-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BsJ/jD64ii52lBeMnLd70J8D5kvEei3XJ5Uk61pHGP9qW08B6EVWm8ZR8mchdRtD 8s4Gf0V0xFcgOBGrZN+QDg== 0000830656-99-000028.txt : 19991117 0000830656-99-000028.hdr.sgml : 19991117 ACCESSION NUMBER: 0000830656-99-000028 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOSTON BIOMEDICA INC CENTRAL INDEX KEY: 0000830656 STANDARD INDUSTRIAL CLASSIFICATION: IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835] IRS NUMBER: 042652826 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-21615 FILM NUMBER: 99756501 BUSINESS ADDRESS: STREET 1: 375 WEST STREET CITY: WEST BRIDGEWATER STATE: MA ZIP: 02379 BUSINESS PHONE: 5085801900 10-Q 1 10-Q Q3 1999 FOR BBI ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 1999, or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _________________ to __________________ Commission file number 000-21615 ------------ BOSTON BIOMEDICA, INC. (Exact name of Registrant as Specified in its Charter) Massachusetts 04-2652826 - ------------------------ ---------------------- (State or other (I.R.S. Employer Jurisdiction of Identification No.) Incorporation or Organization) 375 West Street, West Bridgewater, Massachusetts 02379-1040 - ------------------------ ---------------------- (Address of Principal (Zip Code) Executive Offices) Registrant's telephone number, including area code (508) 580-1900 -------------- Indicate by check whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] The number of shares outstanding of the Registrant's only class of common stock as of November 12, 1999 was 4,773,371. ================================================================================ Part I. Financial Information Item 1. Financial Statements BOSTON BIOMEDICA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
For the Three Months Ended For the Nine Months Ended September 30, September 30, ------------------------------- -------------------------------- 1999 1998 1999 1998 --------------- ------------- -------------- -------------- REVENUE: Products $ 3,649,818 $ 3,037,553 $ 10,597,343 $ 9,417,716 Services 3,830,124 3,143,406 10,866,421 9,419,169 --------------- ------------- -------------- -------------- Total revenue 7,479,942 6,180,959 21,463,764 18,836,885 COSTS AND EXPENSES: Cost of product sales 1,780,760 1,575,772 5,411,944 5,022,361 Cost of services 2,794,385 2,157,365 7,906,037 6,479,595 Research and development 891,145 526,167 2,382,206 1,542,147 Acquired research and development - 3,380,812 - 4,230,812 Selling and marketing 1,021,324 913,891 3,129,141 2,768,518 General and administrative 1,291,832 986,202 3,503,497 2,999,214 --------------- ------------- -------------- -------------- Total operating costs and expenses 7,779,446 9,540,209 22,332,825 23,042,647 Loss from operations (299,504) (3,359,250) (869,061) (4,205,762) Interest income 2,941 352 3,796 27,393 Interest expense (118,143) (15,458) (294,891) (19,600) --------------- ------------- -------------- -------------- Loss before income taxes (414,706) (3,374,356) (1,160,156) (4,197,969) Benefit from (provision for) income taxes 157,588 (2,453) 440,860 310,520 --------------- ------------- -------------- -------------- Net loss $ (257,118) $ (3,376,809) $ (719,296) $ (3,887,449) =============== ============= ============== ============== Net loss per share, basic and diluted $ (0.05) $ (0.72) $ (0.15) $ (0.84) Number of shares used to calculate net income per share Basic and diluted 4,769,003 4,665,603 4,669,217 4,650,158
See Notes to Consolidated Financial Statements 2 BOSTON BIOMEDICA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited)
September 30, December 31, 1999 1998 ------------- -------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 234,821 $ 146,978 Accounts receivable, less allowances of $873,083 in 1999 and $623,710 in 1998 5,594,365 6,086,693 Inventories 6,921,476 6,689,768 Prepaid expenses and other current assets 804,627 479,983 Deferred income taxes 963,581 847,268 ------------- -------------- Total current assets 14,518,870 14,250,690 ------------- -------------- Property and equipment, net 7,608,764 6,925,423 OTHER ASSETS: Goodwill and other intangibles, net 2,643,752 2,809,825 Deposits and other assets 84,455 96,447 ------------- -------------- 2,728,207 2,906,272 ------------- -------------- TOTAL ASSETS $ 24,855,841 $ 24,082,385 ============= ============== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 2,260,571 $ 2,369,495 Accrued compensation expenses 1,289,828 1,284,162 Other accrued expenses 911,640 795,642 Current maturities of long-term debt 15,286 15,569 Deferred revenue 29,883 690,760 ------------- -------------- Total current liabilities 4,507,208 5,155,628 ------------- -------------- LONG-TERM LIABILITIES: Long-term debt, less current maturities 6,169,188 3,988,602 Other liabilities 450,634 730,138 Deferred income taxes 154,965 139,363 STOCKHOLDERS' EQUITY: Common stock, $.01 par value; 20,000,000 shares authorized in 1999 and 1998; 4,770,153 issued and outstanding in 1999 and 4,667,816 in 1998 47,701 46,678 Additional paid-in capital 16,642,182 16,418,717 Accumulated deficit (3,116,037) (2,396,741) ------------- -------------- Total stockholders' equity 13,573,846 14,068,654 ------------- -------------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 24,855,841 $ 24,082,385 ============= ==============
See Notes to Consolidated Financial Statements 3 BOSTON BIOMEDICA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
For the Nine Months Ended September 30, ----------------------------- 1999 1998 -------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (719,296) $ (3,887,449) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and amortization 1,126,511 909,905 Provision for doubtful accounts 171,103 197,903 Other liabilities (279,504) 123,578 Deferred income taxes (100,711) (56,342) Acquired research and development - 4,230,812 Changes in operating assets and liabilities: Accounts receivable 321,225 756,695 Inventories (231,708) (1,068,408) Prepaid expenses and other current assets (324,644) (268,266) Accounts payable (108,924) 112,289 Accrued compensation and other expenses 121,664 (183,971) Deferred revenue (660,877) (447,189) -------------- ------------- Net cash (used in) provided by operating activities (685,161) 419,557 -------------- ------------- CASH FLOWS FOR INVESTING ACTIVITIES: Acquired research and development - (850,000) Payments for additions to property and equipment (1,643,779) (2,139,695) Change in deposits and other assets 11,992 19,522 Acquisitions (net of cash acquired) - (878,901) -------------- ------------- Net cash used in investing activities (1,631,787) (3,849,074) -------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from long term debt 2,191,836 883,598 Repayments of long-term debt (11,533) - Proceeds from common stock issued 224,488 89,149 -------------- ------------- Net cash provided by financing activities 2,404,791 972,747 -------------- ------------- INCREASE (DECREASE) IN CASH: 87,843 (2,456,770) Cash and cash equivalents, beginning of period 146,978 2,772,360 -------------- ------------- Cash and cash equivalents, end of period $ 234,821 $ 315,590 ============== =============
See Notes to Consolidated Financial Statements 4 BOSTON BIOMEDICA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for the interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 1999 are not necessarily indicative of the results that may be expected for the year ending December 31, 1999. For further information, refer to the consolidated financial statements and footnotes thereto included in the Annual Report on Form 10-K for the fiscal year ended December 31, 1998 for Boston Biomedica, Inc. and Subsidiaries ("the Company" or "Boston Biomedica"). Certain prior year amounts in the consolidated financial statements may have been reclassified to conform to the current year's presentation. (2) Use of Estimates In conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses for the periods presented. Such estimates include reserves for uncollectable accounts receivable as well as the net realizable value of inventories. Actual results could differ from the estimates and assumptions used by management. (3) Inventories Inventories consist of the following: September 30, December 31, 1999 1998 --------------- ---------------- Raw materials $ 2,568,441 $ 2,407,154 Work-in-process 1,849,841 1,788,399 Finished goods 2,503,194 2,494,215 --------------- ---------------- $ 6,921,476 $ 6,689,768 =============== ================ (4) Segment Reporting and Related Information (all dollar amounts in thousands) Selected summarized results for the Company's four operating segments are as follows:
Three Months Ended Sept. 30, Nine Months Ended Sept. 30, Segment revenue: 1999 1998 1999 1998 ------------- ------------ ------------- ------------- Diagnostics $ 4,465 $ 3,926 $ 12,407 $ 11,782 Clinical Laboratory Services 2,677 1,817 7,346 5,129 Laboratory Instrumentation 611 908 2,537 3,113 Other 80 - 163 - Eliminations (353) (470) (989) (1,187) ------------- ------------ ------------- ------------- Total revenue $ 7,480 $ 6,181 $ 21,464 $ 18,837 ============= ============ ============= =============
Three Months Ended Sept. 30, Nine Months Ended Sept. 30, Segment operating income (loss): 1999 1998 1999 1998 ------------- ------------ ------------- ------------- Diagnostics $ 255 $ 219 $ 515 $ 477 Clinical Laboratory Services 189 (22) 469 83 Laboratory Instrumentation (333) (149) (682) (447) Other (411) (26) (1,171) (88) Acquired R&D - (3,381) - (4,231) ------------- ------------ ------------- ------------- Total loss from operations $ (300) $ (3,359) $ (869) $ (4,206) ============= ============ ============= =============
5 BOSTON BIOMEDICA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (4) Segment Reporting and Related Information (Continued) Sept. 30, Dec. 31, Identifiable segment assets: 1999 1998 ------------- ------------ Diagnostics $ 16,747 $ 16,548 Clinical Laboratory Services 3,141 2,348 Laboratory Instrumentation 3,992 4,428 Other 976 758 ============= ============ Total assets $ 24,856 $ 24,082 ============= ============ (5) Acquired Research and Development In March 1998, the Company acquired from BioSeq, Inc.("BioSeq") the sole and exclusive worldwide right to development stage technology, including the use of BioSeq technical information, licensed processes and improvements to develop, manufacture, market and sell or sublicense products or services in the field of human in vitro immunodiagnostics. In accordance with accounting standards for purchased research and development, costs totaling $850,000 were expensed in that period. On September 30, 1998 the Company acquired the remaining common stock outstanding of BioSeq (approximately 81%). The Company's aggregate cost of acquiring all of BioSeq's equity was approximately $4,226,000, of which approximately $3,380,000 was expensed as in-process research and development. (6) Computation of Net Loss per Share Net loss per share is computed using average common stock outstanding for the periods presented. Potentially dilutive securities of 79,165 and 203,396 were not included in the computation of diluted earnings per share for the nine months ended and 145,037 and 136,554 for the three months ended September 30, 1999 and 1998, respectively. These potentially dilutive securities are not included because to do so would have been antidilutive as the Company was in a loss position for all periods presented. (7) The Amended Line of Credit Agreement Effective June 30, 1999, the Company entered into an amended revolving line of credit agreement (the "Amended Line") with its bank, increasing the facility to $10 million from $7.5 million. The Amended Line matures June 30, 2001; bears interest at the Company's option based on either the base rate plus 1/4% or LIBOR plus 2.75%; carries a facility fee of 1/4% per annum, payable quarterly; and is collateralized by substantially all of the assets (excluding real property) of the Company. Borrowings under the Amended Line are limited to commercially standard percentages of accounts receivable, inventory and equipment. The Company had approximately $863,000 available under the Amended Line as of September 30, 1999. The Amended Line contains covenants regarding the Company's total liabilities to tangible net worth ratio, minimum debt service coverage ratio, and maximum net loss. The Amended Line further provides for restrictions on the payment of dividends, incurring additional debt, and the amount of capital expenditures. (8) Changes in Securities and Use of Proceeds On August 18, 1999, the Company sold warrants to purchase 500,000 shares of the Company's common stock to Paradigm Group, L.L.C., an accredited investor, for an aggregate purchase price of $50,000. The warrant purchase was recorded as additional paid-in capital. Warrants to purchase 400,000 shares are exercisable at $4.25 per share and warrants to purchase 100,000 shares are exercisable at $5.25 per share, and the warrants expire in February 2000. Warrants to purchase a total of 75,000 shares of the Company's common stock, expiring in August 2001 and with exercise prices ranging from $4.25 to $8.00 per share, were also issued to National Securities, a registered broker-dealer. 6 BOSTON BIOMEDICA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (9) Income Taxes In accordance with SFAS 109, Accounting for Income Taxes, The Company records assets and liabilities to reflect future deductible and taxable items. On September 30, 1999 the Company's deferred tax asset, net of valuation allowances and deferred tax liabilities, was approximately $809,000. Approximately $324,000 relates to the allowance for doubtful accounts and $306,000 relates to a temporary difference created by the March 1998 Acquisition of technology from BioSeq. The Company feels that it is more likely than not that the tax asset, as reflected on the September 30, 1999 balance sheet, is realizable and therefore no valuation allowance is required at this time. 7 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition. Three Months Ended September 30, 1999 and 1998 Total revenue increased 21.0% or $1,299,000 to $7,480,000 for the three months ended September 30, 1999 from $6,181,000 in the prior year period. This increase was the result of an increase in product sales of 20.2%, or $612,000, to $3,650,000 and an increase in specialty laboratory services of 21.8%, or $687,000, to $3,830,000. The increase in product revenue was the result of strong sales of OEM panels within the Quality Control product group, and stronger diagnostic component sales. The growth in these two groups was tempered somewhat by flat Accurun (R) sales as some new products were delayed to meet customer OEM requirements. The increase in service revenue was the result of continued strong clinical laboratory testing sales from both nucleic acid (molecular) testing for HIV, Hepatitis C, and Lyme Disease and immunology testing. Gross profit increased 18.7%, or $457,000, to $2,905,000 for the current three months from $2,448,000 in the prior year period. Overall gross margin decreased to 38.8% from 39.6%. The decrease was primarily attributable to services. The gross margin on services decreased to 27.0% from 31.4%, as the Company used an aggressive pricing strategy to capture a portion of its increased clinical laboratory testing revenue. This decrease was partially offset by an improved product gross profit margin of 51.2% compared to 48.1% from the prior period, as the increased product sales were achieved at normal profit margins. Research and development expenses increased 69.4%, or $365,000, to $891,000 for the current three months from $526,000 in the prior year period. The increase is primarily the result of increased spending on development efforts in pressure cycling technology ("PCT"). Also contributing to the increase was continued spending on new molecular tests and Quality Control Products. There was an accounting charge of $3,381,000 for the quarter ended September 30, 1998 related to in-process technology as a result of the Company's $4,266,000 acquisition of BioSeq and PCT. Selling and marketing expenses increased 11.8%, or $107,000, to $1,021,000 for the current three months from $914,000 in the prior year period. This increase was primarily the result of increased spending in the areas of product promotion, and incentive compensation expense at both BBI Diagnostics and BBI Clinical Laboratories. General and administrative expenses increased 31.0%, or $306,000, to $1,292,000 for the current three months from $986,000 in the prior year period. The increase was a result of several factors: effective August 1, 1999 certain personnel costs reclassified to G&A from other expense categories as a result of the Company's reorganization; higher allowances recorded on clinical testing receivables; increased professional fees related to the legal organization of the drug discovery program; and increased business development and investor relations activities. Net interest expense was $115,000 for the current quarter compared to $15,000 in the prior year period due to an increase in long-term debt under the line of credit agreement. The Company recorded a tax benefit in both quarters based on the combined federal and state statutory rate of 38%. Nine Months Ended September 30, 1999 and 1998 Total revenue increased 13.9%, or $2,627,000, to $21,464,000 for the nine months ended September 30, 1999 from $18,837,000 in the prior year period. This increase was the result of an increase in product sales of 12.5%, or $1,180,000, to $10,597,000 and an increase in specialty laboratory services of 15.4%, or $1,447,000, to $10,866,000. The increase in product revenue is due to continued strong Accurun(R) sales as well as significant increases in diagnostic component and laboratory instrument sales. The increase in specialty laboratory services is primarily attributable to increases in clinical laboratory testing and repository services under the new NHLBI (National Heart Lung and Blood Institute) contract, partially offset by a decline in laboratory instrument services as the contract with ABX, Inc. was completed in the first quarter of 1999. 8 Gross profit increased 11.1%, or $811,000, to $8,146,000 for the current nine months from $7,335,000 in the prior year period. The gross profit margin decreased to 38.0% for the current nine months versus 38.9% in the prior year period. This decrease is due primarily to lower margins on clinical laboratory testing services and repository activities, partially offset by higher product margins. Research and development expenses increased 54.5%, or $840,000, to $2,382,000 for the current nine months from $1,542,000 in the prior year period. The increase is primarily the result of development efforts in PCT and the drug development program as well as additional spending on new molecular tests and Quality Control Products. There were two accounting charges during the nine months ended September 30, 1998. In the first quarter there was an accounting charge of $850,000 related to the acquisition of the worldwide exclusive rights to BioSeq's immunodiagnostic research and development technology. In the third quarter, the Company had a charge of $3,381,000 related to in-process research and development as a result of the Company's $4,266,000 acquisition of BioSeq. Selling and marketing expenses increased 13.0%, or $361,000, to $3,129,000 for the current nine months from $2,768,000 in the prior year period. The increase was attributable primarily to increased promotion and incentive compensation expenditures. General and administrative expenses increased 16.8%, or $504,000, to $3,503,000 for the current nine months from $2,999,000 in the prior year period. The increase was a result of several factors: effective August 1, 1999 certain personnel costs were reclassified from other expense categories to G&A as a result of the Company's reorganization; higher allowances recorded on clinical testing receivables; increased professional fees related to both the reorganization and of the legal organization of the drug discovery program; and increased business development and investor relations activities. Net interest expense of $291,000 was incurred in 1999 versus income of $8,000 for the prior year period as the Company began incurring debt in July 1998. The Company recorded a tax benefit in both quarters based on the combined federal and state statutory rate of 38%. Liquidity and Financial Condition At September 30, 1999, the Company had cash and cash equivalents of approximately $235,000 and working capital of $10,012,000. Trade accounts receivable decreased $321,000 from the prior year end balance as compared to a decrease of $757,000 for the same period last year. Inventory increased $232,000 primarily due to a higher level of Basematrix and OEM panel orders at BBI Diagnostics. However, this represents a less significant increase than the $1,068,000 increase realized last year, as the Company has focused its purchasing on more immediate production needs. The Company has financed its operations to date through cash flow from operations, borrowings from its bank and the sale of its common stock. Effective June 30, 1999, the Company expanded its revolving line of credit with its bank to $10 million from $7.5 million. The Company expects its cash flow, working capital, and available borrowings under its Amended Line to meet existing operational and capital needs for at least the next twelve months. Net cash used in operations for the nine months ended September 30, 1999 was $685,000 as compared to cash provided by operations of $420,000 in the prior year period. This decrease in cash flow was primarily attributable to the Company's step-up in research and development expenditures in 1999 and a decrease in the rate of trade receivable collections compared to the prior year. Cash used in investing activities for the nine months ended September 30, 1999 was $1,632,000 compared to $3,849,000 in the prior year period. The cash used in 1999 relates to expenditures for manufacturing, laboratory 9 and information technology equipment as well as continued improvements at the Company's Massachusetts and Maryland facilities. This represents a slower rate of spending than in 1998 as several capital projects are nearing completion. The 1998 amount also includes $850,000 for acquired research and development, and $879,000 of net cash outflow related to the BioSeq acquisition. (See Footnote 5). Cash provided by financing activities for the nine months ended September 30, 1999 was $2,405,000 compared to $973,000 in the prior year period. The increase was primarily related to the increased debt from the Company's revolving line of credit incurred to finance operating and additional working capital needs, as well as new property and equipment purchases. The Company anticipates significant capital expenditures to continue during the remainder of 1999 and 2000 as it plans to complete renovations to its manufacturing facility in Massachusetts and a new repository facility in Frederick Maryland, as well as implement a fully integrated Enterprise Resource Planning System ("ERP") at all locations. Except for purchase orders in connection with the manufacturing expansion, the Frederick facility, and the ERP System, there were no material financial commitments for capital expenditures as of September 30, 1999. Year 2000 Readiness Disclosure The following disclosure is a Year 2000 ("Y2K") readiness disclosure statement pursuant to the Year 2000 Readiness and Disclosure Act. Boston Biomedica's Year 2000 program is designed to minimize the possibility of serious Year 2000 interruption. Possible Year 2000 worst case scenarios include the interruption of significant parts of the Company's business as a result of internal business system failure or the failure of the business systems of its suppliers, distributors or customers. Any such interruption may have a material adverse impact on the future results of the Company. In 1997 the Company decided to significantly upgrade its "business systems" (all computer hardware and software used to run its businesses including its operations management, administration and financial systems). Specifications were developed for desired capabilities, including Year 2000 compliance. In 1998 the Company began assessing its Year 2000 exposure and commenced implementation of a plan to achieve Year 2000 readiness. Based on its review to date, the Company believes that its products are Year 2000 compliant. During the third quarter of 1998, after investigating several alternatives, implementation of an ERP system was started at two of the Company's four sites. The vendor has certified that the system is Year 2000 compliant. In April 1999, business systems at the other two sites were upgraded to Y2K compliant versions of their existing software at a combined cost of approximately $5,000. A task force with participants and a site leader at each Company location has reviewed all other infrastructure areas including communications systems, building security systems, and embedded technologies in areas such as laboratory instruments and manufacturing equipment. All infrastructure was found to be Y2K compliant with only minor deficiencies, which were upgraded to Y2K compliant equipment and software versions. The Company has surveyed major suppliers, distributors, and customers to determine the status and schedule for their Year 2000 compliance. To date, no significant issues have been identified, and the Company expects to complete its assessment before year end. Where it believes that a particular supplier's situation poses unacceptable risks, the Company plans to identify an alternative source. The costs of the readiness program for business systems, other infrastructure areas, and suppliers and distributors are a combination of incremental external spending and use of existing internal resources. In total, the Company expects to spend less than $150,000 to achieve readiness, of which approximately 95% has been expended to date. This amount is based on the costs to upgrade the existing business systems to Y2K compliant versions, and excludes the costs of implementing the ERP system which is being implemented for reasons beyond Y2K compliance. Milestones and implementation dates and the costs of BBI's Year 2000 readiness program are subject to change based on new circumstances that may arise or new information becoming available that may change the underlying assumptions or requirements. 10 Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements concerning the Company's financial performance and business operations. The Company wishes to caution readers of this Quarterly Report on Form 10-Q that actual results might differ materially from those projected in any forward-looking statements. Factors that could cause actual results to differ from those projected include the possibility that due to unforeseen management, financial, technical, and other difficulties, reorganization of the Company's corporate structure and management, as discussed in its July 22, 1999 Press Release, may not lead to increased profitability or R&D program acceleration. Also, the Company may not be able to develop its research and development programs into commercially successful products, or such development may take longer than currently expected. Certain of these and other factors which might cause actual results to differ materially from those projected are more fully set forth under the caption "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. 11 BOSTON BIOMEDICA, INC. Part II. Other Information Item 1. Legal Procedures Not Applicable. Item 2. Changes in Securities and Use of Proceeds. On August 18, 1999, the Company sold warrants to purchase 500,000 shares of the Company's common stock to Paradigm Group, L.L.C., an accredited investor, for an aggregate purchase price of $50,000. The warrant purchase was recorded as additional paid-in capital. Warrants to purchase 400,000 shares are exercisable at $4.25 per share and warrants to purchase 100,000 shares are exercisable at $5.25 per share, and the warrants expire in February 2000. Warrants to purchase a total of 75,000 shares of the Company's common stock, expiring in August 2001 and with exercise prices ranging from $4.25 to $8.00 per share, were also issued to National Securities, a registered broker-dealer. Item 3. Defaults Upon Senior Securities Not Applicable. Item 4. Submission of Matters to a Vote of Security Holders. The Company held its Special Meeting in Lieu of Annual Meeting of Stockholders on July 22, 1999 (the "Meeting"). A total of 4,015,460 shares, or 84%, of the Common Stock issued and outstanding as of the record date, were represented at the meeting in person or by proxy. At the meeting, four proposals were acted upon. The results of the elections were as follows: 1. Richard Schumacher and Kevin Quinlan were elected Class III Directors of the Company, to serve as such until the Year 2002 Annual Meeting of Stockholders and until their successors have been duly elected and qualified, with a minimum of 3,725,958 shares voting in favor, 289,502 votes withheld. 2. The Boston Biomedica, Inc. Employee Stock Option Plan was amended to increase the number of shares of common stock which may be issued to 2,000,000, with 2,504,106 shares voting in favor, 330,447 against, and 1,180,907 shares abstaining or not voting. 3. The Boston Biomedica, Inc. 1999 Nonqualified Stock Option Plan was adopted, with 2,495,189 shares voting in favor, 331,864 against, and 1,188,407 shares abstaining or not voting. 4. The Boston Biomedica, Inc. 1999 Employee Stock Purchase Plan was adopted, with 2,656,211 shares voting in favor, 178,842 against, and 1,180,407 shares abstaining or not voting. The terms of office of Directors Francis E. Capitanio, William R. Prather, and Calvin A. Saravis, continued after the Meeting. Item 5. Other Information Not Applicable. 12 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit No. ----------- 3.1 Amended and Restated Articles of Organization of the Company** 3.2 Amended and Restated Bylaws of the Company** 4.1 Specimen Certificate for Shares of the Company's Common Stock** 4.2 Description of Capital Stock (contained in the Restated Articles of Organization of the Company filed as Exhibit 3.1)** 4.3 Form of warrants issued in connection with warrant purchase agreement with Paradigm Group 10.1 Line of Credit agreement with BankBoston dated June 30, 1999 10.2 Agreement with Paradigm Group for the purchase of warrants dated August 18, 1999 27 Financial Data Schedule - ------------------------ ** In accordance with Rule 12b-32 under the Securities Exchange Act of 1934, as amended, reference is made to the documents previously filed with the Securities and Exchange Commission, which documents are hereby incorporated by reference. (b) Reports on Form 8-K None 13 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, thereunto duly authorized. BOSTON BIOMEDICA, INC. Date: November 15, 1999 By /S/ Kevin W. Quinlan ----------------- ------------------------ Kevin W. Quinlan, President 14 BOSTON BIOMEDICA, INC. EXHIBIT INDEX EXHIBIT INDEX - -------------
Exhibit No. Reference ----------- --------- 3.1 Amended and Restated Articles of Organization of the Company A** 3.2 Amended and Restated Bylaws of the Company A** 4.1 Specimen Certificate for Shares of the Company's Common Stock A** 4.2 Description of Capital Stock (contained in the Restated Articles of A** Organization of the Company filed as Exhibit 3.1) 4.3 Form of warrants issued in connection with warrant purchase agreement with Filed herewith Paradigm Group 10.1 Line of Credit agreement with BankBoston dated June 30, 1999 Filed herewith 10.2 Agreement with Paradigm Group for the purchase of warrants dated August 18, 1999 Filed herewith 27 Financial Data Schedule Filed herewith
- ------------------------ A Incorporated by reference to the Company's Registration Statement on Form S-1 (Registration No. 333-10759)(the "Registration Statement"). The number set forth herein is the number of the Exhibit in said registration statement. ** In accordance with Rule 12b-32 under the Securities Exchange Act of 1934, as amended, reference is made to the documents previously filed with the Securities and Exchange Commission, which documents are hereby incorporated by reference. 15 EX-27 2 FINANCIAL DATA SCHEDULE
5 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 234,821 0 6,467,448 873,083 6,921,476 14,518,870 12,223,096 (4,614,332) 24,855,841 4,507,208 6,169,188 0 0 47,701 0 24,855,841 10,597,343 21,463,764 5,411,944 22,332,825 0 0 294,891 (1,160,156) 440,860 0 0 0 0 (719,296) (0.15) (0.15)
