EXHIBIT 10.1

LOAN AGREEMENT

THIS LOAN AGREEMENT (this “Agreement”) is dated as of June 29, 2007, by and
among EMERGENT BIODEFENSE OPERATIONS LANSING INC., formerly known as BioPort
Corporation, a Michigan corporation, which maintains its chief executive office
at 3500 N. Martin Luther King, Jr. Blvd., Building One, Third Floor, Lansing,
Michigan 48906 (the “Borrower”), and EMERGENT BIOSOLUTIONS INC., a Delaware
corporation (the “Guarantor”) and HSBC REALTY CREDIT CORPORATION (USA), a
Delaware corporation (the “Bank”).

WHEREAS, Borrower previously executed and delivered to Bank that certain
Promissory Note dated as of August 25, 2006 in the original principal amount of
$15,000,000.00 (the “Original Note”). The Original Note was issued pursuant to a
Loan Agreement dated as of August 25, 2006 among Borrower, Guarantor and Bank
(the “Original Loan Agreement”) and was secured by among other things that
certain Guaranty dated as of August 25, 2006 from Guarantor in favor of Bank
(the “Original Guaranty”).

WHEREAS, of the date hereof Bank has agreed to lend Borrower an additional
$15,000,000.00, pursuant to that certain Promissory Note dated as of the date
hereof from Borrower payable to the order of Bank (the “Note”, which term shall
include any and all amendments, restatements and modifications thereto)
evidencing that certain term loan in the original principal amount of
($30,000,000.00) (hereinafter referred to as the “Loan”); and

WHEREAS, the Loan will be of benefit to the Guarantor and the Guarantor desires
to induce the Bank to make the Loan by guaranteeing the payment of the Loan
pursuant to that certain Guaranty dated as of the date hereof (the “Guaranty”,
as also defined below);

WHEREAS, the Bank is willing to make the Loan to the Borrower upon the terms and
subject to the conditions hereinafter set forth;

WHEREAS, in connection with the execution and delivery of the Note, the
Guaranty, this Loan Agreement and the other documents related to the Loan, the
Original Note, the Original Guaranty and the Original Loan Agreement and any
other documents previously delivered to the Bank in connection with the Original
Note shall be hereby terminated and replaced with the Note, the Guaranty, this
Loan Agreement and the other documents related to the Loan dated as of the date
hereof.

NOW, THEREFORE, in consideration of the foregoing and of the agreements,
covenants and conditions contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows;

SECTION 1. DEFINITIONS

As used herein, the following terms, when initial capital letters are used,
shall have the respective meanings set forth below. In addition, all terms
defined in the applicable Uniform Commercial Code shall have the meanings given
therein unless otherwise defined herein.

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1.01       Defined Terms. As used in this Agreement, the following terms shall
have the following meanings, unless the context otherwise requires:

“Affiliate” shall mean (a) any entity in which the Borrower legally or
beneficially owns or holds, directly or indirectly, any capital stock,
membership interest or other equity interest; (b) any person or entity that is a
partner in or member of the Borrower or a partnership or limited liability
company in which the Borrower is a partner, (c) any person that is a director,
officer, member, stockholder (legally or beneficially) or other affiliate of any
of the foregoing or of the Borrower; and (d) any person or entity that directly
or indirectly controls, is under the control of, or is under common control
with, the Borrower, including, without limitation, any person or entity that
directly or indirectly has the right or power to direct the management or
policies of the Borrower and any person or entity whose management or policies
the Borrower directly or indirectly has the right or power to direct.

“Collateral” shall mean the real property and personal property of the Borrower
upon which the Borrower has granted a lien to the Bank pursuant to the Security
Agreement and the Mortgage.

“Developed Campus” shall mean the portion of the Property located in Ingham
County, Michigan.

“Environmental Laws” shall mean all federal, state and local laws, whether now
or hereafter enacted, and as amended from time to time, relating to pollution or
protection of the environment and the handling of Hazardous Materials;
including, without limitation, laws relating to emissions, discharges, releases
or threatened releases of Hazardous Materials into the environment (including,
without limitation, ambient air, surface water, ground water or land), or
otherwise relating to the manufacture, generation, production, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, and any and all regulations, codes, plans, orders, decrees,
judgments, injunctions, notices or demand letters issued, entered, promulgated
or approved thereunder.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor legislation, and all regulations,
codes, orders, decrees, judgments, injunctions, notices or demand letters
issued, entered, promulgated or approved thereunder.

“Event of Default” shall mean any of the events specified in Section 6 hereof,
provided that any requirement for the giving of notice, the lapse of time, or
both has been satisfied.

“Fifth Third Loan” shall mean that certain financing arrangement with Fifth
Third Bank related to (i) that certain revolving credit loan in the amount of
$15,000,000.00 evidenced by that certain Amended and Restated Loan Agreement
dated June 11, 2007 by and between the Borrower and Fifth Third Bank, a Michigan
banking corporation and that certain Amended and Restated Security Agreement
dated June 11, 2007 by and between the Borrower and Fifth Third Bank, (ii) that
certain term loan in the amount of $2,400,000 evidenced by that certain term
note dated August 10, 2004 by and between the Borrower and Fifth Third Bank, and
(iii) various other notes, security agreements, loan agreements and credit
documents related to such revolving

 

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loan and term loan (collectively, the “Fifth Third Loan Documents”), which are
secured, respectively, by a lien on the proceeds of Government Contracts (as
defined in the Fifth Third Loan Documents) and a lien on certain computer
software known as the “The Enterprise Resource Planning System”.

“GAAP” shall mean generally accepted accounting principles as in effect from
time to time.

“Guaranty” shall mean the Guaranty, of even date herewith, made and executed by
the Guarantor for the benefit of the Bank, as amended, supplemented, restated or
modified from time to time.

“Hazardous Materials” shall mean any (i) hazardous, regulated and/or toxic
chemicals, materials, substances or wastes occurring in the air, water, soil or
ground water or noise in, on, over or under the Property or the improvements
thereon, as defined by the Comprehensive Environmental Response, Compensation,
and Liability Act (Superfund or CERCLA), and the Superfund Amendments and the
Reauthorization Act of 1986 (SARA), 42 U.S.C. § 9601 et seq., the Emergency
Planning and Community Right-to-Know Act, 42 U.S.C. § 11001 et seq., the
Resource Conservation and Recovery Act (the Solid Waste Disposal Act or RCRA),
42 U.S.C. § 6901 et seq., the Federal Water Pollution Control Act, (CWA), 33
U.S.C. § 1251 et seq., the Clean Air Act (CAA), 42 U.S.C. § 7401 et seq., the
Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq., the Federal
Water Pollution Control Act, 33 U.S.C. § 1251 et seq., the Safe Drinking Water
Act, 42 U.S.C. § 300 et. seq. and the Federal Insecticide, Fungicide, and
Rodenticide Act, 7 U.S.C.A. §136 et seq., the Uranium Mill Tailings Radiation
Control Act, 42 U.S.C. § 7901 et seq., the Occupational Safety and Health Act,
29 U.S.C. § 655 et seq., the National Environmental Policy Act, 42 U.S.C. § 4321
et seq., and the Noise Control Act, 42 U.S.C. § 4901 et seq., or comparable
state statutes, as each such statute may be amended from time to time, and/or as
defined in regulations promulgated thereunder; (ii) oil, petroleum products, and
their by-products; (iii) any substance, the presence of which is prohibited or
controlled by any other applicable federal or state or local laws, regulations,
statutes or ordinances now in force or hereafter enacted relating to waste
disposal or environmental protection with respect to hazardous, toxic or other
substances generated, produced, leaked, released, spilled or disposed of at or
from the Property; (iv) any other substance which by law requires special
handling in its collection, storage, treatment or disposal including, but not
limited to, asbestos or asbestos-containing material in any form that could be
friable, polychlorinated biphenyls (PCBs), was formaldehyde foam insulation and
lead-based paints, but not including small quantities of such materials present
on the Property in retail containers, (v) Microbial Matter or infectious
substances; (vi) underground or above-ground storage tanks, whether empty or
containing any substance, the presence of which on the Property is prohibited by
any federal, state or local authority; (vii) any substance that requires special
handling; and (viii) any other material or substance now or in the future
defined as a “hazardous substance,” “hazardous material,” hazardous waste,”
“toxic substance,” “toxic pollutant,” “contaminant,” or “pollutant” within the
meaning of any Environmental Laws. “Microbial Matter” shall mean the presence of
fungi or bacterial matter (which is not normally found in the environment) which
reproduces through the release of spores or the splitting of cells, including,
but not limited to, mold, mildew and viruses, whether or not such Microbial
Matter is living.

 

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“Intercreditor Agreement” shall mean that certain Intercreditor Agreement
between Fifth Third Bank and the Bank, consented to by the Borrower and the
Guarantor, dated as of August 25, 2006.

