SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14 INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the registrant [X]
Filed by party other than the registrant [_]
Check the appropriate box:
[X]Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
LIFESTREAM TECHNOLOGIES, INC.
(Name of Registrant as Specified in Its Charter
and of Person Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11 (1) Title of each class of securities to which transaction
applies: (2) Aggregate number of securities to which transactions
applies: (3) Per unit price or other underlying value of transaction
computed pursuant to
Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0- 11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
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LIFESTREAM TECHNOLOGIES, INC.
510 Clearwater Loop, Suite 101, Post Falls, Idaho 83854
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held June 10, 2002
To our Stockholders:
You are cordially invited to attend a special meeting of the
Stockholders ("Special Meeting") of Lifestream Technologies, Inc. ("Company"), a
Nevada corporation, which will be held at West Coast Templin's Resort located at
414 East First Avenue, Post Falls, Idaho, on June 10, 2002 at 8:30 a.m. Pacific
Time, or at any and all adjournments thereof, for the following purposes:
1. To approve an amendment to the Articles of Incorporation (i) to increase
the number of authorized shares of common stock from 50,000,000 shares, par
value $0.001 per share, to 100,000,000 shares, par value $0.001 per share
and (ii) to increase the number of authorized shares of "blank check"
preferred stock from 5,000,000 shares, par value $0.001 per share, to
15,000,000 shares, par value $0.001 per share;
2. To approve an amendment to the Articles of Incorporation to provide for a
classified Board of Directors;
3. To approve an amendment to the Articles of Incorporation to provide for
limitation of liability and indemnification for members of the Board of
Directors;
4. To approve an amendment to the Articles of Incorporation to make certain
technical amendments to the Articles of Incorporation;
5. To adopt a 2002 Stock Option Plan;
6. To transact such other business as may properly come before the meeting or
any adjournment or postponement thereof.
With respect to Proposals 1 through 4 those proposals, following approval
by the stockholders, will be included in an Amended and Restated Articles of
Incorporation for the Company which will be subsequently filed with the
Secretary of State of the State of Nevada. A copy of the proposed Amended and
Restated Articles of Incorporation are attached to the Proxy Statement as
Exhibit A.
Each of the above proposals are more fully discussed in the Proxy Statement
accompanying this Notice.
The Board of Directors of the Company has determined that each of the
proposals are advisable and in the best interests of the Company and recommends
that you vote FOR them.
The Board has fixed the close of business on April 1, 2002 as the record
date for determining those stockholders who will be entitled to notice of, and
to vote at, the Special Meeting. The stock transfer books will not be closed
between the record date and the date of the meeting.
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Representation of at least a majority of the outstanding shares of the
Company's Common Stock entitled to vote, whether present in person or
represented by proxy, is required to constitute a quorum. Accordingly, it is
important that your shares be represented at the meeting. THE PROMPT RETURN OF
PROXIES WILL SAVE YOUR COMPANY THE EXPENSE OF FURTHER REQUESTS IN ORDER TO
OBTAIN A QUORUM AND TO SOLICIT YOUR VOTE ON THESE PROPOSALS. WHETHER OR NOT YOU
PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED
PROXY CARD AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE. Your proxy may be
revoked at any time prior to the time it is voted. You may also revoke your
proxy by attending the meeting and voting in person.
Please read the proxy materials carefully. Your vote is important and
the Company appreciates your cooperation in considering and acting on the
matters presented.
Very truly yours,
/s/ Christopher Maus
--------------------------------------------
Christopher Maus, Chairman of the Board of
Directors, President and Chief Executive Officer
Post Falls, Idaho
May 1, 2002
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Stockholders Should Read The Entire Proxy Statement
Carefully Prior To Returning Their Proxies
PROXY STATEMENT FOR THE 2002 SPECIAL MEETING OF STOCKHOLDERS OF
LIFESTREAM TECHNOLOGIES, INC.
To Be Held June 10, 2002
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors ("Board") of Lifestream Technologies, Inc.
("Company"), a Nevada corporation, of proxies to be voted at a Special Meeting
of Stockholders ("Special Meeting") to be held at West Coast Templin's Resort
located at 414 East First Avenue, Post Falls, Idaho on June 10, 2002 at 8:30
a.m. Pacific Time or at any and all adjournments or postponements thereof. The
Special Meeting was called by the Board of Directors for the purpose of
approving proposed amendments to the Company's Articles of Incorporation (the
"Articles") and to approve a proposed 2002 Stock Option Plan. The Board of
Directors (the "Board") unanimously proposed the changes to the Articles of
Incorporation for the purposes set forth in the accompanying Notice of Annual
Meeting of Stockholders ("Notice") and believes the changes will improve the
ownership structure of the Company, provide flexibility for the anticipated
further growth of the Company and ultimately enhance stockholder value.
This Proxy Statement and the accompanying proxy card are first being
mailed to you on or about May 3, 2002.
VOTING RIGHTS AND SOLICITATION
The close of business on April 1, 2002 was the record date for
stockholders entitled to notice of, and to vote at, this Special Meeting. As of
that date, 23,577,969 shares of the Company's common stock, $.001 par value per
share ("Common Stock"), were issued and outstanding. The Company did not have
any other class of equity securities outstanding as of the record date. All
shares of the Company's Common Stock outstanding on the record date are entitled
to vote at the Special Meeting, and stockholders of record entitled to vote at
the Special Meeting will have one vote for each share so held on the matters to
be voted upon.
Management does not know of any matters to be presented at the Special
Meeting other than those set forth in this Proxy Statement and accompanying
Notice. If other matters should properly come before the Special Meeting, the
proxy holders will vote on such matters in accordance with their best judgment.
Any stockholder has the right to revoke his or her proxy at any time before it
is voted by either delivering to the Company at its principal executive offices
at 510 Clearwater Loop, Suite 101, Post Falls, Idaho 83854, Attn: Chief
Financial Officer, a written notice of revocation or duly executed proxy bearing
a later date or by attending the Special Meeting and voting in person.
The quorum necessary to conduct business at the Special Meeting
consists of a majority of the outstanding Common Stock of the Company as of the
record date. Abstentions and broker non-votes are counted and included in the
determination of the number of shares present for quorum purposes but are
excluded in tabulating the vote for determination of whether a proposal has been
approved. Approval of the amendments to the Articles will require the approval
by stockholders, in person or by proxy, holding a majority of the issued and
outstanding shares of the Company.
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The cost of this solicitation will be borne by the Company. Proxies
will be solicited principally through the use of the mails, but, if deemed
desirable, may be solicited personally or by telephone, electronic mail,
telegraph, or personal interview by directors, officers and employees of the
Company for no additional compensation. Arrangements may be made with brokerage
houses and other custodians, nominees and fiduciaries to send proxies and proxy
material to the beneficial owners of the Company's Common Stock, and such
persons may be reimbursed for their expenses.
The matters to be considered and acted upon at the Special Meeting are
referred to in the preceding Notice and are more fully discussed below.
PROPOSAL 1
APPROVAL OF AN AMENDMENT TO THE COMPANY'S
ARTICLES OF INCORPORATION TO INCREASE THE AUTHORIZED CAPITALIZATION
Our Board has unanimously adopted a resolution proposing and recommending
stockholder approval of an amendment to the Company's Articles of Incorporation
which will (i) increase the Company's authorized number of shares of common
stock from 50,000,000 shares, par value $0.001 per share, to 100,000,000 shares,
par value $0.001 per share, and (ii) increase the authorized number of shares of
preferred stock from 5,000,000 shares, par value $0.001 per share, to 15,000,000
shares, par value $0.001 per share. The preferred stock would be "blank check"
preferred stock pursuant to the Amended and Restated Articles of Incorporation
such that the rights and preferences of any series of such preferred stock which
is issued by the Company will be set by the Board without additional stockholder
approval. The Company's existing authorized preferred stock constitutes "blank
check" stock pursuant to a power given to the Board in the Company's Bylaws to
set the rights and preferences for such stock. The authorization for the Board
to set the rights and preferences would be contained in Article Four of the
Amended and Restated Articles of Incorporation upon approval of the proposed
provisions and would include the right of the Board to amend the Amended and
Restated Articles of Incorporation to include a description of the applicable
rights and preferences. The Board believes this amended capital structure more
appropriately represents the present and future needs of the Company and
recommends such amendment to the stockholders for adoption. The proposed
amendment is set forth as Article Four [Capital Stock] in the proposed Amended
and Restated Articles of Incorporation attached as Exhibit A to this Proxy
Statement. If the amendment is adopted, it will become effective upon filing
with the Secretary of State of the State of Nevada.
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As of April 1, 2002, the Company had 23,577,969 shares of common stock
outstanding and, in addition, we had reserved approximately 1,745,426 shares of
common stock for issuance upon exercise of outstanding options granted under the
Company's stock option plan, and up to 24,468,984 shares of common stock which
may be issued upon exercise of outstanding convertible securities, options and
warrants issued in connection with Company financings. No shares of our Series A
Preferred Stock have been issued at this time.
Our Board believes it is advisable to increase the authorized number of shares
of common stock and blank check preferred stock in order to have additional
shares of common and preferred stock available to provide us with the
flexibility to use the company's capital stock for business and financial
purposes in the future. These additional shares may be used for various
purposes, including, without limitation, raising additional equity or
convertible debt financing, stock splits, providing equity incentives to
consultants, employees, officers or directors, establishing strategic
relationships with other companies and expanding the Company's business or
product lines through the acquisition of other businesses or products. The
Company has not committed to issue any shares of capital stock which are the
subject of this proposal.
The additional common stock to be authorized will have rights identical to the
currently outstanding common stock of the Company. Adoption of the proposed
amendment and issuance of the common stock will not affect the rights of the
holders of currently outstanding common stock of the Company, except for effects
incidental to issuing additional shares of common stock and increasing the
number of shares of common stock outstanding, such as dilution to net income per
share, if and when the Company becomes profitable, and dilution to the voting
rights of current holders of common stock. The Company's common stock has no
preemptive rights to purchase additional shares upon issuance of additional
shares by the Company.
The additional preferred stock to be authorized will be "blank check" preferred
stock, similar to the existing authorized preferred stock which is "blank check"
preferred pursuant to the Company's Bylaws as adopted by the Board. Pursuant to
the proposed Amended and Restated Articles of Incorporation, the rights and
preferences of any series of preferred stock authorized for issuance by the
Board may be set forth in an amendment to the Amended and Restated Articles of
Incorporation upon approval by the Board. Adoption of the proposed amendment and
issuance of the preferred stock would affect the rights of the holders of
currently outstanding common stock of the Company to the extent of the
preferences set by the Company's Board for the issuance of such preferred stock,
which would likely result in the preferred stock having preferential rights to
dividends, preferential rights to return of capital upon liquidation and
requiring separate approval of such preferred stock before certain corporate
actions could be taken by the Company. Other potential rights and preferences
are listed in the "blank check" provisions set forth in the proposed Amended and
Restated Articles of Incorporation which are attached hereto as Exhibit A. The
proposed technical amendments to the Articles, which are included in this Proxy
as Proposal 4, will include specific language clarifying that although the
existing Articles provide that the stockholders of the Company will not have
preemptive rights to subscribe to any new stock which the Company subsequently
issues, such rights may be granted by the Company pursuant to written agreements
because such rights are frequently given in connection with the issuance of
"blank check" preferred.
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Vote Required
Approval of the amendment to the Company's Articles of Incorporation to increase
the number of the Company's authorized shares of common stock and preferred
stock requires the affirmative vote of a majority of our issued and outstanding
shares of common stock. Abstentions and broker non-votes will have the same
effect as negative votes.
PROPOSAL 2
APPROVAL OF AN AMENDMENT TO THE COMPANY'S
ARTICLES OF INCORPORATION TO INCLUDE A CLASSIFIED BOARD OF DIRECTORS
Our Board has also unanimously adopted a resolution proposing and recommending
that our stockholders approve an amendment to our Articles to provide for the
classification of the Board into three classes of directors with staggered terms
of office beginning with the 2002 Annual Meeting of Stockholders. The text of
the proposed amendment to the Articles is set forth in full in Article Five
[Directors] of Exhibit A to this Proxy Statement.
Currently, pursuant to the Company's Bylaws, each member of the Board
("Director") is assigned to one of two classes. One class is elected at each
successive Annual Meeting to hold office for a two-year term and until
successors for such class have been qualified and elected, or until the death,
resignation or removal of any such Director. Currently, the Board consists of
six Directors. Our Board has unanimously approved and recommended that our
stockholders approve an amendment to the Articles of Incorporation to provide
for the classification of the Board into three classes of directors with three
year staggered terms of office. The proposed amendment would provide that
directors will be classified into three classes, as nearly equal in number as
possible starting with the election of directors at the 2002 Annual Meeting of
Stockholders. At each annual meeting following this initial classification and
election, the successors to the class of directors whose terms expire at that
annual meeting would be elected for a three year term of office to expire at the
third succeeding annual meeting after their election and until their successors
have been duly elected and qualified. If any vacancy occurred on the Board prior
to the 2002 Annual Meeting, the Board may appoint a new director to serve only
until the 2002 Annual Meeting at which time the entire classified Board will be
elected.
