EXHIBIT 10.4
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 AMENDMENT AGREEMENT BETWEEN LIFESTREAM TECHNOLOGIES, INC. AND XXXXXX
DATED AS OF NOVEMBER 12, 2004 (THE "AMENDMENT AGREEMENT"), AND XXXXXX AGREES AND
UNDERSTANDS THAT IT SHALL BE BOUND BY THE PROVISIONS OF THE AMENDMENT AGREEMENT.
LIFESTREAM TECHNOLOGIES, INC.
CONVERTIBLE TERM NOTE
$500,000 ISSUE DATE: NOVEMBER 12, 2004
1. PROMISE TO PAY
FOR VALUE RECEIVED, the undersigned LIFESTREAM TECHNOLOGIES, INC., a
Nevada corporation (the "Company"), HEREBY PROMISES TO PAY RAB Special
Situations LP ("Purchaser"), on or before February 1, 2006, the principal amount
of Five Hundred Thousand Dollars ($500,000), without interest on such principal
amount, and the amount of any "Registration Delay Payments" (as defined in the
Registration Rights Agreement by and among the parties of even date herewith
(the "Registration Rights Agreement") which Purchaser elects not to receive in
cash and which shall be added to (and shall not be in lieu of) the amount of
principal payable hereunder. Subject to the terms and conditions of this Note
permitting principal payments to be made through the issuance of shares of the
Company's common stock, par value $.001 per share, 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"), and/or conversion of this Note at the
option of Purchaser, all principal (including any Registration Delay Payments
which Purchaser elects to add to the principal amount hereof) hereunder are
payable in lawful money of the United States of America to Purchaser in
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immediately available funds. Notwithstanding the foregoing, in the event that
the Second Advance does not occur by the Second Advance Closing Date (as such
terms are defined in the Amended and Restated Loan and Security Agreement dated
as of November 12, 2004 by and among the Company, Purchaser and Lifestream
Diagnostics, Inc.), the outstanding principal amount of this Note shall be
reduced by fifty percent (50%) and the Company shall issue a replacement Note to
the Purchaser in such amount.
The term of this Convertible Term Note (the "Note" or this "Note")
shall commence on the date hereof (the "Issue Date") and shall extend until
February 1, 2006 (the "Term"), when the entire principal amount of this Note,
and any unpaid Registration Delay Payments, shall be due and payable.
Subject at all times to the terms and conditions hereof, 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 Registration Delay Payments accrued
and unpaid to the prepayment date on the principal amount to be prepaid.
Subject at all times to the terms and conditions of this Note
including, without limitation, any limitations on beneficial ownership set forth
in Section 2.10 below, this Note (including any Registration Delay Payments
which Purchaser elects to add to the principal amount hereof), may, at the
option of the Company, be paid or prepaid through the issuance of registered
shares of the Company's Common Stock ("Payment Shares"). The number of Payment
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Shares to be issued shall be determined by dividing the amount of principal
(including any Registration Delay Payments which Purchaser elects to add to the
principal amount hereof) to be paid by an amount equal to 80% of the average of
the five (5) lowest closing bid prices for the Common Stock on the OTC Bulletin
Board, or such other exchange or medium on which the Common Stock is principally
traded (the "Principal Market") during the twenty (20) consecutive trading days
immediately preceding the last trading day of the Term or, in the case of
prepayment, the date the Prepayment Notice is delivered to Purchaser.
2. CONVERSION OF NOTE
Purchaser shall have conversion rights as follows (the "Conversion
Rights"):
2.1. Right to Convert - Purchaser. Subject to and upon compliance with
the provisions of this Section 2, at any time after the Issue Date, at the
option of Purchaser, the Note, or any $1,000 multiple of the principal amount
thereof then outstanding (including any Registration Delay Payments which
Purchaser elects to add to the principal amount hereof), may be converted at the
outstanding principal amount hereof, or at such portion hereof, into fully paid
and non-assessable shares of registered Common Stock ("Conversion Shares") as
provided in Section 2.2.
2.2. Conversion Rate. The number of Conversion Shares to be issued
shall initially be determined by dividing the principal amount of this Note to
be converted (including any Registration Delay Payments which Purchaser elects
to add to the principal amount hereof) by Five Cents ($.05) (the "Conversion
Rate" or, as the context may require, the "Conversion "Price"); provided,
however, that the Conversion Rate shall be subject to the adjustments described
in Section 2.5 (exclusive of Section 2.5(a)) below.
