UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
Amendment Number One
[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
FOR THE YEAR ENDED DECEMBER 31, 1998
[ _ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______ TO ______
COMMISSION FILE NUMBER ____________________________
LIFESTREAM TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
NEVADA 82-0487965
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
201 LINDEN STREET, SUITE 302, FORT COLLINS, COLORADO 80524
(Address of principal executive offices)
(970) 416-9966
(Registrant's telephone number, including area code)
SECURITIES REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
- ------------------- -----------------------------------------
SECURITIES REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT:
COMMON STOCK, PAR VALUE OF $0.001
---------------------------------
TITLE OF CLASS
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes [ X ] No [ _ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year. $9,610.00
The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the closing price of $1.28 at which the
common equity was sold, as of March 31, 1999 was $11,714,000.
The number of shares outstanding of the registrant's common stock as of March
31, 1999 was 11,124,576.
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<PAGE>
AMENDMENT TO FORM 10-KSB
The Registrant will not be filing its Proxy Statement on or before April 30,
1999 and therefore amends its Form 10-KSB as provided herein.
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<PAGE>
LIFESTREAM TECHNOLOGIES, INC.
FORM 10-KSB/A INDEX
FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
INDEX
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PART III
<S> <C>
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act 4
Item 10. Executive Compensation 6
Item 11. Security Ownership of Certain Beneficial Owners and Management 9
Item 13. Exhibits, List and Reports on Form 8-K 11
Signatures 12
</TABLE>
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<PAGE>
Part III.
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act.
The current executive officers, directors and significant employees of the
Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Christopher Maus 46 Chairman, Chief Executive
Officer and Director
Michael Crane 43 Director(1)
William Gridley 70 Director(1)
John Trenary 54 Director(2)
Gerald Tschikof 55 President and Chief
Executive Officer(3)
Criss Sakala 37 Chief Financial Officer,
Secretary and Treasurer
James Moody 42 Chief Technology Officer
Jackson Connolly 51 Vice President - Development
Edward Kalin 51 Vice President - Sales
Charles Cannon III 56 Vice President - Sales
</TABLE>
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(1) Serves as a Member of the Audit Committee and the Compensation Committee
(2) Mr. Trenary resigned from the Board of Directors effective March 23, 1999
(3) Mr. Tschikof resigned from the Company effective March 23, 1999
Each director is elected to hold office for a two-year term or until the next
annual meeting of stockholders and until his/her successor is elected and
qualified. The officers of the Company serve at the direction of the Company's
Board of Directors.
The following sets forth certain biographical information with respect to the
directors and executive officers of the Company.
Christopher Maus, Chairman, formerly managed the manufacture and international
sales for eight different products in a medical industry niche market. Maus has
managed the development phase of the Company. He was previously a member of the
Board of Directors of Performance Coatings, Inc., a privately held company. Maus
is also a director and shareholder in Secured Interactive Technology Inc., an
affiliate.
Michael Crane, Director, is Chairman of the Dulles Greenway, Trip II (Toll
Investors Partnership II, L.P.). Crane is also president of Alchemy
International, a company devoted to solving cancer through passive chemistry. He
sits on the Board of Directors of Discflo Corporation in California. He is
Co-Chairman of Tara Wildlife Management & Services and Managing General Partner
of Resource and Land Partnership which establishes management systems of bottom
land hardwood forests in Louisiana and Mississippi. He is on the President's
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<PAGE>
Advisory Board for Shenandoah University and the Advisory Board for Transtech,
Inc., a transportation technology company. He also is a member of The Investor's
Circle, which promotes socially responsible living. Crane is also a shareholder
in Secured Interactive Technology, Inc.
William Gridley, Director, is Chairman of HYMEDIX, Inc., a company in the
business of developing medical and other products from a proprietary hydrogel
technology. He previously served as President of Brandywine Investors, Ind.,
Crescent Diversified, Ltd., and Competrol BVI, portfolio investment companies.
Additionally, Mr. Gridley was Executive Vice President of American Express Bank
and prior to that Vice President of Chase Manhattan Bank. He is currently Vice
Chairman of Tuskegee University, a position he has held since 1980. Mr. Gridley
earned a BA from Yale University. He has been a Board Member since February,
1996.
Criss Sakala, Chief Financial Officer, has over 14 years of financial and
management experience, most recently from Nypro Colorado, a subsidiary of Nypro,
Inc., and Deloitte & Touche LLP, an international accounting firm. Sakala is a
Certified Public Accountant and holds a BS degree in Business Administration
from Colorado State University.
James Moody, Chief Technology Officer, was President of Interlink and Technology
Solutions, Inc., a consulting firm specializing in Open VMS seminars and onsite
performance tuning. Moody graduated from Gonzaga University with a BS degree in
math and computer science. Moody is a shareholder of Secured Interactive
Technology, Inc.
Jackson Connolly, Vice President - Development, has 28 years of product design
and program management experience. Connolly was previously a partner with
Henshaw/Phillips Associates and The Enclosure Group as an Industrial Designer
and Program Manager for national computer and peripheral device clients. He has
received a BA/BS in Industrial Technology and Arts from California State
University - Fresno. He holds a California Lifetime Secondary Education
Credential and is a member of the Industrial Design Society of America. Connolly
is a shareholder of Secured Interactive Technology, Inc.
Edward Kalin, Vice President - Sales, joined the Company from Colgate Oral
Pharmaceuticals, where he served as regional sales manager/special markets.
Kalin is experienced in selling and promoting prescription products to pharmacy
departments of key retail trade accounts, drug wholesalers, managed healthcare
organizations and government agencies. Kalin also has successfully introduced
numerous new products to drug chains, wholesale drug and deep discount stores.
Kalin received a BS degree in Economics from the University of Maryland.
Charles Cannon III, Vice President - Sales, joined the Company after serving as
Director of Sales for Voice It Worldwide Inc., a leading manufacturer of digital
recording device, and was the National Sales and Marketing Manager for the
Formulations Division of Teldyne(TM) Water Pik. Cannon is experienced in a
variety of facets within the healthcare industry. He attended St. John's
University.
Section 16(a) Beneficial Ownership Reporting Compliance: Since the Company has
become a reporting company under the Exchange Act, the officers, directors and
10% shareholders have not filed any of the forms required to be filed under
Section 16 of the Exchange Act. The Company expects that the required forms will
be filed by May 15, 1999.
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<PAGE>
Item 10. Executive Compensation.
Cash Compensation:
- -----------------
Below is the aggregate annual remuneration of each of the highest paid persons
who are officers or directors of the Company during the Company's last three
years ended December 31, 1998, 1997, and 1996.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long Term Compensation
Awards Payouts
Securities
Other Restricted Underlying All
Name and Annual Stock Options LTIP Other
Principal Position Year Salary Bonus Compensation Awards(10) /SARs Payouts Compensation
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Christopher Maus 1998 $77,900(1) $100,000 (1) $0 -0- 400,000(3) -0- 18,000(11)
Chairman, Chief Executive 1997 $100,000(2) $0 $0 -0- -0- -0- -0-
Officer and Director 1996 $83,000 $0 $0 -0- -0- -0- -0-
Gerald Tschikof 1998 $50,000(4) $0 $0 20,000 -0- -0- 8,000(11)
Criss Sakala 1998 $37,100(5) $0 $0 30,000- 20,000 -0- -0-
Chief Financial Officer
James Moody 1998 $29,900(6) $0 $0 -0- 20,000 -0- -0-
Chief Technology Officer
Jackson Connolly 1998 $55,000(7) $0 $0 -0- -0- -0- -0-
Vice President - Development
Edward Kalin 1998 $61,300(8) $0 $0 18,000 20,000 -0- -0-
Vice President - Sales
Charles Cannon III 1998 $45,300(9) $0 $0 20,000 20,000 -0- -0-
Vice President - Sales
</TABLE>
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(1) In March 1996, the Company executed an employment contract with Mr.
Maus. As such Mr. Maus was entitled to a salary of $100,000 per year.
Additionally, in connection with a 1994 agreement, the Company paid Mr.
Maus a $100,000 bonus in July 1998 for successful completion of the
private placement stock offering completed in May 1998.
(2) Mr. Maus was entitled to a salary of $100,000 per year. Mr. Maus
elected to waive the salary for both 1996 and 1997 (expense was
recorded with an offset to contributed capital.)
(3) Includes (i) 200,000 shares of Common Stock issuable upon the exercise
of options granted to Mr. Maus on April 10, 1998 and exercisable for a
period of five years thereafter at an exercise price of $1.25 per
share. Includes (i) 100,000 shares of Common Stock issuable upon the
exercise of options granted to Mr. Maus on April 10, 1998 which options
are exercisable based upon the successful launch of Cholestron at an
exercise price of $3.00 per share any time prior to April 10, 2006; and
(ii) 100,000 shares of Common Stock issuable upon the exercise of
options granted to Mr. Maus on April 10, 1998 which options are
exercisable upon the Company achieving $1,000,000 in net profits at an
exercise price of $5.00 per share any time prior to April 10, 2006.
(4) Actual cash compensation was based on a start date of September 1,1998.
Mr. Tschikof resigned from the Company effective March 23, 1999.
(5) Actual cash compensation was based on a start date of July 15, 1998.
(6) Actual cash compensation was based on a start date of July 20, 1998.
(7) Actual cash compensation was based on a start date of January 1, 1998.
(8) Actual cash compensation was based on a start date of June 1, 1998.
(9) Actual cash compensation was based on a start date of May 18, 1998.
(10) Matching shares from employment agreements
(11) Compensation of shares for their Board of Director duties. Shares are
distributed at 2,000 shares per month served.
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<PAGE>
Employment Agreements and Other Compensation:
- ---------------------------------------------
The Company executed an employment agreement with its Chief Executive Officer in
March 1996. The agreement was established to renew annually if not terminated by
either party. The agreement states a salary of $100,000 per year and includes
six months of severance pay in the event of termination. This employment
agreement has been superseded as indicated below.
The Company required that new key employees sign an executive employment
agreement (the "Agreement"), in which the new employee was required to purchase
a quantity of the Company's common stock on the date of hire at $1.25 per share.
In addition, the Agreement contains a matching provision which states that for
every share purchased, one additional share is sold for a price equal to the par
value of the stock ($0.001). The Agreement provides for a "buy-back option"
which permits the Company to repurchase shares of stock sold under the Agreement
if the employee leaves the Company for any reason during the 48 to 60 months
following his hire, with the right expiring as to 20% to 25% of the stock each
year. The agreement also contains a stock option grant ranging from 20,000 to
40,000 shares of the Company's common stock at an exercise price of $1.25 per
share and with the same vesting period as for the shares of stock purchased
under the agreement.
For the nine months ended September 30, 1998, the Company executed this
Agreement with eight individuals. The individuals purchased a number of shares
ranging from 1,000 to 30,000, for a total of 109,000 shares (218,000 in the
aggregate including the matching provision). Additionally, an equal number of
shares of stock were sold at the stated par value of the stock.
On April 9, 1999, the Company executed employment agreements with substantially
all of its employees. The employment agreements contain terms, which specify a
reduced salary for a 90 day period and grant the employees options to purchase
92,600 shares of the Company's common stock at a per share price of $1.25. At
conclusion of this 90 day period, employees who remain in the employment of the
Company will receive a cash bonus based on a percentage of the employee's
annualized salary, totaling, in aggregate approximately $75,000. If the Company
cannot pay the bonus, then the employees would be entitled to receive options to
purchase, in aggregate, 74,000 shares of the Company's common stock at the
market price. Finally, the employment agreement contains terms, which, at the
option of the Company, permit the Company to buy back any shares of stock
acquired by the employee upon initial employment.
Compensation of Directors: See footnote 11 on page 6.
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Option/SAR Grants in the last Fiscal Year:
- -----------------------------------------
Stock Option Plan:
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Lifestream Technologies, Inc.
1993 Stock Option Plan
The Company has reserved 600,000 shares of its Common Stock for issuance upon
the exercise of options to be granted or available for grant under an Incentive
Stock Option Plan ("ISOP".) Options granted under the ISOP fall within the
meaning and conform to Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code".) Under the terms of the ISOP, all officers, employees,
consultants, and advisors of the Company will be eligible for ISOs. The Board of
Directors will determine in its discretion which persons will receive ISOs, the
applicable vesting provisions, the exercise term thereof. The terms and
conditions of each option grant may differ and will be set forth in the
optionee's individual incentive stock option agreement. As of March 31, 1999,
the Company has currently not issued any shares under the ISOP. The Company did
not grant any Stock Options to the named Executive Officers during Fiscal 1998
from this plan.
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<PAGE>
Lifestream Technologies, Inc.
1998 Stock Option Plan
Under the 1998 Plan, the Company has reserved 2,000,000 shares of Common Stock
for issuance pursuant to options or stock appreciation rights granted under the
1998 Plan. The 1998 Plan will be administered by either the Board of Directors,
or a committee of the Board of Directors, of the Company, including, without
limitation, the selection of the persons who will be granted Options under the
1998 Plan, the type of Options to be granted, the number of shares and the
Option price. The terms and conditions of each option grant may differ and will
be set forth in the optionee's individual incentive stock option agreement.
