Exhibit 10.1





Exhibit 10.1




LOAN AGREEMENT




Dated as of: October 20, 2010




Between




METRO BANK

as Lender




and




UNILIFE CROSS FARM LLC

as Borrower





 


 









 







LOAN AGREEMENT




This LOAN AGREEMENT made and entered into October 20, 2010, by and between METRO BANK, as
Lender, and UNILIFE CROSS FARM LLC, a Delaware Limited Liability Company, as Borrower.




SECTION I. DEFINITIONS.



General Provisions. Unless expressly provided otherwise in this Agreement or in the Loan
Documents, or unless the context requires otherwise:




(a) all accounting terms used in this Agreement and in the Loan Documents not otherwise
defined herein or therein shall have the meanings given to them in accordance with Generally
Accepted Accounting Principles;




(b) all terms used herein and in the Loan Documents not otherwise defined herein or
therein that are defined in the Pennsylvania Uniform Commercial Code, as amended from time
to time, shall have the meanings set forth therein;




(c) all capitalized terms defined in this Agreement shall have the defined meanings
when used in the Loan Documents and in any other documents made or delivered pursuant to
this Agreement;




(d) the singular shall mean the plural, the plural shall mean the singular, and the use
of any gender shall include all genders;




(e) all references to any particular party defined herein shall be deemed to refer to
each and every person defined herein as such party individually, and to all of them,
collectively, jointly and severally, as though each were named wherever the applicable
defined term is used;




(f) all references to “Sections,” “Subsections,” “Paragraphs” and “Subparagraphs” shall
refer to provisions of this Agreement;




(g) all references to time herein shall mean Eastern Standard Time or Eastern Daylight
Time, as then in effect; and




(h) all references to sections, subsections, paragraphs or other provisions of statutes
or regulations shall be deemed to include successor, amended, renumbered and replacement
provisions.



Defined Terms. As used herein, the following terms shall have the meanings indicated, unless
the context otherwise requires:




“Agreement” shall mean this loan agreement and any future amendments, restatements,
modifications or supplements hereof or hereto.


 


 









 






“Applicable Rate” shall mean the stated rate of interest due and payable, from time to
time, as more fully set forth in the Notes.




“Bankruptcy Code” shall mean the United States Bankruptcy Code, Title 11 of the United
States Code, as amended, or any successor law thereto, and any rules promulgated in
connection therewith.




“Borrower” shall mean Unilife Cross Farm LLC, a Delaware limited liability company.




“Business Assets” shall mean any real, personal, mixed tangible or intangible property
of any nature, including cash on hand, cash in bank or other accounts, readily marketable
securities, and other cash-equivalent liquid assets, prepayments, deposits, escrows,
accounts receivable, tangible property, software, contract rights, intangibles and goodwill,
claims, causes of action and other legal rights and remedies.




“Business Day” shall mean a day other than a Saturday, Sunday or legal holiday
recognized as such under the laws of the Commonwealth of Pennsylvania.




“Closing Date” shall mean the date hereof.




“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, or
any successor law thereto, and any regulations promulgated thereunder.




“Collateral” shall mean:




(a) a valid title-insured first mortgage lien on the real property and all improvements
thereon located at 250 Cross Farm Lane, Conewago Township, York County, Pennsylvania as
security for Facility A;




(b) a valid title-insured second mortgage lien on the real property and all
improvements thereon located at 250 Cross Farm Lane, Conewago Township, York County,
Pennsylvania as security for Facility B;




(c) an assignment of all present and future rents and leases associated with the real
property located at 250 Cross Farm Lane, Conewago Township, York County, Pennsylvania as
security for Facility A and Facility B;




(d) a collateral assignment of agreements affecting real estate associated with the
real property located at 250 Cross Farm Lane, Conewago Township, York County, Pennsylvania
as security for Facility A;




(e) a valid security interest in the Business Assets of Borrower and Guarantors as
security for Facility A and Facility B; and




(f) a valid first priorty security interest in sixty-five percent (65%) of Unilife
Corporation’s capital stock in Unilife Medical Solutions, Ltd.


 


 









 






All Collateral is being granted to Lender as collateral security for the performance of
this Agreement, the payment of the principal of and interest on the Notes and all other
advances made by Lender for the benefit of Borrower under this Agreement, the Notes, the
Collateral Documents or any instrument delivered to Lender pursuant to any of the foregoing
and for the performance of Borrower of any obligation or agreement of Borrower to Lender.




“Commitment Letters” shall mean the two (2) letters dated October 14, 2010 from Lender
to Borrower and any amendments, restatements, modifications or supplements thereof or
thereto.




“Construction Period” shall mean the first eighteen (18) months following the Closing
Date or upon the certified completion of construction by an independent third party engineer
agreed upon between the parties, whichever occurs first.




“Contamination” shall mean the presence of any Hazardous Substance that would require
Remedial Actions under applicable law.




