<PAGE>

NEITHER THIS CONVERTIBLE PROMISSORY NOTE NOR ANY OF THE UNDERLYING SECURITIES
ISSUABLE HEREUNDER HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND SUCH NOTE AND UNDERLYING SECURITIES HAVE BEEN SOLD IN
RELIANCE ON THE EXEMPTION FROM REGISTRATION PROVIDED BY REGULATION S UNDER THE
ACT ("REGULATION S"). DURING THE PERIOD PRIOR TO SEPTEMBER 22, 1996 (THE
"RESTRICTED PERIOD"), THIS NOTE AND THE UNDERLYING SECURITIES MAY NOT BE OFFERED
OR SOLD, DIRECTLY OR INDIRECTLY, WITHIN THE UNITED STATES (AS DEFINED IN
REGULATION S), TO A U.S. PERSON (AS DEFINED IN REGULATION S) OR FOR THE ACCOUNT
OR BENEFIT OF A U.S. PERSON. THE PRECEDING SENTENCE SHALL HAVE NO FURTHER EFFECT
SUBSEQUENT TO THE EXPIRATION OF THE RESTRICTED PERIOD AND THEREAFTER THIS LEGEND
MAY BE REMOVED UPON PRESENTATION OF THE NOTE OR UNDERLYING SECURITIES TO THE
TRANSFER AGENT OF BIOMAGNETIC TECHNOLOGIES, INC.

THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS CONVERTIBLE PROMISSORY
NOTE HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE
OF CALIFORNIA OR ANY OTHER STATE AND THE ISSUANCE OF SUCH SECURITIES OR THE
PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES PRIOR TO
SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SUCH SECURITIES IS EXEMPT
FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE OR SUCH PROVISIONS OF THE CORPORATIONS CODE OF ANY SUCH OTHER
STATE. THE RIGHTS OF THE HOLDER OF THIS CONVERTIBLE PROMISSORY NOTE ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS
SO EXEMPT.


$3,000,000.00                                              San Diego, California
                                                                 August 13, 1996


                         BIOMAGNETIC TECHNOLOGIES, INC.
                       CONVERTIBLE ADVANCE PROMISSORY NOTE

     BIOMAGNETIC TECHNOLOGIES, INC., a California corporation (the "Company"),
for value received, hereby promises to pay to DASSESTA INTERNATIONAL S.A., a
British Virgin Islands corporation ("Holder"), at c/o Experta Administration
Ltd., Am Schanzengraben 23, CH-8002 Zurich, Switzerland, the principal amount of
Three Million Dollars (U.S.$3,000,000.00) or such lesser amount as shall


                                       -1-
<PAGE>

equal the balance outstanding of advances made by Holder to the Company
hereunder, together with interest on the unpaid amount thereof in accordance
with the terms hereof, from the date hereof until paid or converted in
accordance with the terms hereof.

     1.   CONVERTIBLE PROMISSORY NOTE ("NOTE").

          1.1  INTEREST RATE. The rate of interest hereunder ("Interest Rate")
shall equal nine percent (9%) per annum, and shall be simple interest computed
on the basis of a 365-day year for the actual number of days elapsed. The rate
of interest payable hereunder shall in no event exceed the maximum rate
permitted by law.

          1.2  ADVANCES. Advances hereunder shall be made by Holder at the
written request of both the Company's President and Chief Financial Officer in
increments of at least Five Hundred Thousand Dollars ($500,000.00), both of whom
are authorized to request advances and direct the disposition of such advances
until written notice of the revocation of such authority is received by Holder
at the address written above. Any such advance shall be conclusively presumed to
have been made to or for the benefit of the Company when made in accordance with
such requests and directions. The unpaid balance of this obligation at any time
shall be the total amounts advanced hereunder by Holder, less the amounts of
payments made thereon or for the Company, which balance may be endorsed hereon
from time to time by Holder (the "Unpaid Balance").

