<PAGE>



              NOTE PURCHASE, PAYING AND CONVERSION AGENCY AGREEMENT










                                  BIGMAR, INC.
                             JOHNSTOWN, OHIO, U.S.A.



                                CHF 3'000'000.--
                4% Convertible Notes of 1999 due October 29, 2003



                                October 26, 1999


<PAGE>

<TABLE>
<CAPTION>

                                TABLE OF CONTENTS

<S>                                                                                   <C>
DEFINITIONS
I.                   SUBJECT                                                             3
II.                  ANNEXES                                                             3
III.                 SALES RESTRICTIONS                                                  4
IV.                  COMMISSION AND EXPENSES                                             8
V.                   WARRANTIES                                                          9
VI.                  PAYMENT TO THE COMPANY                                             11
VII.                 CONDITIONS TO THE OBLIGATIONS
                     OF BANCA DEL GOTTARDO                                              12
VIII.                INFORMATION MEMORANDUM                                             13
IX.                  PRINTING OF THE NOTES                                              13
X.                   SERVICING OF THE NOTES                                             14
XI.                  CANCELLATION OF NOTES AND COUPONS                                  16
XII.                 COVENANTS                                                          16
XIII.                RIGHT OF TERMINATION                                               18
XIV.                 COMMUNICATIONS                                                     19
XV.                  APPLICABLE LAW AND JURISDICTION                                    19
XVI.                 EFFECTIVENESS                                                      20
XVII.                CURRENCY INDEMNITY                                                 20
XVIII.               ENTIRE AGREEMENT                                                   21
XIX.                 AMENDMENT, CANCELLATION AND WAIVER                                 21

ANNEX A              TERMS OF THE NOTES                                                 22
ANNEX B              DEFINITIVE NOTE (FACE)                                             34
ANNEX C              INTEREST COUPONS                                                   36
ANNEX D              PERMANENT GLOBAL NOTE                                              37
ANNEX E              CONVERSION AGENCY AGREEMENT                                        39
ANNEX F              CERTIFICATE OF NO MATERIAL ADVERSE CHANGE                          55
ANNEX G              SPECIMEN SIGNATURE FORM                                            56
ANNEX H              CERTIFICATE OF COMPLETION OF DISTRIBUTION                          57
ANNEX I              CERTIFICATE OF NONAVAILABILITY TO UNITED STATES PERSONS
                     OR PERSONS WITHIN THE UNITED STATES                                58
ANNEX K              CERTIFICATION OF NON-U.S. BENEFICIAL OWNERSHIP AND
                     FILING REQUIREMENTS                                                59
ANNEX L              CERTIFICATION OF NON-U.S. BENEFICIAL OWNERSHIP AND
                     FILING REQUIREMENTS                                                60
</TABLE>

<PAGE>

              NOTE PURCHASE, PAYING AND CONVERSION AGENCY AGREEMENT

                  entered into effective as of October 26, 1999

                                     between

BIGMAR, INC.
being a corporation existing under the laws of the State of Delaware, whose head
office is situated at 9711 Sportsman Club Road, Johnstown, Ohio 43031, U.S.A.,

(hereinafter called the "Company")

                                                                 on the one part
                                       and

BANCA DEL GOTTARDO
being a corporation duly organized with limited liability and existing under the
laws of Switzerland, whose registered office is situated at Viale Stefano
Franscini 8, 6901 Lugano, Switzerland,

                                                               on the other part



SOME DEFINITIONS

The Company's 4% Convertible Notes of 1999 due October 29, 2003, are referred to
herein as the "Notes".

Until the Notes have been printed in definitive form, if printed, pursuant to
Article IX hereof, the expression "Notes" herein shall include entitlements
under the Permanent Global Note, and the expressions "Noteholder(s)" and
"Couponholder(s)", mutatis mutandis, shall mean and include persons and entities
entitled to the benefits under the Permanent Global Note. Each Noteholder
possesses a co-ownership in the Permanent Global Note in relation to the
principal amount of Notes of which he is an owner. "Permanent Global Note" means
a global note for the total principal amount of Swiss Francs ("CHF")
3'000'000.-- issued in bearer form and representing 60 single Notes each in the
amount of CHF 50'000.-- and representing the aforementioned total principal
amount. The Permanent Global Note will be destroyed by Banca del Gottardo when
the Notes are printed, if printed. Banca del Gottardo shall promptly after
destruction provide to the Company a written certificate that the Permanent
Global Note has been destroyed.

<PAGE>

I. SUBJECT

         Subject to the terms and conditions hereof

         -   the Company, pursuant to authorization by its Board of Directors,
             agrees to issue and sell to Banca del Gottardo CHF 3'000'000.--
             Notes at a price of 100% of their principal amount and

         -   Banca del Gottardo agrees not later than October 29, 1999

         (1)  to purchase (i.e. underwrite) on a firm basis for CHF 3'000'000.--
              Notes at a price of 100% of their principal amount, and

         (2)  to offer the Notes in a placement exclusively to its clients and
              other financial institutions at a price of 100% of their principal
              amount,

         with a total principal amount of         CHF 3'000'000.--
                                                  (Swiss Francs three million)

         maturing on                              October 29, 2003

         bearing interest at the rate of          4% per annum, payable
                                                  semi-annually in arrear each
                                                  on October 29 and April 29,
                                                  commencing April 29, 2000
                                                  until maturity

         The aggregate amount for which Notes are sold are hereinafter referred
         to as the "Proceeds".

         The net Proceeds of the Notes will be utilized by the Company for the
         financing of working capital and general corporate purposes.

         Banca del Gottardo shall not have any responsibility for or be obliged
         to concern itself with the application of the net Proceeds of the
         Notes.

II.      ANNEXES

         The contents of each of the Annexes attached hereto, i.e.

         Annex A:     Terms of the Notes
         Annex B:     Form of Definitive Note (face)

<PAGE>

         Annex C:     Form of Interest Coupons
         Annex D:     Form of Permanent Global Note
         Annex E:     Conversion Agency Agreement
         Exhibit 1
         to Annex E:  Conversion Provisions
         Annex F:     Form of Certificate of No Material Adverse Change
         Annex G:     Specimen signature form
         Annex H:     Certificate of completion of distribution
         Annex I:     Certificate of nonavailability to United States persons
                      or persons within the United States
         Annex K      Certification of non-U.S. Beneficial Ownership and
                      Filing Requirements
         Annex L      Certification of non-U.S. Beneficial Ownership and
                      Filing Requirements

         shall constitute an integral part of this Agreement.

III.     SALES RESTRICTIONS

         a)   The Notes to be issued pursuant to this Agreement have not been
              registered under the United States Securities Act of 1933, as
              amended (the "Securities Act"), and may not be offered, sold or
              delivered, directly or indirectly, in the United States or to, or
              for the account of, any U.S. person except in transactions exempt
              from the registration requirements of the Securities Act.

         b)   As to the Company, the Notes are intended to be obligations that
              are not required to be in registered form for purposes of United
              States federal tax laws and the principal (to the extent
              characterized as original issue discount) and interest payable on
              the Notes are intended to be "portfolio interest" under Sections
              871(h) and 881(c) of the United States Internal Revenue Code of
              1986 as amended (the "Code"). Accordingly, the Notes may not, as
              part of any part of the initial distribution, be offered for sale
              or resale, sold or delivered, directly or indirectly, to a person
              in the United States or to a United States person. Banca del
              Gottardo (i) agrees and represents that no Notes will be offered,
              sold or delivered to or on behalf of a person within the United
              States or to a United States person, (ii) represents and agrees
              that (a) during the period beginning on the earlier of the first
              date that the Notes are offered or the date on which the Notes are
              issued and ending on the date one (1) year after the later of the
              date upon which the Notes were first offered or the date of
              closing of this offering (the "Restricted Period"), it will not
              offer or sell, Notes to a person who is within the United States
              or to a United States person, (b) it has not delivered and will
              not deliver within the United States the Permanent Global Note,
              the Notes or any definitive Notes or coupons, if printed, that are
              sold during the Restricted Period, (c) it has and throughout the
              Restricted Period will have in effect procedures reasonably
              designed to ensure that its employees or agents who are directly
              engaged in selling Notes are aware that such Notes may not be

<PAGE>

              offered or sold during the Restricted Period to a person who is
              within the United States or to a United States person and (d) it
              has not entered and will not enter into any contractual
              arrangement with respect to the distribution and delivery of the
              Notes, except with its affiliates or with the prior written
              consent of the Company, (iii) represents and agrees with respect
              to each affiliate that acquires from it Notes for the purpose of
              offering or selling such Notes during the Restricted Period,
              repeating and confirming the representations and agreements
              contained in clauses (ii) (a), (b), (c) and (d) on each such
              affiliate's behalf, (iv) represents and agrees that it will not
              sell or deliver Notes to a holder which is (a) immediately after
              the sale or delivery, a "10-percent. shareholder" of the Company
              within the meaning of Section 871 (h) (3) of the Code, (b) a bank
              on an extension of credit made pursuant to a loan agreement
              entered into in the ordinary course of its trade or business, (c)
              a controlled foreign corporation which is related to the Company
              under section 864 (d) (4) of the Code, or (d) within a foreign
              country which the United States Secretary of the Treasury has
              determined under section 871 (h) (6) of the Code that the exchange
              of information with the foreign country is inadequate to prevent
              evasion of United States tax by United States persons, (v)
              represents and agrees that (a) on or before the delivery of the
              Permanent Global Note by the Company, Banca del Gottardo will
              deliver to the Company the certificate in the form attached hereto
              as Annex I, and (b) Banca del Gottardo will deliver to the Company
              the certificate in the form attached hereto as Annex H within ten
              business days of the commencement of the Restricted Period and,
              (vi) represents and agrees that the sale of the Notes shall be
              made upon certification, in the form attached hereto as Annex K,
              that the beneficial owners of the Notes either (i) will not be
              United States persons or U.S. persons or (ii) are financial
              institutions (within the meaning of United States Treasury
              Regulation Section 1.165.12(c)(1)(v)) located outside the United
              States that are not United States persons and are purchasing such
              Notes for resale during the Restricted Period and certify they are
              not acquiring the Notes for purposes of resale directly to a
              United States person or to a person within the United States. Any
              certificates provided by a clearing organization must be based on
              statements provided to it by its members. Banca del Gottardo
              agrees to furnish to the Company a properly completed certificate
              with respect to each Note, in the form attached hereto as Annex K
              (and, in the case of clearing organizations, require statements of
              members of the clearing organization), on the earlier of the date
              of the first actual payment of interest on the Note or the date of
              delivery of any instrument or document transferring an interest in
              or entitlement under the Permanent Global Note. For purposes of
              this Agreement, whether an offer, sale or delivery is made to a
              person within the United States or to a United States person will
              be determined under the rules set out in the Code, and United
              States Treasury Regulation Section 1.163-5(c)(2)(i)(D). Banca del
              Gottardo agrees that it will comply fully with the selling
              restrictions set out in this Sub-
<PAGE>

              Section (b) and, in particular, Banca del Gottardo hereby
              covenants and agrees to the effect set out in clauses (ii) and
              (iii) of the second preceding sentence.

         c)   The Notes will be represented by a permanent Global Convertible
              Note (the "Permanent Global Note"), without interest coupons, the
              Permanent Global Note to be deposited by the Company with Banca
              del Gottardo, on the Payment Date. The Permanent Global Note may
              be exchanged, as a whole or in part, for appropriate definitive
              Notes, if printed, in bearer form in the denominations of CHF
              50'000.-- with interest coupons (the "Coupons") attached, in
              bearer form not earlier than 1 year after the later of the date on
              which the Notes are first offered or the Payment Date, before
              which time no Notes represented by the Permanent Global Note or
              interest therein may be offered, sold or transferred into the
              United States or to a U.S. person. Such exchange shall be made
              upon certification, in the form attached hereto as Annex L, that
              the beneficial owners of the Notes either (i) are not United
              States persons or U.S. persons or (ii) are financial institutions
              (within the meaning of United States Treasury Regulation Section
              1.165-12(c)(1)(v)) located outside the United States that are not
              United States persons and have purchased such Notes for resale
              during the Restricted Period and certify they have not acquired
              the Notes for purposes of resale directly or indirectly to a
              United States person or to a person within the United States. Any
              certificates provided by a clearing organization must be based on
              statements provided to it by its members. Banca del Gottardo
              agrees to furnish to the Company a properly completed certificate
              with respect to each Note, in the form attached hereto as Annex L
              (and, in the case of clearing organizations, required statements
              of members of the clearing organization), on the earlier of the
              date of the first actual payment of interest on the Note or the
              date of delivery by the Company of the Note in definitive form.

         d)   In this Agreement, references to "dollars" and "USD" are to United
              States dollars, the term "United States" means the United States
              of America (including the States and the District of Columbia),
              its territories, its possessions and other areas subject to its
              jurisdiction, and the term "United States person" means a citizen
              or resident of the United States, a corporation, partnership or
              other entity created or organized in or under the laws of the
              United States or any political subdivision thereof, or an estate
              or trust the income of which is subject to United States federal
              income taxation regardless of its source, "U.S. person" shall have
              the meaning set forth in Sections 230.901 through 904 of Title 17
              of the United States Code of Federal Regulations ("Regulation S").

         e)   The following legends will appear on the Permanent Global Note and
              all Notes and Coupons, if printed, issued pursuant to the Offer:
              (i) "Any United States person who

<PAGE>

              holds this obligation will be subject to limitations under the
              United States income tax laws, including the limitations
              provided in sections 165(j) and 1287(a) of the Internal Revenue
              Code", and (ii) "This Note has not been and will not be
              registered under the United Stated Securities Act of 1933, as
              amended (the "Securities Act"), and may not be offered, sold or
              delivered, directly or indirectly, in the United States or to,
              or for the benefit of, any U.S. person (as such terms are
              defined in Regulation S under the Securities Act) unless this
              Note is registered under the Securities Act or an exemption
              from the registration requirements of the Securities Act is
              available." The sections referred to in the legend provide
              that, with certain exceptions, a United States person will not
              be permitted to deduct any loss, and will not be eligible for
              capital gain treatment with respect to any gain, realized on a
              sale, exchange or redemption of such Notes or Coupons.

         f)   The Company represents, warrants and covenants that the Notes have
              not been and shall not be offered or sold except in accordance
              with Rule 903 of Regulation S promulgated under the Securities Act
              or in a transaction exempt from the registration requirements of
              the Securities Act. Each of the Company and Banca del Gottardo
              represents, warrants and covenants that (i) none of it, its
              affiliates or any person acting on its behalf has engaged or will
              engage in any directed selling efforts (as defined in Rule 902 of
              Regulation S promulgated under the Securities Act) in the United
              States and it has complied and will comply with the offering
              restrictions of Regulation S under the Securities Act in
              connection with the offer of the Notes, (ii) none of it, its
              affiliates or any person acting on its behalf has utilized or will
              utilize any form of general solicitation or general advertising
              (as such terms are used in Regulation D promulgated under the
              Securities Act) in connection with the offer of the Notes in the
              United States, (iii) none of it, its affiliates or any person
              acting on its behalf has made or will make an offer of the Notes
              in circumstances that would require the registration of the Notes
              under the Securities Act and (iv) requests to purchase Notes shall
              be accepted only from persons who are not within the United
              States.

         g)   Banca del Gottardo has been advised by the Company and
              acknowledges and confirms that it is aware (a) that a violation or
              breach of any of the terms and conditions of Article III of this
              Agreement could directly cause the Company to become subject to
              damages and liabilities (including, but not limited to, excise
              taxes, a loss of the interest deduction and assumption of
              withholding taxes) under various United States securities and tax
              laws, and (b) that, as a consequence, Banca del Gottardo shall
              defend, indemnify and save harmless the Company, its officers,
              directors, agents and employees from any and all third party
              claims, demands, suits or proceedings (including reasonable legal
              fees and expenses) arising out of any breach or alleged breach of
              any

<PAGE>

              of the terms or conditions of Article III of this Agreement,
              except to the extent the claim, demand, suit or proceeding arises
              out of the negligence or willful misconduct of the Company. In
              seeking indemnification, the Company shall give prompt notice of
              the claim, demand, suit or proceeding to Banca del Gottardo,
              cooperate with Banca del Gottardo, and allow Banca del Gottardo to
              control the defense.