EX-4 3 EXHIBIT 4.3 NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE, TRANSFER OR OTHER DISPOSITION OF THIS WARRANT OR SAID SHARES MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, OR (ii) AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL TO THE COMPANY, THAT AN EXEMPTION FROM REGISTRATION UNDER SAID ACT IS AVAILABLE. Warrant No. of No. P-1 STOCK PURCHASE WARRANT Shares 400,000 ------- To Subscribe for and Purchase Common Stock of BOSTON BIOMEDICA, INC. THIS CERTIFIES that, for value received, Paradigm Group, L.L.C. (the "Holder"), is entitled, upon the terms and subject to the conditions hereinafter set forth, to subscribe for and purchase from Boston Biomedica, Inc., a Massachusetts corporation (hereinafter called the "Company"), at the price hereinafter set forth in Section 2 up to 400,000 fully paid and non-assessable shares of the Company's common stock, $.01 par value per share (the "Shares"). This stock purchase warrant (the "Warrant") is issued to the Holder in connection with, and subject to the terms of, that certain Warrant Purchase Agreement dated August 18, 1999, by and between the Company and the Holder. 1. Definitions. As used herein the following term shall have the ----------- following meaning: "Act" means the Securities Act of 1933 as amended, or a similar Federal --- statute and the rules and regulations of the Commission issued under that Act, as they each may, from time to time, be in effect. 2. Purchase Rights. The purchase rights represented by this Warrant are --------------- exercisable by the Holder in whole or in part, at any time and from time to time commencing on the date hereof and ending at 5:00 p.m. on February 17, 2000. This Warrant may be exercised for Shares at a price of $4.25 per share, subject to adjustment as provided in Section 6 (the "Warrant Purchase Price"). 3. Exercise of Warrant. Subject to Section 2 above, the purchase rights ------------------- represented by this Warrant may be exercised, in whole or in part and from time to time, by the surrender of this Warrant and the duly executed Notice of Exercise (the form of which is attached as Exhibit A) at the principal office of the Company and by the payment to the Company, by wire transfer of immediately available funds, of an amount equal to the then applicable Warrant Purchase Price per share multiplied by the number of Shares then being purchased. Upon exercise, the Holder shall be entitled to receive, within a reasonable time, a certificate or certificates, issued in the Holder's name or in such name or names as the Holder may direct, for the number of Shares so purchased. The Shares so purchased shall be deemed to be issued as of the close of business on the date on which this Warrant shall have been exercised. 4. Shares to be Issued; Reservation of Shares. The Company covenants ------------------------------------------- that the Shares that may be issued upon the exercise of the purchase rights represented by this Warrant will, upon issuance, be fully paid and non-assessable, and free from all liens and charges with respect to the issue thereof. During the period within which the purchase rights represented by the Warrant may be exercised, the Company will at all times have authorized and reserved, for the purpose of issuance upon exercise of the purchase rights represented by this Warrant, a sufficient number of shares of its Common Stock to provide for the exercise of the right represented by this Warrant. 5. No Fractional Shares. No fractional shares shall be issued upon the --------------------- exercise of this Warrant. In lieu thereof, a cash payment shall be made equal to such fraction multiplied by the fair market value of such shares of Common Stock, as determined in good faith by the Company's Board of Directors. 6. Adjustments of Warrant Purchase Price and Number of Shares. If there ---------------------------------------------------------- shall be any change in the Common Stock of the Company through merger, consolidation, reorganization, recapitalization, stock dividend, stock split or other change in the corporate structure of the Company, appropriate adjustments shall be made by the Board of Directors of the Company (or if the Company is not the surviving corporation in any such transaction, the Board of Directors of the surviving corporation) in the aggregate number and kind of shares subject to this Warrant, and the number and kind of shares and the price per share then applicable to shares covered by the unexercised portion of this Warrant. 7. No Rights as Shareholders. This Warrant does not entitle the Holder ------------------------- to any voting rights or other rights as a shareholder of the Company prior to exercise of this Warrant and the payment for the Shares so purchased. Notwithstanding the foregoing, the Company agrees to transmit to the Holder such information, documents and reports as are generally distributed to holders of the capital stock of the Company concurrently with the distribution thereof to the shareholders. Upon valid exercise of this Warrant and payment for the Shares so purchased in accordance with the terms of the Warrant, the Holder or the Holder's designee, as the case may be, shall be deemed a shareholder of the Company. 8. Sale or Transfer of the Warrant; Legend. The Warrant shall not be ---------------------------------------- sold or transferred. The Shares shall not be sold or transferred unless either (i) they first shall have been registered under the Act, or (ii) the Company first shall have been furnished with an opinion of legal counsel satisfactory to the Company to the effect that such sale or transfer is exempt from the registration requirements of the Act. Each certificate representing any Warrant shall bear the legend set out on page 1 hereof. Unless the Shares have been registered under the Act, each certificate representing any Shares shall bear a legend substantially in the following form, as appropriate: THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. -2- Such Warrant and Shares may be subject to additional restrictions on transfer imposed under applicable state and federal securities law. 9. Modifications and Waivers. This Warrant may not be changed, waived, ------------------------- discharged or terminated except by an instrument in writing signed by the party against which enforcement of the same is sought. 10. Notices. Any notice, request or other document required or ------- permitted to be given or delivered to the Holder or the Company shall be delivered, or shall be sent by certified or registered mail, postage prepaid, to the Holder at its address shown on the books of the Company or to the Company at the address indicated therefor on the signature page of this Warrant, or, if different, at the principal office of the Company. 11. Loss, Theft, Destruction or Mutilation of Warrant. The Company ----------------------------------------------------- covenants with the Holder that upon its receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant or any stock certificate and, in the case of any such loss, theft or destruction, of an indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate. 12. Representations and Warranties of Holder. By accepting this -------------------------------------------- Warrant, the Holder represents and warrants that he, she or it is acquiring this Warrant and the Shares for his, her or its own account, for investment and not with a view to, or for sale in connection with, any distribution thereof or any part thereof. Holder represents and warrants that he, she or it is (a) experienced in the evaluation of businesses similar to the Company, (b) is able to fend for himself, herself or itself in the transactions contemplated by this Warrant, (c) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Company, (d) has the ability to bear the economic risks of an investment in the Company, (e) has been furnished with or has had access to such information as is specified in subparagraph (b)(2) of Rule 502 promulgated under the Act and (f) has been afforded the opportunity to ask questions of and to receive answers from the Company and to obtain any additional information necessary to make an informed investment decision with respect to an investment in the Company. 13. Binding Effect on Successors. This Warrant shall be binding upon ------------------------------ any corporation succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company's assets, and all of the obligations of the Company relating to the Shares issuable upon exercise of this Warrant shall survive the exercise and termination of this Warrant and all of the covenants and agreements of the Company shall inure to the benefit of the successors and assigns of the Holder. 14. Governing Law. This Warrant shall be construed and enforced in ------------- accordance with, and the rights of the parties shall be governed by, the laws of the Commonwealth of Massachusetts. -3- IN WITNESS WHEREOF, BOSTON BIOMEDICA, INC. has caused this Warrant to be executed under seal by its officer thereunto duly authorized. Dated: August 18, 1999 BOSTON BIOMEDICA, INC. CORPORATE SEAL By: /S/ Richard T. Schumacher ----------------------------- Richard T. Schumacher, Its President Address: 375 West Street West Bridgewater, MA 02379 #838389 v\3 - fitzgemr - hywl01!.doc_ - 11563/1 -4- EXHIBIT A NOTICE OF EXERCISE ------------------ To: BOSTON BIOMEDICA, INC. 1. The undersigned hereby elects to purchase _______ shares of Common Stock of BOSTON BIOMEDICA, INC. (the "Company") pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full. 2. Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name or names as are specified below. 3. The undersigned represents and warrants as follows (the following applies only in the event said shares have not been registered under the Securities Act of 1933, as amended): The undersigned is purchasing or acquiring the aforesaid shares of Common Stock for its own account for investment and not with a present view to, or for sale in connection with, any distribution thereof in violation of the Act. The undersigned represents and warrants that the undersigned: (a) is experienced in the evaluation of businesses similar to the Company, (b) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Company, (c) has the ability to bear the economic risks of an investment in the Company, (d) has been furnished with or has had access to such information as is specified in subparagraph (b)(2) of Rule 502 promulgated under the Act and has carefully reviewed and understood such information, (e) has been afforded the opportunity to ask questions of and to receive answers from the Company and to obtain any additional information necessary to make an informed investment decision with respect to an investment in the Company, and (f) is an "Accredited Investor" as such term is defined in subparagraph (a) of Rule 501 promulgated under the Act. 4. In the event of partial exercise, please re-issue an appropriate Warrant exercisable into the remaining shares. ------------------------------- (Name) ------------------------------- (Address) ------------------------------- (Signature) ------------------------------ (Date) #838389 v\2 - fitzgemr - hywl02!.doc_ - 11563/1 -5- NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE, TRANSFER OR OTHER DISPOSITION OF THIS WARRANT OR SAID SHARES MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, OR (ii) AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL TO THE COMPANY, THAT AN EXEMPTION FROM REGISTRATION UNDER SAID ACT IS AVAILABLE. Warrant No. of No. P-2 STOCK PURCHASE WARRANT Shares 100,000 ------- To Subscribe for and Purchase Common Stock of BOSTON BIOMEDICA, INC. THIS CERTIFIES that, for value received, Paradigm Group, L.L.C. (the "Holder"), is entitled, upon the terms and subject to the conditions hereinafter set forth, to subscribe for and purchase from Boston Biomedica, Inc., a Massachusetts corporation (hereinafter called the "Company"), at the price hereinafter set forth in Section 2 up to 100,000 fully paid and non-assessable shares of the Company's common stock, $.01 par value per share (the "Shares"). This stock purchase warrant (the "Warrant") is issued to the Holder in connection with, and subject to the terms of, that certain Warrant Purchase Agreement dated August 18, 1999, by and between the Company and the Holder. 1. Definitions. As used herein the following term shall have the ----------- following meaning: "Act" means the Securities Act of 1933 as amended, or a similar Federal --- statute and the rules and regulations of the Commission issued under that Act, as they each may, from time to time, be in effect. 2. Purchase Rights. The purchase rights represented by this Warrant are --------------- exercisable by the Holder in whole or in part, at any time and from time to time commencing on the date hereof and ending at 5:00 p.m. on February 17, 2000. This Warrant may be exercised for Shares at a price of $5.25 per share, subject to adjustment as provided in Section 6 (the "Warrant Purchase Price"). 3. Exercise of Warrant. Subject to Section 2 above, the purchase rights ------------------- represented by this Warrant may be exercised, in whole or in part and from time to time, by the surrender of this Warrant and the duly executed Notice of Exercise (the form of which is attached as Exhibit A) at the principal office of the Company and by the payment to the Company, by wire transfer of immediately available funds, of an amount equal to the then applicable Warrant Purchase Price per share multiplied by the number of Shares then being purchased. Upon exercise, the Holder shall be entitled to receive, within a reasonable time, a certificate or certificates, issued in the Holder's name or in such name or names as the Holder may direct, for the number of Shares so purchased. The Shares so purchased shall be deemed to be issued as of the close of business on the date on which this Warrant shall have been exercised. 4. Shares to be Issued; Reservation of Shares. The Company covenants ------------------------------------------- that the Shares that may be issued upon the exercise of the purchase rights represented by this Warrant will, upon issuance, be fully paid and non-assessable, and free from all liens and charges with respect to the issue thereof. During the period within which the purchase rights represented by the Warrant may be exercised, the Company will at all times have authorized and reserved, for the purpose of issuance upon exercise of the purchase rights represented by this Warrant, a sufficient number of shares of its Common Stock to provide for the exercise of the right represented by this Warrant. 5. No Fractional Shares. No fractional shares shall be issued upon the --------------------- exercise of this Warrant. In lieu thereof, a cash payment shall be made equal to such fraction multiplied by the fair market value of such shares of Common Stock, as determined in good faith by the Company's Board of Directors. 6. Adjustments of Warrant Purchase Price and Number of Shares. If there ---------------------------------------------------------- shall be any change in the Common Stock of the Company through merger, consolidation, reorganization, recapitalization, stock dividend, stock split or other change in the corporate structure of the Company, appropriate adjustments shall be made by the Board of Directors of the Company (or if the Company is not the surviving corporation in any such transaction, the Board of Directors of the surviving corporation) in the aggregate number and kind of shares subject to this Warrant, and the number and kind of shares and the price per share then applicable to shares covered by the unexercised portion of this Warrant. 7. No Rights as Shareholders. This Warrant does not entitle the Holder ------------------------- to any voting rights or other rights as a shareholder of the Company prior to exercise of this Warrant and the payment for the Shares so purchased. Notwithstanding the foregoing, the Company agrees to transmit to the Holder such information, documents and reports as are generally distributed to holders of the capital stock of the Company concurrently with the distribution thereof to the shareholders. Upon valid exercise of this Warrant and payment for the Shares so purchased in accordance with the terms of the Warrant, the Holder or the Holder's designee, as the case may be, shall be deemed a shareholder of the Company. 8. Sale or Transfer of the Warrant; Legend. The Warrant shall not be ---------------------------------------- sold or transferred. The Shares shall not be sold or transferred unless either (i) they first shall have been registered under the Act, or (ii) the Company first shall have been furnished with an opinion of legal counsel satisfactory to the Company to the effect that such sale or transfer is exempt from the registration requirements of the Act. Each certificate representing any Warrant shall bear the legend set out on page 1 hereof. Unless the Shares have been registered under the Act, each certificate representing any Shares shall bear a legend substantially in the following form, as appropriate: THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. -2- Such Warrant and Shares may be subject to additional restrictions on transfer imposed under applicable state and federal securities law. 9. Modifications and Waivers. This Warrant may not be changed, waived, ------------------------- discharged or terminated except by an instrument in writing signed by the party against which enforcement of the same is sought. 10. Notices. Any notice, request or other document required or ------- permitted to be given or delivered to the Holder or the Company shall be delivered, or shall be sent by certified or registered mail, postage prepaid, to the Holder at its address shown on the books of the Company or to the Company at the address indicated therefor on the signature page of this Warrant, or, if different, at the principal office of the Company. 11. Loss, Theft, Destruction or Mutilation of Warrant. The Company ----------------------------------------------------- covenants with the Holder that upon its receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant or any stock certificate and, in the case of any such loss, theft or destruction, of an indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate. 12. Representations and Warranties of Holder. By accepting this -------------------------------------------- Warrant, the Holder represents and warrants that he, she or it is acquiring this Warrant and the Shares for his, her or its own account, for investment and not with a view to, or for sale in connection with, any distribution thereof or any part thereof. Holder represents and warrants that he, she or it is (a) experienced in the evaluation of businesses similar to the Company, (b) is able to fend for himself, herself or itself in the transactions contemplated by this Warrant, (c) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Company, (d) has the ability to bear the economic risks of an investment in the Company, (e) has been furnished with or has had access to such information as is specified in subparagraph (b)(2) of Rule 502 promulgated under the Act and (f) has been afforded the opportunity to ask questions of and to receive answers from the Company and to obtain any additional information necessary to make an informed investment decision with respect to an investment in the Company. 13. Binding Effect on Successors. This Warrant shall be binding upon ------------------------------ any corporation succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company's assets, and all of the obligations of the Company relating to the Shares issuable upon exercise of this Warrant shall survive the exercise and termination of this Warrant and all of the covenants and agreements of the Company shall inure to the benefit of the successors and assigns of the Holder. 14. Governing Law. This Warrant shall be construed and enforced in ------------- accordance with, and the rights of the parties shall be governed by, the laws of the Commonwealth of Massachusetts. -3- IN WITNESS WHEREOF, BOSTON BIOMEDICA, INC. has caused this Warrant to be executed under seal by its officer thereunto duly authorized. Dated: August 18, 1999 BOSTON BIOMEDICA, INC. CORPORATE SEAL By: /S/ Richard T. Schumacher ----------------------------- Richard T. Schumacher, Its President Address: 375 West Street West Bridgewater, MA 02379 #838491 v\3 - fitzgemr - hyzf01!.doc_ - 11563/1 -4- EXHIBIT A NOTICE OF EXERCISE ------------------ To: BOSTON BIOMEDICA, INC. 1. The undersigned hereby elects to purchase _______ shares of Common Stock of BOSTON BIOMEDICA, INC. (the "Company") pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full. 2. Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name or names as are specified below. 3. The undersigned represents and warrants as follows (the following applies only in the event said shares have not been registered under the Securities Act of 1933, as amended): The undersigned is purchasing or acquiring the aforesaid shares of Common Stock for its own account for investment and not with a present view to, or for sale in connection with, any distribution thereof in violation of the Act. The undersigned represents and warrants that the undersigned: (a) is experienced in the evaluation of businesses similar to the Company, (b) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Company, (c) has the ability to bear the economic risks of an investment in the Company, (d) has been furnished with or has had access to such information as is specified in subparagraph (b)(2) of Rule 502 promulgated under the Act and has carefully reviewed and understood such information, (e) has been afforded the opportunity to ask questions of and to receive answers from the Company and to obtain any additional information necessary to make an informed investment decision with respect to an investment in the Company, and (f) is an "Accredited Investor" as such term is defined in subparagraph (a) of Rule 501 promulgated under the Act. 4. In the event of partial exercise, please re-issue an appropriate Warrant exercisable into the remaining shares. ------------------------------- (Name) ------------------------------- (Address) ------------------------------- (Signature) ------------------------------ (Date) #838491 v\3 - fitzgemr - hyzf03!.doc_ - 11563/1 -5- NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE, TRANSFER OR OTHER DISPOSITION OF THIS WARRANT OR SAID SHARES MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, OR (ii) AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL TO THE COMPANY, THAT AN EXEMPTION FROM REGISTRATION UNDER SAID ACT IS AVAILABLE. Warrant No. of No. N-2__ STOCK PURCHASE WARRANT Shares 40,000 ------ To Subscribe for and Purchase Common Stock of BOSTON BIOMEDICA, INC. THIS CERTIFIES that, for value received, National Securities (the "Holder"), is entitled, upon the terms and subject to the conditions hereinafter set forth, to subscribe for and purchase from Boston Biomedica, Inc., a Massachusetts corporation (hereinafter called the "Company"), at the price hereinafter set forth in Section 2 up to 40,000 fully paid and non-assessable shares of the Company's common stock, $.01 par value per share (the "Shares"), 1. Definitions. As used herein the following term shall have the ----------- following meaning: "Act" means the Securities Act of 1933 as amended, or a similar Federal --- statute and the rules and regulations of the Commission issued under that Act, as they each may, from time to time, be in effect. 2. Purchase Rights. Reference is made to that certain Warrant Purchase --------------- Agreement dated August 18, 1999 by and between the Company and Paradigm Group L.L.C. (the "Investor") and the related warrant to purchase 400,000 shares of the Company's Common Stock (the "$4.25 Warrant") and the related warrant to purchase 100,000 shares of the Company's Common Stock (the "$5.25 Warrant) (the $4.25 Warrant and the $5.25 Warrant are collectively referred to as the "Warrants"). The purchase rights represented by this Warrant may be exercised by the Holder in whole or in part only at such time as the $4.25 Warrant has been exercised by the Investor and then from time to time thereafter and ending at 5:00 p.m. on August 15, 2001, but this Warrant may be exercised during such time only for that percentage of the 40,000 Shares equal to the same percentage of the 400,000 shares for which the Investor has exercised its $4.25 Warrant. If and whenever the $4.25 Warrant has been exercised by the Investor, the Company will provide notice of such exercise to the Holder within ten (10) days of such exercise. This Warrant may be exercised for Shares at a price of $4.25 per share, subject to the foregoing and to adjustment as provided in Section 6 (the "Warrant Purchase Price"). 3. Exercise of Warrant. Subject to Section 2 above, the purchase rights ------------------- represented by this Warrant may be exercised, in whole or in part and from time to time, by the surrender of this Warrant and the duly executed Notice of Exercise (the form of which is attached as Exhibit A) at the principal office of the Company and by the payment to the Company, by wire transfer of immediately available funds, of an amount equal to the then applicable Warrant Purchase Price per share multiplied by the number of Shares then being purchased. Upon exercise, the Holder shall be entitled to receive, within a reasonable time, a certificate or certificates issued in the Holder's name for the number of Shares so purchased. The Shares so purchased shall be deemed to be issued as of the close of business on the date on which this Warrant shall have been exercised. 4. Shares to be Issued; Reservation of Shares. The Company covenants ------------------------------------------- that the Shares that may be issued upon the exercise of the purchase rights represented by this Warrant will, upon issuance, be fully paid and non-assessable, and free from all liens and charges with respect to the issue thereof. During the period within which the purchase rights represented by the Warrant may be exercised, the Company will at all times have authorized and reserved, for the purpose of issuance upon exercise of the purchase rights represented by this Warrant, a sufficient number of shares of its Common Stock to provide for the exercise of the right represented by this Warrant. 5. No Fractional Shares. No fractional shares shall be issued upon the --------------------- exercise of this Warrant. In lieu thereof, a cash payment shall be made equal to such fraction multiplied by the fair market value of such shares of Common Stock, as determined in good faith by the Company's Board of Directors. 6. Adjustments of Warrant Purchase Price and Number of Shares. If there ---------------------------------------------------------- shall be any change in the Common Stock of the Company through merger, consolidation, reorganization, recapitalization, stock dividend, stock split or other change in the corporate structure of the Company, appropriate adjustments shall be made by the Board of Directors of the Company (or if the Company is not the surviving corporation in any such transaction, the Board of Directors of the surviving corporation) in the aggregate number and kind of shares subject to this Warrant, and the number and kind of shares and the price per share then applicable to shares covered by the unexercised portion of this Warrant. 7. No Rights as Shareholders. This Warrant does not entitle the Holder ------------------------- to any voting rights or other rights as a shareholder of the Company prior to exercise of this Warrant and the payment for the Shares so purchased. Notwithstanding the foregoing, the Company agrees to transmit to the Holder such information, documents and reports as are generally distributed to holders of the capital stock of the Company concurrently with the distribution thereof to the shareholders. Upon valid exercise of this Warrant and payment for the Shares so purchased in accordance with the terms of the Warrant, the Holder or the Holder's designee, as the case may be, shall be deemed a shareholder of the Company. 8. Sale or Transfer of the Warrant; Legend. The Warrant and the Shares ---------------------------------------- shall not be sold or transferred unless either (i) they first shall have been registered under the Act, or (ii) the Company first shall have been furnished with an opinion of legal counsel satisfactory to the Company to the effect that such sale or transfer is exempt from the registration requirements of the Act. Each certificate representing any Warrant shall bear the legend set out on page 1 hereof. Each certificate representing any Shares shall bear a legend substantially in the following form, as appropriate: THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN -2- CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. Such Warrant and Shares may be subject to additional restrictions on transfer imposed under applicable state and federal securities law. 9. REGISTRATION RIGHTS ------------------- 9.1 Piggyback Registrations. (a) If at any time or times within two (2) years after the date hereof, the Company shall determine to register any of its securities under the Act and in connection therewith the Company may lawfully register any of the Shares, the Company will promptly give written notice thereof to the Holder. Upon the written request of the Holder within thirty (30) days after receipt of any such notice from the Company, the Company will, except as herein provided, cause all Shares which the Holder has requested to be registered to be included in such Registration Statement, all to the extent requisite to permit the sale or other disposition of the Shares. However nothing herein shall prevent the Company from at any time abandoning or delaying any registration. (b) If the Company determines not to proceed with a registration after the Registration Statement has been filed with the Commission and the Company's decision not to proceed is primarily based upon the anticipated public offering price of the securities to be sold by the Company, upon request of the Holder who has requested registration hereunder, the Company shall promptly complete the registration for the benefit of those selling security holders who indicate a desire to complete the registration and who agree to bear all expenses incurred by the Company as the result of such registration after the Company has decided not to proceed. (c) If any registration pursuant to this Section 9.1 shall be underwritten in whole or in part, the Company may require that the Shares requested for inclusion pursuant to this Section 9.1 be included in the underwriting on the same terms and conditions as the securities otherwise being sold through the underwriters. In the event that the Shares requested for inclusion pursuant to this Section 9.1 would constitute more than 25% of the total number of shares to be included in a proposed underwritten public offering, and if in the good faith judgment of the managing underwriter of such public offering the inclusion of all of the Shares originally covered by a request for registration would reduce the number of shares to be offered by the Company or interfere with the successful marketing of the shares of stock offered by the Company, then the number of Shares otherwise to be included in the underwritten public offering may be reduced. -3- 9.2 Registration Procedures. If and whenever the Company is required by the provisions of Sections 9.1 to effect the registration of Shares under the Act, the Company will: (a) prepare and file with the Commission a Registration Statement with respect to such securities, and use its best efforts to cause such Registration Statement to become and remain effective for such period as may be reasonably necessary to effect the sale of such securities, not to exceed nine (9) months; (b) prepare and file with the Commission such amendments to such Registration Statement and supplements to the prospectus contained therein as may be necessary to keep such Registration Statement effective for such period as may be reasonably necessary to effect the sale of such Shares, not to exceed nine (9) months; (c) furnish to the Holder participating in such registration and to the underwriters of the securities being registered such reasonable number of copies of the Registration Statement, preliminary prospectus, final prospectus and such other documents as such underwriters may reasonably request in order to facilitate the public offering of such securities; (d) use its best efforts to register or qualify the securities covered by such Registration Statement under the state securities or blue sky laws of such jurisdictions as such participating Holder may reasonably request within twenty (20) days following the original filing of such Registration Statement, except that the Company shall not for any purpose be required to execute a general consent to service of process or to qualify to do business as a foreign corporation in any jurisdiction wherein it is not so qualified; (e) notify the Holder participating in such registration, promptly after it shall receive notice thereof, of the time when such Registration Statement has become effective or a supplement to any prospectus forming a part of such registration statement has been filed; (f) notify the Holder promptly of any request by the Commission for the amending or supplementing of such Registration Statement or prospectus or for additional information; (g) prepare and file with the Commission, promptly upon the request of the Holder, any amendments or supplements to such Registration Statement or prospectus which, in the opinion of counsel for such Holder (and concurred in by counsel for the Company), is required under the Act or the rules and regulations thereunder in connection with the distribution of the Shares by such Holder; (h) prepare and promptly file with the Commission and promptly notify such Holder of the filing of such amendment or supplement to such Registration Statement -4- or prospectus as may be necessary to correct any statements or omissions if, at the time when a prospectus relating to such securities is required to be delivered under the Act, any event shall have occurred as the result of which any such prospectus or any other prospectus as then in effect would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading; and (i) advise such Holder, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for that purpose and promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued. 9.3 Expenses. With respect to each inclusion of Shares in a Registration Statement pursuant to Section 9.1 hereof, all fees, costs and expenses of and incidental to such registration, inclusion and public offering (as specified in paragraph (b) below) in connection therewith shall be borne by the Company, other than the fees and costs of counsel to the Holder, which fees and costs shall be borne by the Holder; and provided, however, that any security holders participating in such registration shall bear their pro rata share of (i) the underwriting discount and commissions and transfer taxes, and (ii) the expense of any special audit of the Company's financial statements if the notice requesting registration does not permit use of existing or contemplated audited statements. 9.4 Indemnification. (a) The Company will indemnify and hold harmless each Holder whose Shares are included in a Registration Statement pursuant to the provisions of this Section 9 and any underwriter (as defined in the Act) for such Holder and each person, if any, who controls such Investor or such underwriter within the meaning of the Act, from and against, and will reimburse such Investor and each such underwriter and controlling person with respect to, any and all loss, damage, liability, cost and expense to which such Investor or any such underwriter or controlling person may become subject under the Act or otherwise, insofar as such losses, damages, liabilities, costs or expenses are caused by any untrue statement or alleged untrue statement of any material fact contained in such Registration Statement, any prospectus contained therein or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading; provided, however, that the Company will not be liable in any such case to the extent that any such loss, damage, liability, cost or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such Holder, such underwriter or such controlling person in writing specifically for use in the preparation thereof. -5- (b) The Holder whose Shares are included in a Registration Statement pursuant to the provisions of this Article will indemnify and hold harmless the Company, any underwriter and any controlling person of the Company or such underwriter from and against, and will reimburse the Company, underwriter or controlling person with respect to, any and all loss, damage, liability, cost or expense to which the Company, any underwriter or any controlling person thereof may become subject under the Act or otherwise, insofar as such losses, damages, liabilities, costs or expenses are caused by any untrue or alleged untrue statement of any material fact contained in such Registration Statement, any prospectus contained therein or any amendment or supplement thereto, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was so made in reliance upon and in strict conformity with written information furnished by such Investor specifically for use in the preparation thereof. (c) Promptly after receipt by an indemnified party pursuant to the provisions of paragraph (a) or (b) of this Section 9.4 of notice of the commencement of any action involving the subject matter of the foregoing indemnity provisions, such indemnified party will, if a claim thereof is to be made against the indemnifying party pursuant to the provisions of paragraph (a) or (b), promptly notify the indemnifying party of the commencement thereof; but the omission to so notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than hereunder. In case such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party shall have the right to participate in, and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party; provided, however, that if the defendants in any action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, or if there is a conflict of interest which would prevent counsel for the indemnifying party from also representing the indemnified party, the indemnified party or parties shall have the right to select separate counsel to participate in the defense of such action on behalf of such indemnified party or parties. After notice from the indemnifying party to the indemnified party of its election so to assume the defense of any action, the indemnifying party will not be liable to such indemnified party pursuant to the provisions of paragraphs (a) or (b) hereof for any legal or other expense subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation, unless (i) the indemnified party shall have employed counsel in accordance with the provision of the preceding sentence, (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after the notice of the commencement of the action, or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party. -6- 9.5 Exclusive Obligation to Register. Except as provided in this Section 9, the Company will have no obligation to the Holder to register under the Act any Shares received by such Holder pursuant to this Agreement. 