“Lien” shall mean any mortgage, pledge, assignment, security interest,
encumbrance, hypothecation, lien, encroachment, reservation, right of way,
easement, covenant, condition, restriction or charge of any kind (including any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
or authorization of, any financing statement under the Uniform Commercial Code
or comparable law of any jurisdiction).

“Loan” means the loan of even date herewith from the Bank to the Borrower
evidenced by the Note.

“Loan Documents” shall mean the Note, this Agreement, the Guaranty, the
Mortgage, the Security Agreement and any other agreement or document referred to
herein or now or hereafter delivered and executed by the Borrower and/or the
Guarantor and/or the Bank in connection with the Loan contemplated hereby,
together with any and all revisions, amendments, restatements and modifications
to, replacements of and substitutions for, any of the foregoing.

“Mortgage” shall mean the Mortgage dated as of August 25, 2006, as amended by
the First Amendment to Mortgage dated as of the date hereof, made and executed
by the Borrower for the benefit of the Bank, as further amended, supplemented,
restated or modified from time to time, to secure the Note, which Mortgage
creates a first lien on the Property.

“Note” shall mean that certain Promissory Note of even date herewith in the
principal amount of $30,000,000.00 from the Borrower payable to the order of the
Bank.

“Permitted Liens” shall mean with respect to the Borrower and the Collateral:
(a) Liens, if any, for taxes, front foot benefit charges, assessments and other
charges enumerated in Section 1.03(a) of the Mortgage, not yet due or payable;
(b) applicable building and zoning laws and regulations; (c) any mechanic’s,
artisan’s, materialman’s, landlord’s, carrier’s or other like Lien arising in
the ordinary course of business with respect to obligations which are not due;
(d) any and all municipal and public utility easements of record; (e) any Lien
arising out of a judgment, order or award with respect to which the Borrower
shall in good faith be prosecuting diligently an appeal or proceeding for review
and with respect to which there shall be in effect a subsisting stay of
execution pending such appeal or proceeding for review, provided appropriate
reserves therefor are established by the Borrower in accordance with GAAP and
provided such Lien is subordinate to any security interest of the Bank in the
property encumbered by such Lien; (f) any deposit of funds made in the ordinary
course of business to secure obligations of the Borrower under worker’s
compensation laws, unemployment insurance laws or similar legislation, to secure
public or statutory obligations of the Borrower, to secure surety, appeal or
customs bonds in proceedings to which the Borrower is a party, or to secure the
Borrower’s performance in connection with bids, tenders, contracts (other than
contracts for the payment of money), leases or subleases made by the Borrower in
the ordinary course of business; (g) any Lien set forth in the Title Insurance
Policy Nos. TRO-06-100063 and TRO-06-100064 issued by Lawyers Title Insurance
Corporation, as updated; (h) any lease, sublease or agreement for occupancy or
use of

 

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any part of the Property, so long as those leases, subleases or agreements are
subordinate to the Mortgage and have been approved by the Bank; (i) a Lien in
favor of the Bank; (j) such other matters affecting title to the Property as are
approved by the Bank in writing; (k) subject to the terms of the Intercreditor
Agreement, Liens arising out of or related to the Fifth Third Loan, including
any extension, amendment or renewal of such Liens; (l) the liens listed on
Schedule 1.1 attached hereto; (m) any liens related to licenses and use
agreements in favor of such vendors or licensors related to intellectual
property used by Borrower; and (n) any restrictions and encumbrances imposed on
Borrower pursuant to intellectual property out-licensed by Borrower to third
parties in the ordinary course of Borrower’s business.

“Property” shall mean that certain real property, improvements, fixtures and
other real property interests owned by the Borrower and located in Clinton
County and Ingham County, Michigan, as more particularly described in the
Mortgage.

“Security Agreement” shall mean the Security Agreement of even date herewith
from the Borrower to the Bank granting to the Bank a Lien on the personal
property of the Borrower (excepting the collateral for the Fifth Third Loan as
permitted pursuant to the Intercreditor Agreement), as amended, supplemented,
restated or modified from time to time.

“Subsidiary” shall mean any corporation, partnership or limited liability
company, at least a majority of the outstanding equity interests of which, now
or in the future, is owned or controlled by the Borrower, directly or
indirectly, or through one or more intermediaries.

“UCC Collateral” shall mean all of the personal property of the Borrower upon
which the Borrower has granted the Bank a lien pursuant to the Security
Agreement.

1.02       Accounting Terms.     As used in this Agreement and any of the other
Loan Documents, as well as in any certificate, report or other document made or
delivered pursuant to or in connection with this Agreement, accounting terms not
defined herein and accounting terms only partly defined herein shall have the
respective meanings given to them under GAAP.

1.03       Use of Defined Terms. All terms defined in this Agreement shall have
the defined meanings when used in any of the other Loan Documents or in any
certificate, report or other document made or delivered pursuant to or in
connection with this Agreement, unless the context shall require otherwise.

SECTION 2. LOAN AND REPAYMENT

2.01       Loan. Subject to the terms and conditions set forth herein and in the
Note, the Bank agrees to lend to the Borrower, in a single advance to be made on
or about the date hereof, the sum of Thirty Million and No/100 Dollars
($30,000,000.00). The Note shall be payable on the 1st day of each month in
monthly installments of principal in the amount of $250,00.00, plus accrued
interest, being the amount required to amortize the Loan over a period of 10
years, beginning August 1, 2007. All accrued interest and outstanding principal
on the Loan shall be due and payable in a final balloon payment on June 29,
2012.

 

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2.02       Note, Interest, Payment Terms. The Borrower’s indebtedness to the
Bank for the Loan together with interest accrued thereon, shall be evidenced by
the Note. The Note shall bear interest and be payable as set forth therein.

2.03       Fee. As of the date hereof, the Borrower has paid to the Bank an
aggregate commitment fee in the amount of $150,000.00 (the “Commitment Fee”) for
the Loan.

SECTION 3. CONDITIONS PRECEDENT.

The Bank shall have no obligation to make any advance under the Loan Documents
unless and until:

3.01                      Delivery of Documents. The Borrower shall have
delivered to the Bank the following:

(i)           certificates of good standing for the Borrower certified by the
Secretary of State, or other appropriate governmental authority, of the state of
incorporation of the Borrower and of the Borrower’s principal place of business;

(ii)          a certificate of the Borrower, certifying as to attached copies of
its certificate of incorporation and bylaws and the resolutions of its Board of
Directors authorizing the execution, delivery and performance of the Loan
Documents to which the Borrower is a party, the borrowings by the Borrower
hereunder, and the granting of the Liens contemplated by the Loan Documents, and
certifying as to the incumbency, authority and signatures of the officers of the
Borrower authorized to sign the Loan Documents on behalf of the Borrower;

(iii)         certificates of good standing for the Guarantor certified by the
Secretary of State, or other appropriate governmental authority, of the state of
incorporation of the Guarantor and of the Guarantor’s principal place of
business;

(iv)         a certificate of the Guarantor, certifying as to attached copies of
its certificate of incorporation and bylaws and the resolutions of its Board of
Directors authorizing the execution, delivery and performance of the Loan
Documents to which the Guarantor is a party, and certifying as to the
incumbency, authority and signatures of the officers of the Guarantor authorized
to sign the Loan Documents on behalf of the Guarantor;

(v)           the original Agreement executed by the Borrower and the Guarantor;

(vi)         the original Note executed by the Borrower and consented to by the
Guarantor;

 

(vii)

the original Guaranty executed by the Guarantor;

 

(viii)

the original Mortgage executed by the Borrower;

 

(ix)

the original Security Agreement executed by the Borrower;

 

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(x)          a written opinion of counsel to the Borrower and the Guarantor
dated as of the date of this Agreement and addressed to the Bank, which opinion
must be, in form and content, satisfactory to the Bank;

(xi)         such financing statements or other documents which the Bank may
reasonably request in connection with the Collateral; evidence satisfactory to
the Bank that all filings under the Uniform Commercial Code or with any federal
or state agency or department that the Bank or its counsel deems necessary or
desirable in connection with the creation and perfection of the security
interests granted under the Loan Documents have been effected; and such other
evidence as the Bank may require that confirms that, as a result of such
filings, the Bank's security interest in the Collateral is consistent with the
representation contained in this Agreement relating thereto;

(xii)       the insurance policies evidencing the insurance coverages required
by the Loan Documents, together with proof of payment of the premiums for such
insurance;

(xiii)      with respect to the initial advance of the Loan, the Commitment Fee
due to the Bank, plus all other fees and expenses payable to the Bank and third
parties in connection with its due diligence, preparation and negotiation of the
Loan Documents, filing of various security documents, including legal and
administrative fees;

(xiv)      such executed agreements, notices or other documents in form and
substance satisfactory to the Bank in connection with the Bank’s control of any
rights in any deposit accounts, electronic chattel paper, investment property or
letter of credit; and

(xv)        such other loan documents, agreements, consents, approvals,
certificates, resolutions, instruments, opinions and other documents and
materials as listed on any closing checklist or as the Bank may reasonably
request.