IV.      COMMISSION AND EXPENSES

         a)   The Company will pay on October 29, 1999 Lugano time (the "Closing
              Date") to Banca del Gottardo

              (1)   a managing and underwriting commission of 5% calculated
                    on the principal amount of the Notes

              (2)   out of pocket expenses of CHF 10'000.--

              The payment by the Company of (1) and (2) above will be made by
              deduction from the payment by Banca del Gottardo to the Company of
              the Proceeds, resulting in the Net Proceeds as per Article VI.

         b) The Company shall further bear when ascertainable and due

              -   all present or future taxes, duties or other charges levied by
                  or within the United States of America in connection with the
                  execution and delivery of this Agreement, the Permanent Global
                  Note (excluding tax on interest or principal on the Notes
                  which is addressed in Annex A); and

              -   the commissions and expenses for the servicing and the
                  conversion of the Notes as per Article X;

         c)   The Company will reimburse Banca del Gottardo on first demand for
              all reasonable bank charges, reasonable legal fees and other
              reasonable costs and expenses incurred or to be incurred by Banca
              del Gottardo in case of or in connection with reorganization,
              merger, restructuring or default, actual or threatened, of the
              Company as well as in connection with the convening of a
              Noteholders' meeting and the preservation and enforcement of any
              of the rights under this Agreement, the Permanent Global Note or
              the Notes.

<PAGE>

         d)   Banca del Gottardo shall bear

              -   all costs and expenses in connection with the initial offering
                  and placement of the Notes incurred by it.

              Banca del Gottardo shall further bear

              -   the cost for the printing and delivery to the holders of the
                  definitive Notes, if printed, incurred by Banca del Gottardo
                  on behalf of the Company.

              -   all costs incurred by it in connection with the offering,
                  including the printing in Switzerland of the Information
                  Memorandum relating to the Notes.

V.         WARRANTIES

           A)     The Company warrants to and for the benefit of Banca del
                  Gottardo that:

                  1.   STATUS: it is a corporation duly incorporated and
                       existing in good standing under the laws of the State of
                       Delaware capable of suing and being sued and has the
                       power and authority to own its assets and to conduct the
                       business which it presently conducts;

                  2.   POWERS: it has the power to enter into, exercise its
                       rights and perform and comply with its obligations under
                       this Agreement;

                  3.   AUTHORIZATION AND CONSENTS: except as to the registration
                       requirements provided for herein, all actions, conditions
                       and things required by the laws of the State of Delaware
                       and the United States of America have been taken,
                       fulfilled and done (including the obtaining of any
                       necessary consents) in order

                       a) to enable it lawfully to enter into, exercise its
                          rights and perform and comply with its obligations
                          under this Agreement; and

                       b) to ensure that those obligations are legally binding
                          and enforceable in accordance with their terms subject
                          to general equity principles, to applicable
                          bankruptcy, insolvency, conservatorship,
                          reorganization and other similar debtor relief laws,
                          and to other laws establishing liens and priorities or
                          otherwise relating to or affecting creditors-rights;

<PAGE>

                  4.   NON-VIOLATION OF LAWS, ETC: its entry into, and exercise
                       of its rights and/or performance of or compliance with
                       its obligations under this Agreement, the terms of the
                       Permanent Global Note and the Notes do not and will not
                       violate in any material way

                       a) any law to which it is subject; or

                       b) its Certificate of Incorporation; or

                       c) except for matters for which the Company has received
                          a waiver, any agreement to which it is a party or
                          which is binding on it or its assets, and does not and
                          will not result in the existence of, or obligate it to
                          increase, any security interest in those assets,
                          except to the extent that such violations in the
                          aggregate would not have a material adverse effect on
                          the financial conditions of the Company;

                  5.   OBLIGATIONS BINDING: its obligations under this
                       Agreement, the Permanent Global Note and the Notes when
                       duly executed are valid, binding and enforceable in
                       accordance with their terms subject to general equity
                       principles, to applicable bankruptcy, insolvency,
                       conservatorship, reorganization and other similar debtor
                       relief laws, and to other laws establishing liens and
                       priorities or otherwise relating to or affecting
                       creditors' rights;

                  6.   INFORMATION MEMORANDUM: the information pertaining to the
                       Company and its subsidiaries which is contained in the
                       Information Memorandum (defined in Article VIII) is
                       accurate in all material respects and there are no other
                       facts the omission of which makes any statement therein
                       materially misleading;

                  7.   ACCOUNTS: the audited and unaudited consolidated
                       financial statements included as contained in the
                       Information Memorandum present fairly the results and
                       financial condition of the Company as a whole for the
                       periods and as of the dates thereof, and are in
                       accordance with generally accepted accounting principles
                       in the United States of America;

                  8.   NO MATERIAL ADVERSE CHANGE: save as disclosed in the
                       Information Memorandum and the Company's filings with the
                       Securities and Exchange Commission in the U.S., there has
                       been no material adverse change in the consolidated
                       financial condition of the Company since June 30, 1999;

<PAGE>


                  9.   LITIGATION: except as disclosed in the Information
                       Memorandum, no litigation, arbitration or administrative
                       proceedings or judgment or award is current or, so far as
                       the Company is aware, threatened or pending

                       a) to restrain the entry into, exercise of its rights
                          under and/or performance or enforcement of or
                          compliance with its obligations under this Agreement;
                          or

                       b)   which either individually or collectively are
                            material in the context of the issue and sale of the
                            Notes or the making and performance of this
                            Agreement;

                  10.  NO BREACH OR DEFAULT: neither failure by the Company to
                       comply with Article III nor any event described in
                       Sections 8, 9 or 10 of the Terms of the Notes has
                       occurred and is continuing. The Company is not in breach
                       or in default under any agreement to an extent or in a
                       manner which has had or could have a material adverse
                       effect on the financial condition of the Company and its
                       consolidated affiliates taken as a whole.

           (B)    Since the commitment of Banca del Gottardo to purchase the
                  Notes is made on the basis of the aforesaid representations
                  and warranties, the Company hereby undertakes with Banca del
                  Gottardo that it will hold Banca del Gottardo harmless against
                  all losses, liabilities, costs, charges and expenses which it
                  may incur as a noteholder as a result of or in relation to any
                  material misrepresentation or any material breach of said
                  representations and warranties by the Company, and as long as
                  any of the Notes are outstanding Banca del Gottardo shall be
                  given prompt notice by the Company of any claim, action or
                  proceeding which might in the Company's good faith judgment
                  give rise to an obligation under this clause (B) of Article V.
                  This indemnification by the Company shall be in addition to
                  any other remedy available to Banca del Gottardo under
                  applicable law.

VI.        PAYMENT TO THE COMPANY

           On the Closing Date, Banca del Gottardo will pay to the Company the
           NET PROCEEDS (the "Net Proceeds") of the offering against the
           Permanent Global Note being delivered to Banca del Gottardo pursuant
           to Article VII.


<PAGE>

VII.       CONDITIONS TO THE OBLIGATIONS OF BANCA DEL GOTTARDO

           Banca del Gottardo shall have received from the Company at the latest
           on October 28, 1999 the following DOCUMENTS:

           (1)    a copy of the Certificate of Incorporation, together with all
                  amendments thereto, of the Company certified by the Secretary
                  or the Assistant Secretary of the Company and a copy of a
                  Certificate of the Secretary of State of the State of Delaware
                  as to the good standing of the Company, each dated as of a
                  recent date;

           (2)    a certified copy of a resolution or resolutions duly adopted
                  by the Board of Directors of the Company signed by a duly
                  authorized officer of the Company, conferring the necessary
                  authority upon the person(s) signing this Agreement, the
                  Information Memorandum, the Permanent Global Note, the Notes
                  and any related documents; and a certificate of the Secretary,
                  or Assistant Secretary of the Company as to the incumbency and
                  signatures of the officer(s) of the Company signing the
                  documents provided for in this clause (2) on behalf of the
                  Company and the approval of this Agreement and the Information
                  Memorandum;

           (3)    PERMANENT GLOBAL NOTE (in the form of Annex D, without
                  interest coupons and without reproduction of the Terms of the
                  Notes) duly issued and signed by an authorized officer of the
                  Company to be held in escrow by Banca del Gottardo pending
                  payment of the Net Proceeds pursuant to Article VI;

           (4)    an executed copy of the Conversion Agency Agreement as set
                  forth in Annex E hereto;

           (5)    specimen signatures for the printing of the Notes;

           (6)    Certificate of No Material Adverse Change dated as of the
                  Closing Date and signed by an authorized officer of the
                  Company, substantially in the form of Annex F hereto;

           (7)    a legal opinion of Bricker & Eckler LLP, external U.S. counsel
                  to the Company on the laws of the United States of America,
                  dated as of the Closing Date;

           (8)    an opinion of the Company's Tax Counsel with respect to the
                  status of the Notes in respect of United States taxes, dated
                  as of the Closing Date;


<PAGE>


           (9)    a certificate of two officers of the Company approving the
                  terms of the Notes and the issue and sale thereof by the
                  Company;

           (10)   1 copy of the Information Memorandum duly signed by an
                  authorized officer of the Company; and

           Each of documents 5, 6, 7, 8, 9 and 10 shall be substantially as
           agreed by the Company and Banca del Gottardo prior to the Closing
           Date.

VIII.      INFORMATION MEMORANDUM

           The Company will supply Banca del Gottardo on behalf of the holders
           of the Notes in due time with information and documentation for the
           preparation by Banca del Gottardo of the Information Memorandum (the
           "Information Memorandum") relating to the Issue, in compliance with
           Swiss law.

           The Information Memorandum shall be reviewed by the Company and Banca
           del Gottardo.

IX.        PRINTING OF THE NOTES

           The Notes and Coupons and all rights and obligations in connection
           therewith are documented solely in form of a Permanent Global Note as
           per Annex D hereto. Each Noteholder of a Note or Coupon therefore
           retains a co-ownership in the Permanent Global Note to the extent of
           his claim against the Company. Content and form of the Permanent
           Global Note must be in accordance with the regulations of SIS
           SEGAINTERSETTLE AG (the "SEGA"). Except as provided in item c) below,
           no printing and delivery of definitive Notes or Coupons will occur.

           a) Publicity: All documents and publications established in
              connection with the issue of the Notes (i.e. the Information
              Memorandum, advertisements, if any, as well as possible additional
              publications) must explicitly and prominently state that the Notes
              are represented by way of a Permanent Global Note and that
              investors are not entitled to receive definitive Notes or Coupons.

           b) Custodianship: Banca del Gottardo undertakes to hold in custody
              the Permanent Global Note, which it has received duly signed in
              accordance with Article VII item 3) above, after payment of the
              Net Proceeds to the Company. The Permanent Global Note remains in
              safekeeping with Banca del Gottardo during the entire duration of
              the issue and until the complete redemption of the Notes.


<PAGE>


           c) Arrangements for printing of the definitive Notes and Coupons: The
              Company irrevocably authorizes Banca del Gottardo to arrange for
              the printing of the definitive Notes with Coupons attached, in the
              name of and at the expense of the Company, should Banca del
              Gottardo deem such printing to be necessary or useful, or if the
              presentation of definitive Notes and Coupons is required by Swiss
              or foreign laws and regulations in connection with the enforcement
              of rights (e.g. in cases of bankruptcy, consolidation or
              reorganisation of the Issuer). In such case, the Notes and Coupons
              will be substantially in the form of Annex B and C. The Company
              irrevocably authorizes Banca del Gottardo to reproduce on the
              definitive Notes the signatures deposited with Banca del Gottardo
              in accordance with Article VII item 5) above.

              Should the definitive Notes and Coupons be printed, Banca del
              Gottardo will then exchange the Permanent Global Note against the
              definitive Notes and Coupons and thereupon cancel and return the
              Permanent Global Note to the Company.

           Notes and/or Coupons which are mutilated, lost or destroyed may be
           replaced by Banca del Gottardo in accordance with the respective
           provisions of the Terms of the Notes.

X.         SERVICING OF THE NOTES

           (1)    TRANSFER OF FUNDS

                  The Company will effect transfer of the funds in freely
                  disposable Swiss Francs required to make any payment of
                  principal or interest on the Notes, including the commissions
                  referred to in paragraph (2) hereafter, to Banca del Gottardo,
                  Lugano, as Paying Agent, for value the respective due date
                  provided that, if such due date does not fall on a Business
                  Day, the Company shall be obliged to effect transfer of such
                  payments for value the Business Day immediately preceding such
                  due date. Any transfer risk shall be borne by the Company.

                  "Business Day" means a day on which commercial banks are open
                  for domestic business and foreign exchange (including dealings
                  in Swiss Francs) in Lugano and New York.

