SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A 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:
[ ] Preliminary proxy statement
[X] 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)
LIFESTREAM TECHNOLOGIES, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6j(2)
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(45) and
0-11
[X] No fee required
(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:
[ ] 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:
LIFESTREAM TECHNOLOGIES, INC.
515 Pine Street, Suite 200
Sandpoint, Idaho 83864
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on June 18, 1998
TO THE STOCKHOLDERS OF LIFESTREAM TECHNOLOGIES, INC.
PLEASE TAKE NOTICE that the 1998 Annual Meeting of Stockholders of Lifestream
Technologies, Inc., a Nevada corporation (the "Company"), will be held at Hayden
Lake Country Club located at 1800 Bozanta Drive, Hayden Lake, Idaho, on June 18,
1998 at 8:30 A.M., Local Time, or at any and all adjournments thereof, for the
following purposes:
1. To elect five (5) members to the Company's Board of Directors
to hold office until the Company's 1999 Annual Meeting of
Shareholders or until their successors are duly elected and
qualified;and
2. To adopt the Company's 1998 Stock Option Plan; and
3. To ratify the appointment of independent auditors; and
4. To transact such other business as may properly come before
the meeting or any adjournment thereof.
The Proxy Statement dated May 28, 1998 is attached.
The Board of Directors has fixed the close of business on May 18, 1998
as the record date for the determination of stockholders entitled to notice of,
and to vote at, the meeting. The financial statements of the Company for the
fiscal year ended December 31, 1997 are contained in the accompanying Annual
Report on Form 10-KSB. The Annual Report does not form any part of the material
for the solicitation of proxies. Stockholders who do not expect to be present at
the meeting are urged to complete, date, sign and return the enclosed proxy. No
postage is required if the enclosed envelope is used and mailed in the United
States.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Christopher Maus
-------------------------------------------------------
Christopher Maus, Director, Chief Executive Officer,
President and Acting Chairman of the Board of Directors
Sandpoint, Idaho
May 28, 1998
THIS IS AN IMPORTANT MEETING, AND ALL STOCKHOLDERS ARE INVITED TO
ATTEND THE MEETING IN PERSON. THOSE STOCKHOLDERS WHO ARE UNABLE TO ATTEND IN
PERSON ARE RESPECTFULLY URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY CARD AT
THEIR EARLIEST CONVENIENCE. PROMPTNESS IN RETURNING THE EXECUTED PROXY CARD WILL
BE APPRECIATED. STOCKHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND
THE MEETING, REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON.
LIFESTREAM TECHNOLOGIES, INC.
515 Pine Street, Suite 200
Sandpoint, Idaho 83864
PROXY STATEMENT
For
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Lifestream Technologies, Inc., a Nevada corporation
(the "Company"), of proxies for use at the 1998 Annual Meeting of Stockholders
("Annual Meeting") to be held at Hayden Lake Country Club located at 1800
Bozanta Drive, Hayden Lake, Idaho, on June 18, 1998, at 8:30 A.M., Local Time,
or at any and all adjournments thereof. The cost of this solicitation will be
borne by the Company. Directors, officers and employees of the Company may
solicit proxies by telephone, telegraph or personal interview. The Annual Report
on Form 10-KSB of the Company for the fiscal year ended December 31, 1997
("Fiscal 1997"), is being mailed together with this Proxy Statement and form of
Proxy. The date of mailing of this Proxy Statement and form of Proxy is
approximately May 28, 1998.
OUTSTANDING STOCK AND VOTING RIGHTS
In accordance with the By-Laws of the Company, the Board of Directors
has fixed the close of business on May 18, 1998, as the record date for
determining the stockholders entitled to notice of, and to vote at, the Annual
Meeting. Only stockholders of record on that date will be entitled to vote. A
stockholder who submits a proxy on the accompanying form has the power to revoke
it by notice of revocation directed to the proxy holders of the Company at any
time before it is voted. Unless authority is withheld in writing, proxies which
are properly executed will be voted for the proposals thereon. Although a
stockholder may have given a proxy, such stockholder may nevertheless attend the
meeting, revoke the proxy and vote in person. The election of the directors
nominated requires the affirmative vote of a plurality of the shares of the
Company's common Stock voting at the Annual Meeting in person or by proxy. The
approval of the Company's 1998 Stock Option Plan and the ratification of the
appointment of the Company's auditors will require the affirmative vote of a
majority of the shares of the Company's Common Stock voting at the Annual
Meeting in person or by proxy, unless such matter is one for which a greater
vote is required by law or by the Company's Articles of Incorporation or Bylaws.