3.02      Compliance. The Borrower and the Guarantor shall have complied and
shall then be in compliance in all material respects with all material terms,
covenants and conditions of this Agreement.

3.03      No Default. There shall exist no Event of Default and no event which,
upon notice or lapse of time or both, would constitute an Event of Default.

3.04      Representations True. The representations and warranties contained in
this Agreement shall be true and correct in all material respects.

3.05      No Material Adverse Change. There shall have been no materially
adverse change in the total financial condition of the Borrower or the
Guarantor, taken as a whole, from the financial condition of the Borrower or the
Guarantor, as the case may be, as set forth in the financial statements
furnished to the Bank pursuant to this Agreement or from the financial condition
of the Borrower or any Guarantor previously disclosed to the Bank in any other
manner.

 

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3.06      Appraisal. The Bank shall have received, at the Borrower’s expense, an
appraisal for the Property showing that the amount of the Loan is no more than
80% of the fair market value of the Property, and being otherwise satisfactory
in form and substance to the Bank.

3.07      Environmental. The Bank shall have received, at the Borrower’s
expense, environmental reports with respect to the Property which are
satisfactory in form and substance to the Bank.

SECTION 4. REPRESENTATIONS AND WARRANTIES

To induce the Bank to enter into this Agreement, the Borrower and the Guarantor
represent, warrant and agree as follows:

4.01       Corporate Status: Subsidiaries. The Borrower is a corporation, duly
organized and validly existing in the jurisdiction in which it is organized, has
the power and authority to own its properties and to carry on its business as
currently conducted, and is duly qualified to do business and is in good
standing in each jurisdiction in which the transaction of its business makes
such qualification necessary. The Borrower has no Subsidiaries.

4.02       Mergers and Consolidations. Except as has been previously disclosed
to Bank, no entity has merged into the Borrower or been consolidated with the
Borrower, and the business of the Borrower has not ever been conducted as a
partnership or proprietorship in the past.

4.03       Purchase of Assets. Except as disclosed in Schedule 4.03 attached
hereto or as previously disclosed to Bank, no entity has sold substantially all
of its assets to the Borrower or sold assets to the Borrower outside the
ordinary course of such seller’s business or in a transaction subject to the
bulk transfer laws at any time in the past.

4.04       Borrower’s and Guarantor’s Authority and Capacity. The Borrower and
the Guarantor have the full legal right, authority and capacity to execute,
deliver and perform the Loan Documents to which they are a party and to incur
the obligations provided for therein. The execution, delivery and performance of
the Loan Documents and the obligations provided for therein have been duly and
validly authorized by all necessary corporate actions on the part of the
Borrower and the Guarantor (all of which actions are in full force and effect),
and do not and will not require any consent or approval of the stockholders of
the Borrower which has not been obtained.

4.05       Binding Agreement of Borrower and the Guarantor. The Loan Documents
are the valid and legally binding obligations and agreements of the Borrower and
of the Guarantor, enforceable in accordance with their respective terms.

4.06       No Conflicting Law and Agreements. Except as disclosed in Schedule
4.06 attached hereto, the execution, delivery and performance by the Borrower
and the Guarantor of the Loan Documents to which it is a party will not violate
any provision of law, any order of any court or government instrumentality or
agency, any indenture, any loan or credit agreement or any other material
agreement, commitment, lease, contract, mortgage, note or other instrument
binding on the Borrower or Guarantor or affecting the Property, or be in
conflict with, result in a breach of, in any material respect, or constitute
(with due notice, lapse of time, or both) a default

 

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(as defined therein) under any such indenture, agreement, commitment, lease,
contract, mortgage, note or other instrument, or result in the creation or
imposition of any Lien (other than a Permitted Lien) of any nature whatsoever
upon any of the Collateral, or result in or require the acceleration of any
indebtedness of the Borrower or Guarantor.

4.07       Compliance with Laws. The Borrower and the Guarantor are in
compliance in all material respects with any federal, state and local laws,
rules and regulations including, but not limited to Environmental Laws and the
Fair Labor Standards Act. The Borrower and the Guarantor maintain all of the
necessary material permits, licenses and certifications necessary for the
operation of their businesses. All of the foregoing are in full force and effect
and not in known conflict with the rights of others. The Borrower is not in
breach of or default (as defined therein) under the provisions of any of the
foregoing, nor is there any event, fact, condition or circumstance which, with
notice or passage of time or both, would constitute or result in a conflict,
breach, default or event of default (as defined therein) under, any of the
foregoing which, if not remedied within any applicable grace or cure period
could reasonably be expected to have a material adverse effect on the Borrower.

4.08       Taxes. The Borrower and the Guarantor have filed or caused to be
filed all Federal, state and local income, excise, property and other tax
returns which are required to be filed. All such returns are true and correct in
all material respects and the Borrower and the Guarantor have paid or caused to
be paid all taxes, assessments, interest and penalties as shown on such returns
or on any assessment received by them, to the extent that such taxes have become
due, including, but not limited to, all F.I.C.A. payments and withholding taxes.
Except as disclosed in Schedule 4.08 attached hereto, the amounts reserved as a
liability for income and other taxes payable in the most recent financial
statements of the Borrower and the Guarantor provided to the Bank pursuant to
this Agreement are sufficient for the payment of all unpaid Federal, state,
county and local income, excise, property and other taxes, whether or not
disputed, of the Borrower and the Guarantor accrued for or applicable to the
period and on the dates of such financial statements and all years and periods
prior thereto and for which the Borrower, any existing Subsidiary or the
Guarantor may be liable in its or their own right or as a transferee of the
assets of, or as successor to, any other person or entity.

4.09       Financial Condition. The financial statements of the Borrower and the
Guarantor and other related information previously submitted to the Bank are
true, complete and correct in all material respects, fairly represent the
financial condition of the Borrower and the Guarantor and the results of their
respective operations and transactions as of the dates and for the periods of
such statements and have been prepared in accordance with GAAP applied on a
consistent basis throughout the period involved. There are no liabilities,
direct or indirect, fixed or contingent, matured or unmatured, known to the
Borrower or the Guarantor which are not required to be reflected therein
pursuant to GAAP. There has been no material adverse change in the business,
operations, prospects, assets, properties or condition (financial or otherwise)
of the Borrower or the Guarantor, taken as a whole since the date of said
financial statements.

4.10       Title To Properties. The Borrower has good, valid, insurable (in the
case of real property) and marketable title to all of its properties and assets
including the Collateral (whether real or personal, tangible or intangible)
reflected on the financial statements referred to in this Agreement, except for
such properties and assets as have been disposed of since the date of such

 

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financial statements as no longer used or useful in the conduct of its business
or as have been disposed of in the ordinary course of business, and all such
properties and assets are free and clear of all Liens except for Permitted
Liens. Except as noted in Title Insurance Policies issued by Lawyers Title
Insurance Corporation in favor of Bank, as updated, none of the real property
included in such properties of the Borrower is subject to any covenant or other
restriction preventing or limiting the right of the record owner to convey or
use it, all such real property has adequate rights of ingress and egress, and
the Developed Campus has direct and unobstructed access to electric, gas, water,
sewer and telephone lines, all of which are adequate for the uses to which such
property is currently devoted.

4.11       Litigation. Except as disclosed in Schedule 4.11 attached hereto,
there are no actions, claims, suits or proceedings pending, or, to the knowledge
of the Borrower or the Guarantor, threatened or reasonably anticipated against
or affecting the Borrower or the Guarantor at law or in equity including,
without limitation, under ERISA or any Environmental Laws or before or by any
governmental instrumentality or agency (domestic or foreign), commission, board,
bureau, arbitrator or arbitration panel, and there is no probable judgment,
liability or award which may reasonably be expected to result in any material
adverse change in the business, operations, prospects, properties or assets or
condition, financial or otherwise, of the Borrower or the Guarantor. The
Borrower is not in default with respect to any judgment, order, writ,
injunction, decree, rule, award or regulation of any court, governmental
instrumentality or agency, commission, board, bureau, or arbitrator or
arbitration panel.

4.12       No Other Defaults. Except as disclosed in Schedule 4.12 attached
hereto, neither the Borrower nor the Guarantor is in default under any contract,
agreement, commitment or other instrument which default would have a material
adverse effect on the business, properties or condition, financial or otherwise,
of the Borrower or the Guarantor, or in the performance of any covenants or
conditions respecting any of their indebtedness. No holder of any indebtedness
of the Borrower or Guarantor has given notice of any asserted default
thereunder. No liquidation or dissolution of the Borrower or the Guarantor and
no receivership, insolvency, bankruptcy, reorganization or other similar
proceeding relative to the Borrower or the Guarantor or their properties is
pending or, to the knowledge of the Borrower or the Guarantor, is threatened
against them or any of them.