The classified board proposal is designed to assure continuity and stability of
the Board and the Company's policies. While the Board has not experienced any
problems with such continuity and stability in the past, it wishes to ensure
that this experience will continue. The Board also believes that the classified
board proposal will assist the Board in protecting the interests of our
stockholders in the event of an unsolicited offer for shares of the Company. The
proposed amendment will have the effect of extending the time required to effect
a change in control of the Board which may tend to perpetuate present management
over at least a two year period. Without the ability to obtain immediate control
of the Board, a takeover bidder will not be able to take action to control the
Company until it has a majority of the Board which may require two years.
Because the classified board proposal will increase the amount of time required
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for a takeover bidder to obtain control of the Company without the cooperation
of the Board, even if the takeover bidder were to acquire a majority of our
outstanding stock, it will tend to discourage certain tender offers, perhaps
including some tender offers that stockholders may feel would be in their best
interests. The classified board proposal will also make it more difficult for
the stockholders to change the composition of the Board even if the stockholders
believe such a change would be desirable and may discourage hostile takeover
bids for shares of the Company.
The proposed amendment also provides that if the designated number of members of
the Board, which is set by the Board, is increased or if a Director is removed
by the stockholders, the new positions may only be filled by a vote of the
Board. Pursuant to the proposed amendment to the Articles, directors chosen to
fill vacancies on a classified board, who will be chosen by the then current
Board, shall hold office until the next election of the class for which such
directors shall have been chosen, and until their successors are elected and
qualified.
Vote Required
Approval of the amendment to the Company's Articles of Incorporation to provide
for a classified Board requires the affirmative vote of a majority of our issued
and outstanding shares of common stock. Abstentions and broker non-votes will
have the same effect as negative votes.
ANTI-TAKEOVER EFFECT
Proposals 1 and 2, while having certain aspects that may have an anti-takeover
effect, are not part of any new plan by the Company to adopt anti-takeover
provisions. The Company is not aware of any attempt or intended attempt by any
person to take control of the Company. The amendments are proposed so that
existing provisions regarding both the classified Board, which has been in the
Company's Bylaws for a number of years, and the ability of the Board to fix the
terms of the preferred shares, which has been in the Company's Bylaws for a
number of years are included in the Articles of Incorporation in a manner that
will assure they will have the intended legal authorization and effect.
PROPOSAL 3
APPROVAL OF AN AMENDMENT TO THE COMPANY'S
ARTICLES OF INCORPORATION TO PROVIDE FOR LIMITATION OF LIABILITY
AND INDEMNIFICATION FOR MEMBERS OF THE BOARD OF DIRECTORS
Our Board has unanimously adopted a resolution proposing and recommending that
our stockholders approve an amendment to our Articles adding Article Six
[Limitation of Liability] to limit the personal liability of members of the
Board to the Company or stockholders resulting from breaches of the directors'
fiduciary duties, to the full extent possible under Nevada law, but only under
circumstances which do not involve liability of the director: (i) for acts or
omissions that involve intentional misconduct, fraud or a knowing violation of
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law by the director, (ii) for conduct violating NRS 78.300 of the Act, or (iii)
for any transaction from which the director will personally receive a benefit in
money, property or services to which the director is not legally entitled. The
proposed amendment also provides that if Nevada law is amended in the future to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of this Corporation
shall be eliminated or limited to the full extent permitted by the Act, as so
amended, without any requirement of further action by the stockholders.
The Board has also unanimously approved and recommended that our stockholders
approve an amendment to our Articles adding Article Seven [Indemnification] to
provide indemnification for members of the Board for any actions to which a
director may be subject because of his or her position as a director. The
amendment would also provide for the Company advancing or reimbursing expenses
which might be incurred by directors under such circumstances, to the full
extent possible under Nevada law, without regard to certain limitations set
forth in the Nevada statute. NPS 78.7502 provides for certain discretionary and
mandatory indemnification of directors, officers and employees if an indemnified
person acted in good faith and in a manner reasonably believed not to be opposed
to the best interests of the corporation. However NPS 78.751 limits the
Company's advance of expenses to situations where stockholders, independent
directors or independent legal counsel would have to approve the advance on a
specific case basis absent a provision to the contrary in the articles or
bylaws. Provisions for indemnification similar to that set forth in the proposed
amendment have been contained in the Company's Bylaws for years.
The Board believes that provisions limiting the liability of directors and
providing for indemnification are necessary and appropriate to obtain qualified
directors to serve on the Company's Board and similar provisions are quite
common in the articles of incorporation of public companies throughout the
United States. Most state corporation laws allow limitations of liability and
indemnification of directors as a response to substantial increases in premium
costs and reductions in coverage for directors' liability insurance policies in
the 1980s. The proliferation of stockholder derivative suits for breaches of
directors' fiduciary duty caused the insurance carriers to change their
directors' liability policies. In an effort to obtain and to maintain qualified
directors, many public companies have included in their articles of
incorporation and charters the limitation on directors' liability in accordance
with the laws of their state of formation. Our proposed, statutorily permitted
limitation, would allow only monetary liability of our directors to be
eliminated or limited, as provided for in proposed Article Six, to the fullest
extent permitted by Nevada statute. The Amendment would not relieve a director
of liability for breaches of his fiduciary duty, if his or her acts or omissions
were in bad faith or involved a knowing violation of law or he or she had
personally gained a financial profit or other advantage to which he or she was
not legally entitled. No suits are currently pending or, to the knowledge of the
Company, threatened against the directors alleging a violation of their
fiduciary duties to the Company or to the stockholders.
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The Board believes that the addition of the limitation of liability provisions
and the indemnification provisions to the Articles, in addition to having such
provisions in the Bylaws, could be material to the ability of the Company to
retain and acquire experienced and qualified independent directors for the Board
of the Company. Although recognizing that they could have a personal interest in
these matters, the Board recommends approval of the proposal.
Exhibit A, the Amended and Restated Articles of Incorporation, attached to this
Proxy Statement, contains a complete copy of proposed Articles Six [Limitation
of Liability] and Seven [Indemnification] and sets forth the proposed provisions
for limitations on liability and indemnification for directors of the Company.
Vote Required
Approval of the amendment to the Company's Articles of Incorporation to provide
for limitations on the liability of directors and to provide for indemnification
for the directors requires the affirmative vote of a majority of our issued and
outstanding shares of common stock. Abstentions and broker non-votes will have
the same effect as negative votes.
PROPOSAL 4
APPROVE CERTAIN TECHNICAL AMENDMENTS TO THE ARTICLES OF INCORPORATION
Our Board has also unanimously adopted a resolution proposing and recommending
that our stockholders approve amendments to our Articles that are intended to
update the Company's Articles of Incorporation and are not intended to affect
the substantive rights of any stockholders. Our Articles were initially adopted
in 1979 and, except for amendments to change the name and the capitalization,
have not been updated since adoption. The amendments: (a) modify Article Three
[Purposes], to delete various out-dated "purposes" that specifically refer to
mining related purposes and that are not relevant to the Company's current or
intended business, while retaining the general "purpose" provisions which allow
the Company to pursue whatever purposes the Board and management believe are in
the Company's best interests; (b) delete references in former Articles Five
[Directors] and Six [Incorporators] to the Company's original Board, and
incorporators, since such references are no longer relevant to the Company's
Articles of Incorporation and (c) amend Article Four [Capital Stock] to provide
that while stockholders generally shall not be entitled to preemptive rights, a
provision that has always been in the Company's Articles, preemptive rights may
be given by the Company by written agreement. In connection with the latter
amendment, the Board notes that while all public companies have a provision
denying statutory preemptive rights, the Articles should clarify the Company's
ability to contract for certain preemptive rights, if appropriate in connection
with Company financings or similar Company purposes. The Board does not consider
the proposed technical amendments to be material changes to the existing
Articles.
The text of the proposed Amended and Restated Articles of Incorporation, which
include the proposed technical amendments, is attached to this Proxy Statement
as Exhibit A. Copies of the existing Articles are available from the principal
executive offices of the Company and will be sent to any stockholder upon
request.
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Vote Required
Approval of the technical amendments to the Company's Articles of Incorporation
requires the affirmative vote of a majority of our issued and outstanding shares
of common stock. Abstentions and broker non-votes will have the same effect as
negative votes.
PROPOSAL 5
APPROVAL OF THE 2002 STOCK OPTION PLAN
Our Board has unanimously approved for submission to a vote of the stockholders
a proposal to ratify the adoption of the 2002 Stock Option Plan (the "Plan")
covering 2,000,000 shares of Common Stock which would be reserved for issuance
pursuant to the exercise of options or stock appreciation rights granted
thereunder. A copy of the Plan is attached to this Proxy Statement as Exhibit B,
and statements herein regarding the Plan are qualified by reference to the
complete Plan.
As of the Record Date, stock options to purchase 1,745,426 shares of Common
Stock under the 1998 Option Plan have been granted to 28 executive officers and
employees of the Company and were outstanding, and 21,450 options have been
exercised (see Executive Compensation" and "Stock Options"). There are no other
stock options outstanding to purchase shares of the Company's Common Stock under
the 1998 Stock Option Plan.
PURPOSE OF THE 2002 OPTION PLAN
The purpose of the 2002 Option Plan is to advance the interests of the Company
and its Stockholders by attracting and retaining key personnel and consultants.
Specifically, the Plan is designed to provide incentives (i) to certain
directors, officers, employees and other persons who perform services on behalf
of the Company and any subsidiaries of the Company by providing them with
opportunities to purchase Common Stock in the Company pursuant to options
granted thereunder which qualify as "incentive stock options" under Section
422(b) of the Internal Revenue Code of 1986, as amended (the "Code") ("ISOs") or
that do not qualify as ISOs ("Non-Qualified Option" or "NQSOs"), or the
opportunity to benefit in the appreciation of Common Stock through the award of
Stock Appreciation Rights ("SARs") and (ii) to individuals who are directors but
not also employees of the Company and the subsidiaries ("Non-Employee
Directors"), and to individuals who are independent contractors, or consultants
to the Company or its subsidiaries, by providing them with opportunities to
purchase Common Stock pursuant to NQSOs or benefit from the appreciation of
Common Stock pursuant to SARs.
ADMINISTRATION
The 2002 Option Plan will be administered either (i) by the Board of Directors
of the Company (the "Board"), or (ii) by a committee of two or more members of
the Board of Directors, each of which is a Non-Employee Director within the
meaning of Rule 16b-3 or any successor provision under the Exchange Act (in
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either case, the "Committee"). The Committee has authority (i) to select the
individuals who are to be granted options or SARs from among those eligible to
participate in the Option Plan, (ii) to establish the number of shares which may
be issued under each option or subject to each SAR, (iii) to determine at what
time options and SARs may be granted, (iv) to determine the exercise price of
shares subject to each option, and the base amount if applicable to each SAR,
(v) to determine the time at which each option and SAR shall become exercisable
and the duration of the exercise period, (vi) to determine whether restrictions
are to be imposed on shares subject to options and SARs and the nature of such
restrictions, if any, and (vii) to interpret the Option Plan and prescribe and
rescind rules and regulations relating to it.
ELIGIBILITY
Options and SARs may be granted only to (i) individuals who are employees of the
Company and its subsidiaries, including officers and directors who are also
employees at the time the option is granted, (ii) Non-Employee Directors, and
(iii) any other persons who perform services for or on behalf of the Company and
its subsidiaries, affiliates or any entity in which the Company has an interest,
or who are deemed by the Board to be in a position to perform such services in
the future. Options that constitute ISOs may only be granted to employees
described in clause (i) above, and Non-Employee Directors shall only be granted
NQSOs. No option shall be granted pursuant to the Plan after ten years from the
date the Plan is approved by the stockholders of the Corporation.
During any calendar year, no employee or consultant shall be granted any Options
or SAR, which, in the aggregate, would exceed 200,000 shares of Common Stock.
OPTION PRICE AND TERMS
Options granted under the 2002 Stock Option Plan may be either ISOs or NQSOs.