Officers, directors, key employees and consultants of the Company and its
subsidiaries are eligible to receive Non Qualified Stock Options under the 1998
Plan. Only officers, directors and employees of the Company who are employed by
the Company or by any subsidiary thereof are eligible to receive Incentive Stock
Options. As of December 31, 1998, the Company has issued the following shares
under the 1998 Option Plan to officers of the Company:
<TABLE>
<CAPTION>
Option/SAR Grants in last Fiscal Year
Number of Percent of
Securities Total Option/
Underlying SARs Granted Exercise of
Option/SARs To Employees Base Price Expiration
Name Granted (#) In Fiscal Year ($/Share) Date
- ---- ----------- -------------- --------- ----
<S> <C> <C> <C> <C>
Gerald Tschikof 40,000 23.53% $1.25 9/1/08
Criss Sakala 20,000 11.76% $1.25 7/15/08
James Moody 20,000 11.76% $1.25 7/20/08
Edward Kalin 20,000 11.76% $1.25 6/1/08
Charles Cannon III 20,000 11.76% $1.25 5/18/08
</TABLE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Number of
Securities
Underlying
Shares Options/SARs
Acquired Value At FY End (#)
On Realized Exerciseable/Expiration
Name Exercise(#) ($) Unexerciseable Date
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jackson Connolly 15,000 $73,110 -0- 01/02
</TABLE>
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<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the Company's
Common Stock beneficially owned as of March 31, 1999 by (a) each person who is
known by the Company to own beneficially or exercise voting or dispositive
control over 5% or more the Company's Common Stock on the record date; (b) each
of the Company's Officers and Directors; and (c) all Officers and Directors (and
nominees) as a group. A person is also deemed to be a beneficial owner of any
securities of which the person has the right to acquire beneficial ownership
within 60 days. Except as otherwise indicated the business address for the
persons set forth below is 201 Linden Street, Suite 302, Fort Collins, CO 80524.
At March 31, 1999, there were 11,124,576 shares of Common Stock of the Company
outstanding.
<TABLE>
<CAPTION>
Total
Beneficial Percent of
Title of Class Name and Address of Owner Ownership (1) Class (2)
- -------------- ------------------------- ----------- -----
<S> <C> <C> <C>
Common Shares Christopher Maus 2,132,200 (3) 19.17%
Common Shares Michael Crane 111,333 (4) 1.00%
Common Shares William Gridley 38,000 (5) 0.34%
Common Shares John Trenary 48,000 (6) 0.43%
Common Shares Gerald Tschikof 113,000 (7) 1.02%
Common Shares Criss Sakala 60,000 (8) 0.54%
Common Shares Edward Kalin 36,000 (9) 0.32%
Common Shares Charles Cannon 40,000 (10) 0.36%
Common Shares Jackson Connolly 36,000 (11) 0.32%
- ----------------------------------------------------------------------------------------------------------------
Total of all Officers and Directors 2,614,533 23.50%
========= ======
Other Beneficial Owners
-----------------------
Common Shares Timothy Mathers 1,352,000 12.15%
4901 S. Frankin Street
Englewood, CO 80110
Common Shares Michael Stranahan 739,000 6.64%
132 W. Second Ave., Suite A
Perrysburg, OH 43551
</TABLE>
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(1) Based upon information furnished to the Company by the principal security
holders or obtained from the stock transfer books of the Company. Other than
indicated in the notes, the Company has been informed that such persons have
sole voting and dispositive power with respect to their shares.
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<PAGE>
(2) Based on 11,124,000 shares of Common Stock outstanding as of March 31, 1999.
(3) Mr. Maus is Chairman, Chief Executive Officer, and a Director of the Company
and also acting Chairman of the Board of Directors of the Company. Includes (i)
200,000 shares of Common Stock issuable upon the exercise of options granted to
Mr. Maus on April 10, 1998 and exercisable for a period of five years thereafter
at an exercise price of $1.25 per share. Includes (i) 100,000 shares of Common
Stock issuable upon the exercise of options granted to Mr. Maus on April 10,
1998 which options are exercisable based upon the successful launch of
Cholestron at an exercise price of $3.00 per share any time prior to April 10,
2006; and (ii) 100,000 shares of Common Stock issuable upon the exercise of
options granted to Mr. Maus on April 10, 1998 which options are exercisable upon
the Company achieving $1,000,000 in net profits at an exercise price of $5.00
per share any time prior to April 10, 2006. Includes 18,000 shares granted at
2,000 shares per month to Directors for their Board of Director duties.
(4) Michael Crane is a director of the Company. Includes 18,000 shares issued at
the rate of 2,000 shares per month to Directors for their Board of Director
duties.
(5) Mr. Gridley is a director of the Company. Includes 18,000 shares issued at
the rate of at 2,000 shares per month to Directors for their Board of Director
duties. Includes 20,000 shares of stock issuable upon the exercise of options
granted to Mr. Gridley on February 1, 1996, which options are exercisable
through February 1, 2000 at an exercise price of $.20 per share. Such options
were granted Mr. Gridley upon being elected to the Board of Directors of the
Company.
(6) Mr. Trenary was a director of the Company. He resigned as a director of the
Company effective March 23, 1999. Includes 18,000 shares granted at 2,000 shares
per month to Directors for their Board of Director duties. Includes 30,000
shares of Common Stock for consulting services, issuable upon the exercise of
options exercisable immediately and through September 1, 2000 at a price of $.50
per share.
(7) Mr. Tschikof was President, Chief Executive Officer and a director of the
Company. He resigned as President, Chief Executive Officer and a director of the
Company effective March 23, 1999. Includes 8,000 shares granted at 2,000 shares
per month to Directors for their Board of Director duties. Includes 20,000
shares of common stock purchased under employment agreement as well as 20,000
share Company match as part of Mr. Tschikof's employment agreement. Includes
25,000 shares of common stock awarded as part of employment agreement. Includes
40,000 shares of Common Stock issuable upon the exercise of options exercisable
ratably over four years at a price of $1.25 per share.
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<PAGE>
(8) Mr. Sakala is Chief Financial Officer, Secretary and Treasurer to the Board
of Directors. Includes 20,000 shares of Common Stock issuable upon the exercise
of options exercisable ratably over five years at a price of $1.25 per share.
Includes 30,000 shares of common stock purchased under employment agreement as
well as 30,000 share Company match as part of Mr. Sakala's employment agreement.
(9) Mr. Kalin is Vice President - Sales. Includes 20,000 shares of Common Stock
issuable upon the exercise of options exercisable ratably over five years at a
price of $1.25 per share. Includes 18,000 shares of common stock purchased under
employment agreement as well as 18,000 share Company match as part of Mr.
Kalin's employment agreement.
(10) Mr. Cannon is Vice President - Sales. Includes 20,000 shares of Common
Stock issuable upon the exercise of options exercisable ratably over five years
at a price of $1.25 per share. Includes 20,000 shares of common stock purchased
under employment agreement as well as 20,000 share Company match as part of Mr.
Cannon's employment agreement.
(11) Mr. Connolly is Vice President - Development. Includes 20,000 shares of
Common Stock issued in exchange for services in 1996.
Item 13. Exhibits and Reports on Form 8-K.
(a) Exhibits are listed in the Exhibit Index on page [____] of
this Form 10-KSB, which is incorporated herein by reference.
(b) Reports on Form 8-K. No reports on Form 8-K were filed for the
quarter ended December 31, 1998.
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<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.
LIFESTREAM TECHNOLOGIES, INC.
BY: /s/ Christopher Maus
-------------------------------------------------
Chief Executive Officer and Chairman of the Board
DATE: April 30, 1999
--------------
BY: /s/ Criss Sakala
-------------------------------------------------
Criss Sakala, Secretary and Treasurer
DATE: April 30, 1999
--------------
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<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
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<S> <C>
3.1 Articles of Incorporation of Lifestream Technologies, Inc., dated April 6, 1979. (1)
3.2 Amended Articles of Incorporation of Lifestream Technologies, Inc., dated February 11, 1994 (1)
3.3 By-laws of Lifestream Technologies, Inc. (1)
10.1 Exchange Agreement and Plan of Reorganization dated February 11, 1994. (1)
10.2 Lease between Jacklin Land Company Limited Partnership and Lifestream Diagnostics, Inc., a wholly-owned subsidiary of
Lifestream Technologies, Inc. dated as of May 19, 1998. (2)
10.3 Employment Agreement between Criss Sakala and Lifestream Technologies, Inc. dated as of June 25, 1998. (2)
10.4 Form of Lifestream Technologies, Inc. Convertible Term Note dated December ___, 1998.
10.5 Convertible Note between Lifestream Technologies, Inc. and Gordon Rock dated January 26, 1998 in the principal amount of
$25,000.
10.6 Promissory Note between Britannia Holdings, Ltd. and Lifestream Technologies, Inc. dated March 18, 1998 in the principal
amount of $250,000.
10.7 Loan Agreement between Lifestream Technologies, Inc., Christopher Maus, Interactive Health Evaluation Systems, Inc., and
Britannia Holdings, Ltd. dated March 18, 1998.
10.8 Employment Agreement between Lifestream Technologies, Inc. and Ed Kalin dated April 29, 1998.
10.9 Employment Agreement between Lifestream Technologies, Inc. and Chuck Cannon dated April 29, 1998.
10.10 Employment Agreement between Lifestream Technologies, Inc. and James Moody dated July 24, 1998.
10.11 Employment Agreement between Lifestream Technologies, Inc. and Gerald Tschikof dated as of September 1, 1998.
10.12 Convertible Note between Lifestream Technologies, Inc. and Gordon Rock dated November 6, 1996 in the principal amount of
$50,000.
10.13 Convertible Note between Lifestream Technologies, Inc. and Gordon Rock dated March 4, 1997 in the principal amount of
$50,000.
16.1 Letter on Change in Certifying Accountant. (3)
21.1 Subsidiaries of the Registrant. (4)
27.1 Financial Data Schedule. (4)
</TABLE>
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(1) Filed as an Exhibit to the Company's Form 10-SB on December 26, 1996 and
incorporated herein by reference.
(2) Filed as an Exhibit to the Company's Form 10-QSB on August 14, 1998 and
incorporated herein by reference.
(3) Filed as an exhibit to the Company's Form 8-K on May 15, 1998 and
incorporated herein by reference.
(4) Filed as an exhibit to the Company's Form 10-KSB on April 15, 1999 and
incorporated herein by reference.
THIS CONVERTIBLE TERM NOTE HAS NOT BEEN REGISTERED UNDER ANY STATE SECURITIES
LAW OR THE SECURITIES ACT OF 1933, AS AMENDED ("FEDERAL ACT"). THIS CONVERTIBLE
TERM NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
HYPOTHECATED, SOLD, OR TRANSFERRED, NOR WILL ANY ASSIGNEE OR TRANSFEREE HEREOF
BE RECOGNIZED BY THE MAKER HEREOF AS HAVING ANY INTEREST IN THIS CONVERTIBLE
TERM NOTE, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO
THIS CONVERTIBLE TERM NOTE UNDER ANY APPLICABLE STATE LAW AND THE FEDERAL ACT OR
ANY OPINION OF COUNSEL SATISFACTORY TO THE MAKER HEREOF THAT SUCH REGISTRATION
IS NOT REQUIRED.
THIS CONVERTIBLE TERM NOTE IS SUBJECT TO THE TERMS AND CONDITIONS OF THAT
CERTAIN LIFESTREAM TECHNOLOGIES, INC. SUBSCRIPTION AGREEMENT OF EVEN DATE
HEREWITH BETWEEN LIFESTREAM TECHNOLOGIES, INC. AND HOLDER, AND HOLDER AGREES AND
UNDERSTANDS THAT IT SHALL BE BOUND BY THE PROVISIONS OF SUCH AGREEMENT.
LIFESTREAM TECHNOLOGIES, INC. CONVERTIBLE TERM NOTE
$_________________ December ___, 1998
1. PROMISE TO PAY
FOR VALUE RECEIVED, the undersigned LIFESTREAM TECHNOLOGIES,
INC., a Nevada corporation (the "Company"), HEREBY PROMISES TO PAY
____________________________ ("Purchaser"), on or before December 15, 2000, the
principal amount of _________________________ ($_____.__), together with
interest on such principal amount at the rates per annum provided below, which
payments of interest shall be made as provided below. Both principal and
interest hereunder are payable in lawful money of the United States of America
to Purchaser in immediately available funds.
<PAGE>
This Convertible Term Note ("the Note" or "this Note") shall
bear interest at a per annum interest rate equal to the prime rate as published
in the "Money Rates" tables of The Wall Street Journal on the first date of the
calendar quarter in which this Note is issued plus two percent (2%) and adjusted
on the first day of each subsequent calendar quarter in which the Note is
outstanding. The term of this Note shall extend until December 15, 2000 (the
"Term"). Interest shall be payable upon the earlier to occur if (i) the
conversion of the Note or (ii) the expiration of the Term of the Note. Subject
at all times upon Purchaser's rights of conversion herein, the Company may
prepay the Note at any time or times, in whole or in part, on not less than 30
days' prior written notice to Purchaser (the "Prepayment Notice"). Each
Prepayment Notice shall specify the principal amount of this Note and all other
outstanding Notes to be redeemed. Each prepayment of principal of this Note
shall be accompanied by the payment of all interest accrued and unpaid to the
prepayment date on the principal amount to be prepaid. In the event the Company
elects to prepay only a portion of the aggregate amount of outstanding Notes,
such prepayment shall be made on a pro rata basis to all holders of the Notes.
2. CONVERSION OF NOTE
Purchaser shall have conversion rights as follows (the
"Conversion Rights"):
2.1 Right to Convert. Subject to and upon compliance with the
provisions of this Section 2, at any time after the date hereof (the "Closing
Date") at the option of Purchaser, the Note, or any $1,000 multiple of the
principal amount thereof then outstanding, may be converted at the outstanding
principal amount hereof, or at such portion hereof, into fully paid and
non-assessable shares of common stock, $.001 par value, of the Company, and
stock of any other class or classes into which such common stock or any such
class may be hereafter changed or reclassified ("Common Stock"), at the initial
conversion rate of one (1) fully paid and non-assessable share of Common Stock
for each $2.50 amount of principal amount of the Note plus any accrued and
unpaid interest on such principal amount ("Conversion Rate") (which $2.50 per
share of Common Stock shall also be referred to hereinafter as the "Conversion
Price"); provided, however, that the Conversion Rate shall be subject to the
adjustments described below.