As of May 18, 1998, the record date for determining the stockholders of
the Company entitled to vote at the Annual Meeting, approximately 8,557,829
shares of the common stock of the Company, $.001 par value ("Common Stock"),
were issued and outstanding. Each share of Common Stock entitles the holder to
one vote on all matters brought before the Annual Meeting. The quorum necessary
to conduct business at the Annual Meeting consists of a majority of the
outstanding shares of Common Stock as of the record date. Abstentions and broker
non-votes are counted for purposes of determining the presence or absence of a
quorum and have the effect of a negative vote on the approval of the Amendment
to the Company's Certificate of Incorporation to increase the Company's
authorized Common Stock. Abstentions and broker non-votes have no effect for the
election of directors, on the amendment to the 1998 Stock Option Plan or the
ratification of the Company's auditors.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
Company's Common Stock beneficially owned at May 18, 1998 by (i) each person who
is known by the Company to own beneficially or exercise voting or dispositive
control over 5% or more the Company's Common Stock on the record date; (ii) each
of the Company's Officers and Directors; and (iii) all Officers and Directors
(and nominees) as a group. A person is also deemed to be a beneficial owner of
any securities of which the person has the right to acquire beneficial ownership
within 60 days. Except as otherwise indicated the business address for the
persons set forth below is 515 Pine Street, Suite 200, Sandpoint, Idaho 83864.
At May 18, 1998, there were 8,557,829 shares of Common Stock of the Company
outstanding.
Amount
Nature of Percent
Name and Address Beneficial of
of Beneficial Owner Ownership(1) Class(2)
- ------------------- ----------- -------
Christopher Maus................................... 2,302,700(3) 26.9%
William Gridley.................................... 40,000(4) *
Robert Boyle....................................... 96,667(5) 1.1%
Tim Mathers........................................ 1,140,000 13.3%
Michael Stranahan.................................. 739,500(6) 8.6%
Michael Crane...................................... 266,666(7) 3.1%
John Trenary....................................... 30,000(8) *
W. Terry Schreier.................................. 328,333 3.8%
Officers & Directors
as a (Group 6 persons)............................. 3,064,366(9) 35.8%
- ------------------
* Less than 1%.
(1) Based upon information furnished to the Company by the principal
security holders or obtained from the stock transfer books of the
Company. Other than indicated in the notes, the Company has been
informed that such persons have sole voting and dispositive power with
respect to their shares.
(2) Based on 8,557,829 shares of Common Stock outstanding as of May 18,
1998. Exclusive of (i) 660,912 shares of Common Stock reserved for
issuance upon the exercise of outstanding options and (ii) up to
1,600,000 shares of Common Stock issuable pursuant to the terms of a
private offering currently being conducted by the Company at $1.25 per
share.
(3) Mr. Maus is Chief Executive Officer, President and a Director of the
Company and also acting Chairman of the Board of Directors of the
Company. Includes (i) 200,000 shares of Common Stock issuable upon the
exercise of options granted to Mr. Maus on April 10, 1998 and
exercisable for a period of five years thereafter at an exercise price
of $1.25 per share. Excludes (i) 100,000 shares of Common Stock
issuable upon the exercise of options granted to Mr. Maus on April 10,
1998 which options are exercisable upon the successful launch of
Cholestron at an exercise price of $3.00 per share any time prior to
April 10, 2006; and (ii) 100,000 shares of Common Stock issuable upon
the exercise of options granted to Mr. Maus on April 10, 1998 which
options are exercisable upon the Company achieving $1,000,000 in net
profits at an exercise price of $5.00 per share any time prior to April
10, 2006.
2
(4) Mr. Gridley is a director of the Company. Includes 20,000 shares of
stock issuable upon the exercise of options granted to Mr. Gridley on
February 1, 1996, which options are exercisable through February 1,
1999 at an exercise price of $.20 per share. Such options were granted
to Mr. Gridley upon being elected to the Board of Directors of the
Company.