                  Banca del Gottardo will supply the Company, by facsimile or
                  otherwise in writing received by the Company not less than
                  five Business Days prior to each due date for any payment
                  under the Notes, with any necessary information including
                  reference numbers and the name of a contact person for the
                  receipt of funds. Further in-


<PAGE>


                  formation regarding the transfer may be obtained by Banca del
                  Gottardo from the Company at the address set out in Article
                  XIV below.

                  Banca del Gottardo shall credit the funds received to separate
                  non-interest bearing accounts with Banca del Gottardo for each
                  Coupon due date and/or redemption date. The receipt by Banca
                  del Gottardo of the due and punctual payment of the funds in
                  Lugano shall release the Company of its obligations under the
                  Permanent Global Note or under the Notes for the interest and
                  principal, to the extent of such payment.

                  Any funds held by Banca del Gottardo which will not be used as
                  a consequence of Coupons and Notes not having been collected
                  within the relevant period described by the Statute of
                  Limitations (as referred to in Section 11 of the Terms of the
                  Notes), shall be held by Banca del Gottardo at the disposal of
                  the Company. Banca del Gottardo shall promptly after the
                  expiry of the relevant period inform the Company about the
                  respective amount.

                  The risk of any exchange loss on the transfer of funds so held
                  by Banca del Gottardo from Banca del Gottardo to the Company
                  shall be borne by the Company, provided the transfer is made
                  by order of, or with the consent of, the Company.

           (2)    COMMISSIONS AND EXPENSES

                  The Company will pay to Banca del Gottardo for the servicing
                  of the Notes a commission of

                  - 0.25% on the face amount of Coupons to be paid and
                  - 0.125% on the principal amount of Notes redeemed.

           (3)    MODALITIES

                  Any transfer by the Company as per (1) and (2) above, shall be
                  made in Swiss Francs freely disposable, without any
                  restrictions, and whatever the circumstances may be,
                  irrespective of the nationality or domicile of the holder of
                  Notes and/or Coupons, and without requiring any affidavit, or
                  the fulfilment of any other formality.


<PAGE>


           (4)    PAYING AGENCY

                  The Company hereby appoints Banca del Gottardo as sole Paying
                  Agent (the "Paying Agent") and Banca del Gottardo agrees to
                  pay to the Noteholders all amounts to become due under the
                  Notes.

                  The Company undertakes, in connection with the Issue, not to
                  appoint any institutions as paying agent without the consent
                  of Banca del Gottardo, which consent shall not be unreasonably
                  withheld and not to pay to other banks any commission or
                  remuneration for the payment of interest or principal on the
                  Notes.

XI.        CANCELLATION OF NOTES AND COUPONS

           The Company requests and authorizes Banca del Gottardo and Banca del
           Gottardo undertakes to cancel and destroy all Coupons (if printed)
           paid and Notes (if printed) redeemed, converted or replaced, after
           the period prescribed by law, and to certify to the Company in
           writing the serial numbers of Notes destroyed, the dates when such
           destruction took place and the names of the persons witnessing such
           destruction.

           Banca del Gottardo reserves the right to record cashed Coupons as
           well as redeemed, repaid, converted or replaced Notes on video tape
           or other data carriers and to store them in this way instead of
           keeping them physically during the period prescribed by law and to
           destroy them subsequently. This reproduction of Coupons and/or Notes
           will remain in safekeeping at Banca del Gottardo during the statutory
           limitation.

XII.       COVENANTS

           As long as any of the Notes remain outstanding, the Company
           undertakes:

           (1)    To send to Banca del Gottardo

                  a)   Annual Reports, on Form 10-K, as filed with the United
                       States Securities and Exchange Commission (the "SEC"),
                       which report shall include or be accompanied by a copy of
                       the report of the Company's independent auditor', and

                  b)   such regular and periodic reports on Form 10-Q and Form
                       8-K (deemed material) as the Company files with the SEC.

<PAGE>

                  Banca del Gottardo is authorized to hold these documents at
                  the disposal of the Noteholders and/or holders of Coupons for
                  inspection.

           (2)    To provide Banca del Gottardo forthwith upon becoming aware
                  thereof with

                  -  any change of its Certificate of Incorporation or By-laws,
                     and without waiting for Banca del Gottardo to take any of
                     the actions mentioned in Section 8, 9 or 10 of the Terms of
                     the Notes, with.i

                  -  a notice in writing of any event provided for in Section 8,
                     9 or 10 of the Terms of the Notes.

           (3)    To hold meetings of the Board of Directors on at least a
                  quarterly basis, i.e. at least one meeting each quarter.

           (4)    To provide Banca del Gottardo with quarterly financial
                  statements of the Company by no later than the 45th day of the
                  month following the quarter covered by such statements. Such
                  statements shall provide Banca del Gottardo with a summary of
                  all of the Company's operations, in addition to a brief
                  summary of how the Net Proceeds of this issue have been used
                  by Company.

           (5)    To appoint two members, as reasonable acceptable to the
                  Company, of its Board of Directors upon request of Banca del
                  Gottardo, unless Banca del Gottardo has exercised any similar
                  right under any other agreement, and thereafter to nominate
                  such appointee for election by the Company's stockholders and
                  use its best efforts to assure their election until any Note
                  or Notes shall be redeemed by the Company.

           (6)    (a)  So long as any Notes are outstanding, to keep
                       available authorized shares of Common Stock sufficient to
                       permit all Notes outstanding and unconverted to be
                       converted in accordance with the Provisions (Exhibit 1 to
                       Annex E of the Agreement);

                  (b)  to assure that all shares of Common Stock delivered upon
                       conversion of Notes will be validly issued, fully-paid
                       and non-assessable;

                  (c)  to file, on or before March 1, 2000, if required, any
                       registration under the United States securities laws that
                       may be required before the Shares can be delivered upon
                       conversion of the Notes and freely marketed in the United
                       States.


<PAGE>


XIII.      RIGHT OF TERMINATION

           Notwithstanding anything contained in this Agreement, Banca del
           Gottardo may by notice, setting forth in detail the basis for Banca
           del Gottardo's reasonable opinion giving rise to such notice, to the
           Company terminate this Agreement at any time before the time on the
           Closing Date when payment would otherwise be due under this Agreement
           to the Company in respect of the Notes if:

           (1)    in the reasonable opinion of Banca del Gottardo, circumstances
                  shall be such as:

                  a)   to prevent or to a material extent restrict payment for
                       the Notes in the manner contemplated in this Agreement;
                       or

                  b)   to a material extent prevent or restrict settlement of
                       transactions in the Notes in the market or otherwise; or

           (2)    in the reasonable opinion of Banca del Gottardo, there shall
                  have been:

                  a)   any change in national or international political, legal,
                       tax or regulatory conditions; or

                  b)   any calamity or emergency

           which has in the view of Banca del Gottardo caused a substantial
           deterioration in the price and/or value of the Notes.

           Any such termination of this Agreement shall be without liability on
           the part of Banca del Gottardo or on the part of the Company.

           Upon any such termination of this Agreement pursuant to Article XIII
           (1), the parties hereto shall (except for the liability of the
           Company in relation to expenses as provided in Article IV (a) (2)
           hereof and except for any liability arising before or in relation to
           such termination) be released and discharged from their respective
           obligations under this Agreement.


<PAGE>


XIV.       COMMUNICATIONS

           All communications among Banca del Gottardo and the Company regarding
           this Agreement shall be made in the English language, by telex or
           facsimile, followed by registered letter, and shall be transmitted


<TABLE>

           <S>                                                 <C>
           BY THE COMPANY TO:                                  BY BANCA DEL GOTTARDO TO:

           Banca del Gottardo                                  Bigmar, Inc.
           Viale Stefano Franscini 8                           9711 Sportsman Club Road
           6901 Lugano, Switzerland                            Johnstown, Ohio 43031, U.S.A.

           Attn:       Capital Market Department               Attn:       Chief Financial Officer
           Telex No.:  841 052
           Facsimile:  0114191 808 18 43                       Facsimile:  001-614-966-5801

                                                               WITH COPIES TO:

                                                               Bricker & Eckler LLP
                                                               100 S. Third St.
                                                               Columbus, OH 43215

                                                               Facsimile:  001-614-227-2390

</TABLE>

XV.        APPLICABLE LAW AND JURISDICTION

           The Terms of this Agreement shall be governed by Swiss law, save and
           except that paragraph 8 of the Terms of the Notes shall be governed
           by the laws of the State of New York.

           Any dispute which might arise between Banca del Gottardo on the one
           hand and the Company on the other hand regarding this Agreement shall
           fall within the jurisdiction of the ordinary Courts of Justice of the
           Canton of Ticino, THE PLACE OF JURISDICTION BEING LUGANO, with the
           right of appeal to the Swiss Federal Court of Justice in Lausanne
           where the law permits.

           Solely for purposes of the preceding paragraph and for the purpose of
           execution of a judgment in Switzerland, the Company elects legal and
           special domicile at Banca del Gottardo's office in Lugano, and Banca
           del Gottardo shall send to the Company as soon as possible any
           documents received by it in this connection.

           Banca del Gottardo shall also be at liberty to enforce its rights and
           to take legal action before the competent courts of the United States
           of America, in which case Swiss law,


<PAGE>


           save and except that paragraph 8 of the Terms of the Notes shall be
           governed by the laws of the State of New York, shall be applicable
           with respect to the construction and interpretation of this
           Agreement.

XVI.       EFFECTIVENESS

           The effectiveness of this Agreement is subject to:

           (a) the receipt by Banca del Gottardo of all documents as
               requested in Article VII of this Agreement, in a form
               reasonably acceptable to Banca del Gottardo,

           (b) no exercise of the Right of Termination as per Article XIII.

XVII.      CURRENCY INDEMNITY

           If any sum due from the Company in favour of the Paying Agent has to
           be converted from Swiss Francs (the "first currency") into another
           currency (the "second currency") for the purpose of (i) making or
           filing a claim or proof against the Company, (ii) obtaining an order
           or judgment in any court or other tribunal or (iii) enforcing any
           order or judgment given or made in relation hereto, the Company shall
           indemnify and hold harmless Banca del Gottardo from and against any
           loss suffered as a result of any discrepancy between (a) the rate of
           exchange used for such purpose to convert the sum in question from
           the first currency into the second currency and (b) the rate or rates
           of exchange at which Banca del Gottardo may in the ordinary course of
           business purchase the first currency with the second currency upon
           receipt of a sum paid to them in the second currency in satisfaction
           in whole or in part of any such order, judgment, claim or proof.

           This indemnity shall constitute a separate and independent obligation
           from the other obligations contained herein, shall give rise to a
           separate and independent cause of action and shall apply,
           irrespective of any waiver granted by Banca del Gottardo from time to
           time and shall continue in full force and effect notwithstanding any
           judgment or order for a liquidated sum or sums in respect of amounts
           due hereunder or under any such judgment or order. Any such loss or
           damage aforesaid shall be deemed to constitute a loss suffered by
           Banca del Gottardo and no further proof or evidence of any actual
           loss shall be required by the Company.


<PAGE>


XVIII.     ENTIRE AGREEMENT

           This Agreement together with the Annexes hereto and other agreements
           and documents delivered pursuant hereto set forth the entire
           agreement and understanding of the parties in respect of the subject
           matter hereof and thereof and supersede all prior or contemporaneous
           agreements, arrangements and understandings relating to the subject
           matter hereof and thereof.

XIX.       AMENDMENT, CANCELLATION AND WAIVER

           This Agreement and the Annexes hereto may be amended, modified,
           superseded or cancelled, and any of the terms hereof or thereof may
           be waived, only by a written instrument executed by the Company and
           Banca del Gottardo hereto or thereto, as the case may be, or, in the
           case of a waiver, by the party or parties waiving compliance. The
           failure of any party at any time or times to require performance of
           any provision hereof or of any Annex hereto shall in no manner affect
           the rights at a later time to enforce the same. No waiver by any
           party of any condition or of the breach of any term contained in this
           Agreement or in any Annex hereto, whether by conduct or otherwise, in
           any one or more instances, shall be deemed to be construed as a
           further or continuing waiver of any such breach or the breach of any
           other term of this Agreement or of the Annexes hereto.

THUS DONE AND SIGNED in 2 originals, of which one is for the Company,

in Lugano effective as of October 26, 1999


BIGMAR, INC.


By:   _____________________________


BANCA DEL GOTTARDO


By:   _____________________________


<PAGE>

                                                                       ANNEX A

                 TERMS OF THE "CONVERTIBLE NOTES" OF THE COMPANY

(1)    FORM AND DENOMINATION

        The Notes are issuable in bearer form in the denominations of CHF
        50'000.-- nominal amount each, with interest coupons (the "Coupons")
        attached. The Notes will be represented solely by a permanent Global
        Note (the "Permanent Global Note"), without interest coupons, to be
        deposited by the Company with Banca del Gottardo on the Payment Date.
        Each holder of a Note or Coupon, retains a co-ownership in the Permanent
        Global Note to the extent of his claim against the Company. EXCEPT AS
        PROVIDED BELOW, NO PRINTING OF NOTES AND COUPONS WILL OCCUR. HOLDERS OF
        NOTES AND COUPONS, THEREFORE, DO NOT HAVE THE RIGHT TO REQUEST THE
        PRINTING AND DELIVERY OF INDIVIDUAL NOTES AND COUPONS. The Notes are
        issued in the initial aggregate principal amount of three million Swiss
        Francs (CHF 3'000'000.--).

        The Permanent Global Note will remain in safekeeping with Banca del
        Gottardo during the entire duration of the issue and until the complete
        redemption of the Notes.

        Should the definitive Notes and Coupons be printed, the Notes shall be
        evidenced by bearer Notes with Coupons attached in the denomination of
        CHF 50'000.-- nominal and multiples thereof.

       Should Banca del Gottardo deem the printing of the Notes with Coupons
       attached to be necessary or useful, or if the presentation of definitive
       Notes and Coupons is required by Swiss or foreign laws in connection with
       the enforcement of rights (e.g. in cases of bankruptcy, consolidation or
       reorganization of the Company), Banca del Gottardo will provide for such
       printing without cost for the holders of the Notes and Coupons. Should
       the definitive Notes and Coupons be printed, Banca del Gottardo will then
       exchange the Permanent Global Note (deposited as above provided) as soon
       as possible against the definitive Notes and Coupons. The Company has
       irrevocably authorized Banca del Gottardo to provide for the printing of
       the definitive Notes and Coupons on its behalf.