10. Modifications and Waivers. This Warrant may not be changed, waived, ------------------------- discharged or terminated except by an instrument in writing signed by the party against which enforcement of the same is sought. 11. Notices. Any notice, request or other document required or ------- permitted to be given or delivered to the Holder or the Company shall be delivered, or shall be sent by certified or registered mail, postage prepaid, to the Holder at its address shown on the books of the Company or to the Company at the address indicated therefor on the signature page of this Warrant, or, if different, at the principal office of the Company. 12. Loss, Theft, Destruction or Mutilation of Warrant. The Company ----------------------------------------------------- covenants with the Holder that upon its receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant or any stock certificate and, in the case of any such loss, theft or destruction, of an indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate. 13. Representations and Warranties of Holder. By accepting this -------------------------------------------- Warrant, the Holder represents and warrants that he, she or it is acquiring this Warrant and the Shares for his, her or its own account, for investment and not with a view to, or for sale in connection with, any distribution thereof or any part thereof. Holder represents and warrants that he, she or it is (a) experienced in the evaluation of businesses similar to the Company, (b) is able to fend for himself, herself or itself in the transactions contemplated by this Warrant, (c) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Company, (d) has the ability to bear the economic risks of an investment in the Company, (e) has been furnished with or has had access to such information as is specified in subparagraph (b)(2) of Rule 502 promulgated under the Act and (f) has been afforded the opportunity to ask questions of and to receive answers from the Company and to obtain any additional information necessary to make an informed investment decision with respect to an investment in the Company. 14. Binding Effect on Successors. This Warrant shall be binding upon ------------------------------ any corporation succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company's assets, and all of the obligations of the Company relating to the Shares issuable upon exercise of this Warrant shall survive the exercise and termination of this Warrant and all of the covenants and agreements of the Company shall inure to the benefit of the successors and assigns of the Holder. 15. Governing Law. This Warrant shall be construed and enforced in ------------- accordance with, and the rights of the parties shall be governed by, the laws of the Commonwealth of Massachusetts. -7- IN WITNESS WHEREOF, BOSTON BIOMEDICA, INC. has caused this Warrant to be executed under seal by its officer thereunto duly authorized. Dated: August 18, 1999 BOSTON BIOMEDICA, INC. CORPORATE SEAL By: /S/ Richard T. Schumacher ----------------------------- Richard T. Schumacher, Its President Address: 375 West Street West Bridgewater, MA 02379 #838574 v\4 - fitzgemr - hz1q04!.doc_ - 11563/1 -8- EXHIBIT A NOTICE OF EXERCISE ------------------ To: BOSTON BIOMEDICA, INC. 1. The undersigned hereby elects to purchase _______ shares of Common Stock of BOSTON BIOMEDICA, INC. (the "Company") pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full. 2. Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name or names as are specified below. 3. The undersigned represents and warrants as follows (the following applies only in the event said shares have not been registered under the Securities Act of 1933, as amended): The undersigned is purchasing or acquiring the aforesaid shares of Common Stock for its own account for investment and not with a present view to, or for sale in connection with, any distribution thereof in violation of the Act. The undersigned represents and warrants that the undersigned: (a) is experienced in the evaluation of businesses similar to the Company, (b) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Company, (c) has the ability to bear the economic risks of an investment in the Company, (d) has been furnished with or has had access to such information as is specified in subparagraph (b)(2) of Rule 502 promulgated under the Act and has carefully reviewed and understood such information, (e) has been afforded the opportunity to ask questions of and to receive answers from the Company and to obtain any additional information necessary to make an informed investment decision with respect to an investment in the Company, and (f) is an "Accredited Investor" as such term is defined in subparagraph (a) of Rule 501 promulgated under the Act. 4. In the event of partial exercise, please re-issue an appropriate Warrant exercisable into the remaining shares. ------------------------------- (Name) ------------------------------- (Address) ------------------------------- (Signature) ------------------------------ (Date) #838574 v\4 - fitzgemr - hz1q04!.doc_ - 11563/1 -9- NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE, TRANSFER OR OTHER DISPOSITION OF THIS WARRANT OR SAID SHARES MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, OR (ii) AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL TO THE COMPANY, THAT AN EXEMPTION FROM REGISTRATION UNDER SAID ACT IS AVAILABLE. Warrant No. of No. N-1 STOCK PURCHASE WARRANT Shares 10,000 ------ To Subscribe for and Purchase Common Stock of BOSTON BIOMEDICA, INC. THIS CERTIFIES that, for value received, National Securities (the "Holder"), is entitled, upon the terms and subject to the conditions hereinafter set forth, to subscribe for and purchase from Boston Biomedica, Inc., a Massachusetts corporation (hereinafter called the "Company"), at the price hereinafter set forth in Section 2 up to 10,000 fully paid and non-assessable shares of the Company's common stock, $.01 par value per share (the "Shares"), 1. Definitions. As used herein the following term shall have the ----------- following meaning: "Act" means the Securities Act of 1933 as amended, or a similar Federal --- statute and the rules and regulations of the Commission issued under that Act, as they each may, from time to time, be in effect. 2. Purchase Rights. The purchase rights represented by this Warrant are --------------- exercisable by the Holder in whole or in part, at any time and from time to time commencing on the date hereof and ending at 5:00 p.m. on August 15, 2001. This Warrant may be exercised for Shares at a price of $5.25 per share, subject to adjustment as provided in Section 6 (the "Warrant Purchase Price"). 3. Exercise of Warrant. Subject to Section 2 above, the purchase rights ------------------- represented by this Warrant may be exercised, in whole or in part and from time to time, by the surrender of this Warrant and the duly executed Notice of Exercise (the form of which is attached as Exhibit A) at the principal office of the Company and by the payment to the Company, by wire transfer of immediately available funds, of an amount equal to the then applicable Warrant Purchase Price per share multiplied by the number of Shares then being purchased. Upon exercise, the Holder shall be entitled to receive, within a reasonable time, a certificate or certificates issued in the Holder's name for the number of Shares so purchased. The Shares so purchased shall be deemed to be issued as of the close of business on the date on which this Warrant shall have been exercised. 4. Shares to be Issued; Reservation of Shares. The Company covenants ------------------------------------------- that the Shares that may be issued upon the exercise of the purchase rights represented by this Warrant will, upon issuance, be fully paid and non-assessable, and free from all liens and charges with respect to the issue thereof. During the period within which the purchase rights represented by the Warrant may be exercised, the Company will at all times have authorized and reserved, for the purpose of issuance upon exercise of the purchase rights represented by this Warrant, a sufficient number of shares of its Common Stock to provide for the exercise of the right represented by this Warrant. 5. No Fractional Shares. No fractional shares shall be issued upon the --------------------- exercise of this Warrant. In lieu thereof, a cash payment shall be made equal to such fraction multiplied by the fair market value of such shares of Common Stock, as determined in good faith by the Company's Board of Directors. 6. Adjustments of Warrant Purchase Price and Number of Shares. If there ---------------------------------------------------------- shall be any change in the Common Stock of the Company through merger, consolidation, reorganization, recapitalization, stock dividend, stock split or other change in the corporate structure of the Company, appropriate adjustments shall be made by the Board of Directors of the Company (or if the Company is not the surviving corporation in any such transaction, the Board of Directors of the surviving corporation) in the aggregate number and kind of shares subject to this Warrant, and the number and kind of shares and the price per share then applicable to shares covered by the unexercised portion of this Warrant. 7. No Rights as Shareholders. This Warrant does not entitle the Holder ------------------------- to any voting rights or other rights as a shareholder of the Company prior to exercise of this Warrant and the payment for the Shares so purchased. Notwithstanding the foregoing, the Company agrees to transmit to the Holder such information, documents and reports as are generally distributed to holders of the capital stock of the Company concurrently with the distribution thereof to the shareholders. Upon valid exercise of this Warrant and payment for the Shares so purchased in accordance with the terms of the Warrant, the Holder or the Holder's designee, as the case may be, shall be deemed a shareholder of the Company. 8. Sale or Transfer of the Warrant; Legend. The Warrant and the Shares ---------------------------------------- shall not be sold or transferred unless either (i) they first shall have been registered under the Act, or (ii) the Company first shall have been furnished with an opinion of legal counsel satisfactory to the Company to the effect that such sale or transfer is exempt from the registration requirements of the Act. Each certificate representing any Warrant shall bear the legend set out on page 1 hereof. Each certificate representing any Shares shall bear a legend substantially in the following form, as appropriate: THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. Such Warrant and Shares may be subject to additional restrictions on transfer imposed under applicable state and federal securities law. 9. REGISTRATION RIGHTS ------------------- 9.1 Piggyback Registrations. (a) If at any time or times within two (2) years after the date hereof, the Company shall determine to register any of its securities under the Act and in connection therewith the Company may lawfully register any of the Shares, the Company will promptly give written notice thereof to the Holder. Upon the written request of the Holder within thirty (30) days after receipt of any such notice from the Company, the Company will, except as herein provided, cause all Shares which the Holder has requested to be registered to be included in such Registration Statement, all to the extent requisite to permit the sale or other disposition of the Shares. However nothing herein shall prevent the Company from at any time abandoning or delaying any registration. (b) If the Company determines not to proceed with a registration after the Registration Statement has been filed with the Commission and the Company's decision not to proceed is primarily based upon the anticipated public offering price of the securities to be sold by the Company, upon request of the Holder who has requested registration hereunder, the Company shall promptly complete the registration for the benefit of those selling security holders who indicate a desire to complete the registration and who agree to bear all expenses incurred by the Company as the result of such registration after the Company has decided not to proceed. (c) If any registration pursuant to this Section 9.1 shall be underwritten in whole or in part, the Company may require that the Shares requested for inclusion pursuant to this Section 9.1 be included in the underwriting on the same terms and conditions as the securities otherwise being sold through the underwriters. In the event that the Shares requested for inclusion pursuant to this Section 9.1 would constitute more than 25% of the total number of shares to be included in a proposed underwritten public offering, and if in the good faith judgment of the managing underwriter of such public offering the inclusion of all of the Shares originally covered by a request for registration would reduce the number of shares to be offered by the Company or interfere with the successful marketing of the shares of stock offered by the Company, then the number of Shares otherwise to be included in the underwritten public offering may be reduced. 9.2 Registration Procedures. If and whenever the Company is required by the provisions of Sections 9.1 to effect the registration of Shares under the Act, the Company will: (a) prepare and file with the Commission a Registration Statement with respect to such securities, and use its best efforts to cause such Registration Statement to become and remain effective for such period as may be reasonably necessary to effect the sale of such securities, not to exceed nine (9) months; (b) prepare and file with the Commission such amendments to such Registration Statement and supplements to the prospectus contained therein as may be necessary to keep such Registration Statement effective for such period as may be reasonably necessary to effect the sale of such Shares, not to exceed nine (9) months; (c) furnish to the Holder participating in such registration and to the underwriters of the securities being registered such reasonable number of copies of the Registration Statement, preliminary prospectus, final prospectus and such other documents as such underwriters may reasonably request in order to facilitate the public offering of such securities; (d) use its best efforts to register or qualify the securities covered by such Registration Statement under the state securities or blue sky laws of such jurisdictions as such participating Holder may reasonably request within twenty (20) days following the original filing of such Registration Statement, except that the Company shall not for any purpose be required to execute a general consent to service of process or to qualify to do business as a foreign corporation in any jurisdiction wherein it is not so qualified; (e) notify the Holder participating in such registration, promptly after it shall receive notice thereof, of the time when such Registration Statement has become effective or a supplement to any prospectus forming a part of such registration statement has been filed; (f) notify the Holder promptly of any request by the Commission for the amending or supplementing of such Registration Statement or prospectus or for additional information; (g) prepare and file with the Commission, promptly upon the request of the Holder, any amendments or supplements to such Registration Statement or prospectus which, in the opinion of counsel for such Holder (and concurred in by counsel for the Company), is required under the Act or the rules and regulations thereunder in connection with the distribution of the Shares by such Holder; (h) prepare and promptly file with the Commission and promptly notify such Holder of the filing of such amendment or supplement to such Registration Statement or prospectus as may be necessary to correct any statements or omissions if, at the time when a prospectus relating to such securities is required to be delivered under the Act, any event shall have occurred as the result of which any such prospectus or any other prospectus as then in effect would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading; and (i) advise such Holder, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for that purpose and promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued. 9.3 Expenses. With respect to each inclusion of Shares in a Registration Statement pursuant to Section 9.1 hereof, all fees, costs and expenses of and incidental to such registration, inclusion and public offering (as specified in paragraph (b) below) in connection therewith shall be borne by the Company, other than the fees and costs of counsel to the Holder, which fees and costs shall be borne by the Holder; and provided, however, that any security holders participating in such registration shall bear their pro rata share of (i) the underwriting discount and commissions and transfer taxes, and (ii) the expense of any special audit of the Company's financial statements if the notice requesting registration does not permit use of existing or contemplated audited statements. 9.4 Indemnification. (a) The Company will indemnify and hold harmless each Holder whose Shares are included in a Registration Statement pursuant to the provisions of this Section 9 and any underwriter (as defined in the Act) for such Holder and each person, if any, who controls such Investor or such underwriter within the meaning of the Act, from and against, and will reimburse such Investor and each such underwriter and controlling person with respect to, any and all loss, damage, liability, cost and expense to which such Investor or any such underwriter or controlling person may become subject under the Act or otherwise, insofar as such losses, damages, liabilities, costs or expenses are caused by any untrue statement or alleged untrue statement of any material fact contained in such Registration Statement, any prospectus contained therein or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading; provided, however, that the Company will not be liable in any such case to the extent that any such loss, damage, liability, cost or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such Holder, such underwriter or such controlling person in writing specifically for use in the preparation thereof. (b) The Holder whose Shares are included in a Registration Statement pursuant to the provisions of this Article will indemnify and hold harmless the Company, any underwriter and any controlling person of the Company or such underwriter from and against, and will reimburse the Company, underwriter or controlling person with respect to, any and all loss, damage, liability, cost or expense to which the Company, any underwriter or any controlling person thereof may become subject under the Act or otherwise, insofar as such losses, damages, liabilities, costs or expenses are caused by any untrue or alleged untrue statement of any material fact contained in such Registration Statement, any prospectus contained therein or any amendment or supplement thereto, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was so made in reliance upon and in strict conformity with written information furnished by such Investor specifically for use in the preparation thereof. (c) Promptly after receipt by an indemnified party pursuant to the provisions of paragraph (a) or (b) of this Section 9.4 of notice of the commencement of any action involving the subject matter of the foregoing indemnity provisions, such indemnified party will, if a claim thereof is to be made against the indemnifying party pursuant to the provisions of paragraph (a) or (b), promptly notify the indemnifying party of the commencement thereof; but the omission to so notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than hereunder. In case such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party shall have the right to participate in, and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party; provided, however, that if the defendants in any action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, or if there is a conflict of interest which would prevent counsel for the indemnifying party from also representing the indemnified party, the indemnified party or parties shall have the right to select separate counsel to participate in the defense of such action on behalf of such indemnified party or parties. After notice from the indemnifying party to the indemnified party of its election so to assume the defense of any action, the indemnifying party will not be liable to such indemnified party pursuant to the provisions of paragraphs (a) or (b) hereof for any legal or other expense subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation, unless (i) the indemnified party shall have employed counsel in accordance with the provision of the preceding sentence, (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after the notice of the commencement of the action, or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party. 9.5 Exclusive Obligation to Register. Except as provided in this Section 9, the Company will have no obligation to the Holder to register under the Act any Shares received by such Holder pursuant to this Agreement. 10. Modifications and Waivers. This Warrant may not be changed, waived, ------------------------- discharged or terminated except by an instrument in writing signed by the party against which enforcement of the same is sought. 11. Notices. Any notice, request or other document required or ------- permitted to be given or delivered to the Holder or the Company shall be delivered, or shall be sent by certified or registered mail, postage prepaid, to the Holder at its address shown on the books of the Company or to the Company at the address indicated therefor on the signature page of this Warrant, or, if different, at the principal office of the Company. 12. Loss, Theft, Destruction or Mutilation of Warrant. The Company ----------------------------------------------------- covenants with the Holder that upon its receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant or any stock certificate and, in the case of any such loss, theft or destruction, of an indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate. 13. Representations and Warranties of Holder. By accepting this -------------------------------------------- Warrant, the Holder represents and warrants that he, she or it is acquiring this Warrant and the Shares for his, her or its own account, for investment and not with a view to, or for sale in connection with, any distribution thereof or any part thereof. Holder represents and warrants that he, she or it is (a) experienced in the evaluation of businesses similar to the Company, (b) is able to fend for himself, herself or itself in the transactions contemplated by this Warrant, (c) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Company, (d) has the ability to bear the economic risks of an investment in the Company, (e) has been furnished with or has had access to such information as is specified in subparagraph (b)(2) of Rule 502 promulgated under the Act and (f) has been afforded the opportunity to ask questions of and to receive answers from the Company and to obtain any additional information necessary to make an informed investment decision with respect to an investment in the Company. 14. Binding Effect on Successors. This Warrant shall be binding upon ------------------------------ any corporation succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company's assets, and all of the obligations of the Company relating to the Shares issuable upon exercise of this Warrant shall survive the exercise and termination of this Warrant and all of the covenants and agreements of the Company shall inure to the benefit of the successors and assigns of the Holder. 15. Governing Law. This Warrant shall be construed and enforced in ------------- accordance with, and the rights of the parties shall be governed by, the laws of the Commonwealth of Massachusetts. IN WITNESS WHEREOF, BOSTON BIOMEDICA, INC. has caused this Warrant to be executed under seal by its officer thereunto duly authorized. Dated: August 18, 1999 BOSTON BIOMEDICA, INC. CORPORATE SEAL By: /S/ Richard T. Schumacher ----------------------------- Richard T. Schumacher, Its President Address: 375 West Street West Bridgewater, MA 02379 #838574 v\4 - fitzgemr - hz1q04!.doc_ - 11563/1 EXHIBIT A NOTICE OF EXERCISE ------------------ To: BOSTON BIOMEDICA, INC. 1. The undersigned hereby elects to purchase _______ shares of Common Stock of BOSTON BIOMEDICA, INC. (the "Company") pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full. 2. Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name or names as are specified below. 3. The undersigned represents and warrants as follows (the following applies only in the event said shares have not been registered under the Securities Act of 1933, as amended): The undersigned is purchasing or acquiring the aforesaid shares of Common Stock for its own account for investment and not with a present view to, or for sale in connection with, any distribution thereof in violation of the Act. The undersigned represents and warrants that the undersigned: (a) is experienced in the evaluation of businesses similar to the Company, (b) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Company, (c) has the ability to bear the economic risks of an investment in the Company, (d) has been furnished with or has had access to such information as is specified in subparagraph (b)(2) of Rule 502 promulgated under the Act and has carefully reviewed and understood such information, (e) has been afforded the opportunity to ask questions of and to receive answers from the Company and to obtain any additional information necessary to make an informed investment decision with respect to an investment in the Company, and (f) is an "Accredited Investor" as such term is defined in subparagraph (a) of Rule 501 promulgated under the Act. 4. In the event of partial exercise, please re-issue an appropriate Warrant exercisable into the remaining shares. ------------------------------- (Name) ------------------------------- (Address) ------------------------------- (Signature) ------------------------------ (Date) #838574 v\4 - fitzgemr - hz1q04!.doc_ - 11563/1 NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE, TRANSFER OR OTHER DISPOSITION OF THIS WARRANT OR SAID SHARES MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, OR (ii) AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL TO THE COMPANY, THAT AN EXEMPTION FROM REGISTRATION UNDER SAID ACT IS AVAILABLE. Warrant No. of No. N-3 STOCK PURCHASE WARRANT Shares 25,000 ------ To Subscribe for and Purchase Common Stock of BOSTON BIOMEDICA, INC. THIS CERTIFIES that, for value received, National Securities (the "Holder"), is entitled, upon the terms and subject to the conditions hereinafter set forth, to subscribe for and purchase from Boston Biomedica, Inc., a Massachusetts corporation (hereinafter called the "Company"), at the price hereinafter set forth in Section 2 up to 25,000 fully paid and non-assessable shares of the Company's common stock, $.01 par value per share (the "Shares"), 1. Definitions. As used herein the following term shall have the ----------- following meaning: "Act" means the Securities Act of 1933 as amended, or a similar Federal --- statute and the rules and regulations of the Commission issued under that Act, as they each may, from time to time, be in effect. 2. Purchase Rights. Reference is made to that certain Warrant Purchase --------------- Agreement dated August 18, 1999 by and between the Company and Paradigm Group L.L.C. (the "Investor") and the related warrant to purchase 400,000 shares of the Company's Common Stock (the "$4.25 Warrant") and the related warrant to purchase 100,000 shares of the Company's Common Stock (the "$5.25 Warrant) (the $4.25 Warrant and the $5.25 Warrant are collectively referred to as the "Warrants"). The purchase rights represented by this Warrant may be exercised by the Holder in whole or in part only at such time as the Investor has exercised its Warrants in full, and then from time to time thereafter ending at 5:00 p.m. on August 15, 2001. If and whenever the Warrants have been exercised by the Investor, the Company will provide notice of such exercise to the Holder within ten (10) days of such exercise. This Warrant may be exercised for Shares at a price of $8.00 per share, subject to the foregoing and to adjustment as provided in Section 6 (the "Warrant Purchase Price"). 3. Exercise of Warrant. Subject to Section 2 above, the purchase rights ------------------- represented by this Warrant may be exercised, in whole or in part and from time to time, by the surrender of this Warrant and the duly executed Notice of Exercise (the form of which is attached as Exhibit A) at the principal office of the Company and by the payment to the Company, by wire transfer of immediately available funds, of an amount equal to the then applicable Warrant Purchase Price per share multiplied by the number of Shares then being purchased. Upon exercise, the Holder shall be entitled to receive, within a reasonable time, a certificate or certificates issued in the Holder's name for the number of Shares so purchased. The Shares so purchased shall be deemed to be issued as of the close of business on the date on which this Warrant shall have been exercised. 4. Shares to be Issued; Reservation of Shares. The Company covenants ------------------------------------------- that the Shares that may be issued upon the exercise of the purchase rights represented by this Warrant will, upon issuance, be fully paid and non-assessable, and free from all liens and charges with respect to the issue thereof. During the period within which the purchase rights represented by the Warrant may be exercised, the Company will at all times have authorized and reserved, for the purpose of issuance upon exercise of the purchase rights represented by this Warrant, a sufficient number of shares of its Common Stock to provide for the exercise of the right represented by this Warrant. 5. No Fractional Shares. No fractional shares shall be issued upon the --------------------- exercise of this Warrant. In lieu thereof, a cash payment shall be made equal to such fraction multiplied by the fair market value of such shares of Common Stock, as determined in good faith by the Company's Board of Directors. 6. Adjustments of Warrant Purchase Price and Number of Shares. If there ---------------------------------------------------------- shall be any change in the Common Stock of the Company through merger, consolidation, reorganization, recapitalization, stock dividend, stock split or other change in the corporate structure of the Company, appropriate adjustments shall be made by the Board of Directors of the Company (or if the Company is not the surviving corporation in any such transaction, the Board of Directors of the surviving corporation) in the aggregate number and kind of shares subject to this Warrant, and the number and kind of shares and the price per share then applicable to shares covered by the unexercised portion of this Warrant. 7. No Rights as Shareholders. This Warrant does not entitle the Holder ------------------------- to any voting rights or other rights as a shareholder of the Company prior to exercise of this Warrant and the payment for the Shares so purchased. Notwithstanding the foregoing, the Company agrees to transmit to the Holder such information, documents and reports as are generally distributed to holders of the capital stock of the Company concurrently with the distribution thereof to the shareholders. Upon valid exercise of this Warrant and payment for the Shares so purchased in accordance with the terms of the Warrant, the Holder or the Holder's designee, as the case may be, shall be deemed a shareholder of the Company. 8. Sale or Transfer of the Warrant; Legend. The Warrant and the Shares ---------------------------------------- shall not be sold or transferred unless either (i) they first shall have been registered under the Act, or (ii) the Company first shall have been furnished with an opinion of legal counsel satisfactory to the Company to the effect that such sale or transfer is exempt from the registration requirements of the Act. Each certificate representing any Warrant shall bear the legend set out on page 1 hereof. Each certificate representing any Shares shall bear a legend substantially in the following form, as appropriate: THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF -2- COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. Such Warrant and Shares may be subject to additional restrictions on transfer imposed under applicable state and federal securities law. 9. REGISTRATION RIGHTS ------------------- 9.1 Piggyback Registrations. (a) If at any time or times within two (2) years after the date hereof, the Company shall determine to register any of its securities under the Act and in connection therewith the Company may lawfully register any of the Shares, the Company will promptly give written notice thereof to the Holder. Upon the written request of the Holder within thirty (30) days after receipt of any such notice from the Company, the Company will, except as herein provided, cause all Shares which the Holder has requested to be registered to be included in such Registration Statement, all to the extent requisite to permit the sale or other disposition of the Shares. However nothing herein shall prevent the Company from at any time abandoning or delaying any registration. (b) If the Company determines not to proceed with a registration after the Registration Statement has been filed with the Commission and the Company's decision not to proceed is primarily based upon the anticipated public offering price of the securities to be sold by the Company, upon request of the Holder who has requested registration hereunder, the Company shall promptly complete the registration for the benefit of those selling security holders who indicate a desire to complete the registration and who agree to bear all expenses incurred by the Company as the result of such registration after the Company has decided not to proceed. (c) If any registration pursuant to this Section 9.1 shall be underwritten in whole or in part, the Company may require that the Shares requested for inclusion pursuant to this Section 9.1 be included in the underwriting on the same terms and conditions as the securities otherwise being sold through the underwriters. In the event that the Shares requested for inclusion pursuant to this Section 9.1 would constitute more than 25% of the total number of shares to be included in a proposed underwritten public offering, and if in the good faith judgment of the managing underwriter of such public offering the inclusion of all of the Shares originally covered by a request for registration would reduce the number of shares to be offered by the Company or interfere with the successful marketing of the shares of stock offered by the Company, then the number of Shares otherwise to be included in the underwritten public offering may be reduced. 