          1.3  PAYMENT. Subject to the provisions of Section 2 regarding
conversion of this Note, the Unpaid Balance plus all accrued but previously
unpaid interest thereon (the "Conversion Amount") shall become due and payable
in one installment on February 13, 1997 or any extension thereof as agreed to be
the Company and Holder (the "Maturity Date"). If any payment of principal or
interest on this Note shall become due on a Saturday, Sunday or a public holiday
under the laws of the State of California, such payment shall be made on the
next succeeding business day. Payment and any prepayment under Section 1.4 below
shall be made at the address of the Holder set forth above, or at such other
place as the Holder shall have designated to the Company in writing, in lawful
money of the United States of America.

          1.4  PREPAYMENT. Prepayment may be made by the Company of the entire
amount of the Unpaid Balance and all accrued but unpaid interest without penalty
at any time.


                                       -2-
<PAGE>

     2.   CONVERSION.

          2.1  CONVERSION BY THE COMPANY.

               (a)  At any time following the date of this Note and prior to
repayment hereunder, the Company, at its sole option, may convert the sum of the
Unpaid Balance of this Note plus all accrued but unpaid interest thereon ( the
"Conversion Amount") into that number of fully paid and nonassessable shares of
common stock, no par value, of the Company ("Common Stock") as is equal to the
Conversion Amount divided by $0.40, with any fraction of a share rounded down to
the next whole share of Common Stock.

               (b)  If the Company determines to convert the Conversion Amount,
the Company shall deliver to the Holder of this Note written notice of such
conversion at least ten (10) days in advance of the proposed conversion date
(the "Company Conversion Date"). The written notice shall specify (i) the
Conversion Amount (calculated as of the Company Conversion Date) and (ii) the
Company Conversion Date.

          2.2  CONVERSION BY HOLDER.

               (a)  On the earlier of: (i) the Maturity Date, (ii) immediately
prior to the occurrence of a Change of Control (as defined below) or (iii) an
Event of Default under Section 4 hereof, the Holder, at its sole option, may
convert the Conversion Amount into that number of fully paid and nonassessable
shares of Common Stock as is equal to the Conversion Amount divided by $0.40,
with any fraction of a share rounded down to the next whole share of Common
Stock.

               (b)  The Company shall give to Holder notice of a Change of
Control no later than ten (10) days prior to the anticipated occurrence of such
Change of Control. If the Holder determines to convert the Conversion Amount
under this Section 2.2, the Holder shall deliver to the Company written notice
of Holder's election to convert at least five (5) days in advance of the
proposed conversion date (the "Holder Conversion Date" and collectively, with
the Company Conversion Date, the "Conversion Date").

               2.3  TERMINATION OF RIGHTS UPON CONVERSION. Provided notice is
given in accordance with Sections 2.1 or 2.2, as the case may be, conversion
shall be deemed effective on the Conversion Date and the Holder shall have no
further rights under this Note, whether or not this Note is surrendered, and the
Holder in whose name the Common Stock shall be issuable upon such conversion
shall be deemed to have become the holder of record of the Common Stock
represented thereby. The written notices to be delivered pursuant to Sections
2.1 and 2.2 shall constitute a contract between the


                                       -3-
<PAGE>

Holder and the Company, whereby the Holder shall be deemed to subscribe for the
number of shares of Common Stock which it will be entitled to receive upon
conversion pursuant to Sections 2.1 and 2.2.

          2.4  DELIVERY OF STOCK CERTIFICATES. Within seven (7) calendar days of
the Conversion Date, the Company at its expense will issue and deliver to the
Holder a certificate or certificates evidencing the number of full shares of
Common Stock issuable to Holder upon any such conversion.

