LOAN AGREEMENT
AGREEMENT made March 18, 1998 between Lifestream Technologies, Inc., a Nevada
corporation, with its principal place of business at 000 Xxxx Xx., Xxxxx 000,
Xxxxxxxxx, Xxxxx 00000 (the "Borrower"); Xxxxxxxxxxx Xxxx ("Xxxx"); Interactive
Health Evaluation systems, Inc., a Nevada corporation ("Interactive"); and
Britannia Holdings, Ltd., a Nevis corporation, whose mailing address is King's
House; Xxx Xxxxxx, Xx. Xxxxx Xxxx, Xxxxxxxx, Xxxxxxx Xxxxxxx XX0 0XX (the
"Lender"). The parties agree as follows:
1. Agreement to Make Loan. Subject to the terms hereof, Lender shall
make a loan to Borrower in the principal sum of U.S. $250,000 (the "Loan"). Such
loan shall be evidenced by the Borrower's promissory note of even date herewith,
and made payable to the order of the Lender twelve months from the date of its
execution ("Note"). Interest shall accrue at the rate of eight percent (8%) per
annum. All unpaid principal and unpaid interest shall be paid in full on
maturity. The Note shall contain such other terms and provisions as the Lender
shall determine are needed for its protection. Such Note shall be secured by the
Stock Pledge Agreement of even date herewith ("Pledge Agreement"), to be
provided by Xx. Xxxx. In addition, as partial consideration for the loan,
Borrower shall also issue to Lender 125,000 share of Borrower's restricted
common stock ("Stock"), which Stock shall be fully paid and non-assessable.
Lender agrees not to sell or transfer the Stock so long as Borrower, Xxxx and/or
Interactive are not in default of this Agreement, the Note or the Pledge
Agreement and that any transfer of the Stock shall be made in accordance with
federal and state securities laws. The Stock shall be issued to Lender on the
date Borrower receives the loan proceeds. Notwithstanding any provisions to the
contrary regarding the term or maturity of the Note, on completion by the
Borrower of any equity offering of at least $2,000,000, all amounts unpaid on
the Note shall become immediately due and payable.
2. Pledge Agreement. Borrower warrants that the stock pledge by Xx.
Xxxx of certain of his stock in the Borrower and filing of an appropriate
financing statement will create a valid and perfected first priority security
interest in Lender's favor in the shares securing the payment of the Note.
Furthermore, the parties acknowledge that Lender would not have made the loan
without the security provided by the Pledge Agreement. Borrower and Xx. Xxxx
represent and warrant that the value of the pledged stock equals at least
$312,500. Borrower and Xx. Xxxx agree to immediately notify Lender if the value
of the pledged stock falls below $312,500 at which time Borrower and Xx. Xxxx
shall immediately provide additional security, whether in the form for
additional pledged stock or otherwise, to provide Lender security or at least
$312,500 to secure Borrower's performance under this Agreement and the Note.
3. Conversion Option. In lieu of repayment in cash, Lender, at Lender's
sole discretion, prior to repayment in full of the Note, shall have the option,
and Borrower hereby grants to Lender the option, to convert all or part of the
amounts owed by Borrower on the Note into stock of the Borrower, calculated at
$1.25 per share. For example, if Lender decided to convert the unpaid principal
of $250,000 into the stock of the Borrower, Lender would receive 200,000 shares
of Borrower's common stock. This options hall be on the following terms and
conditions (`Option"):
a. Borrower shall set aside in reserve sufficient stock
for the conversion rights granted herein to be fully
implemented.
b. The conversion price shall be $1.25 per share.
c. Lender may exercise its Option at any time, until the
loan is paid in full.
d. Lender may exercise its Option in whole or in part by
converting all or only a portion of the amount owing
on the Note into stock of the borrower.
e. Upon giving Borrower notice that Lender will exercise
the Option, Borrower shall deliver to Lender
certificates evidencing ownership of the total number
of shares of stock converted, such stock to be fully
paid and non-assessable.