4.13       ERISA. (a) The pension, profit sharing, savings, stock bonus and
other deferred compensation plans established and maintained by the Borrower,
the Guarantor and any Commonly Controlled Entity (as defined below) which are
subject to the requirements of ERISA, if any, were stated in their inception or
have, since ERISA became effective with respect to such plans, been amended and
restated in a manner designed to qualify under the applicable requirements of
ERISA and the Internal Revenue Service Code of 1986, as amended (the “Code”);
and subsequent to such statement, or restatement, those plans and their related
trusts have received favorable determinations from the Internal Revenue Service
holding that such plans and trusts so qualify; (b) to the knowledge of the
Borrower and the Guarantor, there is no current matter which would materially
adversely affect the qualified tax-exempt status of any pension, profit-sharing,
savings, stock bonus or other deferred compensation plan and their related
trusts of either of the Borrower or any Commonly Controlled Entity under the
Code; (c) neither the Borrower, the Guarantor, nor any Commonly Controlled
Entity has incurred in connection with any such plan any “accumulated funding
deficiency” (as defined in Section 302

 

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of ERISA or Section 412(a) of the Code) whether or not waived; (d) there has
been no “prohibited transaction” (within the meaning of Section 4975 of the Code
or Section 406 of ERISA) involving any such plan of the Borrower, the Guarantor,
or any Commonly Controlled Entity; (e) no “reportable event,” as defined by
Title IV of ERISA, has occurred with respect to any plan subject to the minimum
funding requirements of Section 412 of the Code maintained for employees of the
Borrower or any Commonly Controlled Entity; (f) no “multi-employer plan” (as
defined in ERISA) to which either the Borrower, the Guarantor or any Commonly
Controlled Entity has an obligation to contribute, has “terminated,” as that
term is defined in ERISA; (g) neither the Borrower, the Guarantor, nor any
Commonly Controlled Entity has withdrawn, in a “complete withdrawal” (as defined
in ERISA), from any “multi-employer plan” to which either the Borrower or such
Commonly Controlled Entity had an obligation to contribute; (h) neither the
Borrower, the Guarantor nor any Commonly Controlled Entity has withdrawn, in a
“partial withdrawal” (as defined in ERISA), from any “multi-employer plan” to
which either the Borrower, the Guarantor or such Commonly Controlled Entity had
an obligation to contribute; and (i) no “multi-employer plan” to which either
the Borrower, the Guarantor or any Commonly Controlled Entity had an obligation
to contribute is in “reorganization” (as defined in ERISA and the Code) nor has
notice been received from the administrator of any “multi-employer plan” to
which either the Borrower, the Guarantor, or any Commonly Controlled Entity has
an obligation to contribute that any such plan will be placed in
“reorganization.” For purposes of this Section, the term “Commonly Controlled
Entity’ means any corporation which is a member of a controlled group of
corporations (as defined for purposes of Section 414(6) of the Code) of which
the Borrower is a member and any trade or business (whether or not incorporated)
which is under “common control” (as defined for purposes of Section 414(c) of
the Code) with the Borrower.

4.14       Other Security Interests. The Borrower is the owner of the
Collateral, free from any Lien except a Permitted Lien.

4.15       Franchises, Patents, Etc. Borrower owns or licenses all franchises,
licenses, trademarks, trade names, copyrights or patents necessary to the
conduct of the present business of the Borrower. The Borrower has no actual
knowledge of and has not received any notice to the effect that any product it
manufactures or sells, or any service it renders, or any process, method,
know-how, trade secret, part or material it employs in the manufacture of any
product it makes or sells or any service it renders, or the marketing or use by
it or another of any such product or service, may infringe any trademark, trade
name, copyright, patent, trade secret or legally protectable right of any other
person or entity.

4.16       Approvals. No approval, consent or other action by any governmental
instrumentality or agency or any other person or entity, which approval,
consent, or other action has not been obtained or taken or which does not remain
in effect as of the date hereof, is or will be necessary to permit the valid
execution, delivery and performance by the Borrower and the Guarantor of the
Loan Documents.

4.17       Tradenames. Except as disclosed in Schedule 4.17 attached hereto, the
Borrower utilizes no tradenames in the conduct of its business and has not
changed its name.

4.18       Labor Relations. There are no strikes, work stoppages, material
grievance proceedings or other material controversies pending or, to the best of
the Borrower’s knowledge,

 

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threatened between the Borrower and any employees engaged in the business of the
Borrower or any union or other collective bargaining unit representing such
employees. The Borrower has complied and is in material compliance with all laws
relating to the employment of labor, including, without limitation, provisions
relating to wages, hours, collective bargaining, occupational safety and health,
equal employment opportunities and the withholding of income taxes and social
security contributions, the non-compliance with which might materially adversely
affect its business, operations, prospects, assets, properties or condition
(financial or otherwise).

SECTION 5. COVENANTS

The Borrower and the Guarantor covenant and agree that, so long as any of the
Loan Documents shall remain in effect, unless the Bank shall otherwise consent
in writing, they will:

5.01       Payment of Loan. Comply with the terms and conditions for repayment
of the Loan in accordance with the terms of the Note and Guaranty.

 

5.02

Financial Statements.

Furnish to the Bank:

(a)          as soon as available but in no event more than one hundred twenty
(120) days after the last day of each fiscal year of the Borrower and the
Guarantor, consolidated financial statements of the Borrower and the Guarantor
containing a balance sheet, a statement of income and expenses and a statement
of changes in financial condition as of the close of such period, prepared in
accordance with GAAP applied on a basis consistent with prior periods, showing
the financial condition of the Borrower and the Guarantor at the close of such
year in form reasonably satisfactory to the Bank and prepared and audited by
Ernst & Young, or another independent certified public accountant reasonably
satisfactory to the Bank and on an annual basis forward looking management
prepared projections for the Borrower and the Guarantor;

(b)          as soon as available but in no event more than forty five (45) days
after the last day of each quarter of each fiscal year of the Borrower and the
Guarantor, consolidated financial statements of the Borrower and the Guarantor
containing a balance sheet, a statement of income and expenses and a statement
of changes in financial condition as of the close of such period, prepared in
accordance with GAAP applied on a basis consistent with prior periods, showing
the financial condition of the Borrower and the Guarantor at the close of such
period, in form reasonably satisfactory to the Bank;

(c)          in the event that a portion of the Property has been leased to
third party, unaffiliated tenants, as soon as available but in no event more
than forty five (45) days after the last day of each quarter of each fiscal
year, a detailed budget and report of operating expenses for the Property;

(d)          in the event that a portion of the Property has been leased to
third party, unaffiliated tenants, as soon as available but in no event more
than forty five (45) days after the last day of each fiscal year, projections
for the Property for the following fiscal year;

(e)          promptly, and from time to time, such other information regarding
the operation, business, affairs and financial condition of the Borrower and the
Guarantor as the

 

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Bank may reasonably request, including, but not limited to interim financial
statements including an income statement, balance sheet, aging of accounts
receivable and/or accounts payable; and

(f)           within forty five (45) days after the last day of each of the
quarters of each fiscal year of the Borrower, a certificate of the chief
financial officer of the Borrower certifying that to the best of his knowledge
no Event of Default has occurred and is continuing or, if an Event of Default
has occurred and is continuing, a statement as to the nature thereof and the
action which is proposed to be taken with respect thereto.

The financial statements of the Borrower and the Guarantor delivered to the Bank
pursuant to this Section shall each be certified by the president or chief
financial officer of the Borrower or the Guarantor, as the case may be, as to
the authenticity, accuracy of integrity of the representation contained therein
and as having been prepared in accordance with GAAP applied on a basis
consistent with prior periods. Any such financial information provided to the
Bank shall be maintained by the Bank as confidential proprietary records. The
Bank hereby acknowledges that the Borrower may not have its own separate
financial statements and shall be permitted to supply financial statements
consolidated with Guarantor's and other subsidiaries of the Guarantor’s
financial statements.

5.03       Maintaining Records: Access to Properties and Inspections. Maintain
financial records in accordance with GAAP consistently applied and permit any
authorized representative designated by the Bank to visit and inspect any of the
properties of the Borrower or the Guarantor (including, without limitation,
their books of account, records, correspondence and other papers and to make
extracts therefrom) and to discuss their affairs, finances and accounts with
their respective officers and their respective independent certified public
accountants or other parties preparing statements for or on behalf of the
Borrower or the Guarantor, subject to advance notice and subject to safety
limitations and legal limits of general applicability.