          2.5  CHANGE OF CONTROL. As used herein, "Change of Control" shall mean
(a) any consolidation of the Company with, or merger of the Company with or
into, any other person (including any individual, partnership, joint venture,
corporation, trust or group thereof) other than (i) a consolidation or merger
pursuant to which (A) the shareholders of the Company immediately prior to such
consolidation or merger own more than 50% of the outstanding securities having
power to vote in the election of directors after such consolidation or merger,
or (B) any "person" or "group" (within the meaning of Section 13(d) and Section
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
owns more than 30% of the outstanding securities having the power to vote in the
election of directors after such consolidation or merger or (ii) a consolidation
or merger by the Company with a subsidiary of the Company in which the Company
is the continuing corporation; (b) any sale, lease, transfer or conveyance of
all or substantially all of the assets of the Company; or (c) the announcement
or commencement by an "person" or "group" (with the meaning of Section 13(d) and
Section 14(d) of the Exchange Act) other than with respect to a consolidation or
merger pursuant to clause (a) above, of a BONA FIDE tender offer or exchange
offer in accordance with the rules and regulations of the Exchange Act to
purchase, or the acquisition of securities of the Company, such that after such
acquisition or proposed purchase, the acquiror "beneficially owns" or would
"beneficially own" (as defined in Rule 13d-3 under the Exchange Act) securities
of the Company representing 30% or more of the combined voting power of the
Company's then outstanding securities having power to vote in the election of
director; PROVIDED, HOWEVER, the initiation of any such activities by Holder,
directly or indirectly, shall not constitute a Change of Control within the
meaning of this Note.

          2.6  REGULATION S. In connection with the conversion of this Note
prior to the end of the Restricted Period by the Company or the Holder as
provided in this Section 2, the Holder shall be required either (a) to certify
that it is not a U.S. Person (as defined in Regulation S) and that the Note is
not being converted on behalf of a U.S. Person or (b) to provide an opinion of
counsel that the securities issuable upon conversion have been registered or
that an exemption from registration is available. Such certification shall be
contained in any notice provided by the Holder pursuant to Section 2.2 or shall
be provided in a separate letter from the Holder in the event of


                                       -4-
<PAGE>

conversion by the Company pursuant to Section 2.1. This Section 2.6 shall have
no further force and effect after the expiration of the Restricted Period.

     3.   COVENANTS OF THE COMPANY. The Company covenants and agrees that so
long as this Note shall be outstanding:

          3.1  PAYMENT OF THE NOTE. The Company will punctually pay or cause to
be paid the principal of, or interest on, this Note according to the terms
hereof.

          3.2  NOTICE OF DEFAULT. If any one or more events occur which
constitute or which, with the giving of notice or the lapse of time or both,
would constitute an Event of Default or if the Holder shall demand payment or
take any other action permitted upon the occurrence of any such Event of
Default, the Company will forthwith give notice to the Holder, specifying the
nature and status of the Event of Default or other event or of such demand or
action, as the case may be.

          3.3  PAYMENT OF OBLIGATION. The Company will pay and discharge, at or
before maturity, all its respective material obligations and liabilities,
including, without limitation, tax liabilities, except where the same may be
contested in good faith by appropriate proceedings, and will maintain in
accordance with generally accepted accounting principles, appropriate reserves
for the accrual of any of the same.

          3.4  COMPLIANCE WITH LAWS. The Company will comply in all material
respects with all applicable laws, ordinances, rules, regulations and
requirements of governmental authorities except where the necessity of
compliance is contested in good faith by appropriate proceedings or except where
the failure to so comply would not result in a material adverse effect on the
Company's business or results of operations.

     4.   EVENTS OF DEFAULT. The Holder may declare the entire amount of the
Unpaid Balance of this Note and all accrued but unpaid interest thereon
immediately due and payable or may convert this Note pursuant to Section 2
hereof, effective upon written notice to the Company as described above, if any
of the following events shall occur (each, an "Event of Default"):

          4.1  PAYMENT OF NOTE. Default in the payment of accrued interest
and/or principal due and payable under this Note when due.

          4.2  BANKRUPTCY, INSOLVENCY, ETC. COMMENCED BY THE COMPANY. If the
Company or any subsidiary of the Company:

               (a)  shall commence any proceeding or any other action relating
to it in bankruptcy or seek reorganization, arrangement, readjustment of its
debts, dissolution, liquidation, winding-up, composition or any other relief
under the United


                                       -5-
<PAGE>

States Bankruptcy Act, as amended, or under any other insolvency,
reorganization, liquidation, dissolution, arrangement, composition, readjustment
of debt or any other similar act or law, of any jurisdiction, domestic or
foreign, now or hereafter existing;

               (b)  shall admit its inability to pay its debts as they mature in
any petition or pleading in connection with any such proceeding;

               (c)  shall apply for, or consent to or acquiesce in, an
appointment of a receiver, conservator, trustee or similar officer for it or for
all or substantially all of its assets and properties;

               (d)  shall make a general assignment for the benefit of
creditors; or

               (e)  shall admit in writing its inability to pay its debts as
they mature.

