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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 22, 1999
BIOMAGNETIC TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA
(State or other jurisdiction of incorporation)
1-10285 95-2647755
(Commission File Number) (IRS Employer Identification No.)
9727 Pacific Heights Boulevard, San Diego, CA 92121-3719
(Address of principal executive offices) (Zip Code)
(858) 453-6300
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
(a) On December 22, 1999, Biomagnetic Technologies, Inc. ("BTi")
acquired all of the issued and outstanding capital stock ("Shares")
of Neuromag Oy pursuant to the terms of a Share Purchase Agreement
by and between Marconi Medical Systems, Inc. ("Marconi") and BTi
(the "Share Purchase Agreement"). Under the terms of the Share
Purchase Agreement, BTi paid a total of $10 million in cash to
Marconi for the purchase of the Shares and agreed to pay between a
minimum of $2.5 million and a maximum of $5 million in royalties to
Marconi under a royalty agreement over the next eight years, and
additional consideration of up to approximately $1.8 million
dependent upon the occurrence of certain future events.
The Company has obtained a loan from AIG Private Bank Ltd. totaling $11
million that is secured by Shares of Neuromag Oy and is guaranteed by
an entity unaffiliated with the Company. The loan matures June 30,
2000. Martin Egli, a board member of BTi, also serves on the Board of
Directors of AIG Private Bank Ltd. As a part of its ongoing financing
strategies, the Company intends to raise additional capital for the
purposes of repaying the loan and to continue to fund operations. There
can be no assurance that the Company will be able to raise such capital
on terms acceptable to the Company, if at all.
(b) Similar to BTi, Neuromag Oy, is engaged in research, development
and manufacturing of magnetic source imaging systems. Neuromag Oy is
located in Helsinki, Finland. BTi intends to continue the operations
of Neuromag Oy as a subsidiary of BTi.
The description of the transaction set forth above is qualified in its
entirety by reference to the Share Purchase Agreement filed with this
Current Report and the Press Release issued by BTi dated December 23,
1999, copies of which are attached to this Current Report as Exhibits
2.1 and 99.1, respectively.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
The Financial Information of Neuromag Oy required to be filed pursuant
to Item 7(a) of Form 8-K was not available at the time of filing of
this Current Report on Form 8-K and will be filed on a Form 8-K/A as
soon as practicable, but in no event later than 60 days after the date
this Form 8-K must be filed.
(b) PRO FORMA FINANCIAL STATEMENTS.
The Pro Forma Financial Information required to be filed pursuant to
Item 7(b) of Form 8-K was not available at the time of filing of this
Current Report on Form 8-K and will be filed on a Form 8-K/A as soon as
practicable, but in no event later than 60 days after the date this
Form 8-K must be filed.
(c) EXHIBITS.
Exhibit 2.1 Share Purchase Agreement dated as of December 21,
1999, by and between Marconi Medical Systems, Inc.
and Biomagnetic Technologies, Inc. Certain
schedules and/or exhibits referenced in the Share
Purchase Agreement have not been included because
they contain information which is not material to
an investment decision or which is otherwise
discussed in the agreement. A copy of any omitted
schedule and/or exhibit will be furnished
supplementally to the Securities and Exhcange
Commission upon request. In addition, confidential
treatment has been requested for certain portions
of this exhibit.
Exhibit 99.1 Press Release dated December 23, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
BIOMAGNETIC TECHNOLOGIES, INC.
Date: January 6, 2000 /s/ D. Scott Buchanan
--------------------------------------
D. Scott Buchanan, President and
Chief Executive Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT
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<S> <C>
2.1 Share Purchase Agreement dated as of December 21, 1999, by and between
Marconi Medical Systems, Inc. and Biomagnetic Technologies, Inc. Certain
schedules and/or exhibits referenced in the Share Purchase Agreement have
not been included because they contain information which is not material
to an investment decision or which is otherwise discussed in the agreement.
A copy of any omitted schedule and/or exhibit will be furnished
supplementally to the Securities and Exchange Commission upon request.
In addition, confidential treatment has been requested for certain portions
of this exhibit.
99.1
Press Release dated December 23, 1999.
</TABLE>
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Exhibit 2.1
S H A R E P U R C H A S E
A G R E E M E N T
BY AND BETWEEN
MARCONI MEDICAL SYSTEMS, INC.
AND
BIOMAGNETIC TECHNOLOGIES, INC.
21 DAY OF DECEMBER, 1999
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SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT is entered into on this 21 day of December, 1999,
by and between MARCONI MEDICAL SYSTEMS, INC. (formerly known as Picker
International, Inc.), a corporation incorporated and existing under the laws of
the state of New York, USA, having its principal place of business in Cleveland,
Ohio ("Seller")
and
BIOMAGNETIC TECHNOLOGIES, INC., a corporation incorporated and existing under
the laws of California, having its principal place of business in San Diego,
California, ("Purchaser").
RECITALS:
A. Seller is a minority shareholder in Neuromag Oy, a Finnish limited
liability company (the "Company") engaged in developing, manufacturing
and commercially utilizing biomagnetic measurement equipment; and
B. Seller holds an option (the "Option") to acquire one hundred per cent
(100%) of the Company's capital stock pursuant to that certain
Shareholders' Agreement dated November 14, 1997 by and among Seller and
the Prior Shareholders, a redacted copy of which was previously
delivered to Purchaser by Seller; and
C. Upon Seller's exercise of the Option, the Shareholders Agreement shall
terminate pursuant to Section 18.3 of the Shareholders Agreement; and
D. Subject to the terms and conditions below, Seller intends to exercise
the Option and immediately thereafter to sell and transfer one hundred
per cent (100%) of the shares of the Company's capital stock to
Purchaser, and Purchaser intends to acquire one hundred per cent (100%)
of the Company's issued and outstanding capital stock from Seller.
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NOW THEREFORE, the Parties (as defined below) hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, unless expressly otherwise stated or evident in the
context, the following terms shall have the following meanings, the singular
(where appropriate) shall include the plural and vice versa and references to
Schedules, Exhibits and Sections shall mean Schedules, Exhibits and Sections of
this Agreement:
1.1 "ACCOUNTING PRINCIPLES" shall mean generally accepted accounting
principles in Finland as consistently
applied by the Company.
1.2 "AFFILIATE" Shall mean any company, Person, or group of
Persons that directly or indirectly owns or
controls fifty per cent (50%) or more of
another company.
1.3 "AGREEMENT" Shall mean this Share Purchase Agreement and
the Schedules and Exhibits hereto.
1.4 "AUDITED FINANCIAL Shall mean the Company's annual audited
STATEMENTS" Balance Sheet, Income Statement, Statement
of Cash Flows and Statement of Shareholders
Equity, and the notes thereto, together with
the written report by the Company's
independent certified public accountants,
for the year ending December 31, 1998.
1.5 "BOARD" shall mean the Board of Directors of the
Company.
1.6 "CLAIM" shall mean any BONA FIDE claim made by
Purchaser against Seller in respect of any
breach of this Agreement.
1.7 "CLOSING DATE" shall mean December 22, 1999, or such later
date as set out in Section 2.1.
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1.8 "CLOSING" shall mean the consummation of the
transaction as contemplated in Section 3.
1.9 "COMPANY" shall have the meaning set out in the
Recitals, Section A.
1.10 "CONFIDENTIAL shall mean any and all information of any
INFORMATION" kind or nature whatsoever, whether written,
in note form, electronic or oral, including,
without limitation, financial information,
trade secrets, product specifications, data,
inventions, know-how, formulae,
compositions, processes, computer software
and programs, designs, sketches,
photographs, graphs, drawings, samples,
inventions and ideas, past, current and
planned research and development, current
and planned manufacturing and distribution
methods and processes, client lists,
business plansand other proprietary business
information, regarding the Company or
Seller, which information is not known to
the general public or to Persons
unaffiliated with the Company or Seller, as
the case may be.
1.11 "DIRECTOR(S)" shall mean the members and deputy board
members of the Board of Directors of the
Company on the date hereof.
1.12 "DISCLOSURE LETTER" shall mean the Disclosure Letter issued by
Seller as at the date hereof and attached
hereto as Schedule 4. The Disclosure Letter
may be supplemented by Seller as of the
Closing Date.
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1.13 "ENCUMBRANCES" shall mean any mortgage, pledge, assessment,
security interest, deed of trust, lease,
lien, option, adverse claim, levy, charge or
other encumbrance of any kind, or any
conditional sale or title retention
agreement or other agreement to give any of
the foregoing in the future. For the
avoidance of doubt, Encumbrances shall not
include payments contemplated by the Royalty
Agreement.
1.14 "FINANCIAL STATEMENTS" Shall mean Audited Financial Statements and
Interim Financial Statements
1.15 "GOVERNMENTAL OR shall mean any court, tribunal, arbitrator,
REGULATORY AUTHORITY" authority, agency, commission, official or
other instrumentality of the United States,
Finland or other country, any state, county,
city or other political subdivision.
1.16 "INTERIM FINANCIAL Shall mean the unaudited balance sheet and
STATEMENTS" income statement of the Company for the nine
month period ending September 30, 1999.
1.17 "MATERIAL ADVERSE shall mean any circumstance, change in, or
EFFECT" effect on the Company that is materially
adverse to the earnings, assets or financial
condition of the Company taken as a whole.
1.18 "MATERIAL CONTRACTS" Shall mean existing legally binding (whether
written or oral) contracts or agreements, of
the Company having an annual turnover
(excluding VAT) exceeding One Hundred
Thousand U.S. Dollars (US$ 100,000). For the
avoidance of doubt, the foregoing shall not
include outstanding quotations issued by the
Company.
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1.19 "Ordinary Course of shall mean the action of a Person that is
Business" consistent with the past practices of such
Person and is taken in the ordinary course
of the normal day-to-day operations of such
Person.
1.20 "OTHER AGREEMENTS" shall mean the agreements referred to in
Section 3.4.
1.21 "PARTY(IES)" shall mean Seller, Company or Purchaser.
1.22 "PERSON(S)" Shall mean any natural person, company,
corporation, general partnership, limited
partnership, limited liability company,
proprietorship, other business organization,
trust, union, association or Governmental or
Regulatory Authority.
1.23 "PRIOR SHAREHOLDERS" shall mean Instrumentarium Oyj, a company
organized and existing under the Laws of
Finland; Suomen Itsenaisyyden Juhlarahasto,
a public fund organized and existing under
the laws of Finland; and Mustekala Ky, a
limited partnership organized and existing
under the laws of Finland.
1.24 "PURCHASE PRICE" shall have the meaning set out in Section
2.3 below.
1.25 "PURCHASER" shall have the meaning set out in the
introductory paragraph hereof, i.e.
Biomagnetic Technologies, Inc.
1.26 "PURCHASER'S KNOWLEDGE" OR shall mean the actual knowledge of the
"KNOWN TO PURCHASER" present Board of Directors and Officers of
Purchaser.
1.27 "REPRESENTATIONS AND shall mean the representations and
WARRANTIES" warranties of Seller as defined in
Section 4.
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1.28 "ROYALTY AGREEMENT" Shall mean a certain royalty agreement
between Purchaser and Seller, and included
as Schedule 3.4(8) herewith.
1.29 "SELLER" shall have the meaning set out in the
introductory paragraph hereof, i.e. Marconi
Medical Systems, Inc.
1.30 "SELLER'S KNOWLEDGE" OR shall mean the actual knowledge of the
"KNOWN TO SELLER" present Board of Directors and Officers of
Seller.
1.31 "SHARES" shall mean one hundred per cent (100%) of
the issued and outstanding shares of the
Company's capital stock, which includes all
and not less than all of the Company's
capital stock issued or issuable upon
Seller's exercise of the Option.
1.32 "TAXES" shall mean all income tax, value added tax
and any fees, customs or duties or any other
taxes imposed by any tax authority,
including all penalties and interest.
1.33 "THIRD PARTY CLAIM" shall mean any claim by a third party
(including tax and other authorities)
against the Company.