5.04       Place of Business, Location of Records; Notices. Provide fourteen
(14) days advance written notice of a change in their executive offices or in
such office where their records are kept.

5.05       Maintenance of Business. (a) Maintain the corporate existence of the
Borrower and the Guarantor in good standing and in existence in the State of its
original formation; and (b) maintain and keep in full force and effect all
material necessary licenses and permits for the proper conduct of the Borrower’s
and the Guarantor’s business and shall immediately cure any failure to maintain
necessary permits and licenses as soon is it has knowledge of such failure.

5.06        Insurance. The Borrower shall maintain and pay for insurance
covering such risks and in such amounts and with such insurance companies as
shall be satisfactory to the Bank, and deliver the policies or certificates of
all such insurance to the Bank with satisfactory lender’s loss payable
endorsements naming the Bank as loss payee; and maintain, with financially sound
and reputable insurers, insurance with respect to their properties and business
against such casualties and contingencies of such types (including personal
injury and property damage liability insurance, automobile liability insurance,
product liability insurance, biomedical insurance, worker’s compensation
insurance, business interruption insurance, employee dishonesty insurance, and
directors’ and officers’ liability insurance) and in such amounts as is
customary in

 

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the case of persons or entities in the same or similar business. Each policy or
insurance required hereunder shall require the insurer to give not less than
thirty (30) days prior written notice to the Bank in the event of cancellation
of such policy for any reason whatsoever, and shall provide that the interest of
the Bank thereunder shall not be impaired or invalidated by any act or neglect
of the Borrower or the owner of any of the insured property or by the occupation
of the premises wherein such property is located for purposes more hazardous
than are permitted by such policy. If the Borrower fails to provide and pay for
such insurance, the Bank may, at the Borrower’s expense, procure the same, but
shall not be required to do so. The Borrower agrees to deliver to the Bank,
promptly as rendered, true copies of any reports made to any insurance company.

5.07       Execution of Documents. At the reasonable request of the Bank,
execute and deliver such financing statements, documents and instruments
including, but not limited to, written acknowledgments from any third party
holding all or any portion of the Collateral that it does so for the Bank’s
benefit and any control agreements with respect to any investment property,
letter of-credit rights, deposit accounts or electronic chattel paper, and
perform all other acts as the Bank deems necessary or desirable, and pay, upon
demand, all reasonable costs and expenses (including reasonable attorneys’ fees
and disbursements) incurred by the Bank in connection therewith.

5.08       Obligations and Taxes. Pay all indebtedness and obligations promptly
and in accordance with their terms, and pay and discharge promptly all taxes,
assessments and governmental charges or levies imposed upon them or in respect
of their property and the Collateral, including, but not limited to, all
F.I.C.A. payments and withholding taxes, before the same shall become in
default, as well as all claims for labor, materials, and supplies or otherwise
which, if unpaid, might become a Lien upon such properties or any part thereof,
provided, however, that the Borrower and the Guarantor are not required hereby
to pay and discharge or to cause to be paid and discharged any such
indebtedness, obligation, tax, assessment, charge, levy or claim so long as the
validity thereof shall be contested in good faith by appropriate proceedings and
the Borrower and the Guarantor shall set aside on their books reserves which are
in conformity with generally accepted accounting principles and which the Bank
deems adequate with respect to any such tax, assessment, charge, levy or claim
so contested.

5.09       Litigation Notice. Give the Bank prompt notice of any action, suit or
proceeding at law or in equity or by or before any governmental instrumentality
or agency (domestic or foreign), commission, board, bureau, arbitrator or
arbitration panel which, if adversely determined, could materially impair or
affect the right of the Borrower to carry on its business substantially as now
conducted or could materially affect its respective business, operations,
prospects, properties, assets (including the Collateral) or condition, financial
or otherwise, in each case if in excess of $1,000,000.00.

5.10       Notification Relating to Hazardous Materials. Immediately advise the
Bank in writing of (a) any and all enforcement, cleanup, remediation or removal,
pursuant to any governmental or regulatory actions instituted, completed or
threatened pursuant to any applicable federal, state, or local laws, ordinances
or regulations relating to any Hazardous Material and/ or violation of
Environmental Laws affecting the Property or the business operations of the
Borrower, and (b) all claims made or threatened by any third party against the
Borrower relating to damages, contribution, cost recovery compensation, loss or
injury resulting from any

 

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violations of Environmental Laws. The Borrower shall immediately notify the Bank
of any remedial action related to a release of Hazardous Materials in violation
of Environmental Laws taken by the Borrower with respect to the Property or the
business operations of the Borrower.

5.11        Access Onto Property and to the UCC Collateral. Allow the
appropriate agents and contractors of the Bank to enter upon the Property and to
have reasonable access to the UCC Collateral for the purposes of conducting
environmental investigations and audits (including taking physical samples) and
such other action deemed necessary by the Bank to insure compliance by the
Borrower with all Environmental Laws, subject to advance notice and subject to
safety limitations and legal limits of general applicability. The Borrower
acknowledges that no adequate remedy at law exists for a violation of this
covenant and agrees that the Bank is entitled to specific performance of its
rights under this covenant, subject to advance notice and subject to safety
limitations and legal limits of general applicability. The right of access
granted herein shall continue until this Agreement is terminated

5.12       Notice of Default; Material Adverse Change. Promptly notify the Bank
of any condition or event that constitutes, or with the running of time, the
giving of notice, or both, would constitute, an Event of Default, and promptly
inform the Bank of any material adverse change in the financial condition of the
Borrower or of the Guarantor, as set forth in Section 6.11 below.

5.13       Borrower’s Claims. Promptly notify the Bank in writing of any action
or omission of the Bank which the Borrower claims caused or may cause injury,
loss or damage to the Borrower. Failure of the Borrower to so notify the Bank of
such claim of which it has knowledge within one hundred eighty (180) days after
the Borrower determines that it has such claim shall constitute a waiver of such
claim.

5.14       Defense of Collateral. Defend the Collateral, and the Bank’s security
interest therein, against all claims and demands of all persons at any time
claiming the same or any interest therein (except to the extent Bank agrees to
waive such failure to defend as Bank has determined such failure would not have
a material adverse effect on Bank) and pay, upon demand, all reasonable costs
and expenses (including reasonable attorneys’ fees and disbursements) incurred
by the Bank in connection therewith.

5.15       Use of Proceeds. Use the proceeds of the Loan for any commercial
purpose not violative of or inconsistent with any provision of this Agreement or
the Loan Documents.

5.16       Compliance with Laws. Comply, in all material respects, with all
federal, state and local laws, rules and regulations including, but not limited
to Environmental Laws and the Fair Labor Standards Act applicable to its
business, whether now in effect or hereafter enacted, and upon request of the
Bank, the Borrower will provide the Bank with such evidence of compliance as the
Bank may reasonably request.

5.17       Hazardous Materials. With respect to all property owned, subleased,
operated or occupied by the Borrower, maintain and cause all operators, tenants,
subtenants, licensees and occupants of all such property to maintain such
property free of all Hazardous Materials, other than those Hazardous Materials
used in material compliance with all Environmental Laws and

 

15

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prevent all such property from being used for the manufacture, generation,
production, processing, distribution, use, treatment, storage, disposal,
transport or handling of any Hazardous Materials other than in material
compliance with all Environmental Laws; and deliver to the Bank copies of all
reports prepared by Borrower or its Affiliates, excepting clinical trial
reports, or provided to Borrower or its Affiliates by any governmental
authority, any environmental auditor or engineer, or any other person, relating
to or in connection with the Borrower’s compliance with or violation of any
Environmental Laws, unless the Borrower cannot obtain such reports or copies
thereof.

5.18       Deposit Relationship. The Guarantor shall maintain its primary
deposit relationship with the Bank and shall establish a deposit account and
cash management facility with the Bank.

5.19       Liens. Not create or permit to exist any Lien on the Property or the
UCC Collateral except Permitted Liens.

5.20       Disposition of Property. The Borrower shall not sell, lease or
otherwise dispose of any assets with a value in excess of $250,000 except for
the sale of inventory in the ordinary course of business and the disposition, in
the ordinary course of business, of machinery, technology, intellectual property
and equipment that has become obsolete, damaged, unsuitable or unnecessary for
its business.

5.21       Loan. The Borrower shall not make loans or advances to any person
except for (a) loans and advances to Affiliates and Subsidiaries, and (b) loans
and advances to other persons not exceeding $250,000 at any time.

5.22       Guarantees. The Borrower shall not guarantee, endorse, assume or
otherwise incur or allow to exist any contingent liability in respect of any
obligation of any other person, except an Affiliate or Subsidiary, except by the
endorsement of negotiable instruments for deposit or collection in the ordinary
course of business and except for guarantees with a maximum aggregate liability
for the Borrower of $500,000.00.

