Document:

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

$                                                                        , 2001
 ----------                                                  -------------------

         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 July 30, 2003, 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, and the amount of any "Registration Delay Payments" (as
defined in the Registration Rights Agreement by and among the parties dated of
even date herewith (the "Registration Rights Agreement")) which Purchaser elects
not to receive in cash and which shall be added to (and shall not be in lieu of)
the amount of principal and interest accrued and payable hereunder. All
principal, interest and Registration Delay Payments hereunder are payable in
lawful money of the United States of America to Purchaser in immediately
available funds.

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                  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 (Date) (the "Term").
Interest shall be payable upon the earlier to occur of (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 and Registration Delay Payments 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 - Purchaser. 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 registered 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 $1.00 amount of principal amount of the Note plus
any accrued and unpaid interest on such principal amount and Registration Delay
Payments ("Conversion Rate") (which $1.00 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.

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                  2.2 Right to Convert - Issuer (the "Company"). Subject to and
upon compliance with the provisions of this Section 2, at any time after the
date hereof (the "Closing Date") the Company can force conversion of the Note,
of principal and accrued and unpaid interest and Registration Delay Payments
then outstanding, upon the Company's common stock, as quoted by NASDAQ, or other
trading stock market, maintaining a bid price on or above $3.00 per share for
twenty consecutive trading days, into fully paid and non-assessable shares of
registered 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 $1.00 amount of
principal amount of the Note plus any accrued and unpaid interest and
Registration Delay Payments on such principal amount ("Conversion Rate") (which
$1.00 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.

                  2.3 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 2.4 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. 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.

                  2.4 Fractional Shares. 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.

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                  2.5 Adjustment of Conversion Price. The Conversion Price shall
be subject to adjustment from time to time as follows:

                  (a) If the Company issues shares of Common Stock other than
(i) all shares of Common Stock issued in connection with the acquisition of
another company by the Company by merger or other reorganization whereby the
Company owns, upon consummation of such acquisition, more than fifty percent
(50%) of the voting power to elect the directors of such other company, or in
connection with the acquisition of all or substantially all of the assets of
such other company, (ii) employee stock options and (iii) and in connection with
conversion of notes, warrants and options issued pursuant to or previous to this
Note, for a consideration per share less than the Conversion Price in effect
immediately prior to the issuance of such Common Stock, the Conversion Price in
effect immediately prior to each such issuance shall forthwith be adjusted to a
price equal to the quotient obtained by dividing:

                      (i)   an amount equal to the sum of:

                           (A) the total number of shares of Common Stock
                      outstanding (including any shares of Common Stock deemed
                      to have been issued pursuant to Section 2.5(a)(iii)(C)
                      hereof  and to Section 2.5(b)) immediately prior to such
                      issuance multiplied by the Conversion Price in effect
                      immediately prior to such issuance, plus

                           (B) the consideration received by the Company upon
                      such issuance, by

                     (ii)  the total number of shares of Common Stock
                outstanding (including any shares of Common Stock deemed to
                have been issued pursuant to Section 2.5(a)(iii)(C) and to
                Section 2.5(b)) immediately after such issuance of such Common
                Stock.

                     (iii) For the purposes of any adjustment of the
                Conversion Price pursuant to this Section 2.5(a), the following
                provisions shall be applicable:

                           (A) When Common Stock is issued for cash, the
                     consideration shall be deemed to be the amount of cash
                     paid therefor after deducting therefrom any discounts,
                     commissions or other expenses allowed, paid or incurred by
                     the Company for any underwriting or otherwise in connection
                     with the issuance and sale thereof;
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                           (B) When Common Stock is issued for a consideration
                     in whole or in part other than cash, the consideration
                     other than cash shall be deemed to be the fair market value
                     thereof as determined by the Board of Directors of the
                     Company (which determination shall be conclusive absent
                     manifest error), irrespective of any accounting treatment;
                     provided, however, that such fair market value determined
                     by the Board of Directors shall not exceed the aggregate
                     Current Market Price of the shares of Common Stock being
                     issued. Current Market Price shall mean the average of the
                     daily closing prices of one share of Common Stock for the
                     thirty (30) consecutive business days ending on the day
                     before the day in question and such average will be
                     adjusted for any stock dividend, split, combination or
                     reclassification that took effect during such thirty (30)
                     business day period. The closing price for each day shall
                     be the last reported sales price regular way or, in case no
                     such reported sales took place on such day, the average of
                     the last reported bid and asked prices regular way, in
                     either case on the principal national securities exchange
                     on which the Common Stock is listed or admitted to trading,
                     or if the Common Stock is not at the time listed or
                     admitted for trading on any such exchange, then such price
                     as shall be equal to the average of the last reported bid
                     and asked prices, as reported by Nasdaq on such day, or if,
                     on any day in question, the Common Stock shall not be
                     quoted on Nasdaq, then such price shall be equal to the
                     average of the last reported bid and asked prices on such
                     day as reported by Nasdaq. Notwithstanding the foregoing,
                     if the Common Stock is not traded in such manner that the
                     prices referred to above are available for the period
                     required hereunder, the Current Market Price shall be
                     determined in good faith by the Board of Directors of the
                     Company (which determination shall be conclusive absent
                     manifest error);

                           (C) In the case of the issuance of options to
                     purchase or rights to subscribe for Common Stock,
                     securities by their terms convertible into or exchangeable
                     for Common Stock, or options to purchase or rights to
                     subscribe for such convertible or exchangeable securities:

                               (1) the aggregate maximum number of shares of
                     Common Stock deliverable upon exercise of such options to
                     purchase or rights to subscribe for Common Stock shall be
                     deemed to have been issued at the time such options or
                     rights were issued and for a consideration equal to the
                     consideration (determined in the manner provided in Section
                     2.5(a)(iii)(A) and (B) above with the proviso in Section
                     2.5(a)(iii)(B) above being applied to the number of shares
                     of Common Stock deliverable upon such exercise) received by
                     the Company upon the issuance of such options or rights,
                     plus the minimum purchase price provided in such options or
                     rights for the Common Stock covered thereby;

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                               (2) the aggregate maximum number of shares of
                     Common Stock deliverable upon conversion of or in exchange
                     for any such convertible or exchangeable securities or upon
                     the exercise of options to purchase or rights to subscribe
                     for such convertible or exchangeable securities and
                     subsequent conversions or exchanges thereof shall be deemed
                     to have been issued at the time such securities were issued
                     or such options or rights were issued and for a
                     consideration equal to the consideration received by the
                     Company for any such securities and related options or
                     rights (excluding any cash received on account of accrued
                     interest or accrued dividends), plus the additional
                     consideration, if any, to be received by the Company upon
                     the conversion or exchange of such securities or the
                     exercise of any related options or rights (the
                     consideration in each case to be determined in the manner
                     provided in Section 2.5(a)(iii)(A) and (B) above with the
                     proviso in Section 2.5(a)(iii)(B) above being applied to
                     the number of shares of Common Stock deliverable upon such
                     conversion, exchange or exercise);

                               (3) on any change in the number of shares of
                     Common Stock deliverable upon exercise of any such options
                     or rights or conversion of or exchange for such convertible
                     or exchangeable securities, other than a change resulting
                     from any antidilution provisions thereof, the Conversion
                     Price shall forthwith be readjusted to such Conversion
                     Price as would have obtained had the adjustment made upon
                     the issuance of such options, rights or securities not
                     converted prior to such change or options or rights related
                     to such securities not converted prior to such change been
                     made upon the basis of such change; and

                               (4) on the expiration of any such options or
                     rights, the termination of any such rights to convert or
                     exchange or the expiration of any options or rights related
                     to such convertible or exchangeable securities, the
                     Conversion Price shall forthwith be readjusted to such
                     Conversion Price as would have obtained had the adjustment
                     made upon the issuance of such options, rights, securities
                     or options or rights related to such securities been made
                     upon the basis of the issuance of only the number of shares
                     of Common Stock actually issued upon the conversion or
                     exchange of such securities or upon the exercise of the
                     options or rights related to such securities.

                  (b) If the number of shares of Common Stock outstanding is
increased by a stock dividend payable in shares of Common Stock or by a
subdivision or split of shares of Common Stock, then the Conversion Price in
effect immediately prior to such stock dividend, subdivision or split shall be
proportionately decreased and the number of Conversion Shares shall be
proportionately increased.

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                  (c) If the number of shares of Common Stock outstanding is
decreased by a combination of the outstanding shares of Common Stock, then the
Conversion Price in effect immediately prior to such combination shall be
proportionately increased and the number of Conversion Shares shall be
proportionately decreased.

                  (d) If the Company shall declare a cash dividend upon its
Common Stock payable otherwise than out of earnings or earned surplus or shall
distribute to holders of the Common Stock shares of its capital stock other than
Common Stock, stock or other securities of other persons, evidences of
indebtedness issued by the Company or other persons, assets (excluding cash
dividends and distributions) or options or rights (excluding options to purchase
and rights to subscribe for Common Stock or other securities of the Company
convertible into or exchangeable for Common Stock), then, in each such case, the
Conversion Price in effect immediately prior to such dividend or distribution
shall be adjusted as follows. Immediately following the record date fixed for
the determination of holders of Common Stock entitled to receive such dividend
or distribution, the Conversion Price in effect thereafter shall be determined
by multiplying the Conversion Price in effect immediately prior to such record
date by a fraction of which the numerator shall be an amount equal to (i) the
Current Market Price of one share of Common Stock less (ii) the fair market
value (as determined by the Board of Directors of the Company, which
determination shall be conclusive absent manifest error) of the stock,
securities, evidences of indebtedness, assets, options or rights so distributed
in respect of one share of Common Stock, and of which the denominator shall be
the Current Market Price.

