Exhibit 10.14
EXCHANGE AGREEMENT
This Exchange Agreement (the "Agreement"), dated as of January 12, 2004
is by and among Lifestream Technologies, Inc., a Nevada corporation (the
"Company"), and Palisades Master Fund L.P., Crescent International Ltd., Alpha
Capital AG, Xxxxx International Ltd., Bristol Investment Fund, Ltd.,
Congregation Mishkan Xxxxxx, Gryphon Master Fund LP and Lucrative Investments
(each the "Holder" and collectively referred to as the "Holders").
WHEREAS, each Holder holds an 8% Convertible Debenture of the Company
due on September 6, 2006 (the "Debentures"), which Debentures were issued
pursuant to that certain Securities Purchase Agreement, dated September 10, 2003
(the "Purchase Agreement").
WHEREAS, each Holder desires to exchange (the "Exchange") all of the
principal amount of the Debentures held by it, plus accrued but unpaid interest
thereon through the date hereof, for shares of the Company's common stock, par
value $0.001 per share (the "Common Stock") based on an exchange rate equal to
$0.09 per share (the "Exchange Common Stock").
WHEREAS, to the extent the Exchange causes any Holder to hold more than
4.9% of issued and outstanding Common Stock on the date of the Exchange, then,
to the extent the Exchange shall cause such Holder's beneficial ownership to
exceed 4.9%, such portion of the Exchange resulting in such excess beneficial
ownership of such Holder shall be delayed for periods of 75 calendar days until
such Holder's Debentures are no longer outstanding.
WHEREAS, the shares of Common Stock underlying the Debentures have been
registered pursuant to a registration statement with the Securities and Exchange
Commission (the "Commission") and may be issued free of restrictive legend and
therefore, in reliance on Section 3(a)(9) of the Securities Act as an exemption
from the registration requirements of Section 5 of such Act, the Exchange Common
Stock, at the Exchange, shall be issued free of legend.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for good and valuable consideration the receipt and adequacy
of which are hereby acknowledged, the Company and each Holder agree as follows
ARTICLE 1
DEFINITIONS
Section 1. Definitions. In addition to the terms defined elsewhere in
this Agreement, the following terms have the meanings indicated in this
Section 1:
"Person" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.
"Securities Act" means the Securities Act of 1933, as amended.
ARTICLE II
EXCHANGE OF SECURITIES
Section 2.1. Authorization and Issuance of Exchange Common Stock. The
Company has duly authorized (i) the issuance of the Exchange Common Stock, and
(ii) the Company's entering into the Exchange Agreement. The Company has a
sufficient number of shares of common stock authorized in order to issue the
Exchange Common Stock. The shares underlying the Debentures have been registered
for resale by the Holders on a Form SB-2, File No. 333-111053, which
registration statement (the "Registration Statement") has been declared
effective by the Commission, has remained effective since such date and is
effective on the date hereof.
Section 2.2. Exchange. Subject to the terms and conditions set forth
herein, the Company agrees to issue Exchange Common Stock to each Holder in
exchange for such Holder's delivery of their entire principal amount of
Debentures to the Company for cancellation. Each Holder shall receive, upon the
Exchange, a number of shares of Exchange Common Stock equal to the entire
principal amount of Debentures of such Holder outstanding on the date of the
Exchange, plus all accrued but unpaid interest thereon through the date hereof,
divided by $0.09. Notwithstanding anything herein to the contrary, to the extent
the Exchange will cause any Holder to hold more than 4.9% of issued and
outstanding Common Stock on the date of the Exchange, then, to the extent the
Exchange shall cause such Holder's beneficial ownership to exceed 4.9%, such
portion of the Exchange resulting in such excess beneficial ownership of such
Holder shall be delayed for consecutive periods of 75 calendar days so as never
to cause the Holder to exceed beneficial ownership of the Common Stock of 4.9%
until such Holder's Debentures are no longer outstanding. Subsequent Exchanges
pursuant to the previous sentence shall otherwise occur pursuant to the terms of
Section 2.3.
