EXECUTION




                            COMMERCIAL LOAN AGREEMENT

                                  By and Among

                   BOSTON BIOMEDICA, INC., BTRL CONTRACTS AND
               SERVICES, INC., BBI CLINICAL LABORATORIES, INC. and
                           BBI-SOURCE SCIENTIFIC, INC.

                                 as the Borrower

                                       and

                        THE FIRST NATIONAL BANK OF BOSTON

                                  as the Lender




                           Dated: As of March 28, 1997








                     COMMERCIAL LOAN AND SECURITY AGREEMENT
                     --------------------------------------

                               TABLE OF CONTENTS
                               -----------------
<TABLE>
<CAPTION>

                                                                                                           Page
                                                                                                           ----

<S>                                                                                                        <C>
Preamble.........................................................................................             1

Section 1 - Definitions; Use of Terms; Incorporation by Reference................................             2
---------

Section 2 - Establishment of  Revolving Line of Credit                                                        6
---------

2.1  Revolving Line of Credit                                                                                 6
2.2  Interest Rate on Loans                                                                                   7
2.3  Repayment of Loans                                                                                       7
2.4  Security for the Loans                                                                                   7
2.5  Use of Proceeds                                                                                          7
2.6  Loan Advances                                                                                            7
2.7  Other Advances and Payments                                                                              7
2.8  Loan Statements                                                                                          8
2.9  Review of  Line of Credit                                                                                8

Section 3 - Representations, Covenants and Warranties                                                         9
---------

3.1 General Representations, Covenants and Warranties                                                         9

    3.1.1 Business; Supplementary Information Regarding Borrower                                              9
    3.1.2 Due Organization and Existence; Authorization                                                       9
    3.1.3 Articles of Organization; Stock; Accurate Records                                                   10
    3.1.4 Binding Documents; Violation of Other Agreements                                                    10
    3.1.5 Title To Assets; Security Interests and Mortgages; Leases;
                  Royalties; etc.                                                                             10
    3.1.6  Investments                                                                                        10
    3.1.7  Litigation; Outstanding Orders                                                                     11
    3.1.8  Financial Statements Delivered                                                                     11
    3.1.9  Other Liabilities; Tax Returns; No Adverse Changes                                                 11
    3.1.10 No Agency Between Borrower and Lender                                                              11
    3.1.11 Regulation U                                                                                       11
    3.1.12 ERISA                                                                                              12
    3.1.13 Necessary Permits and Licenses                                                                     12
    3.1.14 Governmental Approvals Not Required                                                                12
    3.1.15 Adequate Financing                                                                                 12
    3.1.16 No Event of Default                                                                                13
    3.1.17 Compliance with Leases                                                                             13
    3.1.18 President and Chief Executive Officer                                                              13
    3.1.19 Compliance with Certain Environmental Laws                                                         13
    3.1.20 Recent Changes of Name or Structure                                                                13
    3.1.21 Payment of Wages                                                                                   14

3.2 Certain Affirmative Covenants                                                                             14

    3.2.1 Payment of Obligations                                                                              14
    3.2.2 Books and Records                                                                                   14
    3.2.3 Inspection                                                                                          14







    3.2.4 Commercial Purposes                                                                                 14
    3.2.5 Notice of Adverse Matters                                                                           14
    3.2.6 Principal Lending Business                                                                          14
    3.2.7  Maintenance of Corporate Existence; Compliance with Laws                                           15
    3.2.8  Payment of Taxes and Filing of Returns                                                             15
    3.2.9  Maintenance of Property and Assets                                                                 15
    3.2.10 Collection Costs; Legal Fees; etc.                                                                 15
    3.2.11 Insurance                                                                                          16
    3.2.12 Further Agreements; Compliance with Other Agreements;
                 Payment of Other Obligations; Tax Returns; Notice of Litigation
                and of Events of Default                                                                      16
    3.2.13 Certain Environmental Matters                                                                      17
    3.2.14 Changes in Master Exhibit                                                                          18
    3.2.15 Key Man Life Insurance                                                                             18

3.3  General Negative Covenants                                                                               18

    3.3.1 Other Debt                                                                                          18
    3.3.2 Payment of Dividends                                                                                19
    3.3.3 Loans by the Borrower                                                                               19
    3.3.4 Investments                                                                                         19
    3.3.5 Mergers, etc.                                                                                       19
    3.3.6 Sales of Assets                                                                                     19
    3.3.7 Negative Pledge                                                                                     19
    3.3.8 No Liens; Permitted Encumbrances                                                                    20
    3.3.9 Continuance of Business                                                                             21

Section 4 - Financial and Reporting Covenants                                                                 21
---------

4.1 Reporting Covenants                                                                                       21

    4.1.1 Quarterly Financial Statements                                                                      21
    4.1.2 Annual Financial Statements                                                                         21
    4.1.3 Officer's Certificate                                                                               22
    4.1.4 Other Information                                                                                   22

4.2  Financial Covenants                                                                                      23

Section 5 - Conditions of Closing                                                                             24
---------

5.1  Conditions of Closing                                                                                    24
5.2  Date References                                                                                          25

Section 6 - Events of Default                                                                                 25
---------

Section 7 - Remedies                                                                                          28
---------

7.1 General Remedies                                                                                          28
7.2 Cumulative Remedies                                                                                       28

Section 8 - Waiver; Termination                                                                               28
---------



                                     -iii-





8.1 Waiver By The Borrower                                                                                  28
8.2 Lender's Option To Waive                                                                                29

Section 9 - Miscellaneous                                                                                   29
---------

9.1 Deposits As Collateral; Set-Off                                                                         29
9.2 Survival of Covenants; Binding Effect                                                                   29
9.3 Termination of Agreement                                                                                30
9.4 Conflict of Terms                                                                                       30
9.5 Prior Discussions; Amendments in Writing; Counterparts;
                  Filing As Financing Statement                                                             30
9.6  General Indemnification                                                                                31
9.7  Destruction of Documents; Jurisdiction                                                                 31
9.8  Notices                                                                                                31
9.9  Application of Proceeds                                                                                32
9.10 Continuance of Defaults                                                                                32
9.11 Severability                                                                                           32
9.12 Headings                                                                                               32
9.13 Governing Law; Sealed Instrument                                                                       32
9.14 Force Majeure                                                                                          33
9.15 Interpretation of Agreement                                                                            33


Master Exhibit

Exhibit 4.1.3 Officer's Compliance Certificate
Exhibit 4.2.1

</TABLE>

                                      -iv-




                            COMMERCIAL LOAN AGREEMENT


    This Commercial  Loan Agreement (this  "Agreement") is dated as of March 28,
1997, and is by and among BOSTON  BIOMEDICA,  INC.  ("BBI"),  BTRL CONTRACTS AND
SERVICES,  INC. ("BTRL"),  BBI CLINICAL LABORATORIES,  INC. ("BBICL"),  formerly
known  as  BBI-NORTH  AMERICAN  CLINICAL   LABORATORIES,   INC.  and  BBI-SOURCE
SCIENTIFIC,  INC. ("BSS"), each of which is a Massachusetts  corporation validly
created,   legally  existing  and  in  good  standing  under  the  laws  of  the
Commonwealth of Massachusetts  and each of which has its "Notice Address" at 375
West Street,  West Bridgewater,  Massachusetts  02379 (BBI, BTRL, BBICL and BSS,
together with their respective successors and assigns, are collectively referred
to herein as the "Borrower")  and THE FIRST NATIONAL BANK OF BOSTON,  a national
banking   association   having  an  office  and  "Notice  Address"  at  Bank  of
Boston-Worcester   Tower,   P.O.  Box  15073,   100  Front  Street,   Worcester,
Massachusetts   01608-1438  (together  with  its  successors  and  assigns,  the
"Lender").