5.23       Merger, Name Changes, etc. Not enter into any merger, consolidation,
reorganization or recapitalization, or purchase or otherwise acquire all or
substantially all of the assets, obligations, capital stock or other equity
interest in any other person, if an uncured Event of Default has occurred or
such transaction would result in an Event of Default. The Borrower shall provide
prior written notice to the Bank of any anticipated name change and will execute
any additional Loan Documents necessary to confirm and re-affirm the obligations
of the Loan Documents in connection with any such name change.

5.24       Affiliate Transactions. Not engage in any transaction with an
Affiliate on terms that are less favorable than could be obtained in a
commercially reasonable transaction with a person who is not an Affiliate.

5.25       Indebtedness. The Borrower shall not incur or permit to exist any
indebtedness for borrowed money other than (a) indebtedness to the Bank, (b) the
Fifth Third Loan, and any refinancing thereof, (c) purchase money indebtedness,
and (d) other indebtedness that does not exceed $500,000 in the aggregate at any
time outstanding. The Guarantor shall not incur any

 

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indebtedness for borrowed money if such transaction would result in the
occurrence of an Event of Default.

 

5.26

Guarantor Financial Covenants. The Guarantor covenants and agrees that it shall:

(a)          Book Leverage Ratio. Maintain a book leverage ratio of less than
1.25. The book leverage ratio shall be calculated by dividing total liabilities
by total net worth, as determined by GAAP. For purposes of calculating GAAP
liabilities, deferred revenues specific to contracts with the Federal Government
will be excluded. The book leverage ratio shall be tested annually by the Bank
for the Guarantor’s most recently completed fiscal year, with the first such
test to be performed for the fiscal year ending December 31, 2007.

(b)          Debt Coverage Ratio. Maintain a debt coverage ratio (“Debt Coverage
Ratio”) of no less than 1.25 to 1.00. The debt coverage ratio shall be
calculated as follows: (i) earnings before interest, taxes, depreciation and
amortization for the most recent four (4) quarters; (ii) divided by the sum of
current obligations under capital leases and principal obligations and interest
expenses for borrowed monies, in each case due and payable for the following
four (4) quarters. The debt coverage ratio shall be tested on a quarterly basis
by Bank and provided to Bank no later than Borrower’s SEC filing date or 45 days
after the end of such quarter, with the first such test to be performed on the
results of the second quarter of 2007 (ending June 30, 2007). Notwithstanding
the foregoing, Borrower shall not be required to meet the Debt Coverage Ratio
provided that Borrower shall maintain a minimum balance of $5,000,000.00 in that
certain deposit account number 389498521 held by Bank which has been pledged to
Bank (the “Pledged Account”). At such times a Borrower shall have satisfied the
Debt Coverage Ratio requirement for the prior quarter, Bank shall permit
Borrower, in Bank’s sole discretion, to draw down funds in the Pledged Account,
however such funds must be restored to maintain a minimum balance of
$5,000,000.00 if at any further date (as determined by quarterly testing)
Borrower does not satisfy the Debt Coverage Ratio.

SECTION 6. EVENTS OF DEFAULT

The occurrence of any one or more of the following events shall constitute an
Event of Default hereunder (subject to any applicable notice and cure periods
contained in the Loan Documents):

6.01       Payments. Default shall be made in the payment of the principal of,
or any installment of principal of, or interest on, the Note within ten (10)
days of when due, whether at the due date thereof, at a date fixed for
prepayment thereof, upon acceleration thereof or otherwise.

6.02       Representations. Any representation or warranty made in or in
connection with any of the Loan Documents shall prove to have been false or
misleading in any material respect when made or deemed to have been made.

6.03       Covenants. Default shall be made in the due observance or performance
of any covenant, condition or agreement on the part of the Borrower or the
Guarantor pursuant to the

 

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terms of any of the Loan Documents and such default shall continue unremedied
for thirty (30) business days after notice to the Borrower and the Guarantor
thereof.

6.04       (a)         Voluntary Bankruptcy, Etc. The Borrower or the Guarantor:
(i) voluntarily is adjudicated as bankrupt or insolvent, (ii) seeks or consents
to the appointment of a receiver or trustee for itself or for all or any part of
its property, (iii) files a petition seeking relief under the bankruptcy or
similar laws of the United States or any state or any other competent
jurisdiction, (iv) makes a general assignment for the benefit of creditors, or
(v) admits in writing its inability to pay its debts as they mature.

(b)          Involuntary Bankruptcy, Etc. A court of competent jurisdiction
enters an order, judgment or decree appointing, without the consent of the
Borrower or the Guarantor, a receiver or trustee for the Borrower or the
Guarantor or for all or any part of their property, or a petition is filed
against the Borrower or the Guarantor seeking relief under the bankruptcy or
other similar laws of the United States or any state or other competent
jurisdiction, and such petition, order, judgment or decree shall remain in force
undischarged or unstayed for a period of 60 calendar days.

 

6.05

Intentionally Deleted.

6.06       Cross Default. The occurrence of (a) an uncured event of default (as
defined therein) under any of the Loan Documents, (b) any uncured event of
default under (i) any promissory note payable to the Bank under which the
Borrower or the Guarantor is an obligor, or (ii) any other agreement between the
Borrower or the Guarantor and the Bank, (c) an uncured event of default (as
defined therein) under the Fifth Third Loan, or (d) an uncured event of default
(as defined therein) under any other indebtedness or liability for borrowed
money of the Borrower in an amount in excess of $1,000,000.00, if the effect of
such default is to accelerate the maturity of such evidence of indebtedness or
liability or to permit the holder thereof to cause any indebtedness to become
due prior to its stated maturity and the Bank determines, in its discretion,
that such default impairs or prevents the Borrower from performing its
obligations under the Loan Documents.

6.07       Judgment. Unless, in the opinion of the Bank, adequately covered by
insurance, the entry of one or more final judgments, decrees or orders for the
payment of money involving more than $1,000,000.00 in the aggregate against the
Borrower or the Guarantor and all applicable periods for appeal have terminated
and such judgment or decree is not satisfied within sixty (60) days thereafter.

6.08       Loss, Damage to Collateral. Loss, theft, damage, or destruction of
any material portion of the Collateral for which there is either no insurance
coverage or for which, in the opinion of the Bank, there is insufficient
insurance coverage.

6.09       Validity of Loan Documents. Any Loan Document shall, at any time
after its execution and delivery and for any reason, cease to be in full force
and effect or shall be declared null and void, or the validity or enforceability
thereof shall be contested by the Borrower or the Guarantor, or the Borrower or
the Guarantor shall deny it has any further liability or obligation thereunder.

 

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6.10       Payments to Subordinated Creditors. The Borrower makes any payment on
account of indebtedness that has been subordinated to the Loan, other than
payments specifically permitted by the terms of such subordination or in the
ordinary course of business.

6.11       Material Adverse Change. There shall be a materially adverse change
in the total financial condition of the Borrower or the Guarantor, taken as a
whole.

SECTION 7. RIGHTS AND REMEDIES

7.01       Remedies. If any one or more Events of Default shall occur, then in
each and every such case, the Bank may at any time thereafter exercise and/or
enforce any of the following rights and remedies:

(a)          Acceleration. Declare the Note to be immediately due and payable,
together with accrued interest thereon, without presentment, demand, protest or
notice of dishonor, all of which the Borrower and the Guarantor hereby waive.

(b)          Possession and Collection (i) Take possession or control of, sell
or otherwise dispose of all of any part of the Collateral, subject to the terms
of Section 4.2 of the Security Agreement; (ii) endorse as the agent of the
Borrower any chattel paper, documents, or instruments forming all or any part of
the Collateral; (iii) pay, purchase, contest, or compromise any encumbrance,
charge, or lien that, in the opinion of the Bank, appears to be prior or
superior to its Lien and pay all reasonable expenses incurred in connection
therewith; (iv) take any other action which the Bank deems necessary or
desirable to protect and realize upon its security interest in the Collateral;
and (v) in addition to the foregoing, and not in substitution therefor, exercise
any one or more of the rights and remedies exercisable by the Bank under other
provisions of this Agreement, under the Note, under any of the other Loan
Documents, or provided by applicable law (including, without limitation, the
Uniform Commercial Code as in effect in any applicable jurisdiction) and may
specifically disclaim any warranties of title or the like. In taking possession
of the Collateral the Bank may proceed without legal process, if this can be
done without breach of the peace. The Borrower waives any right it may have to
require the Bank to pursue any third person for payment of the Loan.

(c)          Receiver.           Obtain appointment of a receiver for all or any
of the Collateral, the Borrower and the Guarantor hereby consenting to the
appointment of such a receiver and each agreeing not to oppose any such
appointment. Any receiver so appointed shall have such powers as may be
conferred by the appointing authority including any or all of the powers, rights
and remedies which the Bank is authorized to exercise by the Loan Documents, and
shall have the right to incur such obligations and to issue such certificates
therefor as the appointing authority shall authorize.