Section 2.3. Closing. On the date hereof, the Company hereby agrees to
deliver to the Holders and the Holders hereby agree to accept the Exchange
Common Stock, against delivery of the entire principal amount of each Holder's
respective Debenture to the Company for cancellation. On the date hereof, the
Company shall deliver to each Holder a certificate representing its respective
Exchange Common Stock via overnight delivery. The Exchange Common Stock must be
unlegended and free of any resale restrictions other than the Holder's
obligation to deliver a prospectus upon sale. Within 3 Trading Days of receipt
of the Exchange Common Stock in proper form, the Holders shall surrender to the
Company their respective Debentures; provided, however, if, pursuant to Section
2.2 the Holder is unable to effect an exchange of all of its principal amount of
Debentures, to effect the Exchange hereunder, the Holder shall not be required
to physically surrender Debentures to the Company. An Exchange hereunder shall
have the effect of lowering the outstanding principal amount of this Debenture
in an amount equal to the applicable Exchange and the Holder and the Company
shall maintain records showing the principal amount exchanged.
Section 2.4. Prospectus Supplement. Within 2 Trading Days of the date
hereof, pursuant to Section 424(b)(3) of the Securities Act, the Company agrees
to file a prospectus supplement on Form 424(b)(3) to the Registration Statement
disclosing the material terms of this Agreement.
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Section 2.5. Condition to Exchange. The Exchange shall not be effective
unless all Holders exchange all principal amounts of their Debentures hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of the Company. The Company
hereby makes the representations and warranties set forth below to the Holders
that as of the date of its execution of this Agreement:
(a) Authorization, etc. The execution, delivery and
performance of this Agreement, the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of the Company, and this
Agreement constitutes the legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms.
(b) Capital Stock. Upon the issuance of the Exchange Common
Stock under this Agreement, the total number of shares of capital stock
which the Company will have authority to issue under the Company's
articles/certificate of incorporation is a maximum of 250,000,000
shares. Immediately after the issuance of the Exchange Common Stock
under this Agreement, 141,200,316 shares of Common Stock will be issued
and outstanding.
(c) Compliance with Laws, Other Instruments of the Company,
etc. None of the execution and delivery of this Agreement, or the issue
and sale of the Exchange Common Stock or the consummation of the
transactions herein or therein contemplated or compliance with the
terms and provisions hereof and thereof will conflict with or result in
a breach of, or require any consent under, the articles/certificate of
incorporation or any applicable law or regulation, or any order, writ,
injunction or decree of any court or governmental authority or agency
(other than filings which will be made by the Company as may be
required by applicable state securities laws), or any agreement or
instrument to which the Company is a party or by which it is bound or
to which it is subject, or constitute a default under any such
agreement or instrument, or result in the creation or imposition of any
lien upon any of the revenues or assets of the Company pursuant to the
terms of any such agreement or instrument.
(d) Governmental Consent. Other than filings required by any
applicable state securities laws which shall be made by the Company,
neither the nature of the Company or of any of its respective
businesses or properties, nor any relationship between the Company and
any other Person, nor (except as expressly provided for in this
Agreement) any circumstance in connection with the offer, issue or sale
of the Exchange Common Stock is such as to require the consent,
approval or authorization of, or filing, registration or qualification
with, any governmental authority on the part of the Company or the as a
condition to the execution and delivery of this Agreement or any other
document required in connection with the authorization, offer, sale
and/or issuance of the Exchange as set forth herein.
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(e) No Commission. The Company has not paid, nor has it
accepted payment, directly or indirectly, commission or other
remuneration for the solicitation of the Exchange.
(f) Registration of Debentures. The shares of Common Stock
underlying the Debentures have been registered for resale by the
Holders under the Securities Act. Based upon consummation of the
Exchange as set forth herein, the Exchange Common Stock will not be
subject to restrictions on resale other than the obligations of the
Holder's to deliver a prospectus.
(g) Compliance with Exchange Act. The Company has timely filed
all reports required to be filed by it under the Securities Exchange
Act of 1934, as amended (and the rules and regulations adopted by the
Commission thereunder) during the Company's current fiscal year.
Section 3.2. Representations and Warranties of the Holders. Each
Holder, severally and not jointly with the other Holders, hereby makes the
representations and warranties set forth below to the Company that as of the
date of its execution of this Agreement:
(a) General Representations and Covenants. (1) This Agreement
is made by the Company with such Holder in reliance upon such Holder's
representations and covenants made in this Section 3.2, which by such
Holder's execution of this Agreement, it hereby confirms; and (2) Each
Holder is aware that the sale provided for in this Agreement and the
issuance of the Exchange Common Stock hereunder is exempt pursuant to
Section 3(a)(9) of the Securities Act, and that the Company's reliance
on such exemption is predicated on such Holder's representations set
forth herein.