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<PAGE>
2.2 Mechanics of Conversion. Before Purchaser shall be
entitled to convert this Note into shares of Common Stock, Purchaser shall
surrender the Note to the Company at its offices at its address below (or at
such other address of which the Company shall have notified Purchaser in
writing), and shall give written notice to the Company at such offices that
Purchaser elects to convert the Note, or if less than the entire principal
amount of the Note is to be converted, the portion thereof to be converted. Such
notice shall also state the name or names (with address or addresses) in which
the certificate or certificates for shares of Common Stock issuable upon such
conversion shall be issued and shall contain such representations as may
reasonably be required by the Company to the effect that the shares to be
received upon conversion are not being acquired and will not be transferred in
any way that might violate the then applicable laws. As promptly as practicable
after the receipt of such notice and the surrender of the Note as aforesaid, the
Company shall issue and shall deliver to Purchaser at the address specified by
Purchaser in the written notice of conversion a certificate or certificates for
the number of full shares issuable upon the conversion of the Note (or portion
thereof) in accordance with the provisions of this Section 2 and cash as
provided in Section 2.3 hereof. Such conversion shall be deemed to have been
effected at the close of business on the date on which such notice shall have
been received at the office of the Company and the Note shall have been
surrendered as aforesaid (the "Conversion Date"), and at such time the rights of
Purchaser as obligee shall cease as to the portion of the Note which has been
converted, and the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become the holder or holders of record of the shares of
Common Stock represented thereby. All certificates issued upon the exercise of
the conversion shall contain a legend governing restrictions upon such shares
imposed by law and the Lifestream Technologies, Inc. Subscription Agreement of
even date herewith. Upon conversion of the Note in part only, the Company shall
execute and deliver to or on the order of Purchaser, at the expense of the
Company, a new note in principal amount equal to the unconverted portion of the
Note so converted.
2.3 Fractional Shares and Accrued Interest. No fractional
shares of Common Stock or scrip representing fractional shares shall be issued
upon conversion of the Note. Instead of any fractional shares which would
otherwise be issuable upon conversion of the Note or specified portions thereof,
the Company shall pay to Purchaser a cash adjustment in respect of such fraction
in an amount equal to such fraction multiplied by the Conversion Price per share
of Common Stock as of the Conversion Date.
2.4 Adjustment for Subdivisions or Combinations of Common
Stock. In the event the Company at any time or from time to time after the
Closing Date effects a subdivision or combination of its outstanding Common
Stock into a greater or lesser number of shares without a proportionate and
corresponding adjustment of the Conversion Rate, then and in each such event the
Conversion Rate shall be increased or decreased proportionately.
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<PAGE>
2.5 No Impairment. The Company will not, by amendment of its
Articles of Incorporation or Bylaws or through any 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 hereunder by the Company, but will
at all time in good faith assist in the carrying out of all the provisions of
this Section 2 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of Purchaser of the Note
against impairment.
2.6 Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Rate pursuant to this Section 2,
the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof, and in any event, prepare and
furnish to Purchaser a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is
based. The Company shall, upon the written request at any time of Purchaser,
furnish or cause to be furnished to Purchaser a like certificate setting forth
(a) such adjustments and readjustments, (b) the Conversion Rate at that time in
effect, and (c) the number of shares of Common Stock and the amount, if any, of
other property which at that time would be received upon the conversion of the
Note.
2.7 Notices of Record Date. In the event of any taking by the
Company of a record of the holders of any class of securities other than this
Note for the purpose of determining the holders thereof who are entitled to
receive any dividend or other distribution, any common stock equivalents or any
right to subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right, other
than a right to vote at a meeting of shareholders, the Company shall mail to
Purchaser at least ten (10) days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend, distribution or rights, and the amount and character of such
dividend, distribution or rights.
2.8 Reservation of Stock Issuable Upon Conversion. The Company
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion of
this Note such number of its shares of Common Stock as shall from time to time
be sufficient to effect the conversion of this Note, and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect such conversion, the Company will take such corporate action as may,
in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose.
3. LIQUIDATION
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<PAGE>
3.1 Liquidation. For purposes of this Section 3, a liquidation
shall be deemed to be: (a) an assignment by the Company of substantially all of
its assets for the benefit of creditors, or (b) any reorganization, composition,
arrangement, liquidation or other debtor relief pursuant to any federal or state
law or through the action of any trustee or receiver of substantially all of the
assets of the Company, or (c) the Company's sale of all or substantially all of
its assets or the acquisition of the Company by another entity by way of merger
or consolidation resulting in the exchange of the outstanding shares of the
Company for securities or consideration issued, or caused to be issued, by the
acquiring corporation or its parent or subsidiary (the transactions described in
this Section 3.2(c) herein defined as "Sale or Merger"). The parties acknowledge
and agree that the registration of stock by the Company under the Securities Act
of 1933 shall not constitute a liquidation under this Section 3.
3.2 Liquidation Rights. In the event of liquidation (as
described in Section 3.1), dissolution or winding up of the Company (a
"Liquidation Event"), Purchaser shall at its election, be entitled to receive in
exchange for and in redemption of the Note or any portion of the principal
amount thereof then outstanding, prior and in preference to any distribution of
any of the assets or surplus funds of the Company to the holders of the Common
Stock or any preferred class of stock of the Company by reason of their
ownership thereof, an amount equal to the outstanding principal amount or of
such portion thereof plus all accrued but unpaid interest thereon.
3.3 Payments. All of the amounts to be paid to Purchaser under
this Section 3 shall be paid or set apart for payment before the consummation of
a Liquidation Event, or before the payment or setting apart for payment of any
amount for, or the distribution of any assets of the Company to the holders of
the Common Stock or any class of preferred stock in connection with any
Liquidation Event. If the assets or surplus funds to be distributed to the
holders of all notes, including this Note, are insufficient to permit the
payment to such holders of their full preferential amount, the assets and
surplus funds legally available for distribution shall be distributed ratably
among the holders of the notes and this Note in proportion to the full
preferential amount each such holder is otherwise entitled to receive.
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<PAGE>
4. EVENTS OF DEFAULT AND REMEDIES
4.1 Events of Default. The following shall constitute Events
of Default (for purposes of this Section 4, the term "Company" shall include
Lifestream Technologies, Inc. and any majority-owned subsidiary of Lifestream
Technologies, Inc.):
(a) default in the due and punctual payment of the principal
of the Note, or any interest accrued thereon, when and as such payment shall
become due and payable, whether at maturity or by acceleration or otherwise if
such payment is not made within five (5) days or written notice given to the
Company by Purchaser specifying such default; or
(b) any material representation or warranty of the Company in
this Note that is untrue in any material respect as of the date made; or
(c) default in the performance or observance of any covenant
or agreement of the Company in this Note and the continuance of such default for
a period of thirty (30) days after there has been given to the Company by
Purchaser written notice specifying such default and requiring that it be
remedied, provided that no such default shall be deemed to occur if such default
may not be cured within thirty (30) days, within said period the Company has
commenced and thereafter diligently and continuously pursues to cure such
default, and the default is cured, in any event, within ninety (90) days; or
(d) actual acceleration of the maturity of indebtedness upon
the occurrence of a default under any bond, note, debenture, lease or other
evidence of indebtedness of the Company (other than the Note and similar notes
of like tenor issued in the same offering as the Note) or under any indenture or
other instrument under which any such evidence of indebtedness has been issued
or by which it is governed in an aggregate amount of at least $100,000.00,
provided, however, that, (i) if such acceleration is rescinded, then the Event
of Default hereunder by reason of such default shall be deemed likewise to have
been thereupon cured or waived, or (ii) if such accelerated indebtedness in the
aggregate does not exceed $100,000.00 or if such acceleration is being contested
by the Company in good faith, then such acceleration shall not be deemed to be
an Event of Default; or
(e) insolvency (as defined in the Uniform Commercial Code as
in effect from time to time) of the Company; the making of an assignment for the
benefit of creditors; the filing or acquiescence in the filing of a petition
instituting any state or federal insolvency, bankruptcy, reorganization,
arrangement, composition, or other debtor relief proceeding; the petition of or
application to any tribunal for a receiver or trustee for itself or for any
substantial part of any of its property; the commencement of any proceeding
under any reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any federal or state jurisdiction, whether now or
hereafter in effect, or the commencement against the Company of any such
proceeding or the appointment of a receiver or any trustee for the Company or
any part of the Company's property; or
(f) the entry of any judgment against the Company or the
attachment, seizure of, or levy against the Company with respect to a claim for
any amount in excess of $100,000.00 that remains unpaid, unstayed, undischarged,
unbonded, or undismissed for a period of thirty days; or
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<PAGE>
(g) the filing of record of any notice of lien, levy or
assessment with respect to any or all of the Company's assets by the United
States Government, or any department, agency or instrumentality thereof, or by
any state, county, municipal or other governmental authority, or the automatic
imposition of a lien, whether coate or otherwise, because of failure to pay any
taxes or debt owing at any time hereafter to any one or more of such entities,
upon any or all of the Company's assets, which lien is not paid on the payment
date thereof unless such lien, levy or assessment is contested in good faith and
for which adequate reserves have been maintained; or
4.2 Acceleration of Maturity, Rescission and Annulment.
(a) If an Event of Default occurs and is continuing then and
in any such case Purchaser may declare the outstanding principal amount of the
Note to be due and payable immediately, without advance notice to the Company,
and, upon any such declaration, the outstanding principal amount of the Note,
and the interest accrued thereon, together with all costs of collection, shall
immediately become due and payable.
(b) At any time after any declaration of acceleration has been
made as provided in this Section 4.2, Purchaser may, by written notice to the
Company, rescind and annul such declaration and its consequences. No such
rescission shall affect any subsequent default or impair any right consequent
thereon.
4.3 Suits for Enforcement. In case any one or more Events of
Default shall have occurred and be continuing, Purchaser may proceed to protect
and enforce Purchaser's rights either by suit in equity or by action at law, or
both, whether for the specific performance of any covenant or agreement
contained herein or in aid of the exercise of any power granted herein or
proceed to enforce the payment of the Note or to enforce any other legal or
equitable right of Purchaser.
4.4 Remedies Cumulative. No remedy herein conferred upon
Purchaser is intended to be exclusive of any other remedy and each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or otherwise.
4.5 Remedies Not Waived. No course of dealing between the
Company and Purchaser or any delay in exercising any rights hereunder shall
operate as a waiver by Purchaser.
5. AMENDMENT AND WAIVER
5.1 Procedure for Amendment and Waiver. Any term, covenant,
agreement or condition hereof may be amended by the Company and Purchaser or
compliance therewith may be waived (either generally or in a particular instance
and either retroactively or prospectively) by Purchaser; provided, however, that
any such amendment shall be effective only if made in writing and executed by
both the Company and Purchaser, and any such waiver shall be effective only if
made in writing and executed by Purchaser; and, further provided that no such
waiver shall extend to or affect any obligation which is not expressly so
waived.
6. MISCELLANEOUS
6.1 Successors and Assigns and Bound by Covenants. All
covenants, stipulations, promises and agreements herein contained shall bind and
inure to the benefit of the Company and Purchaser and their respective permitted
successors and assigns.
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<PAGE>
6.2 Severability. If any one or more of the provisions of this
Note shall be determined to be invalid, illegal or unenforceable in any respect
for any reason, the validity, legality and enforceability of any such provision
in every other respect and the remaining provisions hereof shall not in any way
be impaired.
6.3 Headings. The headings in this Note are inserted for
convenience only and do not constitute a part of this Note.
6.4 Governing Law. This Note shall be construed in accordance
with and governed by the laws of the State of Colorado.
6.5 Loss, Theft, Destruction or Mutilation of Notes. Upon
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of the Note and, in the case of any such loss, theft
or destruction, upon receipt of any indemnity bond in such reasonable amount as
the Company may determine or, in the case of any such mutilation, upon surrender
and cancellation of the Note, the Company shall make and deliver, in lieu of
such lost, stolen, destroyed or mutilated Note, a new Note of like tenor and
unpaid principal amount and dated as of the date to which interest has been paid
on the Note so lost, stolen, destroyed or mutilated.
6.6 Survival of Covenants, Representations and Warranties. All
representations, warranties, covenants and agreements of the Company contained
in the Note shall survive the execution and delivery of the Note and shall
continue in full force and effect thereafter.
6.7 Assignment. Subject to applicable securities laws,
Purchaser may assign or sell or otherwise convey the Note or any and all of the
rights and interests inuring to its benefit hereunder with the consent of the
Company, which consent may not be unreasonably withheld. In the event that, with
the consent of the Company, Purchaser proposes to assign the Note to more than
one person to hold same as tenants-in-common or any similar joint ownership, the
provisions of the Note shall be modified by agreement of the Company and
Purchaser to reflect such proposed assignment, including a modification of
Section 5 hereof to provide for amendment or waiver by the Company and the
holders of two-thirds (2/3) of the outstanding principal amount.
6.8 Interest Rights Preserved. A Note delivered upon transfer
of or in exchange for or in lieu of this Note shall carry all the rights to
interest accrued and unpaid, and to accrue, that were carried by this Note, and
each such Note shall be so dated that neither gain nor loss in interest shall
result from such transfer, exchange or substitution.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be executed in
its corporate name, all as of the ___ day of _____________, 1998.
