of Default or Potential Event of Default; provided, that furnishing such information to Lender is not prohibited
by applicable laws and regulations and Lender agrees in writing not to disclose such information to any other Person, except that in all
events Lender may disclose such information to Lender’s Representatives, as required by law or regulation or as agreed to by Borrower.
Section 4.Borrower’s Default.
Section 4.1Borrower’s
Defaults and Lender’s Remedies.
Section 4.1.1Acceleration
Event of Default. The following shall constitute an “Acceleration Event of Default” under this Agreement:
Section 4.1.1.1Borrower applies
for, consents to or acquiesces in the appointment of a receiver for itself, or in the absence of such application, consent or acquiescence,
a receiver is appointed for either Borrower or the Bank.
Section 4.1.1.2Borrower applies
for, consents to or acquiesces in the appointment of a trustee, receiver or liquidator for itself under Chapter 7 or Chapter 11
of the United States Bankruptcy Code (the ”Code Provisions”), or in the absence of such application, consent or
acquiescence, a trustee, receiver or liquidator is appointed for Borrower under the Code Provisions, and is not discharged within ninety (90)
days, or any bankruptcy, reorganization, debt arrangement or other proceeding or any dissolution or liquidation proceeding is instituted
by or against Borrower under the Code Provisions, and if instituted, is consented or acquiesced in by it or remains for ninety (90)
days undismissed, or if Borrower is enjoined, restrained or in any way prevented from conducting all or any material part of its business
under the Code Provisions.
Section 4.1.2Non-Acceleration
Events of Default. Each of the following shall constitute a “Non-Acceleration Event of Default” under this
Agreement, except, in each case, to the event caused by a Force Majeure Event:
Section 4.1.2.1Borrower fails
to pay any principal or interest due on the Subordinated Debenture when due; or
Section 4.1.2.2Borrower fails
to pay any other fees, charges, costs or expenses under this Agreement or any other Transaction Documents and in each case such failure
shall continue for a period of thirty (30) days after notice thereof is given by the Lender to Borrower; or
Section 4.1.2.3Borrower fails
to perform or observe in any material respect any agreement, term, provision, condition, or covenant (other than any such failure that
results in an Event of Default as expressly provided in any other clause of Section 4.1) required to be performed or observed by
Borrower hereunder or under any other Transaction Document or other agreement with or in favor of Lender and in each case such failure
shall continue for a period of 30 days after notice thereof is given by the Lender to Borrower; or
Section 4.1.2.4Borrower, or
the Bank or any Subsidiary becomes insolvent or is unable to pay its debts as they mature; or makes an assignment for the benefit of creditors
or admits in writing its inability to pay its debts as they mature; or suspends transaction of its usual business; or if a trustee of
any substantial part of the assets of Borrower, or the Bank or any Subsidiary is applied for or appointed, and if appointed, Borrower,
or the Bank or any Subsidiary by any action or failure to act indicates its approval of, consent to, or acquiescence in such appointment,
or within ninety (90) days after such appointment, such appointment is not vacated or stayed on appeal or otherwise, or shall not
otherwise have ceased to continue in effect;
Section 4.1.2.5Any proceedings
are commenced by or against Borrower, or the Bank or any Subsidiary under any bankruptcy, reorganization, arrangement, insolvency, readjustment
of debt, dissolution or liquidation law or statute of the federal government or any state government, if such proceedings are instituted,
Borrower, the Bank or such Subsidiary by any action or failure to act indicates its approval of, consent to or acquiescence therein, or
an order shall be entered approving the petition in such proceedings and within ninety (90) days after the entry thereof such order
is not vacated or stayed on appeal or otherwise, or shall not otherwise have ceased to continue in effect; or
Section 4.1.2.6Any Subsidiary
other than the Bank, applies for, consents to or acquiesces in the appointment of a trustee, receiver or liquidator for itself under the
Code Provisions, or in the absence of such application, consent or acquiescence, a trustee, receiver or liquidator is appointed for such
Subsidiary under the Code Provisions, and is not discharged within ninety (90) days, or any bankruptcy, reorganization, debt arrangement
or other proceeding or any dissolution or liquidation proceeding is instituted by or against such Subsidiary under the Code Provisions,
and if instituted, is consented or acquiesced in by it or remains for ninety (90) days undismissed, or if such Subsidiary is enjoined,
restrained or in any way prevented from conducting all or any material part of its business under the Code Provisions.
Section 4.1.3Effect
of Event of Default; Acceleration and Termination of the Commitment.
Section 4.1.3.1If an Acceleration
Event of Default shall occur and be continuing, Lender may declare the Subordinated Debenture and any other amounts due Lender immediately
due and payable, whereupon, the Subordinated Debenture and such other amounts payable hereunder shall immediately become due and payable,
without presentment, demand, protest or notice of any kind.
Section 4.1.3.3In the case of
the occurrence of a Non-Acceleration Event of Default, Lender shall not have the right to declare the principal amount due under the Subordinated
Debenture immediately due and payable, provided, however, that (a) Borrower shall issue to Lender an additional Warrant to purchase
up to an additional 100,000 Warrants; and (b) Lender may take any and all actions necessary to cause Borrower to cure the Non-Acceleration
Event of Default.
Section 4.1.3.4Upon the occurrence
of any Event of Default, it is specifically understood and agreed that notwithstanding the curing of such any Event of Default, Borrower
shall not be released from any of its covenants hereunder unless and until the Subordinated Debenture is paid in full.
Section 4.2Other Remedies.
If any Event of Default shall occur and be continuing, Lender may, in addition to any other rights and remedies hereunder, exercise any
and all remedies provided in any of the other Transaction Documents and other related documents.
Section 4.3No Lender Liability.
To the extent permitted by law, Lender shall have no liability for any loss, damage, injury, cost or expense resulting from any action
or omission by it, or any of its representatives, which was taken, omitted or made in good faith.
Section 5.Miscellaneous.
Section 5.1Release; Indemnification.
