EXHIBIT 10.3
AMENDMENT AGREEMENT
THIS AMENDMENT AGREEMENT (this "AGREEMENT"), dated as of November 12,
2004, is made by and among Lifestream Technologies, Inc., a Nevada corporation,
with headquarters located at 000 Xxxx Xxxxxxxxxx Xxxx, Xxxxx 000, Xxxx Xxxxx,
Xxxxx 00000 (the "COMPANY"), and RAB Special Situations LP, a Delaware limited
partnership ("RAB").
WHEREAS:
A. The Company and Capital South Financial Services, Inc. ("CAPITAL
SOUTH") previously have entered into, among other things, (i) that certain Loan
and Security Agreement dated as of June 18, 2002 (the "ORIGINAL COMPANY LOAN
AGREEMENT") and (ii) that certain Loan and Security Agreement dated as of May 1,
2003, which amended the Original Company Loan Agreement (the "EXISTING COMPANY
LOAN AGREEMENT"), pursuant to which, among other things, Capital South made
financial accommodations available to the Company, subject to the terms and
conditions set forth therein.
B. Lifestream Diagnostics, Inc., a wholly-owned subsidiary of the
Company (the "SUBSIDIARY") and Capital South previously have entered into, among
other things, (i) that certain Loan and Security Agreement dated as of June 18,
2002 (the "ORIGINAL SUBSIDIARY LOAN AGREEMENT") and (ii) that certain Loan and
Security Agreement dated as of May 1, 2003, which amended the Original
Subsidiary Loan Agreement (the "EXISTING SUBSIDIARY LOAN Agreement"), pursuant
to which, among other things, Capital South made financial accommodations
available to the Subsidiary, subject to the terms and conditions set forth
therein.
C. RAB and Capital South previously have entered into that certain
Master Assignment and Assumption Agreement dated as of November 8, 2004 (the
"ASSIGNMENT AGREEMENT"), pursuant to which, among other things, Capital South
sold and assigned to RAB of all Capital South's right, title and interest in, to
and under the Original Company Loan Agreement, the Existing Company Loan
Agreement, the Original Subsidiary Loan Agreement, the Existing Subsidiary Loan
Agreement and all other agreements, promissory notes, instruments, financial
statements and documents executed in connection with any of the foregoing
(collectively, the "EXISTING LOAN DOCUMENTS").
D. The Company and the Subsidiary have requested that RAB amend and
restate in their entirety each of the Original Company Loan Agreement, the
Existing Company Loan Agreement, the Original Subsidiary Loan Agreement and the
Existing Subsidiary Loan Agreement pursuant to a single Amended and Restated
Loan and Security Agreement by and among RAB, the Company and the Subsidiary
(the "AMENDED LOAN AGREEMENT"), pursuant to which, among other things, RAB would
make certain additional financial accommodations available to the Company and
the Subsidiary, subject to the terms and conditions set forth in the Amended
Loan Agreement, and RAB has agreed to such request.
E. The obligations of the Company and the Subsidiary to repay its
obligations under the Amended Loan Agreement will be evidenced by an amended and
substituted secured promissory note of Lifestream (the "AMENDED Note"), which
shall issued by the Company and the Subsidiary to RAB in substitution for the
current secured promissory note of the Company and the Subsidiary under the
Existing Loan Documents (the "ORIGINAL NOTE").
F. The Amended Loan Agreement shall be substantially in the form of the
Amended Loan Agreement attached hereto as Exhibit A (the "FORM OF AMENDED LOAN
AGREEMENT"), while the Amended Note shall be substantially in the form of the
Amended Note attached hereto as Exhibit B (the "FORM OF AMENDED NOTE").
G. In connection with the entering into of the Amended Loan Agreement,
the Company has agreed to pay a commitment fee to RAB in the amount of $500,000
(the "COMMITMENT FEE"), such Commitment Fee being payable by the Company's
issuance of its Convertible Term Note (the "COMMITMENT NOTE"), all as more
particularly set forth in the form of Commitment Note attached hereto as Exhibit
C (the "FORM OF COMMITMENT NOTE").
H. The Commitment Note is (i) payable, at the option of the Company, in
shares of the Company's Common Stock ("the "PAYMENT SHARES") and (ii)
convertible, at the option of RAB, into shares of the Company's Common Stock
(the "CONVERSION SHARES").
I. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
in the form attached hereto as Exhibit D (the "FORM OF REGISTRATION RIGHTS
AGREEMENT" and, as executed, the "REGISTRATION RIGHTS AGREEMENT"), pursuant to
which the Company has agreed to provide certain registration rights under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), and the rules and
regulations promulgated thereunder, and applicable state securities laws.