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2. PURCHASE AND SALE
2.1 Object
Upon the terms and subject to the conditions set forth herein, Seller
hereby sells and Purchaser hereby purchases the Shares effective on the
Closing Date on the terms and conditions set out in this Agreement.
2.2 Delivery
The Shares, shall be delivered and transferred by Seller to Purchaser
on the Closing Date against payment of the Purchase Price and upon
fulfillment and completion of the Closing procedures set forth in
Section 3, free and clear of any Encumbrances. The certificates for the
Shares shall be properly endorsed for transfer to or accompanied by
duly executed stock powers in favor of Purchaser and otherwise in a
form acceptable for transfer on the books of the Company.
2.3 Purchase Price
(a) Subject to the terms and conditions of this Agreement,
Purchaser agrees to acquire the Shares from Seller and agrees
to pay to Seller in exchange for the Shares an aggregate
purchase price of Ten Million Dollars (U.S. $10,000,000)
(b) The Purchase Price shall be paid in full at Closing.
(c) The Purchase Price shall be paid in immediately available
funds to the bank account(s) identified by Seller.
3. CLOSING, CONDITIONS AND DELIVERIES
3.1 Closing
The Closing shall take place on the Closing Date starting at 10:00 a.m.
at the offices of Roschier-Holmberg & Waselius, Keskuskatu 7A, 00100
Helsinki, Finland.
The Closing Date shall be December 22, 1999 or as soon thereafter as
practicable when all the conditions precedent for Closing as set forth
in this Section 3 have been fulfilled.
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3.2 Seller's Conditions Precedent
The obligation of Seller to close hereunder shall be subject to the
fulfillment, on or before the Closing Date, of each of the following
conditions (to the extent not expressly waived by Seller):
(a) Closing Deliveries.
Purchaser, Seller and, as appropriate, the Company and/or any
other relevant party shall have executed and delivered all of
the documents required pursuant to Section 3.4 below.
(b) Representations, Warranties and Covenants.
All representations and warranties of Purchaser contained in
this Agreement shall be true and correct on and as of the
Closing Date and Purchaser shall have performed all agreements
and covenants required to be performed by it prior to or on
the Closing Date.
(c) No Actions or Proceedings. No Actions or Proceedings shall
have been instituted or threatened that question the validity
or legality of the transactions contemplated by this
Agreement.
(d) Option Exercise Agreement. A certain option exercise agreement
between Seller and the Prior Shareholders for the purchase of
the Shares not currently owned by Seller shall have been
executed and delivered and the purchase of said Shares by
Seller pursuant thereto shall have been completed.
3.3 Purchaser's Conditions Precedent
The obligation of Purchaser to close hereunder shall be subject to the
satisfaction, on or before the Closing Date, of each of the following
conditions (to the extent not waived by Purchaser):
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(a) Closing Deliveries.
Purchaser, Seller and, as appropriate, the Company and/or any
other relevant party shall have executed and delivered all of
the documents required pursuant to Section 3.4 below.
(b) No Actions or Proceedings.
No Actions or Proceedings shall have been instituted or
threatened that question the validity or legality of the
transactions contemplated by this Agreement.
(c) Material Adverse Effect. Seller, the Company, and the Prior
Shareholders shall not have during the period between August
11, 1999 and the Closing Date acted or shall not have caused
the Company to have acted, in any manner outside the Ordinary
Course of Business of the Company that has created or could
reasonably create any Material Adverse Effect on the Company.
3.4 Deliveries at Closing
At and as a condition for Closing, the following deliveries shall take
place:
(a) Seller shall sell, transfer and convey to Purchaser the Shares
and release and deliver to Purchaser the share certificates
representing all of the Shares, duly endorsed in blank, (or
accompanied by duly executed powers);
(b) Non-Competition Agreements among Purchaser, Seller and
Instrumentarium Oyj, attached hereto as Schedule 3.4(b) (the
"Non-Competition Agreements"), duly executed by each of
Purchaser, Seller, and Instrumentarium Oyj.
(c) Purchaser shall pay the Purchase Price to Seller;
(d) Seller shall convey a copy, certified to be a true and
complete copy by a Secretary of Seller, of a resolution of
Seller's Board of Directors authorizing the execution,
delivery and performance of this Agreement by Seller and the
consummation of the transactions contemplated hereby;
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(e) Purchaser shall convey a copy, certified to be a true and
complete copy by a Secretary of Purchaser, of a resolution of
the Purchaser's Board of Directors authorizing the execution ,
delivery and performance of this Agreement by Purchaser and
the consummation of the transactions contemplated hereby;
(f) An Acknowledgment by Seller and each Prior Shareholder
attached hereto as Schedule 3.4(f) (the "Acknowledgment"),
indicating the Shares are fully transferable to Purchaser and
are free and clear of all restrictions on the ability to vote,
and are not subject to claims, options, liens, charges or
other Encumbrances of any kind, and duly executed by each of
Seller and the Prior Shareholders.
(g) the Royalty Agreement, attached hereto as Schedule 3.4(g);
(h) A third-party guaranty, satisfactory to Seller, of certain
Royalty obligations as set forth in the Royalty Agreement,
attached hereto as schedule 3.4(h);
(i) A Distribution Termination Agreement between Seller,
Purchasers, and the Company relating to the termination of
Seller's existing distribution relationship with the Company
and to service arrangements for certain of Seller's other
customers, attached hereto as schedule 3.4(i);
(j) Any other document, condition, amount or matter herein called
for to be produced, delivered, released, paid or fulfilled at
Closing as a condition precedent shall be so produced,
delivered, released, paid and fulfilled.
3.5 Best Efforts to Close
The Parties shall use their respective best efforts to cause all
necessary action to be taken in order to have all of the conditions
precedent for Closing to be fulfilled as promptly as practicable and to
have all deliveries as provided in Section 3.4 made
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timely and properly. Unless Closing has taken place by December 31,
1999 either Party may cancel this Agreement without prejudice to the
confidentiality obligations set out in Section 7.1 hereof or to any
remedies available to the Parties hereunder or under law.
4. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF SELLER
Seller represents and warrants to Purchaser as of the Closing, except as set
forth on the Disclosure Letter(specifically identifying the relevant
subparagraph hereof), as follows. The results of an investigation of the
Company, the Company's Business and the Assets and Properties owned by the
Company by Purchaser, its counsel, CPAs and other advisors, based primarily on
information and documents provided to Purchaser by the Company, has been
completed by Purchaser to Purchaser's satisfaction.
4.1 Organization of Seller and the Company.
(a) Seller is a corporation duly organized, validly existing, and
in good standing under the laws of New York, United States of
America.
(b) The Company is a corporation duly organized and validly
existing under the laws of Finland.
(c) To Seller's Knowledge, the Company is duly authorized to
conduct business as currently conducted and is in good
standing in each jurisdiction where such qualification is
required except for any jurisdiction where failure so to
qualify would not have a Material Adverse Effect upon the
Company.
(d) To Seller's Knowledge, the Company has full power and
authority, and holds all permits, licenses, and authorizations
necessary to carry on its business as currently conducted and
to own and use the assets and properties, including
intellectual property, as currently owned and used by the
Company except where the failure to have such power and
authority or to hold such permit,
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authorization, or license would not have a Material Adverse
Effect on the Company. There is, to Seller's Knowledge, no
pending action or other proceeding which seeks the revocation
of any such existing permit or authorization.
(e) The Company and/or Seller has delivered to Purchaser correct
and complete copies of the Company's charter documents and
organizational documents, each as amended to date, including
without limitation true, complete and current copies of the
Articles of Association and the Company's Trade Register, and
all of the Company's share and shareholders' registers,
minutes of the Board meetings and shareholders' meetings.
4.2 Title and Authority to Transfer the Shares; Capitalization
(a) Seller has full ownership to the Shares and has full power,
capacity and authority to sell and transfer such shares and to
perform all other undertakings set forth in this Agreement.
The Shares are fully transferable to Purchaser and are free
and clear of all restrictions on the ability to vote. The
Shares are not subject Encumbrances of any kind.
(b) The Shares have been legally and validly issued and are fully
paid and constitute one hundred per cent (100 %) of the issued
share capital of the Company. There are no outstanding
obligations, warrants, options, depository receipts,
subscriptions, pre-emptive rights, contracts or agreements to
which Seller or the Company are bound, providing for the
issuance of any additional shares of the Company.
(c) Seller has the full legal power and full corporate power to
enter into this Agreement and to consummate the transactions
contemplated hereby.
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4.3 Contracts
(a) To Seller's Knowledge, there are no other Material Contracts
than those listed in SCHEDULE 4.3 of which to Seller's
Knowledge full copies (to the extent such contracts are in
writing) have been delivered to the Purchaser by the Company.
(b) To Seller's Knowledge, the Company has not received or given
notice of termination of any Material Contract. To Seller's
Knowledge, the Company is not currently in material breach of
any Tekes agreement, or will be in material breach upon the
Closing of this Agreement.
4.4 No Conflicts.
To Seller's Knowledge, the Seller's execution, performance and delivery
of this Agreement does not, and the consummation of the transactions
contemplated hereby will not result in an imposition or creation of any
Encumbrance on the business or assets or properties of the Company or
the Shares.
4.5 Consents and Governmental Approvals and Filings.
To Seller's Knowledge, and except in connection with the Prior
Shareholders, no consent, approval or action of, filing with or notice
to any Governmental or Regulatory Authority or other Persons (including
without limitation consents required under Seller's or the Company's
contracts because of a change in ownership) on the part of Seller or
the Company is required for the lawful and valid execution, delivery
and performance of this Agreement or the consummation of the
transactions contemplated hereby.
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4.6 Financial Statements.
Seller and the Company have previously delivered to Purchaser the
Financial Statements. To Seller's Knowledge, the Financial Statements
are true, correct, and complete copies of the Financial Statements
received by Seller and/or Company.
4.7 Compliance with Law.
To Seller's Knowledge, the Company is in compliance with all applicable
laws, statutes, Orders, ordinances and regulations, whether national,
local or foreign, except where the failure to comply, in each instance
and in the aggregate, could not reasonably be expected to result in a
Material Adverse Effect on the Company. Neither Seller nor to Seller's
Knowledge the Company has received any written notice to the effect
that, or otherwise has been advised that, the Company is not in
compliance with any of such laws, statutes, Orders, ordinances or
regulations, where the failure to comply could reasonably be expected
to result in a Material Adverse Effect on the Company.
4.8 Environmental Matters
(a) To Seller's Knowledge, the Company complies in all material
respects with all relevant environmental laws and
environmental licenses and all environmental licenses are
valid and subsisting and, to Seller's Knowledge, the Company
has not received any written notice that any such
environmental license is being revoked, suspended, amended,
varied, withdrawn or not renewed where the same would have a
Material Adverse Effect.
(b) To Seller's Knowledge, no proceedings have been issued or are
outstanding against the Company in respect of any breach of
any legislation or license concerning the environment.
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4.9 Claims, Litigation
To Seller's Knowledge, the Company has not been served with any summons
or notice to arbitrate and there are no actions, arbitrations or other
legal proceedings pending, or to Seller's Knowledge, threatened,
against the Company or any business or assets of the Company which
could have a Material Adverse Effect. There is, to Seller's Knowledge,
no action or other proceeding pending or threatened by the Company
against any other person or entity which could have a Material Adverse
Effect.
4.10 Tax Warranties
(a) To Seller's Knowledge, the Company has filed with the
appropriate tax authorities all tax returns and reports in
respect of any and all Taxes required to be filed with such
tax authorities. To Seller's Knowledge, the Company has paid
to the appropriate tax authorities all Taxes required to be
paid to them according to filed tax returns or according to
orders to pay issued by tax authorities.
(b) To Seller's Knowledge, there are no tax audits currently
pending against the Company.
(c) To Seller's Knowledge, all Taxes required to have been paid by
the Company have been paid in due time. To Seller's Knowledge,
the Company has not been given or granted any waiver or
extension by any tax authority of any period of limitation
governing the time of assessment or collection of any taxes.