Borrower hereby releases Lender from any and all causes of action, claims or rights which Borrower may now or hereafter have for, or which
may arise from, any loss or damage caused by or resulting from: (a) any failure of Lender to protect, enforce or collect in whole
or in part any of the Subordinated Debt and (b) any other act or omission to act on the part of Lender, its officers, agents or employees,
except in each instance for willful misconduct or gross negligence, and except for any breach by Lender of this Agreement or any other
Transaction Document. Borrower shall indemnify, defend and hold Lender and its Affiliates harmless from and against any and all losses,
liabilities, obligations, penalties, claims, fines, demands, litigation, defenses, costs, judgments, suits, proceedings, actual damages,
disbursements or expenses of any kind or nature whatsoever (including attorneys’ fees and expenses) which may at any time be either
directly or indirectly imposed upon, incurred by or asserted or awarded against Lender or any of Lender’s Affiliates in connection
with, arising from or relating to Lender’s entering into or carrying out the terms of this Agreement or being the holder of any
Subordinated Debenture, but not including any portion of such loss, liability, damage, suit, claim, expense, fees or costs that is primarily
attributable to Lender’s or any of Lender’s Affiliates’ willful misconduct or gross negligence.
Section 5.2Prohibition
on Assignment. Neither party shall assign or attempt to assign its rights under this Agreement, except by operation of law.
Section 5.4Time of the
Essence. Time is of the essence of this Agreement.
Section 5.5No Waiver.
No waiver of any term, provision, condition, covenant or agreement herein contained shall be effective unless set forth in a writing signed
by Lender, and any such waiver shall be effective only to the extent set forth in such writing. No failure to exercise or delay in exercising,
by Lender or any holder of any Subordinated Debenture, of any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege preclude any other or further exercise thereof, or the exercise
of any other right or remedy provided by law. The rights and remedies provided in this Agreement are cumulative and not exclusive of any
right or remedy provided by law or equity. No notice or demand on Borrower in any case shall, in itself, entitle Borrower to any other
or further notice or demand in similar or other circumstances or constitute a waiver of the rights of Lender to any other or further action
in any circumstances without notice or demand. No consent or waiver, expressed or implied, by Lender to or of any breach or default by
Borrower in the performance of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other breach
or default in the performance of the same or any other obligations of Borrower hereunder. Failure on the part of Lender to complain of
any acts or failure to act or to declare an Event of Default, irrespective of how long such failure continues, shall not constitute a
waiver by Lender of its rights hereunder or impair any rights, powers or remedies on account of any breach or default by Borrower.
Section 5.6Severability.
Any provision of this Agreement which is unenforceable or invalid or contrary to law, or the inclusion of which would adversely affect
the validity, legality or enforcement of this Agreement, shall be of no effect and, in such case, all the remaining terms and provisions
of this Agreement shall subsist and be fully effective according to the tenor of this Agreement the same as though any such invalid portion
had never been included herein. Notwithstanding any of the foregoing to the contrary, if any provisions of this Agreement or the application
thereof are held invalid or unenforceable only as to particular Persons or situations, the remainder of this Agreement, and the application
of such provision to Persons or situations other than those to which it shall have been held invalid or unenforceable, shall not be affected
thereby, but shall continue valid and enforceable to the fullest extent permitted by law.
Section 5.7Usury; Revival
of Liabilities. All agreements between Borrower and Lender (including this Agreement and any other Transaction Documents) are
expressly limited so that in no event whatsoever shall the amount paid or agreed to be paid to Lender exceed the highest lawful rate of
interest permissible under the laws of the State of Colorado. If, from any circumstances whatsoever, fulfillment of any provision hereof
or of any other Transaction Documents, at the time performance of such provision shall be due, shall involve exceeding the limit of validity
prescribed by law which a court of competent jurisdiction may deem applicable hereto, then, ipso facto, the obligation to be fulfilled
shall be reduced to the highest lawful rate of interest permissible under the laws of the State of Colorado, and if for any reason whatsoever,
Lender shall ever receive as interest an amount which would be deemed unlawful, such interest shall be applied to the payment of the last
maturing installment or installments of the indebtedness to Lender and not to the payment of interest. To the extent that Lender received
any payment on account of Borrower’s Liabilities and any such payment(s) and/or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, subordinated and/or required to be repaid to a trustee, receiver or any other Person
under any bankruptcy act, state or federal law, common law or equitable cause, then to the extent of such payment(s) or proceeds received,
Borrower’s Liabilities or part thereof intended to be satisfied shall be revived and continue in full force and effect, as if such
payment(s) and/or proceeds had not been received by Lender and applied on account of Borrower’s Liabilities; provided, however,
if Lender successfully contests any such invalidation, declaration, set aside, subordination or other order to pay any such payment and/or
proceeds to any third party, the revived Borrower’s Liabilities shall be deemed satisfied.
Section 5.8Notices.
All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to
have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent
by a nationally recognized overnight courier (receipt requested); (c) on the date sent by e-mail of a PDF document (with confirmation
of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours
of the recipient; or (d) on the fifth (5th) day after the date mailed, by certified or registered mail, return receipt requested,
postage prepaid. Such communications must be sent to the respective parties at the addresses indicated below (or at such other address
for a party as shall be specified in a notice given in accordance with this Section 5.8):
| if to the Lender: |
|
Diamond Bridge Capital, LP
1119 Cambridge Road
Teaneck, NJ 07666 |
| |
|
|
| if to the Borrower: |
|
Lifeloc Technologies, Inc.
12441 West 49TH Ave Unit #4
Wheat Ridge, CO 80033 |
Section 5.9Successors
and Assigns. This Agreement shall inure to the benefit of the parties and their respective heirs, legal representatives, successors
and assigns except that no assignment made by Borrower in violation of this Agreement shall confer any rights on any assignee of Borrower.
Section 5.10No Joint Venture.
Nothing contained herein or in any document executed pursuant hereto and no action or inaction whatsoever on the part of Lender, shall
be deemed to make Lender a partner or joint venturer with Borrower.
Section 5.11Publicity.
Neither party shall publicize the Facility without the prior written consent of the other party, which consent may not be unreasonably
withheld, except that Borrower may make any disclosures required by law.
Section 5.12Documentation.
All documents and other matters required by any of the provisions of this Agreement to be submitted or furnished to Lender shall be in
form and substance satisfactory to Lender.
Section 5.13Additional
Assurances. Borrower agrees that, at any time or from time to time, upon the written request of Lender, it will execute all such
further documents and do all such other acts and things as Lender may reasonably request to effectuate the transaction herein contemplated.
Section 5.14Entire Agreement.
This Agreement and the Exhibits hereto constitute the entire agreement between the parties hereto with respect to the subject matter hereof
and may not be modified or amended in any manner other than by supplemental written agreement executed by the parties hereto. In entering
into this Agreement neither party has relied upon any representation, warranty, covenant, obligation or other agreement that is not set
forth herein or in the other Transaction Documents.