J. In connection with the entering into of the Amended Loan Agreement,
the Company has agreeD to make certain adjustments in the conversion price of
certain Outstanding Equivalents (as defined herein)of the Company, each
according to the terms and conditions set forth herein.
K. The issuance of the Commitment Note, the Payment Shares and the
Conversion Shares are being made in reliance upon the exemption from securities
registration afforded by Section 4(2) of the Securities Act.
L. The transactions contemplated by the Amended Loan Agreement
represent commercial transactions and not investments and not transactions in
securities for purposes of any securities laws.
NOW THEREFORE, the Company and RAB hereby agree as follows:
1. CLOSING.
a. The Closing Date. The date of the closing of the
transaction contemplated by this Agreement (the "CLOSING") shall be November 12,
2004, subject to satisfaction (or waiver) of the conditions to the Closing set
forth in Sections 5 and 6 of this Agreement (or such later Business Day as is
mutually
2
agreed to by the Company and RAB) (such date, the "CLOSING DATE"). "BUSINESS
DAY" means any day other than Saturday, Sunday or other day on which commercial
banks in London and New York are authorized or required by law to remain closed.
b. Execution and Delivery of Agreements; Payment of First
Advance; Issuance of Amended Note and Commitment Note. At the Closing, subject
to satisfaction (or waiver) of the conditions set forth in Sections 5 and 6: (i)
each party hereto shall execute and deliver, and the Company shall cause the
Subsidiary to deliver, to RAB the Amended Loan Agreement; (ii) RAB shall pay and
deliver to the Company and the Subsidiary the Initial Advance (as such term is
defined in the Amended Loan Agreement); (iii) the Company shall issue and
deliver, and shall cause the Subsidiary to deliver, to RAB the Amended Note;
(iv) the Company shall deliver to RAB the Commitment Note; and (v) the parties
hereto shall execute and deliver the Registration Rights Agreement.
c. Return of Original Note. RAB shall deliver the Original
Note to the Company no later than three (3) Business Days following the Closing.
d. Payment of Second Advance. RAB shall pay and deliver to the
Company and the Subsidiary the Second Advance on the Second Advance Closing Date
(as such terms are defined in the Amended Loan Agreement), subject to the
satisfaction by the Company and the Subsidiary of all conditions precedent set
forth in the Amended Loan Agreement. In the event that the Second Advance does
not occur by the Second Advance Closing Date, the outstanding principal amount
of the Commitment Note shall be reduced by the percentage set forth in the
Commitment Note.
2. RAB'S REPRESENTATIONS AND WARRANTIES.
RAB represents and warrants that as of the date of this Agreement and
as of the Closing Date:
a. Reliance on Exemptions. RAB understands that the Commitment
Note, the Payment Shares and the Conversion Shares (collectively, the
"SECURITIES") are being offered to it in reliance on specific exemptions from
the registration requirements of United States federal and state securities laws
and that the Company is relying in part upon the truth and accuracy of, and
RAB's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of RAB set forth herein in order to determine
the availability of such exemptions and the eligibility of RAB to acquire the
Securities. RAB further understands, however, that the transactions contemplated
by the Amended Loan Agreement represent commercial transactions and not
investments and not transactions in securities for purposes of any securities
laws.
b. Information. RAB and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
which have been requested by RAB. RAB and its advisors, if any, have been
afforded the opportunity to ask questions of the Company. Neither such inquiries
nor any other due diligence investigations conducted by RAB or its advisors, if
any, or its representatives shall modify, amend or affect RAB's right to rely on
the Company's representations and warranties contained in Section 3 below.
3
c. Transfer or Resale. RAB understands that except as provided
in the Registration Rights Agreement: (i) the Securities have not been and are
not being registered under the Securities Act or any state securities laws, and
may not be offered for sale, sold, assigned or transferred unless subsequently
registered thereunder or RAB provides the Company with reasonable assurance that
such Securities can be sold, assigned or transferred pursuant to Rule 144
promulgated under the Securities Act (or a successor rule thereto) ("RULE 144")
or other applicable exemption from registration under the Securities Act; (ii)
any sale of the Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller
(or the person through whom the sale is made) may be deemed to be an underwriter
(as that term is defined in the Securities Act) may require compliance with some
other exemption under the Securities Act or the rules and regulations of the SEC
thereunder; and (iii) neither the Company nor any other person is under any
obligation to register such Securities under the Securities Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder. Notwithstanding the foregoing, the Securities may be pledged in
connection with a bona fide margin account or other loan secured by the
Securities.