                  (e) All calculations under this Section 2.5 shall be made to
the nearest one-tenth (1/10) of a share.

                  (f) Whenever the Conversion Price shall be adjusted as
provided in this Section 2.5, the Company shall prepare a statement showing the
facts requiring such adjustment and the Conversion Price and the number of
Conversion Shares that shall be in effect after such adjustment. The Company
shall cause a copy of such statement to be sent to the Purchaser. Where
appropriate, such copy may be given in advance and may be included as part of
the notice required to be mailed under the provisions of Section 2.5(h) hereof.

                  (g) Adjustments made pursuant to Sections 2.5(b), (c) and (d)
shall be made on the date such dividend, subdivision, split, combination or
distribution is made, and shall become effective at the opening of business on
the business day next following the record date for the determination of
shareholders entitled to such dividend, subdivision, split, combination or
distribution.
                  (h) In the event the Company shall propose to take any action
of the types described in Sections 2.5(b), (c), or (d) the Company shall
forward, at the same time and in the same manner, to the Purchaser such notice,
if any, that the Company shall give to the holders of capital stock of the
Company. Failure to give such notice, or any defect therein, shall not affect
the legality or validity of any such action.

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                  (i) Whenever the provisions of this Section 2.5 shall require
that an adjustment shall become effective immediately after the record date for
an event and the Purchaser exercises its Conversion after such record date and
before the occurrence of such event, the Company may defer until the occurrence
of such event issuing to the Purchaser the additional shares of Common Stock
issuable upon such exercise by reason of the adjustment required by such event
over and above the shares of Common Stock issuable upon such exercise before
giving effect to such adjustment; provided, however, that the Company shall
deliver to such Purchaser a due bill or other appropriate instrument evidencing
such Purchaser's right to receive such additional shares upon the occurrence of
the event requiring such adjustment.

                  (j) The sale or other disposition of any Common Stock
theretofore held in the treasury of the Company shall be deemed to be an
issuance thereof.

                  2.6 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.

                  2.7 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.

                  2.8 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.

                  2.9 Reservation of Stock Issuable Upon Conversion;
Registration Rights Agreement. 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.
The parties expressly acknowledge and agree that the Common Stock is subject to
registration pursuant to the Registration Rights Agreement.

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                  2.10 Conversion of Note and Effect on Beneficial Ownership.
Notwithstanding anything contained herein to the contrary, the Company shall not
effect any conversion of Notes, and no Purchaser of Notes shall have the right
to convert any Notes, to the extent that after giving effect to such conversion,
the beneficial owner of such shares (together with such person's affiliates)
would have acquired, through conversion of Notes or otherwise, beneficial
ownership of a number of shares of Common Stock during the 60-day period ending
on and including the date of such conversion (the "60-Day Period"), that, when
added to the number of shares of Common Stock beneficially owned by such person
(together with such person's affiliates) at the beginning of the 60-Day Period,
exceeds 9.99% of the number of shares of Common Stock outstanding immediately
after giving effect to such conversion. For purposes of the foregoing sentence,
the number of shares of Common Stock beneficially owned by a person and its
affiliates shall include the number of shares of Common Stock issuable upon
conversion of the Notes with respect to which the determination of such sentence
is being made, but shall exclude the number of shares of Common Stock which
would be issuable upon (A) conversion of the remaining, non-converted Notes
beneficially owned by such person or any of its affiliates and (B) exercise or
conversion of the unexercised or unconverted portion of any other securities of
the Company (including, without limitation, any warrants) subject to a
limitation on conversion or exercise analogous to the limitation contained
herein beneficially owned by such person or any of its affiliates. Except as set
forth in the preceding sentence, for purposes of this Section 2.10, beneficial
ownership shall be calculated in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended. For purposes of this Section 2.10, in
determining the number of outstanding shares of Common Stock, a holder may rely
on the number of outstanding shares of Common Stock as reflected in (1) the
Company's most recent Form 10-Q, Form 10-K or other public filing with the SEC,
as the case may be, (2) a more recent public announcement by the Company, or (3)
any other notice by the Company or its transfer agent setting forth the number
of shares of Common Stock outstanding. Upon the written request of any holder,
the Company shall promptly, but in no event later than one (1) Business Day
following the receipt of such notice, confirm in writing to any such holder the
number of shares of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect to
the conversion or exercise of securities of the Company, including the
conversion of the Notes and exercise of the Warrants, by such holder or its
affiliates since the date as of which such number of outstanding shares of
Common Stock was reported.

         3.       LIQUIDATION

                  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 3.1 herein defined as "Sale or Merger").

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                   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 and
Registration Delay Payments.

                  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.

                  3.4 Notice of Liquidation Event. If the Board of Directors of
the Company shall declare a liquidation event (as described in Section 3.1), the
Company shall mail notice thereof to the Purchaser hereof not more than ten (10)
days following such declaration by the Board of Directors.

         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 and Registration Delay Payments,
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. 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

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                  (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

                  (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.

                  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 and Registration Delay Payments, 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.

Page 11 of 14

<PAGE>

                  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.

                  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 New York.

                  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 and
Registration Delay Payments have 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.

Page 12 of 14

<PAGE>

                  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 Registration Delay Payments, and to accrue, that
were carried by this Note, and each such Note shall be so dated that neither
gain nor loss in interest or Registration Delay Payments shall result from such
transfer, exchange or substitution.

                  6.9 Notices. Any notice or other document required or
permitted to be given or delivered to the Purchaser shall be delivered at, or
sent by certified or registered mail, postage prepaid, to the Purchaser's
address as set forth in the Company's records, or to such other address as shall
have been furnished to the Company in writing by the Purchaser, and a copy of
any such notice shall be provided to Purchaser's counsel as notified from time
to time by Purchaser to the Company. Any notice or other document required or
permitted to be given or delivered to the Company shall be delivered at, or sent
by certified or registered mail, postage prepaid, to, the address of the Company
as set forth following its signature below, or to such other address as shall
have been furnished to the Purchaser in writing by the Company. Any notice or
other document so addressed and mailed by registered or certified mail shall be
deemed to be given when so mailed. Any notice so addressed and otherwise
delivered shall be deemed to be given when actually received by the addressee.
The addresses and facsimile numbers for such communications shall be:

         If to the Company:

                  Lifestream Technologies, Inc.
                  510 West Clearwater Loop, Suite 101
                  Post Falls, Idaho 83854
                  Attention:        Brett Sweezy

         If to Purchaser:

                  ----------------

                  ================

                  ----------------

                  ----------------

Page 13 of 14

<PAGE>

         IN WITNESS WHEREOF, the Company has caused this Note to be executed in
its corporate name, all as of the _th day of _________, 2001.

[CORPORATE SEAL]                            LIFESTREAM TECHNOLOGIES, INC.

Attest:                                     By:
       ------------------------------          ---------------------------------
         Title:                                   Title:

                                                  510 Clearwater Loop
                                                  Suite 101
                                                  Post Falls, ID 83854

Page 14 of 14LICENSE AND SUPPLY AGREEMENT

                                     between

                          Lifestream Technologies, Inc.
                             (a Nevada corporation)
                               510 Clearwater Loop
                                    Suite 101
                                   Post Falls
                                   Idaho 83854
                            United States of America

                    (hereinafter referred to as "Lifestream")

                                       and

                             Roche Diagnostics GmbH
                              Sandhofer Strasse 116
                                 68305 Mannheim
                           Federal Republic of Germany

                       (hereinafter referred to as "RDG ")

*CONFIDENTIAL TREATMENT REQUESTED                    1

<PAGE>

WHEREAS RDG has developed, has exclusive rights to and currently markets
"Cholesterol Test Strips" (as defined below) for its ***** system, which is a
device for the measurement of blood cholesterol levels and which has been
approved by the United States Food and Drug Administration for sale and use in
the "Professional Market" and the "OTC Market" (as defined below); and

WHEREAS RDG has adapted its ***** technology to produce a "Test Instrument
Module" (as defined below) which accepts Cholesterol Test Strips for the
analysis of cholesterol in blood;

WHEREAS Lifestream has developed a hand-held Lifestream Product as hereinafter
defined, originally named, the "Cholestron" and currently sold as "Lifestream
Cholesterol Monitor" which measures blood lipid levels and utilizes a
proprietary "Smart Card/lInternet" up-link technology; and

WHEREAS Lifestream wishes to have RDG make and supply Cholesterol Test Strips to
be used in the Lifestream Product device; and

WHEREAS RDG desires to supply Cholesterol Test Strips to Lifestream during the
further development and commercialization of the Lifestream Product device in
the Professional Market and the OTC Market;

NOW THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:

1.                 DEFINITIONS

As used herein, the following terms shall have the following meanings:

1.1       "Affiliate" shall mean:

(i)      an organization of which fifty per cent (50%) or more of the voting
         equity interests are controlled or owned, directly or indirectly, by
         either party to this Agreement;

(ii)     an organization which directly or indirectly owns or controls fifty per
         cent (50%) or more of the voting equity interests of either party,
         except if one of the parties is publicly traded, in which case direct
         or indirect ownership or control of thirty per cent (30%) or more of
         the voting securities of such publicly traded party;

(iii)    an organization, the majority ownership of which is directly or
         indirectly common to the majority ownership of either party; or

(iv)     a joint venture of either party.

(v)      on RDG's side, this shall include F. Hoffmann La-Roche Ltd. and its
         Affiliates with the exception of Genentech Inc., 1 DNA Way, South San
         Francisco, California 94080-4990, unless RDG explicitly opts for such
         inclusion by giving written notice.

