THIS CONVERTIBLE TERM NOTE HAS NOT BEEN REGISTERED UNDER ANY STATE SECURITIES
LAW OR THE SECURITIES ACT OF 1933, AS AMENDED ("FEDERAL ACT"). THIS CONVERTIBLE
TERM NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
HYPOTHECATED, SOLD, OR TRANSFERRED, NOR WILL ANY ASSIGNEE OR TRANSFEREE HEREOF
BE RECOGNIZED BY THE MAKER HEREOF AS HAVING ANY INTEREST IN THIS CONVERTIBLE
TERM NOTE, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO
THIS CONVERTIBLE TERM NOTE UNDER ANY APPLICABLE STATE LAW AND THE FEDERAL ACT OR
ANY OPINION OF COUNSEL SATISFACTORY TO THE MAKER HEREOF THAT SUCH REGISTRATION
IS NOT REQUIRED.

THIS CONVERTIBLE TERM NOTE IS SUBJECT TO THE TERMS AND CONDITIONS OF THAT
CERTAIN LIFESTREAM TECHNOLOGIES, INC. SUBSCRIPTION AGREEMENT OF EVEN DATE
HEREWITH BETWEEN LIFESTREAM TECHNOLOGIES, INC. AND HOLDER, AND HOLDER AGREES AND
UNDERSTANDS THAT IT SHALL BE BOUND BY THE PROVISIONS OF SUCH AGREEMENT.

               LIFESTREAM TECHNOLOGIES, INC. CONVERTIBLE TERM NOTE


$_________________                                            December ___, 1998

         1.       PROMISE TO PAY

                  FOR VALUE RECEIVED, the undersigned LIFESTREAM TECHNOLOGIES,
INC., a Nevada corporation (the "Company"), HEREBY PROMISES TO PAY
____________________________ ("Purchaser"), on or before December 15, 2000, the
principal amount of _________________________ ($_____.__), together with
interest on such principal amount at the rates per annum provided below, which
payments of interest shall be made as provided below. Both principal and
interest hereunder are payable in lawful money of the United States of America
to Purchaser in immediately available funds.



<PAGE>
                  This Convertible Term Note ("the Note" or "this Note") shall
bear interest at a per annum interest rate equal to the prime rate as published
in the "Money Rates" tables of The Wall Street Journal on the first date of the
calendar quarter in which this Note is issued plus two percent (2%) and adjusted
on the first day of each subsequent calendar quarter in which the Note is
outstanding. The term of this Note shall extend until December 15, 2000 (the
"Term"). Interest shall be payable upon the earlier to occur if (i) the
conversion of the Note or (ii) the expiration of the Term of the Note. Subject
at all times upon Purchaser's rights of conversion herein, the Company may
prepay the Note at any time or times, in whole or in part, on not less than 30
days' prior written notice to Purchaser (the "Prepayment Notice"). Each
Prepayment Notice shall specify the principal amount of this Note and all other
outstanding Notes to be redeemed. Each prepayment of principal of this Note
shall be accompanied by the payment of all interest accrued and unpaid to the
prepayment date on the principal amount to be prepaid. In the event the Company
elects to prepay only a portion of the aggregate amount of outstanding Notes,
such prepayment shall be made on a pro rata basis to all holders of the Notes.

         2.       CONVERSION OF NOTE

                  Purchaser shall have conversion rights as follows (the
"Conversion Rights"):

                  2.1 Right to Convert. Subject to and upon compliance with the
provisions of this Section 2, at any time after the date hereof (the "Closing
Date") at the option of Purchaser, the Note, or any $1,000 multiple of the
principal amount thereof then outstanding, may be converted at the outstanding
principal amount hereof, or at such portion hereof, into fully paid and
non-assessable shares of common stock, $.001 par value, of the Company, and
stock of any other class or classes into which such common stock or any such
class may be hereafter changed or reclassified ("Common Stock"), at the initial
conversion rate of one (1) fully paid and non-assessable share of Common Stock
for each $2.50 amount of principal amount of the Note plus any accrued and
unpaid interest on such principal amount ("Conversion Rate") (which $2.50 per
share of Common Stock shall also be referred to hereinafter as the "Conversion
Price"); provided, however, that the Conversion Rate shall be subject to the
adjustments described below.