d. Legends. RAB understands that, until such time as the sale
of the Securities has been registered under the Securities Act as contemplated
by the Registration Rights Agreement, the certificates or other instruments
evidencing the Securities, except as set forth below, shall bear a restrictive
legend in substantially the following form (and a stop transfer order may be
placed against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY THE SECURITIES.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Payment Shares and the
Conversion Shares (collectively, the "TRANSACTION SHARES") upon which it is
stamped, if: (i) such securities are registered for sale under the Securities
Act; (ii) in connection with a sale transaction, such holder provides the
Company with an opinion of counsel, in a generally acceptable form to the
Company, to the effect that a public sale, assignment or transfer of such
securities may be made without registration under the Securities Act; or (iii)
such holder provides the Company with a representation letter in a generally
acceptable form relating to the sale of the Common Shares pursuant to Rule 144.
RAB acknowledges, covenants and agrees to sell any of such securities
represented by a certificate(s) from which the legend has been removed only
pursuant to: (i) a registration statement effective under the Securities Act; or
(ii) advice of counsel that such sale is exempt from registration required by
Section 5 of the Securities Act.
4
e. Authorization; Enforcement. This Agreement has been, and at
the Closing the Amended Loan Agreement and the Registration Rights Agreement
will be, executed and delivered on behalf of RAB, and upon such execution and
delivery will be valid and binding agreements of RAB enforceable against RAB in
accordance with their respective terms, subject as to enforceability to general
principles of equity and to applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation and other similar laws relating to, or affecting
generally, the enforcement of applicable creditors' rights and remedies.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to RAB that as of the date of this
Agreement and as of the Closing Date:
a. Organization and Qualification. The Company is a
corporation duly organized and validly existing in good standing under the laws
of the State of Nevada and has the requisite corporate power and authorization
to own its properties and to carry on its businesses as now being conducted. The
Company is duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which its ownership of property or the nature
of the business conducted by it makes such qualification necessary, except to
the extent that the failure to be so qualified or be in good standing would not
have a Material Adverse Effect. As used in this Agreement, "MATERIAL ADVERSE
EFFECT" means any material adverse effect on the business, properties, assets,
operations, results of operations or financial condition of the Company taken as
a whole, or on the transactions contemplated hereby or by the agreements and
instruments to be entered into in connection herewith, or on the authority or
ability of the Company to perform its obligations under this Agreement, the
Amended Loan Agreement, the Registration Rights Agreement, the Amended Note and
the Commitment Note (collectively, the "TRANSACTION DOCUMENTS").
b. Authorization; Enforcement; Compliance with Other
Instruments. (i) The Company has the requisite corporate power and authority to
enter into and perform its obligations under the Transaction Documents and to
issue the Amended Note and the Securities in accordance with the terms thereof;
(ii) the execution and delivery of Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby,
including, without limitation, the issuance of the Amended Note and the
Securities, have been duly authorized by the Company's Board of Directors and no
further consent or authorization is required by the Company, its Board of
Directors or its stockholders; and (iii) this Agreement has been, and at the
Closing the Transaction Documents will be, duly executed and delivered by the
Company and upon such execution and delivery will constitute the valid and
binding obligations of the Company enforceable against the Company in accordance
with their respective terms.
5
c. Capitalization. The authorized capital stock of the Company
consists of (i) 750,000,000 shares of Common Stock, of which, as of the date of
this Agreement, 209,968,735 shares were issued and outstanding and (ii)
15,000,000 shares of undesignated preferred stock, of which, as of the date of
this Agreement, no shares were issued or outstanding. All of such outstanding
shares have been, or upon issuance will be, validly issued and are fully paid
and nonassessable. No shares of the Company's capital stock are subject to
preemptive rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Company.
d. Issuance of Common Shares. The Securities are duly
authorized and, upon issuance in accordance with the terms hereof and thereof,
the Transaction Shares shall be validly issued, fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issue thereof, with
the holders being entitled to all rights accorded to a holder of Common Stock.
The issuance by the Company of the Securities is exempt from registration under
the Securities Act pursuant to Section 4(2) of the Securities Act and pursuant
to similar provisions under applicable state securities laws.
e. No Conflicts. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby will not: (i) result in a
violation of the Certificate of Incorporation or the By-laws of the Company;
(ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or right of
"reset" (to the best of the Company's knowledge), right of first offer or right
of refusal under, any agreement, indenture or instrument to which the Company is
a party including, without limitation, any agreement with or instrument issued
to HPC Capital Management or its affiliates; or (iii) result in a violation of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and the rules and regulations of the
principal market on which the Company's Common Stock is traded (the "PRINCIPAL
MARKET") or by which any property or asset of the Company is bound or affected.