4.11 Brokers
Seller, and to Seller's Knowledge, the Prior Shareholders and the
Company have not retained any broker in connection with the
transactions contemplated hereunder. Purchaser has, and will have, no
obligation to pay any broker's, finder's, investment banker's,
financial advisor's or similar fee in connection with this Agreement or
the
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transactions contemplated hereby by reason of any action taken by or on
behalf of Seller, or to Seller's Knowledge the Prior Shareholders or
the Company.
4.12 Ordinary Course of Business
During the period from August 11, 1999 until Closing, Seller will not
instruct or willingly allow the Company to take any action or measure
which is outside the Ordinary Course of Business and which will have a
Material Adverse Effect, unless such action or measure is directly
related to the transaction contemplated hereby or has been approved in
writing by Purchaser.
4.13 Information
Copies of documents and records of Company provided to Purchaser by
Seller in connection with the Due Diligence Review are true and
accurate copies of documents and records received from the Company.
4.14 Omissions
To Seller's Knowledge, nothing in this Agreement or any schedule,
exhibit, document or certificate delivered in accordance with the terms
hereof, contains any untrue statement of a material fact. To Seller's
Knowledge, the Audited Financial Statements contain no omission which
would render them materially inaccurate.
4.15 Shareholders Agreement
Seller represents and warrants that Section 4 of the Shareholders'
Agreement is directed to the relationship between Seller and Prior
Shareholders in the event that Seller does not exercise the Option.
Seller further represents and warrants that, upon Seller's exercise of
the Option as contemplated hereunder, Section 4 of the Shareholders'
agreement will be of no further force and effect and that Purchaser and
the Company shall not have any liability of any kind or nature to
Seller or the Prior Shareholders by virtue of said Section 4.
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4.16 No Other Warranties
It is specifically stated and agreed that Seller has not made, and
Purchaser has not relied on, any other expressed or implied warranties
or representations regarding the Shares, the Company, or its business
other than those contained in this Section 4.
5. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF PURCHASER
Purchaser hereby represents and warrants to Seller as of the Closing:
5.1 Organization of Purchaser.
Purchaser is duly organized, validly existing and in good standing
under the laws of the State of California and has full corporate power
and all necessary licenses, permits and authorizations to carry on its
businesses as conducted on the Closing Date.
5.2 Power and Authority Regarding the Transaction
Purchaser has the full legal and corporate power to enter into this
Agreement and to consummate the transactions contemplated hereby. The
execution of this Agreement, the consummation of the transactions
contemplated hereby and the fulfillment of the terms hereof, will not
result in a breach of any judgment, decree or order of any national or
supranational court, governmental or other body, any applicable law or
regulation or the Articles of Association of Purchaser.
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5.3 Royalty Obligations
Purchaser acknowledges that it shall undertake certain royalty
obligations to Seller pursuant to the Royalty Agreement. Purchaser
shall fully comply with the terms of the Royalty Agreement
5.4 Consents and Governmental Approvals and Filings.
To Purchaser's Knowledge, no consent, approval or action of, filing
with or notice to any Governmental or Regulatory Authority or other
Persons on the part of Purchaser or the Company (including without
limitation consents required under the Company's contracts because of a
change in ownership) is required for the lawful and valid execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby.
5.5 Other
Purchaser is unaware of any fact or circumstance which would render the
representations and warranties provided by Seller in Sections 4.13 or
4.14 above inaccurate.
6. INDEMNITY
6.1 Indemnity of Seller
If Seller is in breach of this Agreement, the Purchase Price shall, as
the sole and exclusive remedy, be reduced by an amount corresponding to
the deficiency or cost or direct loss actually incurred by the
Purchaser (subject to Section 6.2) as a direct result of such breach.
Such reduction may not, however, in any event exceed ten percent (10%)
of the Purchase Price, which constitutes Seller's maximum liability
under this Agreement or otherwise on whatever ground.
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6.2 Limitation of Liability
Seller's liability under this Agreement (including under Section 6.1
above) is limited as follows:
(a) For the purposes of this Agreement, a liability, which is
contingent, shall not constitute a deficiency, cost or loss,
unless and until such contingent liability becomes an actual
liability and is due and payable. No Claim may be made if the
claim is based on facts or circumstances known to Purchaser or
its advisors prior to Closing.
(b) Purchaser shall not be entitled to make any Claim to the
extent that a provision or allowance for the matter of the
deficiency, cost or loss (whether as a specific reserve or as
a general reserve) has been made in the Financial Statements,
or the same is otherwise accounted for or reflected in the
Financial Statements.
(c) No liability shall arise in respect of any breach of this
Agreement or otherwise:
(i) if and to the extent that any Claim occurs as a result
of any legislation not in force at the date hereof, or
which takes effect retrospectively, or occurs as a
result of any increase in the rate of tax in force at
the date hereof or any change in the practice of the
relevant tax authorities;
(ii) if such liability would not have arisen but for an
act, omission or transaction carried out by Purchaser,
or persons deriving title from Purchaser after
Closing.
(d) In the event it is found that there is a breach of this
Agreement for which Seller is liable, Purchaser shall be
entitled, by way of remedy, to a reduction of the Purchase
Price as set out in Section 6.1. This remedy shall be
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exclusive, and it is specifically agreed that no remedy
whatsoever under the Finnish Sale of Goods Act (355/1987),
including (but not limited to) the right to rescind this
Agreement, shall be available to Purchaser.
(e) No reduction of the Purchase Price shall be made due to a
breach of this Agreement, unless the total amount of the
Claims, which Purchaser may make under this Agreement, in the
aggregate amounts to or exceeds One Hundred Thousand Dollars
(U.S. $100,000), in which case the reduction shall be made for
the full amount of the claim. No individual claim which is
less than Ten Thousand Dollars (U.S. $10,000) shall be taken
into account.
(f) No claim shall be brought unless notice in writing of any such
claim, accompanied by all relevant particulars thereof
specifying the nature of the breach and the amount claimed in
respect thereof, has been given to Seller within thirty (30)
days from the date Purchaser became aware of the circumstances
giving rise to a Claim, and in any event not later than twelve
(12) months from the Closing Date.
(g) No liability shall arise from any breach of this Agreement in
respect to any deficiency, cost or loss which is recoverable
under a policy of insurance in force on the Closing Date, or
which would have been recoverable had the insurance protection
level, which existed on August 11, 1999, been continued.
(h) Purchaser shall take all reasonable steps to mitigate losses
and Seller shall not be liable for any claim to the extent
Purchaser could reasonably have mitigated any cost or loss
resulting from a breach of this Agreement.
(i) When it is determined that Purchaser shall be entitled to
payment, subject to the limitations in this SECTION 6, PAYMENT
SHALL BE made directly from Seller, in immediately available
funds to the bank account(s) identified by Purchaser, within
10 days of final determination.
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6.3 Third Party Claims and Recovery
In case Purchaser becomes aware of any Third Party Claim, which could
lead to a breach of this Agreement, Purchaser shall, in order to
maintain the right to bring a Claim against Seller:
(a) as soon as reasonably practicable, but in no event later than
thirty (30) days after the date Purchaser became aware of any
circumstance giving rise to a Third Party Claim, give notice
thereof to Seller;
(b) not make any admission of liability, agreement or compromise
with any person, body or authority in relation thereto,
without obtaining the prior consent of Seller;
(c) in any action resist, defend, appeal and compromise such claim
in the best interest of Seller;
(d) give Seller, or Seller's duly authorized representatives,
reasonable access to the personnel of Purchaser and to any
relevant premises, accounts, documents and records within
their respective power, to enable Seller, or Seller's duly
authorized representatives, to examine such claim, premises,
accounts, documents and records and to take copies or
photocopies thereof.
In case a Third Party Claim would arise that could lead to a breach of
this Agreement, any negotiation, dispute or litigation relating thereto
with any third party shall be handled by Seller.
If Seller has made any payment to Purchaser as a settlement of any
claim (the "Settlement Payment") and Purchaser has the right to recover
from any third party any amount payable as a result of facts or
circumstances forming the basis of such claim, then Purchaser shall,
upon request of Seller, either assign that right to Seller or, if
Seller so directs, Purchaser shall at the direction and cost of Seller
pursue the
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said recovery and account to Seller for any monies or property
recovered. In either case, that portion of any amount recovered from
the third party which is in excess of the Settlement Payment, after
deduction of Seller's reasonable costs in pursuing said recovery, shall
be the property of Purchaser.
Notwithstanding any of the foregoing, Seller shall have no obligation
to satisfy any claim in respect of any Third Party Claim before the
matter is subject to a final non-appealable decision.
6.4 Indemnity of Purchaser
Purchaser shall as from the Closing Date indemnify, defend and hold
Seller harmless against any and all losses, damages, costs and expenses
(including reasonable attorneys' fees) actually suffered or incurred by
Seller arising out of or resulting from any breach by Purchaser of this
Agreement or from events or circumstances for which Seller does not
bear any responsibility as agreed hereunder.
7. CERTAIN UNDERTAKINGS
7.1 Confidentiality
The Parties undertake not to disclose any Confidential Information
unless (i) required to do so by law, (ii) unless required to do so by
any applicable stock exchange regulations, (iii) such disclosure is
made in connection with the Ordinary Course of Business of the Company
without breach of any statutory or contractual obligations, or (iv)
such disclosure has been consented to by the other Party.
7.2 Retiring Directors
At the next annual general meeting of the Company Purchaser shall
obtain for those Directors and Managing Directors in the Company who
have resigned or been replaced in connection with this transaction
continued coverage on a claims made
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basis until the expiration of the applicable statue of limitations for
such claims by the Company's existing Directors and Officers liability
insurance, or, failing that, grant discharge from liability for their
administration from the Closing Date to the date of their resignation
or replacement; provided, however, that the auditors of the Company in
their reports for the relevant period do not recommend against such
discharge.
8. MISCELLANEOUS
8.1 Notices
All notices, demands or other communication, which all shall be in the
English language, to or upon the respective Parties shall be deemed to
have been duly given or made when delivered by mail, facsimile,
personally or upon confirmation of receipt when delivered by an
internationally recognized express delivery service to the party in
question as follows:
If to Purchaser: Biomagnetic Technologies, Inc.
D. Scott Buchanan, President
9727 Pacific Heights Blvd.
San Diego, CA 92121-3719
U.S.A.
Facsimile #: 858-458-5698
With copies to: Brobeck, Phleger & Harrison LLP
550 West "C" Street
Suite 1300
San Diego, CA 92101
U.S.A.
Facsimile No.: (619) 234-3848
Attention: Faye H. Russell, Esq.
If to Seller: Marconi Medical Systems, Inc.
595 Miner Road
Cleveland, Ohio 44143
USA
Facsimile No.: 440 483-2452
Attention: Vice President and General Counsel
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or at such other address as the respective Party may hereafter specify
in writing to the other Party.
8.2 Schedules Incorporated
Each schedule to which reference is made herein and which is attached
hereto shall be deemed incorporated in this Agreement by such
reference.
8.3 Headings
The headings and the table of contents of this Agreement are for
convenience of reference only and shall not in any way limit or affect
the meaning or interpretation of the provisions of this Agreement.
8.4 Assignment
Neither this Agreement nor any right, interest or obligation hereunder
may be assigned by any party hereto without the prior written consent
of the other parties hereto and any attempt to do so will be void,
except that either party may assign its rights, interests or
obligations to an Affiliate. This Agreement is binding upon, inures to
the benefit of and is enforceable by the parties hereto and their
respective successors and permitted assigns.
8.5 Integration
This Agreement, and all Exhibits and Schedules attached hereto, and all
other documents delivered in connection herewith,represents the entire
understanding and agreement between the Parties with respect to the
subject matter hereof and supersedes all prior negotiations,
understandings and agreements relating to the subject matter hereof.
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8.6 Transfer Tax
The transfer taxes, if any, assessed in connection with this Agreement
shall be borne by Purchaser.
8.7 Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of Finland.