(5) Mr. Boyle is Secretary and Treasurer of the Company and a nominee for
election to the Board of Directors of the Company.
(6) Includes 125,000 shares of Common Stock issuable upon the exercise of
options which options are exercisable until March 1, 2000 at an
exercise price of $1.25 per share.
(7) Mr. Crane is a nominee for election to the Board of Directors of the
Company.
(8) Mr. Trenary is a nominee for election to the Board of Directors of the
Company. Includes 30,000 shares of Common Stock issuable upon the
exercise of options exercisable immediately and through September 1,
2000 at a price of $.50 per share.
(9) See notes 2-8.
Section 16(a) of the Securities and Exchange Act of 1934, as amended
(the "Exchange Act") requires the Company's directors and executive officers,
and persons who own more than ten (10%) percent of a registered class of the
Company's equity securities, to file with the Securities and Exchange Commission
(the "Commission") initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than ten (10%) stockholders are required by Commission
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
The officers, directors and ten percent shareholders of the Company
became obligated to file reports with the Commission as required by Section 16
of the Exchange Act on February 15th 1997. Notwithstanding, none of the
individuals who were officers, directors or ten percent shareholders at that
time, nor have any of the current officers, directors or ten percent
shareholders have filed the reports required by Section 16 of the Exchange Act
as of the date hereof.
Mr. Christopher Maus, Mr. A. Terrence Schreier, Mr. William Gridley,
Mr. David Klausmeyer and Mr. Robert Boyle, the officers and directors of the
Company on February 15, 1997, were obligated to file initial statements of
beneficial ownership on such date. Mr. Tim Mathers who was a principal
shareholder of the Company at that time was also obligated to file such an
initial statement of beneficial ownership on such date.
ELECTION OF DIRECTORS
The Board of Directors is responsible for the overall affairs of the
Company. Five individuals have been nominated to serve as Directors for the
ensuing year or until their successors shall have been duly elected and
qualified. Management does not contemplate that any of the nominees named in the
table will be unable, or will decline, to serve; however, if any of the nominees
are unable to serve or decline to serve, the persons named in the accompanying
proxy may vote for another person, or persons, in their discretion. The
following table sets forth certain information with respect to each nominee for
election to the Board of Directors, including their current positions with the
Company. A summary of the background and experience of each nominee is set forth
in the paragraphs following the table.
3
Nominees For Election
---------------------
Current Position with
Name Age the Company
- ---- --- ---------------------
Christopher Maus 45 Chief Executive Officer,
Director and President
Robert Boyle 54 Secretary, Treasurer and Nominee
William Gridley 58 Director
John Trenary 53 Nominee for Director
Michael Crane 44 Nominee for Director
Christopher Maus has been Chief Executive Officer, President and a
Director of the Company since its reorganization in February of 1994. From 1989
to 1994, Mr. Maus was a partner in the Lifestream Development Partnership
engaged in product research and development and various pre-marketing and
pre-production actions necessary to establish the basis for the Cholestron
device.
Robert Boyle joined the Company in April of 1996 as its
secretary/treasurer. Since 1995, Mr. Boyle has been independently engaged in the
practice of accounting and consulting. Between 1981 and 1995, Mr. Boyle served
as a Partner and Director of a Northern California Certified Public Accounting
firm.
Michael Crane has been Chairman of the Board of Directors of Lochnau,
Inc., a private investment company since 1993.
William Gridley has been a Director of the Company since April 16,
1997. From 1993 to 1996, Mr. Gridley served as president and chief executive
officer of Hymedix, Inc., a polymer chemicals company. Since 1997, Mr. Gridley
has also served as the chairman of the board of directors of Hymedix, Inc.
John Trenary served as president and chief executive officer of
Thermoscan, Inc., a marketer of infa-red ear thermometers between 1991 and 1995.
Since 1995, Mr. Trenary has been retired.
There is no family relationship between any of the officers and
directors.
Upon being elected to the Board of Directors, individuals directors
will receive 2,000 shares per month or an aggregate of 24,000 shares of the
Company's Common Stock as compensation for their services as directors. Officers
of the Company appointed by the Board of Directors receive the same number of
shares as compensation in addition to any other compensation set forth herein.
See "Executive Compensation."