9.2 Registration Procedures. If and whenever the Company is required by the provisions of Sections 9.1 to effect the registration of Shares under the Act, the Company will: -3- (a) prepare and file with the Commission a Registration Statement with respect to such securities, and use its best efforts to cause such Registration Statement to become and remain effective for such period as may be reasonably necessary to effect the sale of such securities, not to exceed nine (9) months; (b) prepare and file with the Commission such amendments to such Registration Statement and supplements to the prospectus contained therein as may be necessary to keep such Registration Statement effective for such period as may be reasonably necessary to effect the sale of such Shares, not to exceed nine (9) months; (c) furnish to the Holder participating in such registration and to the underwriters of the securities being registered such reasonable number of copies of the Registration Statement, preliminary prospectus, final prospectus and such other documents as such underwriters may reasonably request in order to facilitate the public offering of such securities; (d) use its best efforts to register or qualify the securities covered by such Registration Statement under the state securities or blue sky laws of such jurisdictions as such participating Holder may reasonably request within twenty (20) days following the original filing of such Registration Statement, except that the Company shall not for any purpose be required to execute a general consent to service of process or to qualify to do business as a foreign corporation in any jurisdiction wherein it is not so qualified; (e) notify the Holder participating in such registration, promptly after it shall receive notice thereof, of the time when such Registration Statement has become effective or a supplement to any prospectus forming a part of such registration statement has been filed; (f) notify the Holder promptly of any request by the Commission for the amending or supplementing of such Registration Statement or prospectus or for additional information; (g) prepare and file with the Commission, promptly upon the request of the Holder, any amendments or supplements to such Registration Statement or prospectus which, in the opinion of counsel for such Holder (and concurred in by counsel for the Company), is required under the Act or the rules and regulations thereunder in connection with the distribution of the Shares by such Holder; (h) prepare and promptly file with the Commission and promptly notify such Holder of the filing of such amendment or supplement to such Registration Statement or prospectus as may be necessary to correct any statements or omissions if, at the time when a prospectus relating to such securities is required to be delivered under the Act, any event shall have occurred as the result of which any such prospectus or any other prospectus as then in effect -4- would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading; and (i) advise such Holder, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for that purpose and promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued. 9.3 Expenses. With respect to each inclusion of Shares in a Registration Statement pursuant to Section 9.1 hereof, all fees, costs and expenses of and incidental to such registration, inclusion and public offering (as specified in paragraph (b) below) in connection therewith shall be borne by the Company, other than the fees and costs of counsel to the Holder, which fees and costs shall be borne by the Holder; and provided, however, that any security holders participating in such registration shall bear their pro rata share of (i) the underwriting discount and commissions and transfer taxes, and (ii) the expense of any special audit of the Company's financial statements if the notice requesting registration does not permit use of existing or contemplated audited statements. 9.4 Indemnification. (a) The Company will indemnify and hold harmless each Holder whose Shares are included in a Registration Statement pursuant to the provisions of this Section 9 and any underwriter (as defined in the Act) for such Holder and each person, if any, who controls such Investor or such underwriter within the meaning of the Act, from and against, and will reimburse such Investor and each such underwriter and controlling person with respect to, any and all loss, damage, liability, cost and expense to which such Investor or any such underwriter or controlling person may become subject under the Act or otherwise, insofar as such losses, damages, liabilities, costs or expenses are caused by any untrue statement or alleged untrue statement of any material fact contained in such Registration Statement, any prospectus contained therein or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading; provided, however, that the Company will not be liable in any such case to the extent that any such loss, damage, liability, cost or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such Holder, such underwriter or such controlling person in writing specifically for use in the preparation thereof. (b) The Holder whose Shares are included in a Registration Statement pursuant to the provisions of this Article will indemnify and hold harmless the Company, any underwriter and any controlling person of the Company or such underwriter from and against, -5- and will reimburse the Company, underwriter or controlling person with respect to, any and all loss, damage, liability, cost or expense to which the Company, any underwriter or any controlling person thereof may become subject under the Act or otherwise, insofar as such losses, damages, liabilities, costs or expenses are caused by any untrue or alleged untrue statement of any material fact contained in such Registration Statement, any prospectus contained therein or any amendment or supplement thereto, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was so made in reliance upon and in strict conformity with written information furnished by such Investor specifically for use in the preparation thereof. (c) Promptly after receipt by an indemnified party pursuant to the provisions of paragraph (a) or (b) of this Section 9.4 of notice of the commencement of any action involving the subject matter of the foregoing indemnity provisions, such indemnified party will, if a claim thereof is to be made against the indemnifying party pursuant to the provisions of paragraph (a) or (b), promptly notify the indemnifying party of the commencement thereof; but the omission to so notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than hereunder. In case such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party shall have the right to participate in, and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party; provided, however, that if the defendants in any action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, or if there is a conflict of interest which would prevent counsel for the indemnifying party from also representing the indemnified party, the indemnified party or parties shall have the right to select separate counsel to participate in the defense of such action on behalf of such indemnified party or parties. After notice from the indemnifying party to the indemnified party of its election so to assume the defense of any action, the indemnifying party will not be liable to such indemnified party pursuant to the provisions of paragraphs (a) or (b) hereof for any legal or other expense subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation, unless (i) the indemnified party shall have employed counsel in accordance with the provision of the preceding sentence, (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after the notice of the commencement of the action, or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party. -6- 9.5 Exclusive Obligation to Register. Except as provided in this Section 9, the Company will have no obligation to the Holder to register under the Act any Shares received by such Holder pursuant to this Agreement. 10. Modifications and Waivers. This Warrant may not be changed, waived, ------------------------- discharged or terminated except by an instrument in writing signed by the party against which enforcement of the same is sought. 11. Notices. Any notice, request or other document required or ------- permitted to be given or delivered to the Holder or the Company shall be delivered, or shall be sent by certified or registered mail, postage prepaid, to the Holder at its address shown on the books of the Company or to the Company at the address indicated therefor on the signature page of this Warrant, or, if different, at the principal office of the Company. 12. Loss, Theft, Destruction or Mutilation of Warrant. The Company ----------------------------------------------------- covenants with the Holder that upon its receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant or any stock certificate and, in the case of any such loss, theft or destruction, of an indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate. 13. Representations and Warranties of Holder. By accepting this -------------------------------------------- Warrant, the Holder represents and warrants that he, she or it is acquiring this Warrant and the Shares for his, her or its own account, for investment and not with a view to, or for sale in connection with, any distribution thereof or any part thereof. Holder represents and warrants that he, she or it is (a) experienced in the evaluation of businesses similar to the Company, (b) is able to fend for himself, herself or itself in the transactions contemplated by this Warrant, (c) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Company, (d) has the ability to bear the economic risks of an investment in the Company, (e) has been furnished with or has had access to such information as is specified in subparagraph (b)(2) of Rule 502 promulgated under the Act and (f) has been afforded the opportunity to ask questions of and to receive answers from the Company and to obtain any additional information necessary to make an informed investment decision with respect to an investment in the Company. 14. Binding Effect on Successors. This Warrant shall be binding upon ------------------------------ any corporation succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company's assets, and all of the obligations of the Company relating to the Shares issuable upon exercise of this Warrant shall survive the exercise and termination of this Warrant and all of the covenants and agreements of the Company shall inure to the benefit of the successors and assigns of the Holder. 15. Governing Law. This Warrant shall be construed and enforced in ------------- accordance with, and the rights of the parties shall be governed by, the laws of the Commonwealth of Massachusetts. -7- IN WITNESS WHEREOF, BOSTON BIOMEDICA, INC. has caused this Warrant to be executed under seal by its officer thereunto duly authorized. Dated: August 18, 1999 BOSTON BIOMEDICA, INC. CORPORATE SEAL By: /S/ Richard T. Schumacher ----------------------------- Richard T. Schumacher, Its President Address: 375 West Street West Bridgewater, MA 02379 #838574 v\4 - fitzgemr - hz1q04!.doc_ - 11563/1 -8- EXHIBIT A NOTICE OF EXERCISE ------------------ To: BOSTON BIOMEDICA, INC. 1. The undersigned hereby elects to purchase _______ shares of Common Stock of BOSTON BIOMEDICA, INC. (the "Company") pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full. 2. Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name or names as are specified below. 3. The undersigned represents and warrants as follows (the following applies only in the event said shares have not been registered under the Securities Act of 1933, as amended): The undersigned is purchasing or acquiring the aforesaid shares of Common Stock for its own account for investment and not with a present view to, or for sale in connection with, any distribution thereof in violation of the Act. The undersigned represents and warrants that the undersigned: (a) is experienced in the evaluation of businesses similar to the Company, (b) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Company, (c) has the ability to bear the economic risks of an investment in the Company, (d) has been furnished with or has had access to such information as is specified in subparagraph (b)(2) of Rule 502 promulgated under the Act and has carefully reviewed and understood such information, (e) has been afforded the opportunity to ask questions of and to receive answers from the Company and to obtain any additional information necessary to make an informed investment decision with respect to an investment in the Company, and (f) is an "Accredited Investor" as such term is defined in subparagraph (a) of Rule 501 promulgated under the Act. 4. In the event of partial exercise, please re-issue an appropriate Warrant exercisable into the remaining shares. ------------------------------- (Name) ------------------------------- (Address) ------------------------------- (Signature) ------------------------------ (Date) #838574 v\4 - fitzgemr - hz1q04!.doc_ - 11563/1 -9- EX-10 4 EXHIBIT 10.1 LOC AGREEMENT EXECUTION FIRST AMENDED AND RESTATED COMMERCIAL LOAN AGREEMENT By and Among BANKBOSTON, N.A. (f/k/a The First National Bank of Boston) as the Lender and BOSTON BIOMEDICA, INC. AND ALL OF ITS SUBSIDIARIES as the Borrowers Dated: As of June 30, 1999 246472-5 FIRST AMENDED AND RESTATED COMMERCIAL LOAN AGREEMENT ------------------------- TABLE OF CONTENTS ----------------- Page ---- Preamble................................................................. Section 1 - Definitions; Use of Terms; Incorporation by Reference - --------- Section 2 - Establishment of Revolving Line of Credit - --------- 2.1 Revolving Line of Credit 2.2 Revolving Credit Borrowing Base 2.3 Interest Rate on Loans 2.4 Repayment of Loans 2.5 Fees 2.5.1 Facility Fee 2.5.2 Restructuring Fee 2.6 Use of Proceeds 2.7 Loan Advances 2.8 Other Advances and Payments 2.9 Loan Statements 2.10 Review of Line of Credit Section 2A - Letters of Credit - ---------- 2A.1 Letters of Credit 2A.2 Procedure for Issuance of Letters of Credit 2A.3 Fees and Charges 2A.4 Reimbursement Obligations 2A.5 Obligations Absolute Section 3 - Representations, Covenants and Warranties - --------- 3.1 General Representations, Covenants and Warranties 3.1.1 Business 3.1.2 Due Organization and Existence; Authorization 3.1.3 Articles of Organization; Stock; Accurate Records 3.1.4 Binding Documents; Violation of Other Agreements 3.1.5 Title To Assets; Security Interests and Mortgages; Leases; Royalties 3.1.6 Investments 3.1.7 Litigation; Outstanding Orders 3.1.8 Financial Statements Delivered 3.1.9 Other Liabilities; Tax Returns; No Adverse Changes -2- 3.1.10 No Agency Between Borrower and Lender 3.1.11 Regulation U 3.1.12 ERISA 3.1.13 Necessary Permits and Licenses 3.1.14 Governmental Approvals Not Required 3.1.15 Adequate Financing 3.1.16 No Event of Default 3.1.17 Compliance with Leases 3.1.18 Subsidiaries 3.1.19 Compliance with Certain Environmental Laws 3.1.20 Recent Changes of Name or Structure 3.1.21 Payment of Wages 3.1.22 Year 2000 Problem 3.2 Certain Affirmative Covenants 3.2.1 Payment of Obligations 3.2.2 Books and Records 3.2.3 Inspection 3.2.4 Commercial Purposes 3.2.5 Notice of Adverse Matters 3.2.6 Principal Lending Business 3.2.7 Maintenance of Corporate Existence; Compliance with Laws 3.2.8 Payment of Taxes and Filing of Returns 3.2.9 Maintenance of Property and Assets 3.2.10 Collection Costs; Legal Fees; etc. 3.2.11 Insurance 3.2.12 Further Agreements; Compliance with Other Agreements; Payment of Other Obligations; Tax Returns; Notice of Litigation and of Events of Default 3.2.13 Certain Environmental Matters 3.2.14 Changes in Master Disclosure Schedule 3.2.15 Pledge of After Acquired Property 3.2.16 New Subsidiaries 3.3 General Negative Covenants 3.3.1 Other Debt 3.3.2 Payment of Dividends 3.3.3 Loans by the Borrower 3.3.4 Investments 3.3.5 Mergers 3.3.6 Sales of Assets 3.3.7 Negative Pledge 3.3.8 No Liens; Permitted Encumbrances 3.3.9 Continuance of Business Section 4 - Financial and Reporting Covenants - --------- -3- 4.1 Reporting Covenants 4.1.1 Quarterly Financial Statements 4.1.2 Annual Financial Statements 4.1.3 Compliance Certificate 4.1.4 Borrowing Base Certificate 4.1.5 Other Information 4.2 Financial Covenants 4.3 Limitation of Changes in Fiscal Year Section 5 - Conditions of Closing - --------- Section 6 - Events of Default - --------- Section 7 - Remedies - --------- 7.1 General Remedies 7.2 Cumulative Remedies Section 8 - Waiver; Termination - --------- 8.1 Waiver By The Borrower 8.2 Lender's Option To Waive Section 9 - Miscellaneous - --------- 9.1 Deposits As Collateral; Set-Off 9.2 Survival of Covenants; Binding Effect 9.3 Termination of Agreement 9.4 Conflict of Terms 9.5 Prior Discussions; Amendments in Writing; Counterparts; Filing As Financing Statement 9.6 General Indemnification 9.7 Destruction of Documents; Jurisdiction 9.8 Notices 9.9 Application of Proceeds 9.10 Continuance of Defaults 9.11 Severability 9.12 Headings 9.13 Governing Law; Sealed Instrument 9.14 Force Majeure 9.15 Joint and Several 9.16 Interpretation of Agreement Master Disclosure Schedule - -------------------------- Exhibit A Form of Note Exhibit B Form of Security Agreement Schedule 4.1.3 Compliance Certificate -4- Schedule 4.1.4 Borrowing Base Certificate Schedule 5(d) List of Lien Searches -5- FIRST AMENDED AND RESTATED COMMERCIAL LOAN AGREEMENT This FIRST AMENDED AND RESTATED COMMERCIAL LOAN AGREEMENT (this "Agreement") is entered into as of June 30, 1999, by and among (a) BOSTON - ----------- BIOMEDICA, INC., a Massachusetts corporation ("BBI"), (b) all of the --- SUBSIDIARIES of BBI which are signatories hereto (said Subsidiaries, together with BBI and any and all other Subsidiaries which in accordance with the provisions of subsection 3.2.17 of this Agreement, may hereafter from time to time become parties to this Agreement, are hereinafter sometimes referred to collectively as the "Borrowers" and each singly as a "Borrower") and (c) --------- --------- BANKBOSTON, N.A., a national banking association (f/k/a The First National Bank of Boston)(together with its successors and assigns, the "Lender"). ------ Preliminary Statements: ---------------------- A. Pursuant to the provisions of a certain Commercial Loan Agreement, dated as of March 28, 1997 (the "Existing Loan Agreement"), by and among the ------------------------- Lender and the Borrowers, the Lender has agreed to lend certain sums and to extend certain credit to or for the benefit of the Borrowers; and B. The Borrowers now request that the Existing Loan Agreement be amended and restated in its entirety as provided for herein; and C. The Lender is willing to amend and restate the Existing Loan Agreement in its entirety in the manner provided for herein, all upon the terms and conditions contained herein; NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree that the Existing Loan Agreement is hereby amended and restated in its entirety as follows: SECTION 1 DEFINITIONS; USE OF TERMS; INCORPORATION BY REFERENCE -------------------------- 1.1 Definitions. As used in this Agreement, the following terms shall ----------- have the meanings given to such terms as set forth below: "Accounts": all of "accounts" (as such term is defined in the -------- UCC) of each Borrower, and to the extent not included in such definition, shall also mean and include all accounts receivable, book debts, notes, drafts and other forms of obligations or indebtedness now owned or hereafter received or acquired by or belonging or owing to such Borrower whether arising out of personal property owned or leased by it, Goods sold by it or services rendered by it or from any other transaction, whether or not the same involves the lease of personal property, sale of Goods or performance of services by each such Borrower (including, without limitation, any such obligation or indebtedness which would be characterized as an account, General Intangible or Chattel Paper under the Uniform Commercial Code in effect in any jurisdiction) and all of each such Borrower's rights in, to and under all purchase orders now owned or hereafter received or acquired by it for Goods or services, and all of each such Borrower's rights to any Goods represented by any of the foregoing (including returned or repossessed Goods and unpaid seller's rights) and all moneys due or to become due to each such Borrower under all contracts for the -6- sale of Goods and/or the performance of services by it (whether or not yet earned by performance), in each case whether now in existence or hereafter arising or acquired including, without limitation, the right to receive the proceeds of said purchase orders and contracts and all collateral security and guarantees of any kind given by any Person with respect to any of the foregoing. "Application": an application, in such form as the Lender may ----------- specify from time to time, to open a Letter of Credit. "Bankruptcy Code": as defined in subsection 6.7.1 below. --------------- "Base Rate Loan": as defined in Schedule 1 of the Note. -------------- "BBI": as defined in the first paragraph on the first page of --- this Agreement. "BBIBRL": BBI Biotech Research Laboratories, Inc., a ------ Massachusetts corporation which is a Subsidiary of BBI and a party to this Agreement. "BBICL": BBI Clinical Laboratories, Inc., a Massachusetts ----- corporation which is a Subsidiary of BBI and a party to this Agreement. "BBISS": BBI Source Scientific, Inc., a Massachusetts ----- corporation which is a Subsidiary of BBI and a party to this Agreement. "Borrower": as defined in the first paragraph on the first -------- page of this Agreement. "Business Day": any day excluding Saturday, Sunday and any day ------------ which is a legal holiday under the laws of The Commonwealth of Massachusetts, or is a day on which banking institutions located in The Commonwealth of Massachusetts are required or authorized by applicable law to be closed. "Capital Expenditures": as to any Person for any period, the --------------------- aggregate amount paid or accrued by such Person for the rental, lease, purchase (including by way of the acquisition of securities of a Person), construction or use of any property during such period, the value or cost of which, in accordance with GAAP, would appear on such Person's consolidated balance sheet in the category of property, plant or equipment at the end of such period, excluding any such expenditure made to restore, replace or rebuild property to the condition of such property immediately prior to any damage, loss, destruction or condemnation of such property, to the extent such expenditure is made with insurance proceeds or condemnation awards relating to any such damage, loss, destruction or condemnation. "Capitalized Lease": any lease of property, real or personal, ----------------- the obligations of the lessee in respect of which are required in accordance with GAAP to be capitalized on a balance sheet of the lessee. "Closing Date": the date on which the conditions precedent set ------------ forth in Section 5 shall be satisfied or waived (but in no event later than August 31, 1999). "Commercial Letter of Credit": as defined in subsection ------------------------------ 2A.1(b)(i)(1) below. -7- "Compliance Certificate": as defined in subsection 4.1.3 ----------------------- below. "Consolidated Debt Service Ratio": for any period, the ratio -------------------------------- of: (a) the sum of the Consolidated Operating Income for such period, plus any depreciation and amortization, plus any payments made by any Borrower on any Operating Leases during such period, plus any proceeds which any Borrower has received from any long term debt (including advances under the Revolving Line of Credit) and in each case used to finance any of its Capital Expenditures during such period, plus any and all equity capital raised during 1999 (but only for 1999 fiscal periods), minus any payments made by any Borrower for any Federal, state, local and foreign income taxes incurred by such Borrower during such period, minus any payments made by any Borrower for Capital Expenditures during such period, all as determined on a consolidated basis in accordance with GAAP, to (b) the sum of Consolidated Interest Expense for such period, plus any mandatory payments made by any Borrower on any long term debt (including without limitation, any Capitalized Leases) during such period, plus any payments made by any Borrower on Operating Leases during such period, all as determined on a consolidated basis in accordance with GAAP. "Consolidated Interest Expense": for any period, the aggregate ----------------------------- interest expense of the Borrowers for such period as determined on a consolidated basis in accordance with GAAP. "Consolidated Operating Income": for any period, the operating ----------------------------- income of the Borrowers for such period as determined on a consolidated basis in accordance with GAAP. "Consolidated Tangible Net Worth": at any date of ------------------------------------- determination, the sum of the aggregate tangible assets of the Borrowers after having excluded (a) the book value of all Intangible Assets of the Borrowers and (b) all liabilities of the Borrowers (including all deferred income taxes), all as determined on a consolidated basis in accordance with GAAP consistently applied. "Consolidated Total Liabilities": at any date of ----------------------------------- determination, all Indebtedness (including without limitation, all Obligations) of the Borrowers at such date of determination as determined on a consolidated basis in accordance with GAAP. "Default": an Event of Default or event or condition that, but ------- for the requirement that time elapse or notice be given, or both, would constitute an Event of Default. "Eligible Accounts": all Eligible Domestic Accounts and ------------------ Eligible Foreign Accounts. "Eligible Domestic Accounts": all Accounts, other than ---------------------------- Accounts which are: (a) outstanding more than ninety (90) days from the date of invoice or issuance, whichever is earlier; (b) based on payment terms other than those which are usual and customary to the business of the Borrowers; (c) owed by any account debtor located outside the United States; (d) due from any Borrower or from any past, present or future Affiliate of any Borrower; (e) due from any account debtor if more than Twenty Percent (20%) of the aggregate amount of Accounts due from such account debtor are otherwise excluded from the definition of "Eligible Accounts;" (f) due from a Person who is the subject of a voluntary or involuntary bankruptcy, insolvency, -8- reorganization, liquidation or other debt relief or adjustment proceeding, including an assignment for the benefit of its creditors; (g) due from any account debtor which holds or is entitled to any claim, counterclaim, setoff or chargeback or which has the right to return to any Borrower for credit or refund, the goods giving rise to such account; (h) due from account debtors with respect to which any Borrower is an account debtor; (i) based on any sale made on a so-called "bill and hold" basis if the Lender has not received any written evidence from both the applicable Borrower and account debtor that such sale is being made on a "bill and hold" basis, it being understood by the parties hereto that such written evidence must be acceptable in all respects to the Lender; (j) based on any sale made on a so-called "delayed shipping" or "dating" basis; or (k) determined by the Lender, in the exercise of its commercially reasonable judgment, to be difficult to collect, to be of diminished or uncertain value, or in which the Lender may not have a perfected security interest pursuant to the provisions of the Security Documents. "Eligible Equipment": any Borrower's Equipment which is held ------------------- by, and in the actual possession of, such Borrower (and not in the possession of any Person other than such Borrower), and which are determined, from time to time by the Lender, in the exercise of its reasonable judgment, to be acceptable for purposes of making the Loans. "Eligible Finished Inventory": any Borrower's Inventory ------------------------------ consisting of finished goods which are held by, and in the actual possession of, such Borrower (and not in the possession of any Person other than such Borrower) for sale, license, or lease, or furnished or to be furnished by such Borrower under contracts of sale or service, and which are determined, from time to time by the Lender, in the exercise of its reasonable judgment, to be acceptable for purposes of making the Loans. "Eligible Foreign Accounts": all Accounts, other than Accounts ------------------------- which are: (a) outstanding more than ninety (90) days from the date of invoice or issuance, whichever is earlier; (b) based on payment terms other than those which are usual and customary to the business of the Borrowers; (c) owed by any account debtor located in the United States; (d) due from any Borrower or from any past, present or future Affiliate of any Borrower; (e) due from any account debtor if more than Twenty Percent (20%) of the aggregate amount of Accounts due from such account debtor are otherwise excluded from the definition of "Eligible Accounts;" (f) due from a Person who is the subject of a voluntary or involuntary bankruptcy, insolvency, reorganization, liquidation or other debt relief or adjustment proceeding, including an assignment for the benefit of its creditors; (g) due from any government entity; (h) due from any account debtor which holds or is entitled to any claim, counterclaim, setoff or chargeback or which has the right to return to any Borrower for credit or refund, the goods giving rise to such account; (i) due from account debtors with respect to which any Borrower is an account debtor; (j) based on any sale made on, so-called, "delayed shipping", "bill and hold", or "dating" basis; or (k) determined by the Lender, in the exercise of its commercially reasonable judgment, to be difficult to collect, to be of diminished or uncertain value, or in which the Lender may not have a perfected security interest pursuant to the provisions of the Security Documents. "Eligible Inventory": all Eligible Finished Inventory, -------------------- Eligible Work-In-Process Inventory and Eligible Raw Materials Inventory. "Eligible Raw Materials Inventory": any Borrower's Inventory --------------------------------- consisting of raw materials which are used or consumed in such Borrower's business, and which are held by, and in the actual possession of, such Borrower (and not in the possession of any Person other than -9- such Borrower) and which are determined, from time to time by the Lender, in the exercise of its reasonable judgment, to be acceptable for purposes of making the Loans. "Eligible Work-In-Process Inventory": any Borrower's Inventory ---------------------------------- consisting of work-in-process materials which are used or consumed in such Borrower's business, and which are held by, and in the actual possession of, such Borrower (and not in the possession of any Person other than such Borrower) and which are determined, from time to time by the Lender, in the exercise of its reasonable judgment, to be acceptable for purposes of making the Loans. "Equipment": any Borrower's "equipment" as such term is --------- defined in the UCC, and to the extent not included in such definition, shall also mean and include all motor vehicles (whether or not subject to motor vehicle registration), rolling stock, machinery, furniture, office equipment, plant equipment, fixtures, tools, spare parts, accessories, dies, molds and all other like goods, property and assets owned now or hereafter by such Borrower and used in the operation or furtherance of such Borrower's business. "Event of Default": as defined in Section 6 below. ---------------- "Existing Loan Agreement": as defined in the Preliminary ------------------------- Statements of this Agreement. "Facility Fee": as defined in subsection 2.5.1 below. ------------ "Financial Covenants": as defined in subsection 4.2 below. ------------------- "Financing Instruments": any and all agreements (including ---------------------- this Agreement), Instruments, Documents, and other writings including without limitation, security agreements (including the Security Agreement), loan agreements, notes, guarantees, letters of credit (including the Letters of Credit and the Applications therefor), mortgages, deeds of trust, collateral assignments, subordination agreements, contracts, notices, leases, financing statements and all other written matter, whether heretofore, now, or hereafter executed by or on behalf of any Borrower and delivered to the Lender in connection with the transactions described in this Agreement or contemplated hereby, together with all agreements and documents referred to therein or contemplated thereby. "GAAP": generally accepted accounting principles in the United ---- States of America in effect from time to time (subject to the provisions of the last paragraph of subsection 4.2). "Indebtedness": of any Person at any date, without ------------ duplication, (a) all indebtedness of such Person for borrowed money or the deferred purchase price of property or services (other than current trade liabilities incurred in the ordinary course of business and payable in accordance with customary practices), (b) any other indebtedness of such Person which is evidenced by a note, bond, debenture or similar instrument, (c) all obligations of such Person under Capitalized Leases or Operating Leases, (d) all obligations of such Person in respect of acceptances issued or created for the account of such Person and (e) all indebtedness of others of the types described in (a) through (d) above secured by any Lien on any property owned by such Person even though such Person has not assumed or otherwise become liable for the payment thereof (the amount of such indebtedness with respect to such Person being deemed to be the lesser of the value of such property or the amount of indebtedness of others so secured). -10- "Indemnified Party": as defined in subsection 9.6 below. ----------------- "Intangible Assets": any and all goodwill, organizational ------------------ expense, licenses, patents, trademarks, tradenames, copyrights, capitalized research and development expenses, deferred charges, and all other intangible assets. "Interest Rate Protection Contracts": interest rate swap ------------------------------------- agreements, interest rate collar agreements, options on any of the foregoing and any other agreements or arrangements designed to provide protection against fluctuations in interest rates, in each case purchased by any Borrower from a lender with respect to Loans and approved by the Lender. "Investment": the purchase or acquisition of any share of ---------- capital stock, partnership interest, evidence of Indebtedness or other equity security of any other Person (including any Subsidiary), any loan, advance or extension of credit (excluding Accounts and costs and estimated earnings in