8.8 Arbitration
Any dispute, controversy or claim arising out of or relating to this
Agreement or the breach, termination or invalidity thereof shall be
finally settled by arbitration in accordance with the arbitration rules
of the Finnish Central Chamber of Commerce. The arbitration shall be
held in Helsinki and the arbitral proceedings shall be conducted in the
English language.
8.9 Amendments
Any amendment to this Agreement shall be in writing and shall have no
effect before signed by the duly authorized representatives of both
Parties.
8.10 Provisions Severable
If any part of this Agreement is held to be invalid or unenforceable,
such determination shall not invalidate any other provision of this
Agreement, however, the Parties hereto shall attempt, through
negotiations in good faith, to replace any part of this Agreement so
held to be invalid or unenforceable. The failure of the Parties to
reach an agreement on a replacement provision shall not affect the
validity of the remaining part of this Agreement.
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8.11 Publicity
Except as required by law, governmental decree, applicable stock
exchange rules, any other applicable regulations or any official
action, the contents of this Agreement shall remain secret
indefinitely. All press releases and other public relations activities
of the Parties with regard to this Agreement shall be mutually approved
by Seller and Purchaser in advance.
8.12 Counterparts of Agreement
This Agreement has been executed in two (2) identical counterparts, one
(1) for Seller and one (1) for Purchaser.
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IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement in
Cleveland, Ohio as of the day and year first above written.
"SELLER"
MARCONI MEDICAL SYSTEMS, INC.
a New York corporation
By: /s/ Christian Wik
--------------------------------
Name: Christian Wik (by proxy)
--------------------------------
Title: Attorney-at-Law
--------------------------------
"PURCHASER"
BIOMAGNETIC TECHNOLOGIES, INC.,
a California corporation
By: /s/ D. Scott Buchanan
--------------------------------
Name: D. Scott Buchanan
--------------------------------
Title: President and CEO
--------------------------------
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Schedule 3.4 (b) to Exhibit 2.1
28
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NON-COMPETITION AGREEMENT
This Agreement entered into this 21 day of December 1999 by Instrumentarium Oyj,
a corporation incorporated and existing under the laws of Finland, having its
registered office in Helsinki, Finland ("Instru"), and by Marconi Medical
Systems, Inc. (formerly known as Picker International, Inc.), a corporation
incorporated and existing under the laws of the state of New York, USA, having
its principal place of business in Cleveland, Ohio ("Marconi") (jointly referred
to as "Sellers") and Biomagnetic Technologies, Inc., a corporation incorporated
and existing under the laws of the state of California, USA, having its
principal place of business in San Diego, California ("Purchaser") (jointly
referred to as "Parties").
RECITALS:
A. Marconi and Purchaser have today entered into a share purchase agreement
(the "Share Purchase Agreement") regarding the purchase of all the shares
in Neuromag Oy; a corporation incorporated and existing under the laws of
Finland, having its registered office in Helsinki, Finland ("Company"),
subject to the conditions contained therein; and
B. Instru, SITRA and Mustekala Ky, a limited partnership incorporated under
the laws of Finland, having its principal place of business in Espoo,
Finland ("Mustekala"), on the one hand, and Marconi on the other hand
have today entered into an option exercise agreement (the "Option
Exercise Agreement") regarding the purchase by Marconi of all the shares
in Company owned by Instru, SITRA and Mustekala, totalling 1,557 shares.
THEREFORE, in consideration of the foregoing and the consideration set forth
herein, the parties hereto, agree as follows:
29
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NON-COMPETITION
1. NON-COMPETITION UNDERTAKING
Sellers hereby undertake subject to applicable Competition Laws for a
period of three (3) years from Closing not to engage themselves, without
the written consent of Purchaser, in business, anywhere in the world,
directly competing with the business of the Company as presently
conducted in the field of biomagnetic measurement equipment for measuring
naturally occurring magnetic fields produced by the human body (the
"Field"). For the avoidance of doubt, the Field shall not include
equipment for the excitation or detection of magnetic resonance in the
human body. Notwithstanding such undertaking, Sellers shall always have
the right to invest in publicly listed shares or any other publicly
listed financial instruments relating to any form of activity whatsoever.
2. COMPENSATION
If Sellers are or any of Sellers is in breach of the non-competition
undertaking under Section 1. above, which breach has not been remedied
within thirty (30) days from receipt of written notice thereof, such
Seller in breach shall, as the sole and exclusive remedy, compensate
Purchaser for the actual direct and established damage caused as a direct
result of such breach.
3. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of Finland.
4. SETTLEMENT IN GOOD FAITH
In the event of any dispute concerning this Agreement or the
interpretation of the same, it is hereby agreed that the Parties shall
use their best endeavors to settle such disputes, without recourse to
law, by means of negotiations in good
30
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faith under the spirit of fair treatment towards each other, but in the
absence of an agreement, then such disputes shall be referred to
arbitration in accordance with Section 6 hereof.
5. ARBITRATION
Any dispute arising out of or in connection with this Agreement,
including any question regarding its existence, validity or
termination, shall be resolved by arbitration as defined in Section 8.8
of the Share Purchase Agreement.
6. WHOLE AGREEMENT; AMENDMENTS
This Agreement is the whole agreement of the parties concerning the
subject matter hereof and may not be amended except in writing signed by
all parties hereto.
7. PROVISIONS AND SCOPE: ENFORCEABILITY
If any part of this Agreement or any aspect thereof, including its scope,
is held to be invalid or unenforceable such determination shall not
invalidate the Agreement as a whole; however, the parties hereto shall
attempt, through negotiations in good faith or, failing negotiations, in
arbitration to abide by the Agreement to the maximum extent provided by
law and shall replace any part or aspect of this Agreement held to be
invalid or unenforceable as to render it valid or enforceable to the
maximum extent possible.
8. CONFIDENTIALITY
The contents of this Agreement, shall remain confidential and shall not
be released to any person without all the parties' written consent.
9. COUNTERPARTS OF THE AGREEMENT
This Agreement has been executed in three (3) identical counterparts,
one (1) for Instru, one (1) for Marconi, and one (1) for Purchaser.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.
INSTRUMENTARIUM OYJ MARCONI MEDICAL SYSTEMS, INC.
- ----------------------------- -----------------------------
BIOMAGNETIC TECHNOLOGIES, INC.
- -----------------------------
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Schedule 3.4(f) to Exhibit 2.1
33
<PAGE>
ACKNOWLEDGEMENT
On this 21 day of December, 1999 Instrumentarium Oyj, a corporation incorporated
and existing under the laws of Finland, having its registered office in
Helsinki, Finland ("Instru"), Suomen Itsenaisyyden Juhlarahasto, a public fund
organized and existing under the laws of Finland, having its registered office
in Helsinki, Finland ("SITRA"), and Marconi Medical Systems, Inc. (formerly
known as Picker International, Inc.), a corporation incorporated and existing
under the laws of the state of New York, USA, having its principal place of
business in Cleveland, Ohio ("Marconi") (jointly referred to as the "Sellers"),
acknowledge the following to Biomagnetic Technologies, Inc., a corporation
incorporated and existing under the laws of the state of California, USA, having
its principal place of business in San Diego, California ("BTi") (jointly
referred to as the "Parties").
RECITALS:
A. Instru, SITRA, Mustekala Ky, a limited partnership incorporated and
existing under the laws of Finland, having its registered office in
Espoo, Finland ("Ky"), and Marconi have entered into an shareholders'
agreement on November 14, 1997 (the "Shareholders' Agreement"), regarding
the ownership of the shares owned by them in Company;
B. The Shareholders' Agreement provides Marconi with a call option entitling
Marconi to purchase from Instru, SITRA and Ky their shares in Company in
return for an option exercise price including a cash payment and a
royalty earn-out payment;
C. Instru, SITRA and Ky on the one hand, and Marconi on the other hand, have
today entered into an option exercise agreement (the "Option Exercise
Agreement") regarding the purchase by Marconi of all the shares (the
"Shares") in Company owned by Instru, SITRA and Ky, totalling 1,557
shares, in return for a purchase price and certain royalty arrangements;
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D. Marconi and BTi have today entered into a share purchase agreement (the
"Share Purchase Agreement") regarding the purchase of all the shares in
Neuromag Oy; a corporation incorporated and existing under the laws of
Finland, having its registered office in Helsinki, Finland ("Company"),
subject to the conditions contained therein;
E. Marconi and BTi have today entered into a royalty agreement (the "BTI
Royalty Agreement") regarding the payment by BTi of certain royalties to
Marconi based on the sale of certain products of Company;
F. Instru and SITRA, on the one hand, and Marconi on the other hand have
today entered into a royalty agreement (the "Marconi Royalty Agreement")
regarding the payment by Marconi of certain royalties to Instru and SITRA
based on the royalties to be paid to Marconi by BTi in accordance with
the BTi Royalty Agreement; and
G. The Sellers wish to acknowledge to BTi that, except as stated in the BTi
Royalty Agreement, BTi has no other obligations to pay any royalties to
Sellers or any of Sellers by virtue of BTi's purchase of the outstanding
shares of Company.
THEREFORE, in consideration of the foregoing and the consideration set forth
herein, the Sellers acknowledge as follows:
1. ACKNOWLEDGEMENT
1.1 Sellers acknowledge to BTi that, except as stated in the BTi Royalty
Agreement, BTi and/or Neuromag have no other obligations to pay any
royalties to Sellers or any of Sellers by virtue of BTi's purchase of the
outstanding shares of Company.
1.2 Sellers acknowledge on their own behalf that the Shares are fully
transferable to BTi and are free and clear of all restrictions on the
ability to vote, and are not subject to any claims, options, liens,
charges, or encumbrances of any kind.
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2. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of Finland.
3. COUNTERPARTS OF THE AGREEMENT
This Agreement has been executed in four (4) identical counterparts, one
(1) for Instru, one (1) for SITRA, one (1) for Marconi, and one (1) for
BTi.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.
INSTRUMENTARIUM OYJ SUOMEN ITSENAISYYDEN
JUHLARAHASTO
- ----------------------------- -----------------------------
MARCONI MEDICAL SYSTEMS, BIOMAGNETIC TECHNOLOGIES,
INC. INC.
- ----------------------------- -----------------------------
36
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Schedule 3.4(g) to Exhibit 2.1
37
<PAGE>
ROYALTY AGREEMENT
THIS ROYALTY AGREEMENT is entered into on this 21st day of December, 1999, by
and between MARCONI MEDICAL SYSTEMS, INC. (formerly known as Picker
International, Inc.), a corporation incorporated and existing under the laws of
the state of New York, USA, having its principal place of business in Cleveland,
Ohio ("Marconi")
and
BIOMAGNETIC TECHNOLOGIES, INC., a corporation incorporated and existing under
the laws of California, having its principal place of business in San Diego,
California ("BTI").
RECITALS:
A. BTI has pursuant to a Share Purchase Agreement dated December 21, 1999 agreed
to acquire from Marconi all of the issued and outstanding shares in Neuromag Oy
("Neuromag");
B. As a condition for the consummation of the transaction referred to in Recital
A., the parties have agreed to execute this Agreement.
NOW THEREFORE, the Parties (as defined below) hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, unless expressly otherwise stated or evident in the
context, the following terms shall have the following meanings, the singular
(where appropriate) shall include the plural and vice versa and references to
Schedules and Sections shall mean Schedules and Sections of this Agreement:
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1.1 "AGREEMENT" shall mean this Royalty Agreement and the
Schedules thereto.
1.2 "ANNUAL DIFFERENCE AMOUNT" shall mean the Annual Minimum Royalty
Portion minus the Annual Royalty. If the
Annual Royalty is greater than or equal to
the Annual Minimum Royalty Portion, the
Annual Difference Amount shall be zero.
1.3 "ANNUAL MINIMUM ROYALTY Shall mean an amount equal to one eighth
PORTION" (1/8) the Minimum Royalty.
1.4 "ANNUAL ROYALTY" Shall have the meaning given to it in
Section 3.1 below.