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2.3. 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 2.4 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. 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.
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2.4. Fractional Shares. 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.
2.5. Adjustment of Conversion Price. The Conversion Price shall be
subject to adjustment from time to time as follows:
(a) Upon the completion of any offering by the Company of
shares of Common Stock or other securities completed while this Note
remains outstanding, at a purchase price or conversion price that is
less than the Conversion Price (each such offering, a "Subsequent
Offering"), the Conversion Price shall be subject to adjustment whereby
such adjusted 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 Purchaser (each,
a "Subsequent Offering Conversion Price"). Upon completion of any
Subsequent Offering, Purchaser may elect to convert such outstanding
principal amount of the Note (including any Registration Delay Payments
which Purchaser elects to add to the principal amount thereof) at the
applicable Subsequent Offering Conversion Price up to an amount of
Common Stock not to exceed the limitations on beneficial ownership set
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forth in Section 2.10 below. Notwithstanding the foregoing, Purchaser
shall be entitled to convert the principal amount of this Note
(including any Registration Delay Payments which Purchaser elects to
add to the principal amount hereof) into Common Stock at the Subsequent
Offering Conversion Price on one occasion per Subsequent Offering, and
if Purchaser converts less than the entire principal amount of this
Note (including any Registration Delay Payments which Purchaser elects
to add to the principal amount hereof) at the Subsequent Offering
Price, than any principal balance of this Note not so converted shall
thereafter be convertible at the Conversion Price, subject to
adjustment as hereafter provided in this Section 2.5.
(b) If the number of shares of Common Stock outstanding is
increased by a stock dividend payable in shares of Common Stock or by a
subdivision or split of shares of Common Stock, then the Conversion
Price in effect immediately prior to such stock dividend, subdivision
or split shall be proportionately decreased and the number of shares of
Common Stock convertible hereunder shall be proportionately increased.
(c) If the number of shares of Common Stock outstanding is
decreased by a combination of the outstanding shares of Common Stock,
then the Conversion Price in effect immediately prior to such
combination shall be proportionately increased and the number of shares
of Common Stock convertible hereunder shall be proportionately
decreased.
(d) If the Company shall declare a cash dividend upon its
Common Stock payable otherwise than out of earnings or earned surplus
or shall distribute to holders of the Common Stock shares of its
capital stock other than Common Stock, stock or other securities of
other persons, evidences of indebtedness issued by the Company or other
persons, assets (excluding cash dividends and distributions) or options
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or rights (excluding options to purchase and rights to subscribe for
Common Stock or other securities of the Company convertible into or
exchangeable for Common Stock), then, in each such case, the Conversion
Price in effect immediately prior to such dividend or distribution
shall be adjusted as follows. Immediately following the record date
fixed for the determination of holders of Common Stock entitled to
receive such dividend or distribution, the Conversion Price in effect
thereafter shall be determined by multiplying the Conversion Price in
effect immediately prior to such record date by a fraction of which the
numerator shall be an amount equal to (i) the Current Market Price (as
defined below) of one share of Common Stock less (ii) the fair market
value (as determined by the Board of Directors of the Company, which
determination shall be conclusive absent manifest error) of the stock,
securities, evidences of indebtedness, assets, options or rights so
distributed in respect of one share of Common Stock, and of which the
denominator shall be the Current Market Price. The term "Current Market
Price" shall mean the average of the daily closing prices on the
Principal Market of one share of Common Stock for the thirty (30)
consecutive trading days ending on the day before the day in question
and such average will be adjusted for any stock dividend, split,
combination or reclassification that took effect during such thirty
(30) business day period.
(e) All calculations under this Section 2.5 shall be made to
the nearest one-tenth (1/10) of a share.
(f) Whenever the Conversion Price shall be adjusted as
provided in this Section 2.5, the Company shall prepare a statement
showing the facts requiring such adjustment and the Conversion Price
and the number of shares of Common Stock convertible hereunder that
shall be in effect after such adjustment. The Company shall cause a
copy of such statement to be sent to the Purchaser. Where appropriate,
such copy may be given in advance and may be included as part of the
notice required to be mailed under the provisions of Section 2.5(h)
hereof.