excess of billings arising in the ordinary course of business) to, or contribution to the capital of, any other Person (including any Subsidiary), any real estate held for sale or investment, any securities or commodities futures contracts held, any other investment in any other Person (including any other Borrower), and the making of any commitment or acquisition of any option to make an Investment. "Inventory": all "inventory" as such term is defined in the --------- UCC, and to the extent not included in such definition, shall also mean and include any and all of the following owned by any Borrower: any Goods, wares, merchandise, raw materials, supplies, components, work in process, finished goods and all packaging, advertising, shipping material, labels and other devices, names, or marks affixed thereto for purpose of selling the same; tangible personal property held by such Borrower for processing, sale, license, or lease, or furnished or to be furnished by such Borrower under contracts of sale or service or to be used or consumed in such Borrower's business; items referred to above which are in transit, returned, rejected, repossessed or detained. "IRC": the Internal Revenue Code of 1986, as amended, and --- regulations as promulgated and in effect, from time to time, thereunder. "Lender": as defined in the first paragraph on the first page ------ of this Agreement. "Letters of Credit": collectively, Commercial Letters of ------------------- Credit and Standby Letters of Credit. "LIBOR Loan": as defined in Schedule 1 of the Note. ---------- ---------- "Liens": any and all: mortgages, pledges, security interests, ----- encumbrances, liens, or charges of any kind including, but not limited to, agreements to give any of the foregoing; conditional sales or other title retention agreements or devices, or any leases in the nature thereof; and the filing of, or agreement to give, any financing statement under the Uniform Commercial Code of any jurisdiction. "Loans": as defined in subsection 2.1 below. ----- "Main Operating Account": as defined in subsection 2.7 below. ---------------------- -11- "Margin Stock": as defined in subsection 3.1.11 below. ------------ "Master Disclosure Schedule": as defined in subsection 3.1.1 --------------------------- below. "Maturity Date": June 30, 2001. ------------- "Note": a certain First Amended and Restated Commercial ---- Revolving Promissory Note, from the Borrowers, made payable to the order of the Lender, in the face amount of Revolving Credit Maximum Amount, substantially in the form of Exhibit A, as the same may be hereafter amended, modified, substituted, extended or restated, from time to time. "Obligations": any and all Indebtedness, liabilities, duties, ----------- undertakings, covenants and agreements (including those of payment or of performance) of each of the Borrowers to the Lender or any affiliate of the Lender, all of every kind, nature and description, and arising pursuant to the terms of the Financing Instruments or otherwise, including, without limitation: (a) each Borrower's liability to repay the Loans, together with the payment of all interest and other monies due pursuant to the terms of the Note, and any and all substitutions, renewals, extensions, amendments and rewritings of the Loans or the Note and all present and future advances made thereunder and including all Interest Rate Protection Contracts; (b) the faithful performance and observance by each Borrower of all agreements, covenants and conditions contained in this Agreement and in each of the other Financing Instruments; and (c) any and all such Indebtedness, liabilities, duties, undertakings, covenants and agreements due to or in favor of the Lender, whether or not the same are: now existing or hereafter arising; imposed by agreement or by operation of law; due or not due, absolute or contingent, liquidated or unliquidated, voluntary or involuntary; evidenced by a writing; presently contemplated by the parties; the joint or the several liabilities of any Borrower; direct or indirect; related or unrelated to the transactions described in or contemplated by the Financing Instruments; liabilities or undertakings of any Borrower as surety, guarantor or endorser with respect to obligations of one or more other parties; specifically described as secured or unsecured; hereafter acquired by the Lender by assignment, other transfer or operation of law; the result of any transaction whatsoever between any Borrower and the Lender; or by reason of any cause of action which the Lender may have against any Borrower. "Operating Lease": any lease of personal (non-Real Property) --------------- property, the obligations of the lessee in respect of which may not, in accordance with GAAP, be capitalized on a balance sheet of the lessee. "Permitted Acquisition": any domestic corporation, ------------------------ partnership, limited liability company, joint venture or other form of domestic entity that is engaged in the business of any Borrower or any business reasonably related or complimentary thereto. "Permitted Acquisition Venture": any Investment in a Permitted ----------------------------- Acquisition for which (a) any Borrower has provided the Lender, in advance of such Acquisition, with all of the -12- material information, reports, financial statements and any other material used by such Borrower to determine the suitability and prudence of such Investment; and (b) any Borrower has satisfied the Lender that such Investment will not result in such Borrower failing to meet any of the Financial Covenants contained in subsections 4.2 hereof. "Permitted Liens": as defined in subsection 3.3.8 below. --------------- "Persons": any and all individuals, corporations, ------- partnerships, joint stock associations, business or other trusts, governments or any agencies or subdivisions thereof, joint ventures, limited liability companies or partnerships, or other entities or associations whatsoever. "Purchase Money Indebtedness": any Indebtedness incurred by ---------------------------- any Borrower in connection with the acquisition by such Borrower of any real or personal property. "Real Property": any and all land or real estate, together -------------- with all buildings, improvements and fixtures thereon, and all rights, title and interests therein (including without limitation, any rights or interests in any leases, easements or rights-of-way). "Reimbursement Obligation": the obligation of the Borrowers to ------------------------ reimburse the Lender pursuant to subsection 2A.4(a) below for amounts drawn under Letters of Credit. "Reporting Requirements": as defined in subsection 4.1 below. ---------------------- "Responsible Officer": as to any Person, the chief executive -------------------- officer and the president of such Person or, with respect to financial matters, the chief financial officer of such Person or, in either case, such other executive officers as may be designated from time to time by such Person in writing to the Lender. "Restructuring Fee": as defined in subsection 2.5.2 below. ----------------- "Revolving Credit Borrowing Base": as defined in subsection ---------------------------------- 2.2 below. "Revolving Credit Period": the period from and after the ------------------------- Closing Date to and including the Maturity Date or any earlier date on which the obligation of the Lender to make Loans shall terminate, as provided herein. "Revolving Line of Credit": as defined in subsection 2.1 -------------------------- below. "Revolving Credit Maximum Amount": as defined in subsection --------------------------------- 2.1 below. "SEC": the United States Securities and Exchange Commission or --- any other federal governmental agency which may hereafter perform its functions. "Security Agreement": the Security Agreement-All Assets to be ------------------ executed and delivered by the Borrowers, substantially in the form of Exhibit B, as the same may be amended, modified, substituted, extended --------- or restated, from time to time. "Security Documents": collectively, the Security Agreement and ------------------ all other documents now or hereafter delivered to the Lender granting a Lien on any asset or assets of any Person to secure the Obligations or to secure any guarantee of any such Obligations. -13- "Standby Letter of Credit": as defined in subsection ---------------------------- 2A.1(b)(i)(2) below. "Subsidiary": as to any Person, a corporation, partnership or ---------- other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to any direct or indirect Subsidiary or Subsidiaries of BBI. "Total Revolving Credit Outstandings": at any time, the sum of ----------------------------------- (i) the aggregate outstanding principal balance of the Loans at such time and (ii) the maximum aggregate amount from time to time that beneficiaries may draw under outstanding Letters of Credit at such time. "UCC": the Uniform Commercial Code as in effect from time to --- time in The Commonwealth of Massachusetts. "Uniform Customs": the Uniform Customs and Practice for ---------------- Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500, as the same may be amended from time to time. "34 Act": the Securities Exchange Act of 1934, as amended from ------ time to time. The following terms shall have the respective meanings ascribed to them in the UCC: "Account Debtor", "Chattel Paper", "Deposit Account", "Document", -------------- ------------- --------------- -------- "Farm Products", "Goods," and "Instrument". ------------- ----- ---------- Capitalized terms defined elsewhere in this Agreement shall have the respective meanings ascribed to them where so defined. 1.2 Use of Terms. The use of the singular of terms which are defined in ------------ the plural shall mean and refer to any one of the matters or items included in such definition. Use of the connective "or" is not intended to be exclusive; the term "may not" is intended to be prohibitive and not permissive; use of "includes" and "including" is intended to be interpreted as expansive and amplifying and not as limiting in any way; and pronouns used herein shall be deemed to include the singular and the plural and all genders. All exhibits to this Agreement are hereby incorporated herein by reference. SECTION 2 ESTABLISHMENT OF REVOLVING LINE OF CREDIT ----------------------------------------- 2.1 Revolving Line of Credit. Subject to all of the terms and --------------------------- conditions contained in this Agreement and the other Financing Instruments, the Lender hereby agrees to establish for the benefit of the Borrowers a certain revolving line of credit (the "Revolving Line of Credit") pursuant to which the ------------------------ Lender shall make certain loans (hereinafter referred to collectively as the "Loans" and each singly as a "Loan") to the Borrower from time to time during ----- ---- the Revolving Credit Period; provided, however, that the Total Revolving Credit ------------------ Outstandings (after giving effect to all requested Loans and Letters of Credit) shall not at any time exceed TEN MILLION AND 00/100 DOLLARS ($10,000,000.00)(the "Revolving Credit Maximum Amount"). Each Loan shall be evidenced by, and shall -------------------------------- be payable in accordance -14- with the provisions of, the Note and this Agreement. During the Revolving Credit Period, the Borrowers may from time to time borrow, repay and reborrow the Loans, all in accordance with the terms and conditions of the Note and this Agreement. 2.2 Revolving Credit Borrowing Base. Notwithstanding any provision ---------------------------------- contained in any of the Financing Instruments to the contrary, the aggregate principal amount of the Loans outstanding, from time to time, shall never exceed the lesser of either (hereinafter referred to as the "Revolving Credit Borrowing -------------------------- Base"): - ------ (a) the Revolving Credit Maximum Amount; or (b) the sum of: (i) the following Eligible Accounts: (A) 85% of all Eligible Domestic Accounts of BBI; plus ---- (B) 75% of all Eligible Domestic Accounts of BBICL; plus ---- (C) 85% of all Eligible Domestic Accounts of BBISS; plus ---- (D) 70% of all Eligible Domestic Accounts and all Eligible Foreign Accounts of BBIBRL; plus ---- (E) 90% of all Eligible Foreign Accounts of any Borrower (other than BBIBRL) which are secured by one or more letters of credit, each in form and substance satisfactory to the Lender; plus ---- (F) 75% of the Eligible Foreign Accounts of any Borrower (other than BBIBRL) which are not secured by one or more letters of credit, each in form and substance satisfactory to the Lender; plus ---- (ii) the following Eligible Inventory: (A) 30% of the sum of (x) all Eligible Raw Materials Inventory of BBI, valued at the lower of cost or market value, and (y) all Eligible Work-In-Process Inventory of BBI, valued at the lower of cost or market value; plus ---- (B) 40% of all Eligible Finished Inventory of BBI, valued at the lower of cost or market value; plus ---- (C) 25% of all Eligible Raw Materials Inventory of BBISS, valued at the lower of cost or market value; plus ---- (D) 30% of all Eligible Work-In Process Inventory of BBISS, valued at the lower of cost or market value; plus ---- (E) 50% of all Eligible Finished Inventory of BBISS, valued at the lower of cost or market value; plus ---- -15- (iii) $728,657.50, which sum is equal to 70% of the appraised value of all of the Eligible Equipment (other than motor vehicles) of BBI, BBICL, BBISS and BBIBRL as of the date hereof. Descriptions or determinations by the Lender regarding Eligible Accounts, Eligible Inventory, Eligible Raw Materials or Eligible Equipment are intended solely for credit management for the Loans. Such descriptions and determinations are not intended and shall not be construed as any determination of actual value of any Collateral nor shall the same affect the security interests granted to the Lender under the Security Documents. Each Borrower shall be responsible for all credit risks concerning all Accounts, Inventory and Equipment of such Borrower. Determinations and descriptions of eligibility shall not alter in any way the status of Collateral as security for the Obligations. 2.3 Interest Rate on Loans. The principal amount outstanding, from time ---------------------- to time, of each of the Loans shall bear interest in accordance with the provisions of the Note. 2.4 Repayment of Loans. Principal and interest under the Loans shall be ------------------ paid to the Lender in accordance with the provisions of the Note. 2.5 Fees. ---- 2.5.1 Facility Fee. The Borrowers agree to pay to the Lender a ------------ Facility Fee (the "Facility Fee") of one-quarter of one percent (.25%) ------------- per annum of the amount which equals the average unused portion of the Revolving Credit Maximum Amount during each calendar quarter, or part thereof, that any Loan remains outstanding. The Facility Fee shall be paid by the Borrowers to the Lender on a calendar quarterly basis, in arrears. The Facility Fee shall be earned when paid, non-refundable and in addition to all interest and all other amounts due and payable with respect to the Loans or otherwise pursuant to the Financing Instruments. 2.5.2 Restructuring Fee. The Borrowers shall pay to the Lender ----------------- contemporaneously herewith a non-refundable Restructuring Fee (the "Restructuring Fee") of Fifty Thousand and 00/100 Dollars ($50,000.00). ----------------- 2.6 Use of Proceeds. All of the proceeds of the Loans shall be used (a) --------------- to restructure the existing credit facility established by the Lender for benefit of the Borrowers under the Existing Loan Agreement; (b) to finance the general working capital requirements of the Borrowers; and (c) to finance up to Two Million Five Hundred Thousand and 00/100 Dollars ($2,500,000.00) in Capital Expenditures during each fiscal year to be made by the Borrowers. 2.7 Loan Advances. After the date hereof, Loans shall be made by -------------- advances by the Lender to one or more of the accounts maintained by the Borrowers pursuant to subsection 3.2.6 hereof (hereinafter referred to as the "Main Operating Account"). Subject to the terms and conditions hereof, the ------------------------ Lender may make Loans to each Borrower (i) to cover checks drawn by any Borrower on the Main Operating Account and (ii) to cover other authorized charges whether given to the Lender orally, telephonically or in writing and (iii) to cover other charges due and payable hereunder. As an accommodation to each Borrower, and to avoid the necessity that the Lender communicate with each Borrower each time checks are presented for payment against the Main Operating Account, each Borrower requests the Bank to make a Loan charged to the Loan Account sufficient to cover checks and other authorized charges on each occasion that the same are presented. All actions of the Lender in connection with the ordinary administration of the foregoing are hereby ratified and confirmed and shall -16- be conclusive and binding upon each Borrower. Each request by any Borrower to Lender for an advance under the Revolving Line of Credit shall constitute a representation by the Borrowers that as of the date of such request (a) each of the representations and warranties set forth herein are true, (b) each Borrower is in compliance with all of the covenants, terms and conditions hereof, and (c) no event or circumstances exist which constitute or with the lapse of time or notice, or both, would constitute or result in the occurrence of an Event of Default (as hereinafter defined). 2.8 Other Advances and Payments. Whether or not the entire amount ------------------------------ available under the Revolving Line of Credit shall have been advanced to or for the benefit of any Borrower, and whether or not the Loans shall be payable (by maturity or by acceleration) or an Event of Default shall have occurred under this Agreement, the Lender shall be entitled (but shall not be obligated and may not be required) to make, at its sole discretion, additional advances from time to time: 2.8.1 in payment or reimbursement, as the case may be, of any and all payments made or amounts owing pursuant to applicable provisions of the Financing Instruments; 2.8.2 to pay the Lender's usual and customary charges for (a) services rendered by it to any Borrower at such Borrower's request which charges relate to the Obligations; and (b) charges otherwise required to be paid by any Borrower pursuant to this Agreement; and 2.8.3 otherwise to or for the benefit of any Borrower, as requested or consented to by any Borrower, as the Lender may in its discretion deem proper or expedient; and each such additional advance shall be a part of the Obligations and shall at all times be subject to the terms and conditions of this Agreement and secured as provided in the Financing Instruments. 2.9 Loan Statements. All advances to or for the benefit of any Borrower --------------- pursuant to this Agreement shall be charged to the loan account or accounts opened in such Borrower's name on the Lender's books. The Lender periodically shall render to BBI statements of such loan account or accounts, setting forth the daily loan balance and total accrued interest during the subject period, which, when so rendered, shall be considered prima facie evidence of the correctness thereof except to the extent that the Lender receives written notice of any exceptions proposed by BBI within a reasonable time, but in no event later than one hundred twenty (120) days from the date of such statement. If for any reason, any Borrower has not paid interest charges and/or any fees for services, expenses incurred or other charges owed to the Lender by such Borrower, the Lender, at its option and discretion, may at any time or times debit such charges, expenses, and fees to such Borrower's loan account and such amounts shall be added to the principal amount thereof, or the Lender may debit such interest, charges and fees, and any other unpaid Obligations then due, to any deposit or other account of such Borrower at the Lender. Such debits shall not constitute a waiver of any Event of Default. Any item received in payment towards any Borrower's outstanding Indebtedness which requires clearance or payment shall not be considered to have been credited until final clearance and final payment. 2.10 Review of Line of Credit. The Lender agrees (a) to review the ------------------------- Revolving Line of Credit annually on or before June 30 of each year commencing in 2000, to determine whether the Maturity Date will be extended for an additional twelve-month period beyond the Maturity Date then in effect; and (b) to notify BBI of such determination in accordance with the notice provisions of the Agreement. Notwithstanding the foregoing, any determination by the Lender to extend the Maturity Date shall not be binding and enforceable against the Lender until the execution of an Extension Agreement or other appropriate documentation, executed by the parties hereto. -17- SECTION 2A LETTERS OF CREDIT ----------------- 2A.1 Letters of Credit. ----------------- (a) Subject to the terms and conditions hereof, the Lender agrees to issue Letters of Credit for the account of any Borrower on any Business Day during the Revolving Credit Period in such form as may be approved from time to time by the Lender; and provided further, ------------------ however, that the Total Revolving Credit Outstandings (after giving ------- effect to all requested Loans and Letters of Credit) shall not at any time exceed the Revolving Credit Maximum Amount. (b) Each Letter of Credit shall: (i) be denominated in Dollars and shall be either (1) a standby letter of credit issued to support obligations of any Borrower, contingent or otherwise, in connection with the working capital and business needs of such Borrower in the ordinary course of business (a "Standby Letter of Credit") or ------------------------ (2) a commercial letter of credit issued in respect of the purchase of goods or services by any Borrower in the ordinary course of business (a "Commercial Letter of Credit"); and --------------------------- (ii) expire no later than the earlier of (A) five (5) Business Days prior to the Maturity Date or (B) one year after the date of issuance thereof. (c) Each Letter of Credit shall be subject to the Uniform Customs and, to the extent not inconsistent therewith, the laws of The Commonwealth of Massachusetts. (d) The Lender shall not at any time be obligated to issue any Letter of Credit hereunder if such issuance would conflict with, or cause the Lender to exceed any limits imposed by, any applicable law. 2A.2 Procedure for Issuance of Letters of Credit. Any Borrower may from ------------------------------------------- time to time request that the Lender issue a Letter of Credit by delivering to the Lender at its address for notices specified herein an Application therefor, completed to the satisfaction of the Lender, and such other certificates, documents and other papers and information as the Lender may request. Upon receipt of any Application, the Lender will process such Application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall promptly issue the Letter of Credit requested thereby (but in no event shall the Lender be required to issue any Letter of Credit earlier than five (5) Business Days after its receipt of the Application therefor and all such other certificates, documents and other papers and information relating thereto) by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed by the Lender and such Borrower. The Lender shall furnish a copy of such Letter of Credit to the Borrower promptly following the issuance thereof. 2A.3 Fees and Charges. The Borrowers shall pay or reimburse the Lender ---------------- for such normal and customary fees, commissions, costs and expenses as are incurred or charged by the Lender in issuing, effecting payment under, amending or otherwise administering any Letter of Credit. 2A.4 Reimbursement Obligations. ------------------------- -18- (a) The Lender shall notify BBI promptly of each drawing under a Letter of Credit. The Borrowers agree to reimburse the Lender on each date on which the Lender notifies BBI of the date and amount of a draft presented under any Letter of Credit and paid by the Lender for the amount of (i) such draft so paid and (ii) any taxes, fees, charges or other costs or expenses incurred by the Lender in connection with such payment. Each such payment shall be made to the Lender at its address for notices specified herein in lawful money of the United States of America and in immediately available funds. (b) Interest shall be payable on any and all amounts remaining unpaid by the Borrowers under this subsection 2A.4 (i) from the date the draft presented under the affected Letter of Credit is paid to the date on which the Borrowers are required to pay such amounts pursuant to paragraph (a) of this subsection at the rate which would then be payable on any Loans that are Base Rate Loans and (ii) thereafter, until payment in full at the rate which would be payable on any outstanding Loans that are Base Rate Loans which were then overdue. (c) Each drawing under any Letter of Credit shall constitute a request by the Borrowers to the Lender for an advance under the Revolving Line of Credit of a Base Rate Loan in the amount of such drawing. 2A.5 Obligations Absolute. -------------------- (a) The obligations of the Borrowers under this Section 2A shall be absolute and unconditional under any and all circumstances and irrespective of any set-off, counterclaim or defense to payment which any Borrower may have or have had against the Lender, or any beneficiary of a Letter of Credit. (b) The Borrowers also agree that the Lender shall not be responsible for, and the Reimbursement Obligations of the Borrowers under subsection 2A.4(a) shall not be affected by, among other things, (i) the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged, or (ii) any dispute between or among any Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or (iii) any claims whatsoever of any Borrower against any beneficiary of such Letter of Credit or any such transferee. (c) The Lender shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors, omissions, interruptions or delays caused by the Lender's gross negligence or willful misconduct. (d) Each Borrower agrees that any action taken or omitted by the Lender under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful misconduct and in accordance with the standards of care specified in the Uniform Customs, and to the extent not inconsistent therewith, the Uniform Commercial Code of The Commonwealth of Massachusetts, shall be binding on each such Borrower and shall not result in any liability of the Lender to any Borrower. SECTION 3 REPRESENTATIONS, COVENANTS AND WARRANTIES ----------------------------------------- -19- In addition to such other representations, covenants and warranties as are contained herein, or elsewhere in the Financing Instruments or as have otherwise been made to the Lender, each Borrower hereby jointly and severally represents, covenants and warrants that: 3.1 General Representations, Covenants and Warranties. ------------------------------------------------- 3.1.1 Business. The Borrowers are currently engaged in the -------- businesses set forth set forth in the Master Disclosure Schedule attached hereto and incorporated herein by reference (the "Master ------ Disclosure Schedule"). Each Borrowers shall continue to engage in -------------------- business of the same general type as now conducted by each such Borrower as set forth in the Master Disclosure Schedule. -------------------------- 3.1.2 Due Organization and Existence; Authorization. Each ------------------------------------------------- Borrower (a) is duly organized, validly existing and in good standing under the laws of the State in which such Borrower was organized, (b) has adequate power and authority to own its properties and assets and to carry on its business activities as and where now conducted, (c) is qualified to do business as a foreign corporation and is in good standing in each jurisdiction wherein such qualification is necessary, and where the failure to so qualify would have a material adverse effect on the business or property of such Borrower, and (d) has the power and authority to execute and deliver such of the Financing Instruments as have been executed by it, and to perform the Financing Instruments in accordance with the terms thereof. 3.1.3 Articles of Organization; Stock; Accurate Records. The --------------------------------------------------- Articles (or Certificate) of Organization (or Incorporation) and all amendments thereto of each Borrower have been duly filed and are in proper order. All capital stock issued by each Borrower and currently outstanding is properly issued, and all books and records of each Borrower, (including but not limited to, the minute book, by-laws and books of account of each Borrower) are accurate and up-to-date and will be so maintained. 3.1.4 Binding Documents; Violation of Other Agreements. Each ------------------------------------------------- Borrower has taken all steps required by applicable law to make this Agreement, and each of such Financing Instruments, its legal, valid and binding obligation enforceable, jointly and severally, in accordance with its terms, and neither the execution, delivery nor performance of this Agreement or any of the Financing Instruments is in violation of any law, the Articles (or Certificate) of Organization (or Incorporation), Bylaws or other organizational documents of it, or of any other agreement or instrument to which it is a party or by which it or any of its assets is or may be bound, and does not constitute a default under any of the foregoing, or result in the creation or imposition of a Lien upon any of its properties or assets other than that in favor of the Lender. 3.1.5 Title To Assets; Security Interests and Mortgages; ------------------------------------------------------- Leases; Royalties. Each Borrower has title (and good, clear, record and ----------------- marketable title in the case of real property) to all assets reflected in the financial statements hereinafter referred to and delivered to the Lender, and to all assets acquired since the date of said financial statements (other than those assets subsequently disposed of in the ordinary course of business), free of any Lien except in favor of the Lender and except for the Permitted Liens. 3.1.6 Investments. No Borrower has any Investment, in equity ----------- or debt, other than short-term, investment grade securities, including money market funds. -20- 3.1.7 Litigation; Outstanding Orders. There are no actions, -------------------------------- suits, proceedings or investigations pending or, to the knowledge of any Borrower or any of its agents, servants or employees, threatened against any Borrower or any of its properties in any court, before any other tribunal or any federal, state, municipal or other governmental authority. Each Borrower is not in default with respect to any order of any court, or other tribunal or governmental authority. The execution, delivery and performance of this Agreement and each of the Financing Instruments by each Borrower will not constitute a default of any order of any court, or any other tribunal or governmental authority. 3.1.8 Financial Statements Delivered. BBI has furnished to the ------------------------------ Lender the consolidated financial statements of the Borrowers (including consolidated balance sheet and statement of profit and loss) for their fiscal year ended December 31, 1998, as audited by PricewaterhouseCoopers LLP. Said financial statements fairly present the financial position of the Borrowers as at the date thereof and said statement of profit and loss fairly presents the results of the operations of the Borrowers for the fiscal years indicated, all in conformity with GAAP consistently applied. 3.1.9 Other Liabilities; Tax Returns; No Adverse Changes. (a) --------------------------------------------------- No Borrower has any knowledge of any contingent obligations or liabilities of any Borrower for taxes or long-term commitments which are not shown in the balance sheets included in said statements or noted therein; (b) each Borrower has filed all required tax returns or extensions therefor and has paid all applicable federal, state and local taxes shown to be due (other than taxes which may hereafter be paid without penalty) and no Borrower has any knowledge of any deficiency or additional assessment in connection therewith for which no provision has been made on its books; and (c) there has been no material adverse change in the business, properties or condition (financial or otherwise) of any Borrower since the date of the most recent financial statement referred to above. 3.1.10 No Agency Between the Borrowers and the Lender. Nothing ---------------------------------------------- herein contained shall be construed to constitute any Borrower as the Lender's agent for any purpose whatsoever. 3.1.11 Regulation U. No Borrower own, or has any present ------------- intention of acquiring, any "margin security" as defined in Regulation U (12 C.F.R. Part 221) of the Board of Governors of the Federal Reserve System (herein called a "Margin Security"). None of the proceeds of the --------------- Loans will be used, directly or indirectly, for the purpose of purchasing or carrying any Margin Security or for the purpose of reducing or retiring any Indebtedness which was originally incurred to purchase or carry a Margin Security or for any other purpose which might constitute this transaction a "purpose credit" within the meaning of said Regulation U. 3.1.12 ERISA. No Borrower has incurred any material ----- accumulated funding deficiency within the meaning of the Employee Retirement Income Security Act of 1974, as amended, or incurred any material liability to the Pension Benefit Guaranty Corporation established under such Act (or any successor thereto under such Act), nor does any Borrower foresee that it will incur any such material accumulated funding deficiency or material liability in the future, in connection with any employee benefit plan established or maintained by such Borrower. The making of the Loans will not involve any prohibited transaction within the meaning of the Employee Retirement Income Security Act of 1974 or Section 4975 of the Internal Revenue Code, as amended. There are no facts known to any Borrower which create, or in the future may -21- (so far as the Borrower can now foresee) create, any withdrawal or other liability of any Borrower under the Multi-employer Pension Plan Amendment Act of 1980. 3.1.13 Necessary Permits and Licenses. Each Borrower possesses ------------------------------ all franchises, rights, certificates, variances, licenses, permits and other authorizations, consents and approvals from all administrative, regulatory or governmental bodies and all patents, trademarks, service marks, trade names, copyrights, licenses and other rights, in each case, free from burdensome restrictions, that are necessary in any material respect for the ownership, maintenance and operation of its business, properties and assets, and no Borrower is in violation of any thereof in any material respect. 