1.5 "BTI" Shall mean Biomagnetic Technologies
Inc., as further specified in the
introductory paragraph of this Agreement.
1.6 "CLOSING DATE" Shall have the meaning given to it in the
Share Purchase Agreement.
1.7 "CONFIDENTIAL INFORMATION" Shall mean any and all financial
information, trade secrets, client lists and
other proprietary business information
regarding Neuromag or BTI, which information
is not known to the general public or to
persons unaffiliated with Neuromag or BTI,
as the case may be.
1.8 "END-USER SALE PRICE" Shall mean the aggregate price at which
Products are sold, leased, or otherwise
transferred to an end-user in an arm's
length transaction, after deducting any
allowances
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expressly granted such as trade discounts,
and after deducting amounts actually paid by
Seller for sales and other taxes, freight
and associated insurance costs, and customs
or excise duties.
1.9 "INITIAL DIFFERENCE AMOUNT" Shall mean the Initial Minimum Royalty
Portion minus the sum of the Annual
Royalties for the years ending on the first
and second anniversaries of the Closing
Date. If the sum of the Annual Royalty paid
to Marconi for the years ending on the first
and second anniversaries of the Closing Date
is greater than or equal to the Initial
Minimum Royalty Portion, the Initial
Difference Amount shall be zero.
1.10 "INITIAL MINIMUM ROYALTY Shall mean an amount equal to one fourth
PORTION" (1/4) the Minimum Royalty.
1.11 "INSTRU" Shall mean Instrumentarium Oyj, a Finnish
company previously a shareholder in
Neuromag.
1.12 "MAXIMUM ROYALTY" Shall mean five million U.S. Dollars (USD
5,000,000).
1.13 "MINIMUM ROYALTY" Shall mean the two million five hundred
thousand U.S. Dollars (USD 2,500,000).
1.14 "NEUROMAG" Shall mean Neuromag Oy, a corporation
incorporated and existing under the laws of
Finland, having its registered domicile in
Helsinki, Finland.
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1.15 "PARTY" Shall mean Marconi or BTI and "PARTIES"
shall be construed accordingly.
1.16 "MARCONI" Shall mean Marconi Medical Systems, Inc., as
further specified in the introductory
paragraph of this Agreement.
1.17 "PRODUCTS" Shall mean all biomagnetic measurement
equipment for measuring naturally occurring
magnetic fields produced by the human body
including parts and accessories therefore
sold, leased or otherwise transferred by BTI
and Neuromag. Products shall not include (i)
equipment service contracts; or (ii)
separate programming or research services
provided by BTI or Neuromag. "Product" shall
be construed accordingly.
1.18 "ROYALTY" Shall mean the royalty payable by BTI to
Marconi pursuant to this Agreement.
1.19 "ROYALTY PERIOD" Shall mean the period beginning on the
Closing Date and ending on eighth (8th)
anniversary thereof.
1.20 "SHARE PURCHASE AGREEMENT" Shall mean the Share Purchase Agreement
referred to in Recital A. above.
1.21 "DISTRIBUTOR SALE PRICE" Shall mean the aggregate price at which
Products are sold, leased, or otherwise
transferred to an independent distributor in
an arm's length transaction, after deducting
any allowances expressly granted such as
trade discounts, and after deducting amounts
actually paid by Seller for sales and other
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taxes, freight and associated insurance
costs, and customs or excise duties.
1.22 "SITRA" Shall mean Suomen Itsenaisyyden
Juhlarahasto, a Finnish public fund
previously a shareholder in Neuromag.
2. ROYALTY OBLIGATION AND AMOUNT
2.1 BTI hereby irrevocably agrees to pay to Marconi royalties in the amount
of *** of the End-User Sale Price of all Products (other than Products sold
through an independent distributor) sold by BTI or Neuromag during the
Royalty Period, of which royalties Instru shall always receive thirty-five
point nine (35.9) and SITRA sixty-four point one (64.1) per cent from
Marconi. Where Products are sold through an independent distributor, BTI
hereby irrevocably agrees to pay Marconi royalties in the amount of *** of
the Distributor Sale Price of all Products sold by BTI or Neuromag during the
Royalty Period. A Product shall be deemed sold on the date that the Product
is shipped by BTI or Neuromag, as the case may be. The purchase price of
shielded rooms sold by BTI or Neuromag shall be a deduction from the End-User
Sales Price or the Distributor Sale Price, as the case may be. In case
Products are subject to revenue sharing arrangements, e.g. invoiced on a fee
per scan basis, or otherwise leased by BTI, BTI shall pay royalties on the
staggered payments as they are made. It such transaction occurs during the
term of this Agreement, the obligation of BTI to pay royalties for such
transaction shall continue notwithstanding the end of the term of this
Agreement.
2.2 Notwithstanding Section 2.1:
a) BTI's minimum royalty obligation under this Agreement shall be the
Minimum Royalty.
b) BTI's maximum royalty obligation under this Agreement shall be the
Maximum Royalty.
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[***CONFIDENTIAL TREATMENT REQUESTED]
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3. ROYALTY PAYMENT
3.1 Within sixty (60) days from each anniversary of the Closing Date, BTI shall
render a written report to Marconi (each a "Royalty Report") stating the
quantity and End User Sale Price or Distributor Sale Price (as the case may be)
of all Products sold, leased or otherwise disposed of during the one (1) year
period ending on the anniversary of the Closing Date, together with a
calculation of the amount shown therein to be due (the "Annual Royalty"). For
the year ending on:
a) the first anniversary of the Closing Date, the report shall be
accompanied by remittance in full of the Annual Royalty.
b) the second anniversary of the Closing Date, the report shall be
accompanied by remittance in full of the Annual Royalty plus the Initial
Difference Amount. For the avoidance of doubt, example calculations of the
amount due under this Section 3.1(b) are set forth in SCHEDULE 3.1(B) attached
hereto and incorporated by reference herein.
c) each of the third, fourth, fifth, sixth, seventh, and eighth
anniversaries of the Closing Date, the report shall be accompanied by remittance
in full of the Annual Royalty plus the Annual Difference Amount.
3.2. Upon payment pursuant to Section 3.1 above of aggregate amounts:
a) equal to the Minimum Royalty, BTI shall not be required to pay any
additional Annual Difference Amount.
b) equal to the Maximum Royalty, BTI shall not be required to pay any
additional Annual Royalty or Annual Difference Amount.
3.3 Upon payment pursuant to Section 3.1 of aggregate amounts equal to or
greater than the Minimum Royalty, the aggregate of the Initial Difference Amount
and the Annual Difference Amounts already paid pursuant to Section 3.1 shall be
a credit against future Annual Royalties.
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3.4 Any payment under this Agreement shall be considered made when BTI has
effected such payment, to a bank account assigned by Marconi or according to
such other instructions as may be provided from time to time in writing by
Marconi, free from any taxes, levies, bank fees and charges and the like. Any
payment under this Agreement not made when due shall be subject to interest
at the lesser of (i) *** per year; or (ii) the maximum rate allowed by law.
3.5 Marconi acknowledges that it is required to transfer the Royalties received
by Marconi from BTI hereunder to Instru and SITRA (collectively, the "Previous
Shareholders") pursuant to an arrangement between Marconi and the Previous
Shareholders (the "Previous Shareholders Royalty Agreement"). Marconi will
indemnify, defend, and hold BTI harmless against any claim asserted by the
Previous Shareholders to the extent that such claim alleges or is based upon
Marconi's failure to transfer any Royalties received by Marconi from BTI to the
Previous Shareholders pursuant to the terms of the Previous Shareholders'
Royalty Agreement.
4. SECURITY
As security for its obligations under this Agreement, BTI shall prior
to the execution of this Agreement provide Marconi with a third party guarantee
(the "Guarantee"), which shall be satisfactory to Marconi, in an amount equal to
the Initial Minimum Royalty Portion until May 22, 2002, whereupon the Guarantee
shall continue to be in force in an amount equal to the Annual Minimum Royalty
Portion until May 22, 2008, of which Guarantee a copy is attached to this
Agreement as SCHEDULE 4. In the event that Marconi has to draw down on all or a
part of the Guarantee, BTI shall immediately and in any case within thirty (30)
days upon such draw down replenish the Guarantee to the above required amount or
obtain an alternate guarantee of form substantially similar to the Guarantee in
the above required amount. The Guarantee shall include a provision whereby
Marconi has the right to transfer its rights under the guarantee to Instru
and/or SITRA. BTI's obligation to provide the foregoing Guarantee shall
terminate upon payment pursuant to Section 3.1 of all the Royalties to be paid
under this Agreement.
[***CONFIDENTIAL TREATMENT REQUESTED]
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5. REPORTS AND INSPECTIONS
5.1 It is agreed by Parties that all computations of the amounts of the Royalty
due and payable pursuant to this Agreement shall be made in accordance with
internationally recognized and generally accepted accounting principles. During
the Royalty Period and for a period of two (2) years thereafter, BTI shall
maintain complete and accurate books and records with respect to the sales of
the Products. Marconi, on its own behalf and/or on behalf of Instru and/or
SITRA, shall have right, at its sole expense, upon thirty (30) days prior
written notice, to have an independent certified public accountant conduct,
during normal business hours and not more frequently than annually, an audit of
the appropriate records of BTI for the sole purpose of confirming the accuracy
of the payments due hereunder. If such audit reveals an underpayment of five
percent (5 %) or more of the amount that should have been paid to Marconi for
the period audited, then BTI shall bear the expense of such audit. In the event
of any underpayment of the Royalty, BTI shall promptly remit to Marconi all
amounts due.
5.2 NOTICES
All notices, demands or other communication, which all shall be in the
English language, to or upon the respective Parties shall be deemed to
have been duly given or made when delivered by mail or telefax to the
party in question as follows:
If to BTI: Biomagnetic Technologies, Inc.
address: 9727 Pacific Heights Boulevard
San Diego, California 92121
telefax: 858 453-5698
attention: President and CEO
If to Marconi: Marconi Medical Systems, Inc.
address: 595 Miner Road
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Cleveland, Ohio 44143
USA
telefax: 440 473-2452
attention: Vice President, Magnetic ResonanceVice President,
MagneticResonance
with a copy to: Vice President and General Counsel
or at such other address as the respective Party may hereafter specify
in writing to the other Party.
5.3 SCHEDULES INCORPORATED
Each schedule to which reference is made herein and which is attached
hereto shall be deemed incorporated in this Agreement by such
reference.
5.4 HEADINGS
The headings and the table of contents of this Agreement are for
convenience of reference only and shall not in any way limit or affect
the meaning or interpretation of the provisions of this Agreement.
5.5 ASSIGNMENT
This Agreement and the rights and obligations specified herein shall be
binding upon and inure to the benefit of the Parties and shall not be
assignable by either Party, except that Marconi may transfer all or any
portion of its rights and obligations hereunder with full force and
effect to Instru and/or SITRA. Should BTI sell the shares or a part of
the shares owned by BTI in Neuromag or the business of Neuromag or
otherwise reorganize such business, BTI is obligated to ensure that
this Agreement be fulfilled regardless of such sale of shares or
business or reorganization.
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5.6 INTEGRATION
This Agreement represents the entire understanding and agreement
between the Parties with respect to the subject matter hereof and
supersedes all prior negotiations, understandings and agreements
relating to the subject matter hereof.
5.7 CONFIDENTIALITY
Marconi undertakes not to disclose any Confidential Information unless
(i) required to do so by law, (ii) unless required to do so by any
applicable stock exchange regulations, or (iii) such disclosure has
been consented to by BTI.
5.8 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of Finland.
5.9 ARBITRATION
Any dispute, controversy or claim arising out of or relating to this
Agreement or the breach, termination or invalidity thereof shall be
finally settled by arbitration in accordance with the arbitration rules
of the Finnish Central Chamber of Commerce. The arbitration shall be
held in Helsinki and the arbitral proceedings shall be conducted in the
English language.