Section 5.15Choice of
Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Colorado. Nothing
herein shall be deemed to limit any rights, powers or privileges which Lender may have pursuant to any law of the United States of America
or any rule, regulation or order of any department or agency thereof and nothing herein shall be deemed to make unlawful any transaction
or conduct by Lender which is lawful pursuant to, or which is permitted by, any of the foregoing.
Section 5.16Forum; Venue.
To induce Lender to accept this Agreement and the other Transaction Documents, Borrower irrevocably agrees that all actions or proceedings
in any way, manner, or respect, arising out of or from or related to this Agreement or the other Transaction Documents shall be litigated
only in courts having suits within Denver, Colorado. Borrower hereby consents and submits to the jurisdiction of any local, state, or
federal court located within said city. Borrower hereby waives any right it may have to transfer or change the venue of any litigation
brought against Borrower by Lender.
Section 5.17No Third Party
Beneficiary. This Agreement is made for the sole benefit of Borrower and Lender, and no other Person shall be deemed to have any
privity of contract hereunder nor any right to rely hereon to any extent or for any purpose whatsoever, nor shall any other Person have
any right of action of any kind hereon or be deemed to be a third party beneficiary hereunder.
Section 5.18Captions;
Counterparts. Captions contained in this Agreement in no way define, limit or extend the scope or intent of their respective provisions.
This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when
so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument.
Section 5.19Discretion.
Unless specified to the contrary herein, all references herein to an exercise of discretion or judgment by Lender, to the making of a
determination or designation by Lender, to the application of Lender’s discretion or opinion, to the granting or withholding of
Lender’s consent or approval, to the consideration of whether a matter or thing is satisfactory or acceptable to Lender, or otherwise
involving the decision making of Lender, shall be deemed to mean that Lender shall decide unilaterally using its sole and absolute discretion
or judgment.
Section 6.Lender’s Representations
and Warranties. Lender hereby represents and warrants to Borrower that this Agreement and the other Transaction Documents have
been duly authorized, executed and delivered, and are the legal, valid and binding obligations of Lender, enforceable in accordance with
their terms, except as enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization
or other similar laws relating to or affecting the rights of creditors generally, by general principles of equity and by federal or state
securities laws or the public policy underlying such laws.
Section 7.Definitions.
Section 7.1Defined Terms.
The following capitalized terms generally used in this Agreement and in the other Transaction Documents shall have the meanings defined
or referenced below. Certain other capitalized terms used only in specific sections of this Agreement may be defined in such sections.
“Affiliate(s)”
means, with respect to any Person, such Person’s immediate family members, partners, members or parent and subsidiary corporations,
and any other Person directly or indirectly controlling, controlled by, or under common control with, said Person, and their respective
Affiliates, members, shareholders, directors, officers, employees, agents and representatives.
“Borrower’s Liabilities”
means Borrower’s obligations under this Agreement and any other Transaction Documents.
“Business Day”
means a day of the week other than a Saturday, Sunday or a legal holiday under the laws of the State of Colorado or any other day on which
banking institutions located in Colorado are authorized or required by law or other governmental action to close.
“Event of Default”
means any Acceleration Event of Default and any Non-Acceleration Event of Default.
“Force Majeure”
means any act or condition whatsoever beyond the reasonable control of and not occasioned by the fault or negligence of the affected party,
including, without limitation, acts of God, acts of terrorism, acts of nature or of a public enemy, acts of a federal government or any
state or political subdivision thereof, internet brownouts, fires, floods, explosions, wars, pandemics, or other catastrophes; freight
embargoes; or delays of a supplier or subcontractor due to such causes.
“Governmental Agency(ies)”
means, individually or collectively, any federal, state, county or local governmental department, commission, board, regulatory authority
or agency.
“Lender’s Representatives”
means those of Lender’s directors, officers, employees and professional advisors engaged to advise Lender with respect to this Agreement
and the transactions contemplated hereunder who have a reasonable need to know information about the Borrower and who execute a written
confidentiality agreement satisfactory to the Borrower, in its sole discretion, which will include covenants not to use such information
for their own benefit and to maintain the confidentiality of the information in question.
“Person” means
an individual, a corporation (whether or not for profit), a partnership, a limited liability company, a joint venture, an association,
a trust, an unincorporated organization, a government or any department or agency thereof (including a Governmental Agency) or any other
entity or organization.
“Potential Event of
Default” means an event or circumstance that with the passage of time, the giving of notice or both is reasonably likely to
become an Event of Default.
“Subsidiary”
means (i) any corporation, at least a majority of the outstanding voting stock of which is owned, directly or indirectly, by Borrower
or by one or more of its Subsidiaries, or over which Borrower otherwise exercises control, (ii) any general partnership, joint venture
or similar entity, at least a majority of the outstanding partnership or similar interests of which shall at the time be owned by Borrower
or by one or more of its Subsidiaries, or over which Borrower otherwise exercises control, (iii) any limited partnership of which Borrower
or any of its Subsidiaries is a majority general partner, or over which Borrower otherwise exercises control, and (iv) any limited
liability company, at least a majority of the outstanding voting membership interests of which are held by Borrower or one or more of
its Subsidiaries, or over which Borrower otherwise exercises control.
“United States”
means the United States of America.
Section 7.2Certain Accounting
Terms; Interpretations. Notwithstanding the foregoing, any accounting terms used in this Agreement which are not specifically
defined herein shall have the meaning customarily given to them in accordance with GAAP. The foregoing definitions are equally applicable
to both the singular and plural forms of the terms defined. All references to sections and exhibits are to sections and exhibits in or
to this Agreement unless otherwise specified, and the words “hereof”, “herein” and “hereunder” and
words of like import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this
Agreement. The word “including” when used in this Agreement without the phrase “without limitation,” shall mean
“including, without limitation.” All references to time of day herein are references to Denver, Colorado, time unless otherwise
specifically provided. Any reference contained herein to attorneys’ fees and expenses shall be deemed to be reasonable fees and
expenses of Lender’s outside counsel and of any other third-party experts or consultants engaged by Lender’s outside counsel
on Lender’s behalf. All references to any Transaction Document shall be deemed to be to such document as amended, restated, supplemented
or modified from time to time. With respect to any reference in this Agreement to any defined term, (a) if such defined term refers to
a Person, then it shall also mean all heirs, legal representatives and permitted successors and assigns of such Person, and (b) if such
defined term refers to a document, instrument or agreement, then it shall also include any replacement, extension or other modification
thereof.