(d)          Performance by Bank. Make such payment or perform any of the
conditions, covenants, terms, stipulations or agreements contained in this
Agreement or any of the other Loan Documents for the account and at the expense
of the Borrower.

7.02       Sales on Credit. If the Bank sells any of the Collateral upon credit,
the Borrower will be credited only with payments actually made by the purchaser,
received by the Bank and applied to the indebtedness of the purchaser. In the
event the purchaser fails to pay for the

 

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Collateral, the Bank may resell the Collateral and the Borrower shall be
credited with the proceeds of the sale.

7.03       Proceeds. Any proceeds of the collection of the Loan or of the sale
or other disposition of the Collateral will be applied by the Bank to the
payment of fees and costs, and any balance of such proceeds (if any) will be
applied by the Bank to the payment of the remaining Loan (whether then due or
not), at such time or times and in such order and manner of application as the
Bank may from time to time in its sole discretion determine. If the sale or
other disposition of the Collateral fails to pay the Loan in full, the Borrower
and the Guarantor shall remain jointly and severally liable to the Bank for any
deficiency.

7.04       Notices. Any notices required under the Uniform Commercial Code with
respect to the sale or other disposition of the Collateral shall be deemed
reasonable if mailed by the Bank to the persons entitled thereto at their last
known address at least ten (10) days prior to disposition of the Collateral.

7.05        Waiver of Jury Trial. THE BORROWER, THE GUARANTOR AND THE BANK
HEREBY VOLUNTARILY AND KNOWINGLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY ANY PARTY
AGAINST THE OTHER ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED HEREIN. THE BORROWER AND THE GUARANTOR ACKNOWLEDGE
THAT THEY HAVE BEEN INFORMED BY THE BANK THAT THE PROVISIONS OF THIS PARAGRAPH
CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH THE BANK HAS RELIED, IS RELYING AND
WILL RELY IN MAKING THE LOAN. THE BORROWER AND THE GUARANTOR HEREBY CERTIFY THAT
NO REPRESENTATIVE OR AGENT OF THE BANK (INCLUDING ITS COUNSEL) HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT, IN THE EVENT OF LITIGATION,
ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL. THE BORROWER AND THE GUARANTOR
ACKNOWLEDGE THAT THEY HAVE CONSULTED WITH AN ATTORNEY AND FULLY UNDERSTAND THE
LEGAL EFFECT OF THE PROVISIONS OF THIS PARAGRAPH.

7.06       Cumulative Remedies. Each right, power and remedy of the Bank as
provided for in the Loan Documents, or now or hereafter existing at law or in
equity or by statute or otherwise shall be cumulative and concurrent and shall
be in addition to every other such right, power or remedy, and the exercise or
beginning of the exercise by the Bank of any one or more of such rights, powers
or remedies shall not preclude the simultaneous or later exercise by the Bank of
any or all other such rights, powers or remedies. The Bank may comply with any
applicable state or federal law requirements in connection with a disposition of
the Collateral and compliance will not be considered to adversely affect the
commercial reasonableness of any sale of the Collateral.

7.07       No Waiver. No failure or delay by the Bank in insisting upon the
strict performance of any term, condition, or covenant of the Loan Documents or
in exercising any right, power or remedy consequent upon an Event of Default
shall constitute a waiver of any

 

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such term, condition or covenant or of any such breach, or preclude the Bank
from exercising any such right, power or remedy at any later time or times. By
accepting payment after the due date of any amount payable under the Loan
Documents, the Bank shall not be deemed to waive the right either to require
prompt payment when due of all other amounts payable under the Loan Documents,
or to declare a default for failure to effect such prompt payment of any such
other amount.

SECTION 8. MISCELLANEOUS

8.01       Survival. All covenants, agreements, representations and warranties
made in this Agreement and the Loan Documents shall survive the execution and
delivery of the Note and shall continue in full force and effect so long as the
Note, or any of the other obligations under the Loan Documents, or any renewal
or extensions of the Note, is outstanding and unpaid.

8.02        Notices. All notices, demands, instructions and other communications
required or permitted to be given to or made upon any party hereto shall be in
writing, personally delivered or sent by postage prepaid first class certified
mail, return receipt requested, overnight courier or by facsimile machine, and
shall be deemed to be given on the day that such writing is delivered or sent by
facsimile machine or one (1) business day after such notice is sent by overnight
courier or three (3) business days after said notice is sent by certified mail.
Unless otherwise specified in a notice sent or delivered in accordance with the
foregoing provisions of this paragraph, notices, demands, instructions and other
communications in writing shall be given to or made upon the respective parties
hereto at their respective addresses indicated for such party below:

 

Bank:

HSBC Realty Credit Corporation (USA)

 

1130 Connecticut Avenue, N. W., 12th Floor

 

Washington, D. C. 20036

 

Attention: Jeffrey M. Henry, Vice President

 

Facsimile Number: (202) 496-8758

 

With a simultaneous copy to:

McGuireWoods LLP

 

1750 Tysons Boulevard, Suite 1800

 

McLean, Virginia 22102-3915

 

Attn: E. Kristen Moye, Attorney-at-Law

 

Facsimile Number: 703-712-5238

 

Borrower and

Guarantor:

 

Emergent BioSolutions Inc.

 

2273 Research Boulevard, Suite 400

 

Rockville, Maryland 20850

 

Attn: Finance Department

 

Attn: Legal Department

 

Facsimile Number: (301) 944-0173

 

With a simultaneous copy to:

Emergent BioDefense Operations Lansing Inc.

 

3500 N. Martin Luther King, Jr. Blvd.

 

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Building One, Third Floor

 

Lansing, MI 48906

 

Attn: Finance Department

 

Facsimile Number: 517-327-1560

 

With a simultaneous copy to:

Thelen Reid Brown Raysman & Steiner LLP

701 Eighth Street, N.W.

Washington, DC 20001

Attn: Carl A. Valenstein, Esq.

Facsimile Number: 202-654-1836

 

or at such other address as the parties may have furnished to each other in
writing, and shall be deemed to be given on delivery or upon mailing.

8.03       Costs and Expenses. The Borrower and the Guarantor shall bear any and
all reasonable fees, costs and expenses, of whatever kind and nature, including
any taxes of any kind and reasonable attorneys’ fees and disbursements, which
the Bank may incur: (a) in connection with the closing of the Loan, including,
without limitation, the filing of public notices, the preparation of the Loan
Documents, the recording of the UCC financing statements, and the making of
title examinations, and in connection with any amendment of the Loan Documents;
(b) in maintaining, preserving, enforcing or foreclosing any pledge, lien,
encumbrance or security interest granted hereunder or in connection herewith,
whether through judicial proceedings or otherwise; (c) in conducting audits of
the Borrower’s business and with respect to the Collateral; and (d) in
successfully defending or prosecuting any actions or proceedings arising out of
or relating to transactions with any one or more of the Borrower and the
Guarantor. All such fees, costs and expenses until paid shall be included in the
Loan or deducted from any amount due the Borrower or the Guarantor. The Borrower
and the Guarantor agree that the attorneys retained by the Bank shall represent
only the interests of the Bank.

8.04       Indemnification of Bank. The Borrower and the Guarantor shall protect
and indemnify the Bank from and against any and all demands, suits, losses,
assessments, fines, claims, damages, penalties, causes of action, costs or other
expenses (including, without limitation, reasonable attorneys’ fees and
disbursements), imposed upon or incurred by or asserted against the Bank or the
directors, officers, agents or employees of the Bank, except those arising out
of the willful misconduct or gross negligence of the Bank, by reason of and
including but not limited to liability or damage resulting from: (a) any failure
on the part of the Borrower to perform or comply with any of the terms of this
Agreement; (b) any action brought against the Bank attacking the validity of
this Agreement or any other Loan Document; and/or (c) actual or threatened
damage to the environment, agency costs of investigation, personal injury or
death, or property damage, due to a release or alleged release of Hazardous
Materials, on or under the Property or arising from the Borrower’s business
operations or in the surface or ground water located on or under the Property
arising from the Borrower’s business operations, or gaseous emissions from the
Property or arising from the Borrower’s business operations resulting from the
use or existence of Hazardous Materials, whether such claim proves to be true or
false. The term “property damage” as used in this Section includes, but is not
limited to, damage of any real or personal property of the Borrower, the Bank,
and of any third parties. Any amounts payable to the Bank under this Section
which are not paid within thirty (30) days after

 

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written demand therefor by the Bank shall bear interest at the rate of interest
in effect under the Note from the date of such demand. In the event any action,
suit or proceeding is brought against the Bank or the directors, officers,
agents or employees of the Bank by reason of any such occurrence, the Borrower,
upon the request of the Bank and at the Borrower’s expense, shall resist and
defend such action, suit or proceeding or cause the same to be resisted and
defended by counsel designated by the Borrower and approved by the Bank. Such
obligations under this Section as shall have accrued at the time of any
termination of this Agreement shall survive any such termination.