    WHEREAS,  BTRL,  BBICL and BSS are each  wholly-owned  subsidiaries  of BBI,
formed to acquire  certain  assets  determined to be useful and necessary to the
business conducted by BBI; and

    WHEREAS,  the Borrower desires to induce the Lender to lend certain sums and
otherwise to extend credit or grant financial accommodations,  all to or for the
benefit of the  Borrower  pursuant to and in  accordance  with the terms of this
Agreement; and

    WHEREAS,  the Lender is willing to enter into this  Agreement and grant such
financial  accommodations  to or for the benefit of the  Borrower in  accordance
with the terms of this  Agreement only if the Borrower shall make and enter into
certain  agreements,  covenants,  representations  and  warranties  as set forth
herein and as further set forth and contained in the Financing  Instruments  (as
hereinafter  defined),  all of the  terms  and  conditions  of  which  Financing
Instruments are hereby incorporated herein by reference;

    NOW THEREFORE, in order to induce the Lender to lend certain sums, to extend
credit and to grant financial  accommodations,  all to or for the benefit of the
Borrower,  and in  consideration  thereof  and in  consideration  of the  mutual
covenants herein contained,  and for other good and valuable consideration,  the
receipt and  sufficiency of which are hereby  acknowledged,  the Borrower hereby
represents and warrants to the Lender,  and hereby covenants and agrees with the
Lender, all as follows:






                                    SECTION 1

                           DEFINITIONS; USE OF TERMS;
                           INCORPORATION BY REFERENCE

    In this Agreement:

    1.1 "ACCOUNTS" shall mean and refer to any and all of the Borrower's  rights
to payment  for goods  sold or leased or for  services  rendered,  which are not
evidenced by an  Instrument  or Chattel  Paper,  whether or not such rights have
been earned by performance,  and shall include all receivables,  notes,  drafts,
acceptances,  other forms of  obligations  and "accounts" as defined in the UCC,
all in whatever form and however arising or created;

    1.2 "BALANCE  SHEET NET WORTH" shall have the meaning  given to that term in
Section 4.2(b) below;

    1.3  "BANKRUPTCY  CODE"  shall  have  the  meaning  given  to  that  term in
subsection 6.7.1 below;

    1.4  "BORROWER"  shall  have the  meaning  given to that  term in the  first
paragraph on the first page of this Agreement;

    1.5 "CEO" shall have the  meaning  given to that term in  subsection  3.1.18
below;

    1.6 "CLOSING  DATE" shall have the meaning given to that term in Section 5.1
below;

    1.7 "COMMITMENT EXPIRATION DATE" shall mean the earlier to occur of: (a) the
Maturity Date; (b) the occurrence of an Event of Default hereunder;  or (c) upon
termination as provided in Section 9.3 below;

    1.8  "CONNECTICUT  OFFICE" shall mean 75 North  Mountain  Road, New Britain,
Connecticut 06053

    1.9  "DEBT  SERVICE  RATIO"  shall  have the  meaning  given to that term in
Section 4.2.5(c) below;

    1.10  "DEFAULT"  shall mean 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;

    1.11  "EQUIPMENT"  shall mean 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
the  Borrower  and  used  in the  operation  or  furtherance  of the  Borrower's
business; and "equipment" as defined in the UCC;

    1.12 "EVENT OF DEFAULT" shall have the meaning given to that term in Section
6 below;

    1.13  "FACILITY FEE" shall have the meaning given to that term in subsection
2.4 below;

    1.14 "FINANCING  INSTRUMENTS" shall mean and refer to any and all agreements
(including this Agreement), Instruments, Documents, and other writings including
without limitation,  security agreements,  loan agreements,  notes,  guarantees,
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 the 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;

    1.15 "GAAP" shall mean and refer to generally accepted accounting principles
as adopted in the United States;


                                      -2-




    1.16  "INDEMNIFIED  PARTY"  shall  have the  meaning  given to that  term in
subsection 9.6 below;

    1.17  "INTEREST  RATE  PROTECTION  CONTRACTS"  shall mean 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 the Borrower from a
lender with respect to Loans and approved by the Lender;

    1.18  "INVESTMENT"  shall mean 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 or any subsidiary),  and the making of any commitment or acquisition of
any option to make an Investment;

    1.19 "INVENTORY"  shall mean and refer to any and all of the following owned
by the Borrower: 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 the  Borrower  for
processing,  sale,  license,  or lease,  or  furnished or to be furnished by the
Borrower  under  contracts  of sale or service or to be used or  consumed in the
Borrower's  business;  items  referred to above which are in transit,  returned,
rejected, repossessed or detained; and "inventory" as defined in the UCC;

    1.20 "IRC" shall mean and refer to the  Internal  Revenue  Code of 1986,  as
amended,  and  regulations  as  promulgated  and in  effect,  from time to time,
thereunder;

    1.21  "LENDER"  shall  have  the  meaning  given to that  term in the  first
paragraph on the first page of this Agreement;

    1.22  "LIENS"  shall  mean and  refer to 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;

    1.23 "LINE OF CREDIT  MAXIMUM  AMOUNT" shall mean and refer to the amount of
Seven Million Five Hundred Thousand and 00/100 Dollars ($7,500,000.00);

    1.24 "LOANS" shall have the meaning given to that term in Section 2.1 below;

    1.25 "MARGIN  STOCK" shall have the meaning given to that term in subsection
3.1.12 below;

    1.26 "MARYLAND OFFICE" shall mean 3 Taft Court,  Rockville,  Maryland 20850;

    1.27 "MATURITY DATE" shall mean June 30, 1999;

    1.28 "NOTE" shall mean that certain  Commercial  Term  Revolving  Promissory
Note, dated of even date herewith,  from the Borrower, made payable to the order
of the Lender,  in the face amount of the Line of Credit Maximum Amount,  as the
same may be hereafter amended, modified, substituted, extended or restated, from
time to time;

    1.29 "NOTICE ADDRESS" shall have the meaning given to that term in the first
paragraph on the first page of this Agreement;



                                      -3-




    1.30  "OBLIGATIONS"  shall  mean  and  refer  to any and  all  indebtedness,
liabilities, duties, undertakings,  covenants and agreements (including those of
payment or of performance) of the Borrower 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:

                  1.30.1 the 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;

                  1.30.2 the faithful performance and observance by the Borrower
         of all agreements, covenants and conditions contained in this Agreement
         and in each of the other Financing Instruments; and

                  1.30.3  any and all such  indebtedness,  liabilities,  duties,
         undertakings, covenants and agreements 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 the Borrower;  direct or indirect;  related or unrelated
         to the  transactions  described  in or  contemplated  by the  Financing
         Instruments;  liabilities  or  undertakings  of the 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 the Borrower and
         the  Lender;  or by reason of any cause of action  which the Lender may
         have against the Borrower;

    1.31   "PERMITTED   ACQUISITION"   shall  mean  any  domestic   corporation,
partnership,  limited liability company, joint venture or other form of domestic
entity  that  is  engaged  in the  business  of  the  Borrower  or any  business
reasonably related or complimentary thereto.