The Company is not in violation of any term of or in default under its
Certificate of Incorporation or By-laws. The Company is not required to obtain
any consent, authorization or order of, or make any filing or registration with,
any court or governmental agency or any regulatory or self-regulatory agency in
order for it to execute, deliver or perform any of its obligations under or
contemplated by the Transaction Documents in accordance with the terms hereof or
thereof. All consents, authorizations, orders, filings and registrations which
the Company is required to obtain pursuant to the preceding sentence have been
obtained or effected on or prior to the date hereof.
f. Indebtedness of the Company. The Company has no debts,
liabilities or obligations of any nature other than the Original Note (whether
accrued, absolute, contingent, direct, indirect, perfected, inchoate,
unliquidated or otherwise and whether due or to become due, collectively
referred to as "INDEBTEDNESS") except for the Indebtedness set forth on the
financial statement of the Company attached as Schedule A hereto.
g. Title to Properties; Liens and Encumbrances. The Company
has good and marketable title to all of its assets, free and clear of any Liens
except immaterial Liens which would not reasonably be expected to adversely
affect the use or value of such assets and the Lender's Liens (as defined in the
Amended Loan Agreement). For purposes of this Agreement, the term "LIENS" means
any mortgage, deed of trust, lien, security interest, pledge, lease, conditional
6
sale contract, claim, charge, easement, right of way, assessment, restriction
and other encumbrance of every kind, excluding: (i) the security interests
granted to RAB pursuant to the Existing Loan Documents; and (ii) any other valid
security interest, lien or other encumbrance in the leased personal property set
forth on Schedule B.
h. Seniority of Note. Upon issuance, the Commitment Note is
not, and in the future shall not, be junior to any Indebtedness of the Company
or any majority-owned subsidiary of the Company, excluding the amounts owed by
the Company to: (i) RAB pursuant to the Amended Note; (ii) those lessors set
forth on Schedule C that have a valid security interest in or lien on the leased
personal property set forth on Schedule C, as the case may be; and (iii) such
other creditors of the Company or other persons, if any, as may be permitted by
RAB in writing in advance in their sole and absolute discretion.
i. Fair Consideration. The Company, having been fully involved
in developing the transactions contemplated hereby, and having been advised by
the Company's financial and legal advisors, is satisfied that the negotiations
between the Company and RAB were conducted properly and were arm's length in
nature and in good faith, and fair consideration for the Securities was
obtained.
j. Acknowledgment. The Company acknowledges and agrees that
RAB is acting solely in the capacity of an arm's length purchaser with respect
to the Transaction Documents and the transactions contemplated thereby. The
Company further represents to RAB that the Company's decision to enter into the
Transaction Documents has been based solely on the independent evaluation by the
Company and its representatives and the representations and warranties made by
RAB in Section 2 hereof. The Company acknowledges and agrees that RAB is not:
(i) an officer or director of the Company; or (ii) (A) in light of RAB's
contractual limitations on beneficial ownership, a "beneficial owner" of more
than 10% of the Common Stock (as defined for purposes of Rule 13d-3 of the
Exchange Act) or (B) an "affiliate" of the Company (as defined in Rule 144(a)
promulgated under the Securities Act).
k. No Consideration Paid. Other than the Commitment Fee, the
Company has not paid any commission or remuneration, directly or indirectly, to
any person in connection with the transactions contemplated by this Agreement.
l. No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of any of
the Securities under the Securities Act or cause this offering of the Common
Shares to be integrated with prior offerings by the Company for purposes of the
Securities Act or any applicable stockholder approval provisions, including,
without limitation, under the rules and regulations of the Principal Market, nor
will the Company take any action or steps that would require registration of any
of the Securities under the Securities Act or cause the offering of the
Securities to be integrated with other offerings.
7
m. Application of Takeover Protections. The Company and its
Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Certificate of Incorporation or the laws of
the state of its incorporation which is or could become applicable to RAB as a
result of RAB and the Company fulfilling their obligations under the Transaction
Documents, including, without limitation, the Company's issuance of the
Securities and RAB's ownership of the Securities.
n. Material Nonpublic Information. Other than the terms of
this Agreement and the transactions contemplated by this Agreement, all of which
shall be publicly disclosed in the 8-K Filing (as defined in Section 4(f)),
neither the Company nor any of its officers, directors, employees or agents have
provided RAB with any material, nonpublic information.