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(g) Adjustments made pursuant to Sections 2.5(b), (c) and (d)
shall be made on the date such dividend, subdivision, split,
combination or distribution is made, and shall become effective at the
opening of business on the business day next following the record date
for the determination of shareholders entitled to such dividend,
subdivision, split, combination or distribution.
(h) In the event the Company shall propose to take any action
of the types described in Sections 2.5(b), (c), or (d) the Company
shall forward, at the same time and in the same manner, to the
Purchaser such notice, if any, that the Company shall give to the
holders of capital stock of the Company. Failure to give such notice,
or any defect therein, shall not affect the legality or validity of any
such action.
(i) Whenever the provisions of this Section 2.5 shall require
that an adjustment shall become effective immediately after the record
date for an event and the Purchaser exercises its Conversion Rights
after such record date and before the occurrence of such event, the
Company may defer until the occurrence of such event issuing to the
Purchaser the additional shares of Common Stock issuable upon such
exercise by reason of the adjustment required by such event over and
above the shares of Common Stock issuable upon such exercise before
giving effect to such adjustment; provided, however, that the Company
shall deliver to such Purchaser a due bill or other appropriate
instrument evidencing such Purchaser's right to receive such additional
shares upon the occurrence of the event requiring such adjustment. (j)
The sale or other disposition of any Common Stock theretofore held in
the treasury of the Company shall be deemed to be an issuance thereof.
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2.6. No Impairment. The Company will not, by amendment of its
Certificate 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.
2.7. 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.
2.8. 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
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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.
2.9. Reservation of Stock Issuable Upon Conversion; Registration Rights
Agreement. 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. The parties expressly acknowledge and
agree that the Conversion Shares and the Payment Shares are subject to
registration pursuant to the Registration Rights Agreement.
2.10. Conversion of Note and Effect on Beneficial Ownership.
Notwithstanding anything contained herein to the contrary, no payment or
conversion of this Note shall take place to the extent that after giving effect
to such payment or conversion, as the case may be, the beneficial owner of such
shares (together with such person's affiliates) would have acquired, through
payment, conversion of Notes or otherwise, beneficial ownership of a number of
shares of Common Stock during the 60-day period ending on and including the date
of such conversion (the "60-Day Period"), that, when added to the number of
shares of Common Stock beneficially owned by such person (together with such
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person's affiliates) at the beginning of the 60-Day Period, exceeds 9.99% of the
number of shares of Common Stock outstanding immediately after giving effect to
such payment and conversion. For purposes of the foregoing sentence, the number
of shares of Common Stock beneficially owned by a person and its affiliates
shall include the number of shares of Common Stock issuable upon payment and
conversion of the Notes with respect to which the determination of such sentence
is being made, but shall exclude the number of shares of Common Stock which
would be issuable upon (A) payment or conversion of the remaining,
non-converted, unpaid Notes beneficially owned by such person or any of its
affiliates and (B) payment, exercise or conversion of the unpaid, unexercised or
unconverted portion of any other securities of the Company (including, without
limitation, any warrants) subject to a limitation on payment, conversion or
exercise analogous to the limitation contained herein beneficially owned by such
person or any of its affiliates. Except as set forth in the preceding sentence,
for purposes of this Section 2.10, beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended. For purposes of this Section 2.10, in determining the number of
outstanding shares of Common Stock, a holder may rely on the number of
outstanding shares of Common Stock as reflected in (1) the Company's most recent
Form 10-Q, Form 10-K or other public filing with the SEC, as the case may be,
(2) a more recent public announcement by the Company, or (3) any other notice by
the Company or its transfer agent setting forth the number of shares of Common
Stock outstanding. Upon the written request of any holder, the Company shall
promptly, but in no event later than one (1) Business Day following the receipt
of such notice, confirm in writing to any such holder the number of shares of
Common Stock then outstanding. In any case, the number of outstanding shares of
Common Stock shall be determined after giving effect to the payment, conversion
or exercise of securities of the Company, including the payment and/or
conversion of the Note(s), by such holder or its affiliates since the date as of
which such number of outstanding shares of Common Stock was reported.