Section 7.3Exhibits and
Schedules Incorporated. All exhibits and schedules attached hereto or referenced herein, are hereby incorporated into this Agreement.
Section 7.4Dispute Resolution.
The parties shall attempt to resolve any claim, dispute or controversy arising out of or in relation to the performance, interpretation,
application, or enforcement of this Agreement, including but not limited to breach thereof, through good faith negotiations between senior
executives of the parties, who have authority to settle the same. If not resolved by negotiation, all such claims, disputes, and controversies
must be referred to mediation prior to, and as a condition precedent to, the initiation of any adjudicative action or proceeding, including
litigation. If not resolved within sixty (60) days after the date a written request for mediation is made by any party, either party may
pursue any adjudicative action or proceeding it deems appropriate. Any mediation will be conducted before a single mediator to be agreed
upon by the parties. If the parties cannot agreed on the mediator, each party may select a mediator and such mediators will together unanimously
select a neutral mediator to conduct the mediation. Each party will bear the fees and expenses of its mediator and all parties will equally
bear the fees and expenses of the final mediator. Nothing in this Section 7.4 will prohibit a party or its affiliate from seeking
interim injunctive relief at any time permitted by law.
Section 7.5WAIVER OF RIGHT
TO JURY TRIAL. BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LITIGATION ARISING IN ANY WAY IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY OF THE OTHER TRANSACTION DOCUMENTS, OR ANY OTHER
STATEMENTS OR ACTIONS OF BORROWER OR LENDER. BORROWER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN
THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS DISCUSSED THIS WAIVER WITH SUCH
LEGAL COUNSEL. BORROWER FURTHER ACKNOWLEDGES THAT (a) IT HAS READ AND UNDERSTANDS THE MEANING AND RAMIFICATIONS OF THIS WAIVER, (b) THIS
WAIVER HAS BEEN REVIEWED BY BORROWER AND BORROWER’S COUNSEL AND IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THE AGREEMENT
AND THE OTHER TRANSACTION DOCUMENTS (c) THIS WAIVER SHALL BE EFFECTIVE AS TO EACH OF SUCH OTHER TRANSACTION DOCUMENTS AS IF FULLY INCORPORATED
THEREIN.
[Signatures
on Following Page(s)]
In
Witness Whereof, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of
the date first above written.
Borrower:Lender:
Borrower:
Lifeloc Technologies, Inc.
By: _______________________
Name: _____________________
Title: ______________________ |
Lender:
Diamond Bridge Capital, LP
By: _____________________
Name: ___________________
Title: ____________________ |
| |
|
Exhibit 10.2
Subordinated
Debenture
THIS SUBORDINATED DEBENTURE
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR QUALIFIED UNDER ANY STATE OR FOREIGN
SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT COVERING THIS SECURITY UNDER THE ACT AND ANY REQUIRED QUALIFICATION UNDER APPLICABLE STATE AND FOREIGN
LAW OR THE TRANSACTION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE ACT AND THE QUALIFICATION REQUIREMENTS
UNDER APPLICABLE STATE AND FOREIGN LAW AND AN OPINION SATISFACTORY TO THE ISSUER TO SUCH EFFECT HAS BEEN RENDERED BY COUNSEL.
THIS OBLIGATION IS NOT A DEPOSIT AND IT IS NOT INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY FEDERAL AGENCY.
| $750,000 |
December 31, 2024 |
For
Value Received, the undersigned, Lifeloc Technologies, Inc., a
Colorado corporation with its headquarters located at 12441 West 49th Ave Unit #4, Wheat Ridge, CO 80033 (“Borrower”),
hereby promises to pay to the order of Diamond Bridge Capital, LP, a Delaware limited partnership with its main office located at 1119
Cambridge Road, Teaneck, NJ 07666 (“Lender”), the principal sum of Seven Hundred Fifty Thousand Dollars ($750,000),
and to pay interest thereon, on the terms and subject to the conditions stated in this Subordinated Debenture. This Subordinated Debenture
is issued in accordance with, and shall be governed by the terms of, that certain Subordinated Debenture Purchase Agreement of even date
herewith entered into between Borrower and Lender (the “Purchase Agreement”). Unless otherwise indicated herein, terms
defined in the Purchase Agreement shall have the same meaning when used herein
All accrued interest and unpaid
principal due and payable under this Subordinated Debenture shall be paid in full on or before the Maturity Date.
The unpaid principal amount outstanding
under this Subordinated Debenture from time to time shall bear interest before maturity in accordance with the Purchase Agreement, computed
on the basis of a 360-day year and charged for actual days elapsed.
Lender will note on its internal
records the amount of each payment in respect of the Subordinated Debenture. Whenever any payment to be made under this Subordinated Debenture
shall be due on a day that is other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension
of time shall be included in the computation of interest due upon this Subordinated Debenture.
There shall be no penalties or
other charges payable by Borrower to Lender hereunder other than those payments expressly described in the Purchase Agreement. Except
as otherwise provided in the Purchase Agreement, all payments hereunder shall be credited first to accrued interest and second to the
unpaid principal balance outstanding at the time of such payment.
Borrower may prepay all or part
of the outstanding unpaid principal balance under this Subordinated Debenture, without penalty, as provided below and in the Purchase
Agreement.
This Subordinated Debenture is
not secured by any assets of Borrower. The indebtedness of Borrower evidenced by this Subordinated Debenture, including the principal,
premium, if any, and interest, shall be subordinate and junior in right of payment to Borrower’s obligations to its general and
secured creditors, except such other creditors holding obligations of Borrower ranking on a parity with or junior to this Subordinated
Debenture, if any. In the event of any dissolution, liquidation or winding up of Borrower, whether voluntary or involuntary, all obligations
to Borrower’s general creditors and secured creditors, except such creditors holding obligations of Borrower ranking on a parity
with or junior to this Subordinated Debenture, if any, shall be entitled to be paid in full before any payment shall be made on account
of the principal of or interest on this Subordinated Debenture. In the event of any such proceeding, after payment in full of all such
sums owing with respect to such prior obligations, Lender, together with the holders of any obligations of Borrower ranking on a parity
with this Subordinated Debenture, shall be entitled to be paid, from the remaining assets of Borrower, the unpaid principal and interest
of this Subordinated Debenture or such obligations before any payment or other distribution, whether in cash, property or otherwise, shall
be made on account of any capital stock or any obligation of Borrower ranking junior to this Subordinated Debenture.
If an Event of Default shall occur,
Lender shall have the rights set forth in Section 4 of the Purchase Agreement.