    1.32  "PERMITTED  ACQUISITION  VENTURE"  shall  mean  any  Investment  in  a
Permitted  Acquisition  for which (a) the Borrower  has provided the Lender,  in
advance of such  Acquisition,  with all of the  material  information,  reports,
financial  statements  and any other  material used by the Borrower to determine
the  suitability  and  prudence of such  Investment;  and (b) the  Borrower  has
satisfied  the  Lender  that such  Investment  will not  result in the  Borrower
failing to meet any of the Financial  Standards  contained in subsections 4.2.1,
4.2.2 and 4.2.4 hereof;

    1.33 "PERMITTED  ENCUMBRANCES"  shall have the meaning given to that term in
Section 3.3.8 below;

    1.34   "PERSONS"   shall  mean  and  refer  to  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;

    1.35 "REPORTING  REQUIREMENTS"  shall have the meaning given to that term in
Section 4.1 below;

    1.36 "REVOLVING LINE OF CREDIT" shall have the meaning given to that term in
Section 2.1 below;

    1.37  "TANGIBLE  NET  WORTH"  shall have the  meaning  given to that term in
Section 4.2.5(b) below;

    1.38  "TOTAL  DEBT"  shall  have the  meaning  given to that term in Section
4.2.5(a) below;

    1.39 "UCC" shall mean the Uniform  Commercial Code as in effect from time to
time in The Commonwealth of Massachusetts;


                                      -4-



    1.40 The following terms shall have the respective meanings ascribed to them
in the UCC: "ACCOUNT DEBTOR",  "CHATTEL PAPER",  "DEPOSIT ACCOUNT",  "DOCUMENT",
"FARM PRODUCTS", "GENERAL INTANGIBLES", and "INSTRUMENT";

    1.41 Terms defined  elsewhere in this  Agreement  shall have the  respective
meanings ascribed to them where so defined;

    1.42 All  exhibits  to this  Agreement  are  hereby  incorporated  herein by
reference;

    1.43 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;
and

    1.44 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.


                                    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 Borrower a certain  revolving
line of credit (the "REVOLVING LINE OF CREDIT"), in the maximum principal amount
of up to the Line of Credit  Maximum  Amount,  as  evidenced  by and  payable as
provided in the Note.  All advances of  principal  under the  Revolving  Line of
Credit  (each  such  advance  is  hereinafter   referred  to  as  a  "LOAN"  and
collectively  as the "Loans") shall be made in accordance with the provisions of
this Agreement and the Note.  The Lender has opened or hereby opens,  for and in
the name of the Borrower,  loan accounts for the purposes of  administering  the
Loans.

    2.2 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.

    2.3 Repayment of Loans. Principal and interest under the Loans shall be paid
to the Lender in accordance with the provisions of the Note.

    2.4 Facility  Fee.  The Borrower  agrees 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 Line of Credit  Maximum
Amount during each  calendar  quarter,  or part  thereof,  that any Loan remains
outstanding.  The  Facility Fee shall be paid by the Borrower 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 Use of  Proceeds.  All of the  proceeds  of the  Loans  shall be used to
finance Investments in Permitted  Acquisition Ventures and for general corporate
purposes,  including,  but not limited to, working capital, capital expenditures
and equipment leasing.

    2.6 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 Borrower pursuant to
Section 3.2.6 hereof (hereafter,  the "Main Operating Account").  Subject to the
terms and  conditions  hereof,  the Lender may make Loans to the Borrower (i) to
cover checks drawn by Borrower on the Main  Operating  Account and (ii) to cover
other authorized  charges whether given


                                      -5-




to the Lender  orally,  telephonically  or in writing  and (iii) to cover  other
charges due and payable hereunder.  As an accommodation to the Borrower,  and to
avoid the  necessity  that the Lender  communicate  with the Borrower  each time
checks are  presented  for  payment  against  the Main  Operating  Account,  the
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 be
conclusive and binding upon the Borrower. Each request by the Borrower to Lender
for  an  advance  under  the  Revolving  Line  of  Credit  shall   constitute  a
representation  by the Borrower  that as of the date of such request (a) each of
the  representations  and warranties set forth herein are true, (b) the 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).

    2.7 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 the  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:

                  2.7.1 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 Documents;

                  2.7.2 to pay the Lender's usual and customary  charges for (a)
         services rendered by it to the Borrower at the Borrower's request which
         charges relate to the Obligations;  and (b) charges otherwise  required
         to be paid by the Borrower pursuant to this Agreement; and

                  2.7.3  otherwise  to or for the  benefit of the  Borrower,  as
         requested  or consented  to by the  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.

    2.8 Loan  Statements.  All  advances to or for the  benefit of the  Borrower
pursuant  to this  Agreement  shall be charged to the loan  account or  accounts
opened in the Borrower's  name on the Lender's  books.  The Lender  periodically
shall  render to the  Borrower  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 the Borrower  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 the Borrower has not paid interest
charges and/or any fees for services, expenses incurred or other charges owed to
the Lender by the Borrower, the Lender, at its option and discretion, may at any
time or times debit such  charges,  expenses,  and fees to the  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 the  Borrower at the
Lender.  Such debits shall not constitute a waiver of any Event of Default.  Any
item received in payment towards the Borrower's  outstanding  indebtedness which
requires  clearance or payment  shall not be  considered  to have been  credited
until final clearance and final payment.

    2.9 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 1998, 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
the Borrower of such  determination in accordance with the notice  provisions of
the Agreement. Notwithstanding the foregoing, any


                                      -6-




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.