5.10 AMENDMENTS
Any amendment to this Agreement shall be in writing and shall have no
effect before signed by the duly authorized representatives of both
Parties.
5.11 PROVISIONS SEVERABLE
If any part of this Agreement is held to be invalid or unenforceable,
such determination shall not invalidate any other provision of this
Agreement,
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however, the Parties hereto shall attempt, through negotiations in good
faith, to replace any part of this Agreement so held to be invalid or
unenforceable. The failure of the Parties to reach an agreement on a
replacement provision shall not affect the validity of the remaining
part of this Agreement.
5.12 PUBLICITY
Save as required by law, governmental decree, applicable stock exchange
rules, any other applicable regulations or any official action, the
contents of this Agreement shall remain secret indefinitely, except
that Marconi may disclose the contents hereof to Instru and SITRA. All
press releases and other public relations activities of the Parties
with regard to this Agreement shall be mutually approved by Seller and
Purchaser in advance.
5.13 COUNTERPARTS OF AGREEMENT
This Agreement has been executed in two (2) identical counterparts, one
(1) for BTI and one (1) for Marconi.
IN WITNESS WHEREOF, the Parties hereto have duly executed this as of the day and
year first above written.
BIOMAGNETIC TECHNOLOGIES, INC. MARCONI MEDICAL SYSTEMS, INC. PICKER
INTERNATIONAL, INC.
- ---------------------------- ----------------------------
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Schedule 3.4(i) to Exhibit 2.1
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DISTRIBUTION TRANSITION AGREEMENT
BY AND AMONG
MARCONI MEDICAL SYSTEMS, INC.
AND
BIOMAGNETIC TECHNOLOGIES, INC.
AND
NEUROMAG OY
21 day of December, 1999
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DISTRIBUTION TRANSITION AGREEMENT
This DISTRIBUTION TRANSITION AGREEMENT (this "Agreement") is entered
into as of December 21, 1999, by Marconi Medical Systems, Inc., a New York
corporation ("Marconi"), Biomagnetic Technologies, Inc., a California
corporation ("BTi"), and Neuromag Oy, a Finnish limited liability company
("Neuromag").
RECITALS
A. Whereas, Marconi and BTi have entered into a Share Purchase
Agreement of even date herewith whereby BTi agrees to acquire from Marconi one
hundred percent (100%) of the shares of Neuromag.
B. Whereas as a consequence of BTi's acquisition of Marconi's shares of
Neuromag, Marconi desires to terminate its current distribution agreement with
Neuromag concurrently with Marconi's transfer of all of the capital stock of
Neuromag to BTi.
C. Whereas Marconi and BTi both desire to create a smooth transition
process for the existing customers and prospects of Marconi; and
D. Whereas Marconi and BTi now desire to enter into this Distribution
Transition Agreement to govern this process;
NOW THEREFORE, Marconi, BTi and Neuromag hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, unless expressly otherwise
stated or evident in the context, initially capitalized terms shall have the
meanings given such terms in Appendix 1.
2. TERMS AND CONDITIONS.
2.1 TERMINATION OF THE NEUROMAG DISTRIBUTION AGREEMENT BY
MARCONI. Pursuant to Section 19 of the Old Agreement and notwithstanding any
other provision of the Old Agreement, Marconi and Neuromag agree to terminate
the Old Agreement in its entirety (to "Terminate" or the "Termination") and
further agree that the Termination shall occur on the Effective Date. Neither
BTi nor Neuromag shall incur any liability whatsoever for any Damages
suffered or incurred by Marconi from or incident to the Termination except as
specified under this Agreement. Marconi shall not incur any liability
whatsoever for any Damages suffered or incurred by BTi or Neuromag from or
incident to the Termination except as specified under this Agreement. Nothing
herein shall be construed, however, as relieving Neuromag from any obligation
or liability arising out of or connected in any way to Neuromag's performance
under the Old Agreement prior to Closing.
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2.2 CUSTOMER TURNOVER PROCESS AND COMMISSIONS.
(a) At or prior to the Closing, BTi and Marconi shall mutually
agree upon the contents of the following Schedules:
(i) Schedule 2.2(a)(i) - a list of Marconi Prospects;
(ii) Schedule 2.2(a)(ii) - a list of Joint Prospects;
and
(iii) Schedule 2.2(a)(iii) - a list of Exclusive
Neuromag Products.
(b) Marconi agrees that during the Agreement Term it will
provide sales support to BTi and its sales representatives as may be reasonably
necessary to secure, to the extent feasible, binding purchase orders for the
Products from the Marconi Prospects and to foster amicable working relationships
with the Marconi Prospects by, among other things, introducing BTi sales
representatives to key contact persons associated with the Marconi Prospects.
(c) On the Effective Date, Marconi assigns to BTi, and BTi
accepts assignment from Marconi, all of Marconi's interest in and to the Joint
Prospects and the Marconi Prospects, and any Timely Sale and Timely Revenue
Sharing Sale resulting therefrom. BTi hereby assumes all obligations and
liabilities that Marconi may have had with respect to the Marconi Prospects,
Joint Prospect and under any Timely Sale but for the assignment hereunder.
Marconi's assignment to BTi is without representation or warranty of any kind
whatsoever.
(d) With the exception of MGH, the following commissions will
be payable to Marconi on Timely Sales and Timely Revenue Sharing Sale:
(i) Commissions are payable to Marconi by BTi on
Timely Sales of Exclusive Neuromag Products to Joint Prospects. Payment in the
amount of $50,000 shall be made to Marconi by BTi for each Timely Direct Sale of
an Exclusive Neuromag Product to a Joint Prospect within the earlier of 45 days
after completion of installation of the Exclusive Neuromag Product or nine (9)
months of the Timely Direct Sale. Payment in the amount of $25,000 shall be made
to Marconi by BTi for each Timely Revenue Sharing Sale of an Exclusive Neuromag
Product to a Joint Prospect within the earlier of forty-five (45) days after
completion of installation of the Exclusive Neuromag Product or nine (9) months
of the Timely Revenue Sharing Sale.
(ii) Commissions are payable to Marconi by BTi on
Timely Sales of Products to Marconi Prospects. Payment in the amount of $100,000
shall be made to Marconi by BTi for each Timely Direct Sale to a Marconi
Prospect within the earlier of 45 days after completion of installation of the
Product or nine (9) months of the Timely Direct Sale. Payment in the amount of
$50,000 shall be made to Marconi by BTi for each Timely Revenue Sharing Sale of
Products to a Marconi Prospect within the earlier of forty-five (45) days after
the completion of installation of the Product or nine (9) months of the Timely
Revenue Sharing Sale provided that with
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respect to Exclusive Neuromag Products, no commission shall be payable under
this paragraph 2.2(d)(ii) in excess of that paid under paragraph 2.2(d)(i).
(e) Within thirty (30) days following the Effective Date and
monthly thereafter until June 30, 2000, BTi shall submit a report to Marconi,
certified as accurate by an officer of BTi, detailing the status of each Marconi
Prospect and Joint Prospect, with respect to each Timely Sale and Timely Revenue
Sharing Sale. Each report shall provide sufficient detail to allow Marconi to
determine the date of any Timely Sale and Timely Revenue Sharing Sale, and the
date of completion of the installation of any Product, all for the purposes of
determining the date when the commissions are due Marconi hereunder.
(f) With the exception of MGH and notwithstanding any other
provision of this Agreement, no commissions other than those stated in this
Section 2.2 are payable to Marconi under this Agreement.
2.3 TRANSFER OF MASSACHUSETTS GENERAL HOSPITAL (MGH) SALE.
BTi acknowledge that MGH has executed Marconi Quotation No. 3.11.98A4a for a
Vectorview 306 system and Marconi Quotation No. 3.11.98A5a for a Imedco Mu
Metal magnetically shielded room (collectively "The "Quotations"). BTi and
Marconi agree to use their commercially reasonable efforts to obtain MGH's
consent by way of novation to the assignment of Marconi's rights to BTi and
for the assumption of Marconi's obligations and liabilities by BTi under the
Quotations. Marconi's assignment of the Quotations to BTi is without
representation or warranty of any kind whatsoever. Should MGH's consent be
secured, BTi agrees to pay Marconi the sum of [***] payable upon assignment
of the Quotations to BTi and Marconi shall remit to BTi all amounts received
with respect to the Quotations less said [***]. Should MGH's consent not be
secured, the parties hereto agree that all aspects of the Old Agreement shall
remain in force for a period of time to be determined solely to enable
Marconi to performs its obligations under the Quotations. BTi acknowledges
Neuromag's prior commitment to Marconi to provide two (2) Vectorview 306
systems at Neuromag's cost as "seed units."
2.4 SERVICE OF THE NEUROMAG 122 SYSTEMS AT ALBUQUERQUE,
HEIDELBURG AND D SSELDORF. As a condition to Closing, Marconi and BTi shall
enter into the Supply Agreement the terms of which are set forth in EXHIBIT 2.4.
2.5 SERVICE AND SUPPORT OF THE VECTORVIEW SYSTEM CURRENTLY
INSTALLED AT CMAT IN UTAH. As a condition to Closing, Marconi and BTi shall
enter into the Vectorview System Service and Support Agreement the terms of
which are set forth in EXHIBIT 2.5.
2.6 DISPOSITION OF THE NEUROMAG 122 SYSTEM CURRENTLY AT UTAH
AND OWNED BY MARCONI. As a condition to Closing, Marconi and BTi shall enter
into the Neuromag 122 System Asset Purchase Agreement the terms of which are set
forth in EXHIBIT 2.6.
[***CONFIDENTIAL TREATMENT REQUESTED]
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2.7 LOAN OF SOFTWARE TO NATIONAL FOUNDATION FOR BRAIN IMAGING
(NFFBI). BTi assumes the existing agreement between Marconi and the National
Foundation for Brain Imaging .
2.8 LATE PAYMENT. In the event BTi fails to timely pay any
amount due Marconi under this Agreement, BTi agrees to pay a finance charge at
the rate of one and one-half percent (1-1/2%) per month computed from the date
each payment shall have become due. Furthermore, in any action initiated to
enforce the terms of this Agreement following BTi's default, Marconi shall
recover as part of its damages all costs, expenses, and attorney fees incurred
in connection with such action.
3. DURATION AND ASSIGNABILITY. Unless terminated sooner as provided in
this Agreement, this Agreement shall terminate on June 30, 2000 ("Agreement
Term"). Termination of this Agreement for any reason shall not relieve any of
the parties of the duties and obligations accruing to them prior to the
effective date of such termination. This Agreement and the rights hereunder are
not transferable or assignable without the prior written consent of the
non-assigning party, except to a person or entity that acquires all or
substantially all of the assets, stock or business of a party, whether by sale,
merger or otherwise.
4.INDEMNIFICATION.
4.1 MARCONI INDEMNIFICATION. Marconi shall indemnify,
defend and hold BTi and its directors, officers, employees, agents and
representatives (collectively, the "BTi Parties") harmless from and against
any and all costs, losses, claims, liabilities, fines, penalties, damages and
expenses, court costs, reasonable fees and disbursements of counsel,
consultants and expert witnesses (collectively, "Damages") incurred or
suffered by the BTi Parties as a consequence of any other liability or
obligation of Marconi not specifically assumed by BTi pursuant to this
Agreement or any Ancillary Agreement. For the purpose of this clause,
Neuromag is expressly excluded from the BTi Parties except as stipulated in
the Old Agreement (without giving effect to loss of rights arising out of the
termination of the Old Agreement).
4.2 BTI INDEMNIFICATION. BTi shall indemnify, defend and hold
Marconi and its directors, officers, employees, agents and representatives
(collectively, the "Marconi Parties") harmless from and against any and all
costs, losses, claims, liabilities, fines, penalties, damages and expenses,
court costs, reasonable fees and disbursements of counsel, consultants and
expert witnesses (collectively, ("Damages") incurred or suffered by the Marconi
Parties as a consequence of any failure to perform duly and punctually any
covenant, agreement, obligation, liability or undertaking assumed by BTi
pursuant to this Agreement or any of the Ancillary Agreements.