The option price of each share of Common Stock subject to an option will be
fixed by the Committee. In the case of an ISO, the exercise price shall not be
less than the fair market value of the Common Stock on the date of grant of the
option. However, if an ISO is granted to an employee owning more than 10% of the
Company's Common Stock, the exercise price for each share of Common Stock must
be at least 110% of the fair market value of the Common Stock on the date of
Grant. The exercise price for a share of Common Stock subject to a NQSO shall
not be less than 50% of the fair market value of a share of Common Stock on the
date of grant. In addition, as required by Section 422 of the Code, the
aggregate fair market value, determined at the time of grant, of the shares with
respect to which ISOs are exercisable for the first time by an individual during
any calendar year, may not exceed $100,000. NQSOs are not subject to this
requirement. The Committee determines the duration period for Options and SARs,
provided it is not longer than five (5) years, in the case of ISOs granted to
employees who hold ten percent (10%) of the outstanding stock of the Company,
ten (10) years in the case of ISOs generally, or ten (10) years, in the case of
NQSOs. In addition, the exercisability of any Incentive Award is subject to any
terms or conditions with respect to termination, vesting and, in the case of an
option, payment. Unless provided otherwise in any written agreement with respect
to an option, if the optionee's employment is terminated for any reason other
than his death or disability or termination for cause, or if an optionee is not
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an employee of the Company but is a member of the Company's Board and his or her
service as a director is terminated for any reason other than death or
disability, the option granted to him shall lapse to the extent unexercised on
the earlier of the expiration date or six (6) months following the date of
termination. If the optionee dies during the term of his employment, the option
granted to him shall lapse to the extent unexercised on the earlier of the
expiration date of the option or the date one (1) year following the date of the
optionee's death. If the optionee is permanently and totally disabled within the
meaning of Section 22(c)(3) of the Internal Revenue Code of 1986, the option
granted to him lapses to the extent unexercised on the earlier of the expiration
date of the option or one (1) year following the date of such disability.
Unless provided otherwise in a written agreement, an SAR will be exercisable for
30 days after termination of the grantee's employment with the Company for
reasons other than for cause, to the extent exercisable as of the date of such
termination of employment. The terms applicable to the exercise of a grantee who
is a consultant shall be set forth in the applicable written agreement.
The terms of any grant under the Plan shall be set forth in a written agreement
between the Company and the grantee.
The Plan provides for the payment of the exercise price of an option by
surrender of previously owned shares of Common Stock of the Company, and for the
exercise of an option in a credit-assisted transaction.
The number of shares of Common Stock as to which options and SARs may be
granted, the number of shares covered by each outstanding option and SAR, and
the price per share of each outstanding option or used in determining the amount
payable upon exercise of each outstanding SAR shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Common Stock
resulting from a subdivision or combination of shares or the payment of a stock
dividend in shares of Common Stock to holders of outstanding shares of Common
Stock or any other increase or decrease in the number of such shares effected
without receipt of consideration by the Company.
TRANSFERABILITY
Options granted under the Plan are not assignable or transferable by the
optionee otherwise than by will or the laws of descent and distribution, and,
during the lifetime of the optionee, may only be exercised by the optionee.
TERMINATION, SUSPENSION OR MODIFICATION OF THE 2002 STOCK OPTION PLAN
The Committee may amend, suspend or terminate the Plan at any time, except that
no amendment shall be made which (i) increases the total number of shares
subject to the Plan or changes the minimum purchase price therefor (except in
either case in the event of adjustments due to changes in the Company's
capitalization), (ii) affects outstanding Plan Options or any exercise right
thereunder, (iii) extends the term of any Plan Option beyond ten (10) years, or
-13-
(iv) extends the termination date of the Plan. Unless the Plan shall theretofore
have been suspended or terminated by the Board, the Plan shall terminate on ten
years after June 10, 2002. Any such termination of the Plan shall not affect the
validity of any Plan Options previously granted thereunder.
FEDERAL INCOME TAX CONSEQUENCES
An employee granted an ISO does not recognize taxable income either at the date
of grant or at the date of its timely exercise. However, the excess of the fair
market value of Common Stock received upon exercise of the ISO over the option
exercise price is an item of tax preference under Section 57(a)(3) of the Code
and may be subject to the alternative minimum tax imposed by Section 55 of the
Code. Upon disposition of stock acquired on exercise of an ISO, long-term
capital gain or loss is recognized in an amount equal to the difference between
the sales price and the ISO exercise price, provided that the option holder has
not disposed of the stock within two (2) years from the date of grant and within
one (1) year from the date of exercise. If the ISO holder disposes of the
acquired stock (including the transfer of acquired stock in payment of the
exercise price of an ISO) without complying with both of these holding period
requirements (a "Disqualifying Disposition"), the option holder will recognize
ordinary income at the time of such Disqualifying Disposition to the extent of
the difference between the exercise price and the lesser of the fair market
value of the stock on the date the ISO is exercised (the value six (6) months
after the date of exercise may govern in the case of an employee whose sale of
stock at a profit could subject him to suit under Section 16(b) of the
Securities Exchange Act of 1934) or the amount realized on such Disqualifying
Disposition. Any remaining gain or loss is treated as a short-term or long-term
capital gain or loss, depending on how long the shares are held. In the event of
a Disqualifying Disposition, the ISO tax preference described above may not
apply (although, where the Disqualifying Disposition occurs subsequent to the
year the ISO is exercised, it may be necessary for the employee to amend his
return to eliminate the tax preference item previously reported). The Company
and its subsidiaries are not entitled to a tax deduction upon either exercise of
an ISO or disposition of stock acquired pursuant to such an exercise, except to
the extent that the Option holder recognized ordinary income in a Disqualifying
Disposition.
In respect to the holder of NQSOs, the option holder does not recognize taxable
income on the date of the grant of the NQSO, but recognizes ordinary income
generally at the date of exercise in the amount of the difference between the
option exercise price and the fair market value of the Common Stock on the date
of exercise. However, if the holder of NQSO is subject to the restrictions under
Section 16 of the Securities Exchange Act of 1934 on resale of Common Stock
acquired upon exercise of the NQSO, such person generally recognizes ordinary
income at the end of the six (6) month period following the date of exercise in
the amount of the difference between the option exercise price and the fair
market value of the Common Stock at the end of the six (6) month period.
Nevertheless, such holder may elect, within thirty (30) days after the date of
exercise, to recognize ordinary income as of the date of exercise. The amount of
ordinary income recognized by the option holder is deductible by the Company in
the year that income is recognized.
-14-
An individual granted an SAR under the Plan does not recognize income upon such
grant. Upon the exercise of an SAR, the individual will recognize as ordinary
income the difference between the value of the Common Stock on the date of
exercise less the base amount with respect to the SAR.
The foregoing summary of the effect of United States federal income taxation
laws upon the optionee or purchaser and the Company in connection with the Plan
does not purport to be complete, and reference should be made to the applicable
provisions of the Code. In addition, this summary does not discuss the
provisions of the income tax laws of any municipality, state or foreign country
in which the participant may reside.
The Board unanimously recommends a vote "FOR" ratification of the 2002 Stock
Option Plan.
Vote Required
Approval of the 2002 Stock Option Plan requires the affirmative vote of a
majority of the votes present at the Special Meeting at which a majority of our
issued and outstanding shares of common stock are present. Abstentions and
broker non-votes will be counted in determining whether a quorum is present at
the Special Meeting but will not affect the vote on the 2002 Stock Option Plan.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT (1)
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of March 31, 2002 by (i)
each person known by the Company to be the beneficial owner of more than five
percent of the outstanding shares of Common Stock, (ii) each director, (iii)
each officer listed in the Summary Compensation Table of the section of this
Proxy Statement entitled "Executive Compensation" and (iv) all current directors
and executive officers as a group. A person is also deemed to be a beneficial
owner of any securities to which the person has the right to acquire beneficial
ownership within 60 days. All shares are subject to the named person's sole
voting and investment power unless otherwise indicated.
Shares Percent of Shares
Beneficially Beneficially
Name and Address Of Beneficial Owner (2) Owned Owned (3)
- ------------------------------------------------------------------ ----------------- --------------------
- ------------------------------------------------------------------ ----------------- --------------------
Directors and Officers:
Christopher Maus (4)............................. 3,212,700 12.72%
Michael Crane (5)................................. 1,298,442 5.33%
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Robert Boyle (6).................................. 238,200 1.01%
William Gridley (7)............................. 178,000 Less than 1%
David M. Hurley (8).............................. 81,000 Less than 1%
Boyd D. Lyles, Jr. (9)............................ 33,492 Less than 1%
Edward Siemens (10).............................. 143,885 Less than 1%
Paul Beatty (11).................................. 130,306 Less than 1%
Douglas Robinson (12).......................... 85,250 Less than 1%
Brian Packard (12)............................... 85,250 Less than 1%
Brett Sweezy (13)............................... 246,552 1.04%
Ken Clegg (14)................................... 83,141 Less than 1%
Robert Presutti (15).............................. 72,250 Less than 1%
Jackson Connolly (16)........................... 110,571 Less than 1%
----------------- ---------------
----------------- ---------------
All Directors and Officers as a Group (14 persons) (17)(See 5,999,039 23.06%
footnote comment).....
----------------- --------------------
----------------- --------------------
Other Beneficial Owners:
RAB Europe Fund Limited (18).................. 7,580,177 24.57%
c/o RAB Capital Limited
No. 1 Adam Street
London W2CN 6LE
United Kingdom
RAB Europe Partners (19)........................ 1,847,883 7.46%
c/o RAB Capital Limited
No. 1 Adam Street
London W2CN 6LE
United Kingdom
Mercer Management (20)....................... 3,049,199 12.19%
5820 East Mercer Way
Seattle, WA 98040
Commodity Management and Research, Inc. (21)... 2,250,750 9.25%
1050 17th Street, Suite 2000
Denver, Colorado 80265
- --------------------------
-16-
(1) Based upon information furnished to the Company by the beneficial owners or
otherwise obtained from the stock transfer books of the Company.
(2) Unless otherwise indicated, the business address for each beneficial owner
is c/o Lifestream Technologies, Inc., 510 Clearwater Loop, Suite 101, Post
Falls, Idaho 83854.
(3) Percentage of ownership is based upon 23,577,969 actual shares of Common
Stock outstanding on March 31, 2002. Shares of Common Stock subject to
stock options or warrants that are currently exercisable or will become
exercisable within 60 days after March 31, 2002, and shares of Common Stock
subject to convertible term notes that are currently convertible or will
become convertible within 60 days of March 31, 2002, are deemed outstanding
for computing the beneficial ownership percentage of the person or group
holding such options, warrants and notes, but are not deemed outstanding
for computing the percentage of any other person or group.
(4) Includes 601,000 shares issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days after March
31, 2002.
(5) Includes 252,250 shares issuable upon exercise of options and warrants that
are currently exercisable or will become exercisable within 60 days after
March 31, 2002. Also includes 492,498 shares issuable upon conversion of
convertible term notes, and accrued interest, that are currently
convertible or will become convertible within 60 days after March 31, 2002.
Excludes 152,000 common shares held by Lochnau, Inc., a privately held
investment management for which Mr. Crane serves as Chairman of the Board,
to which Mr. Crane disclaims any beneficial ownership.
(6) Includes 101,000 shares issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days after March
31, 2002.
(7) Includes 51,000 shares issuable upon exercise of options that are currently
exercisable or will become exercisable within 60 days after March 31, 2002.
(8) Includes 81,000 shares issuable upon exercise of options that are currently
exercisable or will become exercisable within 60 days after March 31, 2002.
(9) Includes 33,492 shares issuable upon exercise of options that are currently
exercisable or will become exercisable within 60 days after March 31, 2002.
(10) Includes 139,500 shares issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days after March
31, 2002.
-17-
(11) Includes 112,875 shares issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days after March
31, 2002.
(12) Includes 85,250 shares issuable upon exercise of options that are currently
exercisable or will become exercisable within 60 days after March 31, 2002.
(13) Includes 159,413 shares issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days after March
31, 2002.
(14) Includes 83,141 shares issuable upon exercise of options that are currently
exercisable or will become exercisable within 60 days after March 31, 2002.
(15) Includes 72,250 shares issuable upon exercise of options that are currently
exercisable or will become exercisable within 60 days after March 31, 2002.
(16) Includes 87,271 shares issuable upon exercise of options that are currently
exercisable or will become exercisable within 60 days after March 31, 2002.
(17) Includes 1,944,692 shares issuable upon exercise of options and warrants
that are currently exercisable or will become exercisable within 60 days
after March 31, 2002. Also includes 492,498 shares issuable upon conversion
of convertible term notes, and accrued interest, that are currently
convertible or will become convertible within 60 days after March 31, 2002.
(18) Includes 2,500,000 shares issuable upon exercise of warrants that are
currently exercisable or will become exercisable within 60 days after March
31, 2002. Also includes 4,770,000 shares issuable upon conversion of
convertible term notes that are currently convertible or will become
convertible within 60 days after March 31, 2002.
(19) Includes 500,000 shares issuable upon exercise of warrants that are
currently exercisable or will become exercisable within 60 days after March
31, 2002. Also includes 700,000 shares issuable upon conversion of
convertible term notes that are currently convertible or will become
convertible within 60 days after March 31, 2002.
(20) Includes 661,667 shares issuable upon exercise of warrant that are
currently exercisable or will become exercisable within 60 days after March
31, 2002. Also includes 768,806 shares issuable upon conversion of
convertible term notes that are currently convertible or will become
convertible within 60 days after March 31, 2002.