       The Permanent Global Note may be exchanged, as a whole or in part, for
       appropriate definitive Notes, if printed, in bearer form in denominations
       of CHF 50'000.-- with the Coupons attached, not earlier than 1 year after
       the later of the date on which the Notes are first offered or the Payment
       Date. Such exchange shall be made upon certification that the beneficial
       owners of the Notes either (i) are not United States persons or U.S.
       persons or (ii)

<PAGE>

       are financial institutions (as defined in United States Treasury
       Regulation Section 1.165-12(c)(1)(v)) located outside the United
       States that are not United States persons and that have purchased such
       Notes for purposes of resale during the Restricted Period and that
       certify that they have not acquired the Notes for purposes of resale
       directly or indirectly to a United States person or to a person within
       the United States.

       For purposes hereof, (i) the term "Restricted Period" means the period
       beginning on the earlier of the first date that the Notes are offered or
       the date on which the Notes are issued (the "Payment Date") and ending on
       the date one (1) year after the later of the date upon which the Notes
       were first offered or the date of closing of this offering, (ii) the term
       "United States" means the United States of America (including the States
       and the District of Columbia), its possessions, its territories and other
       areas subject to its jurisdiction, (iii) the term "United States person"
       means a citizen or resident of the United States, a corporation,
       partnership or other entity created or organized in or under the laws of
       the United States or any political subdivision thereof, or an estate or
       trust the income of which is subject to United States federal income
       taxation regardless of its source and (iv) the term "U.S. person" has the
       meaning set forth in Sections 230.901 through .904 of Title 17 of the
       United States Code of Federal Regulations ("Regulation S").

       Until such time as and if and when the definitive Notes and Coupons have
       been issued, the expressions "Notes" and "Coupons" mean and include
       co-ownership under the Permanent Global Note and the expressions "holder
       of Note" and "holder of Coupon" shall mean and include any person
       entitled to co-ownership and any further benefit under the Permanent
       Global Note.

(2)    INTEREST

       The Notes bear interest from the Payment Date at the rate of 4% per
       annum, payable semi-annually in arrear on April 29 and October 29 of each
       year until maturity (the "Coupon Due Dates"), the first time on April 29,
       2000. Such interest is payable in Swiss Francs. Each Note will cease to
       bear interest on the date on which they become due for redemption or
       repayment unless payment of principal and/or premium (if any) is
       improperly withheld or refused or default is otherwise made in respect of
       such payment. In such event, interest will continue to accrue (as well
       after as before any judgment) up to but exluding the date on which
       payment in full of the principal of such Note is made or (if earlier) the
       date on which, payment in full of the principal thereof having been
       received by Banca del Gottardo, notice to that effect shall have been
       given to the holders of the Notes. Interest is computed on the basis of a
       360-day year of twelve 30-day months.

<PAGE>

(3)    REPAYMENT

       The Company undertakes to repay the principal amount of the Notes, unless
       previously redeemed, without any previous notice on October 29, 2003.

(4)    OPTIONAL REDEMPTION AND CONVERSION

       The Company reserves the right to call all, but not part, of the
       outstanding Notes for redemption on March 1, 2000, or thereafter up to
       the close of business on October 22, 2003, at a price of 110% of the
       principal amount thereof, together with interest accrued to the date of
       such redemption provided that the average of the daily closing sales
       prices of a Share for a period of 30 consecutive trading days, the last
       day of which trading days is not more than 10 days prior to the day upon
       which the Company sends a notice to Banca del Gottardo of its intention
       to redeem the Notes under this sub-section (a), is at least 200% of the
       Conversion Price, being initially USD 3.75 per Share ( the "Conversion
       Price), in effect on such last day (taking into account any retroactive
       adjustment not then reflected in the Conversion Price, whereby such
       adjustment shall be calculated pursuant to the Conversion Provisions,
       available at Banca del Gottardo). The closing sales price for any day
       shall be the average of the closing prices on the New York Stock Exchange
       and if not listed thereon, the average of the closing bid and asked
       prices on the National Association of Securities Dealers Automated
       Quotation (NASDAQ). All outstanding Notes will become due 60 days after
       receipt of the aforesaid notice of early redemption by Banca del
       Gottardo.

       As long as the Shares are listed on a stock exchange or exchanges in the
       United States of America, reference in this sub-section (a) to the sales
       price for any day shall be deemed to refer to the closing price (regular
       way) of a Share as reported by the principal stock exchange on which the
       Shares are listed for such day, or the average of closing bid and asked
       prices on NASDAQ. If no such sales price is reported for one or more
       trading days, such day or days shall not be deemed as trading day or days
       and shall be disregarded in the calculation of the said 30 trading day
       period.

(5)    PAYMENTS

       Payments with respect to the Notes and Coupons shall be made in Swiss
       Francs against presentation and surrender of such Notes or Coupons in the
       manner specified below. Such payments shall be made without cost to the
       Noteholders, without any limitations and under all circumstances
       notwithstanding any transfer restrictions, regardless of any bilateral or
       multilateral payment or clearing agreement in existence between the
       United States of America and the Swiss Confederation, irrespective of the
       nationality, residence or domicile of any of

<PAGE>

       the Noteholders and without requiring any affidavit or the fulfillment
       of any formalities. The funds required for the payment of principal
       and interest shall be made available to Banca del Gottardo in
       Switzerland as Paying Agent by the Company prior to each Coupon Due
       Date. The receipt of the funds by Banca del Gottardo in Switzerland
       shall release the Company from its obligations in respect of the
       payments due on the respective dates for principal and interest.

       Banca del Gottardo will arrange for payment of such funds as and when due
       to the holders of Notes and Coupons. Notes and coupons may be presented
       for payment at the principal amount printed on the Notes and the amount
       of interest printed on the Coupons only at the offices in Switzerland of
       Banca del Gottardo. No payment on the Notes or Coupons will be made by
       transfer to an account in, or by mailing to an address in, the United
       States.

(6)    TAX STATUS

       All payments of principal and interest on the Notes and Coupons by the
       Company shall be made without deduction for or on account of any present
       or future tax, assessment or other governmental charge ("Taxes") imposed
       upon such payment by the United States of America or any political
       subdivision or taxing authority thereof or therein (the "United States").
       If the Company shall at any time be required by law to withhold any such
       Taxes, the Company will pay as additional amounts to Banca del Gottardo
       for the account of the holders of Notes and Coupons, such amounts as may
       be necessary so that every net payment on each Note or Coupon, after
       withholding for or on account of any such Taxes (including any backup
       withholding tax or similar charge that may be required in order for such
       payment to be made without any certification or disclosure of the
       nationality, residence or identity of the beneficial owner of such Note
       or Coupon) will not be less than the amount provided in such Note or
       Coupon to be then due or payable; provided, however, that the Company
       will not be required to pay such additional amounts for or on account of
       any such Taxes that are imposed (i) otherwise than by withholding from a
       payment on a Note or Coupon, (ii) upon a holder of a Note or Coupon who
       is subject to taxation by the United States for any reason other than
       such holder's ownership or receipt of payments in respect of such Note or
       Coupon, or (iii) on interest or principal received by a holder of a Note
       or Coupon which is (a) a "10-per cent. shareholder" of the Company within
       the meaning of section 871(h) (3) (B)(a) of the Code, (b) a bank or an
       extension of credit made pursuant to a loan agreement entered into in the
       ordinary course of its trade or business, (c) a controlled foreign
       corporation which is related to the Company under section 864(d)(4) of
       the Code, (d) other than a nonresident individual or a foreign
       corporation (as determined under United States tax principles) with
       respect to the United States, or (e) a holder whose Note or Coupon is
       presented for retirement or redemption, or payment is otherwise made,
       other than outside the United States as provided in United States
       Treasury Regulations. Any reference in this Note to the payment of
       principal or

<PAGE>

       interest shall be deemed to include payment of the additional amounts
       payable pursuant to the provisions of this paragraph.

       If, as the result of any change in, enactment of, or amendment to any
       laws or regulations of the United States or any political subdivision or
       taxing authorities thereof affecting taxation, or any change in the
       official application of such laws or regulations, or any change in,
       execution of or amendment to any treaty or treaties affecting taxation to
       which the United States is a party, it is determined by the Company that
       it would be required at any time to pay additional amounts pursuant to
       the preceding paragraph, the Company is entitled to redeem the Notes, as
       a whole but not in part, on giving not more than 60 days' but not less
       than 30 days' prior notice to Banca del Gottardo, on or after April 29,
       2000 at par.

       Notice of redemption shall be given by the Company in writing to Banca
       del Gottardo and such notice so given shall constitute good and
       sufficient notice and shall be binding upon all holders of the Notes,
       regardless of who they may be or where they may be located.

       Banca del Gottardo shall as soon as practicable notify the Noteholders of
       such redemption in accordance with Section 12 hereof.

       The Company has been advised by Banca del Gottardo that pursuant to the
       Swiss federal laws at present in force, interest payments on the Notes
       are not subject to Swiss withholding tax.

(7)    AUTHORIZATIONS

       The Company has confirmed to Banca del Gottardo that no authorizations or
       approvals are required under the laws of the United States for
       performance of its obligations hereunder, except for the registration
       requirements provided for herein.

(8)    STATUS OF THE NOTES AND NEGATIVE PLEDGE

       The Notes constitute unsecured direct obligations of the Company, ranking
       equally with other unsecured and unsubordinated indebtedness for borrowed
       money of the Company.

       So long as any Note remains outstanding the Company will not at any time
       pledge or otherwise subject to any lien any of its property or assets
       (other than (i) liens incurred in the ordinary course of business, as for
       example, installment payment purchases of equipment or other assets used
       in the Company's business and (ii) liens not incurred in the ordinary
       course of business not exceeding USD 250'000.-- in the aggregate),
       without thereby expressly

<PAGE>

       securing the Notes equally and ratably with any and all other
       obligations and indebtedness secured by such pledge or other lien.

(9)    CONVERSION

       Exhibit 1 to Annex E attached to the Agreement dated October 26, 1999 and
       entered into between the Company and Banca del Gottardo, which is
       available for inspection at the Head Office in Lugano of Banca del
       Gottardo, as Conversion Agent for the Notes, contains full provisions
       relevant to conversion of the Notes into initially 8'800 Shares of Common
       Stock (being the equivalent of USD 33'000.-- divided by USD 3.75
       ("Conversion Price"), the initial conversion price per Share, the
       "Conversion Amount") which are to be duly registered under the 1933
       Securities Act. The following is a summary of such provisions:

       The holder of 1 Note or more will be entitled at any time on and after
       March 1, 2000 up to the close of business on October 22, 2003, subject to
       prior redemption, to convert the Notes, at the Conversion Amount thereof,
       into initially 8'800 freely transferable and non-restricted (such
       non-restriction being subject to the effectiveness of a registration
       statement under the U.S. securities laws covering such common stock, if
       required,) shares of Common Stock of the Company, Pricesubject to
       adjustment as described below. No payment or adjustment will be made on
       conversion of any Note for interest accrued thereon or dividends on any
       Common Stock issued, except that accrued interest will be paid on the
       conversion of any Note which has been called for redemption prior to the
       conversion date. The Company is not required to issue fractional shares
       of Common Stock upon conversion of Notes and, in lieu thereof, will pay a
       cash adjustment based upon the market price of the Common Stock on the
       last trading day prior to the date of conversion. In the case of Notes
       called for redemption, conversion rights will expire at the close of
       business on the fifth business day prior to the redemption date. Notes
       may be presented for conversion only to an office of Banca del Gottardo
       outside the United States and Banca del Gottardo will deliver Common
       Stock or other consideration received upon conversion only to an account
       or address outside the United States.

       The Conversion Price is subject to adjustment in the following events
       occurring after October 29, 1999:

       -   the issuance of stock of the Company as a dividend or distribution
           on the Common Stock;

       -   subdivisions of outstanding shares of the Common Stock into a
           greater number of shares;

       -   combinations of outstanding shares of Common Stock into a smaller
           number of shares;

<PAGE>

       -   reclassification of the Common Stock into other shares of the
           Company's capital stock;

       -   issuance to all holders of Common Stock of certain rights entitling
           them to subscribe for Common Stock at a price per share less than the
           current market price but not for shares issuable under the Company's
           stock option and stock purchase plans; and

       -   the distribution to all holders of Common Stock of debt securities or
           assets of the Company or rights to purchase assets or debt securities
           of the Company (excluding cash dividends or distributions from
           retained earnings).

       No adjustment in the Conversion Price will be made unless such adjustment
       would require an increase or decrease of at least one Share in the
       Conversion Price then in effect; but any adjustment that would otherwise
       be required to be made shall be carried forward and taken into account in
       any subsequent adjustment. No adjustment need be made for rights to
       purchase Common Stock pursuant to a Company dividend or interest
       reinvestment plan. If the Company consolidates or merges into or
       transfers or leases all or substantially all of its assets to any person,
       or is a party to a merger that reclassifies or changes its outstanding
       Common Stock, the Notes will become convertible into the kind and amount
       of securities, cash or other assets which the Holders would have owned
       immediately after the transaction if the holders had converted the Notes
       immediately before the effective date of the transaction.

(10)   EVENTS OF DEFAULT

       Subject to the provisions of Section 15, Banca del Gottardo as regards
       all Notes or Holders having 10% or more of the aggregate principal amount
       of all Notes outstanding shall have the right to declare by notice to the
       Company the Notes held by such Holder, plus accrued interest, to be due
       and payable if any of the following events of default shall occur:

       (a)    default in the payment of principal, or, for a period of 15 days
              after due and payable, in the payment of interest on any Note; or

       (b)    default in the performance or observance in any material respect
              of any covenant or agreement of the Company in the Notes if such
              default continues for a period of 30 days after notice thereof has
              been given by Banca del Gottardo to the Company; or

       (c)    a default shall occur under any evidence of indebtedness for money
              borrowed by the Company or under any instrument under which there
              may be issued or by which there may be secured or guaranteed any
              indebtedness for money borrowed by the Company, which default
              involves the failure to pay when due (after any applicable grace
              period

<PAGE>

              and subject to any extension or postponement of such maturity),
              or results in the acceleration of, indebtedness in an amount in
              excess of USD 500'000.-- without such indebtedness having been
              discharged or such default or acceleration having been waived,
              rescinded or annulled, within a period of 30 days after notice
              thereof shall have been given by Banca del Gottardo to the
              Company; or

       (d)    the entry of a decree or order in respect of the Company in an
              involuntary case under any bankruptcy, insolvency or other similar
              law, or appointing a receiver, liquidator, trustee or other
              similar official of the Company or for any substantial part of its
              property, or ordering the winding up or liquidation of its
              affairs, and the continuance of any such decree or order unstayed
              and in effect for a period of 45 consecutive days; or

       (e)    the Company shall commence a voluntary case under any bankruptcy,
              insolvency or other similar law, or consent to the appointment of
              or taking possession by a receiver, liquidator, trustee or other
              similar official, of the Company or for any substantial part of
              its property, or the making by it of a general assignment for the
              benefit of creditors, or if it shall fail generally to pay its
              debts as they become due, or shall take any corporate action in
              furtherance of any of the foregoing; or

       (f)    if the Company shall merge or consolidate, or sell or convey all
              or substantially all of its assets to, any other corporation,
              unless (i) the Company is the surviving corporation, or (ii) the
              surviving or transferee corporation expressly assumes all
              obligations of the Company under the Notes by supplemental
              agreement, confirmed by an opinion of U.S. counsel reasonably
              satisfactory to Banca del Gottardo and the Company, or (iii) the
              Company or the surviving or transferee corporation irrevocably
              deposits in trust with Banca del Gottardo, money or U.S.
              government obligations sufficient to pay principal and interest on
              the Notes to maturity.