*CONFIDENTIAL TREATMENT REQUESTED                    2
<PAGE>

1.2      "RDG Technology" shall mean the patents owned by or licensed to RDG,
         including all patent applications, divisions, continuations,
         continuations-in-part or reissues thereof, and all know-how,
         technology, trade secrets, processes, data, methods and any physical,
         electronic, chemical or biological material or other information which
         RDG owns, controls or has a license to (with a right to sub-license)
         relating to the development and manufacture of the Cholesterol Test
         Strips and or the ROM-Key including software, the Test Instrument
         Module, *****-devices and lancets for *****.

1.3      "Calibration Code" shall mean an electronic file with ***** which
         enables LRE to code a ROM key for Lifestream with calibration data for
         Cholesterol Test Strips as originally delivered in vials by RDG.

1.4      "Cholesterol Test Strip" shall mean an integrated unit containing whole
         blood total cholesterol testing chemistry for analysis of cholesterol
         levels in human capillary blood based on the technology and quality
         used in connection with RDG's ***** system, which shall be packaged in
         vials of 25 test strips each.

1.5      "Contract Product Specifications" shall mean the specifications to
         integrate the Lifestream Product, the Test Instrument Module and the
         Cholesterol Test Strips in order to develop and supply the Contract
         Product.

1.6      "Effective Date" shall mean the date of signature of this Agreement by
         both parties.

1.7      "FDA" shall mean the U.S. Food and Drug Administration.

1.8      "Government Approval" shall mean any approvals, licenses, registrations
         or authorizations of any federal, state or local regulatory agency,
         department, bureau or other government entity, necessary for the use,
         marketing, sale or distribution in the United States of America of the
         Contract Product including, for the avoidance of doubt, the integration
         of the Cholesterol Test Strips and the Test Instrument Module within
         the Contract Product.

1.9      "Lifestream Marks" shall mean all trade names, trademarks, service
         names, service marks, logos and graphic designs (whether copyrighted or
         not) owned by Lifestream from time to time.

1.10     "Lifestream Product" shall mean Lifestream's hand-held device which
         measures blood lipid levels and utilizes a proprietary "Smart Card
         Intemet" uplink technology and which has originally been named the
         "Cholestron" and is currently sold as Lifestream Cholesterol Monitor",
         which device is used for measurement of rapid whole blood total
         Cholesterol Test Strips for analysis of cholesterol levels in human
         capillary blood and is continuously improved by Lifestream and/or its
         partners or suppliers.

1.11     "Lifestream Technology" shall mean the patents owned by Lifestream,
         including all patent applications, divisions, continuations,
         continuations in part or reissues thereof, and all know-how,
         technology, trade secrets, processes, data, methods and any physical,
         electronic, chemical or biological material or other information which
         Lifestream owns, controls or has a license to use (with a right to
         sublicense) relating to the development and manufacture of the
         Lifestream Product.

*CONFIDENTIAL TREATMENT REQUESTED                    3
<PAGE>

1.12     "LRE" means LRE Technology Partner GmbH, having its registered office
         and domicile (Hauptsitz) in Frankfurter Ring 15, 80807 Munich, Federal
         Republic of Germany and having production facilities at Hofer Str. 5,
         86720 Nordlingen, Federal Republic of Germany.

1.13     "OTC Market" shall mean the sale or distribution of products directly
         to consumers or other members of the general public who will use the
         Lifestream Product for screening or monitoring, or to trade customers
         for resale to consumers, for use or consumption without a prescription,
         through any retail outlet, including without limitation drug stores,
         pharmacies, general merchandise stores, food stores, catalogue sales,
         mail order sales, Internet or other "on-line" service sales, direct
         marketing, or other business or marketing methods aimed at consumers or
         other members of the general public and any customers who conduct
         testing directly relating to promotions to enhance the market share of
         the Lifestream Product for any of the aforementioned areas.

1.14     "Professional Market" shall mean licensed medical professionals and
         institutions such as physician's offices, commercial health clinics,
         hospitals, nursing homes and stand-alone surgical centres, provided
         that for purposes of this Agreement the term "Professional Market"
         shall not include anything identified within the definition of the term
         "OTC Market".

1.15     "Purchase Order" shall mean each of the firm, binding purchase orders
         provided by Lifestream specifying the quantity of Cholesterol Test
         Strips or ***** devices and lancets for ***** that Lifestream wishes to
         purchase and the respective shipping dates in accordance with Articles
         4 and 5 hereunder.

1.16     "Rolling Forecast" shall mean the non-binding twelve (12)-month
         forecast of Lifestream's anticipated purchase requirements for
         Cholesterol Test Strips.

1.17     "ROM-Key" shall mean a plastic housing containing an integrated EPROM
         bearing the lot-specific calibration data regarding Cholesterol Test
         Strips, to be plugged into the Test Instrument Module for the
         calibration of Lifestream Product.

1.18     "Test Instrument Module" shall mean the module of an integrated system
         that accepts Cholesterol Test Strips for the analysis of cholesterol,
         which shall include the application specific integrated circuit (ASIC
         chip), a microcontroller (masked version, provided that RDG can
         determine, until an acceptable masked version is available to RDG, this
         shall mean the one time programmable microcontroller version) with
         software, and optro-electronic components which are used in RDG's *****
         technology at the Effective Date, and which shall be configured to the
         Test Instrument Module Specifications stipulated in Schedule 2.

*CONFIDENTIAL TREATMENT REQUESTED                    4
<PAGE>

1.19     "Territory" shall mean the United States of America and such other
         countries as may be agreed in writing by the parties from time to time.

1.20     "UMM" shall mean          UMM (United Medical Manufacturing Company)
                                   6911 Hillsdale Court
                                   Indianapolis
                                   Indiana, 46250
                                   USA.

 2       LICENSE

2.1      Subject to the terms and conditions of this Agreement, RDG hereby
         grants to Lifestream a license under the RDG Technology in the Temtory:

         (a)      to let the Test Instrument Module and ROM-Key produce at LRE,
                  UMM or at such other manufacturer as agreed upon by RDG in
                  writing for measurement of RDG's Cholesterol Test Strips, and

         (b)      to integrate the Test Instrument Module, ROM-Keys and the
                  Cholesterol Test Strips with the Lifestream Product, and

         (c)      to sell, offer for sale, market and distribute Cholesterol
                  Test Strips (including ROM-Keys) in connection with the
                  Lifestream Product (including Test Instrument Modules), and

         (d)      to use Cholesterol Test Strips, ROM-Keys and Test Instrument
                  Modules in connection with the Lifestream Product,

         provided that:

2.1.1    The license granted hereunder does not include the right to otherwise
         use RDG Technology, without prior written consent of RDG, except to
         further or newly develop any variances of the Test Instrument Module;

2.1.2    Subject to Sections 2.1.3, 2.1.4 and 2.1.5, the license under Section
         2.1 shall be granted as follows:

         (a)      The license to let the Test Instrument Module and ROM-Key
                  produce at LRE, UMM or such other manufacturer as agreed upon
                  by RDG in writing for measurement of RDG's Cholesterol Test
                  Strips shall be non-exclusive.

         (b)      the license to integrate the Test Instrument Module, ROM-Keys
                  and Cholesterol Test Strips with the Lifestream Product,

*CONFIDENTIAL TREATMENT REQUESTED                    5
<PAGE>

         (c)      the license to sell, offer for sale, market and distribute
                  Cholesterol Test Strips (including ROM-Keys) and Test
                  Instrument Modules in connection with the Lifestream Product,
                  and

         (d)      the license to use Cholesterol Test Strips, ROM-Keys and Test
                  Instrument Modules in connection with the Lifestream Product

         shall be exclusive in the OTC Market ("sole license") and non-exclusive
         in the Professional Market.

2.1.3    Exclusivity shall automatically cease with immediate effect if
         Lifestream fails to order minimum quantities pursuant to Section 4.5.

2.1.4    RDG and its Affiliates shall retain the unrestricted right to produce,
         market, distribute, sell, use and otherwise dispose of the Cholesterol
         Test Strips and the Test Instrument Module in all markets (including,
         but not limited to, the Professional Market and the OTC Market in the
         Territory). In the United States of America, RDG will not, however, in
         any way actively solicit, support or condone any distribution, sales
         and marketing efforts of RDG's cholesterol testing products inside the
         OTC Market to any third party, which party is marketing products
         performing functions similar to the Lifestream Product and, which party
         is seeking to market its products to different customer segments as
         Lifestream does; and

2.1.5    Lifestream shall not be entitled to sub-license this license to any
         party, whatsoever.

2.1.6    In accordance to 35 U.S.P. Section 287 (a), Lifestream commits to
         mark the use of US patents 5,053,199 and 5,366,609 owned by Roche
         Diagnostics Corporation, Indianapolis, on the Lifestream Product.

2.2      In consideration of the license to let the Test Instrument Modules and
         ROM-Keys produce at LRE, UMM or such other manufacturer as agreed upon
         by RDG in writing for measurement of RDG's Cholesterol Test Strips, as
         granted in Section 2.1 (a) herein, Lifestream agrees to pay to RDG a
         license fee of USD *** (*** United States Dollars) for each Test
         Instrument Module received by Lifestream during the term of this
         Agreement. The license regarding production of the ROM-Keys shall be
         granted to Lifestream at no additional costs.

2.2.1    License fees payable hereunder shall be made without any deductions
         whatsoever.

2.2.2    Throughout the term of this Agreement, Lifestream shall provide RDG at
         the end of each twelve (l 2)-month period with a written account of the
         number of Test Instrument Modules actually received and of the license
         fee due to this Section 2.2, and shall transfer such license fee
         payment due to RDG within ninety (90) days of the end of each twelve
         (12)-month period, in which such license fees accrued.