4. Extension Period and Additional Consideration. Borrower, in its sole
discretion, may elect to extend the term of the Note for an additional 12-month
period by giving Lender at least 30 days written notice before the end of the
first 12-month term. As consideration for exercise of this extension option,
Lender shall receive the following:
a. one share of Borrower's common stock shall be issued
for every $5 of unpaid principal and interest due on
the Note as of the date of the notice of extension,
which stock shall be fully paid and non-assessable;
and
b. the conversion price set forth in section 3.b above
shall be reduced to $1 per share
5. Warranty as to Stock. All of the Borrower's outstanding stock,
including all warrants, securities convertible into stock, options, and
agreements to issue any stock, securities, warrants or options, shall be
referred to as "Outstanding Stock." Borrower agrees that if Lender were to
convert the total principal loan amount of $250,000 to stock at $1.25 per share,
Lender would hold 2.54% of the outstanding stock of Borrower. Lender recognizes
Borrower will be issuing additional shares of stock to fund Borrower's
operations, and may also effect other capitalization changes. To protect Lender
from dilution of its conversion rights, Borrower agrees that: (a) In the event
Borrower sells shares of its stock below $1.25 per share (or $1.00 per share in
the event of the extension of the Note.) Borrower agrees to adjust the share
prices in the conversion section of this Agreement by decreasing the various
conversion prices described in the Agreement by such percentage as necessary to
return the Borrower's percentage of Outstanding Shares issued as a result of
note conversion by Lender to such number as represent the percentage of shares
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they would have represented has Borrower sold the additional equity at a price
of $1.25 per share (or $1.00 per share in the event of an extension of the
note); (b) Lender shall have a right, prior to the closing of any private
financing by Borrower, to purchase shares in such financing sufficient to
maintain the percentage ownership, until such time as Borrower successfully
completes a registered securities offering, including debt securities; (c)
Lender's conversion prices as described in this Agreement and the Note shall be
adjusted proportionately to reflect any change in Borrower's capitalization
caused by stock splits (forward or reverse) or stock dividends. Borrower
represents and warrants it is a reporting company and that benefits of Rule 144
will be available to Lender with respect to the Stock issued pursuant to section
1 and all other shares of stock issues to Lender under the terms of this
Agreement.
6. Other Rights. Borrower agrees to grant Lender such treatment with
respect to shares held by Lender after conversion. So that any rights held by
any present or future shares of the Borrower, whether common or preferred, such
as preemptive rights, anti-dilution rights, registration rights (corresponding
with any registration rights accruing to or exercised by shareholders holding
10% or more of Borrower's securities, co-sale rights (corresponding with any
registration rights accruing to or exercised by shareholders holding 10% or more
of Borrower's securities), and the like shall attach to the shares held by
Lender on conversion, without any further action being required by either
Borrower or Lender.
7. First Offer Rights. Borrower agrees that Lender shall receive an
offer to purchase up to 50% of the Borrower's next private placement stock
offering.
8. First Offer Rights for Offering by Interactive Health Evaluation
Systems, Inc. Interactive agrees to offer Lender the opportunity to purchase up
to a 10% interest in Interactive Health Evaluation Systems, Inc., a corporation
controlled by Xxxxxxxxxxx Xxxx. The offer shall be made the next time that
Interactive offers any shares of stock to raise additional capital.
9. Events of Default. If any of the following events shall occur, the
entire principal balance and accrued interest owing under the Note shall, at the
option of the holder thereof, become immediately due and payable:
a. If the Borrower fails to make any payments when due.
b. If the Borrower, Xx. Xxxx or Interactive fails to
comply with any applicable covenants (other than
payments of amounts owed when due) contained in this
Agreement, the Note, or the Pledge Agreement, after
twenty-one days written notice from Lender to the
defaulting party of such default and the defaulting
party's failure to cure the default.
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c. If a petition in bankruptcy is filed by or against
the Borrower, Xx. Xxxx, Interactive, or a receiver or
trustee of the property of the Borrower or Xx. Xxxx
is appointed; or if the Borrower, Xx. Xxxx, or
Interactive files a petition for reorganization under
any provision of the Bankruptcy Law or of any other
state or federal law, or makes an assignment for the
benefit of creditors, or is adjudged insolvent by any
state or federal court of competent jurisdiction.