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE "FOR" THE ELECTION OF THE NOMINEES FOR DIRECTORS SET FORTH ABOVE.
4
Meetings and Committees of the Board of Directors
During Fiscal 1997, the Company's Board of Directors acted one time by
unanimous written consent and did not hold any meetings.
In February 1997, Mr. Lowell Miller resigned as a Director of the
Company. On April 16, 1998, Mr. A. Terrence Schreier was replaced as Chairman of
the Board of Directors and Mr. David Klausmeyer resigned as a Director.
The Company has constituted an Audit Committee and Compensation
Committee. Until April 1997, the Compensation Committee consisted of Mssrs.
Gridley, Schreier and Miller. Since that time the Audit Committee has consisted
of Mssrs. Gridley, Trenary and Crane. Until April 1997, the Audit Committee
consisted of Mssrs. Gridley, Schreirer and Klausmayer. Since that time, the
Audit Committee has consisted of Messrs. Gridley and Trenary. Neither the Audit
Committee nor the Compensation Committee met during fiscal 1997.
EXECUTIVE COMPENSATION
The following table sets forth information relating to the compensation
paid by the Company for the past three fiscal years to: (i) the Company's
Chairman and Chief Executive Officer; and (ii) each of the Company's executive
officers who earned more than $100,000 during Fiscal 1997 (collectively the
"Named Executive Officers"):
Options/ Other
Name and SARS/Shares Annual
Principal Position Year Salary Bonus (#) Compensation
- ------------------ ---- ------ ----- ----------- ------------
Christopher Maus 1997 $100,000 $-0- 20,000(2) $-0-
Acting Chairman of Board, 1996 $83,000- $-0- 0 $-0-
President and
Chief Executive Officer (1) 1995 $-0- $-0- 0 $-0-
- --------------
(1) Mr. Maus entered into an employment agreement with the Company in March
1996. Notwithstanding that Mr. Maus is entitled to receive a salary of $100,000
per year pursuant to that agreement, Mr. Maus elected to waive receipt of the
salary, or any applicable portions thereof, for fiscal years 1996 and 1997.
(2) Mr. Maus received 20,000 shares of Common Stock from the Company as
compensation for his position as officer and director of the Company during
Fiscal 1997. See "Election of Directors."
Employment Agreements
The Company executed an employment agreement with Mr. Maus in March
1996. The employment agreement renews annually if not terminated by either
party. The agreement entitles Mr. Maus to a salary of $100,000 annually and six
months severance pay in the event of termination.
5
Option Grants in Last Fiscal Year
The Company did not grant any Stock Options to the Named Executive
Officers during Fiscal 1997.
Option Exercises and Holdings
The following table sets forth information with respect to the exercise
of options to purchase shares of Common Stock during the fiscal year ended
December 31, 1997 to each person named in the Summary Compensation Table and the
unexercised options held as of the end of the 1997 fiscal year.
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
Value Realized
Market Price Value of Unexercised
Shares at Exercise Number of Unexercised in the Money Options At
Acquired Less Price Options at FY-End FY-End(2)
Name on Exercise Exercisable Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------------- ----------- ------------- ----------- -------------
Christopher Maus 250,000 $82,250 -0- -0- -0- -0-
(1) The average bid and ask price of the Company's Common Stock as reported by
the NASD OTC Bulletin Board for December 31, 1997 was $1.09.
(2)The average bid and ask price of the Common Stock at December 31, 1997 was
$1.09. The average bid and ask price of the Company's Common Stock as of March
31, 1998 was $.84. The exercise price of the unexercised options held by Mr.
Maus range between $1.25 and $5.00.
(3)On April 16, 1998, Mr. Maus was granted an option to purchase an aggregate of
200,000. See "Security Ownership of Certain Beneficial Owners and Management".
1993 Stock Option Plan
On June 8, 1992, the Board of Directors and a majority of the shareholders
adopted, subject to approval by the stockholders, a stock option plan called the
"1993 Stock Option Plan."
The Company has reserved 600,000 shares of its Common Stock for issuance upon
the exercise of options to be granted or available for grant under an Incentive
Stock Option Plan ("ISOP"). As more specifically set forth below, options
granted under the ISOP fall within the meaning and conform to Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). Under the terms of the
ISOP, all officers, employees, consultants, and advisors of the Company will be
eligible for ISOs. The Board of Directors will determine in its discretion which
persons will receive ISOs, the applicable vesting provisions, and the exercise
term 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 May 18, 1998, no options has been granted under the 1993 Stock Option Plan.