*CONFIDENTIAL TREATMENT REQUESTED                    6
<PAGE>

2.2.3    Lifestream shall keep or procure to be kept complete and accurate
         records of the numbers of Test Instrument Modules actually received.
         Such records shall be accessible not more than once a year at any
         reasonable time during business hours until the expiry of five (5)
         years from the end of the respective period to which such records
         relate, to a certified public accountant selected by RDG for the
         purpose of verifying the number of received Test Instrument Modules and
         any license fee due. Such accountant shall disclose only information
         relating to the accuracy of the records and payments made. The cost of
         such inspection shall be borne solely by Lifestream if such inspection
         discloses that the license fee paid by Lifestream hereunder was less
         than the amount actually due by 5% or more.

3        DEVELOPMENT OF CONTRACT PRODUCT

3.1      Lifestream shall integrate the Test Instrument Module, the ROM-Keys and
         the Cholesterol Test Strips into the Lifestream Product and RDG shall
         supply Lifestream with the Cholesterol Test Strips for such purposes.

3.2      RDG and Lifestream may, from time to time, suggest modifications to the
         specifications for the Cholesterol Test Strips, provided that the
         parties shall negotiate in good faith as to the terms and conditions of
         effecting any such suggested modifications.

4        SUPPLY OF CHOLESTEROL TEST STRIPS

4.1      RDG shall sell to Lifestream such quantities of Cholesterol Test Strips
         as Lifestream shall order from RDG from time to time in accordance with
         this Article 4.

4.2      Lifestream will provide RDG with a non-binding twelve (12) months'
         Rolling Forecast of its anticipated purchase requirements for
         Cholesterol Test Strips at the beginning of each calendar quarter.

4.3      Lifestream shall provide RDG with firm binding Purchase Orders on the
         first day of each calendar quarter specifying the number of Cholesterol
         Test Strips that Lifestream wishes to purchase and a shipment date of
         not less than one hundred and twenty (120)days and no more than one
         year from the date of the respective Purchase Order, provided that
         Lifestream's orders of Cholesterol Test Strips must always provide
         forthe delivery of at least two hundred and fifty thousand individual
         Cholesterol Test Strips in respect of each and every shipment date.
         Orders have to be addressed to Roche Diagnostics GmbH, Sandhofer
         Strasse 116, 68298 Mannheim, Germany, to the attention of Dpt. GX-VD
         (Export Order Management, Mr. Maliske). RDG shall deliver the
         Cholesterol Test Strips to Lifestream in accordance with each Purchase
         Order, provided that the quantity of Cholesterol Test Strips specified
         in the respective Purchase Order is consistent with the quantity
         specified in the respective Rolling Forecast and provided that the
         quantity of Cholesterol Test Strips ordered amounts to at least two
         hundred and f~fty thousand in respect of each and every shipment date

*CONFIDENTIAL TREATMENT REQUESTED                    7
<PAGE>

         and provided that Lifestream complies with all other requirements of
         this clause 4. However, RDG remains free to supply lesser quantities as
         may be caused by RDG's manufacturing process, in which case a deviation
         in quantity of not more than 5% shall not affect the calculation of
         minimum quantities to be purchased by Lifestream according to Section
         4.4.

4.4      Provided that the Cholesterol Test Strip may continue to be lawfully
         sold in the United States of America, Lifestream hereby agrees to
         purchase the following quantities of Cholesterol Test Strips during the
         respective twelve (12)-months periods, starting January 1, 2001:

<TABLE>
<CAPTION>

               ------------------------------------------ -----------------------------------------
                                Period                      Minimum Quantity of Cholesterol Test
                                                                           Strips
                                                                  per period of 12 months
               ------------------------------------------ -----------------------------------------
<S>                                                      <C>
                               Period 1                                     ***
               ------------------------------------------ -----------------------------------------
                               Period 2                                     ***
               ------------------------------------------ -----------------------------------------
                     Perod 3 and following Periods                          ***
               ------------------------------------------ -----------------------------------------
</TABLE>

4.5      Lifestream shall purchase the Cholesterol Test Strips supplied
         hereunder from RDG at the prices stipulated in Schedule 1. After the
         expiry of two years from the Effective Date, RDG may adjust the prices
         for Cholesterol Test Strips stipulated in Schedule 1 of this Agreement
         annually in accordance with any percentage increase in the German
         consumer price index over the respective preceding twelve months,
         provided that if RDG can provide evidence that its actual costs
         incurred in manufacturing and supplying the Cholesterol Test Strips to
         Lifestream hereunder have increased by more than the respective
         percentage increase in the German consumer price index over the
         respective preceding twelve months, RDG shall be entitled to increase
         the prices stipulated in Schedule l of this Agreement to reflect such
         actual increased costs. Any price adjustments made by RDG in accordance
         with this Section 4.5 shall be effective as of sixty (60) days after
         the respective notification in writing to Lifestream.

4.6      Cholesterol Test Strips shall be supplied as bulkware in unlabelled
         vials containing 25 Cholesterol Test Strips each (the back-side of
         Cholesterol Test Strips does not bear black marking) and without any
         ROM-keys whatsoever. Each 650 vials shall be packaged into boxes. Each
         box shall be labeled with the product name, the lot number and the
         expiry date of the Cholesterol Test Strips contained in the vials.

4.7      *** In case of any re-packaging, re-working or re-calibration of
         Cholesterol Test Strips, Lifestream will comply with all regulatory
         rules and makes sure that every product sold is in compliance with
         FDA-rules. Additionally, Lifestream bears the sole responsibility to
         obtain and uphold FDA-approval for Cholesterol Test Strips distributed
         by Lifestream. Accordingly, RDG shall not bear any liability whatsoever
         for Cholesterol Test Strips from vials that have been opened and or
         re-packaged and or re-worked and or re-calibrated by Lifestream.

*CONFIDENTIAL TREATMENT REQUESTED                    8
<PAGE>

5.       SUPPLY OF *****-DEVICES AND LANCETS

5.1      RDG shall sell to Lifestream such quantities of *****-devices and
         lancets for ***** as Lifestream shall order from RDG from time to time
         in accordance with this Article 5.

5.2      Lifestream's right to purchase ***** shall be limited to a maximum
         quantity of the amount of Test Instrument Modules actually supplied by
         LRE to Lifestream in accordance with the license grant under Article 2
         of this Agreement plus an additional margin of 10%. The right of
         Lifestream to order lancets
         for ***** shall be limited to a maximum quantity of Cholesterol Test
         Strips actually delivered by RDG to Lifestream according to Article 4
         of this Agreement plus an additional margin of 10%. ***** devices and
         lancets for ***** shall be delivered in the packaging as described in
         Schedule 2.

5.3      Lifestream shall provide RDG with firm binding Purchase Orders not
         exceeding the maximum quantity as stipulated under Section 5.2 on the
         first day of each calendar quarter specifying the number of
         *****-devices and lancets for ***** that Lifestream wishes to purchase
         and a shipment date of not less than one hundred and twenty (120) days
         and no more than one year from the date of the respective Purchase
         Order, provided that Lifestream's orders for *****-devices must always
         provide for the delivery of multiples of bulks of five hundred (500)
         devices and provided that Lifestream's orders for lancets for *****
         must always provide for the delivery of multiples of bulks of five
         thousand (5000) lancets in respect of each and every shipment date.
         Orders have to be addressed to Roche Diagnostics GmbH, Sandhofer
         Strasse 116, 68298 Mannheim, Federal Republic of Germany, to the
         attention of department GX-VD (Export Order Management, *****). RDG
         shall deliver the *****-devices and lancets for ***** to Lifestream in
         accordance with each Purchase Order, provided that the maximum quantity
         according to Section 5.2 is not exceeded and provided that the ordered
         quantity amounts to multiples of bulk size and provided that Lifestream
         complies with all other requirements of this Article 5.

5.4      Lifestream shall purchase the *****-devices and lancets for *****
         supplied hereunder from RDG at the prices stipulated in schedule 1.
         After the expiry of two years from the Effective Date, RDG may adjust
         the prices stipulated in schedule 1 and the license fees stipulated in
         Section 2.2 of this Agreement annually in accordance with any
         percentage increase in the German Consumer Price Index over the
         respective preceding twelve (12) months, provided that if RDG can
         provide evidence that its actual costs incurred in manufacturing and
         supplying the *****-devices and lancets for ***** to Lifestream
         hereunder have increased by more than the respective percentage
         increase in the German Consumer Price Index over the respective
         preceding twelve (12) months, RDG shall be entitled to increase the
         prices stipulated in schedule 1 of this Agreement to reflect such
         actual increased costs. Any price adjustments made by RDG in accordance
         with this Section 5.4 shall be effective as of sixty (60) days after
         the respective notification in writing to Lifestream.

*CONFIDENTIAL TREATMENT REQUESTED                    9
<PAGE>

6        PAYMENT AND SUPPLY TERMS

6.1      All payments shall be made in United States Dollars. The parties agree
         that prices as stipulated in this Agreement and in Schedule I thereto
         are calculated in EURO and that prices need to be adapted according to
         significant changes (more than 20%) in the conversion rate of EURO
         against United States Dollars. If, during the term of this Agreement,
         the monthly average conversion rate of EURO against United States
         Dollars for a certain calendar month deviates upwards or downwards for
         more than 20% from the conversion rate of EURO against United States
         Dollars as fixed on the Effective Date, prices as quoted in this
         Agreement and the Schedules thereto shall immediately be adapted with
         half of such increase or decrease of the conversion rate and remain
         valid until, again, the average conversion rate of EURO against United
         States Dollars for a certain calendar months deviates upwards or
         downwards for more than 20% from the conversion rate of EURO against
         United States Dollars as fixed on the date of the last price
         adaptation, in which case prices as quoted in this Agreement and the
         Schedules thereto shall be adapted by mutual consent of the parties in
         good faith negotiations reflecting the changes in price calculation as
         caused by such increase or decrease of the conversion rate.

