OFFSHORE NOTE PURCHASE AGREEMENT
This Note Purchase Agreement (the "AGREEMENT"), dated August 13,
1996, is entered into by and between Biomagnetic Technologies, Inc., a
California corporation (the "COMPANY"), and Dassesta International, S.A., a
British Virgin Islands corporation (the "PURCHASER"), in connection with the
offer and sale by the Company outside the United States (as that term is defined
in Regulation S ("REGULATION S") under the United States Securities Act of 1933,
as amended (the "SECURITIES ACT")) of the Note (as deemed below) to the
Purchaser. Capitalized terms used herein and not defined herein shall have the
meanings ascribed to them in Regulation S.
The parties hereto agree as follows:
1. PURCHASE AND SALE OF NOTE. Upon the basis of the representations and
warranties, and subject to the terms and conditions, set forth in this
Agreement, the Company covenants and agrees to sell to the Purchaser on the
Closing Date (as hereinafter defined), at a purchase price of $3,000,000 or such
lesser amount as the Holder shall advance to the Company over the term of the
Note (as defined below) (the "PURCHASE PRICE"), a convertible advance promissory
note, substantially in the form of Annex A (the "NOTE"), convertible pursuant to
terms and conditions set forth in the Note into Common Stock (as defined in the
Note) (the "NOTE SHARES").
2. CLOSING. The closing of the purchase and sale of the Note pursuant to
Section I hereof shall take place on August 13, 1996, at the offices of Xxxxxxx,
Xxxxxxx & Xxxxxxxx LLP located at 000 Xxxx X Xxxxxx, Xxxxx 0000, Xxx Xxxxx,
Xxxxxxxxxx or at such other date, time and place as the Purchaser and the
Company may agree upon in writing (such time and date for the closing, the
"CLOSING DATE"). The Note to be purchased by the Purchaser shall be delivered
by, or on behalf, of the Company at the above-mentioned offices of Xxxxxxx,
Phleger & Xxxxxxxx LLP, against initial payment of $1,000,000 in immediately
available funds by, or on behalf of, the Purchaser to the Company's account (No.
0600682570) at the Silicon Valley Bank.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
understands, and represents and warrants to, and agrees with, the Company, that:
(a) The Purchaser is not a U.S. Person.
(b) No offer of the Note or the Note Shares ( collectively, the
"Securities") was made to the Purchaser in the United States; and at the time
the buy order for the Note was originated the Purchaser was located outside the
United States.
(c) The Purchaser, its affiliates (other than the Company) and any
person acting on behalf of the Purchaser or any such affiliates (i) have not
engaged in any directed selling efforts, as the term shall have the meaning
set forth in Regulation S ("Directed Selling Efforts") with respect to the
Securities, (ii) have complied with the offering restrictions
requirements of Regulation S ("Offering Restrictions") and (iii) have complied
with all other applicable requirements of Regulation S and state law.
(d) The transactions contemplated by this Agreement (i) have not been
pre-arranged with a purchaser who is located in the United States or is a U.S.
Person and (ii) are not part of a plan or scheme to evade the registration
provisions of the Securities Act.
(e) The Purchaser is purchasing the Securities for its own account
for the purpose of investment and not (i) with a view to, or for sale in
connection with, any distribution thereof or (ii) for the account or on behalf
of any U.S. Person.
(f) The Purchaser is aware that the Securities have not been
registered and will not be registered under the Securities Act and may only be
offered or resold pursuant to registration under the Securities Act or an
available exemption therefrom.
(g) The Purchaser has consulted with the Company with respect to the
transactions pursuant to this Agreement, and no objection has been raised by the
Company.
(h) The Purchaser understands that no federal or state agency has
passed on or made any recommendation or endorsement of the Securities.
(i) The Purchaser acknowledges that, in making the decision to
purchase the Securities, it has relied solely upon independent investigations
made by it and not upon any representations made by the Company with respect to
the Company.
(j) The Purchaser understands that the Securities are being offered
and sold to it in reliance on specific exemptions or non-application from the
registration requirements of federal and state securities laws and that the
Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgements and understandings of the Purchaser set
forth herein in order to determine the applicability of such exemptions and the
suitability of the Purchaser to acquire the Securities.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the Purchaser that:
(a) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of California.
(b) This Agreement has been duly authorized, executed and delivered
by the Company and is a valid and binding agreement enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights generally and to general principles of equity;
and the Company has full corporate power and authority necessary to enter into
this Agreement and to perform its obligations hereunder.
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(c) The Note has been duly authorized by the Company, and when
executed and delivered by the Company against payment therefor in accordance
with the terms hereof will constitute, a valid and binding agreement enforceable
against the Company in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights generally and
to general principles of equity; and the Company has full corporate power and
authority necessary to issue and execute the Note and to perform its obligations
thereunder.