(b) Ownership of Debentures. Such Holder is the sole legal and
beneficial owners of the Debentures to be exchanged by such Holder
hereunder and is conveying the Debentures to the Company free and clear
of any liens, claims, interests, charges or other encumbrances. Such
Holder has neither previously sold, assigned, conveyed, transferred or
otherwise disposed of, in whole or in part, the Debentures to be
exchanged by such Holder hereunder, nor has such Holder entered into
any agreement to sell, assign, convey, transfer or otherwise dispose
of, in whole or in part, such Debentures.
(c) Due Authorization. Such Holder represents and warrants
that (i) the execution and delivery of this Agreement by it and the
consummation by it of the transactions contemplated hereby have been
duly authorized by all necessary action on its behalf and (ii) this
Agreement has been duly executed and delivered by such Holder and
constitutes the valid and binding obligation of such Holder,
enforceable against it in accordance with its terms.
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ARTICLE IV
MISCELLANEOUS
Section 4.1. Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be made in
accordance with the provisions of the Purchase Agreement.
Section 4.2. Survival. All warranties and representations (as of the
date such warranties and representations were made) made herein or in any
certificate or other instrument delivered by it or on its behalf under this
Agreement shall be considered to have been relied upon by the parties hereto and
shall survive the issuance of the Exchange Common Stock. This Agreement shall
inure to the benefit of and be binding upon the successors and permitted assigns
of each of the parties; provided however that no party may assign this Agreement
or the obligations and rights of such party hereunder without the prior written
consent of the other parties hereto.
Section 4.3. Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together 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, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
Section 4.4. Severability. If any provision of this Agreement is held
to be invalid or unenforceable in any respect, the validity and enforceability
of the remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
Section 4.5. Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be determined
pursuant to the Governing Law provision of the Purchase Agreement.
Section 4.6. Entire Agreement. The Agreement, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
Section 4.7. Construction. The headings herein are for convenience
only, do not constitute a part of this Agreement and shall not be deemed to
limit or affect any of the provisions hereof. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.
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Section 4.8. Independent Nature of Holders' Obligations and Rights. The
obligations of each Holder under this Agreement are several and not joint with
the obligations of any other Holder, and no Holder shall be responsible in any
way for the performance of the obligations of any other Holder under this
Agreement. Nothing contained herein, and no action taken by any Holder pursuant
thereto, shall be deemed to constitute the Holders as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Holders are in any way acting in concert or as a group with
respect to such obligations or the transactions contemplated by this Agreement.
Each Holder shall be entitled to independently protect and enforce its rights,
including without limitation, the rights arising out of this Agreement, and it
shall not be necessary for any other Holder to be joined as an additional party
in any proceeding for such purpose.
Section 4.9 Equal Treatment of Holders. No consideration shall be
offered or paid to any person to amend or consent to a waiver or modification of
any provision of the Exchange unless the same consideration is also offered to
all of the parties to this Agreement. For clarification purposes, this provision
constitutes a separate right granted to each Holder by the Company and
negotiated separately by each Holder, and is intended to treat for the Company
the Holders as a class and shall not in any way be construed as the Holders
acting in concert or as a group with respect to the purchase, disposition or
voting of securities or otherwise.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized signatories as of the date first
indicated above.
LIFESTREAM TECHNOLOGIES, INC.
By:
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Name:
Title:
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR HOLDERS FOLLOW]
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HOLDER'S SIGNATURE PAGE
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed by their respective authorized signatories as of the date first
indicated above.
Name of Holder: PALISADES MASTER FUND, LP
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HOLDER'S SIGNATURE PAGE
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed by their respective authorized signatories as of the date first
indicated above.
Name of Holder: CRESCENT INTERNATIONAL LTD.
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HOLDER'S SIGNATURE PAGE
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed by their respective authorized signatories as of the date first
indicated above.
Name of Holder: ALPHA CAPITAL AG
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HOLDER'S SIGNATURE PAGE
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed by their respective authorized signatories as of the date first
indicated above.
Name of Holder: XXXXX INTERNATIONAL
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HOLDER'S SIGNATURE PAGE
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed by their respective authorized signatories as of the date first
indicated above.
Name of Holder: BRISTOL INVESTMENT FUND, LTD
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HOLDER'S SIGNATURE PAGE
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed by their respective authorized signatories as of the date first
indicated above.
Name of Holder: CONGREGATION MISHKAN XXXXXX
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HOLDER'S SIGNATURE PAGE
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed by their respective authorized signatories as of the date first
indicated above.
Name of Holder: GRYPHON MASTER FUND, LP
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HOLDER'S SIGNATURE PAGE
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed by their respective authorized signatories as of the date first
indicated above.
Name of Holder: LUCRATIVE INVESTMENTS
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