Upon receipt of evidence reasonably
satisfactory to Borrower of the loss, theft, destruction or mutilation of this Subordinated Debenture, Borrower shall, at Lender’s
expense, execute and deliver in lieu thereof a new debenture in principal amount equal to the unpaid principal amount of such lost, stolen,
destroyed or mutilated debenture, dated the date to which interest has been paid on such lost, stolen, destroyed or mutilated Subordinated
Debenture; provided, that: (i) in the case of any such loss, theft or destruction, Lender shall have delivered to Borrower
an indemnity reasonably satisfactory to Borrower indemnifying and holding Borrower harmless from any and all liability, claim or damage
resulting from such loss, theft or destruction; or (ii) in the case of any such mutilation, upon surrender of this Subordinated Debenture
to Borrower.
Nothing herein shall impair the
obligation of Borrower, which is absolute and unconditional, to pay the principal of and any premium and interest on this Subordinated
Debenture according to its terms.
No provision of this Subordinated
Debenture shall be amended or waived except by a written instrument signed by a duly authorized officer of each of Borrower and Lender.
Any notices or other communications permitted or required hereunder shall be sent and addressed in accordance with the requirements of
the Purchase Agreement.
This Agreement shall be governed
by and construed in accordance with the internal laws of the State of Colorado. Nothing herein shall be deemed to limit any rights, powers
or privileges which Lender may have pursuant to any law of the United States or any rule, regulation or order of any department or agency
thereof and nothing herein shall be deemed to make unlawful any transaction or conduct by Lender which is lawful pursuant to, or which
is permitted by, any of the foregoing.
In
Witness Whereof, Borrower has caused this Subordinated Debenture to be executed as of the date first written above.
Borrower:
Lifeloc Technologies, Inc.
By: __________________________
Name: ________________________
Title: _________________________
Exhibit 10.3
NEITHER THIS WARRANT NOR THE SECURITIES INTO WHICH
THIS WARRANT IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION OR EXCLUSION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN COMPLIANCE
WITH APPLICABLE STATE SECURITIES LAWS.
LIFELOC TECHNOLOGIES,
INC.
COMMON STOCK WARRANT
WARRANT TO PURCHASE SHARES OF COMMON STOCK
THIS COMMON STOCK WARRANT (this
“Warrant”) certifies that, for consideration received, DIAMOND BRIDGE CAPITAL, LP, a Delaware limited partnership,
or its successors or assigns (the “Holder” or “Holders,” as applicable), is entitled
to subscribe for and purchase [Sixty-Two Thousand Five Hundred (62,500)] fully paid and nonassessable shares (as adjusted pursuant to
Section 3 hereof, the “Shares”) of the common stock of Lifeloc Technologies, Inc., a Colorado corporation (the
“Company”), no par value (the “Common Stock”) at a price per Share equal to four dollars
and fifty cents ($4.50) (as adjusted pursuant to Section 3 hereof, the “Exercise Price”), subject to the provisions
and upon the terms and conditions hereinafter set forth or set forth in that certain Subordinated Debenture Agreement by and between Holder
and Company, dated as of December 31, 2024 (the “Debenture Agreement”).
1. Method
of Exercise; Payment.
(a) Exercise.
This Warrant shall be exercisable from and after the date hereof (the “Initial Exercise Date”) through the earlier
of (i) December 31, 2031 or (ii) if all amounts due and payable by the Company under the Debenture Agreement have been paid on or before
December 31, 2030, or if the Company gives the Holder at least 30 days’ notice of its intent to pay all amounts due and payable
by December 31, 2030, then December 31, 2030 (as applicable, the “Expiration Date”). This Warrant
shall be exercisable by Holder in whole or in part and from time to time for the Shares (as adjusted pursuant to Section 3 hereof).
(b) Cash
Exercise. The purchase rights represented by this Warrant may be exercised by the Holder, in whole or in part, by the surrender
of this Warrant (with the notice of exercise form attached hereto as Exhibit A duly executed) at the principal office of the Company,
and by the payment to the Company, by wire transfer or certified, cashier’s or other check acceptable to the Company (or as otherwise
provided pursuant to Section 1(c) hereinbelow), of an amount equal to the aggregate Exercise Price of the Shares being purchased.
(c) Stock
Certificates. Promptly upon receipt of a notice to exercise, the Company will take all necessary actions to authorize the
issuance of such Common Stock under this Warrant.
2. Stock
Fully Paid. All of the Shares issuable upon the exercise of the rights represented by this Warrant will, upon issuance
and receipt of the Exercise Price therefor, be duly authorized, validly issued, fully paid and nonassessable, and free from all taxes,
liens and charges with respect to the issue thereof (except the Holder’s income taxes, if any, that are due and payable with respect
to the Shares).
3. Adjustment
to the Number of Shares Issuable and/or the Exercise Price. The number of Shares issuable upon the exercise of this Warrant
and the Exercise Price are subject to adjustment from time to time as set forth in this Section 3. Upon each adjustment pursuant
to this Section 3, the Holder shall thereafter prior to the Expiration Date be entitled to purchase the adjusted number of Shares of Common
Stock at the Exercise Price as adjusted hereby.
(a) If
the Company, at any time while this Warrant is outstanding, (i) shall pay a stock dividend payable in shares of its capital stock (whether
payable in shares of its Common Stock, preferred stock, or securities convertible into, or exchangeable or exercisable for, Common Stock
or of other capital stock of any class), (ii) shall subdivide outstanding shares of Common Stock into a larger number of shares, or (iii)
combine outstanding shares of Common Stock into a smaller number of shares, then (x) the number of shares of Common Stock issuable upon
exercise of this Warrant (or any shares of stock or other securities at the time issuable upon exercise of this Warrant) shall be proportionally
increased or decreased to reflect such event, and (y) the Exercise Price shall be adjusted to an amount obtained by multiplying the Exercise
Price in effect immediately prior to such event by a fraction equal to the number of Shares for which this Warrant is exercisable immediately
prior to such event divided by the number of Shares for which this Warrant is exercisable immediately after such event. Any
adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders
entitled to receive such dividend or distribution and shall become effective immediately after the effective date of a subdivision, combination
or reclassification.