(21) Includes 250,000 shares issuable upon exercise of warrant that are
currently exercisable or will become exercisable within 60 days after March
31, 2002. Also includes 500,000 shares issuable upon conversion of
convertible term notes that are currently convertible or will become
convertible within 60 days after March 31, 2002.
As part of your consideration on regarding the approval and adoption of the
Stock Option Plan, the following information is provided:
-18-
MANAGEMENT
Directors and Executive Officers
The directors and executive officers of the Company are set forth below:
Name Age Position(s) Held
Christopher Maus 48 President, Chief Executive Officer and
Chairman of the Board
Robert Boyle 55 Director, Secretary and Treasurer
Michael Crane 46 Director
William Gridley 72 Director
David M. Hurley 42 Director
Boyd D. Lyles, Jr. 50 Director
Edward Siemens 48 Chief Operating Officer - Devices
Paul Beatty 55 Vice President - Consumer Sales
Douglas Robinson 42 Chief Operating Officer - Data Concern &
Business Development
Brian Packard 32 Vice President - Marketing
Brett Sweezy 36 Chief Financial Officer
Ken Clegg 33 Chief Technology Officer
Robert Presutti 49 Vice President - Professional Sales
Jackson Connolly 54 Vice President - Product Development
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table sets forth certain information regarding
compensation earned by the Company's Chief Executive Officer and each of the
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Company's four other most highly compensated executive officers for the fiscal
year ended June 30, 2001, the fiscal year ended June 30, 2000 and the
twelve-month fiscal period ended June 30, 1999. The persons named in the table
are hereinafter referred to as the "Named Executive Officers."
Summary Compensation Table
Long Term
Compensation -
Annual Compensation Awards
Fiscal Securities All Other
Name and Year Salary Bonus Other Underlying Compen-sation
Principal Position(s) (1)(2) ($) ($) ($) Options (#) ($)
- --------------------- ------ --- --- --- ----------- ---
Christopher Maus...... 2001
President, Chief Executive 2000 $150,000 $35,000 $12,000 872,000 -
Officer and Chairman of the 1999 150,000 - 27,000 250,000 -
Board (3)(4) 99,460 69,455 25,800 - -
Edward Siemens........ 2001 102,731 - 15,000 360,000 -
Chief Operating Officer 2000 - - - - -
- Devices (5) 1999 - - - - -
Paul Beatty.............. 2001 84,997 - 15,000 300,000 -
Vice President - Consumer 2000 - - - - -
Sales (6) 1999 - - - - -
Doug Robinson.......... 2001
Chief Operating Officer - 2000 80,025 - 15,000 240,000 -
The Data Concern and 1999 - - - - -
Business Development (7) - - - - -
Brian Packard............... 2001 78,333 - 15,000 240,000 -
Vice President - Marketing 2000 - - - - -
(8) 1999 - - - - -
- --------------------------
(1) References to a fiscal year refer to the calendar year in which such fiscal
year ends. Fiscal years 2001 and 2000 ended on June 30th.
(2) On July 2, 1999, the Company changed its fiscal year-end from December 31st
to June 30th, beginning with and retroactively effective for the six-month
transition period ended June 30, 1999. So as to facilitate comparability
and present a consecutive three-year period ended June 30, 2001, the above
-20-
fiscal year 1999 periods actually represent a composite of the last six
months of the fiscal year ended December 31, 1998 and the subsequent
six-month transition period ended June 30, 1999.
(3) The Board, acting upon the recommendation of its Compensation Committee,
executed an employment agreement on behalf of the Company with Mr. Maus on
May 1, 2001 that formally established his Annual salary at $150,000 for the
fiscal year ending June 30, 2001 and granted him 800,000 stock options with
an exercise price of $1.50 per common share that vest, and become
exercisable, as follows: 100,000 on December 31, 2001, 100,000 on December
31, 2002, 100,000 on December 31, 2003, 100,000 on December 31, 2004,
100,000 upon the Company achieving a $100 million market capitalization,
100,000 upon the Company achieving a $200 million market capitalization,
and 200,000 upon the Company achieving a $400 million market
capitalization, with any unexercised options to expire on May 1, 2011. On
January 3, 2000, the Board, acting upon the recommendation of its
Compensation Committee, granted Mr. Maus 250,000 stock options with an
exercise price of $1.50 per common share that vest, and become exercisable,
as follows: 50,000 immediately, 50,000 on January 3, 2001, 50,000 on
January 3, 2002, 50,000 on January 3, 2003, and 50,000 on January 3, 2004,
with any unexercised options to expire on January 3, 2010. The Board,
acting upon the recommendation of its Compensation Committee, has increased
Mr. Maus' Annual salary to $180,000 for the fiscal year ending June 30,
2002.
(4) In connection with his Board service, Mr. Maus received a grant, effective
January 1, 2001, for 72,000 stock options with an exercise price of $1.50
per common share that vest, and become exercisable, on a ratable monthly
basis over with his subsequent twenty-four months of Board service, with
any unexercised options to expire on January 1, 2011. The Other Annual
Compensation amounts represent the then aggregate fair market value of
12,000, 24,000 and 24,000 common shares awarded to Mr. Maus for his Board
service during the six months ended December 31, 2000, fiscal year ended
June 30, 2000 and fiscal year ended June 30, 1999, respectively.
(5) Mr. Siemens' employment with the Company began on August 21, 2000 pursuant
to a Board-approved compensation package providing him with an initial
Annual salary of $125,000, an initial grant of 300,000 stock options with
an exercise price of $3.00 per common share and a $15,000 relocation
allowance. The stock options, which were formally granted on October 4,
2000, vest and become exercisable, as follows: 50,000 immediately, 12,500
on October 4, 2001, 40,000 on December 31, 2001, 12,500 on October 4, 2002,
40,000 on December 31, 2002, 12,500 on October 4, 2003, 40,000 on December
31, 2003, 12,500 on October 4, 2004, 40,000 on December 31, 2004 and 40,000
on December 31, 2005, with any unexercised options to expire on October 4,
2010. On May 1, 2001, Mr. Siemens received an additional grant of 60,000
stock options with an exercise price of $1.50 per common share that vest,
and become exercisable, as follows: 15,000 immediately, 15,000 on December
31, 2001, 15,000 on December 31, 2002 and 15,000 on December 31, 2003, with
any unexercised options to expire on May 1, 2011. The Board, acting upon
the recommendation of its Compensation Committee, has increased Mr.
Siemens' Annual salary to $150,000 for the fiscal year ending June 30,
2002.
-21-
(6) Mr. Beatty's employment with the Company began on October 1, 2000 pursuant
to a Board-approved compensation package providing him with an initial
Annual salary of $120,000, an initial grant of 250,000 stock options with
an exercise price of $3.00 per common share and a $15,000 relocation
allowance. The stock options, which were formally granted on October 4,
2000, vest and become exercisable, as follows: 37,500 immediately, 9,375 on
October 4, 2001, 35,000 on December 31, 2001, 9,375 on October 4, 2002,
35,000 on December 31, 2002, 9,375 on October 4, 2003, 35,000 on December
31, 2003, 9,375 on October 4, 2004, 35,000 on December 31, 2004, and 35,000
on December 31, 2005, with any unexercised options to expire on October 4,
2010. On May 1, 2001, Mr. Beatty received an additional grant of 50,000
stock options with an exercise price of $1.50 per common share that vest,
and become exercisable, as follows: 12,500 immediately, 12,500 on December
31, 2001, 12,500 on December 31, 2002 and 12,500 on December 31, 2003, with
any unexercised options to expire on May 1, 2011. The Board, acting upon
the recommendation of its Compensation Committee, has increased Mr.
Beatty's Annual salary to $145,000 for the fiscal year ending June 30,
2002.
(7) Mr. Robinson's employment with the Company began on September 25, 2000
pursuant to a Board-approved compensation package providing him with an
initial Annual salary of $110,000, an initial grant of 200,000 stock
options with an exercise price of $3.00 per common share and a $15,000
relocaction allowance. The stock options, which were formally granted on
October 4, 2000, vest and become exercisable, as follows: 25,000
immediately, 6,250 on October 4, 2001, 30,000 on December 31, 2001, 6,250
on October 4, 2002, 30,000 on December 31, 2002, 6,250 on October 4, 2003,
30,000 on December 31, 2003, 6,250 on October 4, 2004, 30,000 on December
31, 2004, and 30,000 on December 31, 2005, with any unexercised options to
expire on October 4, 2010. On May 1, 2001, Mr. Robinson received an
additional grant of 40,000 stock options with an exercise price of $1.50
per common share that vest, and become exercisable, as follows: 10,000
immediately, 10,000 on December 31, 2001, 10,000 on December 31, 2002 and
10,000 on December 31, 2003, with any unexercised options to expire on May
1, 2011. The Board, acting upon the recommendation of its Compensation
Committee, has increased Mr. Robinson's Annual salary to $138,000 for the
fiscal year ending June 30, 2002.
(8) Mr. Packard's employment with the Company began on October 1, 2000 pursuant
to a Board-approved compensation package providing him with an initial
Annual salary of $110,000, an initial grant of 200,000 stock options with
an exercise price of $3.00 per common share and a $15,000 home office
allowance. The stock options, which were formally granted on October 4,
2000, vest and become exercisable, as follows: 25,000 immediately, 6,250 on
October 4, 2001, 30,000 on December 31, 2001, 6,250 on October 4, 2002,
30,000 on December 31, 2002, 6,250 on October 4, 2003, 30,000 on December
31, 2003, 6,250 on October 4, 2004, 30,000 on December 31, 2004, and 30,000
on December 31, 2005, with any unexercised options to expire on October 4,
2010. On May 1, 2001, Mr. Packard received an additional grant of 40,000
stock options with an exercise price of $1.50 per common share that vest,
and become exercisable, as follows: 10,000 immediately, 10,000 on December
31, 2001, 10,000 on December 31, 2002 and 10,000 on December 31, 2003, with
any unexercised options to expire on May 1, 2011. The Board, acting upon
-22-
the recommendation of its Compensation Committee, has increased Mr.
Packard's Annual salary to $138,000 for the fiscal year ending June 30,
2002.
DIRECTOR REMUNERATION
In April 1998, the Board adopted the recommendation of its Compensation
Committee that each employee and non-employee member of the Board be
prospectively compensated with 2,000 shares of the Company's Common Stock for
each month of Board service. In April 2001, the Board adopted the recommendation
of its Compensation Committee to terminate the existing Board compensation plan
effective January 1, 2001 and to alternatively grant, retroactive to January 1,
2001, each employee and non-employee member of the Board stock options
exercisable for 72,000 common shares at $1.50 per share. Each option vests, and
becomes exercisable, on a ratable basis over the subsequent twenty-four (24)
months of Board service, with any unexercised options to expire on January 1,
2011. Directors currently receive no additional compensation for service on the
Board's Audit and Compensation Committees.
STOCK OPTIONS
The Company has reserved 600,000 shares of its Common Stock for issuance upon
the exercise of options granted or available for grant under its 1993 Incentive
Stock Option Plan ("1993 Plan"). The 1993 Plan is administered by either the
Board, or its Compensation Committee, which determines, without limitation, the
selection of the persons who will be granted options under the 1993 Plan, the
number of optioned shares and the option exercise price per share. Options
granted under the 1993 Plan fall within the meaning of, and conform to, Section
422 of the Internal Revenue Code of 1986, as amended. Under the terms of the
1993 Plan, all officers, employees, consultants, and advisors of the Company are
eligible for incentive stock options. The Board determines at its discretion
which persons receive incentive stock options, the applicable vesting
provisions, and the exercise terms thereof. The terms and conditions of each
option grant may differ and will be set forth in the optionee's individual
incentive stock option agreement. As of April 1, 2002, the Company has not
granted any options under the 1993 Plan.
The Company has reserved 2,000,000 shares of its Common Stock for issuance
pursuant to stock options or stock appreciation rights granted under its 1998
Employee Stock Option Plan ("1998 Plan"). The 1998 Plan is administered by
either the Board, or its Compensation Committee, which determines, without
limitation, the selection of the persons who will be granted options under the
1998 Plan, the type of options to be granted, the number of optioned shares and
the option exercise price per share. The terms and conditions of each option
grant may differ and will be set forth in the optionee's individual stock option
agreement. Officers, directors, key employees and consultants of the Company and
its subsidiaries are eligible to receive non-qualified stock options under the
1998 Plan. Only officers, directors and employees of the Company or its
subsidiaries are eligible to receive incentive stock options. As of April 1,
2002, the Company had issued 1,745,426 options, with 246,936 of these options
vested and exercisable, under the 1998 Plan.
-23
The following table contains information concerning stock options granted to the
Named Executive Officers during the most recently completed fiscal year ended
June 30, 2001. All grants were made under the Company's 1998 Employee Stock
Option Plan.