[CORPORATE SEAL] LIFESTREAM TECHNOLOGIES, INC.
Attest:_________________________ By:_______________________________
Title: Title:
201 Linden Street
Suite 302
Fort Collins, Colorado 80524
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LIFESTREAM TECHNOLOGIES, INC.
CONVERTIBLE NOTE
CONTENTS
1. Interest
2. Payment
(a) Interest
(b) Principal
(c) Manner and Place of Payment
3. Prepayment
4. Conversion Rights
(a) Right to Convert
(b) Fractional Shares
(c) Capital Adjustments
5. Default
6. Remedies upon Default
(a) Acceleration
(b) Remedies at Law and in Equity
7. Attorneys' Fee, Costs, and Other Expenses
8. Assignment; Obligations Binding on Successors
9. Notices
10. Governing Law
11. Headings
12. Entire Agreement
13. Waiver
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE
OFFERED, SOLD, TRANSFERRED, ENCUMBERED, OR OTHERWISE DISPOSED OF EXCEPT UNDER
SATISFACTION OF CERTAIN CONDITIONS. INFORMATION CONCERNING THESE RESTRICTIONS
MAY BE OBTAINED FROM THE CORPORATION OR ITS LEGAL COUNSEL. ANY OFFER OF
DISPOSITION OF THESE SECURITIES WITHOUT SATISFACTION OF SAID CONDITIONS W]LL BE
WRONGFUL AND WILL NOT ENTITLE THE TRANSFEREE TO REGISTER OWNERSHIP OF THE
SECURITIES WITH THE CORPORATION.
<PAGE>
CONVERTIBLE NOTE
$25,000 January 26, 1998
Sandpoint, Idaho
Lifestream Technologies, Inc., a Nevada corporation (the "Maker"),
promises to pay to the order of Gordon Rock (the "Holder") the principal sum of
Twenty Five Thousand Dollars ($25,000) (the "Principal Sum") together with
interest, upon the terms and conditions provided in this Convertible Note (the
"Note").
1.
Interest
The unpaid balance of the Principal Sum shall bear simple interest at a
rate equal to prime rate, plus Two percent (2%) to Gordon Rock from the date of
this note until such balance is paid in full or converted to common stock as
provided for. For calculation purposes the interest rate will be adjusted on the
first business day of each calendar quarter.
2.
Payment
(a) Interest. Maker shall pay accrued interest to Holder on the last
day of each calendar quarter (the "Interest Payment Date") beginning with the
first Interest Payment Date which shall not be more than Six (6) months from
date of this Note; except that all accrued interest shall be paid at the time
the principal amount is paid in full.
(b) Principal. Maker shall pay Holder the outstanding Principal Sum on
the date that is Two (2) years from the date hereof.
(c) Manner and Place of Payment. All payments shall be made by checks
drawn on Maker's corporate bank account and shall be in the lawful currency of
the United States of America. All payments shall be made to Holder at the
address specified in Section 9 or at such other place as Holder may specify in
writing.
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<PAGE>
3.
Conversion Rights
(a) Right to Convert. At any time prior to December 31, 2000, the
Holder has the right, at its option, to convert the Note or any portion thereof,
into shares of Maker's $.001 par value common stock (the "Common Stock") by
giving a written notice that it is exercising its rights hereunder and
surrendering the Note or a portion of the note for that purpose to the Maker and
executing a stock subscription agreement representing the number of shares being
converted to (see: Exhibit A). The number of shares of common stock of Maker
that Holder shall be entitled to receive upon such conversion shall be
determined by dividing the unpaid balance of the Principal Sum by One Dollar
($1.00) (the "Conversion Factor"). Upon conversion, the shares will be subject
to a Registration Rights Agreement attached hereto as Exhibit B. All accrued and
unpaid interest at the time of the conversion shall be paid in cash and shall
not be treated as part of the unpaid balance of the Principal Sum.
(b) Fractional Shares. The Maker shall not be required to issue
fractional shares upon conversion of the Note, but shall pay in cash, in lieu of
such fractional interest, an amount equal to the difference between the unpaid
balance of the Principal Sum and the product of the Conversion Factor times the
number of whole shares determined under Paragraph 4(a).
(c) Capital Adjustments. If this Note is converted, as provided in
Paragraph 4.(a), subsequent to any share dividend, split-up, recapitalization,
merger, consolidation, combination or exchange of shares, separation,
reorganization, or liquidation ("Capital Adjustments") occurring after the date
hereof, as a result of which shares of any class shall be issued in respect of
outstanding Common Stock or Common Stock shall be changed into the same or a
different number of shares of the same or another class or classes, the
Purchaser shall receive the aggregate number and class of shares which, if this
Note had been converted at the date hereof ("Deemed Conversion") and Common
Stock received upon the Deemed Conversion had not been disposed of, the
Purchaser would be holding, at the time of actual conversion, as a result of the
Deemed Conversion and such Capital Adjustments.
4.
Default
The term "Default" as used in this Note means any of the following
events:
If Maker, at any time fails to pay any interest payment due on this Note within
45 days of the time that it receives notice from Holder that said payment is
past due, or Maker fails to pay any payment of principal due on this Note within
15 days of the time that it receives notice from Holder that such payment is
past due; or
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<PAGE>
(ii) If Maker admits, in writing, its inability to pay its debts as
they become due.
5.
Remedies upon Default
(a) Acceleration. Upon Default, Holder may, by written notice to Maker,
accelerate the due date of the Principal Sum owing under this Note. Such
accelerated amounts shall become immediately due and payable upon receipt of
such notice by Maker.
(b) Remedies at Law and in Equity. If Holder accelerates the amounts
owing under this Note, Holder shall have the right to pursue any or all remedies
available at law or in equity, including, but not limited to, the right to bring
suit on the Note.
6.
Attorneys' Fees, Costs and Other Expenses
Maker agrees to pay all costs and expenses which Holder may incur in
enforcing this Note upon Default, including, but not limited to, reasonable
attorneys' fees, expenses and costs incurred in action undertaken with respect
to this Note, or any appeal of such an action.
7.
Assignment; Obligations Binding on Successors
Maker may not assign any of its rights, duties, or obligations under
this Note without the prior written consent of Holder. This Note shall bind
Maker and its successors and assigns. All rights and powers established in this
Note shall benefit Holder and Holder's successors and assigns; provided,
however, that all transfers of this Note by Holder are subject to the
restrictions described in the legend at the end of this Note.
8.
Notices
All notices, requests, consents, payments and other communications
required or provided for herein to any party shall be in writing, and shall be
deemed to be given when: (a) delivered in person; (b) sent by first class
registered or certified mail with postage prepaid; (c) delivered by overnight
receipted courier service; or (d) except with respect to payments, sent by
confirmed facsimile transmission. Notices shall be sent to the addresses set
forth below, or to such other addresses as may hereafter be designated in
writing by the party:
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<PAGE>
(i) If to the Maker:
Christopher Maus, President
Lifestream Technologies, Inc.
515 Pine St. Suite 200
Sandpoint, Idaho 83864
(ii) If to Holder:
Gordon Rock
5820 Mercer Way
Mercer Island, Washington 980404
9.
Governing Law
This Note will be construed, and the rights, duties and obligations of
the parties will be determined, in accordance with the laws of the State of
Nevada.
10.
Headings
Headings used in this Note have been included for convenience and ease
of reference only, and will not in any manner influence the construction or
interpretation of any provision of this Note.
11.
Entire Agreement
This Note and the Convertible Notes Subscription Agreement represent
the entire understanding of the parties with respect to the transaction giving
rise to the issuance of the Note. There are no other prior or contemporaneous
agreements, either written or oral, between the parties with respect to this
subject.
12.
Waiver
No right or obligation under this Note will be deemed to have been
waived unless evidenced by a writing signed by the party against whom the waiver
is asserted, or by the party's duly authorized representative. Any waiver will
be effective only with respect to the specific instance involved, and will not
impair or limit the right of the waiving party to insist upon strict performance
of the right or obligation in any other instance, in any other respect, or at
any other time.
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<PAGE>
MAKER: Lifestream Technologies, Inc.
By: _________________________________
Christopher Maus
Its President
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<PAGE>
EXHIBIT A
LIFESTREAM TECHNOLOGIES, INC.
CONVERTIBLE NOTE SUBSCRIPTION AGREEMENT
CONTENTS
<PAGE>
1. Subscription
2. Conditions of Subscription
3. Representations and Warranties of Purchaser
a. Nonregistration
b. Citizenship, Residence, Etc.
c. Understanding of Risks
d. Ability to Bear Risk and Afford Loss
e. Independent Investigation and Advice
f. Investment Intent
g. Reliance by Company
h. Legend on Certificates
i. Accredited Investor
4. Transferability
5. Revocation
Representations and Warranties of the Company 6.
a. Corporate Existence and Power
b. Corporate Authorization
c. Capital Structure
d. Financial Condition
e. Litigation
f. Disclosure
g. Government Consent
h. Use of Proceeds
6. Closing
7. Miscellaneous
8. Indemnification
9. Signatures
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<PAGE>
January 26, 1998
Mr. Christopher Maus, President
Lifestream Technologies, Inc.
515 Pine St, Suite 200
Sandpoint, Idaho
Dear Sir:
The undersigned purchaser ("Purchaser") delivers this convertible note
subscription agreement (the "Agreement") in connection with the offering by
Lifestream Technologies, Inc., a Nevada corporation (the "Company"), of up to
$25,000, principal amount of the Company's "Convertible Notes" which are in the
aggregate convertible into a total of 25,000 shares of the Company's common
stock (the "Notes"). Purchaser acknowledges that it has received and reviewed
the various disclosure documents and the corporate business plan attached hereto
describing the Company and the facts surrounding that the offering (the
"Disclosure Documents:).
1.
Subscription
Subject to the terms and conditions of this Agreement, Purchaser
irrevocably subscribes for and agrees to purchase a Note from the Company in the
principal amount of Twenty Five Thousand Dollars ($25,000) and tenders herewith
a check in the amount of $25,000 (the "Funds") payable to the order of the
Company, to be held by the Company until the conditions described in Section 7
of this Agreement have been met.
2.
Conditions of Subscription
Purchaser understands and agrees that:
a. The Company is not bound by this Agreement until it accepts the
Agreement by signing in the space provided on the last page hereof; and
b. The Note to be issued and delivered on account of this subscription
will only be issued in the name of the Purchaser.
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<PAGE>
3.
Representations and Warranties of Purchaser
Purchaser represents, warrants and agrees as follows:
a. Nonregistration. Purchaser understands that the Note is being
offered and sold under an exemption from registration provided for in Regulation
"D" under the Securities Act of 1933 (the "Act") and similar exemptions from the
provisions of applicable state securities or "Blue Sky" laws. Purchaser
understands that this transaction has not been scrutinized by the United States
Securities and Exchange Commission or by any administrative agency charged with
the administration of the securities laws of any state, because of the small
number of persons solicited and the private aspects of the offering, and that
all documents, records and books pertaining to this investment have been made
available to Purchaser and Purchaser's representatives.
b. Citizenship, Residence, Etc. Purchaser (i) is a citizen of the
United States, and at least 21 years of age, and (ii) is a bona fide resident
and domiciliary (not a temporary or transient resident) of the state specified
as part of Purchaser's residence address at the end of this Agreement, and has
no present intention of becoming a resident of any other state or jurisdiction.
c. Understanding of Risks. Purchaser understands and has fully
considered for purposes of this investment the risks of the investment,
restrictions on transferability of the Notes, and the stock issuable upon
conversion thereof, and the matters set forth in the Disclosure Documents,
including but not limited to the following: (i) the Notes, and the underlying
common stock subject to issuance upon conversion thereof, are a speculative
investment which involve a high degree of risk of loss by Purchaser of the
investment therein; and (ii) there are substantial restrictions on the
transferability of, and there may be no public market for, the Notes and the
underlying common stock subject to issuance upon conversion thereof, and
accordingly, it may not be possible for Purchaser to liquidate this investment
in case of emergency.
d. Ability to Bear Risk and Afford Loss. Purchaser is able (i) to bear
the economic risk of this investment for an indefinite period, and (ii) to
afford a complete loss of the investment.
e. Independent Investigation and Advice. Purchaser, in making the
decision to purchase the Note subscribed for hereunder, has relied solely upon
Purchaser's independent investigations and the advice of Purchaser's
representatives and advisors, and Purchaser and any such advisors have been
given the opportunity to ask questions of, and to receive answers from, persons
acting on behalf of the Company concerning the Company and the terms and
conditions of this offering, and to obtain any additional information, to the
extent such persons possess such information or can acquire it without
unreasonable effort or expense, necessary to verify the accuracy of the
information set forth in the Disclosure Documents.
f. Investment Intent. Purchaser is acquiring the Note subscribed for
hereunder, and will acquire any common stock issuable upon conversion thereof,
-8-
<PAGE>
in good faith and solely for Purchaser's own personal account, for investment
purposes only, and not with a view to or for the resale, distribution,
subdivision or fractionalization thereof. Purchaser has no contract,
undertaking, understanding, agreement or arrangement, formal or informal, with
any person to sell, transfer or pledge to any person the Note, or any part
thereof, and Purchaser has no present plans to enter into any such contract,
undertaking, agreement or arrangement. Purchaser understands the legal
consequences of the foregoing representations and warranties to mean that
Purchaser must bear the economic risk of the investment for an indefinite period
of time because the Note and the underlying shares of common stock issuable upon
conversion thereof have not been and will not be registered under applicable
securities laws, and, therefore, cannot be sold unless they are subsequently
registered under such laws or an exemption from such registration is available.