3.1.14 Governmental Approvals Not Required. Neither the nature ----------------------------------- of any Borrower nor its business or property, nor any relationship between or among any Borrower and any other Person is such as to require any consent, authorization, waiver, approval or other action by or any notice to or filing with any court or administrative, regulatory or governmental body, including, without limitation, government agencies, offices and instrumentalities with which any Borrower has contracts, in connection with the execution and delivery by any Borrower of this Agreement or the other Financing Instruments or the fulfillment of or compliance by any Borrower with, or the enforcement by the Lender of, the terms and provisions hereof or thereof. 3.1.15 Adequate Financing. No Borrower has any reason to ------------------- believe that the proceeds of the Loans, together with such other sources of funds as are now directly and immediately available to any Borrower, will not be adequate to finance its business operations for the term of the Loans. 3.1.16 No Event of Default. As of the date hereof, there does ------------------- not exist any Event of Default or any event which, but for the giving of notice or the lapse of time or both, would constitute an Event of Default under this Agreement, any of the Financing Instruments or under the provisions of any instrument evidencing any Indebtedness of any Borrower to any other Person. 3.1.17 Compliance with Leases. Each Borrower enjoys peaceful ---------------------- and undisturbed possession as lessee under all leases necessary in any material respect for the operation of its business or of its properties and assets, none of which contains any provisions which might materially affect or impair the operation of its business or such properties and assets. All such leases are valid and subsisting and are in full force and effect. 3.1.18 Subsidiaries. So long as any Obligations remain ------------ outstanding, BBI shall continue to own one hundred percent (100%) of the issued and outstanding capital stock of its Subsidiaries. 3.1.19 Compliance with Certain Environmental Laws. Neither any ------------------------------------------ Borrower, nor any Person for whose conduct any Borrower is responsible, owns, occupies or operates, or has ever owned, occupied or operated a site or vessel on which has been stored any hazardous material or oil, without compliance with all statutes, regulations, ordinances, directives, and orders of every federal, state, municipal and other governmental authority which has or claims jurisdiction relative thereto (the terms "site", "vessel", and "hazardous material", respectively, as used herein include the definitions of those terms in Massachusetts General Laws, Ch. 2lE); neither any Borrower, nor any Person for whose conduct any Borrower is responsible, has ever disposed of, -22- transported, or arranged for the transport of any hazardous material or oil without compliance with all such statutes, regulations, ordinances, directives, and orders; and neither any Borrower, nor any Person for whose conduct any Borrower is responsible, has ever been legally responsible for any release or threat of release of any hazardous material or oil; received notification of any potential or known release or threat of release of any hazardous material or oil from any site or vessel owned, occupied or operated by any Borrower, or any Person for whose conduct any Borrower is responsible, or of the incurrence of any expense or loss in connection with the assessment, containment, or removal of any release or threat of release of any hazardous material or oil from any such site or vessel. 3.1.20 Recent Changes of Name or Structure. No Borrower has ------------------------------------- within the preceding four (4) months changed its name, identity or structure. 3.1.21 Payment of Wages. Each Borrower represents and warrants ---------------- that all currently owed wages to employees have been paid, and agrees and covenants that all wages to employees will be paid as and when due. 3.1.22 Year 2000 Problem.1.22 Year 2000 Problem.1.22 Year 2000 ----------------- ----------------- --------- Problem. Each Borrower has reviewed the areas within its businesses and ------- operations which could be adversely affected by, and have developed or are developing a program to address on a timely basis, the "Year 2000 Problem" (i.e. the risk that computer applications used by any Borrower may be unable to recognize and perform properly date-sensitive functions involving certain dates prior to and any date after December 31, 1999). Based upon such review, each Borrower reasonably believes that the "Year 2000 Problem" will not have any material adverse effect or change on the business, operations, property or condition (financial or otherwise) of the Borrowers taken as a whole or (b) the validity or enforceability of this Agreement or any of the other Financing Instruments or the rights or remedies of the Lender hereunder or thereunder. 3.2 Certain Affirmative Covenants. ----------------------------- 3.2.1 Payment of Obligations. Each Borrower will duly and ----------------------- punctually pay or cause to be paid, and perform or observe, or cause to be performed or observed, as the case may be, all of the Obligations and will pay and perform or observe, or cause to be paid, performed or observed all other duties or liabilities of any kind of such Borrower to the Lender, under or as provided in the Financing Instruments, or otherwise by agreement or applicable law. 3.2.2 Books and Records. Each Borrower will maintain its ------------------ financial books and records in an accurate, up-to-date, complete and standardized fashion in accordance with GAAP consistently applied, and in accordance with any state or federal regulatory requirements applicable to such Borrower's business or activities. 3.2.3 Inspection. The Borrowers will, at all reasonable times ---------- during regular business hours, and upon reasonable advance notice, permit the Lender and its agents to (a) visit and inspect the properties and assets of the Borrowers, (b) examine and make copies of and take abstracts from the books and records of the Borrowers and (c) arrange for verification of the Accounts of the Borrowers under reasonable procedures. Without limiting the foregoing, the Lender may conduct as many commercial credit examinations of the Borrowers as it reasonably deems necessary, whether or not any Event of Default exists, and the Borrowers will reimburse the Lender for all reasonable fees, costs and expenses incurred or otherwise charged by the -23- Lender with respect to each such credit examination; provided, however ----------------- that, so long as no Event of Default shall have occurred and is continuing, for each such credit examination, the obligation of the Borrowers to pay standard daily rate fees shall not exceed the amount of such standard daily rate fees which the Lender reasonably and customarily charges for such a credit examination conducted over a period of eight days for the balance of calendar 1999 after the date hereof, and 24 days per calendar year for the year 2000 and thereafter (and the foregoing limitations apply only to standard daily rate fees, and is not intended to limit costs and expenses, including travel expenses, regardless of the number of examination days charged to Borrowers). 3.2.4 Commercial Purposes. All advances under the Loans shall ------------------- be used exclusively for the business purposes and operations of the Borrowers and shall not in any respect be used for personal, family or household purposes. 3.2.5 Notice of Adverse Matters. Each Borrower will, ----------------------------- immediately upon learning thereof, report to the Lender all matters materially adversely affecting any Borrower's business or financial condition or assets or property, including, without limitation, any damage or destruction of any material amount of any Borrower's assets by fire or other casualty, whether or not insured against. 3.2.6 Principal Lending Business. Each Borrower will use the --------------------------- Lender as its sole lender of account and depository for its main operating accounts (except for investment accounts); provided however that all of the Borrowers (other than BBI) may maintain checking accounts at banks other than the Lender for purposes of handling their accounts payable and payroll. 3.2.7 Maintenance of Corporate Existence; Compliance with ------------------------------------------------------- Laws. Each Borrower will maintain and keep in full force its corporate ---- existence and good standing and comply with all laws, regulations and orders of the United States and of any state or states, and other political subdivision thereof, and of any other governmental authority which may have jurisdiction over such Borrower or its properties or businesses. 3.2.8 Payment of Taxes and Filing of Returns. Each Borrower -------------------------------------- will pay when due all taxes, including without limitation all real and personal property taxes, assessments and charges and all franchise, income, unemployment, old age benefit, withholding, sales and other taxes assessed against it or any of its properties, and otherwise payable by it, at such times and in such manner as is necessary to prevent any penalty from accruing or any Lien or charge from attaching to its properties. Each Borrower shall prepare and file when due all federal, state and local tax, informational and other governmental returns, reports, extensions, and filings, as may be applicable to such Borrower. The provisions of this subsection, however, shall not preclude any Borrower from contesting in good faith and by expeditious process any such tax, and the Borrowers shall not be in default under this subsection by reason of the existence of a Lien for taxes not then due, all provided that: (a) an adequate reserve therefor is maintained on the books of the Borrowers; (b) the Lender has been notified in writing by BBI of such contest; (c) the enforcement of any and all Liens for non-payment of such taxes is effectively stayed; (d) the Lender is reasonably satisfied that the Borrowers have reasonable basis for such contest or dispute; and (e) the Borrowers shall immediately pay the full amount of such charges and claims in the event any Borrower's contest or dispute is unsuccessful. -24- 3.2.9 Maintenance of Property and Assets. Each Borrower will ---------------------------------- safeguard, protect and preserve its property and assets for the benefit of the Lender, will keep its property and assets free from any adverse lien, security interest or encumbrance, will keep all tangible property in good working order and repair, will preserve all beneficial contract rights, will take commercially reasonable steps to collect all of its Accounts, and will not waste or destroy any of its property or assets or any part thereof; and each Borrower will otherwise preserve, maintain and protect its rights and keep its property and assets in good repair, working order and condition, and capable of identification, and make (or cause to be made) all needful and proper repairs or renewals, replacements, additions and improvements thereto, and shall use its assets only in the ordinary course of business. 3.2.10 Collection Costs; Legal Fees. The Borrowers agree to ------------------------------ pay, and to reimburse the Lender, on demand, for all fees, costs and expenses (including, without limitation, attorneys' reasonable fees and expenses) incurred or paid by the Lender in connection with the preparation, negotiation, interpretation or amendment of this Agreement, and of any or all of the Financing Instruments, and of any other instrument, agreement or document executed and delivered pursuant thereto or in connection therewith, and for any and all such fees, costs and expenses incurred in connection with collection of the Obligations or the enforcement of the Lender's rights and remedies under this Agreement or any of the Financing Instruments or otherwise against any Borrower, or in the defense of any action against the Lender with respect to the Lender's rights or remedies in respect of any Obligation; and all of the foregoing fees, costs, and expenses shall be part of the Obligations secured by this Agreement, and the other Financing Instruments. 3.2.11 Insurance. Each Borrower will maintain insurance at all --------- times with financially sound and reputable companies as are reasonably satisfactory to the Lender, in such amounts and against such risks as are customarily insured against by businesses operating in a similar line of business in a similar area, and consistent with sound business practice, in no event less than the greater of (a) the amount required to avoid coinsurance or (b) the total aggregate outstanding principal Indebtedness owing by the Borrowers to the Lender, including without limitation casualty insurance covering any Borrower's property and assets against the hazards of fire, flood, sprinkler leakage, burglary, theft, pilferage, loss in transit, those hazards covered by extended coverage, and such other hazards as the Lender may require, all such insurance to be in such form, for such periods and with such companies as shall be reasonably acceptable to the Lender. All premiums thereon shall be paid by the Borrowers and if any Borrower fails to do so, the Lender may at its option (but without obligation) procure such insurance and charge the cost to the Main Operating Account; provided, --------- however, that any such payment by the Lender shall not constitute ------- satisfaction of any Borrower's obligations with respect to payment hereunder, or a waiver by the Lender of any Event of Default with respect to such non-payment. In order to evidence compliance with the insurance coverages required under this subsection 3.2.11, BBI shall deliver to the Lender one or more certificates of insurance for all such casualty insurance policies and endorsements thereto. Annually thereafter, BBI shall deliver certificates of such insurance coverages to the Lender, along with satisfactory evidence of general liability, products liability, workmen compensation and other insurance coverage, in form and substance satisfactory to the Lender. 3.2.12 Further Agreements; Compliance With Other Agreements; Payment of Other Obligations; Tax Returns; Notice of Litigation and of Events of Default. -25- Each Borrower will: 3.2.12.1 from time to time execute and deliver or cause to be executed and delivered, and furnish to the Lender such other agreements, documents, instruments or statements, and do or cause to be done such other acts as the Lender may reasonably request, to effect, confirm and secure to the Lender all rights and advantages intended by this Agreement and the Financing Instruments; 3.2.12.2 comply with all leases, and with all other agreements to which any Borrower is a party if a default under any such agreement could materially adversely affect any of such Borrower's property and assets; 3.2.12.3 generally pay all other debts and liabilities as they become due (except for liabilities, other than the Obligations, being contested in good faith for which adequate provision has been made on the books of any Borrower, provided that all enforcement proceedings are effectively stayed pending such contest) and not permit the acceleration of any Indebtedness owed by any Borrower to any Person; and 3.2.12.4 cause BBI to give written notice to the Lender within ten (10) days of the occurrence thereof of any litigation filed by or against any such Borrower which claims in connection therewith exceed, either individually or when aggregated with other existing litigation filed by or against the Borrowers, the sum of Twenty-Five Thousand Dollars ($25,000), and the occurrence or existence of any Event of Default hereunder, or the existence of any situation or state of facts which, either with notice or lapse of time, or both would constitute an Event of Default hereunder, and the action such Borrower has taken or proposes to take with respect thereto, all provided that the receipt of such notice shall not limit or impair, in any way the Lender's rights hereunder. 3.2.13 Certain Environmental Matters. Each Borrower shall: ----------------------------- 3.2.13.1 not store (except in compliance with all laws, ordinances, and regulations pertaining thereto), or dispose of any hazardous material or oil on any site or vessel owned, occupied, or operated by any such Borrower or by any Person for whose conduct the Borrower is responsible; 3.2.13.2 neither directly nor indirectly transport or arrange for the transport of any hazardous material or oil except in compliance with all laws, ordinances and regulations pertaining thereto; 3.2.13.3 shall cause BBI to provide promptly to the Lender with written notice: (a) upon such Borrower's obtaining knowledge of any potential or known release, or threat of release, in violation of any federal, state or local law, ordinance or regulation pertaining thereto, of any hazardous material or oil at or from any site or vessel owned, occupied or operated by such Borrower, or by any Person for whose conduct such Borrower is responsible or whose liability may result in any lien on any Collateral; (b) upon such Borrower's receipt of any notice to such effect from any federal, state or other governmental authority; or (c) upon such Borrower's obtaining knowledge of any incurrence of any expense or loss by such governmental authority in connection with the assessment, containment or removal of any hazardous material or oil for which expense -26- or loss such Borrower may be liable or for which expense a Lien may be imposed on any Collateral. 3.2.14 Changes in Master Disclosure Schedule. BBI shall ----------------------------------------- promptly notify the Lender in writing of any changes in or additions to the information set forth in the Master Disclosure Schedule. -------------------------- 3.2.15 Pledge of After Acquired PropertyPledge of After ------------------------------------------------------ Acquired PropertyPledge of After Acquired Property. If at any time ------------------------------------------------------ following the date hereof, any Borrower shall acquire property of any nature whatsoever having a value in excess of One Hundred Thousand and 00/100 Dollars ($100,000.00) which is intended by the terms of the applicable Security Document to be, but is not, subject to the Liens created by the Security Documents, such Borrower shall, as soon as possible and in no event later than thirty (30) days after the relevant acquisition date and, to the extent permitted by applicable law, grant to the Lender a first priority (subject to Permitted Liens) Lien on such property as collateral security for the Obligations pursuant to documentation reasonably satisfactory in form and substance to the Lender. The Borrower, at its own expense, shall execute, acknowledge and deliver, or cause the execution, acknowledgement and delivery of, and thereafter register, file or record in an appropriate governmental office, any document or instrument (including legal opinions, title insurance, consents and corporate documents) and take all such actions reasonably deemed by the Lender to be necessary or desirable to ensure the creation, priority and perfection of such Lien. 3.2.16 New Subsidiaries. The Borrowers shall cause, at their ----------------- sole cost and expense, each new Subsidiary of any Borrower created or acquired on or after the date hereof, promptly upon such creation or acquisition, to execute and deliver to the Lender the following agreements and documents, which agreements and documents shall be in form and substance reasonably satisfactory to the Lender: (a) a certain joinder and assumption agreement by and between each such new Subsidiary, the Lender, BBI and the other Borrowers, pursuant to which, among other things, each such new Subsidiary shall (i) join in this Agreement, the Note, the Security Agreement and all of the other Financing Instruments and assume all of the Obligations hereunder and thereunder, all as fully and completely as though each such new Subsidiary was an original Borrower hereunder; (ii) make to the Lender all of the representations, warranties and covenants described in this Agreement, the Note, the Security Agreement and all of the other Financing Instruments which have made hereunder and thereunder by the Borrowers; and (iii) agree to be bound by and to observe all of the terms and conditions of this Agreement, the Note, the Security Agreement and all of the other Financing Instruments, jointly and severally with all of the Borrowers; (b) any and all UCC financing statements which the Lender deems necessary and appropriate in order to perfect its first priority perfected security interests in all of the assets of such Subsidiary; and (c) such other agreements, documents, financing statements, instruments, opinions and certificates and completion of such other matters, as the Lender may reasonably deem necessary or appropriate. -27- Promptly upon the creation or acquisition of any Subsidiary created or acquired after the date hereof, the Borrowers shall cause, at their sole cost and expense, all of the issued and outstanding shares of capital stock, membership interests and other equity interests of each such Subsidiary to be pledged to the Lender so that the Lender has a first priority perfected security interest in all such shares, membership interests and other equity interests. 3.3 General Negative Covenants. -------------------------- 3.3.1 Other Debt. No Borrower will issue any evidence of ----------- Indebtedness or create, or incur, assume, guarantee, become contingently liable for or suffer to exist, any Indebtedness except: (a) Indebtedness to the Lender arising under any of the Financing Instruments; (b) Purchase Money Indebtedness of the Borrowers and Indebtedness of the Borrowers incurred with respect to any Capitalized Lease of any non-real estate property and/or any Operating Lease of any non-real estate property which collectively are not in excess of the aggregate sum of One Million and 00/100 Dollars ($1,000,000.00); (c) Indebtedness with respect to taxes, assessments, governmental charges or levies which are being contested in good faith by appropriate proceedings, provided that adequate reserves with respect thereto are maintained on the books of such Borrower in conformity with GAAP; and (d) current liabilities which are incurred in the ordinary course of business and which are not incurred through (i) the borrowing of money or (ii) the obtaining of credit except for credit on an open account basis customarily extended and in fact extended in connection with normal purchases of goods and services. No Borrower shall enter into or participate in any agreement, arrangement or transaction with any Person without the prior written consent of the Lender, if the effect of such agreement, arrangement or transaction has, or could reasonably be expected in the future to have, the effect of (i) rendering such Borrower either primarily or contingently liable for any Indebtedness or other obligation of any Person (ii) transferring any asset of such Borrower to or for the benefit of any Person (except as may be otherwise expressly permitted by this Agreement); or (iii) subjecting any of such Borrower's property or assets to any lien in favor of any third party (other than Permitted Liens), including but not limited to any creditor or obligee of any Person. 3.3.2 Payment of Dividends. No Borrower will pay any dividends -------------------- either in cash or kind on any class of its stock nor make any distribution on account of their stock, nor redeem, purchase or otherwise acquire directly or indirectly any of their stock, without prior written notice to and written consent of the Lender except in compliance with this subparagraph 3.3.2. 3.3.3 Loans By the Borrower. No Borrower will make any loan or --------------------- advances to any Person, including, without limitation, its officers and employees. -28- 3.3.4 Investments. Without the prior written consent of the ----------- Lender, no Borrower will make any Investments other than short term, investment grade securities, including money market funds, and other than Permitted Acquisition Ventures. 3.3.5 Mergers. No Borrower will merge or consolidate or be ------- merged or consolidated with or into any other Person, or be a party to any reorganization, change in legal structure or any sale, lease, transfer or other disposition of all or substantially all of its assets. 3.3.6 Sales of Assets. No Borrower will sell, lease, or ---------------- dispose of any of its property or assets except for sales of Inventory in the ordinary and usual course of its business, and for Equipment no longer needed in the operation of its business, so long as such Borrower receives therefor a sum substantially equal to such Equipment's fair value. 3.3.7 Negative Pledge. Without the prior written consent of ---------------- the Lender, no Borrower will: 3.3.7.1 grant, create, incur, assume or suffer to exist, or permit any Person, whether by means of a power of attorney or otherwise, to grant, create, incur, assume or suffer to exist, any Lien, upon or with respect to, any Real Property of any such Borrower except for Permitted Liens; or 3.3.7.2 sign or file, or permit any Person, whether by means of a power of attorney or otherwise, to sign or file, under the Uniform Commercial Code of any jurisdiction, any financing statement which names any such Borrower as a debtor, or sign, or permit any Person, whether by means of a power of attorney or otherwise, to sign any security agreement authorizing any secured party thereunder to file such financing statement, except in connection with Permitted Liens; or 3.3.7.3 agree with any other Person that any such Borrower will not undertake activities prohibited pursuant to sub-subsections 3.3.7.1 and 3.3.7.2 hereof. To the extent that any Borrower violates the provisions of this subsection 3.3.7 by granting or assigning in favor of any Person, a Lien, upon or with respect to, any Real Property of such Borrower, such Lien is hereby deemed to be a Lien in favor of, and for the sole benefit of, the Lender, until all of the Obligations have been paid in full, and in the event that any Person receives any sums from, or as a result of, the sale, liquidation or distribution of all or any portion of any Real Property of the Borrower on account of such Lien, such sums are hereby deemed to be held in trust by such Person for the sole benefit of the Lender, and shall be promptly delivered to the Lender upon receipt, and shall not be commingled with any other funds of such Person. 3.3.8 No Liens; Permitted Liens. No Borrower will grant or --------------------------- assume or suffer to exist any Lien with respect to any of its assets or property, tangible or intangible, whether now owned or hereafter acquired, except for Liens granted to the Lender pursuant to this Agreement, and except for the following (collectively, the "Permitted --------- Liens"): (a) liens in respect of taxes, fees, assessments and other ----- governmental charges not yet due and payable, or with respect to which the validity thereof is currently being contested in good faith by appropriate proceedings in accordance with the provisions of this Agreement; (b) landlord's liens in respect of rent not in -29- default or Liens in respect of pledges or deposits under worker's compensation, unemployment insurance, social security laws or similar legislation or in connection with appeal and similar bonds incidental to litigation, mechanics', laborers', and materialmen's and similar liens, if the obligations secured by such liens are not then delinquent, and liens securing statutory obligations incidental to the conduct of the business of any Borrower which do not in the aggregate materially detract from the value of the property of such Borrower or materially impair the use thereof in the operation of their respective businesses; (c) judgment liens which shall not have been in existence for a period longer than thirty (30) days after the creation thereof (provided no foreclosure or execution action shall have been commenced) or if a stay of execution shall have been obtained for a period longer than thirty days after the expiration of such stay (provided no foreclosure or execution action shall have yet been commenced) or judgment liens for which any Borrower has obtained a bond in favor of the judgment holder in the full amount of the lien and which bond is otherwise satisfactory to Lender; and (d) Liens otherwise permitted pursuant to subsection 3.3.1 hereof. 3.3.9 Continuance of Business. No Borrower will engage in any ----------------------- business other than the businesses in which it is currently engaged or a business reasonably allied thereto, and each Borrower will continue to conduct and operate its business actively and in good faith. SECTION 4 FINANCIAL AND REPORTING COVENANTS --------------------------------- 4.1 Reporting Covenants. BBI shall cause to be furnished to the Lender ------------------- all of the following reports, statements, certificates and information (said reports, statements, certificates and information are hereinafter referred to collectively as the "Reporting Requirements"): ---------------------- 4.1.1 Quarterly Financial Statements. As soon as available and ------------------------------ are filed with the SEC but in any event within forty-five (45) days after the close of each calendar quarter of its fiscal year, consolidated and consolidating (except the last in each fiscal year) financial statements of the Borrowers, including balance sheets, and statements of profit and loss and statements of cash flows reflecting the financial condition of the Borrowers at the end of such period and the results of its operations for such period and for the period from the beginning of the current fiscal year to the end of such period, in comparative form with figures for the corresponding periods of the previous fiscal year. Such quarterly statements may be furnished to the Lender in the form of BBI's quarterly filings with the SEC under the `34 Act, on Form 10-Q. 4.1.2 Annual Financial Statements. As soon as available and ----------------------------- are filed with the SEC but in any event within ninety (90) days after the close of each fiscal year, consolidated and consolidating financial statements of the Borrowers, including balance sheets, statements of profit and loss, statements of cash flows, and statements of changes in shareholders' equity, reflecting the financial condition of the Borrowers at the end of such fiscal year and the results of its operations during such fiscal year (in each case setting forth in comparative form the corresponding figures for the preceding year) and, in the case of the consolidated financial statements, audited and reported upon (in form generally recognized as "unqualified") by PricewaterhouseCoopers LLP, or such other independent certified public accountant of nationally recognized standing, prepared in accordance with GAAP, applied consistently in the preparation thereof and with prior periods, together with, upon request of the Lender, an opinion of such certified public accountant that to its knowledge there has occurred no event which -30- constitutes, or which with the lapse of time or giving of notice or both would constitute an Event of Default hereunder, or, if the contrary appears to be true, a statement of such Event of Default and the nature thereof. Such annual statements may be furnished to the Lender in the form of BBI's annual filings with the SEC under the `34 Act on Form 10-K. 4.1.3 Compliance Certificate. Upon request of the Lender, but ---------------------- in any event concurrently with the delivery of the financial statements referred to in subsections 4.1.1 and 4.1.2 of this Agreement, a Compliance Certificate (the "Compliance Certificate"), in the form ----------------------- attached hereto as Schedule 4.1.3 and incorporated herein by reference, -------------- as completed and signed by a Responsible Officer of BBI. 4.1.4 Borrowing Base Certificate. Not later twenty (20) days --------------------------- after the close of each calendar month the following: (i) a Borrowing Base Certificate, in the form attached hereto as Schedule 4.1.4 and --------------- incorporated herein by reference as completed and signed by a Responsible Officer of BBI; and (ii) a report summarizing (x) all agings of all Accounts, and (y) a detailed breakdown of all Inventory, all as completed and signed by a Responsible Officer of BBI, and in such form and with such detail or information as the Lender may reasonably request, from time to time. 4.1.5 Other Information. In addition to the foregoing, BBI ------------------ will furnish (or cause to be furnished to) the Lender from time to time with such financial information and statements as the Lender may reasonably request, and, upon request of the Lender, with copies of all financial statements and financial reports that any Borrower sends or makes available to its members of its Board of Directors or to any governmental authority, together with copies of all management letters of substance and other reports of substance submitted to any Borrower by its independent accountants in connection with any annual or interim audit; and, upon request of the Lender, each Borrower will authorize and direct all accountants and auditors to exhibit and deliver copies of any financial statements, trial balances or other accounting records of any sort, and to disclose to the Lender any information they may have concerning any Borrower's financial or business condition. In addition, BBI will furnish to the Lender, promptly after the same are delivered to its stockholders or the SEC, copies of all proxy statements, financial statements and reports as any Borrower shall send to its stockholders or as any Borrower may file with the SEC or any governmental authority at any time having jurisdiction over any Borrower. -31- 4.2 Financial Covenants. Each Borrower shall maintain and observe all of the following financial covenants, in each case determined and classified on a consolidated basis in accordance with GAAP applied on a consistent basis at the applicable dates or during the applicable time periods indicated in the following table (the "Financial Covenants"):
- ----------------------------------------- ----------------------------- -------------------------------------------- APPLICABLE DATE OR TIME APPLICABLE RATIOS FINANCIAL COVENANTS PERIOD OR MONETARY REQUIREMENTS - ----------------------------------------- ----------------------------- -------------------------------------------- Ratio of Consolidated Total Liabilities For each fiscal quarter, to Not to exceed 1.50 to 1.00 for each fiscal to Consolidated Tangible Net Worth be determined as of the quarter last day of each such fiscal quarter, commencing with the fiscal quarter ending March 31, 1999 - ----------------------------------------- ----------------------------- -------------------------------------------- Capital Expenditures For each fiscal year, to be Not to exceed in the aggregate determined as of the last $2,500,000.00 per fiscal year day of each such fiscal year, commencing with the fiscal year ending December 31, 1999 - ----------------------------------------- ----------------------------- -------------------------------------------- Consolidated Net Income For each fiscal quarter, to (a) a Net Loss of not more than be determined as of the $250,000.00 for the fiscal quarter ending last day of each such March 31, 1999; fiscal quarter, commencing with the fiscal quarter (b) a Net Loss of not more than ending March 31, 1999 $250,000.00 for the fiscal quarter ending June 30, 1999; (c) a Net Loss of not more than $450,000.00 for the fiscal quarter ending September 30, 1999, and for the fiscal six months ending December 31, 1999; and (d) a Net Income of at least $1.00 for the fiscal quarter ending March 31, 2000 and for each consecutive fiscal quarter thereafter - ----------------------------------------- ----------------------------- --------------------------------------------