Option/SAR Grants in Last Fiscal Year
Number of Percent of Total
Securities Options/SARs
Underlying Granted to Exercise
Name Option/SARs Employees in 2001 or Base Expiration Date
Granted (#) Fiscal Year (%) Price
($/Share)
- ------------------------------------ ------------------- -------------------- ------------ ----------------
Christopher Maus (1)(2)......... 800,000 30.46% $1.50 2/15/11
72,000 2.74% $1.50 1/01/11
Edward Siemens (3).............. 300,000 11.42% $3.00 10/4/10
60,000 2.28% $1.50 5/1/11
Paul Beatty (4).................... 250,000 9.52% $3.00 10/4/10
50,000 1.90% $1.50 5/1/11
Doug Robinson (5)................ 200,000 7.62% $3.00 10/4/10
40,000 1.52% $1.50 5/1/11
Brian Packard (6)............... 200,000 7.62% $3.00 10/4/10
40,000 1.52% $1.50 5/1/11
- --------------------------
(1) The Board, acting upon the recommendation of its Compensation
Committee, executed an employment agreement on behalf of the Company
with Mr. Maus on May 1, 2001 that included a grant of 800,000 stock
options with an exercise price of $1.50 per common share that vest, and
become exercisable, as follows: 100,000 on December 31, 2001, 100,000
on December 31, 2002, 100,000 on December 31, 2003, 100,000 on December
31, 2004, 100,000 upon the Company achieving a $100 million market
capitalization, 100,000 upon the Company achieving a $200 million
market capitalization, and 200,000 upon the Company achieving a $400
million market capitalization, with any unexercised options to expire
on May 1, 2011.
(2) In connection with his Board service, Mr. Maus received a grant,
effective January 1, 2001, for 72,000 stock options with an exercise
price of $1.50 per common share that vest, and become exercisable, on a
ratable monthly basis over his subsequent twenty-four months of Board
service, with any unexercised options to expire on January 1, 2011.
(3) Mr. Siemens' employment with the Company began on August 21, 2000
pursuant to a Board-approved compensation package that included an
initial grant of 300,000 stock options with an exercise price of $3.00
per common share. The stock options, which were formally granted on
October 4, 2000, vest and become exercisable, as follows: 50,000
-24-
immediately, 12,500 on October 4, 2001, 40,000 on December 31, 2001,
12,500 on October 4, 2002, 40,000 on December 31, 2002, 12,500 on
October 4, 2003, 40,000 on December 31, 2003, 12,500 on October 4,
2004, 40,000 on December 31, 2004 and 40,000 on December 31, 2005, with
any unexercised options to expire on October 4, 2010. On May 1, 2001,
Mr. Siemens received an additional grant of 60,000 stock options with
an exercise price of $1.50 per common share that vest, and become
exercisable, as follows: 15,000 immediately, 15,000 on December 31,
2001, 15,000 on December 31, 2002 and 15,000 on December 31, 2003, with
any unexercised options to expire on May 1, 2011.
(4) Mr. Beatty's employment with the Company began on October 1, 2000
pursuant to a Board-approved compensation package that included an
initial grant of 250,000 stock options with an exercise price of $3.00
per common share. The stock options, which were formally granted on
October 4, 2000, vest and become exercisable, as follows: 37,500
immediately, 9,375 on October 4, 2001, 35,000 on December 31, 2001,
9,375 on October 4, 2002, 35,000 on December 31, 2002, 9,375 on October
4, 2003, 35,000 on December 31, 2003, 9,375 on October 4, 2004, 35,000
on December 31, 2004, and 35,000 on December 31, 2005, with any
unexercised options to expire on October 4, 2010. On May 1, 2001, Mr.
Beatty received an additional grant of 50,000 stock options with an
exercise price of $1.50 per common share that vest, and become
exercisable, as follows: 12,500 immediately, 12,500 on December 31,
2001, 12,500 on December 31, 2002 and 12,500 on December 31, 2003, with
any unexercised options to expire on May 1, 2011.
(5) Mr. Robinson's employment with the Company began on September 25, 2000
pursuant to a Board-approved compensation package that included an
initial grant of 200,000 stock options with an exercise price of $3.00
per common share. The stock options, which were formally granted on
October 4, 2000, vest and become exercisable, as follows: 25,000
immediately, 6,250 on October 4, 2001, 30,000 on December 31, 2001,
6,250 on October 4, 2002, 30,000 on December 31, 2002, 6,250 on October
4, 2003, 30,000 on December 31, 2003, 6,250 on October 4, 2004, 30,000
on December 31, 2004, and 30,000 on December 31, 2005, with any
unexercised options to expire on October 4, 2010. On May 1, 2001, Mr.
Robinson received an additional grant of 40,000 stock options with an
exercise price of $1.50 per common share that vest, and become
exercisable, as follows: 10,000 immediately, 10,000 on December 31,
2001, 10,000 on December 31, 2002 and 10,000 on December 31, 2003, with
any unexercised options to expire on May 1, 2011.
(6) Mr. Packard's employment with the Company began on October 1, 2000
pursuant to a Board-approved compensation package that included an
initial grant of 200,000 stock options with an exercise price of $3.00
per common share. The stock options, which were formally granted on
October 4, 2000, vest and become exercisable, as follows: 25,000
immediately, 6,250 on October 4, 2001, 30,000 on December 31, 2001,
6,250 on October 4, 2002, 30,000 on December 31, 2002, 6,250 on October
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4, 2003, 30,000 on December 31, 2003, 6,250 on October 4, 2004, 30,000
on December 31, 2004, and 30,000 on December 31, 2005, with any
unexercised options to expire on October 4, 2010. On May 1, 2001, Mr.
Packard received an additional grant of 40,000 stock options with an
exercise price of $1.50 per common share that vest, and become
exercisable, as follows: 10,000 immediately, 10,000 on December 31,
2001, 10,000 on December 31, 2002 and 10,000 on December 31, 2003, with
any unexercised options to expire on May 1, 2011.
Option Exercises and Holdings
The following table provides information with respect to the Named Executive
Officers regarding exercises of options/SARs during the most recently completed
fiscal year ended June 30, 2001 and unexercised options/SARs held as of June 30,
2001.
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at In-The-Money
Shares FY-End (#) Options/SARs at
Acquired on FY-End (#)
Exercise (#) Value Exercisable/
Name Realized ($) Unexercisable Exercisable/
Unexercisable (1)
- --------------------------- -------------- ------------- ------------------------- ------------------------
Christopher Maus...... - - 430,000 /1,092,000 $36,000/$18,000
Edward Siemens....... - - 77,500 /282,500 -
Paul Beatty............. - - 59,375 /240,625 -
Doug Robinson........ - - 41,250 /198,750 -
Brian Packard......... - - 41,250 /198,750 -
- --------------------------
(1) Based upon the market price of $1.37 per share on June 30, 2001, determined
on the basis of the closing selling price per share of the Company's Common
Stock on the American Stock Exchange, less the option exercise price
payable per share.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In recent years, the Board has periodically approved the advancement of funds to
Christopher Maus, the Company's President, Chief Executive Officer and Chairman
of the Board. During fiscal 2001, Mr. Maus received advances totaling $87,136
and made principal repayments totaling $5,623. During fiscal 2000, Mr. Maus
received no advances but made principal repayments totaling $6,695. The
underlying promissory note, which had an outstanding principal balance of
$100,349 and $18,836 at June 30, 2001 and June 30, 2000, respectively, is
unsecured, has a stated interest rate of 8.75% and requires bi-weekly repayments
of principal and interest through May 23, 2014.
On June 30, 2001, the Company extended by one year the expiration dates of
342,500 stock purchase warrants with an exercise price of $1.25 that had been
previously granted to three stockholders during fiscal 1999. Mercer Management
is the holder of 200,000 of these warrants. In connection with the above
extension, the Company recognized a $36,928 financing cost in fiscal 2001 for
the incremental increase in the aggregate fair value of these warrants.
During June 2001, the Company commenced a private offering of convertible notes
with detachable stock purchase warrants from which it has received proceeds of
$3,225,000 as of June 30, 2001. The Company subsequently received additional
proceeds of $4,422,500 through December 2001. RAB Europe Fund Limited, RAB
Europe Partners LP and Mercer Management purchased convertible term notes
totaling $5,000,000, $1,000,000 and $750,000, respectively. In connection with
the convertible term note transactions, the investors also received warrants
totaling 2,500,000, 500,000 and 375,000, respectively. The notes are unsecured,
accrue interest at the prime rate plus two percent (6.98% at June 30, 2001), and
mature on July 1, 2003 and July 1, 2006. The notes are immediately convertible
at the option of the holders into common stock of the Company at a rate of $1.00
per share. The Company has the right to force conversion of the notes if the
market price of its common stock exceeds $3.00 per share for 20 consecutive
trading days. Each note holder received one detachable stock purchase warrant
for every two dollars of note principal. Each warrant allows the holder to
purchase a share of the Company's common stock at $2.50 per share. As the
accompanying detachable warrants, in effect, created a beneficial conversion
feature, the Company was required by U.S. generally accepted accounting
principles to reduce the carrying value of notes by an amount equal to the
estimated fair value of the beneficial conversion feature. This fair value
discount, amounting to $6,597,564 at December 31, 2001, was recorded as
additional paid-in capital.
During fiscal 2001, the Company obtained $140,000 in unsecured loans from
Michael Crane, a principal stockholder and member of the Board. Each loan had a
stated interest rate of 20% and a term of 90 days. During fiscal 2001, the
Company also executed an agreement with Mr. Crane whereby he established a
$500,000 personal line of credit with a financial institution for use by the
Company. Borrowings under the agreement were unsecured, accrued interest at the
financial institution's prevailing prime rate plus two percent (6.98% at June
30, 2001), and required the repayment of all outstanding principal and interest
on or before September 13, 2001. Subsequent to the fiscal 2001 year-end, the
Company executed an agreement with Mr. Crane whereby the Company repaid $184,200
in outstanding principal and interest against the above obligations and
consolidated the remaining $469,984 aggregate principal balance into a two-year
convertible term note due August 1, 2003. The note accrues interest at the prime
rate plus two percent (6.98% at June 30, 2001) and is immediately convertible at
Mr. Crane's option into common stock of the Company at a stated rate of $1.00
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per share. In connection with this agreement, the Company issued Mr. Crane
40,000 common shares with an aggregate fair value of $54,000 and a warrant
allowing him to purchase 134,000 additional common shares at $1.00 per share.
The agreement also stipulates that for every subsequent quarter the note remains
outstanding that the Company will issue Mr. Crane an additional warrant for the
purchase of 23,500 common shares at $1.00 per share.
In March 2001, the Company obtained a $1.0 million short-term loan from Mercer
Management, a principal stockholder. The loan was secured by all the
unencumbered assets of the Company, other than accounts receivable, accrued
interest at the prime rate plus two percent and had a 90-day maturity. In
connection therewith, the Company issued Mercer Management warrants allowing it
to purchase 100,000 shares of the Company's common stock at $1.00 per share. At
the end of the 90-day term, the Company and Mercer Management agreed to convert
the above short-term loan into an unsecured convertible term note with a stated
interest rate of prime plus two percent (6.98% at June 30, 2001) and maturity
date of March 5, 2003. The note is immediately convertible at the option of
Mercer Management into common stock of the Company at a rate of $1.00 per share.
In connection therewith, the Company issued Mercer Management additional
warrants allowing it to purchase another 100,000 shares of the Company's common
stock at $1.00 per share. The Company assigned these warrants an estimated fair
value of $138,444 that was recognized as a financing cost. The agreement also
stipulates that for every subsequent quarter the convertible debt remains
outstanding that the Company will issue Mercer Management additional warrants
for the purchase of 37,500 common shares at $1.00 per share. Subsequent to June
30, 2001, the Company repaid $250,000 of the outstanding note balance.
INTEREST OF CERTAIN PERSONS IN
MATTERS TO BE ACTED UPON
Management is not aware of any substantial interest, direct or indirect, by
securities holdings or otherwise of any director, officer or their associates in
any matter to be acted on, as described herein, other than the interest all the
officers and directors have in the Company's Stock Option Plans.
OTHER MATTERS
Management does not know of any matters to be presented at this Special Meeting
other than those set forth herein and in the Notice accompanying this Proxy
Statement. If any other matters properly come before the Special Meeting, it is
the intention of the persons named in the enclosed form of proxy to vote the
shares they represent as the Board may recommend. Discretionary authority with
respect to such matters is granted by the execution of the enclosed proxy.
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STOCKHOLDERS' PROPOSALS TO BE PRESENTED AT THE
COMPANY'S NEXT ANNUAL MEETING OF STOCKHOLDERS
Stockholder proposals intended to be presented at the 2002 Annual Meeting of
Stockholders of the Company must be received by the Company at its principal
executive offices at 510 Clearwater Loop, Suite 101, Post Falls, Idaho 83854,
Attn: Chief Financial Officer not later than June 30, 2002 for inclusion in the
Proxy Statement and Proxy relating to the 2002 Annual Meeting of Stockholders.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-KSB
A copy of the Company's Annual Report on Form 10-KSB for the fiscal year ended
June 30, 2001 is available, without charge, to stockholders upon request to
Brett Sweezy, Chief Financial Officer. Such report is also readily available,
without cost, from the U.S. Securities and Exchange Commission's web site at
www.sec.gov.