6.2      Lifestream shall ensure that all payments for Cholesterol Test Strips,
         ***** devices and lancets for ***** shall be transferred to RDG in
         United States dollars (US $) within forty-five (45) days of the date of
         the respective invoice provided that the invoice shall be dated to
         reflect the respective date of shipment.

6.3      RDG shall deliver or have delivered all Cholesterol Test Strips,
         *****-devices or lancets for ***** ordered by Lifestream in accordance
         with Article 4 and 5 of this
         Agreement to arrive at Lifestream on or before the requested delivery
         date provided that such date is at least one hundred and twenty (120)
         days following RDG's receipt of the respective Purchase Order. The
         Cholesterol Test Strips, *****-devices or lancets for ***** supplied by
         RDG hereunder shall be delivered to Lifestream Technologies, Inc., 510
         Clearwater Loop, Suite 101, Post Falls, Idaho 83854, United States of
         America, FCA, Mannheim, Germany (Incoterms 2000). RDG shall notify
         Lifestream, via fax transmission, of the actual date of each shipment
         of Cholesterol Test Strips, *****-devices or lancets for ***** at least
         five (5) days in advance of the respective shipment.

6.4      Lifestream shall inspect all Cholesterol Test Strips, *****-devices or
         lancets for ***** shipments promptly upon receipt thereof at the
         delivery destination specified in Section 6.3 to determine if the
         shipment meets the product specifications in accordance with the
         specification inspection protocol agreed by both parties. In the event
         that Lifestream determines that any shipment of Cholesterol Test
         Strips, *****-devices or lancets for ***** fails to comply with the
         agreed specification inspection protocol, Lifestream shall notify RDG
         within seven (7) days of receipt and within fifteen (15) days of such
         notification RDG may inspect the shipment at Lifestream's premises,
         following which Lifestream shall return any individual Cholesterol Test
         Strips, *****-devices or lancets for ***** which Lifestream alleges are
         non-compliant to RDG within thirty days.

6.5      In the event that pursuant to any inspection by RDG in accordance with
         Section 6.4 RDG determines that any Cholesterol Test Strips,
         *****-devices or lancets for ***** fail to comply with the agreed
         specification inspection protocol pursuant to Section 4. 10.1 for other
         reasons than gross negligence or intent of RDG, within thirty days
         thereof, RDG shall; as sole remedy for Lifestream in such case:

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<PAGE>

         i.       repair or replace the non-compliant goods at RDG's expense
                  without undue delay,

                  or

         ii.      credit Lifestream for the price Lifestream has paid for the
                  respective non- compliant goods and RDG will bear all
                  transportation charges incurred in returning such goods.

  6.6    If RDG determines that any shipment alleged by Lifestream to be
         non-compliant in RDG's opinion complies with the specification
         inspection protocol, both parties will immediately use their best
         efforts to resolve the issue, and if they are not able to resolve the
         issue immediately, both parties will immediately select a neutral
         independent third party to inspect the shipment to determine the
         validity of the claims.

7        CHANGE OF SUPPLY OF TEST INSTRUMENT MODULES

7.1      From the Effective Date of this Agreement, Lifestream shall order the
         Test Instrument Modules and ROM-Keys in accordance with and limited to
         the terms of the license granted under Section 2 of this Agreement
         directly with LRE or UMM or such other manufacturer as agreed upon by
         RDG in writing for use in Lifestream's Contract Product.

7.2      Lifestream shall manufacture or let manufacture with LRE, UMM or such
         other manufacturer as agreed upon by RDG in writing, sufficient number
         of ROM-keys for storage of the Calibration Code, but limited to
         quantities as required for the sale of Cholesterol Test Strips supplied
         by RDG in accordance with the terms of this Agreement.

7.3      Furthermore, Lifestream shall enter into a supply agreement with LRE,
         UMM or such other manufacturer as agreed upon by RDG in writing for the
         supply of the Test Instrument Module and the ROM-Keys by LRE, UMM or
         such other manufacturer as agreed upon by RDG in writing to Lifestream,
         and RDG shall consent to this Agreement provided that said Supply
         Agreement shall be dependant on the validity and existence of the
         license granted under Section 2 of this Agreement and provided that
         Lifestream must not use Test Instrument Modules or ROM-Keys for other
         purposes than for integration into the Lifestream Product.

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8        EXCLUSIVITY

         Lifestream hereby agrees and warrants that it shall exclusively
         purchase or otherwise acquire Cholesterol Test Strips from RDG in
         respect of Lifestream's activities in the Territory, and Lifestream
         furthermore undertakes not to acquire Cholesterol Test Strips from any
         third party unless either party terminates this Agreement.

9        TRADEMARKS

         Lifestream hereby warrants and guarantees that it has obtained all
         requisite approvals from trademark tradename owners to promote, market,
         distribute and sell the Lifestream Product under a respective trademark
         tradename

10       LABELLING AND PACKAGING

10.1     RDG shall package the Cholesterol Test Strip in unlabelled vials a 25
         test strips in accordance with specifications agreed between Lifestream
         and RDG in writing. RDG agrees to provide Lifestream with one
         Calibration Code per lot of Cholesterol Test Strips supplied hereunder
         and Lifestream shall be responsible for packaging the Cholesterol Test
         Strips together with the correct, corresponding Calibration Code. RDG
         will ship the vials in boxes with minimum information as legally
         required for importation into the USA. The ***** -devices will be
         shipped in bulk packages (500 units per cardboard box). The lancets for
         ***** will be packed in polyethylene bags (5000 units per bag). These
         bags will then be packed in cardboard boxes according to the respective
         delivery-size.

10.2     If the packaging or labeling that Lifestream requests requires RDG to
         perform any modifications to RDG's current packaging specifications or
         packaging or labeling equipment for the Cholesterol Test Strips, then
         Lifestream will remunerate RDG for any and all extra internal and
         external costs incurred with RDG in connection with packaging the
         Cholesterol Test Strips, provided that RDG provides Lifestream with
         adequate reasonable documentation relating to these costs.

10.3     RDG shall be responsible for providing instructions to Lifestream on
         the method for, and safety precautions to be exercised in, using
         Cholesterol Test Strips in accordance with FDA requirements. Any
         statements, representations or advertisements concerning the
         Cholesterol Test Strips, including without limitation those made in the
         labeling for the Lifestream Product or those included with instructions
         for the Lifestream Product which involve the Cholesterol Test Strips
         and in each case which are made solely in reliance on or supported by
         information or data supplied to Lifestream by RDG, shall be the
         responsibility of RDG, provided that Lifestream has complied with, and
         has not in any way deviated from, the instructions or other information
         provided by RDG. Lifestream shall exclusively be responsible for the
         correctness of the calibration of repackaged and or re-worked
         Cholesterol Test Strips and for the correctness of the labeling of
         packages containing Cholesterol Test Strips including, *****-devices
         and/or lancets for *****, but not limited to FDA requirements and
         instructions for use.

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<PAGE>

10.4     Lifestream shall solely bear the full responsibility for all adverse or
         negative effects occurring from the re-packaging or re-working of the
         Cholesterol Test Strips.

10.5     Lifestream shall not make any express warranty regarding the
         Cholesterol Test Strips, *****-devices or lancets for ***** other than
         those specifically authorized by RDG hereunder.

10.6     All products supplied by RDG (including Cholesterol Test Strips, *****
         and Lancets for ***** shall be delivered FCA, Mannheim, Germany
         (Incoterms 2000).

11       PROMOTIONAL EFFORTS

11.1     Lifestream shall have the sole discretion to develop any and all
         promotional materials, labels, advertising, marketing materials and or
         informational inserts for the Lifestream Product (except to the extent
         that such relate to the Cholesterol Test Strips in which case Section
         10.1 shall apply) including without limitation the graphic elements and
         designs associated therewith, the name or mark placed thereon and the
         copy and layout thereof provided that no reference is made to RDG
         and/or its Affiliates and to their respective trademarks and or RDG
         Technology. RDG agrees that Lifestream owns all rights, titles and
         interests in and to any such promotional materials for the Lifestream
         Product (except to the extent that such relate to the Cholesterol Test
         Strips, *****-devices and/or lancets for *****, in which case Section
         10.1 shall apply) including but not limited to all copyrights in
         respect thereof provided that no reference is made to RDG and or its
         Affiliates and to their respective trademarks and/or RDG Technology.

11.2     Packaging, packaging insert, promotional materials etc. concerning the
         ***** device and concerning lancets for ***** shall be used and
         distributed to the market by Lifestream without any changes whatsoever.
         In case Lifestream sells the Lifestream Product together with a
         *****-device and or lancets for *****, the parties agree that
         Lifestream shall remain free during the term of this Agreement to
         implement or copy without any changes whatsoever text elements, graphs
         etc. from RDG's packaging insert into Lifestream's User's Manual
         concerning the Lifestream Product, as long as due reference is made to
         RDG's trademark ownership.

11.3     RDG shall provide Lifestream with such reasonable assistance as
         Lifestream may request to effectuate its rights under this Article 11
         at Lifestream's expense, and Lifestream shall provide RDG with such
         reasonable assistance as RDG may request to effectuate its rights under
         this Article 11 at RDG's expense.

11.4     RDG shall supply Lifestream with copies of all information concerning
         the quality of the Cholesterol Test Strips which Lifestream reasonably
         requests from time to time and which RDG considers necessary to support
         the claims contained in the Lifestream Product inserts and or to
         support advertising or promotional claims concerning the Cholesterol
         Test Strips.