Certain Relationships and Related Transactions
Christopher Maus, the President, Acting Chairman of the Board of Directors and a
Director of the Company and Chief Executive Officer or the Company received
various cash advances from the Company which were formalized into a promissory
note executed in favor of the Company by Mr. Maus on December 31, 1995. The note
matures upon demand by the Company and bears interest at 8% per annum until such
time. The outstanding balance of the promissory note at December 31, 1997 and
1996, respectively, was $69,622 and $54,189.
6
PROPOSAL RELATING TO THE 1998 STOCK OPTION PLAN
On April 16, 1998, the Board of Directors adopted, subject to approval by the
stockholders, a stock option plan called the "1998 Stock Option Plan (the
"Plan")." The following summary describes features of the Plan. This summary is
qualified in its entirety by reference to the specific provisions of the Plan,
the full text of which is set forth as Appendix A.
The Board of Directors have determined that the Plan will work to increase the
employees', consultants' and non-employee directors' proprietary interest in the
Company and to align more closely their interests with the interests of the
Company's stockholders. The Plan will also maintain the Company's ability to
attract and retain the services of experienced and highly qualified employees
and non-employee directors. The Board of Directors believes that the Plan is in
the Company's best interests and therefore recommends adoption of the Plan on
essentially the terms and conditions as are set forth below.
Under the Plan, the Company has reserved an aggregate of 2,000,000 shares of
Common Stock for issuance pursuant to options ("Plan Options") or stock
appreciation rights ("SARs") granted under the Plan. The Plan will be
administered by either the Board of Directors, or a committee of the Board of
Directors (the "Committee"), of the Company including, without limitation, the
selection of the persons who will be granted Plan Options under the Plan, the
type of Plan Options to be granted, the number of shares subject to each Plan
Option and the Plan Option price.
Plan Options granted under the Plan may either be options qualifying as
incentive stock options ("Incentive Options") under Section 422 of the Internal
Revenue Code of 1986, as amended, or options that do not so qualify
("Non-Qualified Options"). In addition, the Plan also allows for the inclusion
of a credit assisted transaction provision ("Credit Provision"), which permits
an eligible person to pay the exercise price of the Plan Option by obtaining
credit from a creditor, approved by the [Committee], based on the shares
underlying the Plan Options available to the eligible person upon exercise. Any
Incentive Option granted under the Plan must provide for an exercise price of
not less than 100% of the fair market value of the underlying shares on the date
of such grant, but the exercise price of any Incentive Option granted to an
eligible employee owning more than 10% of the Company's Common Stock must be at
least 110% of such fair market value as determined on the date of the grant. The
term of each Plan Option and the manner in which it may be exercised is
determined by the Board of the Directors or the Committee, provided that no Plan
Option may be exercisable more than 10 years after the date of its grant and, in
the case of an Incentive Option granted to an eligible employee owning more than
10% of the Company's Common Stock, no more than five years after the date of the
grant. The exercise price of Non-Qualified Options shall be determined by the
Board of Directors or the Committee but in any case may not be less than 50% of
the fair market value of a share of Common Stock on the date on which the
NonQualified Option is granted. During any calendar year, no employee or
consultant shall be granted any Plan Options or SARs, that in the aggregate
would exceed 200,000 shares of Common Stock.
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.
Officers, directors, key employees and consultants of the Company and its
subsidiaries are eligible to receive NonQualified Options under the Plan. Only
officers, directors and employees of the Company who are employed by the Company
or by any subsidiary thereof are eligible to receive Incentive Options.
7
All Plan Options are nonassignable and nontransferable, except by will or by the
laws of descent and distribution, and during the lifetime of the optionee, may
be exercised only by such optionee. If an optionee's employment is terminated
for any reason, other than his death or disability or termination for cause, or
if an optionee is not an employee of the Company but is a member of the
Company's Board of Directors and his service as a director is terminated for any
reason, other than death or disability, the Plan Option granted to him shall
lapse to the extent unexercised on the earlier of the expiration date or three
months following the date of termination. If the optionee dies during the term
of his employment, the Plan Option granted to him shall lapse to the extent
unexercised on the earlier of the expiration date of the Plan Option or the date
one 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 Plan Option granted to him lapses to the
extent unexercised on the earlier of the expiration date of the option or one
year following the date of such disability.