                                    SECTION 3

                    REPRESENTATIONS, COVENANTS AND WARRANTIES

    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, the Borrower hereby represents,  covenants and warrants
that:

    3.1  General Representations, Covenants and Warranties.

                  3.1.1  Business;   Supplemental   Information   Regarding  the
         Borrower.  BBI is  engaged in the  business  of  assaying,  processing,
         manufacturing,  selling,  and distributing human blood-based  products;
         BTRL is engaged in the business of biomedical and biotechnical contract
         research  and  services;  BBICL is engaged in the business of providing
         clinical reference laboratory  services;  BSS is, or will be, primarily
         engaged in the  business of  developing  clinical  instrumentation  and
         biomedical devices for the in vitro diagnostic industry;  each of BBI's
         and BSS's principal  place of business and chief  executive  office and
         mailing  address  is located  at the  Notice  Address  set forth at the
         beginning of this  Agreement;  BTRL's  principal  place of business and
         mailing  address is the  address  of the  Maryland  Office and  BBICL's
         principal  place of business and mailing  address is the address of the
         Connecticut  Office.  The  Borrower  does not and will not  conduct any
         business under any trade name or trade style other than the legal names
         of BBI, BTRL, BBICL and BSS or as set forth in the Master Exhibit.  Set
         forth in the Master Exhibit attached hereto are the names and addresses
         of the  respective  officers  and members of the Board of  Directors of
         each Borrower, the name and title of each officer authorized to execute
         the Financial Instruments and thereafter deal with the Lender on behalf
         of the Borrower,  and locations of all the  Borrower's  other places of
         business or at which the Borrower's  properties may be kept or located,
         which information is true,  accurate and complete;  the Borrower agrees
         to furnish the Lender with written  notice  within ten (10) days of any
         changes in such information, or any additional information necessary to
         insure that said Master  Exhibit  remains true,  accurate and complete.
         Nothing  in this  subsection  3.1.1  shall be  construed  to permit any
         action  which is otherwise  restricted  or  prohibited  pursuant to the
         terms of this Agreement.

                  3.1.2 Due Organization and Existence;  Authorization.  Each of
         BBI, BTRL, BBICL and BSS (a) is duly organized, validly existing and in
         good standing under the laws of the Commonwealth of Massachusetts,  (b)
         has adequate  corporate  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 the Borrower, and (d) has
         the  corporate  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 of  Organization  and all  amendments  thereto of each of BBI,
         BTRL,  BBICL and BSS have been duly filed and are in proper order.  All
         capital  stock  issued  by BBI,  BTRL,  BBICL  and  BSS  and  currently
         outstanding is properly issued, and all books and records of BBI, BTRL,
         BBICL and BSS,  including but not limited to, the minute book,  by-laws
         and books of account of each of BBI, BTRL,  BBICL and BSS, are accurate
         and up-to-date and will be so maintained.



                                      -7-



                  3.1.4 Binding Documents;  Violation of Other Agreements.  Each
         of BBI, BTRL,  BBICL and BSS 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 of  Organization,  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; etc. The 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
         Encumbrances.

                  3.1.6 Investments.  The Borrower has no Investment,  in equity
         or debt, other than short-term,  investment grade securities, including
         money market funds, except as disclosed in the Master Exhibit.

                  3.1.7 Litigation;  Outstanding Orders.  Except as disclosed on
         the  Master  Exhibit  attached  hereto,  there are no  actions,  suits,
         proceedings  or  investigations  pending  or, to the  knowledge  of the
         Borrower, any of its agents, servants or employees,  threatened against
         the Borrower or any of its  properties  in any court,  before any other
         tribunal  or  any  federal,  state,  municipal  or  other  governmental
         authority.  The 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 the 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.   The  Borrower  has
         furnished   to  the  Lender   its   financial   statements,   including
         consolidated  balance  sheet and statement of profit and loss as at and
         for the  fiscal  year  ended  December,  1995,  as audited by Coopers &
         Lybrand,  LLP. Said financial  statements  fairly present the financial
         position of the Borrower as at the dates thereof and said  statement of
         profit and loss fairly  presents the results of the  operations  of the
         Borrower for the fiscal years  indicated,  all in conformity  with GAAP
         consistently applied.

                  3.1.9 Other  Liabilities;  Tax  Returns;  No Adverse  Changes.
         Except as may be set forth in the Master Exhibit  annexed  hereto,  (a)
         the  Borrower  has  no  knowledge  of  any  contingent  obligations  or
         liabilities  of the Borrower for taxes or long-term  commitments  which
         are not shown in the  balance  sheets  included in said  statements  or
         noted  therein;  (b) the 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  the  Borrower  has  no  knowledge  of any
         deficiency or additional  assessment in connection  therewith for which
         no provision has been made on its books; (c) there has been no material
         adverse change in the business,  properties or condition  (financial or
         otherwise) of the Borrower since the date of the most recent  financial
         statement   referred   to  above  and  (d)  the   Borrower's   Taxpayer
         Identification   Numbers  are  04-2652826  (BBI),   04-3152484  (BTRL),
         04-3196246  (BBICL) and BSS has  applied for a Taxpayer  Identification
         Number,  which it will promptly  supply to the Lender when  available .
         The Borrower's  federal income tax returns have been prepared and filed
         for its fiscal year(s) stated in the Master Exhibit.

                  3.1.10 No Agency Between the Borrower and the Lender.  Nothing
         herein  contained  shall be construed to constitute the Borrower as the
         Lender's agent for any purpose whatsoever.



                                      -8-




                  3.1.11  Regulation  U. The Borrower  does not own, nor 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.  The  Borrower  has not  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 the  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
         the 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 the Borrower which create,  or in
         the future may (so far as the  Borrower can now  foresee)  create,  any
         withdrawal or other liability of the Borrower under the  Multi-employer
         Pension Plan Amendment Act of 1980.

                  3.1.13 Necessary Permits and Licenses.  The 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 the Borrower is not in violation
         of any thereof in any material respect.

                  3.1.14 Governmental Approvals Not Required. Neither the nature
         of the  Borrower nor its  business or  property,  nor any  relationship
         between  or among  the  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 the  Borrower has
         contracts,  in  connection  with  the  execution  and  delivery  by the
         Borrower of this  Agreement or the other  Financing  Instruments or the
         fulfillment of or compliance by the Borrower  with, or the  enforcement
         by the Lender of, the terms and provisions hereof or thereof.

                  3.1.15  Adequate  Financing.  The  Borrower  has no  reason to
         believe  that the  proceeds  of the  Loans,  together  with such  other
         sources of funds as are now directly and  immediately  available to the
         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 the
         Borrower to any other Person.

                  3.1.17  Compliance  with Leases.  The 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.


                                      -9-



                  3.1.18  President  and Chief  Executive  Officer.  Richard  T.
         Schumacher  shall  continue to perform  the  traditional  functions  of
         President  and  chief  executive  officer  of the  Borrower  and  shall
         continue to exercise  the  traditional  authority of such  officer.  In
         addition, while any Obligations remain outstanding,  BBI shall continue
         to own one hundred percent (100%) of the issued and outstanding capital
         stock of BTRL, BBICL and BSS.

                  3.1.19 Compliance with Certain Environmental Laws. Neither the
         Borrower, nor any Person for whose conduct the 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 the Borrower,  nor any
         Person for whose conduct the Borrower is responsible, has ever disposed
         of,  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 the Borrower, nor any
         Person for whose  conduct the  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 the Borrower, or
         any Person for whose  conduct the  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.  Except for BBICL,
         the Borrower has not within the preceding  four (4) months  changed its
         name, identity or corporate structure.

                  3.1.21 Payment of Wages. The 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.

    3.2  Certain Affirmative Covenants.

                  3.2.1  Payment  of  Obligations.  The  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 the 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.  The  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 the Borrower's business or activities.