          4.3  BANKRUPTCY, INSOLVENCY, ETC. COMMENCED AGAINST THE COMPANY. If
any proceedings are commenced or any other action is taken against the Company
or any subsidiary of the Company in bankruptcy or seeking reorganization,
arrangement, readjustment of its debts, dissolution, liquidation, winding-up,
composition or any other relief under the United States Bankruptcy Act, as
amended, or under any other insolvency, reorganization, liquidation,
dissolution, arrangement, composition, readjustment of debt or any other similar
act or law, of any jurisdiction, domestic or foreign, now or hereafter existing;
or a receiver, conservator, trustee or similar officer for the Company or for
all or substantially all of its assets and properties is appointed; and in each
such case, such event continues for ninety (90) days undismissed, unbounded and
undischarged.

          4.4  MONEY JUDGMENTS AGAINST THE COMPANY. A final judgment or final
judgments for the payment of money shall have been entered by any court or
courts of competent jurisdiction against the Company and remains undischarged
for a period (during which execution shall be effectively stayed) of ninety (90)
days, provided that the aggregate amount of all such judgments at any time
outstanding (to the extent not paid or to be paid, as evidenced by a written
communication to that effect from the applicable insurer, by insurance) exceeds
$50,000.

          4.5  CHANGE IN LAW. It becomes unlawful for the Company to perform or
comply with its obligations under this Note.

          4.6  REMEDIES NOT WAIVED. No course of dealing between the Company and
the Holder or any delay in exercising any rights hereunder shall operate as a
waiver by the Holder.


                                       -6-
<PAGE>

     5. MISCELLANEOUS

          5.1  TRANSFER OF NOTE. This Note shall not be transferable or
assignable in any manner and no interest shall be pledged or otherwise
encumbered by the Holder without the express written consent of the Company, and
any such attempted disposition of this Note or any portion hereof shall be of no
force or effect.

          5.2  TITLES AND SUBTITLES. The titles and subtitles used in this Note
are for convenience only and are not to be considered in construing or
interpreting this Note.

          5.3  NOTICES. Any notice required or permitted under this Note shall
be given in writing at the address set forth above for the Holder or given by
the Holder to the Company for the purpose of notice.

          5.4  ATTORNEYS' FEES. If any action at law or in equity is necessary
to enforce or interpret the terms of this Note, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and disbursements in addition to
any other relief to which such party may be entitled.

          5.5  AMENDMENTS AND WAIVERS. Other than the right to the payment of
the Unpaid Balance and all accrued but unpaid interest thereon, which may only
be amended or waived with the written consent of the Holder, any other term of
this Note may be amended and the observance of any other term of this Note may
be waived (either generally or in a particular instance and either retroactively
or prospectively), with the written consent of the Company and the Holder.

          5.6  SEVERABILITY. If one or more provisions of this Note are held to
be unenforceable under applicable law, such provision shall be excluded from
this Note and the balance of the Note shall be interpreted as if such provision
were so excluded and shall be enforceable in accordance with its terms.

          5.7  GOVERNING LAW. This Note shall be governed by and construed and
enforced in accordance with the laws of the State of California, without giving
effect to its conflicts of laws principles.

                [Remainder of This Page Intentionally Left Blank]


                                       -7-
<PAGE>

          5.8  COUNTERPARTS. This Note may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.


Date: August 13, 1996                   BIOMAGNETIC TECHNOLOGIES,
                                        INC., a California corporation

                                        By:    /s/ James V. Schumacher
                                              ---------------------------

                                        Title: Chairman, President & CEO
                                               --------------------------

ACKNOWLEDGED AND AGREED:

DASSESTA INTERNATIONAL S.A.

By: /s/ Martin P. Egli       /s/ Rainer H. Moser
    --------------------------------------------

     Name: Martin P. Egli       Rainer H. Moser
           ------------------------------------
     Its:  Pres.                V.P.
           ------------------------------------




             [SIGNATURE PAGE TO CONVERTIBLE ADVANCE PROMISSORY NOTE]


                                       -8-