4.3 NEUROMAG INDEMNIFICATION. Neuromag shall indemnify, defend
and hold Marconi and its directors, officers, employees, agents and
representatives (collectively, the "Marconi Parties") harmless from and against
any and all costs, losses, claims, liabilities, fines, penalties, damages and
expenses, court costs, reasonable fees and disbursements of counsel, consultants
and expert witnesses (collectively, "Damages") incurred or suffered by the
Marconi Parties as a consequence of any failure
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to perform duly and punctually any covenant, agreement, obligation, liability or
undertaking of Neuromag whether arising under this Agreement, any Ancillary
Agreement,or as stipulated in the Old Agreement(without giving effect to loss of
rights arising out of the termination of the Old Agreement).
4.4 NOTICE AND OPPORTUNITY TO DEFEND. The indemnified party,
as the case may be, shall give the indemnifying party notice (either oral or
written) of any claim that could give rise to the indemnified party's right to
indemnification under Sections 4.1, 4.2 or 4.3 as soon as practicable after the
indemnified party's receipt of such notice. Notwithstanding any other term of
this Agreement, the indemnified party's failure to give notice in the manner
provided in this Section 4.4 shall not relieve the indemnifying party of its
indemnification obligations under this Agreement. The indemnifying party shall
have the right, at its option, to compromise or defend, at its own expense and
by its own counsel, any such matter involving the asserted liability of the
party seeking such indemnification. If the indemnifying party shall undertake to
compromise or defend any such asserted liability, the indemnifying party shall
promptly (and in any event not less than ten (10) days after receipt of the
indemnified party's original notice) notify the indemnified party in writing of
the indemnifying party's intention to do so. If the indemnifying party elects
not to compromise or defend the asserted liability, fails to notify indemnified
party's election to compromise or defend as herein provided, fails to admit its
obligation to indemnify under this Agreement with respect to the claim, or, if
in indemnified party's opinion, the claim could result in the indemnified
party's becoming subject to injunctive relief or relief other than the payment
of money damages that could materially adversely affect the ongoing business of
the indemnified party in any manner, the indemnified party shall have the right,
at its option, to pay, compromise or defend such asserted liability by its own
counsel and its reasonable costs and expenses shall be included as part of the
indemnifying party's indemnification obligation under this Agreement. If the
indemnifying party chooses to defend any claim, then (A) the indemnified party
may participate in the defense of any claim at its own expense and (B) the
indemnified party shall make available to the indemnifying party any books,
records or other documents within its control that are necessary or appropriate
for such defense. Notwithstanding anything to the contrary in this Section 4.4,
the indemnifying party shall (A) keep the indemnified party informed on a
reasonable and timely basis as to the status of the defense of such claim and
(B) conduct the defense of such claim in a prudent manner. Notwithstanding
anything to the contrary in this Section 4.4, the indemnifying party shall not
cease to defend, settle or otherwise dispose of any claim without the
indemnified party's prior written consent of the indemnified party (which
consent shall not be unreasonably withheld).
4.5 SURVIVAL OF INDEMNIFICATION OBLIGATION. Notwithstanding
any other provision of this Agreement, Marconi's, BTi's, and Neuromag's
indemnification obligations under Article 4 shall survive any termination of
this Agreement.
5. LIMITATION ON DAMAGES. No party hereto shall be liable or
responsible for any incidental, consequential, punitive or special damages
resulting from or in any way relating to the performance of any breach under
this Agreement.
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6. FORCE MAJEURE. Neither party shall be held responsible or liable
under any circumstances for any failure or delay in performance hereunder which
is caused by an act of God or any other cause beyond the reasonable control of
either party or any cause without either party's fault or negligence. If either
party is prevented from or delayed in performing any of its obligations under
this Agreement by force majeure, then that party shall give notice thereof and
shall thereupon be excused from the performance of such obligation for as long
as the circumstances of force majeure continue.
7. GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the state of New York and the United States of America,
without regard to conflicts of laws provisions of the state of New York or the
United States of America. The sole jurisdiction and venue for actions related to
the subject matter of this Agreement shall be the New York state and Unites
States of America federal courts having within their jurisdiction the Borough of
Manhattan, City of New York. Both parties consent to the jurisdiction of such
courts and agree that process may be served in the manner provided in this
Agreement for giving of notices or otherwise as allowed by New York or federal
law.
8. ARBITRATION. The parties agree to negotiate in good faith, for a
period not to exceed 30 days, to resolve any dispute, claim or controversy
arising out of or relating to this Agreement. Any dispute, claim or controversy
arising out of or relating to this Agreement (other than any dispute as to which
a party is required to act to comply with applicable legal requirements) that is
not resolved within such 30 day period shall be settled by arbitration in San
Diego, California by a panel of three arbitrators in accordance with the
commercial arbitration rules of the American Arbitration Association. Judgment
upon the award rendered by the arbitrators may be enforced in any court having
jurisdiction.
9. NOTICES. Except as expressly stated otherwise in this Agreement,
notices under this Agreement shall be in writing and shall be either personally
delivered, or sent by prepaid, registered airmail or other more expedient and
reliable means, including facsimile transmission of which receipt is
acknowledged, to the addresses set forth below.
If to BTi:
Biomagnetic Technologies, Inc.
D. Scott Buchanan, President
9727 Pacific Heights Blvd.
San Diego, CA 92121-3719
U.S.A.
Fax: (858) 458-5698
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With copies to:
Brobeck, Phleger & Harrison LLP
550 West "C" Street
Suite 1300
San Diego, CA 92101
U.S.A.
Fax: (619) 234-3848
Attention: Maria Sendra, Esq.
If to Marconi:
Marconi Medical Systems, Inc.
595 Miner Road
Cleveland, OH 44143
Fax: (440) 473-2452
Attention: Vice President and General Counsel
or at such other address as the respective party may hereafter specify in
writing to the other party.
10. HEADINGS. The headings included in this Agreement are for
convenience of reference only and shall have no legal effect.
11. INTEGRATION. This Agreement, the attached Exhibits and Schedules,
the Ancillary Agreements and all other documents delivered in connection with
this Agreement, represent the entire understanding and agreement between the
parties with respect to the subject matter hereof and supersede all prior
negotiations, understandings and agreements relating to the subject matter
hereof.
12. AMENDMENTS. Any amendment to this Agreement shall be in writing and
shall have no effect until signed by the duly authorized representatives of both
parties.
13. PROVISIONS SEVERABLE. If any provision of this Agreement is held to
be invalid or unenforceable, such determination shall not invalidate any other
provision of this Agreement; and, in such event, such provision, shall be
modified or interpreted so as to best accomplish the objective of such
unenforceable or invalid provision within the limits of applicable law or
applicable court decision and the manifest intent of the parties.
14. AUTHORITY. Each party represents and warrants that (A) it has
obtained all necessary approvals, consents and authorizations to enter into this
Agreement and to perform its obligations under this Agreement, (B) the persons
executing this Agreement on its behalf are duly authorized to do so and to bind
the party to this Agreement and (C) the execution, deliver and performance of
this Agreement does not violate any provision of its charter, bylaws or other
governing authority or conflict with any other agreement or commitment to which
it is bound.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
"MARCONI"
MARCONI MEDICAL SYSTEMS, INC.,
a New York corporation
By: ______________________________________
Name: ______________________________________
Title:______________________________________
"BTI"
BIOMAGNETIC TECHNOLOGIES, INC.,
a California corporation
By: ______________________________________
Name: ______________________________________
Title:______________________________________
"NEUROMAG"
NEUROMAG OY,
a Finnish limited liability company
By: ______________________________________
Name: ______________________________________
Title:______________________________________
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Appendix 1
Definitions
"Acquisition" shall mean BTi's receipt of ownership of all of the capital stock
of Neuromag.
"Agreement" shall have the meaning set forth in the first paragraph.
"Agreement Term" shall have the meaning set forth in Section 3.
"Ancillary Agreements" shall mean the MGH Agreement, the Supply Agreement, the
Vectorview System Service and Support Agreement, the Neuromag 122 System Asset
Purchase Agreement and the National Foundation for Brain Imaging Assumption
Agreement.
"BTi" shall mean Biomagnetic Technologies, Inc., a California corporation.
"BTi Parties" shall have the meaning set forth in Section 4.1.
"Cause" shall mean the use of commercially reasonable efforts to obtain a result
or effectuate an action.
"Closing" shall mean the date upon which both parties have signed this
Agreement.
"Damages" shall have the meaning given such term in Section 4.1.
"Direct" shall mean a Sale for cash or other valuable consideration, or through
a third party lease.
"Effective Date" shall mean the closing of the transactions contemplated by the
Share Purchase Agreement.
"Exclusive Neuromag Products" shall mean those products listed on Schedule
2.2(a)(iii).
"Exhibit" shall mean exhibits attached to this Agreement.
"Joint Prospects" shall mean the list of sites set forth on Schedule 2.2(a)(ii).
"Joint Revenue Sharing Payment" shall have the meaning set forth in Section
2.2(c)(i).
"MGH" shall mean Massachusetts General Hospital.
"Marconi" shall mean Marconi Medical Systems, Inc., a New York corporation.
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"Marconi Parties" shall have the meaning set forth in Section 4.2.
"Monthly Revenue Installment Payment" shall mean the amount of monies received
by BTi during a calendar month from either (A) a Joint Prospect for an Exclusive
Neuromag Product or (B) a Marconi Prospect for a Product.
"Neuromag Oy" or "Neuromag" shall mean Neuromag Oy, a Finnish limited liability
company.
"Old Agreement" shall mean the distribution agreement made as of February 1,
1996 by Neuromag Ltd. and Marconi.
"Marconi Prospects" shall mean the list of not more than eight sites, one such
site being MGH, set forth in Schedule 2.2(a)(i).
"Marconi Revenue Sharing Payment" shall have the meaning set forth in Section
2.2(c)(ii).
"Products" shall mean the Neuromag Exclusive Products and the products listed on
Schedule 2.2(b).
"Revenue Sharing" shall mean a Sale for which forty percent or more of the
Product purchase price will be paid by the customer from a future stream of
revenue resulting from the use of the purchased Product.
"Sale" shall mean BTi's receipt of a binding purchase order.
"Schedules" shall mean schedules attached to this Agreement.
"Terminate" or "Termination" shall have the meaning set forth in Section 2.1.
"Timely" shall mean received by BTi on or before June 30, 2000.
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Exhibit 2.4
TERMS OF SUPPLY AGREEMENT
Marconi will continue to support and service the Neuromag 122 Systems installed
at the VA Hospital Albuquerque, Heidelburg and D sseldorf for a yet to be
determined time period.
BTi will supply Marconi with parts for the Neuromag 122 Systems on the same
terms and conditions as set forth in the Old Agreement which terms and
conditions are incorporated herein by reference.
The Supply Agreement may be renewable.
BTi agrees to refrain from soliciting the service business from VA Albuquerque,
Heidelburg and D sseldorf for a period of three (3) years from the
Effective Date or such earlier time as may be permitted by Marconi.
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Utah dated April 22, 1997 and any alleged oral agreement related
thereto. BTI and Marconi shall share equally in any costs associated
with the foregoing acceptance and waiver. Notwithstanding the
foregoing, BTI's and/or Neuromag's obligation shall not exceed One
million Finmarks (1,000,000 FIM) as a right of setoff in favor of
Marconi against the payment due Neuromag upon Utah's acceptance of the
Vectorview system.
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Exhibit 2.6
PROPOSED TERMS OF NEUROMAG 122 SYSTEM ASSET PURCHASE AGREEMENT
BTi hereby purchases the Neuromag 122 System, including shielded room, presently
located at the University of Utah, from Marconi for a purchase price of
$875,000. The System and shielded room are being purchased as-is, where-is, with
all faults, and without representation or warranty of any kind whatsoever.
Payment of the purchase price will not occur until the earlier of either (A) the
sale of the Neuromag 122 System by BTi to a third party or (B) one year from the
Effective Date.
