FORM OF
BRIDGE NOTE EXTENSION AND CONVERSION
July 15, 1998
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Dear Ladies and Gentlemen:
This letter agreement sets forth our mutual agreement with respect the
Convertible Promissory Note, dated October 8, 1997, in the principal amount of
$25,000.00 issued by LSC, Incorporated (the "Company") to you (the "Note"),
pursuant to the Bridge Loan Agreement, dated September 11, 1997, among the
Company and the other purchasers of Convertible Promissory Notes (the
"Agreement"). The Company plans to commence a private placement of a minimum of
250,000 shares and a maximum of 1,000,000 shares of Common Stock at a price of
$4.00 per share (the "Private Placement") in July 1998. In order to facilitate
completion of the Private Placement, the Company is requesting that you agree to
amend the Note and the Agreement and convert principal and interest under the
Note into shares of Common Stock of the Company, as set forth in this letter
agreement.
1. MATURITY DATE. Section 2 of the Agreement and the first paragraph of
the Note are each hereby amended to the extent necessary to provide
that the Note will be due and payable on the earlier of (a) thirty (30)
days after the initial closing of the Financing, as defined in the
Agreement, or (b) December 31, 1998.
2. WARRANT. Due to the fact that no warrants will be issued to investors
in the Private Placement, in lieu of the warrant referred to in Section
3 of the Agreement, the Company will grant to you a warrant (the
"Warrant") to purchase _____ shares of Common Stock (which is equal to
50% of the principal amount of the Note, divided by the $4.00 per share
price of the Private Placement). The Warrant will be exercisable for a
period of five years from the date of issuance at an exercise price of
$3.20 per share (which is equal to 80% of the $4.00 per share price of
the Private Placement). The Warrant will be in the same form as the
warrant attached as Exhibit B to the Agreement. The Company will issue
the Warrant to you promptly after receipt of a signed copy of this
letter agreement from you.
3. CONVERSION. You hereby irrevocably elect to convert all principal and
accrued interest through the last day of the month prior to the initial
closing of the Private Placement into shares of Common Stock of the
Company, at a conversion price of $3.20 per share, effective upon the
initial closing of the Private Placement. The Company will pay you cash
in lieu of issuing fractional shares upon conversion of the Note and
pay in cash interest from the first day of the month in which the
initial closing of the Private Placement occurs through the date of
such closing. You hereby represent and warrant to the Company that the
representations and warranties set forth in Section 5 of the Agreement
are true and correct as of the date hereof. In addition, you
acknowledge having received a draft, dated July 10, 1998, of the
Company's Confidential Private Placement Memorandum for the Private
Placement,
July 15, 1998
Page 2
including the Company's audited financial statements for the years
ended December 31, 1997 and 1996 and unaudited financial statements for
the six-month period ended June 30, 1998.
Please execute a copy of this letter agreement and return it to us acknowledging
your agreement to amend the Note and the Agreement and convert principal and
interest under the Note into shares of Common Stock of the Company, as set forth
above.
LSC, INCORPORATED
By:
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X. X. (Xxxx) Xxxxxx,
President and Chief Executive Officer
ACKNOWLEDGED AND AGREED TO
AS OF JULY ____, 1998
By:
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