       Upon the occurrence of an event of default, the Company shall promptly
       give notice thereof to Banca del Gottardo which shall publish such notice
       of default in accordance with Section 12 hereof. Banca del Gottardo shall
       in relation to any event of default have no other obligation than the
       publication of such event of default.

       The principal amount of all Notes declared to be due and payable plus
       accrued interest thereon shall become due and payable 15 days after
       notice to the Company by Banca del Gottardo or by each Holder of such
       event of default; provided, however, that such declaration shall be
       rescinded if, within 15 days of such notice, such event of default shall
       have been remedied by payment, in the case of a payment default, or in a
       manner reasonably satisfactory to Banca del Gottardo.

<PAGE>

       In the event that a Resolution or Extraordinary Resolution is passed
       at a meeting of Holders held pursuant to Section 15, any actions taken
       pursuant to this Section 10 by a Holder shall be subject to any
       previously taken action pursuant to such Section 15.

(11)   PRESCRIPTION

       In accordance with the Swiss statute of limitations as referred to in
       Art. 127 et seq. of the Code of Obligations the coupons will become
       barred five years and the Notes ten years after their respective due
       dates.

(12)   NOTICES AND PUBLICATIONS

       All notices to the Holders shall be deemed to have been duly given if
       published in the Feuille Officielle Suisse du Commerce and in a daily
       newspaper in Lugano. All notices to the Company by any Holder shall be
       deemed to have been duly given if sent by fax or telex to the principal
       office of the Company.

(13)   LISTING OF THE NOTES

       No application will be made for the admission and quotation of the Notes
       on any stock exchange.

(14)   REPLACEMENT OF NOTES OR COUPONS

       If any Note or Coupon, if printed, is defaced, mutilated, destroyed,
       stolen or lost, it may be renewed or replaced at the head office of Banca
       del Gottardo in Lugano, Switzerland on payment of such costs as may be
       incurred in connection therewith and on presentation of such evidence and
       indemnity as Banca del Gottardo may require. Defaced or mutilated Notes
       or Coupons must be surrendered before replacements may be issued.

(15)   NOTEHOLDERS' MEETING

       a)     A meeting of the Holders (hereinafter called a "Meeting") may be
              convened by the Company or shall be convened by the Company if so
              requested by Notes representing not less than 25% of the aggregate
              principal amount of all Notes outstanding under the Terms of the
              Notes (i) after the event of default shall have occurred and be
              continuing to consider a waiver of an event of default or any
              modification or amendment of the provisions of the terms of the
              Notes, or (ii) a substitution of Banca del Gottardo.

              The cost and expenses of a Meeting shall be borne by the Company.

<PAGE>

       b)     Notice of the Meeting specifying the place, day and hour of the
              Meeting shall be given at least 20 days prior to the proposed date
              thereof (exclusive of the day on which the notice is given and the
              day on which the Meeting is to be held) in accordance with Section
              12 hereof. Such notice shall state generally the nature of the
              business to be transacted at the Meeting thereby convened but
              (except for an Extraordinary Resolution (as defined below)) it
              shall not be necessary to specify in such notice the terms of any
              resolution to be proposed.

       c)     The Meeting shall be held in Lugano and shall be chaired by a
              representative of the Company or if such representative of the
              Company shall not be present within 30 minutes after the time
              appointed for the holding of the Meeting, the Noteholders present
              shall choose one of their members to be chairman. The Meeting
              shall be conducted in the English language exclusively.

       d)     Resolutions shall only be passed if a quorum of two or more
              persons holding 25% or more of the aggregate principal amount of
              all Notes outstanding are present. The quorum at any Meeting for
              passing an Extraordinary Resolution shall be two or more persons
              holding two-thirds or more of the aggregate principal amount of
              all Notes outstanding. Resolutions shall be passed if approved by
              the absolute majority of votes cast save that an Extraordinary
              Resolution shall be passed only if approved by three-fourths or
              more of votes cast. Any resolution passed at a Meeting duly
              convened and held in accordance with the terms of the Notes shall
              be binding upon all the Holders, whether present or not present at
              such Meeting and whether or not voting, and upon all the holders
              of coupons.

       e)     If within 30 minutes after the time appointed for any such Meeting
              a quorum is not present, the Meeting shall, if convened upon the
              request of Holders, be dissolved. In any other case, it shall
              stand adjourned for such period being not less than 14 days nor
              more than 28 days, and at such place as may be appointed by the
              Company. At such adjourned Meeting, two or more persons present
              holding 10% or more of the aggregate principal amount of all Notes
              outstanding shall form a quorum, provided that if the business of
              such adjourned Meeting includes consideration of a proposed
              Extraordinary Resolution, the quorum shall be two or more persons
              present holding one-third or more of the aggregate principal
              amount of all Notes for the time being outstanding.

       f)     If within 30 minutes after the time appointed for any such
              adjourned Meeting the respective quorum is not present the Meeting
              shall stand further adjourned for such period being not less than
              14 days nor more than 28 days, and at such place as may be
              appointed by the Company and at such further adjourned Meeting two
              or more persons present holding any Notes outstanding (whatever
              the principal amount of the Notes so

<PAGE>

              held by them) shall form a quorum, provided that if the
              business of such further adjourned Meeting includes
              consideration of a proposed Extraordinary Resolution, the
              quorum shall be two or more persons present holding one-third
              or more of the aggregate principal amount of all Notes for the
              time being outstanding.

       g)     Notice of any adjourned Meeting or further adjourned Meeting shall
              be given in the same manner as notice of an original Meeting and
              such notice shall state, in the case of an adjourned Meeting, that
              two or more persons present holding 10% (or in the case of a
              Meeting the business of which includes consideration of a proposed
              Extraordinary Resolution, one-third) or more of the aggregate
              principal amount of all Notes for the time being outstanding will
              form a quorum, or, in the case of a further adjourned Meeting,
              that two or more persons present holding any Notes outstanding (or
              in the case of a Meeting the business of which includes the
              consideration of a proposed Extraordinary Resolution, two or more
              persons present holding one-third or more of the aggregate
              principal amount of all Notes for the time being outstanding),
              shall form a quorum.

       h)     The voting rights of the Holders shall be determined according to
              the principal amount of Notes held, each Note with a principal
              amount of CHF 50'000.-- giving the right to one vote. Holders of
              the coupons shall not have any voting rights. Notes held by or on
              behalf of the Company shall have no voting rights and shall be
              disregarded for the purpose of this Section 15, save that the
              Company shall be entitled to vote in respect of Notes held by it
              for the benefit of and at the direction of an independent third
              party. In the case of an equality of votes the chairman shall have
              a casting vote in addition to the vote or votes (if any) to which
              he may be entitled as a Holder.

       i)     Any director or officer of the Company and its lawyers and any
              other person authorized on its behalf by it may attend and speak
              at any Meeting.

       j)     The Meeting shall have the following powers exercisable by
              Extraordinary Resolution with the consent of the Company:

              (i)    extension of the date fixed for final maturity of the
                     Notes;

              (ii)   reduction or cancellation of the principal payable on
                     the Notes;

              (iii)  reduction or cancellation of the rate or amount payable, or
                     extension of the date of payment, in respect of any
                     coupons;

<PAGE>

              (iv)   alteration of the majority required to pass an
                     Extraordinary Resolution; and

              (v)    waiver of any Event of Default.

       k)     Any reference in these Terms of the Notes to an "Extraordinary
              Resolution" shall be construed as references to resolutions of the
              Holders passed in accordance with the foregoing provisions of this
              Section 15 with respect to any of the matters stated in
              sub-section j) above.

(16)   APPLICABLE LAW AND JURISDICTION

       The terms, conditions and form of the Notes and coupons (the English
       language version of which shall govern) shall be governed by and
       construed in accordance with Swiss law.

       Any action or proceedings against the Company relating to the Notes may
       be brought and enforced in the ordinary courts of the Canton of Ticino,
       venue being in the City of Lugano, or, if such courts fail to grant
       jurisdiction in the ordinary courts of the Canton of Basle-City, venue
       being in Basle, and the Company hereby irrevocably submits to the
       jurisdiction of such courts in respect of any such action or proceeding,
       with the right to appeal, as provided by law, to the Swiss Federal Court
       in Lausanne, the judgment of which shall be final. Solely for that
       purpose, the Company hereby elects legal and special domicile at the
       office of Banca del Gottardo, Viale Stefano Franscini 8, 6901 Lugano,
       Switzerland. Banca del Gottardo shall notify the Company promptly upon
       receipt of any notice by it in its capacity as the Company's agent for
       service of process. The Company covenants that so long as any Notes are
       outstanding it will maintain an agent for service of process in
       Switzerland. The aforementioned jurisdiction shall also be valid for the
       cancellation and replacement of lost, stolen, defaced, mutilated or
       destroyed Notes and coupons. Payment effected to a holder of Notes who
       has been identified as the legitimate holder of a Note or coupon by a
       final judgment of a Swiss court shall release the Company from its
       payment obligations under such Note or coupon.

       Any Noteholder shall also have the right to bring any legal action or
       proceeding against the Company in respect of a Note or coupon and all
       covenants contained therein in any state or federal court in the Country
       of Franklin, Ohio, in the United States of America which may have
       jurisdiction.

<PAGE>

                                                                        ANNEX B

                           (Form of Convertible Note)

No. ________________

ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE
LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE
CODE.

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED, SOLD OR DELIVERED, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR
TO, OR FOR THE BENEFIT OF, ANY U.S. PERSON (AS SUCH TERMS ARE DEFINED IN
REGULATION S UNDER THE SECURITIES ACT) UNLESS THIS NOTE IS REGISTERED UNDER
THE SECURITIES ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT IS AVAILABLE.

                                  BIGMAR, INC.

                     (Incorporated in the State of Delaware)

                                  CHF 50'000.--

                          4% Notes due October 29, 2003

         Convertible into freely transferable and non-restricted shares
                         of Common Stock of the Company

BIGMAR, INC. (the "Company"), for value received, hereby certifies that it
owes to the bearer, payable upon presentation and surrender hereof, the
principal amount of 50'000.-- Swiss Francs (CHF fifty thousand) on October
29, 2003 or on such earlier date as such principal amount may become due in
accordance with the Terms of the Notes appearing on the reverse hereof, and
interest from October 29, 1999 on said principal amount at the rate of 4%
(four percent) per annum, payable in cash, semi-annually in arrear on April
29 and October 29 of each year and at maturity, until payment of said
principal amount has been made or duly provided for, but only, in the case of
interest due on or before maturity, upon presentation and surrender of the
interest coupons attached hereto as they shall severally become due, all in
accordance with the Terms of the Notes.

<PAGE>

This Note is one of a duly authorized issue of 4% Notes due October 29, 2003
of the Company in the aggregate principal amount of 3'000'000.-- Swiss Francs
(the "Notes") issued pursuant to a Note Purchase, Paying and Conversion
Agency Agreement, dated as of October 26, 1999 (the "Agreement"), between the
Company of the first part and Banca del Gottardo of the second part. The
Notes are issued subject to and with the benefit of the Agreement.

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed under
its corporate seal as of October 29, 1999.

Swiss Security no.:    1012321
ISIN: CH001012321

                                             BIGMAR, INC.


                                             By:
                                                 ------------------------------

<PAGE>

                                                                        ANNEX C

                                (Form of Coupon)

ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE
LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE
CODE.

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED, SOLD OR DELIVERED, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR
TO, OR FOR THE BENEFIT OF, ANY U.S. PERSON (AS SUCH TERMS ARE DEFINED IN
REGULATION S UNDER THE SECURITIES ACT) UNLESS THIS NOTE IS REGISTERED UNDER
THE SECURITIES ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT IS AVAILABLE.

                                                               Coupon No. 1-8
BIGMAR, INC.
Johnstown, Ohio, U.S.A.

Swiss Francs 50'000.--

4% Notes due October 29, 2003

Note of Swiss Francs 50'000.-- (fifty thousand)

Semi-annual  interest  due on April 29 and  October  29,  2000/2003  payable
in cash on the terms set forth in the Terms of the Notes:
                                                          Swiss Francs 1'000.--

                                         BIGMAR, INC.

                                         By:
                                            -----------------------------------


                                (Reverse Coupon)

This coupon is payable at the head office in Lugano of Banca del Gottardo.


<PAGE>

                                                                        ANNEX D
(to be typed on security paper)

                              PERMANENT GLOBAL NOTE

ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE
LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE
CODE.

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED, SOLD OR DELIVERED, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR
TO, OR FOR THE BENEFIT OF, ANY U.S. PERSON (AS SUCH TERMS ARE DEFINED IN
REGULATION S UNDER THE SECURITIES ACT) UNLESS THIS NOTE IS REGISTERED UNDER
THE SECURITIES ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT IS AVAILABLE.

                                  BIGMAR, INC.

                                CHF 3'000'000.--

                          4% Notes due October 29, 2003

                             Convertible into shares
                         of Common Stock of the Company

This Permanent Global Note without interest coupons is a Permanent Global
Note in respect of a duly authorized issue of 4% Notes due October 29, 2003
(the "Notes") of Bigmar, Inc. (the "Company"), a corporation duly organized
and existing under the laws of the State of Delaware, in the principal amount
of three million Swiss Francs and issued pursuant to a Note Purchase, Paying
and Conversion Agency Agreement (the "Agreement") dated as of October 26,
1999 between the Company of the first part and Banca del Gottardo of the
second part.