It is important that your shares be represented at the Special Meeting,
regardless of the number of shares that you hold. YOU ARE URGED TO PROMPTLY
EXECUTE AND RETURN THE ACCOMPANYING PROXY IN THE ENVELOPE THAT HAS BEEN ENCLOSED
FOR YOUR CONVENIENCE. Stockholders who are present at the Special Meeting may
revoke their proxies and vote in person or, if they prefer, may abstain from
voting in person and allow their proxies to be voted.
By Order of the Board of Directors,
/s/ Christopher Maus
Christopher Maus
Chairman of the Board of Directors,
President and Chief Executive Officer
May 1 2002
Post Falls, Idaho
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Exhibit A
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
LIFESTREAM TECHNOLOGIES, INC.
Pursuant to NRS 78.403 of the General Corporation Law of Nevada (the "Act"), the
following constitutes the Amended and Restated Articles of Incorporation (the
"Restated Articles") of Lifestream Technologies, Inc., a Nevada Corporation:
ARTICLE ONE: [NAME]. The name of the Corporation is: LIFESTREAM
TECHNOLOGIES, INC.
ARTICLE TWO: [LOCATION]. The name and address of the Corporation's resident
agent is Nevada Agency & Trust Company, 50 W. Liberty Street, Suite 880, in the
City of Reno, County of Washoe, State of Nevada.
ARTICLE THREE. [PURPOSES]. The purposes for which the Corporation is
organized are to engage in any activity or business not in conflict with the
laws of the State of Nevada or of the United States of America, and without
limiting the generality of the foregoing, specifically:
I. To have and to exercise all the powers now or hereafter conferred by the
laws of the State of Nevada upon corporations organized pursuant to the
laws under which the Corporation is organized and any and all acts
amendatory thereof and supplemental thereto.
II. To conduct and carry on its business or any branch thereof in any state or
territory of the United States or in any foreign country in conformity with
the laws of such state, territory, or foreign country, and to have and
maintain in any state or territory, or foreign country a business office,
plant, store, or other facility.
III. The purposes specified herein shall be construed both as purposes and
powers and shall be in no wise limited or restricted by reference to, or
inference from, the terms of any other clause in this or any other clause
in this or any other article, but the purposes and powers specified in each
of the clauses herein shall be regarded as independent purposes and powers,
and the enumeration of specific purposes and powers shall not be construed
to limit or restrict in any manner the meaning of general terms or of the
general powers of the Corporation, nor shall the expression of one thing be
deemed to exclude another, although it be of like nature not expressed.
ARTICLE FOUR. [CAPITAL STOCK]. The Corporation shall have authority to
issue an aggregate of ONE HUNDRED FIFTEEN MILLION (115,000,000) shares of
capital stock, par value $0.001 per share. The capital stock shall be divided
into two classes: One Hundred Million (100,000,000) shares of Common Stock and
Fifteen Million (15,000,000) shares of serial Preferred Stock..
The Board of Directors of the Corporation is authorized,
subject to limitations prescribed by law and the provisions of this Article, to
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provide by resolution for the issuance of shares of Preferred Stock in one or
more series, at such time or times and for such consideration or considerations
as the Board may determine. Each series shall be so designated to distinguish
its shares from the shares of all other series and classes. All shares of a
series of Preferred Stock shall have preferences, limitations, and relative
rights identical with those of other shares of the same series and, except to
the extent otherwise provided in the articles of amendment adopted by the Board
of Directors creating the series and filed with the Nevada Secretary of State in
accordance with NRS 78.195 and NRS 78.1995 of the Nevada Corporations Act
(the"Act"), of those of other series of the same class. Except as may otherwise
be provided in these Articles of Incorporation, different series of Preferred
Stock shall not be construed to constitute different classes of shares for the
purpose of voting by classes. To the extent not inconsistent with the Act and
the provisions of these Articles of Incorporation, the authority of the Board of
Directors with respect to each such series shall include, without limitation of
the foregoing, determination of the following:
(i) The number of shares in and the distinguishing designation of that series;
(ii) Whether the shares of that series shall have full, special, conditional, or
limited voting rights, or no voting rights, except to the extent otherwise
provided by law;
(iii)Whether the shares of that series are convertible and the terms and
conditions of the conversion, including provision for adjustment of the
conversion rate in circumstances determined by the Board of Directors of
the Corporation;
(iv) Whether shares of that series shall be redeemable and the terms and
conditions of redemption, including the date or dates upon or after which they
shall be redeemable and the amount per share payable in case of redemption,
which amount may vary under different conditions or at different redemption
dates;
(v) Entitlement to distributions, calculated in any manner, including
dividends that may be cumulative, noncumulative, or partially cumulative and
dividends which, for classes of stock other than Common Stock, may be
participatory or nonparticipatory;
(vi) The rights of shares of that series in the event of voluntary or
involuntary dissolution of the Corporation and the rights of priority of that
series relative to the Common Stock and any other series of Preferred Stock on
the distribution of assets on dissolution; and
(vii) Any other rights, preferences and limitations of that series
permitted by law.
The holders of the shares of capital stock of the Corporation shall not be
entitled to preemptive or preferential rights to subscribe to any unissued stock
or any other securities which the Corporation may now or hereafter be authorized
to issue, except as granted by the Corporation pursuant to written agreements.
The Corporation's capital stock may be issued and sold from time to time
for such consideration as may be fixed by the Board of Directors, provided that
the consideration so fixed is not less than par value.
The stockholders shall not possess cumulative voting rights at
stockholder's meetings called for the purpose of electing Board of Directors.
ARTICLE FIVE. [DIRECTORS]. The affairs of the Corporation shall be governed
by a Board of Directors of not less than Five persons.
The number of directors shall be fixed, from time to time, by
the affirmative vote of at least three-fourths of the entire Board of Directors
or by action of the stockholders of the Corporation. Commencing as of the date
of the first annual meeting of the Corporation's stockholders following the
effective date of the adoption by the stockholders of this amended Article Five,
the directors shall be classified in respect to the time for which they shall
severally hold office, by dividing them into three classes. The number of
directors in each class shall be as nearly equal as possible. At the 2002 annual
meeting of the stockholders, the initial directors of the first class shall be
elected for a term of one year, the initial directors of the second class shall
be elected for a term of two year's and the initial directors of the third class
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shall be elected for a term of three years. Thereafter, at each annual election,
any vacancy in any class of directors may be filled and successors to the class
of directors whose terms shall expire that year shall be elected to hold office
for a term of three years, so that the term of office of one class of directors
shall expire in each year. In the event the number of directors is increased,
the additional directors shall be elected by the Board of Directors to a class
or classes of directors with terms expiring in three years or less in order to
maintain proportionate equality between the classes. Any decrease in the number
of directors shall be effective at the time of the next succeeding annual
meeting of stockholders unless there shall be vacancies in the Board of
Directors, in which case such decrease may become effective at any time prior to
the next succeeding annual meeting to the extent of the number of such
vacancies. In the event of the removal of a director, whether by the
stockholders or by a vote of the Board of Directors, the resulting vacancy shall
be filled by a majority vote of the remaining Board of Directors. Directors need
not be residents of the State of Nevada and need not own shares of the
Corporation's stock. Except as otherwise provided by statute or these Articles
or the Corporation's Bylaws, the directors to be elected shall be elected at the
annual meeting of stockholders. Each director shall hold office until the
expiration of the term for which he is elected and until his successor has been
elected and qualified, or until his prior resignation or removal, as hereinafter
provided in the Bylaws.
ARTICLE SIX. [LIMITATION OF LIABILITY]. To the fullest extent
permitted by NRS 78 of the Act, a director of this Corporation shall not be
personally liable to the Corporation or its stockholders for monetary damages
for conduct as a director or for breach of fiduciary duty as director, except
for liability of the director (i) for acts or omissions that involve intentional
misconduct, fraud or a knowing violation of law by the director, (ii) for
conduct violating NRS 78.300 of the Act, or (iii) for any transaction from which
the director will personally receive a benefit in money, property or services to
which the director is not legally entitled. If the Act is amended in the future
to authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of this Corporation
shall be eliminated or limited to the full extent permitted by the Act, as so
amended, without any requirement of further action by the stockholders.
ARTICLE SEVEN. [INDEMNIFICATION]. The Corporation shall indemnify any
individual made a party to a proceeding because that individual is or was a
director of the Corporation and shall advance or reimburse the reasonable
expenses incurred by such individual in advance of final disposition of the
proceeding, without regard to the limitations in NRS 78.7502 and NRS 78.751 of
the Act, or any other limitation which may hereafter be enacted to the extent
such limitation may be disregarded if authorized by the Articles of
Incorporation, to the full extent and under all circumstances permitted by
applicable law.
ARTICLE EIGHT. [ASSESSMENT OF STOCK]. The capital stock of the Corporation,
after the amount of the subscription price or par value has been paid in, shall
not be subject to pay debts of the Corporation, and no paid up stock and no
stock issued as full paid up shall ever be assessable or assessed.
ARTICLE NINE. [BYLAWS]. The power to alter, amend, or repeal the Bylaws,
shall be vested in the Board of Directors, except as otherwise may be
specifically provided in the Bylaws.
ARTICLE TEN. [STOCKHOLDERS' MEETINGS] Meetings of stockholders shall be
held at such place within or without the State of Nevada as may be provided by
the Bylaws of the President or any other executive officer of the Corporation,
by Board of Directors, or any member thereof, or by record holder or holders of
at least ten per cent (10%) of all shares entitled to vote at the meeting. Any
action otherwise required to be taken at a meeting of the stockholders, except
election of directors, may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by stockholders having at
least a majority of voting power.
ARTICLE ELEVEN. [CONTRACTS OF CORPORATION] No contract or
other transaction between the Corporation and any other corporation, whether or
not a majority of those shares of the capital stock of such other corporation is
owned by this Corporation, and no act of this Corporation shall in any way be
affected or invalidated by the fact that any of the directors of this
Corporation are pecuniarily or otherwise interested in, or are directors or
officers of such other corporation. Any director of this Corporation,
individually, or any firm of which such director may be a member, may be a party
to, or may be pecuniarily or otherwise interested in any contract or transaction
of the Corporation; provided, however, that the fact that he or such firm is so
interested shall be disclosed or shall have been known to the Board of Directors
of this Corporation, or a majority thereof; and any director of this Corporation
who is also a director or officer of such other corporation, or who is so
-32-
interested, may be counted in determining the existence of a quorum at any
meeting of the Board of Directors of this Corporation that shall authorize such
contract or transaction, and may vote thereat to authorize such contract or
transaction, with like force and effect as if he were not such director or
officer of such other corporation or not so interested.
Any repeal or modification of this Article by the stockholders of this
Corporation shall not adversely affect any right of any individual who is or was
a director of the Corporation which existed at the time of such repeal or
modification.
IN WITNESS WHEREOF, the Corporation has caused this Amended and
Restated Articles of Incorporation to be signed as of the __________ day of
______________, 2002 by its President, who hereby affirms that these Articles
stated herein are true.
By:
-------------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
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Exhibit B
LIFESTREAM TECHNOLOGIES, INC.
2002 STOCK OPTION PLAN
1. Purpose
This Lifestream Technologies, Inc. 2002 STOCK OPTION PLAN (the or this
"Plan") provides for the grant of Stock Options and stock appreciation rights
("SARs") to employees and consultants of Lifestream Technologies, Inc., a Nevada
corporation (the "Company"), and its present and future subsidiaries (a
"Subsidiary"), as defined in Section 424(f) of the Internal Revenue Code of
1986, as amended (the "Code"), in order to advance the interests of the Company
and its subsidiaries through the motivation, attraction and retention of key
personnel and consultants.
2. Incentive Stock Options and Non-Qualified Stock Options
The Stock Options granted under the Plan may be either Incentive Stock
Options ("ISOs") which are intended to be "Incentive Stock Options" as that term
is defined in Section 422 of the Code; or non-qualified stock options ("NSOs")
which are intended to be options that do not qualify as "Incentive Stock
Options" under Section 422 of the Code.
All Stock Options shall be ISOs unless the Option Agreement clearly
designates the Stock Options granted thereunder, or a specified portion thereof,
as NSOs. Subject to the other provisions of the Plan, a Participant may receive
ISOs and NSOs at the same time, provided that the ISOs and NSOs are clearly
designated as such, and the exercise of one does not affect the exercise of the
other.
Except as otherwise expressly provided herein, all of the provisions
and requirements of the Plan relating to Stock Options shall apply to ISOs and
NSOs. As used here in "Stock Incentives" refers to ISOs, NSOs and SARs.