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3. LIQUIDATION
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 3.1 herein defined as "Sale or Merger").
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 (including
any Registration Delay Payments which Purchaser elects to add to the principal
amount hereof).
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
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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.
3.4. Notice of Liquidation Event. If the Board of Directors of the
Company shall declare a liquidation event (as described in Section 3.1), the
Company shall mail notice thereof to the Purchaser hereof not more than ten (10)
days following such declaration by the Board of Directors.
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 any installment
of principal on the Note (including any Registration Delay Payments
which Purchaser elects to add to the principal amount thereof), when
and as such payment shall become due and payable, whether on a payment
due date, at maturity or by acceleration or otherwise if such payment
is not made within five (5) days of 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
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(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; 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) 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
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(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 $200,000.00 that remains unpaid,
unstayed, undischarged, unbonded, or undismissed for a period of thirty
days; or
(g) the filing of record, at any time subsequent to the Issue
Date, 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 xxxxxx 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.
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 (including any Registration Delay Payments
which Purchaser elects to add to the principal amount hereof), together
with all costs of collection, shall immediately become due and payable.
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(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 Xxxxxxxxx.
5. NEGATIVE COVENANT
The Company covenants and agrees with the Purchaser that it shall not,
and it shall cause its majority-owned subsidiaries to not, without the prior
written consent of the holder of this Note, which may be withheld in its sole
discretion, authorize, incur or suffer to exist any (a) Indebtedness with
repayment obligations senior to the Indebtedness evidenced by this Note or any
other obligation under the Amendment Agreement, or (b) Lien on any asset now
owned or hereafter acquired by the Company or its majority-owned subsidiaries,
except Liens in existence on the Issue Date and any Liens hereinafter granted
relating to the securities or assets of Secured Interactive Technologies, Inc.
For purposes of this Note, the terms "Indebtedness" and "Liens" shall have the
same meanings as set forth in the Amendment Agreement.
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6. AMENDMENT AND WAIVER
6.1. 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.
7. MISCELLANEOUS
7.1. 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.
7.2. 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.
7.3. Headings. The headings in this Note are inserted for convenience
only and do not constitute a part of this Note.
7.4. Governing Law. This Note shall be construed in accordance with and
governed by the laws of the State of New York.
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7.5. 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 Registration Delay Payments,
if any, have been paid on the Note so lost, stolen, destroyed or mutilated.
7.6. 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.
7.7. Assignment. Subject to compliance with 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 without the consent of the
Company. In the event that Purchaser wishes 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.
7.8. Registration Delay Payment Rights Preserved. A Note delivered upon
transfer of or in exchange for or in lieu of this Note shall carry all the
rights to Registration Delay Payments that were carried by this Note, and each
such Note shall be so dated that neither gain nor loss in Registration Delay
Payments shall result from such transfer, exchange or substitution.
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7.9. Notices. Any notice or other document required or permitted to be
given or delivered to the Holder shall be delivered at, or sent by certified or
registered mail, postage prepaid, to the Holder's address as set forth in the
Company's records, or to such other address as shall have been furnished to the
Company in writing by the Holder, and a copy of any such notice shall be
provided to Xxxxxx's counsel as notified from time to time by Holder to the
Company. Any notice or other document required or permitted to be given or
delivered to the Company shall be delivered at, or sent by certified or
registered mail, postage prepaid, to, the address of the Company as set forth
following its signature below, or to such other address as shall have been
furnished to the Holder in writing by the Company. Any notice or other document
so addressed and mailed by registered or certified mail shall be deemed to be
given when so mailed. Any notice so addressed and otherwise delivered shall be
deemed to be given when actually received by the addressee.
7.10. Entire Agreement. This Note, the Amendment Agreement and the
documents executed in furtherance thereof contains the entire understanding of
the parties with respect to the matters covered herein.
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IN WITNESS WHEREOF, the Company has caused this Note to be executed in
its corporate name, all as of the 12th day of November 2004.
[CORPORATE SEAL] LIFESTREAM TECHNOLOGIES, INC.
Attest: By:
----------------------------- -------------------------------
Title: Title:
------------------------------ ----------------------------
000 Xxxxxxxxxx Xxxx
Xxxxx 000
Xxxx Xxxxx, XX 00000
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