The Board of Directors or 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
years, or (iv) extends the termination date of the Plan. Unless the Plan shall
theretofore have been suspended or terminated by the Board of Directors, the
Plan shall terminate on June 18, 2008. Any such termination of the Plan shall
not affect the validity of any Plan Options previously granted thereunder.
The following discussion is based on federal income tax laws and regulations in
effect on March 31, 1995. It does not purport to be a complete description of
the federal income tax consequences of the Plan, nor does it describe the
consequences of state, local or foreign tax laws which may be applicable.
Accordingly, any person receiving a grant under the Plan should consult with his
own tax adviser.
An employee granted an Incentive Stock Option 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
Incentive Stock Option 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 Incentive Stock Option, long-term capital gain
or loss is recognized in an amount equal to the difference between the sales
price and the Incentive Stock Option exercise price, provided that the option
holder has not disposed of the stock within two years from the date of grant and
within one year from the date of exercise. If the Incentive Stock Option holder
disposes of the acquired stock (including the transfer of acquired stock in
payment of the exercise price of an Incentive Stock Option) without complying
with both of these holding period requirements ("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
Incentive Stock Option is exercised (the value six 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 Incentive Stock Option tax preference described above may not
apply (although, where the Disqualifying Disposition occurs subsequent to the
year the Incentive Stock Option 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 Incentive Stock Option 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 Non-Qualified Options, the option holder does not
recognize taxable income on the date of the grant of the Non-Qualified Option,
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
Non-Qualified Options is subject to the restrictions on resale of Common Stock
8
under Section 16 of the Securities Exchange Act of 1944, such person generally
recognizes ordinary income at the end of the six-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-month
period. Nevertheless, such holder may elect within 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.
If the Plan is approved by the stockholders, the Company will not have granted
any Plan Options or SARs thereunder.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS
VOTE "FOR" THE ADOPTION OF THE 1998 STOCK OPTION PLAN
APPOINTMENT OF THE COMPANY'S AUDITORS
The Board of Directors has approved an recommends the appointment of BDO Seidman
LLP as independent auditors of the Company for the fiscal year ended December
31, 1998, will be ratified. Although the Board of Directors of the Company is
submitting the appointment of BDO Seidman LLP for stockholder approval, it
reserves the right to change the selection of BDO Seidman LLP as auditors, at
any time during the fiscal year, if it deems such change to be in the best
interest of the Company, even after stockholder approval. Representatives of BDO
Seidman LLP are expected to be present at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS
VOTE "FOR" THE RATIFICATION OF BDO SEIDMAN LLP
AS INDEPENDENT AUDITORS FOR THE COMPANY
FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998.
INTEREST OF CERTAIN PERSONS IN
OPPOSITION TO MATTERS TO BE ACTED UPON
The Company is not aware of any substantial interest, direct or indirect, by
securities holdings or otherwise of any officer, director, or associate of the
foregoing persons in any matter to be acted on, as described herein, other than
elections to offices.
OTHER MATTERS
Management is not aware of any other business which may come before the meeting.
However, if additional matters properly come before the meeting, proxies will be
voted at the discretion of the proxy holders.
STOCKHOLDERS' PROPOSALS TO BE PRESENTED AT THE
COMPANY'S NEXT ANNUAL MEETING OF STOCKHOLDERS
Stockholder proposals intended to be presented at the 1999 Annual Meeting of
Stockholders of the Company must be received by the Company, at its principal
executive offices not later than April 1, 1999 for inclusion in the Proxy
Statement and Proxy relating to the 1999 Annual Meeting of Stockholders.
9
AVAILABILITY OF FORM 10-KSB ANNUAL REPORT
A copy of the Company's Annual Report on Form 10-KSB for the year ended December
31, 1997, has been included in this Proxy Statement, but is exclusive of certain
exhibits filed therewith, including related exhibits as filed with the
Securities and Exchange Commission. These exhibits are available without charge
to stockholders upon request to Christopher Maus, President or Harvey Rosenberg,
manager of stockholder relations.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Christopher Maus
----------------------------------------------------
Christopher Maus, Director, Chief Executive Officer,
President and Acting Chairman of the Board of
Directors
Sandpoint, Idaho
May 28, 1998
10
ADDENDUM A
LIFESTREAM TECHNOLOGIES, INC.