                  3.2.3  Inspection.  The Borrower will, at all reasonable times
         during regular business hours, and upon reasonable advance notice, make
         available in its offices,  and shall allow the Lender,  at the Lender's
         expense  (unless a Default  shall have  occurred,  in which  event such
         activities shall be at the Borrower's  expense),  access to, all of the
         Borrower's  books and records for  inspection,  audit,  examination and
         copying  by the  Lender  and  the  Lender's  representatives,  and  the
         Borrower will, at all reasonable times, permit entry by the Lender upon
         the  Borrower's  premises,   including  the  Maryland  Office  and  the
         Connecticut  Office,  for purposes of inspection of the  properties and
         assets of the Borrower by the Lender and the  Lender's  representatives
         and agents.


                                      -10-



                  3.2.4 Commercial Purposes.  All advances under the Loans shall
         be used exclusively for the Borrower's business purposes and operations
         and shall not in any respect be used for personal,  family or household
         purposes.

                  3.2.5  Notice  of  Adverse   Matters.   The   Borrower   will,
         immediately  upon  learning  thereof,  report to the Lender all matters
         materially  adversely  affecting the  Borrower's  business or financial
         condition or assets or property,  including,  without  limitation,  any
         damage or destruction of any material  amount of the Borrower's  assets
         by fire or other casualty, whether or not insured against.

                  3.2.6 Principal  Lending  Business.  The 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 BTRL, BBICL and BSS 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.  The 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 the  Borrower or its  properties  or
         businesses.

                  3.2.8  Payment of Taxes and Filing of  Returns.  The  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.  The 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 the
         Borrower.  The  provisions  of  this  subsection,  however,  shall  not
         preclude the Borrower from  contesting in good faith and by expeditious
         process any such tax,  and the Borrower  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  Borrower;  (b) the  Lender  has been  notified  in
         writing by the Borrower 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 Borrower has reasonable  basis
         for such contest or dispute; and (e) the Borrower shall immediately pay
         the full amount of such charges and claims in the event the  Borrower's
         contest or dispute is unsuccessful.

                  3.2.9  Maintenance  of Property and Assets.  The 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 the 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; etc. The Borrower agrees
         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



                                      -11-




         enforcement of the Lender's rights and remedies under this Agreement or
         any of the Financing  Instruments or otherwise against the 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.  The 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  Borrower to the Lender,  including  without
         limitation  casualty  insurance  covering the  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 Borrower  and if the Borrower  fails to do so, the
         Lender  may  at  its  option  (but  without  obligation)  procure  such
         insurance and charge the cost to the Borrower's Main Operating Account;
         provided,  however,  that any such  payment  by the  Lender  shall  not
         constitute  satisfaction of the 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  Section  3.2.11,  the
         Borrower  shall  deliver  to the  Lender  one or more  certificates  of
         insurance for all such  casualty  insurance  policies and  endorsements
         thereto.  Annually thereafter,  the Borrower shall deliver certificates
         of such  insurance  coverages  to the Lender,  along with  satisfactory
         evidence   of   general   liability,   products   liability,   workmens
         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.

                  The 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 the Borrower is a party if a default under
                  any such agreement could  materially  adversely  affect any of
                  the 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 the Borrower,
                  provided  that all  enforcement  proceedings  are  effectively
                  stayed  pending such contest) and not permit the  acceleration
                  of any indebtedness owed by the Borrower to any Person; and

                           3.2.12.4 give written notice to the Lender within ten
                  (10) days of the occurrence thereof of any litigation filed by
                  or against the Borrower  which claims in connection  therewith
                  exceed,  either  individually  or when  aggregated  with other
                  existing litigation filed by or against the Borrower,  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


                                      -12-




                  lapse of time,  or both would  constitute  an Event of Default
                  hereunder,  and the action the  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.  The 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 the 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 provide the Lender with written notice:  (a)
                  upon the  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 the
                  Borrower,  or by any Person for whose  conduct the Borrower is
                  responsible  or whose  liability may result in any lien on any
                  Collateral;  (b) upon the Borrower's  receipt of any notice to
                  such  effect  from any  federal,  state or other  governmental
                  authority;  or (c) upon the 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 or
                  loss the  Borrower  may be liable or for which  expense a Lien
                  may be imposed on any Collateral.

                  3.2.14 Changes in Master Exhibit.  The Borrower shall promptly
         notify  the Lender in writing  of any  changes in or  additions  to the
         information set forth in the Master Exhibit.

                  3.2.15  Key  Man  Life  Insurance.  So  long  as  any  of  the
         Obligations  remain  outstanding,  the Borrower agrees to maintain life
         insurance  on the life of Richard  T.  Schumacher  providing  for a net
         payment  in cash upon the death of said  Richard  T.  Schumacher  in an
         amount  of not less  than One  Million  Dollars  ($1,000,000),  and the
         Borrower shall pledge or collaterally assign such policy or policies to
         the  Lender  and,  at all times,  maintain  such  pledge or  collateral
         assignment. Such insurance coverage shall include a disability rider in
         the full amount of such coverage. The Lender hereby agrees to review on
         an annual  basis such  obligation  to provide  such life  insurance  to
         determine whether to waive the same, which  determination shall be made
         in the Lender's sole discretion, and shall include consideration of the
         financial performance of the Borrower.

    3.3  General Negative Covenants.

                  3.3.1 Other Debt.  The Borrower will not issue any evidence of
         indebtedness   or  create,   or  incur,   assume,   guarantee,   become
         contingently  liable for or suffer to exist, any indebtedness in excess
         of an aggregate of Five Hundred Thousand Dollars ($500,000) (other than
         indebtedness  to the Lender)  outstanding at any one time,  without the
         prior  written  consent  of  the  Lender  which  consent  will  not  be
         unreasonably withheld or delayed; provided,  however, that the Borrower
         may incur  liabilities  which  are  incurred  or arise in the  ordinary
         course of the Borrower's  business,  including purchase commitments for
         materials and supplies, without the prior written consent of the Lender
         but shall  seek  consent  of the  Lender,  which  consent  shall not be
         unreasonably  withheld or delayed,  for liabilities incurred or arising
         with  respect to money  borrowed or for the  purchase or lease of fixed
         assets.  The  Borrower  shall  not  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  the  Borrower  either
         primarily  or  contingently   liable  for  any  indebtedness



                                      -13-



         or other  obligation of any Person (ii)  transferring  any asset of the
         Borrower  to or  for  the  benefit  of  any  Person  (except  as may be
         otherwise expressly  permitted by this Agreement);  or (iii) subjecting
         any of the  Borrower's  property  or assets to any lien in favor of any
         third party  (other than  Permitted  Encumbrances),  including  but not
         limited to any creditor or obligee of any Person.

                  3.3.2  Payment of  Dividends.  The  Borrower  will not 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.  Other than as  disclosed on the
         Master Exhibit,  the Borrower will not make any loan or advances to any
         Person, including, without limitation, its officers and employees.