The Notes, and common stock issuable under conversion of the Notes, shall not be
transferable, except upon the following conditions: The Purchaser shall, prior
to any transfer (which term, as used herein, includes, without being limited to,
any sale, offer, pledge or encumbrance) or attempted transfer of such Note or
stock, give written notice to the Company of Purchaser's intention to effect
such transfer. Each such notice shall describe the manner and circumstance of
the proposed transfer in sufficient detail, and shall contain an undertaking by
the person giving such notice to furnish such other information as may be
required, to enable legal counsel designated by such Purchaser and satisfactory
to the Company and its counsel to render a legal opinion satisfactory in form to
the Company and its counsel to the effect that the proposed transfer may be
effected without registration of such stock under any applicable securities
laws. Upon receipt of such a legal opinion, such Note or stock shall be
transferred in accordance with the terms of the notice delivered by Purchaser to
the Company, with any Note or stock certificate issued upon such transfer to
bear the restrictive legend set forth in Paragraph 4.h, unless in the opinion of
such counsel such legend is not required. The Purchaser shall not be entitled to
transfer such Note or stock until receipt of such a legal opinion by the
Company, or until receipt of a "no-action" letter or similar interpretive
opinion from the staff of each appropriate securities agency, satisfactory in
form to the Company, or until registration of such securities under applicable
securities laws has become effective.
g. Reliance by Company. Purchaser understands that the Company is
relying on the truth and accuracy of the representations, declarations and
warranties made in this Agreement in offering the Note for sale to Purchaser
without having first registered the same under the Act.
h. Legend on Certificates. Purchaser consents to the placement of a
legend on the Note subscribed for hereunder, and on the certificate(s) for any
shares of common stock issued upon conversion thereof, in substantially the
following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, OR ANY STATE SECURITIES LAWS, AND
MAY NOT BE OFFERED, SOLD, TRANSFERRED, ENCUMBERED, OR OTHERWISE DISPOSED OF
EXCEPT UPON SATISFACTION OF CERTAIN CONDITIONS. INFORMATION CONCERNING THESE
RESTRICTIONS MAY BE OBTAINED FROM THE CORPORATION OR ITS LEGAL COUNSEL. ANY
OFFER OR DISPOSITION OF THESE SECURITIES WITHOUT SATISFACTION OF SAID CONDITIONS
WILL BE WRONGFUL AND WILL NOT ENTITLE THE TRANSFEREE TO REGISTER OWNERSHIP OF
THE SECURITIES WITH THE CORPORATION:"
-9-
<PAGE>
i. Accredited Investor. Purchaser is an "Accredited Investor" as such
term is defined in Regulation D promulgated by the Securities and Exchange
Commission. specifically, Purchaser qualifies under the category or categories
of "Accredited Investor" indicated below (PURCHASER MUST INDICATE THE APPLICABLE
CATEGORY OR CATEGORIES BY INITIALING IN THE SPACE(S) PROVIDED):
<TABLE>
<CAPTION>
<S> <C>
_________ (initial) (i) Purchaser is a director or executive officer of the Company;
_________ (initial) (ii) Purchaser is a natural person and has an individual net worth, or
a joint net worth with Purchaser's spouse (if any), at this time in
excess of $1 million;
_________ (initial) (iii) Purchaser is a natural person and has had an individual income in
excess of $200,000 in each of 1995 and 1996, or joint income with
Purchaser's spouse (if any) in excess of $300,000 in each of
those years, and has a reasonable expectation of reaching the
same income level in 1997.
</TABLE>
The foregoing representations and warranties and undertakings are made
by Purchaser with the intent that the Company rely on then in determining
Purchaser's suitability as a purchaser of a Note hereunder, and are true and
accurate as of the date of this Subscription Agreement and as of the date, of
issuance of the Notes, and shall survive such issuance. If in any respect, such
representations and warranties shall not be true and accurate prior to the
issuance of the Note to Purchaser, Purchaser shall give immediate written notice
of such fact to the Company, specifying which, presentations and warranties are
not true and accurate and in what respects they are not accurate.
4.
Transferability
Purchaser agrees not to transfer or assign this Agreement, or any
interest herein, and any such transfer shall be void.
5.
Revocation
Purchaser may not cancel, terminate, or revoke this Agreement, or any
agreement of Purchaser made hereunder, and this Agreement shall survive the
death or disability of Purchaser and shall be binding upon Purchaser's heirs,
executors, administrators, successors, and assigns.
-10-
<PAGE>
6.
Representations and Warranties of the Company
Upon acceptance hereof, the company represents and warrants as follows:
a. Corporate Existence and Power. The Company is a corporation duly
organized and existing and in good standing under the laws of the State of
Nevada, and has the corporate power to own its properties and to carry on its
business as now being conducted and as proposed to be conducted; and the Company
has the corporate power and authority to enter into this Agreement and to issue
the Note.
b. Corporate Authorization. The making and performance by the Company
of this Agreement and the Note has been duly authorized by all necessary
corporate action and will not violate any provision of its articles of
incorporation or bylaws, or result in the breach of or require any consent
under, or result in the creation of any lien upon any property or assets of the
Company pursuant to, any agreement to which the Company is a party or by which
the Company or its property may be bound; and this Agreement and the Notes
constitute valid and legally binding obligations of the Company, enforceable in
accordance with their respective terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally, and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies.
c. Capital Structure.
(i) The authorized capital stock of the Company consists of
50,000,000 total shares of $.001 par value common stock, of which 8,041,500
shares are issued and outstanding, and 5,000,000 shares of $.001 par value
preferred shares, of which are no shares issued or outstanding. All outstanding
shares are validly issued, fully paid and nonassessable.
(ii) There are outstanding options, warrants, rights,
convertible securities or other contracts obligating the Company to issue and
transfer from treasury of its capital stock in the amount of 560,667 shares of
common stock.
(iii) The shares of Common Stock issuable to Purchaser upon
conversion of the Note will be validly issued, fully paid and nonassessable.
d. Financial Condition. The financial statements furnished to the
Purchaser fairly represent the financial condition of the Company as of the
dates of such financial statements and the results of their operations for the
periods ending on said dates.
e. Litigation. Except as set forth in the Disclosure Documents, there
are no suits or proceedings pending, or to the knowledge of the Company
threatened, against the Company that, if adversely determined, would have a
material adverse effect on the financial condition or business of the Company.
f. Disclosure. The Company has provided Purchaser with all the
information reasonably available to it without undue expense that such Purchaser
has requested for deciding whether to purchase the Note and all information that
the Company believes is reasonably necessary to enable such Purchaser to make
such decision. To the best of the Company's knowledge after reasonable
investigation, neither this Agreement nor any other written statements or
certificates made or delivered in connection herewith contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements herein or therein not misleading.
g. Government Consent. No consent, approval or authorization of, or
designation, declaration or filing with, any governmental authority on the part
of the Company is required in connection with the valid execution and delivery
of this Agreement, or the offer, sale or issuance of the Note or common stock
issuable thereunder, or the consummation of any other transaction contemplated
hereby.
h. Use of Proceeds. The Company presently intends to use the funds
received from the sale of the Notes for working capital purposes. Actual
application of such funds shall be determined by the Company's Board of
Directors in the exercise of its responsibilities. a.
-11-
<PAGE>
7.
Closing
The following terms shall govern the acceptance of this subscription,
payment for the Note, and closing of Purchaser's purchase of the Note:
a. The Company may not accept this subscription until it has received a
copy of the original convertible note marked paid in full, accompanied by a
satisfactorily completed and executed Convertible Note Subscription Agreement,
in the same form as this Agreement, from the Holder of the Convertible Note.
b. The Company may, but shall not be obligated to, effect the closing
of this offering (the "Closing") by simultaneously accepting subscription
payments, and executing the accompanying Convertible Note Subscription
Agreements and the Note. The time and date the Closing occurs shall be deemed
the "Closing Date." a.
8.
Miscellaneous
a. All notices or other communications given or made under this
Agreement shall be sufficiently given if hand-delivered or mailed by registered
or certified mail (return receipt requested and postage prepaid) to Purchaser or
to the Company at the respective addresses set forth herein, or at such other
addresses as Purchaser or the Company shall designate to the other by written
notice.
b. This Agreement shall be governed by the laws of the State of Nevada.
c. This Agreement constitutes the entire agreement among the
parties with respect to the subject matter referred to herein and may be
amended only by a writing executed by all parties.
d. If more than one person is signing this Agreement, each
representation and warranty and undertaking made herein shall be a joint and
several representation, warranty or undertaking of each person.
9.
Indemnification
Each party understands the meaning and legal consequences of the
representations and warranties that it makes in this Agreement and agrees to
defend, indemnify and hold harmless the other party (including, if applicable,
the other party's officers, directors, employees and agents) and their
successors and assigns, from and against any and all loss, damage, liability or
expense, including without limitation attorneys' fees, due to or arising out of
the inaccuracy of any of its representations or acknowledgments, or the breach
of any of its agreements, warranties or undertakings contained in this
Agreement.
-12-
<PAGE>
10.
Signatures
I/we have read this Subscription Agreement and agree to be bound by its
terms.
Signature of Purchaser:
_________________________
By: Gordon Rock
___________
Date
Address:
Gordon Rock
5820 Mercer Way
Mercer Island, Washington
98040
Lifestream Technologies, Inc., a Nevada corporation, hereby accepts the
foregoing subscription subject to the terms and conditions hereof this 21st day
of January, 1998.
Lifestream Technologies, Inc.
By:__________________________
Christopher Maus
Its President
-13-
<PAGE>
EXHIBIT B
REGISTRATION RIGHTS
In the event an offering or sale of new common stock subsequent to capital
formation is made by the Company, to public investors, pursuant to a
registration statement, and an underwriting agreement is reached with one or
more broker dealers who are members of the National Association of Securities
Dealers, the conversion of this note to shares issued under Regulation "D" will
have "piggyback" registration rights on a ratable basis of existing
shareholders. The Company will be responsible for all costs related to the
filing of the registration statement.
-14-
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTION 165(J) AND 1287(a) OF THE INTERNAL REVENUE CODE.
PROMISSORY NOTE
Date of Loan: March 18, 1998
Lender: BRITANNIA HOLDINGS, LTD.
King's House, The Grange
St. Peter Port
Guernsey, Channel Islands GY1 2QJ
Borrower: LIFESTREAM TECHNOLOGIES, INC.
201 Linden Street
Suite 302
Fort Collins, CO 80524
United States of America
Loan Amount: Two Hundred Fifty Thousand
United States Dollars (U.S. $250,000)
Interest Rate: Eight Percent (8%) Per Annum
Duration of Loan: Twelve Months (subject to a 12-month extension)
Maturity Date: March 17, 1999 (subject to a 12-month extension)
FOR VALUE RECEIVED, LIFESTREAM TECHNOLOGIES, INC., located at 201
Linden Street, Suite 302, Fort Collins, CO 80524, United States of America, a
Nevada corporation ("Borrower"), promises to pay, not later than March 17, 1999
(subject to a 12-month extension), to the order of Britannia Holdings Ltd., a
Nevis corporation, or its successors or assigns ("Holder"), at such place as
Holder may designate, the principal sum of Two Hundred Fifty Thousand United
States Dollars (U.S. $250,000), with interest accruing annually at the rate of
eight percent (8%). All unpaid principal and unpaid interest shall be paid in
full on maturity. Notwithstanding any provisions to the contrary regarding the
term and maturity date of this Note, on completion by the Borrower of any equity
offering of at least $2,000,000, all amounts unpaid on the Note shall be
immediately due and payable.
<PAGE>
At Borrower's option, Borrower may elect to extend the term of this
Note for an additional 12-month period by giving Holder at least 30 days written
notice of the extension before the end of the first 12-month term with respect
to the first extension and ten days written notice prior to the end of the first
extension period with respect to the second extension. As consideration for the
extension, Borrower shall issue to Holder one share of Borrower's common stock
for every $5 of unpaid principal and interest due on this Note as of the date of
the notice of extension, which stock shall be fully paid and non-assessable. In
addition, the conversion price set forth below shall be reduced form $1.25 per
share to $1 per share. .
The prepayment of all or any portion of the principal and/or interest
due on this Note shall be expressly permitted without any penalty being imposed.
Provided, however, Borrower shall give Lender at least 10 days prior written
notice of any prepayment of principal.
This Note is secured by a stock pledge of certain of Borrower's stock
owned by Christopher Maus, all in accordance with the terms of a Pledge
Agreement executed in conjunction herewith.
In lieu of repayment in cash, Holder, at Holder's sole discretion,
prior to repayment of this Note, shall have the option to convert all or part of
the amounts owed by Borrower hereunder into shares of Borrower's common stock at
$1.25 per share (except in the event Borrower has exercised its extension
option, in which case the conversion price shall be at $1.00 per share.) This
conversion option may be exercised upon the terms and conditions set forth in
Loan Agreement executed in conjunction herewith.
If this Note shall be placed in the hands of an attorney for
collection, or if suit shall be brought to collect any of the principal or
interest of this Note, the Borrower agrees to pay the Holder's costs in
connection therewith, including but not limited to, reasonable attorneys' fees
and all costs of suit or costs associated with the collection of this Note
(including, but not limited to, costs and reasonable attorney's fees incurred on
appeal or in connection with bankruptcy proceedings).