(d) No consent, approval, authorization or order of any court,
governmental agency or body or arbitrator having jurisdiction over the Company
or any of its affiliates (other than the Purchaser) is required for execution of
this Agreement, including, without limitation, the issuance and sale of the Note
or the performance of its obligations hereunder.
(e) Neither the sale of the Note pursuant to, nor the performance of
its obligations under, this Agreement by the Company will:
(i) violate, conflict with, result in a breach of, or constitute
a default (or an event which with the giving of notice or the lapse of time or
both would be reasonably likely to constitute a default) under (A) the articles
of incorporation, charter or by-laws of the Company or any subsidiary of the
Company, (B) any decree, judgment, order, law, treaty, rule, regulation or
determination applicable to the Company or any subsidiary of the Company of any
court, governmental agency or body, or arbitrator having jurisdiction over the
Company or any subsidiary of the Company or over the properties or assets of the
Company or any subsidiary of the Company, (C) the terms of any bond, debenture,
note or any other evidence of indebtedness, or any agreement, stock option or
other similar plan, indenture, lease, mortgage, deed of trust or other
instrument to which the Company or any subsidiary of the Company is a party, by
which the Company or any subsidiary of the Company is bound, or to which any of
the properties of the Company or any subsidiary of the Company is subject, or
(D) the terms of any "lock-up" or similar provision of any underwriting or
similar agreement to which the Company or any subsidiary of the Company is a
party; or
(ii) result in the creation or imposition of any lien, charge or
encumbrance upon the Securities or any of the assets of the Company or any
subsidiary of the Company.
(f) The Company is a Reporting Issuer, as the term shall have the
meaning set forth in Regulation S, and has filed all reports required to be
filed by Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT") during the preceding l2 months and has been subject
to such filing requirements for the past 90 days.
(g) No offer of the Securities was made by the Company to a person in
the United States.
(h) The Company, any subsidiary of the Company, and any person acting
on behalf of the Company or any such subsidiary (i) have not engaged in any
Directed Selling Efforts with respect to the Securities, (ii) have complied with
the Offering Restrictions
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requirements of Regulation S and (iii) have complied with all other applicable
requirements of Regulation S and state law.
(i) The transactions contemplated by this Agreement (i) have not been
pre-arranged with a purchaser who is in the United States or is a U.S. Person
and (ii) are not part of a plan or scheme to evade the registration provisions
of the Securities Act.
(j) The Company has not offered to sell, sold or issued any common
stock or warrants or other securities convertible into its common stock in a
transaction involving Regulation S in the past year except the Note; and there
are no outstanding warrants or other securities convertible into its common
stock which have been sold in a transaction involving Regulation S.
(k) There is no pending or, to the best knowledge of the Company,
threatened action, suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having jurisdiction over the Company
or any subsidiary of the Company that would materially affect the execution by
the Company of, or the performance by the Company of its obligations under, this
Agreement.
(l) The Company, any person representing the Company, and, to the
best knowledge of the Company, any other person selling or offering to sell the
Securities in connection with the transaction contemplated by this Agreement,
have not made any written communication in connection with the offer or sale of
the Securities which contained any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the statements, in
the light of the circumstances under which they were made, not misleading.
(m) The Company is not in possession of any material non-public
information which has not been disclosed to the Purchaser that, if disclosed,
would, or could reasonably be expected to have, an effect on the price of the
Securities.
(n) The Company's finance committee, comprised of the certain outside
directors not affiliated with the Purchaser (the "Finance Committee"), has
sought the advice of Xxxxxxx, Phleger & Xxxxxxxx LLP, counsel to the Company,
with respect to all matters under the California law concerning transactions
involving a corporation and an interested director and/or a majority shareholder
of the corporation, and has in all its actions, meetings and communications
followed such advice, including without limitation, following all corporate
procedures recommended by Xxxxxxx, Phleger & Xxxxxxxx LLP. The Company confirms
that its decision to enter into this Agreement and to issue the Note has been
made in reliance upon its own independent judgment and investigations, based
upon the recommendation of the Finance Committee that the transactions
contemplated hereby and the Note are fair and equitable to the Company and its
minority shareholders and in the best interest of the Company and its minority
shareholders, and that the terms and conditions of this Agreement and the terms
and conditions of the Note have been negotiated with the Purchaser in good faith
and at arm's length, without any coercion or duress on the part of the
Purchaser.