(b) If
the Company, at any time while this Warrant is outstanding, shall distribute to all holders of Common Stock, or holders of any securities
convertible into, or exchangeable or exercisable for Common Stock (and not to the Holder), evidences of its indebtedness, assets or any
rights or warrants to subscribe for or purchase any security (excluding those referred to in this Section 3), the number of shares of
Common Stock issuable upon exercise of this Warrant (or any shares of stock or other securities at the time issuable upon exercise of
this Warrant) shall be proportionally increased to reflect such event as determined by the Appraiser. The Company shall
promptly provide a statement to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription
rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall
become effective immediately after the record date mentioned above.
(c) In
case of any reclassification of the Common Stock, any consolidation or merger of the Company with or into another person, the sale or
transfer of all or substantially all of the assets of the Company or any compulsory share exchange pursuant to which the Common Stock
is converted into other securities, cash or property, then, subject to the terms hereof, the Holder shall have the right thereafter to
exercise this Warrant into the shares of stock and other securities and property receivable upon or deemed to be held by holders of Common
Stock following such reclassification, consolidation, merger, sale, transfer or share exchange, and the Holder shall be entitled upon
such event to receive such amount of securities or property as the shares of the Common Stock into which this Warrant could have been
exercised immediately prior to such reclassification, consolidation, merger, sale, transfer or share exchange would have been entitled. The
terms of any such reclassification, consolidation, merger, sale, transfer or share exchange shall include such terms so as to continue
to give to the Holder the right to receive the securities or property set forth in this Section 3(c) upon any exercise following such
reclassification, consolidation, merger, sale, transfer or share exchange. This provision shall similarly apply to successive
reclassification, consolidations, mergers, sales, transfers or share exchanges.
(d) If
the Company, at any time while this Warrant is outstanding, shall issue additional shares of Common Stock or securities convertible into
Common Stock, in each case other than an Excluded Issuance, for effective consideration per share less than the Exercise Price (a “Dilutive
Issuance”), then, the Exercise Price shall be reduced, concurrently with such issue, to a price (calculated to the nearest cent)
determined by multiplying such Exercise Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issue plus the number of shares which the aggregate consideration received by the Company for such issue would
purchase at such Exercise Price, and the denominator of which shall be the number of shares of Common Stock outstanding immediately prior
to such issue plus the number of such additional shares of Common Stock so issued. For the purposes of this Section 3(d), all
shares of Common Stock issuable upon conversion of any outstanding shares of preferred stock and the exercise and/or conversion of any
other outstanding securities or rights exercisable for or convertible into shares of Common Stock shall be deemed to be outstanding. For
purposes of this Agreement, “Excluded Issuance” means any issuance or sale by the Company after the date hereof of:
(a) shares of Common Stock issued upon the exercise of this Warrant or other Warrants issued to Holder in connection with the Debenture
Agreement, or other debentures issued on substantially the same terms within twelve (12) months after the date of the Debenture Agreement;
or (b) shares of Common Stock issued in connection with the events described in Sections 3(a) through (c) above; or (c) shares of Common
Stock issued in connection with an equity incentive plan of the Company, or the exercise of awards previously issued thereunder; (d) up
to 300,000 shares of Common Stock or convertible securities convertible into shares of Common Stock in connection with a transaction in
which the Company, directly or indirectly, acquires another business or its tangible or intangible assets; or (e) shares of Common Stock
in an offering for cash for the account of the Company that is underwritten on a firm commitment basis and is registered with the Securities
and Exchange Commission under the Securities Act.
(e) The
Company shall not, by amendment of its articles of incorporation or through a reorganization, transfer of assets, consolidation, merger,
dissolution, issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed under this Warrant by the Company, but shall at all times in good faith assist in carrying out all
the provisions of this Section 3 and in taking all such action as may be necessary or appropriate to protect Holder’s rights under
this Section 3 against impairment.
4. Notice
of Adjustments. Whenever the number of Shares purchasable hereunder or the Exercise Price thereof shall be adjusted pursuant to Section
3 hereof, the Company shall promptly provide notice to the Holder setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment was calculated, and the number and class of Shares which may be purchased
and the Exercise Price therefor after giving effect to such adjustment.
5. Fractional
Shares. This Warrant may not be exercised for fractional shares. In lieu of fractional shares the Company shall promptly
make a cash payment therefor based upon the per share fair market value of a Share then in effect.
6. Representations,
Warranties and Covenants of the Company.
(a) The
Company represents and warrants to the Holder that all corporate actions on the part of the Company, its officers, directors and stockholders
necessary for the sale and issuance of the Shares pursuant hereto and the performance of the Company’s obligations hereunder were
taken prior to and are effective as of the effective date of this Warrant, except that the Company may need to obtain stockholder approval
to increase its authorized capital to ensure there are sufficient shares of Common Stock available for issuance of the Shares pursuant
hereto.
(b) This
Warrant is not inconsistent with the Company’s articles of incorporation or bylaws, and does not contravene any law or governmental
rule, regulation or order applicable to it, does not and will not contravene any provision of, or constitute a default under, any indenture,
mortgage, contract, agreement or other instrument to which it is a party or by which it is bound, and constitutes the legal, valid and
binding agreements of the Company, enforceable in accordance with its terms.
(c) No
consent or approval of, giving of notice to, registration with, or taking of any other action in respect of any state, federal or other
governmental authority or agency is required with respect to the execution, delivery and performance by the Company of its obligations
under this Warrant, except for the filing of notices pursuant to Regulation D under the Securities Act and any filing required by applicable
state securities law, which filings will be effective by the time required thereby.
(d) All
issued and outstanding shares of Common Stock or any other securities of the Company have been duly authorized and validly issued and
are fully paid and nonassessable. All outstanding shares of Common Stock and any other securities were issued in full compliance
with all federal and state securities laws.
(e) The
Company is not, pursuant to the terms of any agreement currently in existence, under any obligation to register under the Securities Act
any of its presently outstanding securities or any of its securities which may hereafter be issued.
(f) Assuming
that the Holder is an accredited investor (as defined in Rule 501(a) of Regulation D promulgated under the Securities Act (as defined
in Section 8 hereof)), the issuance of the Shares upon exercise of this Warrant will constitute a transaction exempt from (i) the registration
requirements of Section 5 of the Securities Act, in reliance upon Section 4(2) thereof, and (ii) the qualification requirements of the
applicable state securities laws.
(g) At
the written request of the Holder, in the event the Holder proposes to sell Shares issuable upon the exercise of this Warrant in compliance
with Rule 144 promulgated under the Securities Act by the Securities and Exchange Commission, the Company shall furnish to the Holder,
within three (3) Trading Days after receipt of such request, a written statement confirming the Company’s compliance with the filing
requirements of the Securities and Exchange Commission as set forth in such Rule, as such Rule may be amended from time to time.