                  3.3.4  Investments.  Without the prior written  consent of the
         Lender,  the Borrower  will not make any  Investments  other than short
         term,  investment grade  securities,  including money market funds, and
         other than Permitted Acquisition Ventures.

                  3.3.5 Mergers, etc. The Borrower will not 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.  The Borrower will not 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 the 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,
    the Borrower will not:

                           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 of the
                  Borrower's   property   or   assets   except   for   Permitted
                  Encumbrances; 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 the 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
                  Encumbrances; or

                           3.3.7.3 agree with any other Person that the Borrower
                  will  not   undertake   activities   prohibited   pursuant  to
                  sub-subsections 3.3.7.1 and 3.3.7.2 hereof.

                  To the extent that the  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 of the  Borrower's  property or
         assets,  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 the  Borrower's  property or assets 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.


                                      -14-




                  3.3.8 No Liens; Permitted Encumbrances.  The Borrower will not
         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  Encumbrances"):  (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  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 the Borrower  which do not in the  aggregate
         materially  detract  from the value of the  property of the 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 the  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; (d) the security interests, mortgages
         or Liens, if any,  described in the Master Exhibit annexed hereto;  and
         (e) Liens otherwise permitted pursuant to Section 3.3.1 hereof.

                  3.3.9 Continuance of Business. The Borrower will not engage in
         any business other than the businesses in which it is currently engaged
         or a business reasonably allied thereto, and the Borrower will continue
         to conduct and operate its business actively and in good faith.


                                    SECTION 4

                        FINANCIAL AND REPORTING COVENANTS

    4.1 Reporting Covenants.  The Borrower agrees to provide the Lender with the
reports,  statements,  certificates and information set forth in this Section 4,
all of which are referred to as the "Reporting Requirements".

                  4.1.1  Quarterly  Financial  Statements.   The  Borrower  will
         furnish to the Lender,  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, including balance sheets, and statements of profit and loss
         and statements of cash flows reflecting the financial  condition of the
         Borrower 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,  accompanied
         by a certificate by the Borrower's chief financial officer or President
         to the  effect  that such  financial  statements  fairly  present  such
         financial  condition  and  results of  operations  as of the end of and
         during such  period,  in  accordance  with GAAP  consistently  applied,
         subject  only  to  year-end   adjustments  and  audit.  Such  quarterly
         statements may be furnished to the Lender in the form of the Borrower's
         quarterly filings with the Securities and Exchange  Commission  ("SEC")
         under the Securities  Exchange Act of 1934, as amended (the "'34 Act"),
         on Form 10-Q.

                  4.1.2 Annual Financial  Statements.  The Borrower will furnish
         the  Lender,  within  ninety  (90) days after the close of each  fiscal
         year,  consolidated and consolidating  financial statements,  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 Borrower at the end of such fiscal year
         and the results of its


                                      -15-





         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
         Coopers & Lybrand,  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, and accompanied by a certificate by the Borrower's chief
         financial  officer or president that such financial  statements  fairly
         present such  financial  condition  and results of operations as of the
         end of and during  such  period;  together  with,  upon  request of the
         Lender,  an opinion of such  certified  public  accountant  that to its
         knowledge there has occurred no event which 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 the Borrower's
         annual filings with the SEC under the '34 Act on Form 10-K.

                  4.1.3 Officer's Certificates.  The Borrower will, upon request
         of the Lender but in any event within  forty-five  (45) days of the end
         of  each  calendar   quarter,   deliver  to  the  Lender  an  officer's
         certificate   signed  by  its  President  or  chief  financial  officer
         certifying  that: (a) the signer has reviewed the relevant terms of the
         Financing Instruments and is familiar with the operations and financial
         condition  of the  Borrower;  and (b) there is in existence no Event of
         Default  described  in any of the  Financing  Instruments  and no event
         which,  with the  giving  of notice  or lapse of time,  or both,  would
         result in the  occurrence of an Event of Default and the Borrower is in
         complete  compliance  as of the  date  of  such  certificate  with  the
         Financial Standards, as demonstrated in such certificate.  In the event
         of a continuing Event of Default or a continuing  condition which, with
         the  giving of notice or lapse of time,  or both,  would  result in the
         occurrence  of an Event of  Default,  the  Borrower  shall note in such
         certificate the nature and period thereof and the action which has been
         taken, is being taken or is proposed to be taken with respect  thereto,
         provided  that no such notice,  action or proposed  action shall affect
         Lender's  rights  hereunder  with  respect  to any  Default or Event of
         Default. The form of officer's  certificate required by this subsection
         is attached to this Agreement as Exhibit 4.1.3.

                  4.1.4 Other  Information.  In addition to the  foregoing,  the
         Borrower will furnish 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 the 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 the  Borrower  by its  independent
         accountants in connection  with any annual or interim audit;  and, upon
         request of the  Lender,  the  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 the
         Borrower's financial or business condition.  In addition,  the Borrower
         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 the Borrower  shall send to its  stockholders
         or as the Borrower may file with the SEC or any governmental  authority
         at any time having jurisdiction over the Borrower or any of them.


    4.2  Financial Standards.

    The  Borrower  shall  maintain  and observe all of the  following  financial
standards,  in each case  determined  and  classified  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 Standards"):



                                      -16-


<TABLE>
<CAPTION>


                                       APPLICABLE DATE OR TIME                  APPLICABLE RATIOS
        FINANCIAL STANDARDS                   PERIOD                        OR MONETARY REQUIREMENTS
---------------------------------------------------------------------------------------------------------------------
<S>                                 <C>                          <C>
4.2.1:  Consolidated Debt Service     Quarterly, at the end of    At least 1.75:1 (rounded to nearest hundredth),
Ratio                                 each quarter                tested on a rolling four-quarter basis
---------------------------------------------------------------------------------------------------------------------
4.2.2:  Consolidated Total            Quarterly                   Not to exceed 2.0:1 (in each case rounded to the
Liabilities: Tangible Net Worth                                   nearest hundredth)
Ratio
---------------------------------------------------------------------------------------------------------------------
4.2.3:  Tangible Net Worth            Annually                    At least $15,000,000 plus 50% of net profits for
                                                                  the fiscal year ended 12/31/96 and thereafter
                                                                  for each immediately preceding fiscal year for
                                                                  which the measurement is being taken; provided
                                                                  however that in the event of a Permitted
                                                                  Acquisition Venture, such requirement shall be
                                                                  reduced by the amount of goodwill associated
                                                                  with such Permitted Acquisition Venture.
---------------------------------------------------------------------------------------------------------------------
4.2.4:  Profitability                 Quarterly                   There can be no more than two consecutive fiscal
                                                                  quarters with Consolidated Net Income of less
                                                                  than zero
---------------------------------------------------------------------------------------------------------------------
</TABLE>


                  4.2.5  As used in this Agreement:

                  (a) "Consolidated  Total  Liabilities"  means the aggregate of
         all liabilities of the Borrower for money  borrowed,  incurred from any
         source  and in any  manner  whatsoever,  all in  accordance  with GAAP,
         including  all  subordinated  debt,  plus  the  capitalization  of  all
         obligations on leases of real and personal property;

                  (b) "Tangible Net Worth" means the aggregate  tangible  assets
         of the  Borrower  after  excluding  the book  value  of all  Intangible
         Assets,  minus  the  amount of  aggregate  liabilities,  including  all
         deferred  income  taxes,  and  "Intangible  Assets"  shall  include all
         goodwill,   organizational  expense,  licenses,  patents,   trademarks,
         tradenames,  copyrights, capitalized research and development expenses,
         deferred  charges,  and all other  intangible  assets as  determined in
         accordance with GAAP consistently applied;

                  (c) "Consolidated Debt Service Ratio" means Adjusted Operating
         Cash Flow (as described on Exhibit 4.2.1  attached  hereto)  divided by
         Total Debt Service (as described on Exhibit 4.2.1 attached hereto).