*CONFIDENTIAL TREATMENT REQUESTED                    13
<PAGE>

12       OPTION GRANT

12.1     Lifestream hereby grants to RDG a first right of refusal for a license
         to use, have used, to develop or have developed for RDG's and its
         affiliates' use, to market and have marketed and to distribute and have
         distributed Lifestream's Smart-Card Reader/Internet Infrastructure in
         connection with RDG's or RDG's Affiliates' ddiagnostic systems upon
         such terms as shall be agreed between the parties in good faith.

12.2     RDG hereby grants to Lifestream a non-exclusive option to expand the
         Territory during the term of this Agreement upon such terms as shall
         agreed between the parties in good faith.

12.3     In case, RDG exercises its first right of refusal or, Lifestream
         exercises its option hereunder, the parties agree to use their
         reasonable endeavors to seek to reach agreement without undue delay,
         but not later than six months following the execution of RDG's first
         right of refusal according to Section 12.1 or Lifestream's option
         according to Section 12.2.

13       GOVERNMENT APPROVAL

         Lifestream shall use its best efforts to prepare and file all filings
         necessary to maintain Government Approval for the Lifestream Product,
         including, for the avoidance of doubt, the Cholesterol Test Strips, the
         ROM-Key and the Test Instrument Modules as integrated therein and as
         sold and used in connection therewith, to the extent that such
         Government Approval has not already been obtained. The responsibility
         for obtaining and maintaining such Government Approval shall remain
         with Lifestream throughout the term of this Agreement.

14       COMPLIANCE

14.1     In performing their obligations under this Agreement, RDG and
         Lifestream shall at all times each comply with all applicable
         regulatory requirements, (including the provision of information by RDG
         to Lifestream that is necessary for Lifestream to comply with its FDA
         medical device reporting requirements), all health registration laws,
         regulations, Government Approvals and orders of any competent
         government entity in the Territory and with all other applicable
         governmental requirements relating to the development, manufacture,
         promotion, marketing and sale of the Lifestream Product, and in
         connection therewith the Cholesterol Test Strips, *****-devices and
         lancets for ***** in the Territory.

*CONFIDENTIAL TREATMENT REQUESTED                    14
<PAGE>

14.2     Upon reasonable notice during the term of this Agreement, Lifestream
         and its agents shall have the right to conduct audits of RDG's or its
         Affiliates' or subcontractors' manufacturing facilities and procedures
         which relate to the Cholesterol Test Strips to verify RDG's compliance
         with the quality system regulations, provided however that such audits
         shall not occur more than once in each twelve (12) month period, and,
         additionally, in case of special occurrences (including but not limited
         to product liability-actions by third parties, restricting orders by
         relevant authorities, etc.).

14.3     Lifestream understands and recognizes that the Test Instrument Modules
         and Cholesterol Test Strips and other materials made available to it
         hereunder may be subject to the import/export administration
         regulations of the United States Department of Commerce and to other
         government regulations as may be required within the Territory related
         to the export of medical devices. Lifestream represents that it is
         familiar with and agrees to comply with all such regulations, including
         any future modifications thereof, in connection with the distribution
         of the Test Instrument Modules, ROM-Keys, Cholesterol Test Strips,
         *****-device and/or lancets for *****. To the extent legally
         applicable, Lifestream agrees that it will not export or re-export
         outside the Territory, directly or indirectly, any Test Instrument
         Modules, ROM-Keys, Cholesterol Test Strips, *****-device and or lancets
         for ***** or clinical data relating to the Test Instrument Modules,
         ROM-Keys, Cholesterol Test Strips, *****-device and or lancets for
         *****. Lifestream agrees to take all reasonable and legally permitted
         steps to avoid that its customers do so. Lifestream hereby agrees to
         indemnify and hold RDG harmless from any breach of this clause.

15       PAYMENTS

15.1     All payments payable hereunder shall be made in US Dollars on the
         following account of RDG:

         *****

15.2     Any withholding tax (if any) levied by US federal, state or local
         authorities on payments made by Lifestream to RDG hereunder, shall be
         exclusively borne by Lifestream.

16       COMPLAINTS

16.1     Lifestream shall advise RDG (Attn. Product Quality Management,
         Department DQ-P, Fax: *****) by facsimile within forty-eight (48) hours
         of it becoming aware of any injury which arises from, or other adverse
         serious event relating to, the use or any malfunction of the Lifestream
         Product with regard to the Test Instrument Module or the Cholesterol
         Test Strips or *****-device or lancets for ***** and shall provide RDG
         with a written report detailing the material facts known to Lifestream,
         including but not limited to, customer name, address, telephone number,
         instrument and lot or serial number, as appropriate, within ten (10)
         business days thereof.

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<PAGE>

16.2     Lifestream shall regularly notify RDG in writing of quality complaints
         it receives from customers using Cholesterol Test Strips or which
         appear to result *****-device and/or lancets for *****

16.3     RDG shall advise Lifestream by telephone or facsimile within
         forty-eight (48) hours of it becoming aware of any serious injury which
         arises from, or other adverse serious event relating to, the use or any
         malfunction of the Cholesterol Test Strips or the *****-device and or
         lancets for ***** and to the extent practicable shall provide
         Lifestream with a written report detailing the material facts known to
         RDG, including but not limited to customer name, address, telephone
         number, instrument and lot or serial number, as appropriate, within ten
         (10) business days thereof

16.4     RDG and Lifestream shall maintain, and shall each require its
         respective manufacturers and suppliers of products relating to this
         Agreement to maintain, complete and accurate complaint files in
         accordance with 21 United States Code of Federal Regulations 820.198
         and with all other laws and regulations as applicable in countries of
         the Territory. RDG shall investigate each complaint of a failure of the
         Cholesterol Test Strips or the *****-devices and lancets for
         *****-device and or lancets for ***** that relates to safety,
         performance or efficacy and shall maintain a written record thereof
         Lifestream shall investigate each complaint of a failure of the
         Lifestream Product including ROM-Key and Test Instrument Module that
         relates to safety, performance or efficacy and shall maintain a written
         record thereof RDG and Lifestream each agrees to send the other party
         copies of each such complaint and a full report on each such
         investigation promptly after receiving such complaint or completing
         such investigation, as the case may be, but in no event more than ten
         (10) business days after the applicable event. Each party shall have
         the right to send its representatives to review the other party's
         related files upon five (5) days written notice. The parties agree to
         cooperate fully with such reviews, and to provide the other with all
         documents requested by the other during such reviews.

16.5     If either party believes that a recall of any Cholesterol Test Strips
         integrated within a Lifestream Product, or a Lifestream Product, is
         desirable or required by law, it will promptly notify the other party.
         The parties will discuss reasonably and in good faith whether such
         recall is appropriate or required and the manner in which any mutually
         agreed recall shall be conducted. If possible, voluntary recalls and
         recalls required by law shall be conducted by mutual agreement (not to
         be unreasonably withheld). In the event that such recall is required
         because of the Cholesterol Test Strips themselves and not their
         integration in the Lifestream Product, RDG shall bear all costs related
         to the recall. In the event that any recall results from the
         integration of either the Cholesterol Test Strips or the Test
         Instrument Module into the Lifestream Product, or from any repackaging,
         reworking or re-calibration of the Cholesterol Test Strips, or is due
         to the Lifestream Product or the Contract Product itself, Lifestream
         shall bear the costs related to the recall. If the parties cannot agree
         upon a recall, either party may conduct the recall and an arbitrator
         acceptable to both parties shall determine which party will bear the
         cost. This clause shall not limit the obligations of either party under
         law with respect to the recall of Cholesterol Test Strips, Test
         Instrument Modules, ROM-Keys, *****-devices or lancets for ***** or
         Lifestream Products required by law or properly mandated by

*CONFIDENTIAL TREATMENT REQUESTED                    16
<PAGE>

         governmental authority. If a recall is required by law or desired
         either by RDG or Lifestream, Lifestream shall immediately stop its
         sales of the corresponding component. The parties will cooperate
         reasonably with each other in effecting any recall of the Cholesterol
         Test Strips, Test Instrument Modules, ROMKeys, *****-devices, lancets
         for ***** and or Lifestream Products pursuant to this clause and will
         communicate with their respective purchasers or users as necessary.

16.6     Lifestream shall maintain complete and accurate records of all
         Lifestream Products it sells for such periods as may be required by
         applicable law.

17       INTELLECTUALPROPERTY

17.1     RDG shall retain all of its rights, title and interest in and to, and
         ownership of all RDG Technology, copyrights, trademarks, trade names,
         and all other industrial and intellectual property rights covering or
         embodied in the Cholesterol Test Strips, *****-devices, lancets for
         ***** and (to the extent applicable) ROM-Keys and Test Instrument
         Modules. Except as otherwise expressly provided in this Agreement,
         Lifestream has no right, title or interest in any industrial or
         intellectual property relating to the Cholesterol Test Strips,
         *****-devices, lancets for ***** and (to the extent applicable)
         ROM-Keys and Test Instrument Modules. The parties shall each execute
         such documents as the other reasonably requests in order to effectuate
         the terms of this clause within five (5) days of a demand for such
         execution by the other.

17.2     Lifestream shall retain all of its rights, title, and interest in and
         to, and ownership of, all Lifestream Marks, Lifestream Products and
         Lifestream Technology. RDG has no right, title or interest in any
         industrial or intellectual property relating to the Lifestream Marks,
         Lifestream Products or Lifestream Technology, beyond such right, title
         or interest in any industrial or intellectual property regarding the
         ROM-Key and or the Test Instrument Module that may be owned by RDG. The
         parties shall each execute such documents as the other reasonably
         requests in order to effectuate the terms of this clause within five
         (5) days of a demand for such execution by the other.