7. Restrictive
Legend. The Shares (unless registered under the Securities Act) shall be stamped or imprinted with a legend in substantially
the following form:
THESE SHARES HAVE NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION
UNDER REGULATION D PROMULGATED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION OR EXCLUSION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS.
8. Transfer
of Warrant.
(a) This
Warrant may be sold, transferred, assigned or hypothecated, in whole or in part, by the Holder without the consent of the Company; provided,
in each case that any transferee or assignee agrees to be bound by the terms of this Warrant, and such transfer or assignment is in compliance
with the Securities Act and the securities law of any applicable jurisdiction. The Warrant may be divided or combined, upon
request to the Company by the Holder, into one or more new warrants representing the same aggregate number of Shares. For purposes
of this Warrant, “person” means an individual or a corporation, association, partnership, limited liability
company, joint venture, organization, business, trust or any other entity or organization, including a government or any subdivision or
agency thereof. The terms and conditions of this Warrant shall inure to the benefit of and be binding upon the respective permitted
successors and assigns of the parties.
(b) No
opinion of counsel or “no-action” letter shall be necessary for any transfer or assignment by any Holder.
9. Rights
of Stockholders. No holder of this Warrant shall be entitled, as a Warrant holder, to vote or receive dividends or be deemed
the holder of the Shares or any other securities of the Company which may at any time be issuable on the exercise hereof for any purpose,
nor shall anything contained herein be construed to confer upon the holder of this Warrant, as such, any of the rights of a stockholder
of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock,
change of par value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings, or to receive dividends or subscription
rights or otherwise until the Warrant shall have been exercised and the Shares purchasable upon the exercise hereof shall have become
deliverable, as provided herein.
10. Expiration
of Warrant. This Warrant shall expire and shall no longer be exercisable after 5:00 p.m., Mountain Time, on the Expiration Date.
11. Notices.
All notices and other communications required or permitted hereunder shall be in writing, shall be effective when given, and shall in
any event be deemed to be given upon receipt or, if earlier, (a) five (5) days after deposit with the U.S. Postal Service or other applicable
postal service, if delivered by first class mail, postage prepaid, (b) upon delivery, if delivered by hand, and (c) one business day after
the business day of deposit with Federal Express or similar overnight courier, freight prepaid, and shall be addressed (i) if to the Holder,
at , at the address of its principal corporate offices, which on the date hereof is 1119 Cambridge Road, Teaneck, NJ 07666 and (ii) if
to the Company, at the address of its principal corporate offices (Attention: President), which on the date hereof is 12441 West 49th
Ave Unit #4, Wheat Ridge, CO 80033, or at such other address as a party may designate by ten (10) days advance written notice to the other
party pursuant to the provisions above.
12. Warrant
Agent.
(a) The
Company shall serve as the initial warrant agent under this Warrant. The Company and the Holder may appoint a new warrant agent
as mutually agreed upon by the Company and the Holder.
(b) Any
corporation into which the Company or any new warrant agent may be merged or any corporation resulting from any consolidation to which
the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially
all of its corporate trust or stockholders services business shall be a successor warrant agent under this Warrant without any further
act. Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first
class mail, postage prepaid) to the Holder at the Holder’s last address as shown on the register maintained by the warrant agent
pursuant to this Warrant.
13. Payment
of Taxes. The Company will pay all documentary stamp taxes attributable to the issuance of Shares upon the exercise of
the Warrants represented by this Warrant. The Holder shall be responsible for all other tax liability that may arise as a result
of holding or transferring the Warrants represented by this Warrant or receiving the Shares under this Warrant.
14. Replacement
of Warrant. If the certificate evidencing this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue
in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant certificate, a new warrant
certificate of like tenor, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction
and bond or other indemnity, if requested, reasonably satisfactory to it. A Holder of a replacement warrant certificate also
shall comply with such other reasonable regulations and pay such other reasonable charges attributable to the replacement of a warrant
certificate.
15. Governing
Law. This Warrant and all actions arising out of or in connection with this Warrant shall be governed by and construed in accordance
with the laws of the State of Colorado.
16. Amendments. This
Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against
which enforcement of such change, waiver, discharge or termination is sought.
17. Registration
Rights. The Company shall file a registration statement under the Securities Act covering the resale of all Shares of the Holder as
soon as possible following delivery of the Holder’s Notice of Exercise, and use its reasonable best efforts to have the registration
statement declared effective by the SEC for distribution thereof. The Company shall bear and pay all expenses incurred in connection with
any registration, filing or qualification of the Shares with respect to the registrations pursuant to this Section for each Holder, including
(without limitation) all registration, filing, and qualification fees, printers and accounting fees relating or apportionable thereto
and the fees and disbursements of one counsel for the selling Holders as selected by them. If the Company does not register the shares
as soon as possible and the Holder relies on an exemption or exclusion from the registration requirements to sell the shares the Company
will cover the costs of the counsel’s opinion letter(s) that will be required to sell the shares.
[signature page follows]
Issued this 31st day of December, 2024.
| |
|
Lifeloc Technologies, Inc., |
| |
|
a
Colorado corporation
By:__________________________
Name:_______________________
Title: _______________________ |
EXHIBIT A
NOTICE OF EXERCISE
TO:Lifeloc
Technologies, Inc.
Attention: President
1. The
undersigned hereby elects to purchase __________ shares of the Common Stock of Lifeloc Technologies, Inc. (the “Company”)
pursuant to the terms of the attached Warrant.
2. The
undersigned tenders herewith payment in full of $____________ for the purchase price of _____________ Shares, together with all applicable
transfer taxes, if any.
3. Please
issue a certificate or certificates representing said Shares in the name of the undersigned or in such other name as is specified below:
4. The
undersigned hereby represents and warrants that the aforesaid shares of Shares are being acquired for the account of the undersigned for
investment and not with a view to, or for resale, in connection with the distribution thereof.
Exhibit 99.1
Lifeloc Technologies Secures
$750,000 Financing to Support Growth and Innovation
Wheat Ridge, CO – January 7, 2025 – Lifeloc
Technologies, Inc. (OTC: LCTC), a leading provider of portable breath alcohol testing devices and related solutions, today announced the
successful closing of a $750,000 financing transaction through a subordinated debenture agreement with Diamond Bridge Capital, LP. The
financing also includes a warrant granting Diamond Bridge Capital the right to purchase up to 62,500 shares of Lifeloc’s common
stock at a strike price of $4.50 per share.