-32-
- ----------------------------------------- ----------------------------- -------------------------------------------- APPLICABLE DATE OR TIME APPLICABLE RATIOS FINANCIAL COVENANTS PERIOD OR MONETARY REQUIREMENTS - ----------------------------------------- ----------------------------- -------------------------------------------- - ----------------------------------------- ----------------------------- -------------------------------------------- Consolidated Debt Service Ratio For each fiscal quarter, to (a) At least 1.50 to 1.00 for the fiscal be determined as of the quarter ending March 31, 1999; last day of each such fiscal quarter, commencing (b) At least 1.50 to 1.00 for the period with the fiscal quarter of two (2) consecutive fiscal quarters ending March 31, 1999 ending June 30, 1999; (c) At least 1.00 to 1.00 for the period of three (3) consecutive fiscal quarters ending September 30, 1999; and (d) At least 1.50 to 1.00 for each period of four (4) consecutive quarters ending December 31, 1999 and on the last day of each fiscal quarter thereafter - ----------------------------------------- ----------------------------- --------------------------------------------
Notwithstanding anything to the contrary in this Agreement to the contrary, for purposes of making all calculations in connection with the covenants contained in this subsection 4.2, all accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with GAAP consistently applied as in effect on the date of this Agreement. In the event of any material difference at any time between GAAP in effect on the date of this Agreement and GAAP from time to time in effect, the Compliance Certificate required pursuant to subsection 4.1.3 shall include a reconciliation of the calculations required thereby with the financial statements being delivered with such certificate. 4.3.3.3 Limitation on Changes in Fiscal YearLimitation on Changes in -------------------------------------------------------------- Fiscal YearLimitation on Changes in Fiscal Year. No Borrower shall change its - ------------------------------------------------- fiscal year without the prior written consent of the Lender. SECTION 5 CONDITIONS OF CLOSING --------------------- The effectiveness of this Agreement and the agreement of the Lender to make the initial Loan requested to be made by it is subject to the satisfaction, immediately prior to or concurrently with the making of such Loan on the Closing Date, of the following conditions precedent: (a) Financing Instruments. The Lender shall have received this --------------------- Agreement, the Note and the Security Agreement, each as executed and delivered by a duly authorized officer of each Borrower, with the signature of such officer properly witnessed and notarized thereon. (b) Actions to Perfect Security Interest. The Lender shall -------------------------------------- have received evidence in form and substance reasonably satisfactory to it that all filings, recordings, registrations and other actions, including, without limitation, the filing of duly executed financing statements on form UCC-1, necessary or, in the opinion of the Lender, desirable to perfect the security interest -33- created by the Security Agreement shall have been completed (or, to the extent that any such filings, recordings, registrations and other actions shall not have been completed, arrangements satisfactory to the Lender for the completion thereof shall have been made). (c) Pledged Stock; Stock Powers. The Lender shall have ------------------------------ received the original certificates representing the shares of capital stock pledged pursuant to the Security Agreement, together with an undated stock power for each such certificate executed in blank by a duly authorized officer of each Borrower. (d) Lien Searches. The Lender shall have received the results ------------- of a recent search by a Person reasonably satisfactory to the Lender of the UCC, judgment and tax lien filings which may have been filed with respect to real and personal property of each Borrower in the jurisdictions set forth in Schedule 5(d), and the results of such -------------- search shall be satisfactory to the Lender. (e) Insurance. The Lender shall have received evidence in form --------- and substance satisfactory to it that all of the requirements of this Agreement and the Security Agreement requiring the maintenance of insurance shall have been satisfied. (f) Authority Documents. The Lender shall have received a copy ------------------- of the resolutions, in form and substance satisfactory to the Lender, of the Board of Directors of each Borrower authorizing (i) the execution, delivery and performance of this Agreement and the other Financing Instruments to which it is a party, (ii) the Loans contemplated hereunder and (iii) the granting by it of the security interests created pursuant to the Security Documents to which each Borrower is a party, all as certified by the Clerk or an Assistant Clerk of each Borrower as of the Closing Date, which certificate shall be in form and substance reasonably satisfactory to the Lender and shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded. (g) Incumbency Certificate. The Lender shall have received a ----------------------- certificate of each Borrower, dated as of the Closing Date, as to the incumbency and signature of the officers of each such Borrower executing any Financing Instrument reasonably satisfactory in form and substance to the Lender, executed by the President or any Vice President and the Clerk or any Assistant Clerk of each such Borrower. (h) Corporate Documents. The Lender shall have received true -------------------- and complete copies of the articles of organization and by-laws of each Borrower, as certified as of the Closing Date as complete and correct copies thereof by the Clerk or an Assistant Clerk of each such Borrower. (i) Legal Existence, Good Standing and Foreign Qualification ---------------------------------------------------------- Certificates. The Lender shall have received certificates of legal ------------ existence, good standing and foreign qualification for each Borrower, all of recent date issued by the appropriate Secretary of State. (j) Borrowing Base Certificate. The Lender shall have received -------------------------- (i) a borrowing base certificate, in the form referred to in subsection 4.1.4 above and (ii) a report summarizing all agings of Account and all Inventory, in such form and with such detail or information as the Lender may reasonably request, all as completed and signed by a Responsible Officer of BBI. -34- (k) Legal Opinion. The Lender shall have received an executed ------------- legal opinion of Perkins, Smith & Cohen, LLP, counsel to the Borrowers, covering such matters related to the transactions contemplated by this Agreement and the other Financing Instruments as the Lender may reasonably request. Such legal opinion shall be in a form and substance reasonably acceptable to the Lender and its counsel. (l) Fees and Expenses. The Lender shall have received (i) the ----------------- Restructuring Fee; and (ii) reimbursement or payment of all legal fees, costs and expenses incurred by the Lender in connection with the transactions contemplated herein. SECTION 6 EVENTS OF DEFAULT ----------------- Notwithstanding any provision to the contrary in any instrument evidencing any Obligation, the occurrence of any one or more of the following shall constitute and mean an "Event of Default" under this Agreement: ---------------- 6.1 Any statement, report, certificate, representation or warranty, made or furnished by any Borrower in, or in connection with the execution and delivery of this Agreement or any of the Financing Instruments, or in compliance with the provisions of this Agreement or any of the Financing Instruments, or otherwise furnished to the Lender at any time, shall prove to have been false or erroneous when made in any material respect, or omits or fails to state a material fact necessary in order to make the statements contained therein or herein not misleading; 6.2 Any Borrower shall fail to make payment of the principal or interest on the Loans when and as due; 6.3 Any Borrower shall fail to make payment of any other Obligation within fifteen (15) days of the date when and as due; 6.4 Any Borrower shall fail to perform, observe, comply with or satisfy any covenant, agreement or condition contained in this Agreement (other than payment of any Obligation) not cured within thirty (30) days of the earlier of (i) notice by the Lender to BBI or (ii) actual knowledge by any Borrower of the occurrence thereof, plus such additional time as may be required to cure such default because of delays beyond any Borrower's control, if such default is susceptible of being cured and if the Borrowers are acting in good faith and is making diligent efforts to cure such default; provided, however, that such cure ------------------ period shall not exceed the aggregate of ninety (90) days and shall not apply to: (a) any transfer or voluntary encumbrance of assets; (b) any failure with respect to any requirement of any Borrower to give notice to the Lender as provided herein; (c) the Reporting Requirements or the Financial Covenants; or (d) any event which is otherwise an Event of Default pursuant to any other subsections of this Section 6; and such cure period shall run concurrently with, and not in addition to, any and all applicable grace or cure periods contained in any of the other Financing Instruments; 6.5 Any Borrower shall default in payment of (a) any obligation under any lease which default could materially adversely affect the business operations of any Borrower; or (b) any obligation or Indebtedness to any other Person at any time outstanding, continued for a period sufficient to cause the acceleration of the maturity of such obligation or Indebtedness (whether or not such obligation or -35- Indebtedness is actually accelerated) and such acceleration could materially adversely affect the business operations of any Borrower; 6.6 Failure, generally, of any Borrower to pay its debts when due and such failure could materially adversely affect the business operations of any Borrower; or the taking of possession, custody or control of, or the attachment by judicial process of, or issuance of an injunction against, or creation of any other Lien (other than in favor of the Lender) upon, any part of any Borrower's property or assets by any Person, which action is not dissolved within thirty (30) days; 6.7 Any Borrower: 6.7.1 files a voluntary petition in bankruptcy (which term includes any action under Title 11 of the United States Code entitled "Bankruptcy" and commonly referred to as the "Bankruptcy Code"); or --------------- 6.7.2 is adjudicated a bankrupt or insolvent; or 6.7.3 files any petition or answers seeking or acquiescing in any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief for itself under any law relating to bankruptcy, insolvency or other relief for debtors; or 6.7.4 seeks or consents to or acquiesces in the appointment of any trustee, receiver, master or liquidator (or other similar official) of itself or of all or any substantial part of its property; or 6.7.5 makes any general assignment for the benefit of creditors; or 6.7.6 admits in writing to its general inability to pay its debts as they become due; 6.8 Commencement of any bankruptcy, insolvency, or other creditor's relief proceedings against, or entry by a court of competent jurisdiction of any order, judgment or decree approving a petition filed against any Borrower, seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future federal or state law or regulation relating to bankruptcy, insolvency, or other relief for debtors, which proceeding, order, judgment or decree remains unvacated or unstated for an aggregate of thirty (30) days, whether or not consecutive, from the date of entry thereof; 6.9 A material portion of any Borrower's assets shall be damaged by fire or other casualty, the restoration or replacement cost of which damage exceeds, in the aggregate, the amount of insurance proceeds readily available (less applicable deductibles and plus capital in an amount which, in Lender's sole discretion (a) is available for such purposes and (b) expenditure of such capital for such purposes is appropriate under the circumstances) for such restoration or replacement; 6.10 The issuance or existence of any judgment or judgments against any Borrower by any court of competent jurisdiction, or other governmental authority of competent jurisdiction, aggregating in excess of One Hundred Thousand Dollars ($100,000) in any fiscal year, and not covered by insurance, not paid within thirty (30) days of the date thereof; -36- 6.11 The loss, suspension or revocation of any governmental license required or necessary in connection with the operation of any Borrower's business; 6.12 Service of any process upon the Lender seeking to attach by means of trustee process any funds of any Borrower or of any Affiliate on deposit with Lender, which attachment or process is not dissolved within thirty (30) days; or 6.13 The occurrence of any change in any Borrower's condition or affairs (financial or otherwise) that, in the Lender's reasonable opinion, impairs the Lender's security or materially increases the Lender's risk under this Agreement or the Financing Instruments, or the occurrence of any event or circumstance with respect to any Borrower such that the Lender reasonably deems itself insecure. SECTION 7 REMEDIES -------- 7.1 General Remedies. In addition to and without in any way limiting ----------------- any other rights and remedies available to the Lender under this Agreement prior to an Event of Default, or any other rights and remedies available to the Lender (whether prior to or after an Event of Default) under any of the Financing Instruments or under applicable law or in equity, upon and at any time or times after the occurrence of any Event of Default hereunder: 7.1.1 the Lender may declare and cause all or any portion of the Obligations to be immediately due and payable; 7.1.2 the Lender may decline to honor the credit of any Borrower or may refuse to make further advances to any Borrower; 7.1.3 the Lender shall have the right to apply to the Obligations any deposits or other sums at any time credited by or due from the Lender to any Borrower; and 7.1.4 the Lender may treat any or all of the Financing Instruments as being in default and may exercise any rights and remedies thereunder as it shall deem appropriate. 7.2 Cumulative Remedies. The enumeration of rights and remedies herein, ------------------- and in each of the Financing Instruments, shall be cumulative and not exclusive, and shall be in addition to, and shall not exclusive of, any other rights or remedies the Lender may have, whether under the UCC or other applicable law, or in equity, or otherwise. The Lender shall, in its discretion, determine its choice of rights and remedies and the order in which they shall be exercised, and whether or not, and which, Collateral is to be proceeded against, and in which order. The exercise of any right or remedy shall not preclude the exercise of others. SECTION 8 WAIVER ------ 8.1 Waiver By the Borrowers. Each Borrower hereby waives demand, ------------------------ presentment, protest and notice thereof with respect to any and all instruments, notice of acceptance hereof, notice of Loan or -37- advances made, credit extended, or any other action taking in reliance herein, and all other notices and demands of any kind except as expressly set forth herein. 8.2 Lender's Option To Waive. The Lender may at its sole discretion, at ------------------------ any time and from time to time, waive any of the requirements or provisions hereof, or contained within any of the Financing Instruments, or any default hereunder or under any of the Financing Instruments, but only by an express written waiver signed by an authorized officer of the Lender; no act other than an express written waiver, nor any failure to act or delay by the Lender shall constitute a waiver of any requirement or provision of, or any default under, or any of the Lender's rights or remedies under, this Agreement or any of the Financing Instruments. No single or partial waiver by the Lender of any provision of this Agreement or any of the Financing Instruments, or any breach or default thereunder, or of any right or remedy which the Lender may have, shall operate as a waiver of any other provision, breach, default, right or remedy, nor of the same one on any future occasion. SECTION 9 MISCELLANEOUS ------------- 9.1 Deposits As Collateral; Set-Off. Any and all deposits, Deposit --------------------------------- Accounts, and other sums at any time credited by or due to any Borrower from the Lender or any of its banking or lending affiliates or any lender acting as a participant under any loan arrangement between the Lender and any Borrower, and any cash, certificates of deposit, securities, instruments, documents, policies and certificates of insurance, goods, Accounts, choses in action, Chattel Paper, and other property of any Borrower in the possession or control of, or in transit to or from, the Lender, or any of its banking or lending affiliates, or any lender acting as a participant under any loan arrangement between the Lender and any Borrower, or any third party acting on the Lender's behalf, regardless of the reason the Lender, or such other party, receives or is to receive the same (whether in pledge, or for safekeeping, or as agent for collection or transmission or otherwise) and regardless of whether the Lender has conditionally released the same, shall at all times constitute security for any and all Obligations, and may be applied or set off against such Obligations at any time, whether or not other collateral is available to the Lender. 9.2 Survival of Covenants; Binding Effect. All agreements, -------------------------------------------- representations, covenants and warranties made by any Borrower in this Agreement, the Financing Instruments, or in any certificate or other document delivered to the Lender in connection herewith shall survive the termination of this Agreement and survive the execution and delivery of this Agreement, and shall remain in full force and effect until all Obligations to the Lender have been paid in full and satisfied, and the security interests and rights granted to the Lender in any collateral and its rights and remedies hereunder and under the Financing Instruments shall continue in full force and effect notwithstanding the fact that any Borrower's Loan account may from time to time be in a zero or credit position, until all Obligations have been satisfied. All the terms and provisions of this Agreement and the Financing Instruments shall be binding upon and inure to and be enforceable by and against the parties hereto and their respective successors and assigns. 9.3 Termination of Agreement. ------------------------ 9.3.1 This Agreement shall terminate upon the final and irrevocable payment in full by the Borrowers of the Obligations, or upon acceleration of the Obligations pursuant to the terms of this Agreement. -38- 9.3.2 The termination of this Agreement shall not affect any rights of any Borrower or the Lender arising prior to the effective date of such termination, as the case may be, and the provisions hereof shall continue to be fully operative until all transactions entered into, rights created or Obligations incurred prior to such occurrence or termination shall have been fully disposed of, concluded or liquidated. Upon termination of this Agreement, all Obligations (including, without limitation, the Loans) shall be due and payable without notice or demand. The security interests, liens and rights granted to the Lender hereunder and under any instrument or document delivered pursuant hereto or in connection herewith shall continue in full force and effect, notwithstanding the termination of this Agreement or the fact that any Borrower's Accounts may from time to time be temporarily in a credit position, until all of the Obligations have been paid in full after the termination hereof. All representations, warranties, covenants, waivers and agreements contained herein shall survive the termination hereof unless otherwise provided. Notwithstanding the foregoing, if after receipt of any payment of all or any part of the Obligations, the Lender is for any reason compelled to surrender such payment to any person or entity because such payment is determined to be void or voidable as a preference, impermissible setoff, a diversion of trust funds or for any other reason, this Agreement shall continue in full force and each Borrower shall be liable to, and shall indemnify and hold the Lender harmless for, the amount of such payment surrendered until the Lender shall have been finally and irrevocably paid in full. The provisions of the foregoing sentence shall be and remain effective notwithstanding any contrary action which may have been taken by the Lender in reliance upon such payment, and any such contrary action so taken shall be without prejudice to the Lender's rights under this Agreement and shall be deemed to have been conditioned upon such payment having become final and irrevocable. 9.4 Conflict of Terms. In the event of any conflict or contradiction ----------------- between or among any provision or provisions of this Agreement and any provision or provisions of any of the other Financing Instruments, the provisions of this Agreement shall govern. 9.5 Prior Discussions; Amendments in Writing; Counterparts; Filing As ------------------------------------------------------------------- Financing Statement. This Agreement and all other Financing Instruments - -------------------- incorporate all discussions and negotiations between the Borrowers and the Lender, either express or implied, concerning the matters included herein and therein, any custom or usage to the contrary notwithstanding. No such discussions or negotiations shall limit, modify, or otherwise affect the provisions of the Financing Instruments. This Agreement may be amended or modified only in writing signed by the parties hereto, and in the case of the Lender signed by a duly authorized officer thereof. This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but such counterparts together shall constitute one and the same instrument. 9.6 General Indemnification. Each Borrower shall, and does hereby, ------------------------ further indemnify and save the Lender harmless from any and all liabilities, damages, costs, losses and expenses (including, without limitation, court costs and attorney's reasonable fees and expenses) that the Lender may sustain or incur by reason of, relating to or arising out of the preparation of this Agreement, or in collecting or enforcing the Obligations, or in enforcing any of Lender's rights or remedies, or in the prosecution or defense of any action or proceeding concerning any matter growing out of or connected with this Agreement, any of the Financing Instruments, or the Obligations, or on account of the Lender's relationship with any Borrower (each of which may be defended, compromised, settled or pursued by the Lender with counsel of Lender's selection, at the sole expense of the Borrowers) except for such claims -39- which have been determined by a court of competent jurisdiction to have arisen out of the Lender's gross negligence or bad faith. The within indemnification shall survive termination of this Agreement. Each Borrower's obligations under this subsection constitute part of the Obligations secured by the security interest created by this Agreement and by the other Financing Instruments. 9.7 Destruction of Documents; Jurisdiction. This Agreement and all ---------------------------------------- other Financing Instruments may be reproduced by the Lender by any photographic, photostatic, microfilm, or similar process, and the Lender may destroy the original from which any document was so reproduced. Any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made in the regular course of business). Each Borrower acknowledges receipt of a true, correct and complete copy or counterpart of this Agreement. 9.8 Notices. All notices, requests and demands to or upon the ------- respective parties hereto to be effective shall be in writing (including by facsimile transmission), and, unless otherwise expressly provided herein, shall be deemed to have been duly given when delivered by hand, or when sent by facsimile transmission or by telex, answer back received, or on the first Business Day after delivery to any overnight delivery service, freight prepaid, or three (3) Business Days after being sent by certified or registered mail, return receipt requested, postage prepaid, and addressed as follows, or to such other address as may be hereafter notified by the respective parties hereto: (a) If to any Borrower then: Boston Biomedica, Inc. 375 West Street West Bridgewater, MA 02379 Attention: Richard T. Schumacher, President Telecopy No: 508-580-1110 with copies to: Perkins, Smith & Cohen, LLP One Beacon Street Boston, MA 02108-3106 Attention: Howard L. Levin, Esq. Telecopy No: 617-854-4040 (b) If to the Lender, then: BankBoston, N.A. Middle Market Lending Worcester Tower 100 Front Street Worcester, MA 01608-1438 Attention: G. Christopher Miller, Director Mail Stop: MA-CEN 72-18-04 Telecopy No: 508-770-7740 with copies to: Peabody & Arnold LLP 50 Rowes Wharf Boston, MA 02110 Attention: Frank S. Hamblett, Esq. Telecopy No: 617-951-2125 -40- 9.9 Application of Proceeds. The proceeds of any collection, sale or ----------------------- disposition of the Collateral, or of any other payments received hereunder, shall be applied toward the Obligations in such order and manner as the Lender determines in its sole discretion, any statute (the application of which may be waived or modified by agreement), customs or usage to the contrary notwithstanding. The Borrowers shall remain liable to the Lender for any deficiency remaining following such application. 9.10 Continuance of Defaults. As used herein, and in any of the ------------------------- Financing Instruments, upon any and each occurrence of an Event of Default, such Event of Default shall be deemed to continue until cured by the Borrowers in accordance with this Agreement (and the applicable provisions of the Financing Instruments, as the case may be), and until such time as the Borrowers request and receive from the Lender the Lender's written acknowledgment that such Event of Default (as specified in the request) has been cured and is no longer continuing, which acknowledgment the Lender shall not unreasonably withhold or delay. 9.11 Severability. If any provision of this Agreement or any of the ------------ Financing Instruments, or any portion of such provision, or the application thereof to any person or circumstance, shall to any extent be held invalid or unenforceable, the remainder of this Agreement and the Financing Instruments or the remainder of such provision and the application thereof to other persons or circumstances (other than those as to which it is held invalid or unenforceable) shall not be affected thereby, and each term and provision hereof and of the Financing Instruments shall be valid and enforced to the fullest extent permitted by law. To the extent permitted by law, the parties hereto waive any provision of law which renders any such provision prohibited or unenforceable in any respect. 9.12 Headings. Headings appearing in this Agreement are intended for -------- convenience only and do not constitute and shall not be interpreted to be a part of this Agreement. 9.13 Governing Law; Sealed Instrument. This Agreement is executed and --------------------------------- delivered in The Commonwealth of Massachusetts, and for all purposes shall be construed in accordance with and governed by the laws of The Commonwealth of Massachusetts, and shall take effect as a sealed instrument. Each Borrower submits itself to the jurisdiction of the Courts of The Commonwealth of Massachusetts for all purposes with respect to this Agreement and each Borrower's relationship with the Lender. 9.14 Force Majeure. The Lender shall not be responsible for delays or ------------- failures in performance hereunder resulting from causes beyond its control, including without limitation, acts of God, strikes, lockouts, riots, acts of war, governmental regulations, fire, communication line failures, power failures, earthquakes or other disasters. 9.15 Joint and Several. All of the obligations and liabilities of each ----------------- of Borrower under this Agreement and all of the other Financing Instruments are joint and several. 9.16 Interpretation of Agreement. Should any provision of this ----------------------------- Agreement or the other Financing Instruments require interpretation or construction, it is agreed by the parties hereto that the court, administrative body, or other entity interpreting or construing this Agreement or the other Financing Instruments shall not apply a presumption that the provisions thereof shall be more strictly construed against one party by reason of the rule of construction that a document is to be construed more strictly against the party who itself or through its agents prepared the same, it being agreed that the parties and/or their respective attorneys and agents have fully participated in the preparation of all provisions of this Agreement and the other Financing Instruments. -41- [THE REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY] -42- EXECUTED as an instrument under seal as of the day and year first stated above. BORROWERS: WITNESS: BOSTON BIOMEDICA, INC. ______________________________ By:_________________________________ Name: Kevin W. Quinlan, Treasurer WITNESS: BBI BIOTECH RESEARCH LABORATORIES, INC. (f/k/a BTRL Contracts and Services, Inc.) ______________________________ By:_________________________________ Name: Kevin W. Quinlan, Treasurer WITNESS: BBI CLINICAL LABORATORIES, INC. (f/k/a BBI-North American Clinical Laboratories, Inc.) ______________________________ By:_________________________________ Name: Kevin W. Quinlan, Treasurer WITNESS: BBI SOURCE SCIENTIFIC, INC. ______________________________ By:_________________________________ Name: Kevin W. Quinlan, Treasurer WITNESS: BBI BIOSEQ, INC. ______________________________ By:_________________________________ Name: Kevin W. Quinlan, Treasurer LENDER: WITNESS: BANKBOSTON, N.A. (f/k/a The First National Bank of Boston) ______________________________ By:_________________________________ Name: G. Christopher Miller, Director -43- COMMONWEALTH OF MASSACHUSETTS ___________, ss. August __, 1999 Then personally appeared the above-named Kevin W. Quinlan, as Treasurer of each of Boston Biomedica, Inc., BBI Biotech Research Laboratories, Inc., BBI Clinical Laboratories, Inc., BBI Source Scientific, Inc., and BBI BioSeq, Inc. and acknowledged the foregoing instrument to be his free act and deed, and the free act and deed of each of Boston Biomedica, Inc., BBI Biotech Research Laboratories, Inc., BBI Clinical Laboratories, Inc., BBI Source Scientific, Inc. and BBI BioSeq, Inc., before me. ---------------------------- Notary Public My commission expires: [AFFIX NOTARIAL SEAL] COMMONWEALTH OF MASSACHUSETTS _________, ss. August __, 1999 Then personally appeared the above-named G. Christopher Miller, as Director of BankBoston, N.A., and acknowledged the foregoing instrument to be his free act and deed and the free act and deed of BankBoston, N.A., before me. ---------------------------- Notary Public My commission expires: [AFFIX NOTARIAL SEAL] -44- Schedule 4.1.3 COMPLIANCE CERTIFICATE ---------------------- TO: BANKBOSTON, N.A. (f/k/a The First National Bank of Boston) Worcester Tower 100 Front Street Worcester, MA 01608-1438 Reference is hereby made to a certain First Amended and Restated Commercial Loan Agreement, dated as of June 30, 1999 (as the same may be amended, modified, substituted, extended or restated, from time to time, the "Loan Agreement") by and among (a) BOSTON BIOMEDICA, INC., a Massachusetts --------------- corporation, for itself (when acting for itself, "BBI") and as Agent (when --- acting in such capacity, the "Borrower Agent") for all of the Borrowers (as --------------- defined below), (b) all of the SUBSIDIARIES of BBI (said Subsidiaries, together with BBI and any and all other Subsidiaries which may from time to time become parties thereto, are hereinafter sometimes referred to collectively as the "Borrowers" and each singly as a "Borrower") and (c) BANKBOSTON, N.A., a --------- -------- national banking association (f/k/a The First National Bank of Boston)(together with its successors and assigns, the "Lender"). All capitalized terms not ------ defined herein but defined in the Loan Agreement shall have the meanings given to such terms in the Loan Agreement. The undersigned hereby certifies that he or she is a Responsible Officer of BBI and as such, is authorized, for and on behalf of BBI, to execute and deliver this Compliance Certificate to the Lender in accordance with the provisions of the Loan Agreement. Pursuant to the provisions of subsection 4.1.3 of the Loan Agreement, the undersigned hereby certifies to the Lender as follows: 1. Each of the representations and warranties made by the Borrowers in or pursuant to the Financing Instruments are true and correct in all material respects on and as of the date hereof, as if made on and as of the date hereof, except (a) to the extent such representations and warranties expressly relate to an earlier date in which case such representations and warranties shall be true and correct in all material respects as of such earlier date, and (b) as follows: [Describe divergences, if any] 2. Since the end of the last fiscal quarter of the Borrowers, no material adverse change on the business, operations, property or condition (financial or otherwise) of any of the Borrowers taken as a whole has occurred except: [Describe, if any] 3. The undersigned has reviewed or caused to be reviewed all of the Financing Instruments, and based upon such review and to the knowledge of the undersigned, no Default or Event of Default has occurred and is continuing as of the date hereof (or if applicable, will occur after giving effect to the making of the Loans requested to be made on the date hereof), except as follows: [Describe Defaults or Events of Default] -45- 4. Except as set forth in the certificates attached hereto and except as heretofore disclosed to the Lender in previous Compliance Certificates, there has been no change (i) in the Articles of Organization or By-Laws of any of the Borrowers, or (ii) in the incumbency of the officers of each Borrower whose signatures have heretofore been certified to the Lender. 5. The financial statements submitted herewith (if any) are in compliance with the provisions of subsections 4.1.1 or 4.1.2 of the Loan Agreement, whichever is applicable, and fairly present the financial condition of the Borrowers and the results of their operations for the period ended __/__/__ (the "Applicable Financial --------------------- Statements Date"), in accordance with GAAP consistently applied, ---------------- [subject only to year-end adjustments and audit].] 6. The Borrowers are in complete compliance with the Financial Covenants as of the Applicable Financial Statements Date, as demonstrated below.