17.3     The parties agree that any new industrial or intellectual property
         rights arising pursuant to this Agreement (other than those relating to
         the Cholesterol Test Strips, the Test Instrument Module or the
         Lifestream Product, including any improvements thereof shall be owned
         by the developing party.

17.4     In the event either RDG or Lifestream learns of any third party patents
         which may cover the manufacture or use or sale of the Cholesterol Test
         Strips, *****-device, lancets for *****, the ROM-Key or the Test
         Instrument Modules, such party will promptly notify the other. The
         parties agree to confer in good faith regarding such potential
         infringement risk and to explore reasonable alternatives for avoiding
         such risk.

*CONFIDENTIAL TREATMENT REQUESTED                    17
<PAGE>

17.5     In the event Lifestream or RDG becomes aware of any actual or
         threatened infringement of any RDG Technology, that party shall
         promptly notify the other. RDG shall within its discretion prosecute
         any infringement action against any person or entity infringing the RDG
         Technology at its own expense. Lifestream shall cooperate with RDG as
         reasonably requested. Any and all amounts recovered with respect to
         such an infringement action shall be retained by RDG. If RDG fails to
         bring or prosecute any such action, and such failure continues for
         forty-five (45) days after written notice from Lifestream, then
         Lifestream may take over such action and shall retain all amounts
         recovered, and RDG shall cooperate fully with Lifestream in such suit
         at Lifestream's expense.

18       WARRANTIES

18.1     RDG represents and warrants that:

       (i)        the Cholesterol Test Strips shall be based on the technology
                  and quality of RDG's ***** cholesterol test strips which have
                  received FDA approval for use in connection with RDG's *****
                  system;
       (ii)       the Cholesterol Test Strips supplied in vials by RDG under
                  this Agreement will be of merchantable quality and will
                  conform to the specifications stipulated for the Cholesterol
                  Test Strips in clause 1.3 at the time of delivery;
       (iii)      the Cholesterol Test Strips shall be manufactured in
                  accordance with applicable current standards promulgated by
                  the FDA and shall be manufactured in a facility registered
                  with and approved for such purpose by the FDA;
       (iv)       the RDG Technology covering the Cholesterol Test Strips
                  includes all rights to make, use or sell the Cholesterol Test
                  Strips within the scope of this Agreement;
       (v)        the RDG Technology does not infringe any third party rights
                  and RDG has no knowledge of any information which could render
                  any claims of the patents within the RDG Technology invalid
                  and or unenforceable;
       (vi)       there are no inventions used in the manufacture of or
                  otherwise incorporated in the Cholesterol Test Strips other
                  than those covered by the RDG Technology; and
       (vii)      as of the Effective Date RDG and or its suppliers (if any) of
                  Cholesterol Test Strips have not received any significant
                  complaints relating to the Cholesterol Test Strips based on
                  either the number or severity of complaints received so that a
                  reasonable person may question the safety, efficacy, accuracy
                  or reliability of the Cholesterol Test Strips or the method
                  for manufacturing or testing them.

18.2     Lifestream hereby acknowledges and agrees that RDG in no way whatsoever
         guarantees or warrants that the Cholesterol Test Strips shall be fit
         for use within the Lifestream Product, and moreover Lifestream agrees
         that Lifestream is solely responsible and liable for their integration
         within the Lifestream Product.

*CONFIDENTIAL TREATMENT REQUESTED                    18
<PAGE>

18.3     Lifestream hereby acknowledges and agree that RDG in no way whatsoever
         guarantees or warrants the accuracy of results obtained by using
         Cholesterol Test Strips that have been re-packaged and or re-worked,
         and or the calibration thereof

18.4     Each of RDG and Lifestream respectively represents and warrants that it
         is duly organized and validly existing and has full corporate power and
         authority to enter into this Agreement and that the execution, delivery
         and performance of this Agreement by it does not conflict with any
         agreement or understanding, oral or written, to which it is a party or
         by which it may be bound.

19       INDEMNIFICATION

19.1     RDG agrees to defend, indemnify and hold Lifestream harmless from and
         against all third-party claims, damages, losses, costs and expenses
         (with the exception of indirect, consequential or punitive damages),
         including reasonable attorney's fees, which Lifestream may incur to the
         extent that such claims arise or result from any Cholesterol Test
         Strips supplied by RDG hereunder which result in injury, illness or
         death of any person or damage to any property, except such claims
         arising or resulting from any Cholesterol Test Strips that have been
         re-packaged and or re-worked and or re-calibrated and except such
         claims as arise or result from the integration of the Cholesterol Test
         Strips, the Test Instrument Modules or the ROM-Keys in the Lifestream
         Product, such integration being the sole responsibility of Lifestream,
         RDG's breach of any of its representations or warranties under this
         Agreement or the gross negligence, recklessness or willful misconduct
         of RDG or its officers, employees or agents.

19.2     In no event shall RDG be liable under this Agreement for any failure of
         any Cholesterol Test Strip, *****-devices and or lancets for ***** or
         Test Instrument Module to meet their respective specifications due to
         improper use, storage, re-working, re-packaging, re-calibration or
         shipment of such Cholesterol Test Strips, *****-devices and/or lancets
         for *****.

19.3     Lifestream agrees to defend, indemnify and hold RDG harmless from and
         against all third-party claims, damages, losses, costs and expenses,
         including reasonable attorney's fees, which RDG may incur to the extent
         that such claims arise or result from improper sales by Lifestream in
         the OTC Market or the Professional Market, any representation made or
         warranty given by Lifestream to third parties with respect to the
         Cholesterol Test Strips or ***** or lancets for ***** (other than the
         labeling for the Cholesterol Test Strips or ***** or lancets for *****
         as approved by the FDA or by RDG in writing and/or warranties or
         representations approved by RDG and given in accordance with this
         Agreement), any re-working and or re-packaging and or re-calibration of
         Cholesterol Test Strips, Lifestream's breach of any of its
         representations or warranties under this Agreement, the manufacture,
         sale or use of any product which is not supplied by RDG and which is
         sold or combined by Lifestream with the Lifestream Product or the
         integration of the Test Instrument Module or the Cholesterol Test
         Strips in the Lifestream Product which results in injury, illness or
         death of any person or damage to any property or patent infringement,
         or the gross negligence, recklessness or willful misconduct of
         Lifestream or Lifestream's officers, employees or agents.

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<PAGE>

20       INSURANCE

Each     party will maintain comprehensive general liability insurance covering
         the indemnification, defense, hold harmless, and other obligations of
         that party under this Agreement throughout the term of the Agreement.

21       CONFIDENTIALITY

21.1     Throughout the term of the Agreement and for a period of five years
         following the termination thereof, each party hereto agrees to hold in
         strict confidence and not disclose to any third party any and all
         information received by one party from the other pursuant to this
         Agreement including, but not limited to any technology, know-how,
         processes or patent application disclosed by the other or derived from
         information thus disclosed, trade secrets, inventions, ideas, data,
         manufacturing or finance matters. Each party furthermore agrees that it
         may only use such information received from the other to the extent
         required to accomplish the purposes of this Agreement and to restrict
         access to such information to persons entrusted to carry out the
         activities provided for hereunder who are subject to an analogous
         confidentiality obligation. Each party agrees to clearly mark as
         confidential any and all information which it makes available to the
         other party which the disposing party considers to be confidential.
         Each party furthermore agrees to reduce to writing any such
         confidential information which it discloses orally and to provide the
         receiving party with a copy thereof within thirty (30) days of the date
         of the oral disclosure.

21.2     The confidentiality obligations pursuant to clause 17.1 shall not apply
         to information which:

21.2.1   is in the public domain at the time of its disclosure;

21.2.2   is published or otherwise becomes part of the public domain through no
         fault of the receiving party or becomes available from a third party
         who has the right to disclose it;

21.2.3   was in the possession of the receiving party at the time of its
         disclosure as shown by prior written records;

21.2.4   was or will be independently developed by employees of the receiving
         party who had no access to the information disclosed; or

21.2.5   must be disclosed in accordance with applicable laws or in order to
         obtain Government Approval in accordance with the terms of this
         Agreement.

21.3     Neither party shall make any press release or other similar public
         announcement concerning the executed Agreement without the prior
         written consent of the other party hereto, such approval not to be
         unreasonably withheld, except as required by law. Approval will be
         deemed granted if no response is received by the proposing party within
         ten (10) working days of its delivery of a request for approval to the
         other

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<PAGE>

22       TERM AND TERMINATION

22.1     This Agreement shall commence on the Effective Date and, subject to
         Section 20.2 and 20.3 shall remain in full force and effect for the
         term of the initial four (4) years period, starting January I, 2001 and
         ending December 31, 2004. Following this date, this Agreement shall be
         automatically renewed for additional terms of twelve months each unless
         written termination notice has been given by either party twelve months
         prior to the end of the initial period or any additional renewal term.

22.2     Either party has the right to terminate this Agreement at the end of
         the initial period (December 31, 2004) or at the end of each additional
         twelve months renewal term, by giving 12 months prior written notice to
         the other party.

22.3     If either party commits any material breach of this Agreement or
         becomes substantially unable to perform its obligations hereunder and
         fails to remedy any such breach or default within ninety (90) days
         after written notice thereof by the non-breaching party, the
         non-breaching party may, at its option, immediately terminate this
         Agreement by notice to such effect. For the avoidance of doubt, failure
         by Lifestream to comply with its obligation to purchase a minimum of
         ***** Cholesterol Test Strips in each twelve (12) months period during
         the term of this Agreement, starting with January I, 2001, shall
         constitute a material breach on the part of Lifestream and entitle RDG
         to terminate this Agreement in accordance with this clause 20.3.