Subject to the provisions of the Agreement, Bigmar, Inc., for value received,
hereby promises to pay to the holder of this Permanent Global Note, payable
upon presentation and surrender hereof, the amount of Swiss Francs
3'000'000.-- (CHF three million) and interest thereon at 4% per annum, in
accordance with the Terms of the Notes set forth in Annex A of the Agreement.

<PAGE>

Each holder of Notes retains a co-ownership in this Permanent Global Note to
the extent of his claims against the Company. The decision, if and when the
definitive Notes with Coupons attached are to be printed, is at the sole
discretion of Banca del Gottardo. An exchange of this Permanent Global Note
prior to the complete redemption of the issue can only be effected against
the definitive Notes with Coupons attached.

If definitive Notes are printed, this Permanent Global Note is exchangeable
for the definitive Notes in accordance with Article IX of the Agreement.
Unless and until so exchanged, Banca del Gottardo, on behalf of the holders
of the Notes, as the bearer of this Permanent Global Note shall enjoy the
benefit of and be subject to the Agreement (including the Terms of the Notes).

The Terms of the Notes set forth in Annex A of the Agreement are hereby
incorporated by reference herein MUTATIS MUTANDIS and, except as otherwise
provided herein, shall be binding on the Company and the holder hereof as if
fully set forth herein. Except as otherwise provided herein, the Company
shall make all payments hereunder as and when provided in the Terms of the
Notes and shall be bound by all its covenants set forth therein.

This Permanent Global Note shall be governed by and construed in accordance
with the laws of Switzerland.

IN WITNESS WHEREOF, the Company has caused this Permanent Global Note to be
duly executed under its corporate seal as of October 29, 1999.

Dated: October 29, 1999

Swiss Security no.:    1012321
ISIN: CH0010123211
                                       BIGMAR, INC.

                                       By:
                                          ---------------------------------

This Permanent Global Note shall not become valid for any purpose until this
Permanent Global Note has been authenticated by any two officers of Banca del
Gottardo.

By:                                         By:
   -----------------------------------         -------------------------------
      Authorized Officer                          Authorized Officer


<PAGE>

                                                                         ANNEX E

                           CONVERSION AGENCY AGREEMENT

This agreement is entered into effective as of October 29, 1999, between
BIGMAR, INC., a Delaware corporation with principal offices at 9711 Sportsman
Club Road, Johnstown, Ohio 43031, United States of America (the "Company") of
the first part and BANCA DEL GOTTARDO, a Swiss corporation with principal
offices at Viale Stefano Franscini 8, 6901 Lugano, Switzerland ("Banca del
Gottardo") of the second part.

As authorized by its Board of Directors on October 5, 1999 and pursuant to a
Note Purchase, Paying and Conversion Agency Agreement dated October 26, 1999
(the "Agreement"), the Company proposes to make an offer on the Swiss capital
market for the sale of its convertible notes (the "Convertible Notes"). The
Convertible Notes will be convertible into shares (the "Shares") of the
Common Stock of the Company (the "Common Stock"), on the terms and conditions
provided hereafter. The Board of Directors of the Company has approved this
agreement as regards the conversion of the Notes and has authorized the
conversion of the Convertible Notes into the Common Stock of the Company on
the terms and conditions hereof.

Article 1     CONVERSION AGENT

              1.1.  The Company hereby appoints Banca del Gottardo, acting
                    through its specified office in Switzerland, as sole
                    Conversion Agent (the "Conversion Agent") for the conversion
                    of Notes or coupons into Shares in accordance with the
                    provisions for conversion set forth in Exhibit 1 hereto (the
                    "Conversion Provisions") which constitutes an integral part
                    of this agreement.

              1.2.  So long as any Notes are outstanding, the Company shall
                    maintain a stock transfer agent (the "Stock Transfer Agent")
                    or shall itself perform the functions required of such agent
                    under this agreement.

              1.3.  The appointment of the Conversion Agent hereunder shall
                    continue in effect until the conversion right in respect of
                    the Convertible Notes shall have terminated. So long as
                    Banca del Gottardo satisfactorily performs its obligations
                    hereunder the Company shall not without the consent of Banca
                    del Gottardo appoint any other Conversion Agent or pay any
                    other bank any commission or remuneration for the conversion
                    of the Convertible Notes or coupons.

<PAGE>

Article 2     COMMISSIONS

              2.1.  In consideration for the services rendered by the Conversion
                    Agent in connection with the conversion of the Convertible
                    Notes and coupons, the Company undertakes to pay upon demand
                    to the Conversion Agent in Swiss Francs a commission of 0.25
                    per cent of the principal amount of each Note converted,
                    however at least CHF 125.-- per conversion of a Convertible
                    Note in a principal amount of CHF 50'000.-- together with
                    reasonable out-of-pocket expenses (e.g., telex, cable,
                    postage, telephone, legal and insurance expenses, if any)
                    incurred by the Conversion Agent in connection with its
                    services hereunder.

              2.2.  Neither Banca del Gottardo nor the Noteholders shall have
                    any obligation to pay to the Stock Transfer Agent any
                    commission, fees, costs or charges in connection with the
                    conversion of Convertible Notes or coupons and the making
                    available of the respective Shares as provided hereafter.

Article 3     INDEMNIFICATION

              The Company will indemnify and hold harmless the Conversion Agent
              against any losses, liabilities, costs, claims, actions or demands
              which it may incur or which may be made against it as a result of
              or in connection with its appointment or the exercise of its
              powers and duties under this Agreement other than those based upon
              or arising out of the negligence of willful misconduct on the part
              of the Conversion Agent or any of its employees.

Article 4     CONVERSION OF CONVERTIBLE NOTES AND COUPONS

              Each Convertible Note, if printed, and all unmatured coupons
              attached thereto, submitted for conversion to the Conversion Agent
              (a "Converted Note") shall be imprinted or stamped by the
              Conversion Agent with a legend to the effect that such Convertible
              Note or coupon has been converted. All Converted Notes and coupons
              shall be held by Banca del Gottardo for the account of the
              Company. Banca del Gottardo shall maintain a record of Convertible
              Notes and coupons converted.

Article 5     NOTICES

              All notices required under this Agreement shall be deemed to have
              been duly given if sent by cable, telex or facsimile transmission
              (confirmed in writing, sent by registered airmail) to the
              following addresses:

<PAGE>

              If to the Company:

              BIGMAR, INC.
              9711 Sportsman Club Road
              Johnstown, Ohio 43031, U.S.A.

              Attn:         Chief Financial Officer
              Facsimile:    001-614-966-5801

              If to the Conversion Agent:

              BANCA DEL GOTTARDO
              Viale Stefano Franscini 8
              6901 Lugano, Switzerland

              Attention:    New Issue Department
              Telex:        841 052
              Facsimile:    0114191 808 18 43

              or to such other address as at the party receiving the notice
              shall have notified to the other party in writing. Such cable,
              telex or facsimile transmission notice shall be deemed to have
              been duly given at the time of dispatch. Any party receiving a
              notice by cable, telex or facsimile transmission will be protected
              by relying upon the cabled, telexed or transmitted notice even
              though such notice is not subsequently confirmed in writing.

Article 6     GOVERNING LAW

              6.1.  This agreement shall be governed by and construed in
                    accordance with Swiss law, except as to matters regarding
                    conversion of the Notes into Common Stock of the Company,
                    which shall be governed by and construed in accordance with
                    the laws of Delaware. Any action or proceedings against the
                    Company relating to this agreement or the Convertible Notes
                    or coupons may be brought and enforced in the ordinary
                    courts of the Canton of Ticino, venue being in the City of
                    Lugano, and the Company hereby irrevocably submits to such
                    courts in respect of any such action or proceeding with the
                    right to appeal, as provided by law, to the Swiss Federal
                    Court in Lausanne, the judgment of which shall be final.
                    Solely for that purpose and for the purpose of execution in
                    Switzerland, the Company hereby elects legal and special
                    domicile at the office of Banca del Gottardo, Viale Stefano
                    Franscini 8, 6901 Lugano, Switzerland. Banca del Gottardo
                    shall notify the Company promptly upon receipt of any notice
                    by it in its capacity as the Company's agent for service of
                    process.

<PAGE>

              6.2.  The Conversion Agent shall also have the right to bring any
                    legal action or proceeding hereunder against the Company in
                    any state or federal court in Franklin County, Ohio.

Article 7     COUNTERPARTS

              This agreement may be executed in any number of counterparts, each
              of which shall be an original; but such counterparts shall
              together constitute but one and the same instrument.

              IN WITNESS WHEREOF, the Company and Banca del Gottardo have caused
              this agreement to be signed and acknowledged by their officers
              authorized to do so, as of October 26, 1999.


                                    BIGMAR, INC.


                                    By:
                                       --------------------------------------


                                    BANCA DEL GOTTARDO


                                    By:
                                       --------------------------------------

<PAGE>

                                                           EXHIBIT 1 TO ANNEX E

                              CONVERSION PROVISIONS

The following are the provisions for the conversion (the "Conversion
Provisions") of the CHF 3'000'000.-- 4% Convertible Notes due October 29, 2003
of Bigmar, Inc., Johnstown, Ohio 43031, U.S.A., (the "Company") into shares of
the common stock of the Company. Unless otherwise defined herein, the terms used
herein have the meanings ascribed to them in the Note Purchase, Paying and
Conversion Agency Agreement and the Conversion Agency Agreement (the "Agency
Agreement") dated as of October 26, 1999, between the Company and Banca del
Gottardo.

--------------------------------------------------------------------------------

ARTICLE 1

Conversion Right

1.1.   Subject to and upon compliance with these Conversion Provisions, the
       holder of any Note (a "Noteholder") will have the right at any time on
       and after March 1, 2000 up to the close of business of banks in Lugano on
       October 22, 2003, or, in case the Notes are called for redemption in
       accordance with Section 4 of the Terms of the Notes, then prior to the
       close of business of banks in Lugano on the earlier of October 22, 2003
       and the fifth business day preceding the date fixed for redemption, but
       in no event thereafter, to convert USD 33'000.-- (the Conversion Amount)
       of one Note or more Notes into initially 8'800 freely transferable and
       non-restricted (such non-restriction being subject to the effectiveness
       of a registration statement under the U.S. securities laws covering such
       common stock) shares of common stock which are duly registered under the
       1933 Securities Act, with par value USD 0.001 per share (such presently
       authorized capital stock and any other stock into which such presently
       authorized common stock may hereafter be changed, the "Common Stock"), of
       the Company, calculated as to each conversion to the greatest number of
       full Shares, disregarding fractions, at a price of initially USD 3.75 per
       share, such price being subject to adjustment in certain instances as
       provided in Article 2 hereafter (as so adjusted from time to time, the
       "Conversion Price"). Fractions of a share will not be issued on
       conversion; provided, however, that if a Noteholder at any one time
       delivers more than one Note for conversion, the number of Shares issued
       shall be calculated on the basis of the aggregate principal amount of the
       Notes so delivered. A cash adjustment shall be paid in respect of any
       fractional Share which would otherwise be issuable upon conversion of any
       Note in an amount in Swiss Francs based upon the market price of the
       Common Stock on the last trading day prior to the date of conversion.
       Cash adjustments for fractional shares will not be made for amounts less
       than five U.S. Dollar/seven Swiss Francs.

<PAGE>

1.2.   In order to exercise the right of conversion, a Noteholder shall (a)
       deliver the Note or Notes to be converted during normal business hours,
       accompanied by the conversion notice in the form obtainable from the
       Conversion Agent (the "Conversion Notice") to any Conversion Agent and
       (b) pay to the Conversion Agent any stamp or other taxes that may be
       payable in Switzerland on such conversion. Each Note, if printed,
       delivered for conversion must be delivered with all unmatured coupons
       attached and/or with an amount equal to the face value of any missing,
       unmatured coupons. Such missing, unmatured coupons shall be paid by Banca
       del Gottardo upon subsequent presentation thereof, provided they shall
       not have become barred pursuant to Section 11 of the Terms of the Notes.

1.3.   The Conversion Agent undertakes to:

       (a)    make available to Noteholders the Conversion Notice in such form
              as may from time to time be agreed by the Company and the
              Conversion Agent;

       (b) upon receipt of a Conversion Notice from a Noteholder:

              (i)    verify that (A) the Conversion Notice has been duly
                     completed and signed by or on behalf of the Noteholder
                     named therein, (B) the Conversion Notice is accompanied by
                     all Notes, if printed, to which it relates and all
                     unmatured coupons appertaining to such Notes and/or an
                     amount equal to the face value of any missing unmatured
                     coupons and (C) the amount of any stamp or other taxes
                     payable by the Noteholder has been paid; and

              (ii)   endorse the Conversion Notice;

       (c)    imprint or stamp all Notes, if printed, submitted to it for
              conversion, and all unmatured coupons attached thereto, in
              accordance with Article 4 of the Agency Agreement promptly upon
              satisfaction by the Noteholder of all conditions precedent to the
              conversion; and

       (d)    dispatch within two business days after satisfaction by the
              Noteholder of all conditions precedent to the conversion to the
              relevant tax authorities, payment in respect of any stamp or other
              taxes payable on the conversion, in accordance with the laws of
              Switzerland.

1.4.   The Conversion Agent shall promptly, upon the later of the date of
       receipt of the Conversion Notice and the satisfaction of all other
       conditions precedent to the conversion stated above, endorse the
       Conversion Notice and notify the Company and the Stock Transfer Agent of
       the

<PAGE>

       Company (at present American Stock Transfer & Trust Company, 40 Wall
       Street, New York, NY 10005, U.S.A.), by facsimile, telex or cable of
       (a) the principal amount and serial numbers of the Notes deposited for
       conversion, (b) the number of Shares issuable upon conversion of such
       Notes and (c) the name and address of each person (the "Shareholder")
       to whom such Shares are to be issued. Such conversion shall become
       effective at the close of business on the date (the "Conversion Date")
       on which the Company shall have received at its principal executive
       offices, during normal business hours, from the Conversion Agent a
       telex or cable notification. If such facsimile, telex or cable
       notification is received after the close of business on such date, the
       Conversion Date will be the immediately following business day. At
       such Conversion Date the rights of the holder (other than the Company)
       of a Note shall cease and the Shareholder shall be deemed to have
       become the holder of such Shares.