4. COVENANTS.
a. Best Efforts. Each party shall use its best efforts timely
to satisfy each of the conditions to be satisfied by it as provided in Sections
5 and 6 of this Agreement.
b. Blue Sky. The Company shall, on or before the Closing Date,
take such action as the Company shall reasonably determine is necessary to
qualify the Securities, or obtain exemption for the Securities, for issuance to
RAB at the Closing pursuant to this Agreement under applicable securities or
"Blue Sky" laws of the states of the United States, and shall provide evidence
of any such action so taken to RAB on or prior to the Closing Date. The Company
shall make all filings and reports relating to the offer and sale of the
Securities required under applicable securities or "Blue Sky" laws of the states
of the United States following the Closing Date.
c. Reporting Status. Until the later of the date on which (a)
RAB shall have sold all of the Transaction Shares, and (b) the Commitment Note
and the Outstanding Equivalents shall no longer remain outstanding (such period,
the "REPORTING PERIOD"), the Company shall file all reports required to be filed
with the SEC pursuant to the Exchange Act, and the Company shall not terminate
its status as an issuer required to file reports under the Exchange Act even if
the Exchange Act or the rules and regulations thereunder would otherwise permit
such termination.
d. Financial Information. The Company agrees to send the
following to RAB during the Reporting Period: (i) within two (2) Business Days
after the filing thereof with the SEC, unless available through the XXXXX
system, a copy of its Annual Reports on Form 10-K, its Quarterly Reports on Form
10-Q, any Current Reports on Form 8-K and any registration statements (other
than on Form S-8) or amendments filed pursuant to the Securities Act; and (ii)
copies of any notices and other information made available or given to the
stockholders of the Company generally, contemporaneously with the making
available or giving thereof to the stockholders.
e. Listing. The Company shall promptly secure the listing of
all of the Transaction Shares, to the extent required, on the Principal Market
and each other national securities exchange and automated quotation system, if
any, upon which shares of Common Stock are then listed (subject to official
notice of issuance) and shall maintain, so long as any other shares of Common
Stock shall be so listed, such listing of all the Transaction Shares issued
pursuant to this Agreement. The Company shall pay all fees and expenses in
connection with satisfying its obligations under this Section 4(e).
8
f. Disclosure of Transactions and Other Material Information.
On or before the second Business Day following the Closing Date, the Company
shall file a Form 8-K describing the terms of the transactions contemplated by
this Agreement in the form required by the Exchange Act, and attaching the
Transaction Documents as exhibits to such filing (including all attachments, the
"8-K FILING"). From and after the filing of the 8-K Filing with the SEC, RAB
shall not be in possession of any material nonpublic information received from
the Company or any of its officers, directors, employees or agents, that is not
disclosed in the 8-K Filing. The Company shall not, and shall cause its
officers, directors, employees and agents, not to, provide RAB with any material
nonpublic information regarding the Company from and after the filing of the 8-K
Filing with the SEC without the express written consent of RAB. Subject to the
foregoing, neither the Company nor RAB shall issue any press releases or any
other public statements with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the prior
approval of RAB, to make any press release or other public disclosure with
respect to such transactions: (i) in substantial conformity with the 8-K Filing
and contemporaneously therewith; and (ii) as is required by applicable law and
regulations (provided that in the case of clause (i) RAB shall be consulted by
the Company in connection with any such press release or other public disclosure
prior to its release).
g. Right of First Offer. In the event that, prior to the
expiration of twelve (12) months following the Closing Date, the Company
proposes to consummate a private placement of Common Stock or other securities
(a "PRIVATE FINANCING") or enters into any agreement to do so, RAB shall have a
right of first offer to consummate the Private Financing on the same terms as
are proposed, within ten (10) days of written notice from the Company. Such
written notice shall specify the terms and conditions of the Private Financing,
including the name(s) of the proposed investor(s). In the event RAB does not
exercise its right of first offer within such ten (10) day period, the right of
first offer granted to Investor under this paragraph shall terminate and cease
to be of any further force or effect. Until April 5, 2005, the right of first
offer granted to Investor in this paragraph shall be subordinated to a right of
first offer granted by the Company to HPC Capital Management or its affiliates.