Upon default, any amounts owed under the Note shall incur interest at the rate
of eighteen percent (18%) per annum until paid in full.
10. Effect of Agreement on Note and Pledge Agreement. The Note and
Pledge Agreement to be executed, acknowledged, and delivered pursuant to this
Agreement shall be subject to all the conditions, stipulations, agreements, and
covenants contained in this Agreement to the same extent as if the Agreement
were fully set forth and made part of such Note and Pledge Agreement, until this
Agreement is terminated.
11. Amendment to Agreement. This Agreement may not be changed orally,
but only by an agreement in writing and signed by the party against whom
enforcement of any waiver, change, modification, or discharge is sought.
12. Application of Agreement. This Agreement is made for the sole
protection and benefit of the parties, and no other person shall be deemed to
have a right to action of any kind hereunder.
13. Notice. Notices to the parties may be given by personal delivery or
delivery by air courier with regular service to the addresses at the following
addresses:
To Lender: Britannia Holdings, Ltd.
King's House, The Xxxxxx Xxxxxx
Xx. Xxxxx Xxxx
Xxxxxxxx, Xxxxxxx Xxxxxxx XX0 0XX
Facsimile: 00(0)0000 000000
With a copy to:
Xxxxx, Xx & XxXxxxxxx PLLC
000 Xxxxx Xxx., Xxx. 0000
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
To Borrower: Lifestream Technologies, Inc.
000 Xxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
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To Xx. Xxxx: Xx. Xxxxxxxxxxx Xxxx
c/o Lifestream Technologies, Inc.
000 Xxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
To Interactive: Interactive Health Evaluation
Systems, Inc.
000 Xxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Facsimile: (208_ 263-6627
Any notice given by facsimile shall be deemed effective on the date of
transmission provided a text copy is delivered by first class or air mail, when
sent to the Borrower, Xx. Xxxx, or Interactive and a text copy is delivered by
air courier with regular service to the addressee, when sent to Lender.
14. Entire Agreement. This Agreement supersedes all agreements
previously made between the parties relating to its subject matter. There are no
other understandings or agreements between them.
15. Non-waiver. No delay or failure by either party to exercise any
right under this Agreement, and no partial or single exercise of that right,
shall constitute a waiver of that or any other right, unless otherwise expressly
provided herein.
16. Headings. Headings in this Agreement are for convenience only and
shall not be used to interpret or construe its provisions.
17. Governing law. This Agreement shall be construed in accordance with
and governed by the laws of the State of Idaho.
18. Binding effect. The provisions of this Agreement shall be binding
upon and inure to the benefit of each of the parties and their respective legal
representatives, successors, and assigns.
19. Foreign Targeted Bearer Debt. The loan transaction contemplated by
this Agreement shall constitute and qualify as "portfolio debt investment" (as
that term is defined and interpreted under the taxation laws of the United
States of America). The parties to this obligation specifically intend that the
interest payable hereunder shall not be subject to income or excise taxation,
including the imposition of any withholding taxes thereon, under the laws of the
United States of America or any State or Municipality thereof. Lender certifies
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to Borrower that Lender is not a "United States Person" (as that term is defined
and interpreted under the taxation laws of the United States of America).
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their respective corporate names:
BORROWER: LIFESTREAM TECHNOLOGIES, INC.,
a Nevada Corporation
By: _______________________
Xxxxxxxxxxx Xxxx
Title: Chairman
XX. XXXX:
---------------------------
Xxxxxxxxxxx Xxxx
INTERACTIVE: INTERACTIVE HEALTH EVALUATION
SYSTEMS, INC., a Nevada Corporation
---------------------------
Xxxxx Xxxx
Title: President
LENDER: BRITANNIA HOLDINGS, LTD.,
a Nevis Corporation
By: _______________________
Title: __________________
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