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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
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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.
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<PAGE>
Part I. Financial Information
Item 1. Financial Statements
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
------------------------------- --------------------------------
1999 1998 1999 1998
--------------- ------------- -------------- --------------
REVENUE:
<S> <C> <C> <C> <C>
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
</TABLE>
See Notes to Consolidated Financial Statements
2
<PAGE>
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- --------------
ASSETS
CURRENT ASSETS:
<S> <C> <C>
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
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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
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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
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Total current liabilities 4,507,208 5,155,628
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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
============= ==============
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE>
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
-----------------------------
1999 1998
-------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
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
============== =============
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE>
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:
<TABLE>
<CAPTION>
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
Segment revenue: 1999 1998 1999 1998
------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
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
============= ============ ============= =============
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
Segment operating income (loss): 1999 1998 1999 1998
------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
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)
============= ============ ============= =============
</TABLE>
5
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
BOSTON BIOMEDICA, INC.
EXHIBIT INDEX
EXHIBIT INDEX
- -------------
<TABLE>
<CAPTION>
Exhibit No. Reference
----------- ---------
<S> <C> <C> <C>
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
</TABLE>
- ------------------------
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
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 234,821
<SECURITIES> 0
<RECEIVABLES> 6,467,448
<ALLOWANCES> 873,083
<INVENTORY> 6,921,476
<CURRENT-ASSETS> 14,518,870
<PP&E> 12,223,096
<DEPRECIATION> (4,614,332)
<TOTAL-ASSETS> 24,855,841
<CURRENT-LIABILITIES> 4,507,208
<BONDS> 6,169,188
0
0
<COMMON> 47,701
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 24,855,841
<SALES> 10,597,343
<TOTAL-REVENUES> 21,463,764
<CGS> 5,411,944
<TOTAL-COSTS> 22,332,825
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 294,891
<INCOME-PRETAX> (1,160,156)
<INCOME-TAX> 440,860
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (719,296)
<EPS-BASIC> (0.15)
<EPS-DILUTED> (0.15)
</TABLE>
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.
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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.
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
(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-
<PAGE>
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-
<PAGE>
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
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-8-
<PAGE>
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-
<PAGE>
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
<PAGE>
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.
<PAGE>
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;
<PAGE>
(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
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
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<PAGE>
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
<PAGE>
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
<PAGE>
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-
<PAGE>
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-
<PAGE>
(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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
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
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
Schedule 4.1.4 Borrowing Base Certificate
Schedule 5(d) List of Lien Searches
-5-
<PAGE>
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-
<PAGE>
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-
<PAGE>
"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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
"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-
<PAGE>
"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-
<PAGE>
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-
<PAGE>
"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-
<PAGE>
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-
<PAGE>
(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-
<PAGE>
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.
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<PAGE>
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-
<PAGE>
(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-
<PAGE>
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.
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<PAGE>
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-
<PAGE>
(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-
<PAGE>
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
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<PAGE>
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-
<PAGE>
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.
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<PAGE>
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
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<PAGE>
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.
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<PAGE>
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.
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<PAGE>
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
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<PAGE>
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
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<PAGE>
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.
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<PAGE>
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"):
<TABLE>
<CAPTION>
- ----------------------------------------- ----------------------------- --------------------------------------------
APPLICABLE DATE OR TIME APPLICABLE RATIOS
FINANCIAL COVENANTS PERIOD OR MONETARY REQUIREMENTS
- ----------------------------------------- ----------------------------- --------------------------------------------
<S> <C> <C>
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
- ----------------------------------------- ----------------------------- --------------------------------------------
</TABLE>
-32-
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------- ----------------------------- --------------------------------------------
APPLICABLE DATE OR TIME APPLICABLE RATIOS
FINANCIAL COVENANTS PERIOD OR MONETARY REQUIREMENTS
- ----------------------------------------- ----------------------------- --------------------------------------------
<S> <C> <C>
- ----------------------------------------- ----------------------------- --------------------------------------------
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
- ----------------------------------------- ----------------------------- --------------------------------------------
</TABLE>
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
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<PAGE>
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-
<PAGE>
(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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
[THE REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY]
-42-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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.
<TABLE>
<CAPTION>
- --------------------------------- ------------------------- ---------------------------- ---------------------
APPLICABLE DATE OR TIME APPLICABLE RATIOS ACTUAL AS OF
FINANCIAL COVENANTS PERIOD OR MONETARY REQUIREMENTS __/__/__
- --------------------------------- ------------------------- ---------------------------- ---------------------
<S> <C> <C> <C>
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
- --------------------------------- ------------------------- ---------------------------- ---------------------
</TABLE>
-46-
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------- ------------------------- ---------------------------- ---------------------
APPLICABLE DATE OR TIME APPLICABLE RATIOS ACTUAL AS OF
FINANCIAL COVENANTS PERIOD OR MONETARY REQUIREMENTS __/__/__
- --------------------------------- ------------------------- ---------------------------- ---------------------
<S> <C> <C> <C>
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
- --------------------------------- ------------------------- ---------------------------- ---------------------
</TABLE>
-47-
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------- ------------------------- ---------------------------- ---------------------
APPLICABLE DATE OR TIME APPLICABLE RATIOS ACTUAL AS OF
FINANCIAL COVENANTS PERIOD OR MONETARY REQUIREMENTS __/__/__
- --------------------------------- ------------------------- ---------------------------- ---------------------
<S> <C> <C> <C>
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
- --------------------------------- ------------------------- ---------------------------- ---------------------
</TABLE>
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-
<PAGE>
EXECUTED as of this ________ day of __________________, ______.
BOSTON BIOMEDICA, INC.
By:_________________________________
Kevin W. Quinlan, Treasurer
-49-
<PAGE>
APPENDIX A
-50-
<PAGE>
- --------------------------------------------------------------------------------
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-
=================================================================
WARRANT PURCHASE AGREEMENT
Warrants to Purchase
500,000 Shares of the
Common Stock of Boston Biomedica, Inc.
Dated: August 18, 1999
=================================================================
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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,
- ---
<PAGE>
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,
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
SCHEDULES
-14-
<PAGE>
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-
<PAGE>
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-