The right of first offer shall not apply to the issuance of Common Stock or
other securities (i) to officers, directors and employees for compensatory
purposes, (ii) in connection with strategic partnerships, acquisitions, mergers
and acquisitions and other business combinations, (iii) in underwritten public
offerings, (iv) upon the exercise or conversion of securities outstanding on the
date of this Agreement, and (v) other transactions the primary purpose of which
is not capital raising
h. Conversion Price of Outstanding Securities. As partial
inducement to RAB for entering into this Agreement, the Company hereby agrees
that the conversion price of the Outstanding Equivalents (as hereinafter
defined) shall be reduced to $.05 per share for the balance of the conversion
period thereof (the "MODIFIED CONVERSION PRICE"). For purposes of the preceding
sentence, "OUTSTANDING EQUIVALENTS" shall mean the currently outstanding amended
and restated unsecured notes dated May 12, 2003 in favor of RAB Special
Situations LP and/or an affiliate, as applicable, in the current principal
amount of $3,840,000. Upon the completion of any offering by the Company of
shares of Common Stock or other securities, completed while the Outstanding
9
Equivalents remain outstanding, at a purchase price that is less than the
Modified Conversion Price (each such offering, a "SUBSEQUENT OFFERING"), the
Modified Conversion Price shall be subject to adjustment whereby such adjusted
Modified Conversion Price shall be equal to the lesser of (i) the price per
share of Common Stock or conversion price of securities that is the subject of
such Subsequent Offering, or (ii) such other amount as may be agreed to in
writing between the Company and RAB (each, a "SUBSEQUENT OFFERING CONVERSION
PRICE"). Upon completion of any Subsequent Offering, RAB may elect to convert
the Outstanding Equivalents at the applicable Subsequent Offering Conversion
Price up to an amount of Common Stock not to exceed any contractual limitations
on beneficial ownership applicable to the Outstanding Equivalents.
Notwithstanding the foregoing, RAB shall be entitled to convert the Outstanding
Equivalents into Common Stock at the Subsequent Offering Conversion Price on one
occasion per Subsequent Offering, and if RAB converts less than all of the
Outstanding Equivalents at the Subsequent Offering Price, than any remaining
Outstanding Equivalents not so converted shall thereafter be convertible at the
Modified Conversion Price. Promptly following the Closing, the Company shall
cause amended Outstanding Equivalents to be issued to RAB Special Situations LP
and/or an affiliate, as applicable, incorporating the terms set forth in this
paragraph h. in a form reasonably satisfactory to RAB.
5. CONDITIONS TO THE COMPANY'S OBLIGATIONS.
The obligations of the Company at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided, that these conditions are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion by providing
each Investor with prior written notice thereof:
a. RAB shall have executed the Amended Loan Agreement and
Registration Rights Agreement and delivered the same to the Company; and
b. The representations and warranties of RAB contained herein
shall be true and correct as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak
as of a specific date), and RAB shall have performed, satisfied and complied
with the covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by RAB at or prior to the Closing Date.
6. CONDITIONS TO RAB'S OBLIGATIONS.
The obligations of RAB at the Closing is subject to the satisfaction,
at or before the Closing Date, of each of the following conditions, provided,
that these conditions are for RAB's sole benefit and may be waived by RAB at any
time in its sole discretion by providing the Company with prior written notice
thereof:
a. The Company shall have executed, and shall have caused the
Subsidiary to execute, the Amended Loan Agreement and the Amended Note, and
delivered the same to RAB;
b. The Company shall have executed the Commitment Note and the
Registration Rights Agreement, and delivered the same to RAB;
10
c. The Common Stock shall not have been suspended from trading
on or delisted from the Principal Market;
d. The representations and warranties of the Company contained
herein shall be true and correct as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties that
speak as of a specific date) and the Company shall have performed, satisfied and
complied with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Company at or prior
to the Closing Date;
e. The Board of Directors of the Company shall have adopted
resolutions consistent with Section 3(b)(ii) above (the "RESOLUTIONS"); and
f. The Company shall have made all filings under all
applicable federal and state securities laws necessary to consummate the
issuance of the Commitment Note pursuant to this Agreement in compliance with
such laws.