- --------------------------------- ------------------------- ---------------------------- --------------------- APPLICABLE DATE OR TIME APPLICABLE RATIOS ACTUAL AS OF FINANCIAL COVENANTS PERIOD OR MONETARY REQUIREMENTS __/__/__ - --------------------------------- ------------------------- ---------------------------- --------------------- Ratio of Consolidated Total For each fiscal Not to exceed 1.50 to 1.00 ___:___ Liabilities to Consolidated quarter, to be for each fiscal quarter Tangible Net Worth determined as of the last day of each such fiscal quarter, commencing with the fiscal quarter ending March 31, 1999 - --------------------------------- ------------------------- ---------------------------- --------------------- Capital Expenditures For each fiscal year, Not to exceed in the ___:___ to be determined as of aggregate $2,500,000.00 the last day of each per fiscal year such fiscal year, commencing with the fiscal year ending December 31, 1999 - --------------------------------- ------------------------- ---------------------------- ---------------------
-46-
- --------------------------------- ------------------------- ---------------------------- --------------------- APPLICABLE DATE OR TIME APPLICABLE RATIOS ACTUAL AS OF FINANCIAL COVENANTS PERIOD OR MONETARY REQUIREMENTS __/__/__ - --------------------------------- ------------------------- ---------------------------- --------------------- Consolidated Net Income For each fiscal (a) a Net Loss of not more ___:___ quarter, to be than $250,000.00 for the determined as of the fiscal quarter ending last day of each such March 31, 1999; fiscal quarter, commencing with the (b) a Net Loss of not more fiscal quarter than $250,000.00 for the ending March 31, 1999 fiscal quarter ending June 30, 1999; (c) a Net Loss of not more than $450,000.00 for the fiscal quarter ending September 30, 1999, and for the fiscal six months ending December 31, 1999; and (d) a Net Income of at least $1.00 for the fiscal quarter ending March 31, 2000 and for each consecutive fiscal quarter thereafter - --------------------------------- ------------------------- ---------------------------- ---------------------
-47-
- --------------------------------- ------------------------- ---------------------------- --------------------- APPLICABLE DATE OR TIME APPLICABLE RATIOS ACTUAL AS OF FINANCIAL COVENANTS PERIOD OR MONETARY REQUIREMENTS __/__/__ - --------------------------------- ------------------------- ---------------------------- --------------------- Consolidated Debt Service Ratio For each fiscal (a) At least 1.50 to 1.00 ___:___ quarter, to be for the fiscal quarter determined as of the ending March 31, 1999; last day of each such fiscal quarter, (b) At least 1.50 to 1.00 commencing with the for the period of two (2) fiscal quarter ending consecutive fiscal March 31, 1999 quarters ending June 30, 1999; (c) At least 1.00 to 1.00 for the period of three (3) consecutive fiscal quarters ending September 30, 1999; and (d) At least 1.50 to 1.00 for each period of four (4) consecutive quarters ending December 31, 1999 and on the last day of each fiscal quarter thereafter - --------------------------------- ------------------------- ---------------------------- ---------------------
Attached hereto as Appendix A are calculations demonstrating that, based upon ---------- the financial statements of the Borrowers submitted herewith (if any), the Borrowers were in compliance with all of the Financial Covenants as of the Applicable Financial Statements Date, except as noted on Appendix A attached ---------- hereto.] 7. Any changes in the chief executive office and chief place of business of any of the Borrowers which have occurred and/or any additional locations at which any of the Inventory or Equipment are kept, notice of which has not yet been provided to the Lender, in accordance with the provisions of the Security Documents, are set forth below: -48- EXECUTED as of this ________ day of __________________, ______. BOSTON BIOMEDICA, INC. By:_________________________________ Kevin W. Quinlan, Treasurer -49- APPENDIX A -50- - -------------------------------------------------------------------------------- FIRST AMENDED AND RESTATED COMMERCIAL LOAN AGREEMENT (the "Agreement") --------- by and among BANKBOSTON, N.A. (f/k/a The First National Bank of Boston) (the "Lender") ------ and BOSTON BIOMEDICA, INC. AND ALL OF ITS SUBSIDIARIES (collectively, the "Borrowers") --------- - -------------------------------------------------------------------------------- MASTER DISCLOSURE SCHEDULE -------------------------- Each Borrower represents and warrants to the Lender that the statements contained in Section 3 of the Agreement are true, correct and complete as of the date of the Agreement, except as set forth in this Master Disclosure Schedule (as the same may be supplemented, from time to time, the "Master Disclosure ------------------ Schedule"). The Master Disclosure Schedule is arranged in sections corresponding - -------- to the lettered and numbered sections contained in Section 3 of the Agreement. 3.1.1 Business. The Borrowers are engaged in the following businesses: -------- (a) BBI develops, manufactures and sells reagants, quality control and other performance management diagnostic products to increase the accuracy of in-vitro diagnostic tests. (b) BBIBRL provides (i) research and development support for the other business units of BBI as well as contract research services for third parties; and (ii) is pursuing research and development programs in drug discovery with the goal of introducing new solutions for the detection and treatment of infectious diseases. (c) BBICL provides specialty laboratory testing services in infectious diseases. (d) BBISS develops and manufactures laboratory and diagnostic instruments. (e) BioSeq, Inc. is engaged in research and development programs in the area of pressure cycling technology (PCT) with the goal of introducing new solutions for the purification and disinfection of products derived from organic sources for improving the detection and treatment of infectious. PABOS2:FSH:246472_6 -51- EX-10 5 EXHIBIT 10.2 AGREEMENT WITH PARADIGM GROUP ================================================================= WARRANT PURCHASE AGREEMENT Warrants to Purchase 500,000 Shares of the Common Stock of Boston Biomedica, Inc. Dated: August 18, 1999 ================================================================= WARRANT PURCHASE AGREEMENT -------------------------- TABLE OF CONTENTS ----------------- ARTICLE 1. DESCRIPTION OF PROPOSED FINANCING..................................1 1.1 Authorization of Warrants..................................................1 1.2 Purchase and Sale of Warrants..............................................1 1.3 Closing....................................................................1 ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................2 2.1 Organization and Qualification.............................................2 2.2 Capitalization.............................................................2 2.3 Authorization of Transaction...............................................2 2.4 Offerees...................................................................2 2.5 Registration Right.........................................................2 2.6 Compliance with Securities and Exchange Commission Requirements............3 2.7 Brokerage..................................................................3 ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF INVESTOR.........................3 3.1 Investment Intent; Accredited Investor; Legends............................3 3.2 Authorization..............................................................4 3.3 Restricted Securities......................................................4 3.4 Brokerage..................................................................4 ARTICLE 4. CONDITIONS OF INVESTOR'S OBLIGATIONS...............................4 4.1 Representations and Warranties.............................................4 4.2 Performance................................................................4 4.3 Consents and Waivers.......................................................5 4.4 Legal Action...............................................................5 ARTICLE 5. AFFIRMATIVE COVENANTS OF THE COMPANY...............................5 5.1 Use of Proceeds............................................................5 5.2 Board of Directors.........................................................5 5.3 Future Commissions.........................................................5 5.4 S-3 Registration...........................................................6 ARTICLE 6. REGISTRATION; PUT OPTION...........................................6 6.1 S-3Registration............................................................6 6.2 Expenses...................................................................7 6.3 Indemnification............................................................7 6.4 Payment of Warrant Exercise Price; Refund of Warrant Exercise Proceeds.....9 6.5 Exclusive Obligation to Register...........................................9 6.6 Put Option.................................................................9 ARTICLE 7. MISCELLANEOUS.....................................................10 7.1 Termination...............................................................10 7.2 Survival of Representations and Covenants.................................11 7.3 Notices...................................................................11 7.4 Publicity and Disclosures; Confidentiality................................12 7.5 Assignment................................................................12 7.6 Entire Agreement..........................................................12 7.7 Amendments and Waivers....................................................12 7.9 Counterparts..............................................................12 7.10 Effect of Table of Contents and Headings.................................12 SIGNATURES LIST OF EXHIBITS WARRANT PURCHASE AGREEMENT -------------------------- 500,000 STOCK PURCHASE WARRANTS PURCHASE AGREEMENT entered into as of the 18th day of August, 1999 by and among Boston Biomedica, Inc., a Massachusetts corporation with its principal place of business at 375 West Street, West Bridgewater, Massachusetts (the "Company"), and Paradigm Group, L.L.C., an Illinois limited liability company with its principal place of business at 3000 Dundee Road, Suite 105, Northbrook, Illinois 60062 (the "Investor"). WHEREAS, the Company desires to raise additional capital; and WHEREAS, the Investors are interested in investing in the Company; NOW, THEREFORE, in consideration of the mutual agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE 1. DESCRIPTION OF PROPOSED FINANCING 1.1 Authorization of Warrants. The Company has authorized or will --------------------------- authorize the issuance of: (i) nontransferable stock purchase warrants dated as of the Closing (hereinafter defined) and evidencing rights to purchase an aggregate of 400,000 shares of the Company's common stock, $.01 par value per share (the "Common Stock"), at an exercise price of $4.25 per share in substantially the form of Exhibit A attached hereto (the "$4.25 Warrants"); and --------- (ii) nontransferable stock purchase warrants dated as of the Closing and evidencing rights to purchase an aggregate of 100,000 shares of the Company's Common Stock at an exercise price of $5.25 per share in substantially the form of Exhibit B attached hereto (the "$5.25 Warrants") (the $4.25 Warrants and the --------- $5.25 Warrants are collectively referred to herein as the "Warrants"). The Warrants shall expire six months after the Closing as defined below (the "Warrant Expiration Date"). 1.2 Purchase and Sale of Warrants. Subject to the terms and conditions ----------------------------- of this Agreement and in reliance upon the representations and warranties contained herein, the Investor agrees to purchase from the Company, and the Company agrees to sell to the Investor, at the Closing, the Warrants at an aggregate purchase price of $50,000 (the "Purchase Price"). 1.3 Closing. The Closing of the purchase and sale of the Warrants ------- contemplated by this Agreement (herein the "Closing") shall take place at the offices of Brown, Rudnick, Freed & Gesmer, One Financial Center, Boston, MA 02111 at 10:00 a.m. on the date of Closing which shall be August 18, 1999 or at such other time and place as shall be mutually agreed by the Investors and the Company. At the Closing, the Company shall deliver to the Investor the Warrants to be issued in the Investor's name against payment of the Purchase Price therefor by wire transfer of immediately available funds. ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY - -------------------------------------------------------- The Company hereby represents and warrants to the Investor that: 2.1 Organization and Qualification. The Company is a corporation -------------------------------- organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts and has all required corporate power and authority to own its property, to carry on its business as presently conducted and as it presently intends to conduct it and to carry out the transactions contemplated hereby. The copies of the Articles of Incorporation and By-Laws of the Company, as amended to date, which have been furnished to counsel for the Investor by the Company are correct and complete. 2.2 Capitalization. The authorized capital stock of the Company -------------- consists of 20,000,000 shares of Common Stock, $.01 par value, of which 4,770,153 shares are validly issued and outstanding, fully paid and nonassessable, and 1,000,000 shares of Preferred Stock, $.01 par value, none of which shares are issued and outstanding. The Company has duly authorized and reserved for issuance upon exercise of the Warrants a total of 500,000 shares of Common Stock (the "Shares"), and the Shares of Common Stock issued upon such exercise will be validly issued and outstanding, fully paid and nonassessable. 2.3 Authorization of Transaction. The execution, delivery and ------------------------------ performance of this Agreement have been duly authorized by all necessary corporate or other action of the Company and it is the valid and binding obligation of the Company, enforceable in accordance with its terms, subject to general principles of equity and to laws of general application relating to bankruptcy, insolvency and the relief of debtors. The issuance of the Shares upon exercise of the Warrants pursuant to the terms of this Agreement shall be duly and validly authorized, and no further approval or authority of the stockholders or the directors of the Company will be required for the issuance and sale of the Shares as contemplated by this Agreement. 2.4 Offerees. Neither the Company nor anyone acting on its behalf has -------- within the past six (6) months offered the Warrants for sale to, or solicited any offers to buy the same from, any person or organization other than the Investor so as to bring the offer, issuance or sale of the Warrants or the issuance of Common Stock upon exercise of the Warrants, as contemplated by this Agreement, within the provisions of Section 5 of the Securities Act of 1933, as amended (the "Act"). Neither the Company nor anyone acting on its behalf has in the past or will hereafter sell, offer for sale or solicit offers to buy any of said securities so as to bring the offer, issuance or sale of the Warrants, or the issuance of Common Stock upon exercise of the Warrants, as contemplated by this Agreement, within the provisions of Section 5 of the Act. The Company has complied and will comply with all applicable state securities laws in connection with the issuance and sale of the Warrants. 2.5 Registration Rights. Other than such registration rights as are -------------------- granted pursuant to ARTICLE 6 of this Agreement, except as set forth on Schedule -------- 2.5 hereto, no stockholder, - --- noteholder, or any other holder of any security issued by the Company, nor any holder of rights to acquire any security from the Company, has any right to require the Company to file, or to join the Company in the filing of, a registration statement or notification under the Act. 2.6 Compliance with Securities and Exchange Commission Requirements. ------------------------------------------------------------------ The Company has filed all reports, proxy statements, forms and other documents (collectively, the "SEC Documents") required to be filed by it with the Securities and Exchange Commission (the "Commission") under the Act and under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and as of their respective dates such SEC Documents (i) complied in all material respects with the requirements of the Act or the Exchange Act, as the case may be, and the rules and regulations of the Commission promulgated thereunder applicable to such SEC Documents, and (ii) did not contain at the time of their filing an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. 2.7 Brokerage. Except as set forth on Schedule 2.7 hereto, there are no --------- ------------ valid claims for brokerage commissions, finder's fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement made by or on behalf of the Company and the Company will indemnify and hold the Investor harmless against any liability or expense to them arising out of such a claim. ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF INVESTOR - ----------------------------------------------------- The Investor hereby represents and warrants to the Company that: 3.1 Investment Intent; Accredited Investor; Legends. The Investor is -------------------------------------------------- purchasing or acquiring the Warrants for its own account for investment and not with a present view to, or for sale in connection with, any distribution thereof in violation of the Act. The Investor represents and warrants that the Investor: (a) is experienced in the evaluation of businesses similar to the Company, (b) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Company, (c) has the ability to bear the economic risks of an investment in the Company, (d) has been furnished with or has had access to such information as is specified in subparagraph (b)(2) of Rule 502 promulgated under the Act and has carefully reviewed and understood such information, (e) has been afforded the opportunity to ask questions of and to receive answers from the Company and to obtain any additional information necessary to make an informed investment decision with respect to an investment in the Company, and (f) is an "Accredited Investor" as such term is defined in subparagraph (a) of Rule 501 promulgated under the Act. The Investor hereby consents to the imposition of a legend substantially similar to the following on each Warrant and, unless registered under the Act pursuant to ARTICLE 6 hereof, each certificate for Shares of Common Stock issued upon exercise of the Warrants, and the Investor agrees to abide by the restrictions contained therein: [This Warrant has] [The shares represented by this certificate have] not been registered under the Securities Act of 1933, as amended (the "Act") and may not be sold, transferred, pledged, hypothecated or assigned unless registered under the Act or an opinion of counsel, satisfactory to the corporation, is obtained to the effect that such sale, transfer or assignment is exempt from the registration requirements of the Act. The Investor acknowledges that unless the Shares of Common Stock issuable upon exercise of the Warrants have been registered under the Act pursuant to ARTICLE 6 hereof, each representation and warranty made by the Investor in this Section 3.1 must be made by the Investor again at the time of each exercise of the Warrants, and the exercise of the Warrants shall be conditioned and subject to such representation and warranty. 3.2 Authorization. The Investor has the power and authority to enter ------------- into this Agreement and to perform all of its obligations hereunder. 3.3 Restricted Securities. The Investor understands that the Warrants ---------------------- have not been registered under the Act by reason of a specific exemption from the registration provisions of the Act which depends upon, among other things, the bona fide nature of the Investor's investment intent as expressed herein. The Investor acknowledges that the Warrants and, unless registered under the Act pursuant to ARTICLE 6 hereof, the Shares of Common Stock issuable upon exercise of the Warrants, when received, must be held indefinitely unless they are subsequently registered under the Act or an exemption from such registration is available. The Investor has been advised of or is aware of the provisions of Rule 144 promulgated under the Act, which rule permits limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions contained therein. 3.4 Brokerage. There are no valid claims for brokerage commissions, --------- finder's fees or similar compensation in connection with the transactions contemplated by this Agreement based upon any arrangement or agreement made by or on behalf of the Investor and the Investor agrees to indemnify and hold harmless the Company against any liability or expense to it arising out of such a claim to the extent that such claim arises out of actions or alleged actions of such Investor. ARTICLE 4. CONDITIONS OF INVESTOR'S OBLIGATIONS - ----------------------------------------------- The obligation of the Investor to purchase and pay for the Warrants of the Company subscribed for by the Investor at the Closing shall be subject to the satisfaction of each of the following conditions: 4.1 Representations and Warranties. The representations and warranties ------------------------------ of the Company contained herein or in the exhibits annexed hereto or otherwise made in writing by or on behalf of the Company in connection with the transactions contemplated hereby shall be true and correct as of the Closing with the same effect as though made on and as of that date. 4.2 Performance. The Company shall have performed and complied with all ----------- of the agreements and conditions contained herein and required to be performed or complied with by the Company at or prior to the Closing and shall not be in breach of any provision of this Agreement. 4.3 Consents and Waivers. All necessary consents, waivers, approvals, -------------------- amendments and other action on the part of any person necessary to have been obtained or effected in order to carry out the transactions contemplated by this Agreement shall have been duly obtained or effected and shall be in full force and effect and adequate. 4.4 Legal Action. ------------ (a)......There shall not have been instituted or threatened any material legal proceeding seeking to prohibit the consummation of the transactions contemplated by this Agreement, or to obtain damages from the Investor with respect thereto. (b)......None of the parties hereto shall be prohibited by any order, writ, injunction or decree of any governmental body of competent jurisdiction from consummating the transactions contemplated by this Agreement, and no action or proceeding shall then be pending which questions the validity of this Agreement, any of the transactions contemplated hereby or any action which has been taken by any of the parties in connection herewith or in connection with any of the transactions contemplated hereby. ARTICLE 5. AFFIRMATIVE COVENANTS OF THE COMPANY - ----------------------------------------------- The Company covenants with the Investor that: 5.1 Use of Proceeds. The Company shall use the proceeds from the sale --------------- of the Warrants to the Investor and the exercise of the Warrants by the Investor for general working capital purposes and not for the repayment of existing indebtedness or other obligations to any insider of the Company. 5.2 Board of Directors. The Company agrees that within ten business ------------------- days following the exercise, in the aggregate, of 90% of the Warrants and the payment of the exercise price therefor and issuance of, in the aggregate, 450,000 Shares in respect thereof, the Company shall cause Sheldon Drobny or his designee to be appointed to the board of directors of the Company. 5.3 Future Commissions. Subject to the requirements of applicable state ------------------ and federal securities laws, the Company shall pay to the Investor or its designee a three percent (3%) commission on any and all amounts received, directly or indirectly, by the Company or any of its affiliates, as a consequence of any merger, license or other similar arrangement or remuneration which results as a direct consequence of the efforts of the Investor or its identified designee or agent, provided however that such commission shall be payable hereunder only if the Company's senior management has approved, in writing and prior to any contact by the Investor with any person or entity, such efforts of the Investor or its identified designee or agent. As used in this Section 5.3, the term "affiliates" shall include the principals and associates of the Company and any individual, corporation, organization, firm or company of which the Company is a member, employee, principal, or party to, or from which the Company would otherwise benefit financially, either directly or indirectly. 5.4 S-3 Registration. The Company shall use its best efforts to prepare ---------------- and file with the Commission a registration statement on Form S-3 with respect to the Shares (the "Registration Statement") within thirty (30) days following the Closing pursuant to ARTICLE 6 hereof. The Company shall use its best efforts to cause such Registration Statement to become effective within ninety (90) days following the Closing and remain effective for such period as may be reasonably necessary to effect the sale of such Shares, not to exceed nine (9) months following the Closing. ARTICLE 6. REGISTRATION; PUT OPTION - ----------------------------------- 6.1 S-3 Registration. The Company shall use its best efforts to: ---------------- (a)......prepare and file with the Commission within thirty (30) days following the Closing a Registration Statement with respect to the Shares, and use its best efforts to cause such Registration Statement to become and remain effective for such period as may be reasonably necessary to effect the sale of such Shares, not to exceed nine (9) months; (b)......prepare and file with the Commission such amendments to such Registration Statement and supplements to the prospectus contained therein as may be necessary to keep such Registration Statement effective for such period as may be reasonably necessary to effect the sale of such Shares, not to exceed nine (9) months; (c)......furnish to the Investor participating in such registration and to the underwriters of the securities being registered, if any, such reasonable number of copies of the Registration Statement, preliminary prospectus, final prospectus and such other documents as such underwriters may reasonably request in order to facilitate the public offering of such securities; (d)......use its best efforts to register or qualify the securities covered by such Registration Statement under the state securities or blue sky laws of such jurisdictions as the Investor may reasonably request within twenty (20) days following the original filing of such Registration Statement, except that the Company shall not for any purpose be required to execute a general consent to service of process or to qualify to do business as a foreign corporation in any jurisdiction wherein it is not so qualified; (e)......notify the Investor, promptly after it shall receive notice thereof, of the time when such Registration Statement has become effective or a supplement to any prospectus forming a part of such Registration Statement has been filed; (f)......notify the Investor promptly of any request by the Commission for the amending or supplementing of such Registration Statement or prospectus or for additional information; (g)......prepare and file with the Commission, promptly upon the request of the Investor, any amendments or supplements to such Registration Statement or prospectus which, in the opinion of counsel for the Investor (and concurred in by counsel for the Company), is required under the Act or the rules and regulations thereunder in connection with the distribution of the Registrable Securities by such Investor; (h)......prepare and promptly file with the Commission and promptly notify the Investor of the filing of such amendment or supplement to such Registration Statement or prospectus as may be necessary to correct any statements or omissions if, at the time when a prospectus relating to such securities is required to be delivered under the Act, any event shall have occurred as the result of which any such prospectus or any other prospectus as then in effect would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading; and (i)......advise the Investor, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for that purpose and promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued. 6.2 Expenses. All fees, costs and expenses of and incidental to such -------- registration, inclusion and public offering (as specified in paragraph (b) below) in connection therewith shall be borne by the Company, other than the fees and costs of counsel to the Investor, which fees and costs shall be borne by the Investor; and provided, however, that any security holders participating in such registration shall bear their pro rata share of (i) the underwriting discount and commissions and transfer taxes, and (ii) the expense of any special audit of the Company's financial statements if the registration does not permit use of existing or contemplated audited statements. 6.3 Indemnification. --------------- (a)......The Company will indemnify and hold harmless the Investor whose Shares are included in a Registration Statement pursuant to the provisions of this Article and any underwriter (as defined in the Act) for such Investor and each person, if any, who controls such Investor or such underwriter within the meaning of the Act, from and against, and will reimburse such Investor and each such underwriter and controlling person with respect to, any and all loss, damage, liability, cost and expense to which such Investor or any such underwriter or controlling person may become subject under the Act or otherwise, insofar as such losses, damages, liabilities, costs or expenses are caused by any untrue statement or alleged untrue statement of any material fact contained in such Registration Statement, any prospectus contained therein or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading; provided, however, that the Company will not be liable in any such case to the extent that any such loss, damage, liability, cost or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such Investor, such underwriter or such controlling person in writing specifically for use in the preparation thereof. (b)......The Investor whose Shares are included in a Registration Statement pursuant to the provisions of this Article will indemnify and hold harmless the Company, any underwriter and any controlling person of the Company or such underwriter from and against, and will reimburse the Company, underwriter or controlling person with respect to, any and all loss, damage, liability, cost or expense to which the Company, any underwriter or any controlling person thereof may become subject under the Act or otherwise, insofar as such losses, damages, liabilities, costs or expenses are caused by any untrue or alleged untrue statement of any material fact contained in such Registration Statement, any prospectus contained therein or any amendment or supplement thereto, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was so made in reliance upon and in strict conformity with written information furnished by such Investor specifically for use in the preparation thereof. (c)......Promptly after receipt by an indemnified party pursuant to the provisions of paragraph (a) or (b) of this Section 6.3 of notice of the commencement of any action involving the subject matter of the foregoing indemnity provisions, such indemnified party will, if a claim thereof is to be made against the indemnifying party pursuant to the provisions of paragraph (a) or (b), promptly notify the indemnifying party of the commencement thereof; but the omission to so notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than hereunder. In case such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party shall have the right to participate in, and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party; provided, however, that if the defendants in any action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, or if there is a conflict of interest which would prevent counsel for the indemnifying party from also representing the indemnified party, the indemnified party or parties shall have the right to select separate counsel to participate in the defense of such action on behalf of such indemnified party or parties. After notice from the indemnifying party to the indemnified party of its election so to assume the defense of any action, the indemnifying party will not be liable to such indemnified party pursuant to the provisions of paragraphs (a) or (b) hereof for any legal or other expense subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation, unless (i) the indemnified party shall have employed counsel in accordance with the provision of the preceding sentence, (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after the notice of the commencement of the action, or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party. 6.4 Payment of Warrant Exercise Price; Refund of Warrant Exercise ------------------------------------------------------------------ Proceeds. - --------- (a)......If at the time of exercise of any Warrants by the Investor the Commission has not declared the Registration Statement effective, then the Investor shall reaffirm in writing the representations and warranties set forth in Section 3.1 hereof, and at the Investor's election the Investor may either: (i) make payment of the exercise price of such Warrants to the Company against delivery of unregistered Shares subject to the restrictions of and with the legend set forth in Section 3.1; or (ii) delay payment of the exercise price, without accrual of interest thereon, until the business day immediately following the date the Investor receives notice that the Commission has declared the Registration Statement effective. In the event the Investor elects to delay such payment, certificates representing the Shares issuable in connection with such exercise shall be delivered to the Investor when the Registration Statement has become effective and such payment has been received by the Company. (b)......If the Commission has not declared the Registration Statement effective by the close of business on the ninetieth (90th) day following the Closing, the Company shall refund to the Investor an amount equal to one percent (1%) of the combined proceeds of the exercise of the Warrants theretofore paid to the Company. Thereafter, following the completion of each successive thirty-day period during which the Commission has not declared the Registration Statement effective, the Company shall refund to the Investor an amount equal to an additional one percent (1%) of the combined proceeds of the exercise of the Warrants theretofore paid to the Company. In the event of any refund pursuant to this Section (b), the Warrants theretofore exercised shall be considered as having been exercised in full as of their original exercise date at a proportionately reduced exercise price. If the Commission has not declared the Registration Statement effective because of any action or failure to act by the Investor, there shall be no refund of the proceeds of the exercise of the Warrants under this Section (b). 6.5 Exclusive Obligation to Register. Except as provided in this ----------------------------------- ARTICLE 6 and in Section 5.4 hereof, the Company will have no obligation to the Investor to register under the Act any Shares received by the Investor pursuant to this Agreement. 6.6 Put Option. If at any time or times following the effective date of ---------- the Registration Statement and prior to the Warrant Expiration Date during which the Registration Statement remains effective, both the closing bid price of the Company's Common Stock, as reported on the Nasdaq National Market, and the average closing bid price of the Company's Common Stock over the fourteen (14) trading days immediately prior thereto (together, the "15 Trading Day Period"), equals or exceeds $6.75 (the "(Price Condition"); then the Company shall at each such time or at any time thereafter have the option (a "Put Option") to compel the Investor to exercise the Warrants as hereinafter provided and make payment to the Company of the aggregate exercise price therefor by providing written notice to the Investor of the Company's election to exercise the Put Option. Within ten (10) business days following the date of each such notice (each such notice date referred to herein as a "Put Option Election Date"), the Investor shall exercise the Warrants with respect to that number of Shares as is equal to the lesser of: (A) 500,000, less such number of Shares as to which Warrants have been previously exercised, either pursuant to the exercise of an earlier Put Option or pursuant to an earlier exercise of Warrants by the Investor; (B) the number of Shares specified by the Company in each such notice; or (C) unless the Aggregate Trading Volume Condition (defined below) is met, a quotient, the numerator of which is equal to the product of 500,000 times the average daily trading volume of the Company's Common Stock for the 15 Trading Day Period, and the denominator of which is equal 40,000. In the event the Price Condition is met and the aggregate number of shares of the Company's Common Stock traded on the Nasdaq National Market exceeds 300,000 shares during any 30 trading day period prior to the Warrant Expiration Date (the "Aggregate Trading Volume Condition"), then following written notice of the Company's election to exercise the Put Option, the Investor shall exercise the Warrants with respect to that number of Shares as is equal to the lesser of (A) or (B) above. In the event the Investor fails to exercise the Warrants and make payment to the Company of the aggregate exercise price therefor within ten (10) business days following the Put Option Election Date, the Company may, in addition to any other remedies it may have under this Agreement or otherwise, terminate the Warrants without any obligation to obtain the consent of or provide notice to the Investor, or deem the Warrants to have been exercised and demand payment of the exercise price therefor. ARTICLE 7. MISCELLANEOUS - ------------------------ 7.1 Termination. ----------- (a) At any time prior to the Closing, this Agreement may be terminated (i) by mutual consent of the parties, (ii) by either side if there has been a material misrepresentation, breach of warranty or breach of covenant by the other side in its representations, warranties and covenants set forth herein, (iii) by the Investor if the conditions stated in ARTICLE 4 have not been satisfied at or prior to the Closing. (b) If this Agreement shall be terminated in accordance with this Section 7.1, all obligations of the parties hereunder shall terminate without liability of any party to the others except as provided in Section 7.4. In the event that this Agreement is so terminated, each party will return all papers, documents, financial statements and other data furnished to it by or with respect to each other party to such other party (including any copies thereof made by the first party). (c) This Agreement shall terminate without further liability to any of the parties at such time as all of the obligations of the Company under the Warrants have been fully satisfied and discharged. 7.2 Survival of Representations and Covenants. All representations, ------------------------------------------- warranties, covenants, agreements and obligations made herein or in any schedule, exhibit, notice, certificate or other document executed in connection herewith or delivered by any party to another party incident hereto shall be deemed to have been relied upon by the other party hereto and survive the execution and/or delivery thereof, and all statements contained in any such schedules, exhibit, notice, certificate or other document delivered hereunder or in connection herewith shall be deemed to constitute representations and warranties made by the parties herein. 7.3 Notices. Any notice or other communication in connection with this ------- Agreement shall be deemed to be delivered if in writing (or in the form of a telegram) addressed as provided below and if either (a) actually delivered at said address, or (b) in the case of a letter, three business days shall have elapsed after the same shall have been deposited in the United States mails, postage prepaid and registered or certified, return receipt requested: If to the Company, to: Boston Biomedica, Inc. 375 West Street West Bridgewater, MA 02379 Attn: Richard T. Schumacher, President with a copy to: Brown, Rudnick, Freed & Gesmer, P.C. One Financial Center Boston, MA 02111 Attn: Steven R. London, Esq. Fax: (617) 856-8201 If to the Investors, to: Paradigm Group, L.L.C. 3000 Dundee Road Suite 105 Northbrook, IL 60062 and in any case at such other address as the addressee shall have specified by written notice. All periods of notice shall be measured from the date of delivery thereof. 7.4 Publicity and Disclosures; Confidentiality. No press releases or -------------------------------------------- any public disclosure, either written or oral, of the transactions contemplated by this Agreement shall be made without the prior knowledge and written consent of the Company. The Investor agrees that it will keep confidential and not disclose or divulge any confidential, proprietary or secret information which it may obtain from the Company in connection with the transactions contemplated herein, or pursuant to inspection rights granted hereunder unless such information is or hereafter becomes public information. 7.5 Assignment. This Agreement and the rights hereunder shall not be ---------- assignable by either party. 7.6 Entire Agreement. This Agreement (including all exhibits or ----------------- schedules appended to this Agreement and all documents delivered pursuant to or referred to in this Agreement, all of which are hereby incorporated herein by reference) constitutes the entire agreement between the parties, and all promises, representations, understandings, warranties and agreements with reference to the subject matter hereof and inducements to the making of this Agreement relied upon by any party hereto, have been expressed herein or in the documents incorporated herein by reference. 7.7 Amendments and Waivers. Changes in or additions to this Agreement ----------------------- may be made or compliance with any term, covenant, agreement, condition or provision set forth herein or therein may be omitted or waived (either generally or in a particular instance and either retroactively or prospectively), only upon written consent of the Company and the Investor. 7.8 Governing Law; Severability. This Agreement shall be deemed a ----------------------------- contract made under the laws of the Commonwealth of Massachusetts and, together with the rights and obligations of the parties hereunder, shall be construed under and governed by the laws of such Commonwealth. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision hereof. 7.9 Counterparts. This Agreement may be executed in multiple ------------ counterparts, each of which shall be deemed in original but all of which together shall constitute one and the same instrument. 7.10 Effect of Table of Contents and Headings. Any table of contents, ----------------------------------------- title of an article or section heading herein contained is for convenience of reference only and shall not affect the meaning of construction of any of the provisions hereof. IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the parties hereto or their duly authorized representatives effective as of the date first above written. BOSTON BIOMEDICA, INC. Corporate Seal By: /S/ Richard T. Schumacher -------------------------- ATTEST: /S/ Nancy M. Snell - ----------------------------- Notary Commission Expires Sept 24, 2004 PARADIGM GROUP, L.L.C. By: /S/ -------------------------- LIST OF EXHIBITS ---------------- A. Form of $4.25 Stock Purchase Warrant B. Form of $5.25 Stock Purchase Warrant C. Disclosure Schedules SCHEDULES -14- Schedule 2.5 Registration Rights ------------------- The Company is a party to a Registration Rights Agreement dated June 5, 1990, as amended (the "Registration Agreement"), with G&G Diagnostics Limited Partnership I and G&G Diagnostics Limited Partnership II (together, "G&G") pursuant to which G&G has certain rights to have its shares of Common Stock registered by the Company under the Securities Act. A total of 357,667 shares of Common Stock (the "Registrable Shares") held by G&G or subject to warrants held by G&G may be registered under the Registration Agreement. If the Company proposes to register any of its securities under the Securities Act, either for its own account or for the account of other securityholders, G&G is entitled to notice of the registration and is entitled to include, at the Company's expense, the Registrable Shares therein, provided, among other conditions, that the underwriters have the right to limit the number of such shares included in the registration. In addition, G&G may require the Company at its expense on no more than two occasions, to file a registration statement under the Securities Act with respect to its Registrable Shares, and the Company is required to use its best efforts to effect such a registration, subject to certain conditions and limitations. Further, G&G may require the Company at its expense to register the Registrable Shares on Form S-3 when such form is available to the Company, subject to certain conditions and limitations. -15- Schedule 2.7 Brokerage In connection with this Agreement, the Company will pay National Securities, a registered broker dealer, a fee equal to six percent (6%) of the Purchase Price paid by the Investor and received by the Company at the Closing and six percent (6%) of the aggregate amount paid by the Investor and received by the Company upon exercise of the Warrants (net of any refunds payable by the Company to the Investor subsequent to the exercise of the Warrants). In addition, the Company will issue to National Securities warrants to purchase shares of the Company's common stock as follows: Warrants to Purchase Shares Exercise Price Restriction on Exercise - --------------------------- -------------- ----------------------- 40,000 $4.25/share Exercisable for that percentage of the 40,000 shares equal to that percentage of the Investor's $4.25 Warrant for 400,000 shares which have been exercised by the Investor. 10,000 $5.25/share Immediately exercisable in full. 25,000 $8.00/share Only exercisable if and when the Investor has exercised in full its Warrants to purchase 500,000 shares. The warrants to be issued to National Securities will expire on August 15, 2001. -16- -----END PRIVACY-ENHANCED MESSAGE-----