22.4     Upon the termination of this Agreement, the following shall occur:

 22.4.1  At the termination date, Lifestream shall be free to issue a last and
         final Purchase Order for the supply of Cholesterol Test Strips,
         *****-devices and or lancets for *****, which last and final Purchase
         Order regarding *****-devices and or lancets for ***** shall be limited
         to the extent of the amount of *****-devices and or lancets for *****
         that have been supplied by RDG to Lifestream during the last
         twenty-four (24) months prior to the issuing date of that last and
         final Purchase Order. The last and final Purchase Order regarding
         Cholesterol Test Strips shall be unlimited.

22.4.2   The license granted pursuant to Article 2 shall terminate, and
         Lifestream shall discontinue the development, marketing, sales and
         distribution of the Lifestream Product that utilizes the ROM-Key and or
         Test Instrument Module and or Cholesterol Test Strips after a sell-out
         period of twenty-four (24) months. Beyond that, Lifestream shall be
         entitled to sell its remaining inventory of Cholesterol Test Strips,
         *****-devices and lancets for ***** as ordered under this Agreement,
         including but not limited to the final Purchase Order.

*CONFIDENTIAL TREATMENT REQUESTED                    21
<PAGE>

22.4.3   After termination neither party shall represent or hold itself out as
         being an authorized distributor or sales representative for the other
         party of any of the other party's products, or engage in any practices
         which might make it appear that such party is an authorized distributor
         or sales representative of the other party.

22.4.4   Each party shall return to the other or destroy, at the other party's
         instruction, all confidential information of the other party, with the
         exception of records required to be maintained to be in compliance with
         FDA regulations or other governmental requirements, including
         advertising matter.

22.4.5   The rights of either party which may have accrued up to the date of
         termination shall not be affected by any such termination, and the
         provisions concerning Indemnification, Confidentiality, Governing Law
         and Jurisdiction and Miscellaneous, including this provision concerning
         the Survival of Provisions, shall remain valid notwithstanding any
         termination.

23       GOVERNING LAW AND JURISDICTION

This     Agreement shall be construed in accordance with and governed by the
         laws of the Federal Republic of Germany without regard to and excluding
         the provisions of the 1980 UN Convention on Contracts for the
         International Sale of Goods. The parties hereby submit to the exclusive
         jurisdiction of the courts of Mannheim, Federal Republic of Germany.

24       MISCELLANEOUS

24.1     The parties' obligations under the Agreement will not be assignable to
         third parties without the prior written consent of RDG.

24.2     This Agreement, together with the schedules attached hereto, embodies
         the final, complete and exclusive understanding between the parties,
         and replaces and supersedes all previous agreements, understandings or
         arrangements between the parties with respect to its subject matter
         including but not limited to the License and Supply Agreement between
         the Parties, as of I October 1997. No modification or waiver of any
         terms or conditions hereof shall have any force or effect unless such
         modification or waiver is agreed to in writing by both parties.

*CONFIDENTIAL TREATMENT REQUESTED                    22

<PAGE>

24.3     Neither party shall be liable to the other for its failure to perform
         any of its obligations under this Agreement during any period in which
         such performance is delayed because of or rendered impracticable or
         impossible due to, circumstances beyond its reasonable control,
         including, but not limited to acts of God, embargoes, governmental
         restrictions, strikes or other concerted acts of workers, fire, flood,
         explosion, riots, wars, civil disorder, rebellion, sabotage or failure
         to obtain supplies of components necessary to perform obligations
         hereunder upon commercially reasonable terms, provided that the party
         experiencing the delay promptly notifies the other of the delay.

24.4     Any notice required or permitted to be given under or in connection
         with this Agreement or the subject matter hereof shall be given by
         courier, first class air mail or telefax to the recipient at the
         following address, or to any other address as may have been furnished
         in writing by the recipient to the sending party for such purposes. Any
         such aforementioned notice or request shall be effective upon receipt
         by the party to which it is addressed, provided that any notice sent by
         courier or first class air mail shall be deemed received within seven
         working days of posting and any notice sent by telefax shall be deemed
         received within one working day of being telefaxed, as the case may be.

 Roche Diagnostics GmbH:          Roche Diagnostics GmbH
                                  Patient Care
                                  Sandhofer Strasse 116
                                  D- 68298 Mannheim
                                  Germany
                                  Attention Product Marketing - Point of Care
                                  Telephone: ***
                                  Facsimile:  ***

 With copy to:                    Legal Counsel, Patient Care
                                  Telephone: ***
                                  Facsimile:  ***

 Lifestream:                     Lifestream Technologies, Inc.
                                 510 Clearwater Loop
                                 Suite 101
                                 Post Falls
                                 Idaho 83854
                                 United States of America
                                 Attention: Mr. Christopher T. Maus, President
                                 Telephone: ***
                                 Facsimile: ***

 With copy to:                   Elsaesser Jarzabek Anderson Marks & Elliott
                                 Chartered Attorneys-At-Law
                                 Mr. Ford Elsaesser
                                 Lake Plaza Building
                                 123 South Third Avenue
                                 P.O. Box 1049
                                 Sandpoint, Idaho 83864-0855
                                 Fax: ***
                                 Telephone: ***

*CONFIDENTIAL TREATMENT REQUESTED                    23

<PAGE>

24.5     Failure by one of the parties to this Agreement to assert its rights
         arising from any breach of this Agreement shall not be deemed a waiver
         of such rights nor shall any such waiver be implied upon acceptance of
         any prepayment. The rights and remedies specified herein, except those
         rights and remedies which are specified as exclusive, are in addition
         to and shall not restrict any other right or remedy either party may
         have at law.

24.6     All stipulations contained in this Agreement shall be so construed as
         not to infringe the provisions of any applicable laws, but if any such
         stipulation does infringe any such provision, the same shall be deemed
         to be void and severable and shall be replaced by an appropriate
         provision conforming to such law and reflecting the economic intentions
         of the parties hereto, and this shall not effect the validity of the
         remainder of this Agreement. In the event that the terms and conditions
         of this Agreement are materially altered as a result, the parties shall
         renegotiate the terms and conditions of this Agreement in order to
         resolve any inequities.

24.7     Each party is acting as an independent contractor of the other under
         the terms of this Agreement. Neither party is, nor shall it be deemed
         to be, an employee, agent or legal representative of the other for any
         purpose. Neither party shall be entitled to enter into any contracts in
         the name of, or on behalf of the other, nor shall either party be
         entitled to pledge the credit of the other in any way or hold itself
         out as having authority to do so.

25       LIST OF SCHEDULES

         Schedule 1: Supply Price List
         Schedule 2: Test Instrument Module Specifications

*CONFIDENTIAL TREATMENT REQUESTED                    24
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective duly authorized officers.

 Signed for and on behalf of                    Signed for and on behalf of

 ROCHE DIAGNOSTICS GMBH                         LIFESTREAM TECHNOLOGIES, INC.
                 i.V.

/s/ S. Ek               /s/ N. Grzibek          /s/ Christopher T. Maus

S. Ek                    N. Grzibek             Christopher T. Maus

Mannheim, December 12, 2000

*  CONFIDENTIAL TREATMENT REQUESTED                 25
<PAGE>

                                   SCHEDULE 1

<TABLE>
<CAPTION>

1.     Supply Price List
------------------------

<S>                                              <C>
 Product                                         Price (FCA Mannheim; European Incoterms 2000)

 Cholesterol Test Strip
 Cat. No.: 1454412-001;                          US $ ***  per vial containing 25 strips

 Softclix(R)II
 Bulk of 500 devices                             US $ ***
 Cat. No.: 3009297-001

 Lancets for Softclix(R)II
 Bulk of 5,000 lancets                           US $ ***
 Cat. No.: 1623486

2.     License Fee
------------------

 Test Instrument Module                          US $ *** per module
 (masked version/one time programmable
 microcontroller version)
</TABLE>

*CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

                                   SCHEDULE 2

Test Instrument Module Specifications

The Test Instrument Module is based on the current RDG product known as the
***** printed circuit board.

Hardware Configuration

The Test Instrument Module will consist of:
o        A FR-4 circuit board, SMT and through-hole electronics, and optics,
         with an injection comolded black and clear plastic "Optic Cover" with
         coating, mechanically attached.
o        An unattached part: "the reagent strip holder".
o        OTP (one time programmable) memory component until such time as RDG
         determines that an acceptable masked version is available to it, from
         which time a masked microcontroller will be included instead.
o        Anti-static bulk packaging of a mutually acceptable configuration (Test
         Instrument Module).
o        "Bag and Talk" bulk packaging (strip holder).

NOT included are:

o        The conductive elastomer keypad switches
o        The black plastic ROM-KEY guide and it's mounting screws o Piezio
         electric beeper or it's connectors
o        LCD glass, conductive connector and clear plastic window
o        Battery contacts, unless required for B/M quality assurance procedures
o        All plastic enclosure, keypad parts and labeling with the exception of
         the loose "strip holder" mentioned above

Software Configuration

The Test Instrument Module will contain software:

o        Which will utilize the current ***** whole blood cholesterol reagent
         strip.
o        Which will match the separate ROM-KEY for the same chemistry.

System Performance, manufacturing and quality assurance standards

The Test Instrument Module is expected to meet the performance and quality
assurance requirements of the ***** as specified in existing RDG procedures
currently supporting serial production and sales to the public.

Final calibration and testing, ATP (Acceptance Test Procedure) will utilize
RDG's current ***** process and system.

*CONFIDENTIAL TREATMENT REQUESTED

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