1.5.   As soon as practicable on or after the Conversion Date, but in no event
       later than seven business days thereafter, the Company shall (a) cause
       the Shareholder to be registered as the owner of the Shares issued upon
       conversion of such Shareholder's Notes in the register of Shareholders of
       the Company, (b) make available, or cause the Stock Transfer Agent to
       issue, a certificate or certificates for such Shares registered in the
       name of the Shareholder (together with any other securities, properties
       or cash deliverable at the Conversion Date) and (c) at the request of the
       Shareholder, cause the Stock Transfer Agent to forward, at the risk and
       expense and for account of such Shareholder, such certificate or
       certificates (together with any other securities, properties or cash
       deliverable upon conversion) to such person or persons at the address
       specified in the Conversion Notice, together with such assignments and
       other documents, if any, as may be required by law to effect the transfer
       thereof with full benefits under the laws of the applicable jurisdiction
       of the United States of America.

1.6.   The Company covenants that:

       (a)    so long as any Notes are outstanding, it shall keep available
              authorized shares of Common Stock sufficient to permit all Notes
              outstanding and unconverted to be converted in accordance with
              these Conversion Provisions;

       (b)    all shares of Common Stock delivered upon conversion of Notes as
              provided herein will be validly issued, fully-paid and
              non-assessable;

       (c)    it shall file, on or before March 1, 2000, if required, any
              registration under the United States securities laws that may be
              required before the Shares can be delivered upon conversion of the
              Notes and freely marketed in the United States.

<PAGE>

1.7.   Shares issued upon conversion and registered in the name of the
       Shareholder shall be freely transferable and non-restricted and shall be
       entitled to receive all dividends paid on such Common Stock on or after
       the Conversion Date, except for dividends payable to Shareholders
       registered as such as of a record date occurring prior to the Conversion
       Date. No payments shall be made upon conversion for interest accrued
       since the Coupon Due Date next preceding the Conversion Date.

1.8.   Notes may be presented for conversion only to an office of the Conversion
       Agent outside the United States. The Company and the Conversion Agent
       will deliver Common Stock or other consideration received upon conversion
       only to an account or address outside the United States.

ARTICLE 2

The Conversion Price shall be subject to adjustments in the following
circumstances occurring after October 29, 1999:

2.1.   In case the Company shall hereafter (i) pay a dividend on its Common
       Stock in shares of its Common Stock or make a distribution in shares of
       its Common Stock with respect to its outstanding Common Stock, (ii)
       subdivide its outstanding shares of Common Stock into a greater number of
       shares of Common Stock or (iii) combine its outstanding shares of Common
       Stock into a smaller number of shares of Common Stock, the Conversion
       Price in effect at the time of the record date for such dividend or of
       the effective date of such subdivision or combination shall be determined
       by multiplying the Conversion Price in effect immediately prior to such
       record date or effective date by a fraction, the numerator of which shall
       be the total number of outstanding shares of Common Stock immediately
       prior to such record date or effective date, and the denominator of which
       shall be the total number of outstanding Common Stock immediately
       following such record date or effective date. Such adjustments made
       pursuant to this Section 2.1 shall be made successively whenever any
       event listed above shall occur.

2.2.   In case the Company shall fix a record date for the issuance of rights,
       options to all (but not less than all) holders of its outstanding Common
       Stock entitling them to subscribe for or purchase shares of Common Stock
       (or securities convertible into shares of Common Stock) at a price per
       share (or having a price per share, if a security convertible into Common
       Stock) less than the Current Market Price per share of Common Stock (as
       defined in Section 2.4) on such record date, the Conversion Price to be
       in effect after such record date shall be determined by multiplying the
       Conversion Price in effect immediately prior to such record date by a
       fraction, of which the numerator shall be the number of shares of Common
       Stock

<PAGE>

       outstanding on such record date plus the number of shares of Common
       Stock which the aggregate offering price of the total number of shares
       of Common Stock so to be offered (or the aggregate initial Conversion
       Price of the convertible securities so to be offered) would purchase
       at such Current Market Price and of which the denominator shall be the
       number of shares of Common Stock outstanding on such record date plus
       the number of additional shares of Common Stock to be offered for
       subscription or purchase (or into which the convertible security so to
       be offered are initially convertible). In case such subscription or
       exercise price may be paid in a consideration part or all of which
       shall be in a form other than cash, the value of such consideration
       shall be as determined by the Board of Directors of the Company.
       Shares of Common Stock owned by or held for the account of the Company
       or any majority-owned subsidiary shall not be deemed outstanding for
       the purpose of any such computation. Such adjustment shall be made
       successively whenever such a record date is fixed; and in the event
       that such rights are not so issued, the Conversion Price shall again
       be adjusted to be the Conversion Price which would then be in effect
       if such record date had not been fixed.

2.3.   In case the Company shall fix a record date for the making of a
       distribution to all (but not less than all) holders of shares of Common
       Stock of evidences of its indebtedness or assets (other than cash
       dividends or cash distributions payable out of surplus legally available
       for dividends under the laws of the jurisdiction of incorporation of the
       Company, dividends or distributions payable in shares of Common Stock as
       described in Section 2.1, or rights, options or convertible securities
       containing the right to subscribe for or purchase shares of Common Stock
       (excluding those referred to in Section 2.2)), the Conversion Price to be
       in effect after such record date shall be determined by multiplying the
       Conversion Price in effect immediately prior to such record date by a
       fraction, of which the numerator shall be the Current Market Price per
       share of Common Stock (as defined in Section 2.4) on such record date,
       less the fair market value per share (as determined by the Board of
       Directors of the Company, whose determination shall be conclusive, and
       described in a statement filed with Banca del Gottardo) of the portion of
       the assets or evidences of indebtedness so to be distributed, or of such
       rights, options, or convertible securities, applicable to one share of
       Common Stock, and of which the denominator shall be such Current Market
       Price per share of Common Stock. Such adjustment shall be made
       successively whenever such a record date is fixed; and in the event that
       such distribution is not so made, the Conversion Price shall again be
       adjusted to be the Conversion Price which would then be in effect if such
       record date had not been fixed. If any such rights, options, or
       convertible securities shall by their terms provide for an increase or
       increases, with the passage of time, in the amount of additional
       consideration per share of Common Stock payable to the Company upon the
       exercise or conversion thereof, the Conversion Price then in effect
       shall, forthwith upon any such increase becoming effective, be readjusted
       to reflect such increase.

<PAGE>

2.4.   For the purpose of any computation under Sections 2.2 and 2.3, the
       "Current Market Price" means with respect to any Trading Day the last
       sale price (regular way) of the Common on such day as reported on the New
       York Stock Exchange Consolidated Tape (as published in the Wall Street
       Journal), or, if such Common Stock is not listed on the New York Stock
       Exchange, Inc. or reported on such Consolidated Tape, then the last sale
       price on such day on the principal domestic stock exchange on which such
       stock is then listed or admitted to trading, or, if no sale takes place
       on such day on such exchange, the average of the closing bid and asked
       prices on such day as officially quoted on such exchange, or, if such
       Common Stock is not then listed or admitted to trading on any domestic
       stock exchange but is quoted in the Smallcap System ("NASDAQ") of the
       National Association of Securities Dealers, Inc. Automated Quotation
       System ("NASDAQ"), then the Current Market Price for each such Trading
       Day shall be the last sale price on such day as quoted by NASDAQ, or, if
       no sale takes place on such day or if such Common Stock is neither listed
       or admitted to trading on any domestic stock exchange nor quoted on such
       National Market System, then the Current Market Price for each such
       Trading Day shall be the average of the reported closing bid and asked
       price quotations on such day in the over-the-counter market, as reported
       by NASDAQ, or, if not so reported, as furnished by the National Quotation
       Bureau, Inc., or, if such firm at the time is not engaged in the business
       of reporting such prices, as furnished by any similar firm then engaged
       in such business as selected by the Company, or if there is no such firm,
       as furnished by any member of the National Association of Securities
       Dealers, Inc. selected by the Company with the written approval of the
       Holders of the Notes convertible for a majority of the shares of Common
       Stock issuable under then outstanding Notes. If at any time such Common
       Stock is not listed on any domestic exchange or quoted in the domestic
       over-the-counter market, the Current Market Price shall be deemed to be
       an amount mutually agreed upon in writing between the Company and the
       Holder of this Note within fifteen days immediately following the date on
       which the Current Market Price is to be determined. If no agreement as to
       Current Market Price is determined as stated herein, (i) the Holder of
       this Note shall select an independent appraiser who shall determine the
       fair market value per share of the Common Stock which shall be the
       Current Market Price, provided the Company shall agree to such Current
       Market Price. If the Company shall not agree to the Current Market Price
       as determined in the preceding sentence then (ii) the Company and Banca
       del Gottardo shall each select an independent appraiser who shall,
       independently of the other appraiser, determine the fair market value of
       the Common Stock of the Company. If the value determined by the appraiser
       whose determination is the higher of the two appraisals does not exceed
       by more than ten percent (10%) the average of the values determined by
       each appraiser, then the Current Market Price shall be the average of the
       values determined by the two appraisers. If the value determined by the
       appraiser whose determination is the higher of the two appraisals does
       exceed by more than ten percent (10%) the average of the value determined
       by each appraiser, then the two appraisers shall select a third
       independent

<PAGE>

       appraiser who shall, independently of the other appraisals, determine
       the fair market value of the Common Stock. The value determined by the
       appraiser whose determination is the most discrepant from the average
       of the three appraisals shall be discarded, and the Current Market
       Price shall equal the average of the remaining two appraisals; except
       that in the event that the highest and lowest appraisals are equally
       discrepant from the average of the three appraisals, the Current
       Market Price shall be such average. The Company shall bear the
       expenses of all appraisals.

       For the purpose of this Section 2.4, "trading day" shall mean a day on
       which the securities exchange or on NASDAQ specified for purposes of this
       Section 2.4 shall be open for business or, if the shares of Common Stock
       shall not be listed on such exchange for such period, a day with respect
       to which quotations of the character referred to in the next preceding
       sentence shall be reported.

2.5.   In computing an adjustment in the Conversion Price pursuant to Sections
       2.1 to 2.3 above, shares of Common Stock not outstanding at the time of
       such computation shall be deemed outstanding to the extent that the
       Conversion Price has been previously adjusted to reflect the issuance of
       such shares of Common Stock or rights, options to subscribe for or
       purchase such shares of Common Stock.

2.6.   Except as stated in Sections 2.1, 2.2 and 2.3 above, the Conversion Price
       (except at the Company's option) shall not be adjusted for the issuance
       of shares of Common Stock of the Company whether or not at less than the
       Current Market Price or the current Conversion Price, whether for cash or
       property.

2.7.   No adjustment shall be made to the Conversion Price unless such
       adjustment would result in any increase or decrease of at least USD 0.05
       in the Conversion Price then in effect; provided, however, that any
       adjustments which by reason of this Section 2.7 are not required to be
       made will by carried forward and taken into account in any subsequent
       adjustment.

2.8.   All calculations under these Conversion Provisions shall be made to the
       nearest one U.S. cent, with 0.5 U.S. cent or more to be considered a full
       U.S. cent, or to the nearest one-hundredth of a share, as the case may
       be.

2.9.   Whenever the Conversion Price is adjusted as herein provided, the Company
       shall promptly send to Banca del Gottardo a certificate of the Company
       setting forth the Conversion Price after such adjustment and setting
       forth a brief statement of the facts requiring such adjustment and the
       date on which it becomes effective. The contents of any certificate
       required by this Section 2.9 may be transmitted by telex or cable, but
       shall be confirmed in writing as

<PAGE>

       hereinbefore provided. Banca del Gottardo may rely upon such
       certificate (or such transmission by cable or telex, whether or not so
       confirmed) as conclusive evidence of the correctness of the adjustment
       referred to therein.

2.10.  Notwithstanding the foregoing, no adjustment shall be made to the extent
       that it would reduce the Conversion Price to less than the par value of
       the shares of Common Stock (USD .01 at the date hereof).

2.11.  Anything in this Article 2 to the contrary notwithstanding, the Company
       shall be entitled, but shall not be required, to make such reductions in
       the Conversion Price in addition to those required by this Article as it,
       in its discretion, shall determine to be advisable.

2.12.  In any case in which this Article shall require that an adjustment be
       made retroactively immediately following a record date, the Company shall
       as promptly as practicable issue to the holder of any Note converted
       after such record date the shares of Common Stock and other common stock
       of the Company issuable on such conversion in excess of the shares of
       Common Stock and other common stock of the Company issuable on such
       conversion on the basis of the Conversion Price prior to such adjustment.

ARTICLE 3

3.1.   In the event that:

       (a)    the Company shall authorize the issuance to all holders of shares
              of Common Stock of rights, options to subscribe for or purchase
              any shares of Common Stock or any securities convertible into
              shares of Common Stock, or of any other subscription rights;

       (b)    the Company shall authorize the distribution to all holders of
              shares of Common Stock of evidences of its indebtedness or assets
              (other than cash dividends or cash distributions payable out of
              consolidated earnings or earned surplus or dividends payable in
              Common Stock);

       (c)    there shall be any consolidation or merger to which the Company is
              a party and for which approval of any shareholders of the Company
              is required, or there shall be the conveyance or transfer of all
              or substantially all of the properties and assets of the Company,
              or there shall be any reorganization or reclassification or change
              of outstanding Common Stock issuable upon the exercise of
              conversion rights hereunder (other than a change in par value, or
              from par value to no par value, or from no par value to par value,
              or as a result of a subdivision or combination);

<PAGE>

       (d)    there shall be voluntary or involuntary dissolution, liquidation
              or winding-up of the Company; or

       (e)    the Company proposes to take any action (other than the actions of
              the type described in Section 2.1) which would require an
              adjustment of the Conversion Price pursuant to Article 2;

       then the Company shall, at least 10 days prior to the applicable record
       date, provide written notice of such event to Banca del Gottardo stating
       (x) the record date in the United States of America as of which the
       holders of record of shares of Common Stock to be entitled to receive any
       such rights, warrants, or distributions are to be determined, or (y) the
       date in the United States of America on which such reorganization,
       consolidation, merger, conveyance, transfer, dissolution, liquidation or
       winding-up is expected to become effective, and the date as of which it
       is expected that holders of record of the shares of Common Stock shall be
       entitled to vote upon, and, if approved, to exchange their shares of
       Common Stock for securities or other property, if any, deliverable upon
       such reorganization, reclassification, consolidation, merger, conveyance,
       transfer, dissolution, liquidation or winding-up.