Until payment is received by Marconi in full, Marconi shall retain a purchase
money security interest in the Neuromag 122 System. BTi agrees to execute and
deliver such Security Agreement in the form set forth as Appendix 2.6(A) and
such financing statement, landlord mortgagee waiver and other documents as
Marconi may require to evidence or perfect the security interest in the System.
For a period of eighteen months following the Effective Date, Marconi agrees to
de-install the Neuromag 122 system and the magnetically shielded room and ship
them to a location in North America directed by BTi. Marconi will re-install
(i)the system and the room at a single location; or (ii) the room only. In this
regard, Marconi retains all the rights Marconi may have under certain letters by
and between the University of Utah and Marconi dated January 13, 1999 and March
25, 1999 relating to Marconi's right to receive up to $300,000 in expenses from
Utah to move the Neuromag 122 system.
Upon Closing, Marconi shall deliver to BTi a Bill of Sale for the Neuromag 122
System in the form substantially as set froth in Appendix 2.6(B).
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Appendix 2.6 (B)
BILL OF SALE
Marconi Medical Systems, Inc. in exchange for the sum of Eight Hundred
Seventy-Five Thousand Dollars ($875,000) and other valuable consideration,
payable in accordance with the terms and conditions of a certain Distribution
Transition Agreement of even date herewith, does hereby sell, assign, transfer
and set over by this instrument to Biomagnetic Technologies, Inc. (hereinafter
"Buyer"), the following described personal property to wit:
Neuromag 122 System, Serial No. 1003, including shielded room
MARCONI WARRANTS THAT, AS OF THE DATE HEREOF, THE LISTED PROPERTY OPERATES IN
ALL MATERIAL RESPECTS IN ACCORDANCE WITH ITS PUBLISHED PERFORMANCE
SPECIFICATIONS. EXCEPT FOR THE FOREGOING, THE ABOVE-LISTED PROPERTY IS SO SOLD,
ASSIGNED AND TRANSFERRED ON AN "AS-IS" "WHERE-IS" BASIS WITHOUT WARRANTY AND
WITH ALL FAULTS WHETHER OR NOT DISCLOSED. SELLER MAKES NO REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE CONDITION, QUALITY,
MERCHANTABILITY, FITNESS FOR A PARTICULAR USE, OPERATION OR PERFORMANCE OF SUCH
PROPERTY. IN NO EVENT SHALL SELLER BE LIABLE FOR INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES, HOWEVER ARISING.
Seller hereby represents and warrants to Buyer that Seller is the absolute owner
of the above-listed property, that such property is free and clear of any liens,
charges, claims, and encumbrances in favor of any person , and that Seller has
full right, power and authority to sell such property and to execute this Bill
of Sale.
IN WITNESS WHEREOF, Seller has caused this Bill of Sale to be executed on its
behalf by a duly authorized officer.
Marconi Medical Systems, Inc.
By:__________________________
Dated: _______________________
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APPENDIX 2.6 (A)
SECURITY AGREEMENT
December______, 1999
Biomagnetic Technologies, Inc., a California corporation, with principal offices
at 9727 Pacific Heights Blvd., San Diego, CA 92121 (hereinafter "Debtor"), for
valuable consideration, receipt of which is hereby acknowledged, does hereby
grant unto Marconi Medical Systems, Inc., 595 Miner Road, Highland Heights, Ohio
44143 (hereinafter "Secured Party"), a purchase money security interest in the
property described as follows: Neuromag 122 System, Serial No. 1003 including
shielded room (the "Collateral"), to secure the payment of Eight Hundred
Seventy-Five Dollars ($875,000.00) due the earlier of either a) the sale of the
collateral by Debtor to a third party, or b) December 21, 2000, and also any and
all liabilities of Debtor to Secured Party, direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising (all
hereinafter called the "Obligations").
Debtor hereby warrants and covenants that:
1. Debtor will advise the Secured Party in writing of the location of the
Collateral. Debtor will not move the Collateral without the written consent of
Secured Party. The Collateral will not become attached or affixed to real estate
in such a manner that it will become a fixture.
2. The Collateral is being acquired from Secured Party as seller of the
Collateral. This Agreement is a purchase money security agreement.
3. Debtor will pay all costs of filing this Agreement or other statements
required to perfect and continue perfected the security interest in the
Collateral.
4. Except for the security interest granted hereby, Debtor is the owner of the
Collateral, free from any prior lien, security interest or encumbrances, and
Debtor will defend the Collateral against all claims and demands of all persons
at any time claiming the same or any interest therein.
5. Debtor will not sell or otherwise transfer or encumber the Collateral without
written consent of Secured Party; will keep the Collateral in good order and
repair and will not waste or destroy the Collateral.
6. A financing statement covering the collateral will be filed in any public
offices necessary to perfect the security interest.
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7. Debtor will keep the Collateral insured at all times against loss by fire
and/or other hazards concerning which, in the judgment of the Secured Party,
insurance protection is reasonably necessary, in a company or companies
satisfactory to the Secured Party and in amounts sufficient to protect Secured
Party against loss or damage to said Collateral; that such policy or policies of
insurance will be delivered to the Secured Party, together with loss payable
clauses in favor of the Secured Party as its interest may appear, in form
satisfactory to the Secured Party.
8. At its option, Secured Party may discharge taxes, liens, or security
interests of other encumbrances at any time levies are placed on the Collateral,
may pay for insurance on the Collateral and may pay for the maintenance and
preservation of the Collateral. Debtor agrees to reimburse Secured Party on
demand for any payment made, or any expense incurred by Secured Party pursuant
to the foregoing authorization. Until default, Debtor may have possession of the
Collateral and use it in any lawful manner not inconsistent with this Agreement
and not inconsistent with any policy of insurance thereon.
9. Upon the happening of any of the following events or conditions, namely: (a)
default in the payment or performance of any of the Obligations or of any
covenant or liability contained or referred to herein or in any note evidencing
any of the Obligations, which is incorporated herein by reference in its
entirety; (b) any warranty, representation or statement made or furnished to
Secured Party by or on behalf of Debtor in connection with this Agreement or to
induce Secured Party to sell the Collateral to Debtor proving to have been false
in any material respect when made or furnished; (c) loss, theft, substantial
damage, destruction, sale or encumbrance to or of any of the Collateral, or the
making of any levy, seizure or attachment thereof or thereon; (d) dissolution,
termination of existence, insolvency, business failure, appointment of a
receiver of any part of the property of, assignment for the benefit of creditors
by, or the commencement of any proceeding under any bankruptcy or insolvency
laws by or against, Debtor or any guarantor or surety for Debtor, or if Secured
Party in good faith believes its prospect of payment or performance is impaired
or insecure at any time; thereupon, or at any time thereafter (such default not
having previously been cured) Secured Party at its option may declare all of the
obligations to be immediately due and payable and shall then have the remedies
for a secured party under the laws of the State of California, including,
without limitation thereto, the right to take possession of the Collateral, and
for that purpose Secured Party may, so far as Debtor can give authority
therefor, enter upon any premises on which the Collateral or any part thereof
may be situated and remove the same therefrom.
10. This Agreement and the security interest in the Collateral created hereby
shall terminate when the Obligations have been paid in full. No waiver by
Secured Party of any default shall be effective unless in writing nor operate as
a waiver of any other default or of the same default on a future occasion.
Secured Party is authorized to fill in any blank spaces herein and to date this
Agreement the date of commencement of de-installation of the Collateral. All
rights of Secured Party hereunder shall inure to the benefit of the successors
and assigns of Secured Party; and all obligations of Debtor shall bind the
successors and assigns of Debtor.
11. Secured Party is hereby appointed Debtor's attomey in fact to do all things
and acts necessary to perfect and to continue to perfect the security interest
in the Collateral.
12. This Agreement contains the entire agreement between the parties, and no
oral agreement shall be binding.
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BIOMAGNETIC TECHNOLOGIES, INC. MARCONI MEDICAL SYSTEMS, INC.
a California corporation a New York corporation
______________________________ _____________________________
(Signature of Debtor) (Signature of Secured Party)
By ___________________________ By __________________________
Title ________________________ Title _______________________
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Exhibit 99.1
CONTACT: D.Scott Buchanan
Aron Stern
Biomagnetic Technologies Inc.
San Diego CA, USA
(858) 453-6300
Antti Ahonen
Neuromag Oy
Helsinki, Finland
358 9 394 4510
BIOMAGNETIC TECHNOLOGIES INC. ANNOUNCES ITS COMBINATION WITH NEUROMAG OY; TO
BE KNOWN AS 4-D NEUROIMAGING
San Diego, California, December 23, 1999 -- Biomagnetic Technologies, Inc
("BTi"), (OCTBB: BMTI) is extremely pleased to announce today its combination
with Neuromag Oy.
This combination of the two world leaders in the field of Magnetic Source
Imaging (MSI) will be known as 4-D NeuroImaging. The names BTi and Neuromag
are synonymous with the great strides in MSI instrumentation that have
occurred over the last 10 years. Through collaboration with their extensive
customer bases, the companies have contributed significantly to the recent
emergence of MSI as a powerful clinical tool. While individually successful,
both companies realized that the full potential of MSI could be achieved more
rapidly by the combination of their extensive expertise in hardware and
software development for both research and clinical applications. By drawing
upon the best elements of the technology and applications experience of each
partner, 4-D NeuroImaging offers an exceptional, and heretofore unavailable,
resource for present and future MSI customers.
4-D NeuroImaging will continue the tradition of service and support that have
been hallmarks of the founding companies. Both the VectorView and the Magnes
product lines will continue to be produced and fully supported, thereby
providing the broadest set of choices for our present and future customers.
4-D NeuroImaging, with company offices in San Diego, Helsinki, Finland, and
Aachen, Germany, and strong distribution in Japan and the rest of the world,
will provide an extensive global presence.
As was the case of the founding companies, 4-D NeuroImaging is committed to
the promotion of cooperation amongst the members of its far flung and diverse
customer base to develop clinical applications, to expand the frontiers of
brain research, and to make MSI the tool of choice for functional imaging of
the human brain.
The combination of the companies was accomplished when BTi purchased 100% of
the capital stock of Neuromag Oy using debt financing as part of its ongoing
financial strategy.
"The formation of 4-D NeuroImaging will significantly enhance the combined
value of both companies, and provide the necessary critical mass in
technology, applications, distribution and customer base to accelerate the
clinical acceptance of MSI as a tool for diagnosis and treatment of
neurological and neuropsychiatric disease," commented D. Scott Buchanan,
President and CEO of BTi.
"I am very pleased to see these two principals in the field of MSI come
together in a manner that will enhance each company's capabilities.
Nueromag's success in the Asian and Research market combined with BTi's
success in the Clinical market, will allow 4-D NeuroImaging to effectively
serve all market segments worldwide," said Dr. Enrique Maso, Chairman of
BTi, now 4-D NeuroImaging.
Antti Ahonen, General Manager of Neuromag commented that "The time is right to
bring together these two pioneers of biomagnetism. 4-D NeuroImaging will
allow both companies to continue to exercise their strengths and to combine
them to accelerate the commercial and clinical acceptance of MSI."
The new company starts with a backlog of six systems and is well positioned
to capture a growing market in MSI from a position of strength.
4-D NeuroImaging, headquartered in San Diego, CA, is dedicated to the
development of Magnetic Source Imaging systems that measure magnetic fields
in the human body and assist in the diagnosis of a potentially broad range of
medical disorders. Its main products, the Magnes and VectorView systems,
provide the most complete line of equipment for examination of brain
function. More than 200 insurance companies and healthcare providers have
approved reimbursement for certain MSI procedures performed with these
systems.
This press release may contain forward-looking statements that involve risks
and uncertainties. The Company's actual results could differ materially
from those discussed here. For a complete and detailed description of these
risks and uncertainties and these transactions, please refer to the Company's
public filings with the U.S. Securities and Exchange Commission. The company
is not obligated to publicly update or revise these forward-looking
statements.