3. Administration
The Plan shall be administered by the Board of Directors of the Company
or a committee (the "Committee") of two (2) or more members of the Board who are
"disinterested" for purposes of Rule 16b-3 under the Securities Exchange Act of
1934 (the "Act"). As used herein, any reference to the Committee shall be deemed
to refer to either the Board or the Committee, whichever is appropriate. The
Committee shall have full authority to administer the Plan, including authority
to interpret and construe any provision of the Plan and any Stock Incentives
granted thereunder, and to adopt such rules and regulations for administering
the Plan as it may deem necessary in order to comply with the requirements of
the Code or in order that Stock Options that are intended to be ISOs will be
classified as ISOs under the Code, or in order to conform to any regulation or
to any law or change in any law or regulation applicable thereto.
-34-
All actions taken and all determinations and interpretations made by
the Committee in good faith shall be final and binding upon all Participants,
the Company and any other interested persons. No member of the Committee shall
be personally liable for any action, determination or interpretation made in
good faith with respect to the Plan, and all members of the Committee shall, in
addition to their rights as directors, be fully protected by the Company with
respect to any such action, determination or interpretation.
4. Certain Definitions
4.1 "Common Stock." Common Stock means authorized but unissued or
reacquired Common Stock of the Company.
4.2 "Corporate Transaction." "Corporate Transaction" shall mean one or more
of the following transactions, unless persons who were holders of securities
issued by the Company which are outstanding immediately prior to such
transaction are (based on such holdings of securities of the Company) holders of
more than 50% of the outstanding voting common stock of the surviving or
acquiring entity (or equivalent equity interest if the entity is not a
corporation): (i) a merger or consolidation; (ii) a share exchange (with or
without a stockholder vote) in which 95% or more of the outstanding capital
stock of the Company is exchanged for capital stock of another corporation; or
(iii) the sale, transfer or other disposition of all or substantially all of the
Company's assets. In determining whether more than 50% of the voting common
stock is so held: (i) convertible preferred stock shall be calculated on an "as
converted" basis; (ii) convertible debt shall be calculated on an "as exchanged"
basis; and (iii) warrants, options and other purchase rights shall not be
counted for any purpose.
4.3 "Employee." An Employee is an employee of the Company or any
Subsidiary.
4.4 "Fair Market Value." If the Common Stock is traded on the AMEX National
Market, the Fair Market Value of a share of Common Stock on any date shall be
the closing price, as quoted on the AMEX National Market for the date in
question, or, if the Common Stock is listed on a national stock exchange, the
closing price on such exchange on the date in question. If the Common Stock is
not traded on the AMEX National Market or on such an exchange, the Fair Market
Value of a share of (common Stock on any date, or the method for determining
such value, shall be determined in good faith by the Committee.
4.5 "Participant." A Participant is an Employee or consultant of the
Company or any Subsidiary to whom a Stock
Incentive is granted.
4.6 "Stock Option." A Stock Option is the right granted under the Plan to
an Employee or consultant to purchase, at such time or times and at such price
or prices (the "Option Price") as are determined by the Committee, the number of
shares of Common Stock determined by the Committee.
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5. Eligibility and Participation
Grants of ISOs, NSOs and SARs may be made to Employees of the Company
or any Subsidiary. Grants of NSOs and SARs may be made to consultants to the
Company or any Subsidiary. The Committee shall from time to time determine the
Participants to whom Stock Incentives shall be granted, the number of shares of
Common Stock subject to each Stock Incentive and the terms and provisions of all
Stock Incentives, all as provided in this Plan.
6. Terms of Stock Options
6.1 Maximum Number. The maximum aggregate number of shares of Common
Stock that may be issued pursuant to Stock Incentives shall be 2,000,000 shares.
If a Stock Option or SAR expires or terminates for any reason without being
exercised in full, the unpurchased shares of Common Stock subject to such Stock
Option or the shares as to which the SAR is not exercised shall again be
available for purposes of the Plan. To the extent that the aggregate Fair Market
Value (determined as of the time the ISO is granted) of the stock with respect
to which ISOs are exercisable for the first time by any individual during any
calendar year under all plans of the Company and its parent and Subsidiaries
exceeds $100,000, such options shall be treated as options which are not ISOs.
During any calendar year, no employee or consultant shall be granted any Stock
Incentives that relate to more than 200,000 shares of Common Stock.
6.2 Price. The Option Price per share of any ISO shall be not less than
the Fair Market Value of a share of Common Stock on the date on which the Stock
Option is granted. The Option Price per share of any NSO shall not be less than
50% of the fair market value of a share of Common Stock on the date or which the
Stock Option is granted. If an ISO is granted to an Employee who then owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or any parent or Subsidiary of the Company, the Option
Price per share of such ISO shall be at least 110% of the Fair Market Value of
the Common Stock subject to the ISO at the time such ISO is granted, and such
ISO shall not be exercisable after five (5) years after the date on which it was
granted. Each Stock Option shall be evidenced by a written agreement (an "Option
Agreement") containing such terms and provisions as the Committee may determine,
subject to the provisions of the Plan.
6.3 Time of Exercise. Subject to the provisions of the Plan, the
Committee, in its discretion, shall determine the time when a Stock Incentive,
or a portion of a Stock Incentive, shall become exercisable, and the time when a
Stock Incentive, or a portion of a Stock Incentive, shall expire. Each Stock
Option granted under the Plan shall be exercisable at such time or times, or
upon the occurrence of such event or events, including, without limitation, the
surrender of another Stock Option or stock award, and in such amounts, as the
Committee shall specify in the particular Option Agreement. Notwithstanding the
foregoing, subsequent to the grant of a Stock Option, the Committee, at any time
before complete termination of such Stock Option, may accelerate the time or
times at which such Stock Option may be exercised in whole or in part. The
Company may also require as a condition of exercise that the Participant will
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agree, if requested by the Company in connection with a public offering of the
Company's securities, to adhere to lock-up arrangements between the Company and
an underwriter involved in such public offering.
6.4 Term. A Stock Option shall have such term as the Committee shall
determine, except that no ISO shall be exercisable after the expiration of ten
(10) years from the date such Stock Option is granted or five (5) years if
required by section 422 of the Code or any successor provision.
6.5 Payment. Payment for all shares purchased pursuant to exercise of a
Stock Option shall be made in cash or, to the extent that the Option Agreement
so provides, by delivery of Common Stock of the Company valued at its Fair
Market Value on the date of delivery. Subject to the provisions of section 6.7,
such payment shall be made at the time that the Stock Option or any part thereof
is exercised, and no shares of Common Stock shall be issued or delivered until
full payment therefor has been made.
6.6 Withholding. Whenever the Company is required to issue or transfer
shares of Common Stock under the Plan, the Company shall have the right to
require the Participant to remit to the Company an amount sufficient to satisfy
any federal, state and local withholding tax requirements prior to the delivery
of any certificate or certificates for such shares. If a Participant surrenders
shares of Common Stock acquired pursuant to the exercise of an ISO in payment of
the option price of a Stock Option and such surrender constitutes a
disqualifying disposition for purposes of obtaining ISO treatment under the
Code, the Company shall have the right to require the Participant to remit to
the Company an amount sufficient to satisfy any federal, state and local
withholding tax requirements prior to the delivery of any certificate or
certificates for such shares. Whenever under the Plan payments are to be made in
cash, such payments shall be net of an amount sufficient to satisfy any federal,
state and local withholding tax requirements. A recipient may elect with respect
to any Stock Option (other than an ISO) or SAR which is paid in whole or part in
stock to surrender or authorize the Company to withhold shares of Common Stock
(valued at their fair market value on the date of surrender or withholding of
such shares) in satisfaction of all such withholding requirements in accordance
with any rules established by the Committee, including such rules required to
satisfy Section 16 of the Act, or any successor provision.
6.7 Special Procedure for Certain Credit Assisted Transactions. To the
extent not inconsistent with the other terms and conditions of the particular
Option Agreement or any other agreement between the Participant and the Company
and to the extent not inconsistent with the provisions of section 422 of the
Code or any successor provision or the provisions of Rule 16b-3 under the Act or
any successor rule, if applicable, any Participant desiring to obtain credit
from a broker, dealer or other "creditor" as defined in Regulation T issued by
the Board of Governors of the Federal Reserve System (provided such broker,
dealer or creditor has been approved by the Committee) to assist in exercising a
Stock Option may deliver to such creditor a written exercise notice executed by
such holder with respect to such Stock Option, together with written
instructions to the Company to deliver the Common Stock issued upon such
exercise of the Stock Option to the creditor for deposit into an account
designated by the Participant. Upon receipt of such exercise notice and
instructions in a form acceptable to the Company, the Company shall confirm to
the creditor that it will deliver to the creditor on behalf of the Participant
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the Common Stock issued upon such exercise of the Stock Option and covered by
such instructions promptly following receipt of the exercise price from the
creditor. To the extent not inconsistent with the provisions of section 422 of
the Code or any successor provision or the provisions of Rule 16b-3 or any
successor rule, if applicable, upon written request, the Company may in its
discretion, but shall not be obligated to, deliver to the creditor on behalf of
the Participant shares of Common Stock resulting from such a credit assisted
exercise prior to receipt of the exercise price for such shares if the creditor
has delivered to the Company, in addition to the other documents contemplated by
this section 6.7, the creditor's written agreement to pay the Company such
exercise price in cash within three (3) days after delivery of such shares. The
credit assistance contemplated by this section 6.7 may include a margin loan by
the creditor secured by the Common Stock purchased upon exercise of a Stock
Option or an immediate sale of some or all of such Common Stock by the creditor
to obtain or recover the exercise price which the creditor has committed to pay
to the Company on behalf of the Participant.
6.8 Termination of Employment or Death. Upon any termination of
employment of the Participant for any reason other than death or disability,
except as otherwise provided in the particular Option Agreement, and except as
otherwise provided in section 17(a) with respect to termination for cause, any
Stock Option held at the date of such employment termination may, to the extent
exercisable, be exercised within six (6) months after the date of such
employment termination. Upon any termination of employment of the Participant by
reason of disability, within the meaning of section 22(e)(3) of the Code or any
successor provision, except as otherwise provided in the particular Option
Agreement, any Stock Option held at the date of such employment termination may,
to the extent exercisable, be exercised within twelve (12) months after the date
of such employment termination. If the Participant dies, except as otherwise
provided in the particular Option Agreement, any Stock Option held at the date
of death may, to the extent exercisable, be exercised by a legatee or legatees
of the Participant under the Participant's last will, or by the Participant's
personal representatives or distributees, within twelve (12) months after the
Participant's death. This section 6.8 shall not extend the term of the Stock
Option beyond the term specified pursuant to section 6.4. For purposes of this
section 6.8, employment of a Participant shall not be deemed terminated so long
as the Participant is employed by the Company, by a Subsidiary or by another
corporation (or a parent or subsidiary corporation of such other corporation)
which has assumed the Stock Option of the Participant in a transaction to which
section 424(a) of the Code or any successor provision is applicable. For
purposes of this section 6.8, the extent to which a Stock Option is exercisable
shall be determined as of the date of termination of employment. This section
6.8 shall not apply to a consultant unless, and only to the extent, determined
by the Committee and specified in the particular Option Agreement.
7. SARs
Subject to the following provisions, all SARs shall be in such form and
upon such terms and conditions as the Committee in its discretion may from time
to time determine.
7.1 Award. SARs may be granted in connection with all or any portion of
a previously or contemporaneously granted Stock Option or not in connection with
a Stock Option. An SAR shall entitle the grantee to receive upon exercise the
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excess of (a) the fair market value of a specified number of shares of the
Common Stock at the time of exercise over (b) a specified price dollar amount
(which shall be not less than the Stock Option exercise price in the case of an
SAR granted in connection with a previously or contemporaneously granted Stock
Option, or in the case of any other SAR not less than 50% of the Fair Market
Value of the Common Stock at the time the SAR was granted).
7.2 Terms. An SAR shall be granted for a period of not less than one
(1) year nor more than ten (10) years, and shall be exercisable in whole or in
part, at such time or times during its term and subject to terms and conditions
as shall be prescribed by the Committee at the time of grant and to all of the
following:
(a) Except as otherwise provided in the particular SAR
agreement, no SAR shall be exercisable in whole or in part during the first six
(6) months of its term. Notwithstanding the foregoing, subsequent to the grant
of an SAR, the Committee, at any time before complete termination of such SAR,
may accelerate the time or times at which such SAR may be exercised in whole or
in part.
(b) Except as otherwise provided in the particular SAR
agreement, SARs will be exercisable only during a Participant's employment at
the Company or one of its Subsidiaries, or within thirty (30) days following the
termination of such employment, except as otherwise provided in section 17(a)
with respect to termination for cause. Except as otherwise provided in the
particular SAR agreement, if the grantee of an SAR dies, the grantee's legal
successor shall have the right to exercise the SAR during its term and not
longer than thirty (30) days after death of the grantee. SARs may contain such
other limitations with respect to the time when such rights may be exercised as
the Committee may determine and such limitations may vary. This section 7.2(b)
shall not apply to a (consultant unless, and only to the extent, determined by
the Committee and specified in the particular SAR agreement.