                                      -2-
<PAGE>


                  2.2 Mechanics of Conversion. Before Purchaser shall be
entitled to convert this Note into shares of Common Stock, Purchaser shall
surrender the Note to the Company at its offices at its address below (or at
such other address of which the Company shall have notified Purchaser in
writing), and shall give written notice to the Company at such offices that
Purchaser elects to convert the Note, or if less than the entire principal
amount of the Note is to be converted, the portion thereof to be converted. Such
notice shall also state the name or names (with address or addresses) in which
the certificate or certificates for shares of Common Stock issuable upon such
conversion shall be issued and shall contain such representations as may
reasonably be required by the Company to the effect that the shares to be
received upon conversion are not being acquired and will not be transferred in
any way that might violate the then applicable laws. As promptly as practicable
after the receipt of such notice and the surrender of the Note as aforesaid, the
Company shall issue and shall deliver to Purchaser at the address specified by
Purchaser in the written notice of conversion a certificate or certificates for
the number of full shares issuable upon the conversion of the Note (or portion
thereof) in accordance with the provisions of this Section 2 and cash as
provided in Section 2.3 hereof. Such conversion shall be deemed to have been
effected at the close of business on the date on which such notice shall have
been received at the office of the Company and the Note shall have been
surrendered as aforesaid (the "Conversion Date"), and at such time the rights of
Purchaser as obligee shall cease as to the portion of the Note which has been
converted, and the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become the holder or holders of record of the shares of
Common Stock represented thereby. All certificates issued upon the exercise of
the conversion shall contain a legend governing restrictions upon such shares
imposed by law and the Lifestream Technologies, Inc. Subscription Agreement of
even date herewith. Upon conversion of the Note in part only, the Company shall
execute and deliver to or on the order of Purchaser, at the expense of the
Company, a new note in principal amount equal to the unconverted portion of the
Note so converted.

                  2.3 Fractional Shares and Accrued Interest. No fractional
shares of Common Stock or scrip representing fractional shares shall be issued
upon conversion of the Note. Instead of any fractional shares which would
otherwise be issuable upon conversion of the Note or specified portions thereof,
the Company shall pay to Purchaser a cash adjustment in respect of such fraction
in an amount equal to such fraction multiplied by the Conversion Price per share
of Common Stock as of the Conversion Date.

                  2.4 Adjustment for Subdivisions or Combinations of Common
Stock. In the event the Company at any time or from time to time after the
Closing Date effects a subdivision or combination of its outstanding Common
Stock into a greater or lesser number of shares without a proportionate and
corresponding adjustment of the Conversion Rate, then and in each such event the
Conversion Rate shall be increased or decreased proportionately.

                                      -3-
<PAGE>

                  2.5 No Impairment. The Company will not, by amendment of its
Articles of Incorporation or Bylaws or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Company, but will
at all time in good faith assist in the carrying out of all the provisions of
this Section 2 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of Purchaser of the Note
against impairment.

                  2.6 Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Rate pursuant to this Section 2,
the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof, and in any event, prepare and
furnish to Purchaser a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is
based. The Company shall, upon the written request at any time of Purchaser,
furnish or cause to be furnished to Purchaser a like certificate setting forth
(a) such adjustments and readjustments, (b) the Conversion Rate at that time in
effect, and (c) the number of shares of Common Stock and the amount, if any, of
other property which at that time would be received upon the conversion of the
Note.

                  2.7 Notices of Record Date. In the event of any taking by the
Company of a record of the holders of any class of securities other than this
Note for the purpose of determining the holders thereof who are entitled to
receive any dividend or other distribution, any common stock equivalents or any
right to subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right, other
than a right to vote at a meeting of shareholders, the Company shall mail to
Purchaser at least ten (10) days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend, distribution or rights, and the amount and character of such
dividend, distribution or rights.

                  2.8 Reservation of Stock Issuable Upon Conversion. The Company
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion of
this Note such number of its shares of Common Stock as shall from time to time
be sufficient to effect the conversion of this Note, and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect such conversion, the Company will take such corporate action as may,
in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose.

         3.       LIQUIDATION

                                      -4-
<PAGE>
                  3.1 Liquidation. For purposes of this Section 3, a liquidation
shall be deemed to be: (a) an assignment by the Company of substantially all of
its assets for the benefit of creditors, or (b) any reorganization, composition,
arrangement, liquidation or other debtor relief pursuant to any federal or state
law or through the action of any trustee or receiver of substantially all of the
assets of the Company, or (c) the Company's sale of all or substantially all of
its assets or the acquisition of the Company by another entity by way of merger
or consolidation resulting in the exchange of the outstanding shares of the
Company for securities or consideration issued, or caused to be issued, by the
acquiring corporation or its parent or subsidiary (the transactions described in
this Section 3.2(c) herein defined as "Sale or Merger"). The parties acknowledge
and agree that the registration of stock by the Company under the Securities Act
of 1933 shall not constitute a liquidation under this Section 3.