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5. COVENANTS OF THE PURCHASER. The Purchaser covenants and agrees with
the Company to:
(a) refrain from engaging, and cause its affiliates and any person
acting on behalf of the Purchaser or any such affiliates to refrain from
engaging, in any Directed Selling Efforts with respect to the Securities;
(b) comply, and to cause its affiliates and any person acting on
behalf of the Purchaser or any affiliate to comply, with the Offering
Restrictions, and any other applicable requirements, of Regulation S;
(c) refrain, during the Restricted Period (as defined in Section 6
hereof), from offering or selling the Note or any Note Shares in the United
States, to a U.S. Person or for the account or benefit of a U.S. Person other
than in accordance with Rule 903 or Rule 904 of Regulation S;
(d) refrain from offering or selling the Note in the United States,
to a U.S. Person or for the account or benefit of a U.S. Person; and
(e) offer, sell, pledge or otherwise transfer the Note Shares after
the expiration of the Restricted Period (as hereinafter defined), in each case
only pursuant to registration under the Securities Act or an available exemption
therefrom and, in any case, in accordance with applicable state securities laws.
6. COVENANTS OF THE COMPANY. The Company covenants and agrees with the
Purchaser to:
(a) continue to comply with all applicable reporting requirements of
the Exchange Act;
(b) refrain from engaging, and use its best efforts to insure that
none of its affiliates (other than the Purchaser and its affiliates) will
engage, in any Directed Selling Efforts with respect to the Securities;
(c) ensure that all Offering Restrictions applicable to the sale of
the Securities pursuant to this Agreement are thoroughly complied with and
satisfied;
(d) continue to comply, and to cause its affiliates and any person
acting on behalf the Company or any affiliate to comply, with all other
applicable requirements of Regulation S and state law with respect to the offer
and sale of the Securities
(e) refrain from offering to sell or selling any shares of common
stock, or warrants or other securities convertible into its common stock, in a
transaction involving Regulation S for a period of 180 days following the date
hereof;
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(f) notify the Purchaser promptly if at any time during the period
beginning on the date of this Agreement and ending on the date the Note is
converted or satisfied in full (i) any event shall have occurred as a result of
which any written communication made by the Company, any person representing the
Company, or, to the best knowledge of the Company, by any other person in
connection with the transactions contemplated by this Agreement would include an
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or (ii) there is any public disclosure of
material information regarding the Company or its financial condition or results
of operation;
(g) reserve and keep available at all times, free from preemptive
rights, out of an aggregate of its authorized but unissued common stock or its
authorized and issued common stock held in its treasury, for the purpose of
enabling it to satisfy any obligation to issue Note Shares upon exercise of the
conversion privilege set forth in Section 2 of the Note, the maximum number of
shares of common stock which may then be issuable and deliverable upon the
exercise of such conversion privilege;
(h) within 7 calendar days of the Conversion Date (as defined in the
Note), (X) issue the Note Shares into which the Note is convertible and (Y)
deliver to the Purchaser a certificate representing the Note Shares, in
accordance with Section 2 of the Note, which Note Shares: (i) shall be free and
clear of any security interests, liens, claims or other encumbrances; (ii) shall
have been duly and validly authorized and on the Conversion Date will be duly
and validly issued, fully paid and nonassessable; (iii) will not have been,
individually and collectively, issued or sold in violation of any preemptive or
other similar rights of the holders of any securities of the Company; (iv) will
not subject the holders thereof to personal liability by reason of being such
holders; and (v) after the expiration of the period commencing on the Closing
Date and ending on the fortieth day thereafter (the "RESTRICTED PERIOD"), shall
be quoted on and (if sold in accordance with the provisions of this Agreement)
eligible for trading on the National Association of Securities Dealers Automated
Quotations system;
(i) deliver such certificates in accordance with the instructions of
the Purchaser, and in such names as the Purchaser shall instruct, subject to
customary settlement procedures;
(j) if the Conversion Date falls during the Restricted Period,
deliver the certificate representing the Note Shares bearing a Regulation S
legend substantially similar to that currently on the Note, it being understood
that by so doing the Company agrees to provide, on the day after the expiration
of the Restricted Period, to the transfer agent for the Company for the benefit
of the holders of Note Shares, any opinion of counsel required by such transfer
agent to accept from such holders the legended certificate(s) representing the
Note Shares and deliver in its place unlegended certificate(s) representing the
Note Shares containing no legend other than the legend described in Section 6(k)
below; and
(k) if the Conversion Date falls after the expiration of Restricted
Period, deliver the certificate(s) representing the Note Shares bearing no
legend other than the following:
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THE SHARES REPRESENTED BY THIS CERTIFICATE, WHILE (1) HELD BY DASSESTA
INTERNATIONAL, S.A. ("DASSESTA") AND (2) DASSESTA OWNS TEN PERCENT OR
MORE OF THE ISSUED AND OUTSTANDING SHARES OF BTI, CONSTITUTE "CONTROL
SECURITIES" AND MAY NOT BE 0FFERED FOR SALE, SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO REGISTRATION UNDER THE ACT OF AN
EXEMPTION THEREFROM AND, WHEN HELD BY ANY PERSON, INCLUDING A
PLEDGEE, WHO DOES NOT OWN TEN PERCENT OR MORE OF THE ISSUED AND
OUTSTANDING SHARES OF BTI, THE LEGEND SET FORTH IN THIS PARAGRAPH
SHALL HAVE NO FURTHER FORCE OR EFFECT AND MAY BE REMOVED UPON
PRESENTATION OF THIS CERTIFICATE TO THE TRANSFER AGENT FOR BIOMAGNETIC
TECHNOLOGIES, INC.