8.05       Reinstatement of Liens. If, at any time after payment in full by the
Borrower of the Loan and termination of the Bank’s Liens, any payments on the
Loan previously made by the Borrower or any other person must be disgorged by
the Bank for any reason whatsoever (including, without limitation, the
insolvency, bankruptcy, or reorganization of the Borrower or such other person),
this Agreement and the Bank’s Liens granted hereunder shall be reinstated as to
all disgorged payments as though such payments had not been made, and the
Borrower shall sign and deliver to the Bank all documents and things necessary
to reperfect all terminated Liens.

8.06        Bank Disclosures. Upon the prior written consent of the Borrower
(such consent not to be unreasonably withheld or delayed), the Bank may issue
press releases concerning, and otherwise publicly announce or publicize,
financings provided by the Bank to the Borrower. The Borrower hereby authorizes
the Bank to disclose to any parent, subsidiary or affiliate of the Bank, and
hereby authorizes all such parents, subsidiaries and affiliates of the Bank, to
disclose to the Bank, the financial record of the Borrower.

8.07       Participation. The Bank shall have the right to grant participations
in the Loan held by it to others at any time and from time to time, and the Bank
may divulge to any such participant or potential participant all information,
reports, financial statements and documents obtained in connection with this
Agreement, the Note and any of the other Loan Documents or otherwise.

8.08       Change, etc. Neither this Agreement nor any term, condition,
representation, warranty, covenant or agreement contained herein may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom such change, waiver, discharge or termination
is sought.

8.09       Governing Law. This Agreement, the Note and the other Loan Documents
shall be governed and construed in accordance with the laws of the State of New
York, except to the extent that the law of other jurisdictions governs the
creation, perfection and enforcement of Liens on the Property pursuant to the
Mortgage and on the UCC Collateral pursuant to the Security Agreement.

8.10       Terms Binding. All of the terms, conditions, stipulations,
warranties, representations and covenants of this Agreement shall apply to and
be binding upon and shall inure to the benefit of the Borrower, the Guarantor
and the Bank and each of their respective heirs, executors, personal
representatives, successors and assigns and all persons or entities who become
bound as a debtor under this Agreement, but neither the Borrower nor the
Guarantor

 

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shall have the right to assign this Agreement to any person or entity without
the prior written consent of the Bank.

8.11       Invalidity of Certain Provisions. If any term or provision of this
Agreement or the application thereof to any person or circumstances shall, to
any extent, be invalid or unenforceable, the remainder of such term or provision
or the application thereof to persons or circumstances other than those as to
which it is held invalid or unenforceable shall not be affected thereby and
shall be valid and enforceable to the fullest extent permitted by law.

8.12        Merger Integration and Interpretation. The Loan Documents contain
the entire agreement of the parties with respect to the matters covered and the
transactions contemplated hereby and thereby, and no other agreement, statement
or promise made by any such party, or by any employee, officer, agent or
attorney of any such party, which is not contained herein or therein, shall be
valid or binding. Neither this Agreement nor any uncertainty or ambiguity herein
shall be construed or resolved against the Bank or the Borrower, whether under
any role of construction or otherwise.   On the contrary, this Agreement has
been reviewed by each of the parties and its counsel and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish the purposes and intentions of all parties hereto fairly.

8.13       No Partnership; Control; Third Parties. This Agreement contemplates
the extension of credit by the Bank, in its capacity as a lender, to the
Borrower, in its capacity as a borrower, and for the payment of interest and
repayment of principal by the Borrower to the Bank. The relationship between the
Bank and the Borrower is limited to that of creditor/secured party, and debtor.
The provisions herein for compliance with financial covenants, delivery of
financial statements, and other covenants are intended solely for the benefit of
the Bank to protect its interests as lender in assuring payments of interest and
repayment of principal, and nothing contained in this Agreement shall be
construed as permitting or obligating the Bank to act as financial or business
advisor or consultant to the Borrower, as permitting or obligating the Bank to
control the Borrower, or to conduct the Borrower’s operations, as creating any
fiduciary obligation on the part of the Bank to the Borrower, as creating any
joint venture, agency, or other relationship between the parties other than as
explicitly and specifically stated in this Agreement. The Borrower acknowledges
that it has had the opportunity to obtain the advice of experienced counsel of
its own choosing in connection with the negotiation and execution of this
Agreement and to obtain the advice of such counsel with respect to all matters
contained herein, including, without limitation, the provision herein relative
to the waiver of trial by jury. The Borrower further acknowledges that it is
experienced with respect to financial and credit matters and has made its own
independent decision to apply to the Bank for credit and to execute and deliver
this Agreement. The terms and provisions of the Note and the Loan Documents are
for the benefit of the Borrower and the Bank, their respective successors,
assigns, endorsees and transferees and all persons claiming under or through
them and no other person shall have any right or cause of action or account
thereof.

8.14      Electronic Transmission of Data. The Bank, the Borrower and the
Guarantor agree that certain data related to the Loan (including confidential
information, documents, applications and reports) may be transmitted
electronically, including transmission over the Internet. This data may be
transmitted to, received from or circulated among agents and representatives of
the Borrower, the Guarantor and/or the Bank and their affiliates and other

 

24

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persons involved with the subject matter of this Agreement. The Borrower and the
Guarantor acknowledge and agree that (a) there are risks associated with the use
of electronic transmission and that the Bank does not control the method of
transmittal or service providers, (b) the Bank has no obligation or
responsibility whatsoever and assumes no duty or obligation for the security,
receipt or third party interception of any such transmission, and (c) the
Borrower and the Guarantor will release, hold harmless and indemnify the Bank
from any claim, damage or loss, including that arising in whole or part from the
Bank’s strict liability or sole, comparative or contributory negligence, which
is related to the electronic transmission of data.

8.15       Gender etc. Whenever used herein, the singular shall include the
plural, the plural shall include the singular, and the use of the masculine,
feminine or neuter gender shall include all genders.

8.16       Authority to File Financing Statements and Amendments. The Borrower
hereby authorizes the Bank to file Uniform Commercial Code Financing Statements
describing the Collateral without the Borrower’s signature thereon. After notice
to the Borrower, the Bank is authorized to file amendments without the
Borrower’s signature thereon to any financing statements naming the Bank as a
secured party in order to add collateral or a debtor. The Borrower is not
authorized to file correction statements to financing statements.

8.17       Heading. The section and subsection headings of this Agreement are
for convenience only, and shall not limit or otherwise affect any of the terms
hereof.

8.18       Counterparts. To facilitate execution, this Agreement may be executed
in any number of counterparts as may be required; and it shall not be necessary
that the signatures of, or on behalf of, each party, or that the signatures of
all persons required to bind any party, appear on each counterpart; but it shall
be sufficient that the signature of, or on behalf of, each party, or that the
signatures of the persons required to bind any party, appear on one or more
counterparts. All counterparts shall collectively constitute a single agreement.
It shall not be necessary in making proof of this Agreement to produce or
account for more than a number of counterparts containing the respective
signatures of, or on behalf of, all of the parties hereto.

8.19       Termination of Prior Agreement. Borrower has previously executed and
delivered to Bank that certain Loan Agreement dated August 25, 2006 (the
“Original Loan Agreement”). In connection with the execution and delivery of
this Agreement, the Original Loan Agreement shall be hereby terminated and
replaced with this Agreement.

(Signature Page Follows)

 

25

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IN WITNESS WHEREOF, each of the parties hereto have caused this Agreement to be
executed, sealed and attested the day and year first above mentioned.

 

BORROWER:

 

ATTEST:

EMERGENT BIODEFENSE OPERATIONS

 

LANSING INC., a Michigan corporation

 

Jay Reilly

 

By:/s/Daniel Abdun-Nabi

 

Name:Daniel Abdun-Nabi

 

Title: Secretary

 

 

 

GUARANTOR:

 

ATTEST:

EMERGENT BIOSOLUTIONS INC.,

 

a Delaware corporation

Jay Reilly

 

 

By:/s/Daniel Abdun-Nabi

 

Name: Daniel Abdun-Nabi

 

Title: President

 

 

BANK:

 

 

HSBC REALTY CREDIT CORPORATION (USA),

 

a Delaware corporation

 

 

 

By:/s/Thomas M. Neal

 

Name:

Thomas M. Neal

 

Title: Senior Vice President

 

 

 

 

U:\HSBC\BioPort 2007\Loan Agreement v.6.doc

 

 

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