                  (d) "Consolidated Net Income" means for any fiscal period, the
         consolidated  gross revenues of the Borrower for such period,  less all
         expenses  and other proper  charges  (including  taxes on income),  all
         determined in accordance with GAAP.


                                      -17-




                  4.2.6 Computation  According to GAAP. All of the terms used in
         the  foregoing  financial  covenants,  except to the  extent  otherwise
         specifically  defined  herein,  and all  computations  made  under  the
         foregoing covenants, shall in all respects be governed by and performed
         in accordance with GAAP consistently applied.

                                    SECTION 5

                              CONDITIONS OF CLOSING

    5.1  Conditions of Closing.  This  Agreement and all of the other  Financing
Documents shall become effective and be dated as of the date on which the Lender
has received all of the following  items,  each of which must be  completed,  in
both form and  substance,  acceptable  to the Lender in its sole but  reasonable
discretion (said date is hereinafter referred to as the "CLOSING DATE"):

                  (a) This Agreement (together with all of the Exhibits referred
         herein  attached  hereto)  and the  Note,  each as  executed  by a duly
         authorized  officer of the  Borrower  and  attested by the Clerk of the
         Borrower.

                  (b)  Assignments  of the  Key  Person  Life  Insurance  Policy
         referred  to in  subsection  3.2.15  above,  each as executed by a duly
         authorized  officer of the Borrower,  in favor of the Lender,  together
         with the original of such Policy;

                  (c) A Certificate  of Clerk of the Borrower,  certifying:  (i)
         the adoption by the Board of  Directors of the Borrower of  resolutions
         authorizing  and  approving  the  transactions   contemplated  by  this
         Agreement and all of the other Financing Instruments; (ii) the Articles
         of  Organization  of each  Borrower,  along with any and all amendments
         thereto, all as certified by the Massachusetts  Secretary of State; and
         (iii) the By-Laws of each  Borrower,  along with any and all amendments
         thereto;  and (iv) if not supplied on the Master Exhibit,  the name and
         signatures of the officers of the Borrower  authorized to sign, for and
         on  behalf  of the  Borrower,  this  Agreement  and  all  of the  other
         Financing Instruments.

                  (d) A  Certificate  of  Corporate  Legal  Existence  and  Good
         Standing for each Borrower, as issued by the Massachusetts Secretary of
         State.

                  (e) An  opinion  from  Counsel  for the  Borrower  in form and
         substance satisfactory to the Lender.

                  (f) Any and all  other  documents  and  information  which the
         Lender may  reasonably  requested in connection  with the  transactions
         contemplated   by  this  Agreement  and  all  of  the  other  Financing
         Documents.

    5.2 Date  References.  The  parties  hereto  acknowledge  and agree that all
references  contained  in the Note and all of the  other  Financing  Instruments
executed in connection with the  transactions  contemplated  herein to the words
"dated of even date herewith" shall mean and refer to the Closing Date.


                                    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:



                                      -18-





    6.1 Any statement, report, certificate,  representation or warranty, made or
furnished by the 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 The Borrower  shall fail to make payment of the principal or interest on
the Loans when and as due;

    6.3 The Borrower shall fail to make payment of any other  Obligation  within
fifteen (15) days of the date when and as due;

    6.4 The 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 the Borrower or (ii) actual knowledge by the Borrower of
the occurrence  thereof,  plus such  additional  time as may be required to cure
such default because of delays beyond the Borrower's control, if such default is
susceptible  of being  cured and if the  Borrower is 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 the  Borrower  to give  notice to the Lender as
provided herein; (c) the Reporting  Requirements or the Financial Standards;  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 The Borrower  shall default in payment of (a) any  obligation  under any
lease which default could materially adversely affect the business operations of
the 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 indebtedness is actually  accelerated) and such acceleration could materially
adversely affect the business operations of the Borrower;

    6.6 Failure,  generally,  of the Borrower to pay its debts when due and such
failure  could  materially  adversely  affect  the  business  operations  of the
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 the Borrower's
property or assets by any Person,  which action is not  dissolved  within thirty
(30) days;

    6.7  The 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



                                     --19-





                  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 the 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 the 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 the
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;

    6.11 The loss, suspension or revocation of any governmental license required
or necessary in connection with the operation of the Borrower's business;

    6.12  Service of any process  upon the Lender  seeking to attach by means of
trustee  process any funds of the  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 the  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 the  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 the
         Borrower or may refuse to make further advances to the 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 the Borrower; and



                                      -20-





                  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 Borrower. The Borrower hereby waives demand,  presentment,
protest and notice  thereof with respect to any and all  instruments,  notice of
acceptance  hereof,  notice of Loan or 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 the 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 the 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 the 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 the
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.



                                      -21-





    9.2 Survival of Covenants; Binding Effect. All agreements,  representations,
covenants and warranties made by the 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 the 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 Borrower of the Obligations, or upon
         acceleration  of  the  Obligations   pursuant  to  the  terms  of  this
         Agreement.

                  9.3.2 The  termination of this Agreement  shall not affect any
         rights of the  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 the  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 the 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  Borrower  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.



                                      -22-




    9.6 General  Indemnification.  The 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 the  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 Borrower)  except for such claims 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. The 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).
The  Borrower  acknowledges  receipt of a true,  correct  and  complete  copy or
counterpart of this Agreement.

    9.8 Notices.

                  9.8.1 All notices or demands  hereunder to the parties  hereto
         shall be made in writing and shall be deemed to have been  sufficiently
         given for all purposes one business day after being sent by  recognized
         overnight  delivery service for next day delivery service,  on the same
         business day if delivered by hand and three  business  days after being
         sent by United States mail,  certified mail return  receipt  requested,
         first class,  postage  prepaid,  and  addressed to the parties at their
         respective  Notice  Addresses  set  forth  above,   together  with  the
         following additions: (a) for the Lender, "Attention: Commercial Banking
         Group" and (b) for the  Borrower,  "Attention:  Richard T.  Schumacher,
         President".  Either  of the  parties  may  change  its  Notice  Address
         hereunder  by  giving  notice  of such  change  to the  other  party in
         accordance with the provisions of this subsection.