7. CONDITIONS PRECEDENT TO THE PURCHASER'S OBLIGATIONS. The obligations
of the Purchaser hereunder are subject to the performance by the Company of its
obligations hereunder and to the satisfaction of the following additional
conditions precedent:
(a) The representations and warranties made by the Company in this
Agreement shall, unless waived by the Purchaser, be true and correct as of the
date hereof and at the Closing Date, with the same force and effect as if they
had been made on and as of the Closing Date.
(b) The Company will provide an opinion of counsel confirming in
substance the representations and warranties set out in paragraphs (a), (b),
(c), (d), (e) and (f) of Section 4 subject to such counsel's standard opinion
exceptions, limitations, restrictions and assumptions. Such counsel will not
opine as to laws of foreign countries.
8. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS. The obligations of
the Company hereunder are subject to the performance by the Purchaser of its
obligations hereunder and to the satisfaction of the additional condition
precedent that the representations and warranties made by the Purchaser in this
Agreement shall, unless waived by the Company, be true and correct as of the
date hereof and at the Closing Date, with the same force and effect as if they
had been made on and as of the Closing Date.
9. FEES AND EXPENSES. Each of the Purchaser and the Company agrees to pay
its own expenses incident to the performance of its obligations hereunder,
including, but not limited to, the fees, expenses and disbursements of such
party's counsel.
l0. NON-DELIVERY OF THE NOTE SHARES. If, within 7 calendar days of the
Conversion Date, the Company shall fail to (i) issue the Note Shares and (ii)
deliver to the Purchaser a certificate representing the Note Shares, in
accordance with terms of the Note, for any reason other than the failure by the
Purchaser to comply with its obligations hereunder or thereunder, then the
Company shall hold the Purchaser harmless against any loss, claim or damage
arising from or as a result of such failure by the Company (including, without
limitation, any such loss, claim or damage resulting from an obligation to
resell the Note Shares).
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11. SURVIVAL OF THE REPRESENTATIONS, WARRANTIES, ETC. The respective
agreements, representations, warranties and other statements made by or on
behalf of the Company and the Purchaser, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation made by or on behalf of the other party to this Agreement or any
officer, director or employee of, or person controlling or under common control
with, such party and will survive delivery of any payment for the Note.
12. NOTICES. All communications hereunder shall be in writing and shall be
sufficient in all respects if delivered, sent by registered mail, or by telecopy
and confirmed to the Purchaser or Company at the respective address set forth
below:
Dassesta International, SA Biomagnetic Technologies, Inc.
c/o SP Investment Network Ltd. 0000 Xxxxxxx Xxxxxxx Xxxx.
Am Schanzengraben 23 Xxx Xxxxx, XX 00000
X.X.Xxx 000 Xxxxxxxxx: Xxxxxxxxx
0000 Xxxxxx,Xxxxxxxxxxx Telephone: (000) 000-0000
Attention: Xxxxxx X. Xxxx
13. MISCELLANEOUS. (a) This Agreement may be executed in one or more
counterparts and it is not necessary that signatures of all parties appear on
the same counterpart, but such counterparts together shall constitute but one
and the same agreement.
(b) This Agreement shall inure to the benefit of and be binding upon
the parties hereto, their respective successors and each person under common
control therewith, and no other person shall have any right or obligation
hereunder.
(c) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of California (without giving effect to conflicts of
laws principles).
(d) The headings of the sections of this document have been inserted
for convenience of reference only and shall not be deemed to be a part of this
Agreement.
(e) The provisions of this Agreement are severable, and if any clause
or provision shall be held invalid, illegal or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect in
that jurisdiction only such clause or provision, or part thereof, and shall not
in any manner affect such clause or provision in any other jurisdiction or any
other clause or provision of this Agreement in any jurisdiction.
l4. TIME OF ESSENCE. Time shall be of the essence in this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, all as of the day and year first above written.
DASSESTA INTERNATIONAL, S.A.
By: /s/ Xxxxxx X. Xxxx /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxx Xxxxxx X. Xxxxx
Title: Pres. V.P.
BIOMAGNETIC TECHNOLOGIES, INC.
By: /s/ Xxxxx X. Xxxxxxxxxx
Name: Xxxxx X. Xxxxxxxxxx
Title: Chairman, President & CEO
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ANNEX A
OFFSHORE CONVERTIBLE NOTE
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