                  3.2 Liquidation Rights. In the event of liquidation (as
described in Section 3.1), dissolution or winding up of the Company (a
"Liquidation Event"), Purchaser shall at its election, be entitled to receive in
exchange for and in redemption of the Note or any portion of the principal
amount thereof then outstanding, prior and in preference to any distribution of
any of the assets or surplus funds of the Company to the holders of the Common
Stock or any preferred class of stock of the Company by reason of their
ownership thereof, an amount equal to the outstanding principal amount or of
such portion thereof plus all accrued but unpaid interest thereon.

                  3.3 Payments. All of the amounts to be paid to Purchaser under
this Section 3 shall be paid or set apart for payment before the consummation of
a Liquidation Event, or before the payment or setting apart for payment of any
amount for, or the distribution of any assets of the Company to the holders of
the Common Stock or any class of preferred stock in connection with any
Liquidation Event. If the assets or surplus funds to be distributed to the
holders of all notes, including this Note, are insufficient to permit the
payment to such holders of their full preferential amount, the assets and
surplus funds legally available for distribution shall be distributed ratably
among the holders of the notes and this Note in proportion to the full
preferential amount each such holder is otherwise entitled to receive.


                                   -5-
<PAGE>

         4.       EVENTS OF DEFAULT AND REMEDIES

                  4.1 Events of Default. The following shall constitute Events
of Default (for purposes of this Section 4, the term "Company" shall include
Lifestream Technologies, Inc. and any majority-owned subsidiary of Lifestream
Technologies, Inc.):

                  (a) default in the due and punctual payment of the principal
of the Note, or any interest accrued thereon, when and as such payment shall
become due and payable, whether at maturity or by acceleration or otherwise if
such payment is not made within five (5) days or written notice given to the
Company by Purchaser specifying such default; or

                  (b) any material representation or warranty of the Company in
this Note that is untrue in any material respect as of the date made; or

                  (c) default in the performance or observance of any covenant
or agreement of the Company in this Note and the continuance of such default for
a period of thirty (30) days after there has been given to the Company by
Purchaser written notice specifying such default and requiring that it be
remedied, provided that no such default shall be deemed to occur if such default
may not be cured within thirty (30) days, within said period the Company has
commenced and thereafter diligently and continuously pursues to cure such
default, and the default is cured, in any event, within ninety (90) days; or

                  (d) actual acceleration of the maturity of indebtedness upon
the occurrence of a default under any bond, note, debenture, lease or other
evidence of indebtedness of the Company (other than the Note and similar notes
of like tenor issued in the same offering as the Note) or under any indenture or
other instrument under which any such evidence of indebtedness has been issued
or by which it is governed in an aggregate amount of at least $100,000.00,
provided, however, that, (i) if such acceleration is rescinded, then the Event
of Default hereunder by reason of such default shall be deemed likewise to have
been thereupon cured or waived, or (ii) if such accelerated indebtedness in the
aggregate does not exceed $100,000.00 or if such acceleration is being contested
by the Company in good faith, then such acceleration shall not be deemed to be
an Event of Default; or

                  (e) insolvency (as defined in the Uniform Commercial Code as
in effect from time to time) of the Company; the making of an assignment for the
benefit of creditors; the filing or acquiescence in the filing of a petition
instituting any state or federal insolvency, bankruptcy, reorganization,
arrangement, composition, or other debtor relief proceeding; the petition of or
application to any tribunal for a receiver or trustee for itself or for any
substantial part of any of its property; the commencement of any proceeding
under any reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any federal or state jurisdiction, whether now or
hereafter in effect, or the commencement against the Company of any such
proceeding or the appointment of a receiver or any trustee for the Company or
any part of the Company's property; or

                  (f) the entry of any judgment against the Company or the
attachment, seizure of, or levy against the Company with respect to a claim for
any amount in excess of $100,000.00 that remains unpaid, unstayed, undischarged,
unbonded, or undismissed for a period of thirty days; or

                                      -6-

<PAGE>

                  (g) the filing of record of any notice of lien, levy or
assessment with respect to any or all of the Company's assets by the United
States Government, or any department, agency or instrumentality thereof, or by
any state, county, municipal or other governmental authority, or the automatic
imposition of a lien, whether coate or otherwise, because of failure to pay any
taxes or debt owing at any time hereafter to any one or more of such entities,
upon any or all of the Company's assets, which lien is not paid on the payment
date thereof unless such lien, levy or assessment is contested in good faith and
for which adequate reserves have been maintained; or

                  4.2 Acceleration of Maturity, Rescission and Annulment.
                  (a) If an Event of Default occurs and is continuing then and
in any such case Purchaser may declare the outstanding principal amount of the
Note to be due and payable immediately, without advance notice to the Company,
and, upon any such declaration, the outstanding principal amount of the Note,
and the interest accrued thereon, together with all costs of collection, shall
immediately become due and payable.