If default occurs in the payment of this Note, or any part thereof, or
any interest thereon, then the principal balance with accrued interest shall at
once become immediately due and payable without notice, time being of the
essence on this Note. Said principal balance and interest shall bear interest
from the date of any such default until paid at the rate of eighteen percent
(18%) per annum, or at the highest interest rate permitted by law whichever is
less.
The principal and interest of this Note are payable in lawful money of
the United States of America, at the address of Lender written above, or at such
other address as Lender shall specify in writing to Borrower.
This Promissory Note is to be construed in all respects and enforced
according to the laws of the State of Idaho.
2
<PAGE>
FOREIGN TARGETED BEARER DEBT OBLIGATION
LEGEND RESTRICTIONS
1. This debt instrument is an unregistered bearer debt instrument
issued by a foreign lender to a United States obligor.
2. This obligation cannot be offered or sold (or resold in connection
with its original issuance) to any individual or entity who is a "United States
Person" (as that term is defined and interpreted under the laws of taxation of
the United States of America).
3. This obligation is intended to constitute and qualify as "portfolio
debt investment" (as that term is defined and interpreted under the taxation
laws of the United States of America). The parties to this obligation
specifically intend that the interest payable hereunder shall not be subject to
income or excise taxation, including the imposition of any withholding taxes
thereon, under the laws of the United States of America of any State or
Municipality thereof.
4. The principal and interest per the terms and conditions of this Note
shall be payable only outside the United States of America and any possession of
the United States of America.
5. It is specifically understood and intended that no "United States
Person" (as that term is defined and interpreted under the taxation laws of the
United States of America) shall ever be an owner or holder of this obligation;
however, should any "United States Person" (as that term is defined and
interpreted under the taxation laws of the United States of America) ever become
a holder or owner of this obligation, such "United States person" will be
subject to limitation under the United States income tax laws, including the
limitation provided in Sections 165(j) and 1287(a) of the Internal Revenue Code
of the United States of America.
6. This obligation cannot be delivered by the obligor (or any
distributor) or this obligation within the United States of America or any
possession of the United States of America.
7. The owner of this obligation must certify to the obligor (or my
distributor) of this obligation that the owner is not a "United States Person"
(as that term is defined and interpreted under the taxation laws of the United
States of America).
3
<PAGE>
Executed to be effective as of March 18, 1998.
BORROWER:
LIFESTREAM TECHNOLOGIES, INC.,
a Nevada Corporation
By: _________________________________
Print Name: Christopher Maus
Title: President
4
LOAN AGREEMENT
AGREEMENT made March 18, 1998 between Lifestream Technologies, Inc., a Nevada
corporation, with its principal place of business at 515 Pine St., Suite 200,
Sandpoint, Idaho 83864 (the "Borrower"); Christopher Maus ("Maus"); Interactive
Health Evaluation systems, Inc., a Nevada corporation ("Interactive"); and
Britannia Holdings, Ltd., a Nevis corporation, whose mailing address is King's
House; The Grange, St. Peter Port, Guernsey, Channel Islands GY1 2QJ (the
"Lender"). The parties agree as follows:
1. Agreement to Make Loan. Subject to the terms hereof, Lender shall
make a loan to Borrower in the principal sum of U.S. $250,000 (the "Loan"). Such
loan shall be evidenced by the Borrower's promissory note of even date herewith,
and made payable to the order of the Lender twelve months from the date of its
execution ("Note"). Interest shall accrue at the rate of eight percent (8%) per
annum. All unpaid principal and unpaid interest shall be paid in full on
maturity. The Note shall contain such other terms and provisions as the Lender
shall determine are needed for its protection. Such Note shall be secured by the
Stock Pledge Agreement of even date herewith ("Pledge Agreement"), to be
provided by Mr. Maus. In addition, as partial consideration for the loan,
Borrower shall also issue to Lender 125,000 share of Borrower's restricted
common stock ("Stock"), which Stock shall be fully paid and non-assessable.
Lender agrees not to sell or transfer the Stock so long as Borrower, Maus and/or
Interactive are not in default of this Agreement, the Note or the Pledge
Agreement and that any transfer of the Stock shall be made in accordance with
federal and state securities laws. The Stock shall be issued to Lender on the
date Borrower receives the loan proceeds. Notwithstanding any provisions to the
contrary regarding the term or maturity of the Note, on completion by the
Borrower of any equity offering of at least $2,000,000, all amounts unpaid on
the Note shall become immediately due and payable.
2. Pledge Agreement. Borrower warrants that the stock pledge by Mr.
Maus of certain of his stock in the Borrower and filing of an appropriate
financing statement will create a valid and perfected first priority security
interest in Lender's favor in the shares securing the payment of the Note.
Furthermore, the parties acknowledge that Lender would not have made the loan
without the security provided by the Pledge Agreement. Borrower and Mr. Maus
represent and warrant that the value of the pledged stock equals at least
$312,500. Borrower and Mr. Maus agree to immediately notify Lender if the value
of the pledged stock falls below $312,500 at which time Borrower and Mr. Maus
shall immediately provide additional security, whether in the form for
additional pledged stock or otherwise, to provide Lender security or at least
$312,500 to secure Borrower's performance under this Agreement and the Note.
<PAGE>
3. Conversion Option. In lieu of repayment in cash, Lender, at Lender's
sole discretion, prior to repayment in full of the Note, shall have the option,
and Borrower hereby grants to Lender the option, to convert all or part of the
amounts owed by Borrower on the Note into stock of the Borrower, calculated at
$1.25 per share. For example, if Lender decided to convert the unpaid principal
of $250,000 into the stock of the Borrower, Lender would receive 200,000 shares
of Borrower's common stock. This options hall be on the following terms and
conditions (`Option"):
a. Borrower shall set aside in reserve sufficient stock
for the conversion rights granted herein to be fully
implemented.
b. The conversion price shall be $1.25 per share.
c. Lender may exercise its Option at any time, until the
loan is paid in full.
d. Lender may exercise its Option in whole or in part by
converting all or only a portion of the amount owing
on the Note into stock of the borrower.
e. Upon giving Borrower notice that Lender will exercise
the Option, Borrower shall deliver to Lender
certificates evidencing ownership of the total number
of shares of stock converted, such stock to be fully
paid and non-assessable.
4. Extension Period and Additional Consideration. Borrower, in its sole
discretion, may elect to extend the term of the Note for an additional 12-month
period by giving Lender at least 30 days written notice before the end of the
first 12-month term. As consideration for exercise of this extension option,
Lender shall receive the following:
a. one share of Borrower's common stock shall be issued
for every $5 of unpaid principal and interest due on
the Note as of the date of the notice of extension,
which stock shall be fully paid and non-assessable;
and
b. the conversion price set forth in section 3.b above
shall be reduced to $1 per share
5. Warranty as to Stock. All of the Borrower's outstanding stock,
including all warrants, securities convertible into stock, options, and
agreements to issue any stock, securities, warrants or options, shall be
referred to as "Outstanding Stock." Borrower agrees that if Lender were to
convert the total principal loan amount of $250,000 to stock at $1.25 per share,
Lender would hold 2.54% of the outstanding stock of Borrower. Lender recognizes
Borrower will be issuing additional shares of stock to fund Borrower's
operations, and may also effect other capitalization changes. To protect Lender
from dilution of its conversion rights, Borrower agrees that: (a) In the event
Borrower sells shares of its stock below $1.25 per share (or $1.00 per share in
the event of the extension of the Note.) Borrower agrees to adjust the share
prices in the conversion section of this Agreement by decreasing the various
conversion prices described in the Agreement by such percentage as necessary to
return the Borrower's percentage of Outstanding Shares issued as a result of
note conversion by Lender to such number as represent the percentage of shares
2
<PAGE>
they would have represented has Borrower sold the additional equity at a price
of $1.25 per share (or $1.00 per share in the event of an extension of the
note); (b) Lender shall have a right, prior to the closing of any private
financing by Borrower, to purchase shares in such financing sufficient to
maintain the percentage ownership, until such time as Borrower successfully
completes a registered securities offering, including debt securities; (c)
Lender's conversion prices as described in this Agreement and the Note shall be
adjusted proportionately to reflect any change in Borrower's capitalization
caused by stock splits (forward or reverse) or stock dividends. Borrower
represents and warrants it is a reporting company and that benefits of Rule 144
will be available to Lender with respect to the Stock issued pursuant to section
1 and all other shares of stock issues to Lender under the terms of this
Agreement.
6. Other Rights. Borrower agrees to grant Lender such treatment with
respect to shares held by Lender after conversion. So that any rights held by
any present or future shares of the Borrower, whether common or preferred, such
as preemptive rights, anti-dilution rights, registration rights (corresponding
with any registration rights accruing to or exercised by shareholders holding
10% or more of Borrower's securities, co-sale rights (corresponding with any
registration rights accruing to or exercised by shareholders holding 10% or more
of Borrower's securities), and the like shall attach to the shares held by
Lender on conversion, without any further action being required by either
Borrower or Lender.
7. First Offer Rights. Borrower agrees that Lender shall receive an
offer to purchase up to 50% of the Borrower's next private placement stock
offering.
8. First Offer Rights for Offering by Interactive Health Evaluation
Systems, Inc. Interactive agrees to offer Lender the opportunity to purchase up
to a 10% interest in Interactive Health Evaluation Systems, Inc., a corporation
controlled by Christopher Maus. The offer shall be made the next time that
Interactive offers any shares of stock to raise additional capital.
9. Events of Default. If any of the following events shall occur, the
entire principal balance and accrued interest owing under the Note shall, at the
option of the holder thereof, become immediately due and payable:
a. If the Borrower fails to make any payments when due.
b. If the Borrower, Mr. Maus or Interactive fails to
comply with any applicable covenants (other than
payments of amounts owed when due) contained in this
Agreement, the Note, or the Pledge Agreement, after
twenty-one days written notice from Lender to the
defaulting party of such default and the defaulting
party's failure to cure the default.
3
<PAGE>
c. If a petition in bankruptcy is filed by or against
the Borrower, Mr. Maus, Interactive, or a receiver or
trustee of the property of the Borrower or Mr. Maus
is appointed; or if the Borrower, Mr. Maus, or
Interactive files a petition for reorganization under
any provision of the Bankruptcy Law or of any other
state or federal law, or makes an assignment for the
benefit of creditors, or is adjudged insolvent by any
state or federal court of competent jurisdiction.
Upon default, any amounts owed under the Note shall incur interest at the rate
of eighteen percent (18%) per annum until paid in full.
10. Effect of Agreement on Note and Pledge Agreement. The Note and
Pledge Agreement to be executed, acknowledged, and delivered pursuant to this
Agreement shall be subject to all the conditions, stipulations, agreements, and
covenants contained in this Agreement to the same extent as if the Agreement
were fully set forth and made part of such Note and Pledge Agreement, until this
Agreement is terminated.
11. Amendment to Agreement. This Agreement may not be changed orally,
but only by an agreement in writing and signed by the party against whom
enforcement of any waiver, change, modification, or discharge is sought.
12. Application of Agreement. This Agreement is made for the sole
protection and benefit of the parties, and no other person shall be deemed to
have a right to action of any kind hereunder.
13. Notice. Notices to the parties may be given by personal delivery or
delivery by air courier with regular service to the addresses at the following
addresses:
To Lender: Britannia Holdings, Ltd.
King's House, The Grange Street
St. Peter Port
Guernsey, Channel Islands GY1 2QJ
Facsimile: 44(0)1481 724116
With a copy to:
Ellis, Li & McKinstry PLLC
999 Third Ave., Ste. 3700
Seattle, WA 98104
Facsimile: (206) 625-1052
To Borrower: Lifestream Technologies, Inc.
515 Pine Street
Suite 200
Sandpoint, ID 83864
Facsimile: (208) 263-6627
4
<PAGE>
To Mr. Maus: Mr. Christopher Maus
c/o Lifestream Technologies, Inc.
515 Pine Street
Suite 200
Sandpoint, ID 83864
Facsimile: (208) 263-6627
To Interactive: Interactive Health Evaluation
Systems, Inc.
515 Pine Street
Suite 200
Sandpoint, ID 83864
Facsimile: (208_ 263-6627
Any notice given by facsimile shall be deemed effective on the date of
transmission provided a text copy is delivered by first class or air mail, when
sent to the Borrower, Mr. Maus, or Interactive and a text copy is delivered by
air courier with regular service to the addressee, when sent to Lender.
14. Entire Agreement. This Agreement supersedes all agreements
previously made between the parties relating to its subject matter. There are no
other understandings or agreements between them.
15. Non-waiver. No delay or failure by either party to exercise any
right under this Agreement, and no partial or single exercise of that right,
shall constitute a waiver of that or any other right, unless otherwise expressly
provided herein.
16. Headings. Headings in this Agreement are for convenience only and
shall not be used to interpret or construe its provisions.
17. Governing law. This Agreement shall be construed in accordance with
and governed by the laws of the State of Idaho.
18. Binding effect. The provisions of this Agreement shall be binding
upon and inure to the benefit of each of the parties and their respective legal
representatives, successors, and assigns.
19. Foreign Targeted Bearer Debt. The loan transaction contemplated by
this Agreement shall constitute and qualify as "portfolio debt investment" (as
that term is defined and interpreted under the taxation laws of the United
States of America). The parties to this obligation specifically intend that the
interest payable hereunder shall not be subject to income or excise taxation,
including the imposition of any withholding taxes thereon, under the laws of the
United States of America or any State or Municipality thereof. Lender certifies
5
<PAGE>
to Borrower that Lender is not a "United States Person" (as that term is defined
and interpreted under the taxation laws of the United States of America).