1998 STOCK OPTION PLAN
1. Purpose
This Lifestream Technologies, Inc. 1998 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 herein "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 or more members of the Board of
Directors. 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.
1
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 all 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 Nasdaq
National Market, the Fair Market Value of a share of Common Stock on any date
shall be the closing price, as quoted on the Nasdaq 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 Nasdaq 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.
2
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 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. With respect to each grant of a NSO, the Option Price per
share shall not be less than 50% of the fair market value of a share of Common
Stock on the date on 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 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
3
require as a condition of exercise that the Participant will 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
years from the date such Stock Option is granted or five 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, if 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 Securities Exchange Act of 1934 (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 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
4
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 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 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 16(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 three 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 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 months after the Participant's
death. This section 6.8 shall not extend the term of the Stock Option 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.
6.9 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
5
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 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 16
hereof, to prevent dilution or enlargement of rights. Any adjustment pursuant to
this section 6.9 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 6.9, 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.
6
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
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 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
year nor more than ten 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 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 by the Company or one of its Subsidiaries, or within thirty
days following the termination of such employment, except as otherwise
provided in section 16(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 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. Upon exercise of an SAR, payment shall be made 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.
7
8. 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
the same terms and conditions (including the applicable vesting and termination
provisions) as those contained in the previously issued option being replaced
thereby.
9. 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.
10. 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
6.9, 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.
11. 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.
8
12. 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.
13. 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
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.
14. 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.
15. 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
9
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.
16. 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:
(a) 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
(b) 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.
17. Effective Date
This Plan was adopted by the Board of Directors and became effective on
April 16, 1998, subject to the approval of the Company's stockholders within
twelve months thereafter. All ISOs must be granted within ten years from April
16, 1998.
* * * * *
10
This Proxy Is Solicited By And On Behalf Of The Board of Directors
LIFESTREAM TECHNOLOGIES, INC.
Proxy -- Annual Meeting of Stockholders -- June 18, 1998
The undersigned, revoking all previous proxies, hereby appoint(s) Christopher
Maus as Proxy, with full power of substitution, to represent and to vote all
Common Stock of Lifestream Technologies, Inc. owned by the undersigned at the
Annual Meeting of Stockholders to be held in Hayden Lake Country Club located at
1800 Bozanta Drive, Hayden Lake, Idaho, on June 18, 1998 at 8:30 A.M., including
any original or subsequent adjournment thereof, with respect to the proposals
set forth in the Notice of Annual Meeting and Proxy Statement. No business other
than matters described below is expected to come before the meting, but should
any other matter requiring a vote of stockholders arise, the person named herein
will vote thereon in accordance with his best judgment. All powers may be
exercised by said Proxy. Receipt of the Notice of Annual Meeting and Proxy
Statement is hereby acknowledged.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING.
1. ELECTION OF DIRECTORS. Nominees:
Christopher Maus Robert Boyle Michael Crane William Gridley
John Trenary
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE PLEASE DRAW A LINE THROUGH THAT NOMINEE'S NAME)
[ ] WITHHOLDING AUTHORITY to vote for all nominees listed
above
2. Proposal to adopt the 1998 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To ratify the appointment of independent auditors
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The shares represented by this proxy will be voted as directed. IF NO SPECIFIC
DIRECTION IS GIVEN, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE
NOMINEES NAMED IN PROPOSAL 1, FOR PROPOSAL 2, AND FOR PROPOSAL 3.
The undersigned stockholder hereby acknowledges receipt of the Notice
of Annual Meeting and Proxy Statement and hereby revokes any proxy or proxies
heretofore given. This proxy may be revoked at any time prior to the Annual
Meeting. If you received more than one proxy card, please date, sign and return
all cards in the accompanying envelope.
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in the corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
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Signature
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Signature If Held Jointly
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(Please Print Name)
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Number of Shares Subject to Proxy
Dated: ________________________, 1998
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.