7. INDEMNIFICATION.
In consideration of RAB's execution and delivery of the Amended Loan
Agreement and the Registration Rights Agreement and in addition to all of the
Company's other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless RAB and each other holder of the
Amended Note and the Securities and all of their stockholders, officers,
directors, employees and direct or indirect investors and any of the foregoing
persons' agents or other representatives (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the "INDEMNITEES") from and against any and all actions, causes
of action and suits and from any claims, losses, costs, penalties, fees,
liabilities and damages, and expenses actually suffered or actually paid by such
Indemnitee in connection therewith (irrespective of whether any such Indemnitee
is a party to the action for which indemnification hereunder is sought), and
including reasonable attorneys' fees and disbursements (the "INDEMNIFIED
LIABILITIES"), incurred by any Indemnitee as a result of, or arising out of, or
relating to: (a) any misrepresentation or breach of any representation or
warranty made by the Company in the Transaction Documents or any other
certificate, instrument or document contemplated thereby, provided such
Indemnitee notifies the Company of its claim for indemnification under this
Section 7 for such misrepresentation or breach of a representation or warranty
on or before the date which is one (1) year after the date of this Agreement;
(b) any breach of any covenant, agreement or obligation of the Company contained
in the Transaction Documents or any other certificate, instrument or document
contemplated thereby; or (c) any cause of action, suit or claim brought or made
against such Indemnitee (other than a cause of action, suit or claim which is
(x) brought or made by the Company and (y) is not a shareholder derivative suit)
and arising out of or resulting from: (i) the execution, delivery, performance
or enforcement of the Transaction Documents; or (ii) solely the status of RAB or
holder of the Amended Note or the Securities as an investor in the Company. To
the extent that the foregoing undertaking by the Company may be unenforceable
for any reason, the Company shall make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law.
11
8. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law; Jurisdiction; Jury Trial. The corporate laws
of the State of Nevada shall govern all issues concerning the relative rights of
the Company and its stockholders. All other questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York. Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereby irrevocably
waives any right it may have, and agrees not to request, a jury trial for the
adjudication of any dispute hereunder or in connection herewith or arising out
of this Agreement or any transaction contemplated hereby.
b. Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
c. Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
d. Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. The Transaction Documents
supersede all other prior oral or written agreements between RAB, the Company,
their affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor RAB makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement, any Schedule or Exhibit, may be amended other than by an instrument
in writing signed by the Company and RAB. No provision hereof may be waived
other than by an instrument in writing signed by the party against whom
enforcement is sought.
12
f. Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); or (iii) three (3) Business
Days after deposit with a nationally recognized overnight delivery service, in
each case properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:
If to the Company: With a copy to:
Lifestream Technologies, Inc. Xxxxxxxxx Xxxxxxxxxx & Beilly LLP
000 Xxxx Xxxxxxxxxx Xxxx, Xxxxx 000 0000 Xxxxxxxxx Xxxx., XX, Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000 Xxxx Xxxxx, XX 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
E-Mail: XxxxxX@xxxxxxxxxxxxxx.xxx E-Mail: xxxxx@xxxxxx.xxx
Attention: Xxxxx Xxxxxx Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
If to RAB: With a copy to:
RAB Special Situations LP Xxxxxx Xxxxxx Xxxxx Xxxxxxxx
c/o RAB Capital plc 000 Xxxx Xxxxxx Xxxxxx
0 Xxxx Xxxxxx Xxxxxxx, Xxxxxxxx 00000-0000
London Telephone: (000) 000-0000
XX0X 0XX Facsimile: (000) 000-0000
United Kingdom E-Mail: xxxxxx.xxxxxxxxxx@xxxx.xxx
Telephone: 00 (0)00 0000 0000 Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
Facsimile: 00 (0)00 0000 0000
E-Mail: xx@xxxxxx.xxx
Attention: Xxxxxx Xxxxxxx
Any party may modify its notice information by written notice given to
each other party no less than five days prior to the effectiveness of such
change. Written confirmation of receipt: (A) given by the recipient of such
notice, consent, waiver or other communications; (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission; or (C) provided by a nationally recognized overnight delivery
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
13
g. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns. The Company shall not assign this Agreement or any rights without the
prior written consent of RAB. RAB may assign some or all of its rights hereunder
without the consent of the Company, provided, however, that any such assignment
shall not release RAB from its obligations hereunder unless such obligations are
assumed by such assignee and the Company has consented to such assignment and
assumption. Notwithstanding anything to the contrary contained in the
Transaction Documents, RAB shall be entitled to pledge the Securities in
connection with a bona fide margin account or other loan secured by such
Securities.
h. Survival. Unless this Agreement is terminated under Section
8(j), the representations and warranties of the Company and RAB contained in
Sections 2 and 3, the agreements and covenants set forth in Sections 4 and 8,
and the indemnification provisions set forth in Section 7, shall survive the
Closing. RAB shall be responsible only for its own representations, warranties,
agreements and covenants hereunder.
i. Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
j. Termination. In the event that the Closing shall not have
occurred on or before two (2) Business Days from the date hereof due to the
Company's or RAB's failure to satisfy one or more of the conditions set forth in
Sections 5 and 6 above and the non-breaching party's failure to waive such
unsatisfied condition(s), the non-breaching party shall have the option to
terminate this Agreement with respect to such breaching party at the close of
business on such date without liability of any party to any other party.