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their respective corporate names:
BORROWER: LIFESTREAM TECHNOLOGIES, INC.,
a Nevada Corporation
By: _______________________
Christopher Maus
Title: Chairman
MR. MAUS:
---------------------------
Christopher Maus
INTERACTIVE: INTERACTIVE HEALTH EVALUATION
SYSTEMS, INC., a Nevada Corporation
---------------------------
Craig Coad
Title: President
LENDER: BRITANNIA HOLDINGS, LTD.,
a Nevis Corporation
By: _______________________
Title: __________________
6
April 29, 1998
VIA FACSIMILE: Ed Kalin
RE: Employment Offer
Dear Ed;
Lifestream Technologies, Inc. is submitting this formal offer of employment for
your consideration and acceptance as Vice President of Sales. This position is
to be based in Fort Collins, Colorado.
LIFESTREAM TECHNOLOGIES, INC.
-----------------------------
OFFER OF EMPLOYMENT
-------------------
Salary
Your starting salary will be $105,000.00 per year.
Insurance
While you are an employee, the Company will pay to you, each month, an amount
equal to your present medical insurance premium as long as you are not covered
by a spouse's or other insurance program, until such the time the Company makes
an insurance program generally available.
Matching Stock Purchase Program
As a requirement for employment you will purchase at least One Unit (10,000
shares) of the Company's restricted (legend stock) common stock at $1.25 per
share under the Company's stock purchase agreement. You may purchase additional
shares if you wish; however this is a one-time offer. In addition the Company
will issue one share of the Company's restricted common stock at a cost of $.001
per share for every share purchased. The Company retains the right to purchase
back all shares (under the schedule below) including all matching shares at a
price equal to the original purchase price if you resign or are terminated.
Employment Period Company "Buy Back Option"
0-12 months 100%
12-24 months 80%
24-36 months 60%
36-48 months 40%
48-60 months 20%
over 60 months 0%
<PAGE>
Page 2
Stock Options
The Company will issue an option for 20,000 shares of the Company's restricted
common stock at $1.25 per share or fair market value from the Company's
Incentive Stock Option Plan. Options will vest as set forth below. Details and
other provisions are set forth in the Company's stock option plan and the
related stock option agreement.
Employment Period Option Vesting
0-12 months 0%
12-24 months 25%
24-36 months 50%
36-48 months 75%
48-60 months 100%
Incentive Stock Option Plan
You will be eligible to participate further in the Stock Option Plan based on
the Company's and your personal performance. Your performance reviews will be
conducted on an annual basis and upon a recommendation from the CEO and approval
by the Board, additional option grants may be made. All options will be fully
vested in the event of the sale of the Company.
Confidentiality
All employees will be required to execute the Company's standard confidentiality
and non-disclosure agreements as well as other Company employment forms and
agreements.
Acceptance
It is the Company's interest to conclude our corporate objectives regarding the
Ft. Collins initiative as soon as possible. This offer is open until May 8,
1998, and is predicated on the acceptance by all members of the proposed
management team. Notification to present employer should not be given until the
Company has received an acceptance by everyone in the management team (estimate
date May 8, 1998). The Company will notify you as to the acceptance of all
parties.
Starting Date
The starting date of employment will be determined by the mutual agreement of
both parties.
Thank you for your immediate consideration of this offer.
Sincerely,
- ------------------------------
Christopher Maus, President
Lifestream Technologies, Inc.
<PAGE>
Page 3
ACCEPTED BY
\s\ 5-8-98
- -------------------------------- ------
Ed Kalin Date
Estimated Starting Date 6-1-98
------
Number Shares to Purchase 18,000
------
April 29, 1998
VIA FACSIMILE: Chuck Cannon
RE: Employment Offer
Dear Chuck;
Lifestream Technologies, Inc. is submitting this formal offer of employment for
your consideration and acceptance as Vice President of Sales. This position is
to be based in Fort Collins, Colorado.
LIFESTREAM TECHNOLOGIES, INC.
-----------------------------
OFFER OF EMPLOYMENT
-------------------
Salary
Your starting salary will be $75,000.00 per year.
Insurance
While you are an employee, the Company will pay to you, each month an amount
equal to your present medical insurance premium as long as you are not covered
by a spouse's or other insurance program, until such the time the Company makes
an insurance program generally available.
Matching Stock Purchase Program
As a requirement for employment you will purchase at least One Unit (10,000
shares) of the Company's restricted (legend stock) common stock at $1.25 per
share under the Company's stock purchase agreement. You may purchase additional
shares if you wish; however this is a one-time offer. In addition the Company
will issue one share of the Company's restricted common stock at a cost of $.001
per share for every share purchased. The Company retains the right to purchase
back all shares (under the schedule below) including all matching shares at a
price equal to the original purchase price if you resign or are terminated.
Employment Period Company "Buy Back Option"
0-12 months 100%
12-24 months 80%
24-36 months 60%
36-48 months 40%
48-60 months 20%
over 60 months 0%
<PAGE>
Page 2
Stock Options
The Company will issue an option for 20,000 shares of the Company's restricted
common stock at $1.25 per share or fair market value from the Company's
Incentive Stock Option Plan. Options will vest as set forth below. Details and
other provisions are set forth in the Company's stock option plan and the
related stock option agreements.
Employment Period Option Vesting
0-12 months 0%
12-24 months 25%
24-36 months 50%
36-48 months 75%
48-60 months 100%
Incentive Stock Option Plan
You will be eligible to participate further in the Stock Option Plan based on
the Company's and your personal performance. Your performance reviews will be
conducted on an annual basis and upon a recommendation from the CEO and approval
by the Board, additional option grants may be made. All options will be fully
vested in the event of the sale of the Company.
Confidentiality
All employees will be required to execute the Company's standard confidentiality
and non-disclosure agreements as well as other Company employment forms and
agreements.
Acceptance
It is the Company's interest to conclude our corporate objectives regarding the
Ft. Collins initiative as soon as possible. This offer is open until May 8,
1998, and is predicated on the acceptance by all members of the proposed
management team. Notification to present employer should not be given until the
Company has received an acceptance by everyone in the management team (estimate
date May 8, 1998). The Company will notify you as to the acceptance of all
parties.
Starting Date
The starting date of employment will be determined by the mutual agreement of
both parties.
Thank you for your immediate consideration of this offer.
Sincerely,
- ------------------------------
Christopher Maus, President
Lifestream Technologies, Inc.
<PAGE>
Page 3
ACCEPTED BY
\s\ 5-1-98
- ----------------------------- ------
Chuck Cannon Date
Estimated Starting Date 6-1-98
------
Number Shares to Purchase 20,000
------
July 24, 1998
VIA FACSIMILE: James Moody
RE: Employment Offer
Dear James;
Lifestream Technologies, Inc. is submitting this formal offer of employment for
your consideration and acceptance as Chief Technology Officer. This position is
to be based in Post Falls, Idaho.
LIFESTREAM TECHNOLOGIES, INC.
-----------------------------
OFFER OF EMPLOYMENT
Salary
Your starting salary will be $85,000 per year.
Your long term salary will be $100,000 per year, upon the completion of the
Interactive Software Project, including integration of PDR software and two
additional sources of content by December 31, 1998.
Insurance
While you are an employee, the Company will pay to you, each month, an amount
equal to your present medical and dental insurance premium as computed through
Cobra, as long as you are not covered by a spouse's or any other insurance
program, until such time the Company makes an insurance program generally
available.
Matching Stock Purchase Program
As a requirement (optional) for employment you will purchase at least One Unit
(10,000 shares) of the Company's restricted (legend stock) common stock at $1.25
per share under the Company's stock purchase agreement. You may purchase
additional shares if you wish; however this is a one-time offer. In addition the
Company will issue one share of the Company's restricted common stock at a cost
of $.001 per share for every share purchased for $1.25 per share. The Company
retains the right to purchase back all shares (under the schedule below)
including all matching shares at a price equal to the original purchase price if
you resign or your employment terminates for any reason. In the event of the
sale of the Company, any purchase back of shares will be at fair market value.
Employment Period Company "Buy Back Option"
0-12 months 100%
12-24 months 80%
24-36 months 60%
36-48 months 40%
<PAGE>
Page 2
48-60 months 20%
over 60 months 0%
Stock Options
The Company will issue an option for 20,000 shares of the Company's restricted
common stock at $1.25 per share from the Company's Stock Option Plan. Options
will vest as set forth below. Details and other provisions are set forth in the
Company's stock option plan and the related stock option agreement. These
options will be fully vested in the event of the sale of the Company.
Employment Period Option Vesting
0-12 months 0%
12-24 months 25%
24-36 months 50%
36-48 months 75%
48-60 months 100%
Incentive Stock Option Plan
You will be eligible to participate further in the Stock Option Plan based on
the Company's and your personal performance. Your performance reviews will be
conducted on an annual basis and upon a recommendation from the CEO and approval
by the Board, additional option grants may be made. All options will be fully
vested in the event of the sale of the Company.
Confidentiality
All employees will be required to execute the Company's standard confidentiality
and non-disclosure agreements as well as other Company employment forms and
agreements.
Acceptance
This offer is open until July 28, 1998, and is predicated on the acceptance by
all members of the proposed management team and the Board of Directors. The
Company will notify you as to the acceptance of all parties (we estimate
Company's decision of acceptance within approximately 48 hours after receipt of
this executed acceptance letter).
<PAGE>
Page 3
Starting Date
The starting date of employment will be determined by the mutual agreement of
both parties.
Thank you for your immediate consideration of this offer.
Sincerely,
- ------------------------------
Christopher Maus, President
Lifestream Technologies, Inc.
ACCEPTED BY
- ------------------------------ --------------------
James Moody Date
Half Time July 20, 1998 Full Time October 1, 1998
-------------------- --------------------------
Estimated Starting Date
1,000 Shares
- ------------------------------
Number Shares to Purchase
Lifestream INC.
- ----------------------------------
T E C H N O L O G I E S
201 Linden Street - Suite 302 - Fort Collins, CO 80521
(970) 416-9966 - Fax (970) 416-9998
TO: Mr. Gerald Tschikof
Re: Employment Offer
----------------
Dear Jerry:
Lifestream Technologies, Inc. is submitting this formal offer of
employment for your consideration and acceptance as President and Chief
Executive Officer. This position is to be based in Fort Collins, Colorado.
Salary. Your starting salary will be $150,000 per year.
Insurance. While you are an employee, the Company will pay you, each
month, an amount equal to your present medical insurance premium as long as a
spouse's or other insurance program does not cover you, until such time the
Company makes an insurance program generally available, at which time coverage
will be provided by the Company at whatever cost, if any, employees will have to
pay.
Stock Grant. The Company will issue to you, at no cost, 25,000 shares
of the Company's common stock. If you leave the employ of the Company for any
reason prior to September 1, 1999, you will transfer all of these shares back to
the Company at no cost.
Matching Stock Purchase Program. As a requirement for employment you
will purchase at least one unit (10,000 shares) of the Company's common stock at
$1.25 per share under the attached Share Purchase and Transfer Restriction
Agreement. You may purchase additional shares if you wish; however, this is a
one-time offer. In addition, the Company will issue one share of the Company's
common stock at a cost of $.001 per share for every share purchased for $1.25 a
share. All purchases will be made pursuant to the attached Subscription
Agreement. The Company will lend you $25,000, interest free, pursuant to the
attached Promissory Note, to purchase two units. Repayment will be due and
payable in 48 months or, if earlier, upon termination of your employment for any
reason. In addition, if you sell any Company shares (and you may only sell
shares that are no longer subject to the "Buy Back Option" described below), you
will pay any after tax proceeds to reduce your outstanding debt with the
Company. The Company retains the right to purchase back shares, including
matching shares (under the schedule below) at a price equal to the original
purchase price if you resign or if your employment terminates for any other
reason.
<PAGE>
Employment Period Company "Buy Back Option"
----------------- -------------------------
0-12 months 100%
13-24 months 75%
25-36 months 50%
37-48 months 25%
49-60 months 0%
This "Buy Back Option" will terminate in the event of your death,
permanent disability or the termination of your employment by the Company for
other than good cause if in any such event you also pay off the Promissory Note.
Stock Options. The Company will issue to you an option for 40,000
shares of the Company's common stock at $1.25 per share from the Company's Stock
Option Plan pursuant to the attached Non-Qualified Stock Option Agreement.
Options will vest as set forth below. Details and other provisions are set forth
in the Company's Stock Option Plan and the related Stock Option Agreement. All
these options will be fully vested in the event of the sale of the Company.
Employment Period Option Vesting
----------------- --------------
0-12 months 0%
13-24 months 25%
25-36 months 50%
37-48 months 75%
over 49 months 100%
Future Stock Options and Stock Grants. During the beginning of each
calendar year during which you are an employee, if you have met the performance
goals set for you by the Board of Directors for the previous year, you may be
granted stock and/or a non-qualified stock option under the Company's Stock
Option Plan for up to 100,000 shares with, in the case of options, an exercise
price equal to the then current market price of the Company's common stock on
the grant date. If an option is granted then it will vest 20% per year and will
fully vest in the event of the sale of the Company.
Stock Purchase Rights. During the term of your employment, the Company
grants you the right to participate in all subsequent rounds of financing to
purchase up to an additional 5% of the Company stock at the then offering price
and subject to any conditions imposed on purchasers generally.
Taxes. You will be responsible for paying all taxes arising out of all
stock issuances to you by the Company.
2
<PAGE>
Termination. Your employment may be terminated at any time by you or
the Company on thirty (30) days' notice, or by the Company upon ten (10) days'
notice for cause.