                  (b) At any time after any declaration of acceleration has been
made as provided in this Section 4.2, Purchaser may, by written notice to the
Company, rescind and annul such declaration and its consequences. No such
rescission shall affect any subsequent default or impair any right consequent
thereon.

                  4.3 Suits for Enforcement. In case any one or more Events of
Default shall have occurred and be continuing, Purchaser may proceed to protect
and enforce Purchaser's rights either by suit in equity or by action at law, or
both, whether for the specific performance of any covenant or agreement
contained herein or in aid of the exercise of any power granted herein or
proceed to enforce the payment of the Note or to enforce any other legal or
equitable right of Purchaser.

                  4.4 Remedies Cumulative. No remedy herein conferred upon
Purchaser is intended to be exclusive of any other remedy and each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or otherwise.
                  4.5 Remedies Not Waived. No course of dealing between the
Company and Purchaser or any delay in exercising any rights hereunder shall
operate as a waiver by Purchaser.

         5.       AMENDMENT AND WAIVER

                  5.1 Procedure for Amendment and Waiver. Any term, covenant,
agreement or condition hereof may be amended by the Company and Purchaser or
compliance therewith may be waived (either generally or in a particular instance
and either retroactively or prospectively) by Purchaser; provided, however, that
any such amendment shall be effective only if made in writing and executed by
both the Company and Purchaser, and any such waiver shall be effective only if
made in writing and executed by Purchaser; and, further provided that no such
waiver shall extend to or affect any obligation which is not expressly so
waived.

         6.       MISCELLANEOUS

                  6.1 Successors and Assigns and Bound by Covenants. All
covenants, stipulations, promises and agreements herein contained shall bind and
inure to the benefit of the Company and Purchaser and their respective permitted
successors and assigns.

                                      -7-
<PAGE>

                  6.2 Severability. If any one or more of the provisions of this
Note shall be determined to be invalid, illegal or unenforceable in any respect
for any reason, the validity, legality and enforceability of any such provision
in every other respect and the remaining provisions hereof shall not in any way
be impaired.

                  6.3 Headings. The headings in this Note are inserted for
convenience only and do not constitute a part of this Note.

                  6.4 Governing Law. This Note shall be construed in accordance
with and governed by the laws of the State of Colorado.

                  6.5 Loss, Theft, Destruction or Mutilation of Notes. Upon
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of the Note and, in the case of any such loss, theft
or destruction, upon receipt of any indemnity bond in such reasonable amount as
the Company may determine or, in the case of any such mutilation, upon surrender
and cancellation of the Note, the Company shall make and deliver, in lieu of
such lost, stolen, destroyed or mutilated Note, a new Note of like tenor and
unpaid principal amount and dated as of the date to which interest has been paid
on the Note so lost, stolen, destroyed or mutilated.

                  6.6 Survival of Covenants, Representations and Warranties. All
representations, warranties, covenants and agreements of the Company contained
in the Note shall survive the execution and delivery of the Note and shall
continue in full force and effect thereafter.

                  6.7 Assignment. Subject to applicable securities laws,
Purchaser may assign or sell or otherwise convey the Note or any and all of the
rights and interests inuring to its benefit hereunder with the consent of the
Company, which consent may not be unreasonably withheld. In the event that, with
the consent of the Company, Purchaser proposes to assign the Note to more than
one person to hold same as tenants-in-common or any similar joint ownership, the
provisions of the Note shall be modified by agreement of the Company and
Purchaser to reflect such proposed assignment, including a modification of
Section 5 hereof to provide for amendment or waiver by the Company and the
holders of two-thirds (2/3) of the outstanding principal amount.

                  6.8 Interest Rights Preserved. A Note delivered upon transfer
of or in exchange for or in lieu of this Note shall carry all the rights to
interest accrued and unpaid, and to accrue, that were carried by this Note, and
each such Note shall be so dated that neither gain nor loss in interest shall
result from such transfer, exchange or substitution.


                                      -8-
<PAGE>

         IN WITNESS WHEREOF, the Company has caused this Note to be executed in
its corporate name, all as of the ___ day of _____________, 1998.


[CORPORATE SEAL]                            LIFESTREAM TECHNOLOGIES, INC.


Attest:_________________________            By:_______________________________  
         Title:                                  Title:

                                            201 Linden Street
                                            Suite 302
                                            Fort Collins, Colorado  80524







                                      -9-