k. Placement Agent or Exchange Agent. The Company acknowledges
that it has not engaged a placement agent or exchange agent in connection with
the transactions contemplated by this Agreement. The Company shall be
responsible for the payment of any placement agent's fees, exchange agent fees
or brokers' commissions relating to or arising out of the transactions
contemplated hereby. The Company shall pay, and hold RAB harmless against, any
liability, loss or expense (including, without limitation, reasonable attorneys'
fees and out of pocket expenses) arising in connection with any such claim.
l. Remedies. RAB and each holder of the Amended Note and the Securities shall
ihave all rights and remedies set forth in the Transaction Documents and all
rights and remedies which such holders have been granted at any time under any
other agreement or contract and all of the rights which such holders have under
any law. Any person having any rights under any provision of this Agreement
shall be entitled to enforce such rights specifically (without posting a bond or
other security), to recover damages by reason of any breach of any provision of
this Agreement and to exercise all other rights granted by law.
* * * * * *
14
IN WITNESS WHEREOF, RAB and the Company have caused this Agreement to
be duly executed as of the date first written above.
COMPANY: RAB:
LIFESTREAM TECHNOLOGIES, INC. RAB SPECIAL SITUATIONS LP
By: RAB Partners Limited, its General Partner
By: By:
------------------------------------------------- -----------------------------------------
Name: Name:
------------------------------------------------ ---------------------------------------
Title: Its:
----------------------------------------------- ---------------------------------------
15
SCHEDULE A
----------
INDEBTEDNESS
Financial statements from Form 10Q-SB for the quarter ended September 30, 2004.
SCHEDULE B
----------
INDEBTEDNESS AS OF NOVEMBER 12, 2004
CURRENT OUTSTANDING CAPITAL LEASES FOR PERSONAL PROPERTY:
LEASE INFORMATION AMOUNT OUTSTANDING LEASE DESCRIPTION
----------------- ------------------ -----------------
1) DELL FINANCIAL SERVICES $6,303.97 9 Dell Computers and components
X.X. Xxx 0000
Xxxxx Xxxxxx, XX 00000-0000
Acct. # 000-0000000-000
000-000-0000
2) GE CAPITAL (PHONE LEASE) $13,868.34 Phone system upgrade
X.X. Xxx 00000-0000
Xxxxxxxx, XX 00000-0000
Acct. # 6705338-004
000-000-0000
3) AMERICAN EXPRESS $1,490.71 Cisco Networking Equipment
BUSINESS FINANCE
X.X. Xxx 000000
Xxxxxx, XX 00000-0000
Acct. # 373563
000-000-0000
4) XXXXX FARGO FINANCIAL LEASING $7,899.07 IBM network Servers (portion of them)
X.X. Xxx 00000
Xxx Xxxxx, XX 00000-0000
Acct. # 42411388-1
000-000-0000
5) GE CAPITAL LEASE $3,054.23 IBM network Servers (portion of them)
X.X. Xxx 00000-0000
Xxxxxxxx, XX 00000-0000
Acct. # 9050255-001
000-000-0000
SCHEDULE C
----------
INDEBTEDNESS AS OF NOVEMBER 12, 2004
CURRENT OUTSTANDING CAPITAL LEASES FOR PERSONAL PROPERTY:
LEASE INFORMATION AMOUNT OUTSTANDING LEASE DESCRIPTION
----------------- ------------------ -----------------
1) DELL FINANCIAL SERVICES $6,303.97 9 Dell Computers and components
X.X. Xxx 0000
Xxxxx Xxxxxx, XX 00000-0000
Acct. # 000-0000000-000
000-000-0000
2) GE CAPITAL (PHONE LEASE) $13,868.34 Phone system upgrade
X.X. Xxx 00000-0000
Xxxxxxxx, XX 00000-0000
Acct. # 6705338-004
000-000-0000
3) AMERICAN EXPRESS $1,490.71 Cisco Networking Equipment
BUSINESS FINANCE
X.X. Xxx 000000
Xxxxxx, XX 00000-0000
Acct. # 373563
000-000-0000
4) XXXXX FARGO FINANCIAL LEASING $7,899.07 IBM network Servers (portion of them)
X.X. Xxx 00000
Xxx Xxxxx, XX 00000-0000
Acct. # 42411388-1
000-000-0000
5) GE CAPITAL LEASE $3,054.23 IBM network Servers (portion of them)
X.X. Xxx 00000-0000
Xxxxxxxx, XX 00000-0000
Acct. # 9050255-001
000-000-0000