7.3 Payment to Grantee. Upon exercise of an SAR, payment shall be made
to the Grantee (or his legal successor) in cash or Common Stock (at Fair Market
Value on the date of exercise) as provided in the particular SAR agreement or,
in the absence of such provision, as the Committee may determine.
8. Changes in Capitalization; Merger; Liquidation
The number of shares of Common Stock as to which Stock Options and SARs
may be granted, the number of shares covered by each outstanding Stock Option
and SAR, and the price per share of each outstanding Stock Option or used in
determining the amount payable upon exercise of each outstanding SAR shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a subdivision or combination of shares or
the payment of a stock dividend in shares of Common Stock to holders of
outstanding shares of Common Stock or any other increase or decrease in the
number of such shares effected without receipt of consideration by the Company.
If the Company shall be the surviving corporation in any merger or consolidation
(other than as a subsidiary of another corporation), recapitalization,
reclassification of shares or similar reorganization, the holder of each
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outstanding Stock Option shall be entitled to purchase, at the same times and
upon the same terms and conditions as are then provided in the Stock Option, the
number and class of shares of stock or other securities to which a holder of the
number of shares of Common Stock subject to the Stock Option at the time of such
transaction would have been entitled to receive as a result of such transaction,
and a corresponding adjustment shall be made in connection with determining the
value of each outstanding SAR. In the event of any such changes in
capitalization of the Company, the Committee may make such additional
adjustments in the number and class of shares of Common Stock or other
securities with respect to which outstanding Stock Options and SARs are
exercisable and with respect to which future Stock Incentives may be granted as
the Committee in its sole discretion shall deem equitable or appropriate,
subject to the provisions of section 17 hereof, to prevent dilution or
enlargement of rights. Any adjustment pursuant to this section 8 may provide, in
the Committee's discretion, for the elimination of any fractional shares that
might otherwise become subject to any Stock Incentive without payment therefor.
In the event of a dissolution or liquidation of the Company, a sale of all or
substantially all of the stock or all or substantially all of the assets of the
Company, a direct or indirect merger or consolidation in which the Company is
not the surviving corporation or survives only as a subsidiary of another
corporation, or any other transaction having a similar result or effect, each
outstanding Stock Incentive shall terminate except to the extent that another
corporation assumes such Stock Incentive or substitutes another stock incentive
therefor. In the event of a change of the Company's shares of Common Stock with
$0.001 par value into the same number of shares with no par value or a different
par value, the shares resulting from any such change shall be deemed to be the
Common Stock within the meaning of the Plan. Except as expressly provided in
this section 8, the holder of a Stock Option or SAR shall have no rights by
reason of any subdivision or combination of shares of Common Stock of any class
or the payment of any stock dividend or any other increase or decrease in the
number of shares of Common Stock of any class or by reason of any dissolution,
liquidation, merger or consolidation or distribution to the Company's
shareholders of assets or stock of another corporation. Except as expressly
provided herein, any issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number or
price of shares of Common Stock subject to any Stock Incentive. The existence of
the Plan and the Stock Incentives granted pursuant to the Plan shall not affect
in any way the right or power of the Company to make or authorize any
adjustment, reclassification, reorganization or other change in its capital or
business structure, any merger or consolidation of the Company, any issue of
debt or equity securities having preferences or priorities as to the Common
Stock or the rights thereof, the dissolution or liquidation of the Company, any
sale or transfer of all or any part of its business or assets, or any other
corporate act or proceeding.
9. Special Provisions for Certain Substitute Options
Any Stock Option issued by the Company pursuant to the Plan in
substitution for an option previously issued by another entity, which
substitution occurs in connection with a transaction to which section 424(a) of
the Code or any successor provision is applicable, may provide for an exercise
price computed in accordance with such Code section and the regulations
thereunder and may contain such other terms and conditions as the Committee may
prescribe to cause such substitute Stock Option to contain as nearly as possible
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the same terms and conditions (including the applicable vesting and termination
provisions) as those contained in the previously issued option being replaced
thereby.
10. No Contract of Employment; Leaves of Absence
Nothing in this Plan shall confer upon a Participant the right to
continue in the employ of the Company or any Subsidiary, nor shall it interfere
in any way with the right of the Company, or any such Subsidiary, to discharge a
Participant at any time for any reason whatsoever, with or without cause.
Nothing in this Plan or any Stock Incentive shall effect any rights or
obligations of the Company or any Participant under any written contract of
employment. Except as otherwise provided by law or regulation with respect to
ISOs, the Committee may in its discretion determine whether any leave of absence
constitutes a termination of employment for purposes of the Plan and the impact,
if any, of such leave of absence on Stock Incentives previously granted to a
holder who takes a leave of absence.
11. No Rights as a Stockholder
A Participant shall have no rights as a stockholder with respect to any
shares of Common Stock subject to a Stock Option. Except as provided in section
8, no adjustment shall be made in the number of shares of Common Stock issued to
a Participant, or in any other rights of the Participant upon exercise of a
Stock Option by reason of any dividend, distribution or other right granted to
stockholders for which the record date is prior to the date of exercise of the
Participant's Stock Option.
12. Compliance with Code; Compliance with Rule 16b-3
All ISOs granted under this Plan are intended to comply with section
422 and, to the extent applicable, section 424 of the Code or any successor
provision, and all provisions of this Plan and all ISOs granted hereunder shall
be construed in such manner as to effectuate that intent. With respect to
persons subject to Section 16 of the Act, transactions under the Plan are
intended to comply with all applicable conditions of Rule 16b-3 or any successor
provision. To the extent any provision of the Plan or action by the Committee
fails to so comply, it shall be deemed null and void, to the extent permitted by
law and deemed advisable by the Committee.
13. Assignability
No Stock Incentive granted under this Plan shall be assignable or
transferable by a Participant, other than by will or the laws of descent and
distribution, and Stock Incentives issued to a Participant are exercisable
during his lifetime only by him.
14. Corporate Transactions
At least ten (10) days prior to the consummation of a Corporate
Transaction, the Company shall give Participants written notice of the proposed
Corporate Transaction, and, unless otherwise provided in the particular Stock
Option or SAR agreement, the vesting schedules of all Stock Incentives shall be
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accelerated so that all of the Stock Incentives outstanding under this Plan
immediately prior to the consummation of the Corporate Transaction shall for all
purposes under this Plan, become exercisable as of such time; provided however,
that any exercise of such Stock Incentive shall be conditioned upon the
consummation of Such transaction. All Stock Incentives, to the extent not
previously exercised, shall terminate upon the consummation of such Corporate
Transaction, except to the extent that another corporation assumes such Stock
Incentives or substitutes other stock incentives therefor.
15. Nonexclusivity of the Plan
Neither the adoption of the Plan by the Board of Directors nor the
submission of the Plan to stockholders of the Company for approval shall be
construed as creating any limitations on the power or authority of the Board of
Directors to adopt such other or additional incentive or other compensation
arrangements of whatever nature as the Board of Directors may deem appropriate
or preclude or limit the continuation of any other plan, practice or arrangement
for the payment of compensation or fringe benefits to Employees generally, or to
any class or group of Employees, which the Company or a Subsidiary has lawfully
put into effect, including, without limitation, any retirement, pension, savings
and stock purchase plan, insurance, death and disability benefits and executive
short-term incentive plans.
16. Restrictions on Delivery and Sale of Shares
Each Stock Incentive granted under the Plan is subject to the condition
that if at any time the Committee, in its discretion, shall determine that the
listing, registration or qualification of the shares covered by such Stock
Incentive upon any securities exchange or under any state or federal law is
necessary or desirable as a condition of or in connection with the granting of
such Stock Incentive or the purchase or delivery of shares thereunder, the
delivery of any or all shares pursuant to such Stock Incentive may be withheld
unless and until such listing, registration or qualification shall have been
effected. If a registration statement is not in effect under the Securities Act
of 1933 or any applicable state securities laws with respect to the shares of
Common Stock purchasable or otherwise deliverable under Stock Incentives then
outstanding, the Committee may require, as a condition of exercise of any Stock
Incentive, that the Participant represent, in writing, that the shares received
pursuant to the Stock Incentive are being acquired for investment and not with a
view to distribution and agree that the shares will not be disposed of except
pursuant to an effective registration statement, unless the Company shall have
received an opinion of counsel that such disposition is exempt from such
requirement under the Securities Act of 1933 and any applicable state securities
laws. The Company may endorse on certificates representing shares delivered
pursuant to a Stock Incentive such legends referring to the foregoing
representations or restrictions or any other applicable restrictions on resale
as the Company, in its discretion, shall deem appropriate.
17. Termination and Amendment of the Plan
The Plan may be terminated, modified or amended by the stockholders or
the Board of Directors of the Company; provided, however, that:
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no such termination, modification or amendment without the consent of the holder
of a Stock Incentive shall adversely affect his rights under such Stock
Incentive, except the Committee may terminate a particular Stock Incentive if
the employment of the holder of the Stock Incentive is terminated for cause; and
any modification or amendment which would require shareholder approval in order
for the Plan to continue to meet the requirements of Rule 16b-3 or any successor
rule, if Rule 16b-3 or any successor rule is applicable, or any other legal or
regulatory requirements, shall be effective only if it is approved by the
shareholders of the Company in the manner required thereby.
18. Effective Date
This Plan was adopted by the Board of Directors and became effective on
June 10, 2002 subject to the approval of the Company's stockholders within
twelve (12) months thereafter. All ISOs must be granted within ten (10) years
from June 10, 2002.
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50316737.09
PROXY
LIFESTREAM TECHNOLOGIES, INC.
SPECIAL MEETING OF STOCKHOLDERS
June 10, 2002
This Proxy is solicited by and on behalf of the Board of Directors
The undersigned stockholder of Lifestream Technologies, Inc. hereby
appoints Messrs. Christopher Maus and Robert Boyle of Lifestream Technologies,
Inc., and either of them, with full power of substitution to each, to act as
attorneys-in-fact and proxies to represent the undersigned at the Special
Meeting of Stockholders, to be held at the West Coast Templin's Resort located
at 414 East First Avenue, Post Falls, Idaho on June 10, 2002, at 8:30 a.m.,
local time, and at any and all adjournments thereof, and to vote all of the
shares of Common Stock of Lifestream Technologies, Inc. which the undersigned is
entitled to vote as fully as if the undersigned were present in person, in the
manner indicated on the reverse hereof. Receipt of the Notice of Meeting and the
accompanying Proxy Statement is hereby acknowledged.
This proxy, when properly executed, will be voted and will be voted in
the manner directed on this proxy card. If no specification is made, a vote FOR
all the proposals will be entered.
Should the undersigned be present and elect to vote in person at the
Special Meeting or at any adjournment thereof, upon notification to the
Secretary of Lifestream Technologies, Inc. at the Meeting of the Stockholder's
decision to terminate the proxy, this power of attorney and proxy shall be
deemed terminated and of no further force and effect.
(Continued and to be signed on the
reverse side.)
SPECIAL MEETING
OF
LIFESTREAM TECHNOLOGIES, INC.
STOCKHOLDERS
------------
Monday, June 10, 2002
8:30 a.m.
West Coast Templin's Resort
414 East First Avenue
Post Falls, Idaho
-44-
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS WHICH RECOMMENDS A VOTE FOR EACH OF THE PROPOSALS.
PLEASE REFER TO THE PROXY STATEMENT FOR A DISCUSSION OF EACH OF THESE MATTERS.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
1 Proposal to amend the Lifestr [ ] [ ] [ ] 4. Proposal to amend the [ ] [ ] [ ]
Technologies, Inc. Articles of Lifestream Technologies,
Incorporation with respect to number of Inc. Articles of
authorized shares of common and Incorporation to adopt
preferred stock and provide for "blank certain technical amendments.
check" preferred stock provisions.
2. Proposal to amend the Lifestream [ ] [ ] [ ] 5. Proposal to adopt the [ ] [ ] [ ]
Technologies, Inc. Articles of 2002 Stock Option Plan.
Incorporation to provide for a
classified board of directors.
3. Proposal to amend the Lifestream [ ] [ ] [ ] In their discretion, the
Technologies, Inc. Articles of Proxies are authorized
Incorporation with respect to to vote upon such other
limitations of liability and business as may properly
indemnification of directors. come before the meeting.
The undersigned hereby revokes any and all prior proxies and acknowledges
receipt from the Company prior to the execution of this proxy of Notice of
Meeting, the Proxy Statement dated May 1, 2002.
Please sign exactly as your name appears to the left. When signing as
attorney, executor, administrator, trustee, or guardian, please give your
full name. If shares are held jointly, each holder should sign. Please fill
in the date the proxy is signed.
Signature ______________________________________
Signature if held jointly __________________________________ Dated _________
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
SELF-ADDRESSED POSTAGE-PREPAID ENVELOPE.
`
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