3.2.   If the event described in the notice given pursuant to Section 3.1. will
       result in an adjustment of the Conversion Price pursuant to Article 2,
       such notice shall also state the new Conversion Price unless the
       Conversion Price cannot be calculated at the time such notice is given.

3.3.   The failure to give or publish the notice required by this Article 3 or
       any defect therein shall not affect the legality or validity of the
       proceedings referred to in Section 3.1.

ARTICLE 4

So long as any of the Convertible Notes remain convertible, the Company shall
not take any action which would result in an adjustment of the Conversion Price
pursuant to Article 2 if, after giving effect thereto, the Conversion Price
would be decreased to such an extent that the Shares could not be legally
issued, under applicable law of the jurisdiction of incorporation of the Company
then in effect, at such decreased Conversion Price as fully-paid and
non-assessable Shares.

ARTICLE 5

The Conversion Agent shall not at any time be responsible to any Noteholder for
determining whether any facts exist (a) which may require any adjustment of the
Conversion Price, (b) with respect to the nature or extent of any such
adjustment when made, (c) with respect to the method employed, or herein or in
any supplemental agreement (if any) provided to be employed in making

<PAGE>

any such adjustment. The Conversion Agent makes no representation as to the
validity or value (or the kind or amount) of any shares of Common Stock, or
of any securities, property or cash, which may at any time be issued or
delivered upon the conversion of any Convertible Note. The Conversion Agent
shall not be responsible for any failure of the Company to make any cash
payment or to issue, transfer or deliver any shares of stock or stock
certificates or other securities or property upon the surrender of any Note
for the purpose of conversion or to comply with any of the covenants of the
Company contained in these Conversion Provisions.

ARTICLE 6

6.1.   In case of any consolidation of the Company with, or merger of the
       Company into, any other corporation (other than a consolidation or merger
       in which the Company is the continuing corporation), or in the case of
       any sale or transfer of all of the assets of the Company as an entirety
       or substantially as an entirety, the corporation formed by such
       consolidation or the corporation into which the Company shall have been
       merged or the corporation which shall have acquired such assets, as the
       case may be, shall execute with Banca del Gottardo a supplemental
       agreement which shall (a) provide that the holder of each Convertible
       Note then outstanding shall have the right to receive thereafter, during
       the period such Convertible Note shall be convertible as specified in
       Article 2, upon conversion of such Convertible Note, in lieu of each
       share of Common Stock deliverable on such conversion immediately prior to
       such event, only the kind and amount of shares and/or other securities
       and/or property and/or cash which are receivable, or which, but for the
       failure to distribute to holders of Common Stock all or substantially all
       of the consideration receivable on such sale or transfer of assets, would
       be receivable upon such consolidation, merger, sale or transfer by a
       holder of one share of Common Stock of the Company and (b) set forth the
       Conversion Price for the shares and/or other securities and/or property
       and/or cash so issuable, which shall be an amount equal to the Conversion
       Price per share of Common Stock of the Company immediately prior to such
       event.

6.2.   In case of any reclassification or change of the shares of Common Stock
       issuable upon conversion of the Notes (other than a change in par value,
       or from par value to no par value, or as a result of a subdivision or
       combination) or in case of any consolidation or merger of another
       corporation into the Company in which the Company is the continuing
       corporation and in which the holders of the shares of Common Stock
       thereafter receive shares, other securities, property, cash or any
       combination thereof for such shares of Common Stock (including for this
       purpose shares reflecting a change in par value or from par value to no
       par value or as a result of a subdivision or combination of the shares of
       Common Stock), the Company shall execute with Banca del Gottardo a
       supplemental agreement which shall (a) provide that the holder of each
       Convertible Note then outstanding shall receive, upon

<PAGE>

       conversion thereof, in lieu of each share of Common Stock of the
       Company deliverable upon such conversion immediately prior to such
       event, the kind and amount of shares and/or other securities and/or
       property and/or cash receivable upon such reclassification, change,
       consolidation or merger by a holder of one share of Common Stock, and
       (b) set forth the Conversion Price for the shares and/or other
       securities and/or property and/or cash so issuable, which shall be an
       amount equal to the Conversion Price per share of Common Stock
       immediately prior to such event.

6.3.   If, as a result of Section 6.1 or Section 6.2, the holder of any
       Convertible Note thereafter surrendered for conversion shall become
       entitled to receive shares of two or more classes of common stock of the
       Company, the Board of Directors (whose determination shall be conclusive)
       shall determine the allocation of the Conversion Price between or among
       shares of such classes of capital stock. Any supplemental agreement
       executed pursuant to Sections 6.1 and 6.2 shall provide for adjustments
       which shall be as nearly equivalent as practicable to the adjustments
       provided for herein, and, where appropriate, state the Conversion Price
       in terms of one full share of Common Stock or one full share of common
       stock of any successor or purchasing corporation. The terms of this
       Article 6 also shall apply to successive consolidations, merger, sales or
       transfers. In the event that at any time as a result of an adjustment
       made pursuant to this Article 6 the holder of any Note thereafter
       surrendered for conversion shall become entitled to receive any shares or
       securities other than shares of Common Stock, thereafter the prices or
       price of such other shares or other securities so receivable on
       conversion of any Convertible Note shall be subject to adjustment from
       time to time in a manner and on terms as nearly equivalent as practicable
       to the provisions with respect to Common Stock contained in Article 2,
       and the provisions of Article 2 with respect to the Common Stock shall
       apply on like terms to any such other shares.

6.4.   The Conversion Agent shall have no responsibility for any consolidation,
       merger, sale or transfer, the form or substance or any plan relating
       thereto or the consequences thereof to any Noteholder.

       The Conversion Agent shall have no responsibility to determine the
       correctness of any provision contained in any supplemental agreement
       relating either to the kind or amount of shares of stock or securities or
       property receivable by Noteholders upon the conversion of their
       Convertible Notes after any such consolidation, merger, sale or transfer,
       or to any adjustment made with respect thereto. The Conversion Agent may,
       at its option, receive an opinion of counsel for the Company as
       conclusive evidence that any such supplemental agreement complies with
       the provisions of this Article.


<PAGE>

ARTICLE 7

CONVERSION AGENT:

BANCA DEL GOTTARDO

Viale Stefano Franscini 8, 6901 Lugano


<PAGE>

                                                                        ANNEX F

Dated:            October 26, 1999

To:               Banca del Gottardo
                  Viale Stefano Franscini 8
                  6901 Lugano, Switzerland

Re:               Bigmar, Inc. (the "Company")
                  CHF 3'000'000.-- 4% Convertible Notes of 1999
                  Due October 29, 2003 (the "Notes")

-------------------------------------------------------------------------------

                   "CERTIFICATE OF NO MATERIAL ADVERSE CHANGE"

Pursuant to the Note Purchase, Paying and Conversion Agency Agreement dated
October 26, 1999 (the "Agreement") between the Company and Banca del Gottardo
covering the issue of the Notes by the Company.

I, John G. Tramontana, being President of the Company HEREBY CERTIFY on behalf
of the Company that except as set forth in the Information Memorandum as to the
date hereof:

a)     there has been no material adverse change in the financial condition of
       the Company and its consolidated affiliates taken as a whole since June
       30, 1999, and

b)     no event has occurred rendering untrue or incorrect any of the warranties
       set forth in Article V of the Agreement to a material extent, and

c)     no event has occurred which constitutes or which with the giving of
       notice or lapse of time would constitute one of the events referred to in
       Section 10 of the Terms of the Notes.

                                        Yours truly,
                                        Bigmar, Inc.


                                        ----------------------------------
                                        John G. Tramontana
                                        President

<PAGE>

                                                                        ANNEX G

(Specimen Signature Form)


                                  BIGMAR, INC.
                             Johnstown, Ohio, U.S.A.


                Swiss Francs 3'000'000.-- 4 per cent Swiss Francs
                                Convertible Notes
                              Due October 29, 2003


The specimen signature of Mr. John G. Tramontana, the President to be used for
the printing of the above-captioned Notes and coupons is as follows:



                                        ----------------------------------



                                        ----------------------------------



                                        ----------------------------------





October 26, 1999


<PAGE>



                                                                        ANNEX H

                    CERTIFICATE OF COMPLETION OF DISTRIBUTION


The undersigned, being the duly authorized officers of Banca del Gottardo, a
corporation duly organized with limited liability and existing under the laws
of Switzerland ("Gottardo"), does hereby certify for and on behalf of
Gottardo that the offering of those certain 4% Convertible Notes due October
29, 2003 of Bigmar, Inc., a Delaware corporation ("Bigmar") as described in
that certain Note Purchase, Paying and Conversion Agency Agreement, effective
October 29, 1999 (the "Note Purchase Agreement"), between the Gottardo and
Bigmar, has closed and the 1 year restricted period described in the Note
Purchase Agreement has commenced.

IN WITNESS WHEREOF, the undersigned have executed this document as of the
date set forth below.

October 26, 1999

                                 BANCA DEL GOTTARDO


                                 By:
                                    ----------------------------------------

                                 Its:
                                    ----------------------------------------

<PAGE>



                                                                         ANNEX I

                         CERTIFICATE OF NONAVAILABILITY
                            TO UNITED STATES PERSONS
                       OR PERSONS WITHIN THE UNITED STATES


The undersigned, being the duly authorized officers of Banca del Gottardo, a
corporation duly organized with limited liability under the laws of
Switzerland ("Gottardo"), does hereby certify for and on behalf of Gottardo
that it is a "financial institution" within the meaning of United States
Treasury Regulations Section 1.165-12(c)(1)(v) and that it is not acquiring
Bigmar Inc.'s CHF 3'000'000.-- 4% Notes due October 29, 2003, which is
evidenced by a Permanent Global Note for purposes of resale directly or
indirectly to a "United States person" or to a person within the "United
States" as such terms are defined in the Note Purchase, Paying and Conversion
Agency Agreement between Gottardo and Bigmar, Inc. dated October 26, 1999.

IN WITHNESS WHEREOF, the undersigned have executed this document as of the
date set forth below.

October 26, 1999

                                 BANCA DEL GOTTARDO


                                 By:
                                    ----------------------------------------

                                 Its:
                                    ----------------------------------------





<PAGE>

                                                                         ANNEX K

                 CERTIFICATION OF NON-U.S. BENEFICIAL OWNERSHIP
                             AND FILING REQUIREMENTS

                                  BIGMAR, INC.
                    4% CONVERTIBLE NOTES DUE OCTOBER 29, 2003


The undersigned certifies that, as to the portion of the Permanent Global
Note being purchased by the undersigned, the beneficial owners of the Notes
(a) are not either United States persons or U.S. persons or (b) are financial
institutions (within the meaning of United States Treasury Regulation Section
1.165-12(c)(1)(v) located outside the United States that are not United
States persons and that they are purchasing such Notes for purposes of resale
during the Restricted Period. Financial Institutions that are purchasing the
Notes for purposes of resale during the Restricted Period also hereby certify
that they are not acquiring the Notes for purposes of resale directly or
indirectly to a United States person or U.S. person or to a person within the
United States. The undersigned certifies further that it is (i) the
beneficial owner of the portion of the Permanent Global Note being purchased
or (ii) a financial institution (within the meaning of United States Treasury
Regulation Section 1.165-12(c)(1)(v) through which the beneficial owner
directly or indirectly will hold the portion of the Permanent Global Note
being purchased.

For purposes of this certification, (i) the term "Restricted Period" means
the period beginning on the earlier of the first date that the Notes are
offered or the date on which the Notes are issued (the "Payment Date") and
ending one (1) year after the later of the date upon which the Notes were
first offered or the date of closing of the offering, (ii) the term "United
States" means the United States of America (including the States and the
District of Columbia, its possessions, its territories and other areas
subject to its jurisdiction, (iii) the term "United States person" means a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof, or an estate or trust the income of which is
subject to United States federal income taxation regardless of its source,
and (iv) the term "U.S. person" has the meaning set forth in Sections 230.901
through .904 of Title 17 of the United States Code of Federal Regulations
("Regulation S").



                                         -----------------------------
                                         Beneficial Owner or
                                         Financial Institution

                                         Name:
                                               -----------------------

                                         Address:
                                                  --------------------

<PAGE>

                                                                         ANNEX L

                 CERTIFICATION OF NON-U.S. BENEFICIAL OWNERSHIP
                             AND FILING REQUIREMENTS

                                  BIGMAR, INC.
                    4% CONVERTIBLE NOTES DUE OCTOBER 29, 2003

The undersigned certifies that as to the portion of the Permanent Global Note
(i) hereby presented for exchange into definitive Notes, or (ii) hereby
presented for conversion into Common Stock the beneficial owners of the Notes
(a) are not either United States persons or U.S. persons or (b) are financial
institutions (within the meaning of United States Treasury Regulation Section
1.165-12(c)(1)(v) located outside the United States that are not United
States persons and that have purchased such Notes for purposes of resale
during the Restricted Period. Financial Institutions that have purchased the
Notes for purposes of resale during the Restricted Period also hereby certify
that they have not acquired the Notes for purposes of resale directly or
indirectly to a United States person or U.S. person or to a person within the
United States. The undersigned certifies further that it is (i) the
beneficial owner of the portion of the Permanent Global Note tendered for
exchange or (ii) a financial institution (within the meaning of United States
Treasury Regulation Section 1.165-12(c)(1)(v)) through which the beneficial
owner directly or indirectly holds the portion of the Permanent Global Note
tendered.

For purposes of this certification, (i) the term "Restricted Period" means
the period beginning on the earlier of the first date that the Notes are
offered or the date on which the Notes are issued (the "Payment Date") and
ending one (1) year after the later of the date upon which the Notes were
first offered or the date of closing of the offering, (ii) the term "United
States" means the United States of America (including the States and the
District of Columbia), its possessions, its territories and other areas
subject to its jurisdiction, (iii) the term "United States person" means a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof, or an estate or trust the income of which is
subject to United States federal income taxation regardless of its source and
(iv) the term "U.S. person" has the meaning set forth in Sections 230.901
through .904 of Title 17 of the United States Code of Federal Regulations
("Regulation S").

The undersigned hereby confirms that, upon conversion of the Notes into
Common Stock, the undersigned will not hold beneficially five percent (5%) or
more of the then outstanding shares of common stock, or in the alternative,
hereby undertakes to make, on a timely basis, all filings required to be made
under the United States Securities Exchange Act of 1934, as amended, with
respect to holdings of Common Stock by the undersigned.



                                         -----------------------------
                                         Beneficial Owner or
                                         Financial Institution

                                         Name:
                                               -----------------------

                                         Address:
                                                  --------------------