The subordinated debenture carries an annual interest rate of
8.25% and matures on December 31, 2030. The proceeds will be used to support the Company’s ongoing growth initiatives, fund research
and development efforts, including commercialization of Lifeloc’s SpinDx technology, and strengthen its financial position as it
continues to innovate in the field of alcohol detection and drug screening technologies. The financing agreement also provides for registration
rights, obligating the Company to file a registration statement with the SEC for the resale of the shares underlying the warrant issued
to Diamond Bridge Capital. This demonstrates Lifeloc’s commitment to transparency and its ongoing focus on creating value for shareholders.
“This financing marks an important step forward for Lifeloc
as we expand our capabilities and build on our legacy of innovation,” said Wayne Willkomm, CEO of Lifeloc Technologies. “The
commitment from Diamond Bridge Capital reflects confidence in our business model and future growth prospects. With these funds, we intend
to focus on bringing our SpinDx technology to market, expanding our industry-leading testing solutions into a new and growing market.”
“At the beginning of the computer age, data was gathered
and then sent to an outside service center for processing,” said Vern Kornelsen, Lifeloc’s Chief Financial Officer and largest
individual shareholder. “Later, with the evolution of the personal computer, data was gathered and processed locally. We believe
SpinDx™ will drive the same evolution in drug testing.”
Under current industry practice, testing samples are collected
and sent to an outside lab for analysis, with the results available a day later, sometimes several days later — at a usual cost
of upwards of $100 - $300 per test. Lifeloc expects SpinDx™ to make it possible to collect a sample and get the results locally
within minutes — at a cost expected to be in the range of $25 per test.
“There are efforts underway by others to capture this market,”
said Kornelsen. “However, SpinDx™ is unique in its ability to accurately and quickly process the sample and provide a quantitative
result versus the very few devices available today.”
Lifeloc’s extensive in-house testing has confirmed that
the technology “works.” The reader’s ability to produce accurate output using samples provided by Anschutz Medical Center
has been demonstrated, with next steps being the achievement of entire analysis within the disk followed by the SpinDx™ reader’s
subsequent placement with several beta test sites where it will be further validated. The company also intends to reduce the current prototype
reader’s size by 25% to make it more market friendly. Initially, Lifeloc expects the analytical disk to be produced and supplied
in small quantities by a large international microfluidics company. By the time the system is market ready, currently planned for Q4 of
2025, the Company plans to have acquired high volume automation equipment, and to have identified microfluidics-experienced personnel
such that Lifeloc is able to produce the disk in quantity in house.
Lifeloc has prepared the following forward-looking financial projections,
contemplating the potential effect of commercialization and market adoption of its SpinDx™ technology:
| | |
2024 (Projected) | | |
2025 (Projected) | | |
2026 (Projected) | | |
2027 (Projected) | | |
2028 (Projected) | |
| Sales | |
| 8,543,099 | | |
| 7,736,250 | | |
| 9,070,100 | | |
| 13,133,300 | | |
| 19,526,100 | |
| Cost of Goods Sold | |
| 5,036,244 | | |
| 4,641,750 | | |
| 5,351,358 | | |
| 7,617,314 | | |
| 11,129,876 | |
| Gross Profit | |
| 3,506,855 | | |
| 3,094,500 | | |
| 3,718,742 | | |
| 5,515,986 | | |
| 8,396,224 | |
| Operating expenses, including interest, before R&D | |
| 2,591,495 | | |
| 2,804,233 | | |
| 3,013,102 | | |
| 3,067,079 | | |
| 3,120,636 | |
| Profit before R&D | |
| 915,360 | | |
| 290,267 | | |
| 705,640 | | |
| 2,448,907 | | |
| 5,275,588 | |
| R&D | |
| 2,156,625 | | |
| 1,943,072 | | |
| 970,572 | | |
| 970,572 | | |
| 970,572 | |
| Profit (loss) before tax | |
| (1,241,265 | ) | |
| (1,652,805 | ) | |
| (264,932 | ) | |
| 1,478,335 | | |
| 4,305,016 | |
Lifeloc anticipates that its standing in the alcohol breathalyzer
market will provide an edge in introducing the SpinDx™ drug detection product to the market. After commercialization of the initial
SpinDx™ product, the company plans to begin teaming SpinDx™ with Lifeloc’s alcohol breathalyzer, with the goal of developing
a marijuana breathalyzer.
“The strategic funding we’re receiving from Diamond
Bridge Capital not only reinforces our financial stability but also enables us to stay at the forefront of technological advancements
in safety and public health,” Willkomm added. “We are excited about the opportunities this investment creates and look forward
to driving value for all our stakeholders.”
About Lifeloc Technologies
Lifeloc Technologies, Inc. (OTC: LCTC) is a trusted
U.S. manufacturer of evidential breath alcohol testers and related training and supplies for Workplace, Law Enforcement, Corrections and
International customers. Lifeloc stock trades over-the-counter under the symbol LCTC. We are a fully reporting Company with our SEC filings
available on our web site, www.lifeloc.com/investor.
Forward-Looking Statements
This
press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995,
including certain forward-looking financial projections that reflect the Company’s current expectations for its financial
performance in future periods. These projections include estimates of revenue, operating expenses, and other financial metrics and
are intended to provide investors with insights into the Company’s anticipated financial performance. The projections are
based on a variety of assumptions that the Company believes are reasonable as of the date hereof. However, they should not be relied
upon as a definitive representation of the Company's future results. These forward-looking financial projections may differ
materially from the Company’s actual performance and are subject to risks and uncertainties, including, but not limited to,
the possibility that the Company may fail to successfully commercialize its SpinDx™ technology within the contemplated time
frame or at all, that the Company may fail to achieve expected market adoption of its technology solutions, that the Company may be
unable to produce its solutions at the cost it currently anticipates, to offer its solution at the prices it currently expects, or
to achieve the profit margin it anticipates, and that the Company may fail to raise sufficient additional capital to complete its
research and development plans, in addition to those additional risks outlined in the Company's filings with the Securities and
Exchange Commission, including but not limited to those risk factors outlined in the Company’s annual report on Form 10-K.
Investors should not rely on these projections and should review them in the context of the Company’s overall financial
disclosures and risk factors.
Contact:
Investor Relations
Lifeloc Technologies, Inc.
Email: corporateinfo@lifeloc.com
Phone: (303) 431-9500
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