Board Seat. The Board of Directors will appoint you to the Board of
Directors for this year and will support your nomination for each subsequent
year you are President, and upon termination of your employment as
CEO/President, for any reason, you will immediately resign your position on the
Board.
Confidentiality, Etc. All employees are required to execute the
attached Conditions of Employment Agreement.
Documents. In case of any inconsistencies between this letter and the
attached documents, the attached documents shall control. If you are in
agreement with all of this, please sign this letter and both copies of each of
the attached documents and return them to the undersigned. The Company will then
sign them and return to you one fully signed copy of each.
Sincerely,
LIFESTREAM TECHNOLOGIES, INC.
By: _____________________________
Christopher Maus, Chairman
ACCEPTED AND AGREED TO BY:
- ------------------------------------ ------------------
Gerald Tschikof Date
Starting Date: September 1, 1998
Number of Shares to Purchase: ________
3
CONVERTIBLE NOTE
$50,000 November 6, 1996
Sandpoint, Idaho
Lifestream Technologies, Inc., a Nevada corporation (the "Maker"),
promises to pay to the order of Gordon Rock (the "Holder") the principal sum of
Fifty Thousand Dollars ($50,000) (the "Principal Sum") together with interest,
upon the terms and conditions provided in this Convertible Note (the "Note").
1.
Interest
The unpaid balance of the Principal Sum shall bear simple interest at a
rate equal to prime rate, plus Two percent (2%) to Gordon Rock from the date of
this note until such balance is paid in full or converted to common stock as
provided for. For calculation purposes the interest rate will be adjusted on the
first business day of each calendar quarter.
2.
Payment
(a) Interest. Maker shall pay to Holder all accrued interest at the
time the principal amount is paid in full, or within 60 days of the date of
conversion.
(b) Principal. Maker shall pay Holder the outstanding Principal Sum and
on the date that is three (3) years from the date hereof.
(c) Manner and Place of Payment. All payments shall be made by checks
drawn on Maker's corporate bank account and shall be in the lawful currency of
the United States of America. All payments shall be made to Holder at the
address specified in Section 9 or at such other place as Holder may specify in
writing.
3.
Conversion Rights
(a) Right to Convert. At any time prior to November ___, 1999, the
Holder has the right, at its option, to convert the Note or any portion thereof,
into shares of Maker's $.001 par value common stock (the "Common Stock") by
giving a written notice that it is exercising its rights here under and
surrendering the Note or a portion of the Note for that purpose to the Maker and
executing a stock subscription agreement representing the number of shares being
converted to (see: Exhibit A). The number of shares of common stock of Maker
that Holder shall be entitled to receive upon such conversion shall be
determined by dividing the unpaid balance of the Principal Sum by Seventy Five
cents ($0.75) (the "Conversion Factor"). Upon conversion, the shares will be
subject to a Registration Rights Agreement attached hereto as Exhibit B. All
accrued and unpaid interest at the time of the conversion shall be paid in cash
and shall not be treated as part of the unpaid balance of the Principal Sum.
-1-
<PAGE>
(b) Fractional Shares. The Maker shall not be required to issue
fractional shares upon conversion of the Note, but shall pay in cash, in lieu of
such fractional interest, an amount equal to the difference between the unpaid
balance of the Principal Sum and the product of the Conversion Factor times the
number of whole shares determined under Paragraph 4(a).
(c) Capital Adjustments. If this Note is converted, as provided in
Paragraph 4(a), subsequent to any share dividend, split-up, recapitalization,
merger, consolidation, combination or exchange of shares, separation,
reorganization, or liquidation ("Capital Adjustments") occurring after the date
hereof, as a result of which shares of any class shall be issued in respect of
outstanding Common Stock or Common Stock shall be changed into the same or a
different number of shares of the same or another class or classes, the
Purchaser shall receive the aggregate number and class of shares which, if this
Note had been converted at the date hereof ("Deemed Conversion") and Common
Stock received upon the Deemed Conversion had not been disposed of, the
Purchaser would be holding, at the time of actual conversion, as a result of the
Deemed Conversion and such Capital Adjustments.
4.
Default
The term "Default" as used in this Note means any of the following
events:
(i) If Maker, at any time fails to pay any interest payment due on this
Note within 45 days of the time that it receives notice from Holder that said
payment is past due, or Maker fails to pay any payment of principal due on this
Note within 15 days of the time that it receives notice from Holder that such
payment is past due; or
(ii) If Maker admits, in writing, its inability to pay its debts as
they become due.
5.
Remedies upon Default
(a) Acceleration. Upon Default, Holder may, be written notice to Maker,
accelerate the due date of the Principal Sum owing under this Note. Such
accelerated amounts shall become immediately due and payable upon receipt of
such notice by Maker.
-2-
<PAGE>
(b) Remedies at Law and in Equity. If Holder accelerates the amounts
owing under this Note, Holder shall have the right to pursue any or all remedies
available at law or in equity, including, but not limited to, the right to bring
suit on the Note.
6.
Attorneys' Fees, Costs, and Other Expenses
Maker agrees to pay all costs and expenses which Holder may incur in
enforcing this Note upon Default, including, but not limited to, reasonable
attorneys' fees, expenses and costs incurred in any action undertaken with
respect to this Note, or any appeal of such an action.
7.
Assignment; Obligations Binding on Successors
Maker may not assign any of its rights, duties, or obligations under
this Note without the prior written consent of Holder. This Note shall bind
Maker and its successors and assigns. All rights and powers established in this
Note shall benefit Holder and Holder's successors and assigns; provided,
however, that all transfers of this Note by Holder are subject to the
restrictions described in the legend at the end of this Note.
8.
Notices
All notices, requests, consents, payments and other communications
required or provided for herein to any party shall be in writing, and shall be
deemed to be given when: (a) delivered in person; (b) sent by first class
registered or certified mail with postage prepaid; (c) delivered by overnight
receipted courier service; or (d) except with respect to payments, sent by
confirmed facsimile transmission. Notices shall be sent to the addresses set
forth below, or to such other addresses as may hereafter be designated in
writing by the party:
(i) If to the Maker:
Christopher Maus, President
Lifestream Technologies, Inc.
515 Pine St., Suite 200
Sandpoint, Idaho 83864
-3-
<PAGE>
(ii) If to Holder:
Gordon Rock
c/o Rock Associates
135 Lake St.
Suite 265
Kirkland, Washington 98033
9.
Governing Law
This Note will be construed, and the rights, duties and obligations of
the parties will be determined, in accordance with the laws of the State of
Nevada.
10.
Headings
Headings used in this Note have been included for convenience and ease
of reference only, and will not in any manner influence the construction or
interpretation of any provision of this Note.
11.
Entire Agreement
This Note and the Convertible Notes Subscription Agreement represent
the entire understanding of the parties with respect to the transaction giving
rise to the issuance of the Note. There are no other prior or contemporaneous
agreements, either written or oral, between the parties with respect to this
subject.
12.
Waiver
No right or obligation under this Note will be deemed to have been
waived unless evidenced by a writing signed by the party against whom the waiver
is asserted, or by the party's duly authorized representative. Any waiver will
be effective only with respect to the specific instance involved, and will not
impair or limit the right of the waiving party to insist upon strict performance
of the right or obligation in any other instance, in any other respect, or at
any other time.
-4-
<PAGE>
MAKER: Lifestream Technologies, Inc.
By:_____________________________
Christopher Maus
Its President
-5-
CONVERTIBLE NOTE
$50,000 March 4, 1997
Sandpoint, Idaho
Lifestream Technologies, Inc., a Nevada corporation (the "Maker"),
promises to pay to the order of Gordon Rock (the "Holder") the principal sum of
Fifty Thousand Dollars ($50,000) (the "Principal Sum") together with interest,
upon the terms and conditions provided in this Convertible Note (the "Note").
1.
Interest
The unpaid balance of the Principal Sum shall bear simple interest at a
rate equal to prime rate, plus Two percent (2%) to Gordon Rock from the date of
this note until such balance is paid in full or converted to common stock as
provided for. For calculation purposes the interest rate will be adjusted on the
first business day of each calendar quarter.
2.
Payment
(a) Interest. Maker shall pay to Holder all accrued interest at the
time the principal amount is paid in full, or within 60 days of the date of
conversion.
(b) Principal. Maker shall pay Holder the outstanding Principal Sum and
on the date that is three (3) years from the date hereof.
(c) Manner and Place of Payment. All payments shall be made by checks
drawn on Maker's corporate bank account and shall be in the lawful currency of
the United States of America. All payments shall be made to Holder at the
address specified in Section 9 or at such other place as Holder may specify in
writing.
3.
Conversion Rights
(a) Right to Convert. At any time prior to March 4, 2000, the Holder
has the right, at its option, to convert the Note or any portion thereof, into
shares of Maker's $.001 par value common stock (the "Common Stock") by giving a
written notice that it is exercising its rights here under and surrendering the
Note or a portion of the Note for that purpose to the Maker and executing a
stock subscription agreement representing the number of shares being converted
to (see: Exhibit A). The number of shares of common stock of Maker that Holder
shall be entitled to receive upon such conversion shall be determined by
dividing the unpaid balance of the Principal Sum by Seventy Five cents ($0.75)
(the "Conversion Factor"). Upon conversion, the shares will be subject to a
Registration Rights Agreement attached hereto as Exhibit B. All accrued and
unpaid interest at the time of the conversion shall be paid in cash and shall
not be treated as part of the unpaid balance of the Principal Sum.
-1-
<PAGE>
(b) Fractional Shares. The Maker shall not be required to issue
fractional shares upon conversion of the Note, but shall pay in cash, in lieu of
such fractional interest, an amount equal to the difference between the unpaid
balance of the Principal Sum and the product of the Conversion Factor times the
number of whole shares determined under Paragraph 4(a).
(c) Capital Adjustments. If this Note is converted, as provided in
Paragraph 3(a), subsequent to any share dividend, split-up, recapitalization,
merger, consolidation, combination or exchange of shares, separation,
reorganization, or liquidation ("Capital Adjustments") occurring after the date
hereof, as a result of which shares of any class shall be issued in respect of
outstanding Common Stock or Common Stock shall be changed into the same or a
different number of shares of the same or another class or classes, the
Purchaser shall receive the aggregate number and class of shares which, if this
Note had been converted at the date hereof ("Deemed Conversion") and Common
Stock received upon the Deemed Conversion had not been disposed of, the
Purchaser would be holding, at the time of actual conversion, as a result of the
Deemed Conversion and such Capital Adjustments.
4.
Default
The term "Default" as used in this Note means any of the following
events:
(i) If Maker, at any time fails to pay any interest payment due on this
Note within 45 days of the time that it receives notice from Holder that said
payment is past due, or Maker fails to pay any payment of principal due on this
Note within 15 days of the time that it receives notice from Holder that such
payment is past due; or
(ii) If Maker admits, in writing, its inability to pay its debts as
they become due.
5.
Remedies upon Default
(a) Acceleration. Upon Default, Holder may, by written notice to Maker,
accelerate the due date of the Principal Sum owing under this Note. Such
accelerated amounts shall become immediately due and payable upon receipt of
such notice by Maker.
-2-
<PAGE>
(b) Remedies at Law and in Equity. If Holder accelerates the amounts
owing under this Note, Holder shall have the right to pursue any or all remedies
available at law or in equity, including, but not limited to, the right to bring
suit on the Note.
6.
Attorneys' Fees, Costs, and Other Expenses
Maker agrees to pay all costs and expenses which Holder may incur in
enforcing this Note upon Default, including, but not limited to, reasonable
attorneys' fees, expenses and costs incurred in any action undertaken with
respect to this Note, or any appeal of such an action.
7.
Assignment; Obligations Binding on Successors
Maker may not assign any of its rights, duties, or obligations under
this Note without the prior written consent of Holder. This Note shall bind
Maker and its successors and assigns. All rights and powers established in this
Note shall benefit Holder and Holder's successors and assigns; provided,
however, that all transfers of this Note by Holder are subject to the
restrictions described in the legend at the end of this Note.
8.
Notices
All notices, requests, consents, payments and other communications
required or provided for herein to any party shall be in writing, and shall be
deemed to be given when: (a) delivered in person; (b) sent by first class
registered or certified mail with postage prepaid; (c) delivered by overnight
receipted courier service; or (d) except with respect to payments, sent by
confirmed facsimile transmission. Notices shall be sent to the addresses set
forth below, or to such other addresses as may hereafter be designated in
writing by the party:
(i) If to the Maker:
Christopher Maus, President
Lifestream Technologies, Inc.
515 Pine St., Suite 200
Sandpoint, Idaho 83864
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(ii) If to Holder:
5820 E. Mercer Way
Mercer Isl., WA 98040
9.
Governing Law
This Note will be construed, and the rights, duties and obligations of
the parties will be determined, in accordance with the laws of the State of
Nevada.
10.
Headings
Headings used in this Note have been included for convenience and ease
of reference only, and will not in any manner influence the construction or
interpretation of any provision of this Note.
11.
Entire Agreement
This Note and the Convertible Notes Subscription Agreement represent
the entire understanding of the parties with respect to the transaction giving
rise to the issuance of the Note. There are no other prior or contemporaneous
agreements, either written or oral, between the parties with respect to this
subject.
12.
Waiver
No right or obligation under this Note will be deemed to have been
waived unless evidenced by a writing signed by the party against whom the waiver
is asserted, or by the party's duly authorized representative. Any waiver will
be effective only with respect to the specific instance involved, and will not
impair or limit the right of the waiving party to insist upon strict performance
of the right or obligation in any other instance, in any other respect, or at
any other time.
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MAKER: Lifestream Technologies, Inc.
By:_____________________________
Christopher Maus
Its President
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