                  9.8.2  Notwithstanding  any provision  herein to the contrary,
         the  Borrower  agrees that the failure or delay by the Lender in giving
         any  notice  or  statement  hereunder,  or any  inaccuracy  therein  or
         incompleteness  thereof,  shall  not in any way  alter  or  affect  the
         absolute  and  unconditional  obligation  of the  Borrower  to pay  and
         perform in full the  Obligations,  but any action taken or not taken by
         the Borrower as a direct result of such lack or delay of notice,  or of
         the Borrower's good faith reliance upon a material  inaccuracy  therein
         or the material  incompleteness  thereof, as the case may be, shall not
         in of itself, and to the extent thereof, constitute an Event of Default
         hereunder,  so long as the Borrower does not otherwise  have or receive
         notice or  knowledge  of the  material  contents or  substance  of such
         notice, or of the inaccuracy or incompleteness thereof, as the case may
         be, and the Borrower acts at all times in good faith.

    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  Borrower  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 Borrower in  accordance
with this Agreement (and the applicable provisions of the Financing Instruments,
as the case may be),


                                      -23-





and until such time as the Borrower  requests  and receives  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.  The  Borrower
submits  itself  to the  jurisdiction  of the  Courts  of  The  Commonwealth  of
Massachusetts for all purposes with respect to this Agreement and the 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 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.


                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]




                                      -24-




    EXECUTED  as an  instrument  under seal as of the day and year first  stated
above.

                                     Borrower:

Signed in the presence of:           BOSTON BIOMEDICA, INC.



______________________________       By:_________________________________
Witness                              Kevin W. Quinlan, Treasurer, hereunto duly
                                            authorized


                                     BTRL CONTRACTS AND SERVICES, INC.



                                     By:_________________________________
                                        Kevin W. Quinlan, Treasurer,
                                        hereunto duly authorized



                                     BBI CLINICAL LABORATORIES, INC.



                                     By:_________________________________
                                            Kevin W. Quinlan, Treasurer,
                                            hereunto duly authorized

                                     BBI-SOURCE SCIENTIFIC, INC.



                                     By:_________________________________
                                            Kevin W. Quinlan, Treasurer,
                                            hereunto duly authorized




                                      -25-








                                     Lender:

                                     THE FIRST NATIONAL BANK OF BOSTON


                                     By:_________________________________
                                            G. Christopher Miller
                                               Vice President





PABOS2:SCS:28634_4



                                      -26-




                                                                   EXHIBIT 4.1.3

                        OFFICER'S COMPLIANCE CERTIFICATE

TO:      THE FIRST NATIONAL BANK OF BOSTON
         Bank of Boston-Worcester Tower
         100 Front Street
         Worcester, Massachusetts 01608-1438

         The  undersigned  authorized  officer  of  BBI,  BTRL,  BBICL  and  BSS
(together,  the "Borrower"),  hereby  certifies,  with respect to the Commercial
Loan Agreement  dated as of ___________ __, 1997 between The First National Bank
of Boston (the  "Lender") and the Borrower,  as amended  through the date hereof
(the "Loan  Agreement"),  that (a) the signer has reviewed the relevant terms of
the  Financing  Instruments  and is familiar with the  operations  and financial
condition  of the  Borrower;  and (b) there is in  existence no Event of Default
described  in any of the  Financing  Instruments  and no event  which,  with the
giving of notice or lapse of time, or both, would result in the occurrence of an
Event of Default, except as noted below, if any, and the Borrower is in complete
compliance  as  of  __/__/__  with  the  Financial  Standards  (the  "Applicable
Financial  Statements Date"), as demonstrated  below. All capitalized terms used
herein and not otherwise  defined shall have the meanings given them in the Loan
Agreement.

<TABLE>
<CAPTION>

                                   APPLICABLE DATE OR TIME              APPLICABLE RATIOS               ACTUAL AS OF
      FINANCIAL STANDARDS                  PERIOD                    OR MONETARY REQUIREMENTS             __/__/__

<S>                               <C>                        <C>
Consolidated Debt Service Ratio    Quarterly, at the end of   Not to exceed  1.75:1  (in each case         ___:___
                                   each quarter               rounded to the nearest hundredth).

Consolidated Total                 Quarterly                  Not to exceed 2.0:1 (in each case            ___:___
Liabilities: Tangible Net                                     rounded to the nearest hundredth).
Worth Ratio

Tangible Net Worth                 Annually                   At least $15,000,000 plus 50% of net          $____________
                                                              profits for the fiscal year ended
                                                              12/31/96 and thereafter for each
                                                              immediately preceding fiscal year for
                                                              which the measurement is being taken,
                                                              subject to adjustment in the event of
                                                              acquisitions made by the Borrower in
                                                              the future, which adjustments shall
                                                              be determined by the Lender in its
                                                              sole judgment, reasonably exercised.

Profitability                                                 Quarterly There can be no more
                                                              than two consecutive fiscal
                                                              quarters with Consolidated Net
                                                              Income of less than zero.
</TABLE>

Comments Regarding Exceptions:

         Attached  hereto  are  financial  statements  as of and for the  fiscal
(quarter)(year)  ended on the Applicable  Financial  Statements Date, which have
been  certified  by the  undersigned  as  required  by  Section  4.1 of the Loan
Agreement.


                                      -27-



                                BOSTON BIOMEDICA, INC.



                                By:_________________________________
                                   Kevin W. Quinlan, Treasurer, hereunto duly
                                   authorized


                                BTRL CONTRACTS AND SERVICES, INC.



                                By:_________________________________
                                   Kevin W. Quinlan, Treasurer, hereunto duly
                                   authorized


                                BBI CLINICAL LABORATORIES, INC.



                                By:_________________________________
                                   Kevin W. Quinlan, Treasurer,
                                   hereunto duly authorized

                                BBI-SOURCE SCIENTIFIC, INC.



                                By:_________________________________
                                   Kevin W. Quinlan, Treasurer,
                                   hereunto duly authorized


DATE: ___________________



                                      -28-




                                                                   EXHIBIT 4.2.1










A.       OPERATING CASH FLOW ("OCF")

         Add: 1.       Earnings before interest and taxes (EBIT)
           2.       Depreciation and Amortization
           3.       Non-cash expenses
         Less:4.       Cash income taxes paid
           5.       Capital Expenditures (CAPEX)
           6.       Non-cash income
           7.       OCF               ___________________

B.       ADJUSTMENTS TO OCF ("Adjusted OCF")

         Add: 8.       Net Equity Raised (1)
           9.       Financed CAPEX (2)
           10.      Adjusted OCF      ___________________


C.       TOTAL DEBT SERVICE ("TDS")

           1.       Interest Expense
           2.       Required Payment of Long Term
                        Debt and Capital Leases
           3.       TDS              ___________________


Adjusted OCF/TDS = Debt Service Ratio


         Notes:

         (1)   "Net Equity  Raised" is equity  raised which is net of any equity
               used to finance acquisitions.

         (2)   "Financed  CAPEX"  is  bank/lease  debt used to  finance  capital
               purchases.





PABOS2:SCS:28634_5


                                      -29-