“Debt” shall mean:




(a) all items of indebtedness or liability that in accordance with Generally Accepted
Accounting Principles would be included in determining total liabilities as shown on the
liabilities side of a balance sheet as of the date as of which Debt is to be determined;




(b) all indebtedness secured by any mortgage, pledge, lien or security interest
existing on any real or personal property owned by the Person whose Debt is being
determined, regardless whether the indebtedness secured thereby is a recourse or nonrecourse
obligation of that Person or any Subsidiaries; and




(c) all guaranties, endorsements (other than for purposes of collection in the ordinary
course of business), other contingent obligations with respect to, or to purchase or to
otherwise acquire, indebtedness of others, and all other contingent obligations.




“Debt Service Reserve” shall have the meaning as set forth in Section 5.14.




“Default” shall mean any event specified in Subsection 7.1, whether or not any
requirement for notice or lapse of time or any other condition has been satisfied.




“Event of Default” shall mean any event specified in Subsection 7.1, provided that any
requirement for notice or lapse of time or any other condition has been satisfied.




“Facility A” shall mean the term loan given by Lender to Borrower in the principal
amount of $14,250,000.00.


 


 









 






“Facility B” shall mean the term loan given by Lender to Borrower in the principal
amount of $3,750,000.00.




“Financial Covenants” for Borrower shall mean:




(a) For Borrower:




(i) The Borrower’s minimum cash flow, based upon year end financial statements and
defined as (net income + depreciation + amortization + interest expense + non-cash items —
unfunded capital expenditures — distributions — withdraws — gain on the sale of fixed
assets) / (interest expense + scheduled principal payments on long term debt), shall not
fall below 1.10x.




(ii) The Borrower’s current ratio, based upon year end financial statements and as
defined by GAAP, shall not fall below 1.10x.




(iii) The Borrower’s debt-to-net worth, based upon year end financial statements and as
defined by GAAP, shall not exceed 2.00x.




(b) For Unilife Corporation: Unilife Corporation shall maintain a minimum cash balance
of not less than $5,000,000.00, which shall include any amount deposited in Borrower’s Debt
Service Reserve account with Lender.




“Generally Accepted Accounting Principles” shall mean, at any particular time,
generally accepted accounting principles as in effect at such time; provided, however, that,
if employment of more than one principle shall be permissible at such time in respect of a
particular accounting matter, “Generally Accepted Accounting Principles” shall refer to the
principle that is then employed by Borrower with the agreement of its independent certified
public accountants.




“Guarantors” shall mean Unilife Medical Solutions, Inc. and Unilife Corporation.




“Hazardous Substances” shall mean any chemical, solid, liquid, gas, or other substance
having the characteristics identified in, listed under, or designated pursuant to:




(a) the Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended, 42 U.S.C. §9601(14), as a “hazardous substance;”




(b) the Clean Water Act, 33 U.S.C. §1321(b)(2)(A), as a “hazardous substance;”




(c) the Clean Water Act, 33 U.S.C. §§1317(a) and 1362(13), as a “toxic pollutant;”


 


 









 






(d) Table 1 of Committee Print Numbered 95-30 of the Committee on Public Works and
Transportation of the United States House of Representatives, as a “toxic pollutant;”




(e) the Clean Air Act, 42 U.S.C. §7412(a)(1), as a “hazardous air pollutant;”




(f) the Toxic Substances Control Act, 15 U.S.C. §2606(f), as an “imminently hazardous
chemical substance or mixture;”




(g) the Resource, Conservation and Recovery Act, 42 U.S.C. §§6903(5) and 6921, as a
“hazardous waste;” or




(h) any other laws, regulations or governmental publications, as presenting an imminent
and substantial danger to the public health or welfare or to the environment, or as
otherwise requiring special handling, collection, storage, treatment, disposal, or
transportation.




The term “Hazardous Substances” shall also include: (w) petroleum, crude oil, gasoline,
natural gas, liquefied natural gas, synthetic fuel, and all other petroleum, oil, or gas
based products; (x) nuclear, radioactive, or atomic substances, mixtures, wastes, compounds,
materials, elements, products or matters; (y) asbestos, asbestos-containing materials,
polychlorinated biphenyls, and (z) any other substance, mixture, waste, compound, material,
element, product or matter that presents an imminent and substantial danger to the public
health or welfare or to the environment upon its Release.




“IFIP” shall mean the Infrastructure and Facilities Improvement Program.




“Lender” shall mean Metro Bank.




“Loan” or “Loans” shall mean individually and collectively Facility A and Facility B.




“Loan Documents” shall mean the Notes, this Agreement and the other Security Documents
and all other documents and instruments executed and delivered to Lender by or on behalf of
Borrower in connection therewith and any modifications, amendments, restatements,
substitutions and replacements of or for any of the foregoing.




“Mortgages” shall mean the Open-End Commercial Mortgage and Security Agreement for the
real property located at 250 Cross Farm Lane, Conewago Township, York County, Pennsylvania
and the Commercial Mortgage and Security Agreement for the real property located at 250
Cross Farm Lane, Conewago Township, York County, Pennsylvania dated as of October 20, 2010
executed by Borrower.




“Notes” shall mean Borrower’s Term Note, in the principal amount of $14,250,000.00,
dated as of October 20, 2010 and Borrower’s Term Note, in the principal amount of
$3,750,000.00, dated as of October 20, 2010.


 


 









 






“Obligations” shall mean all liabilities, duties and obligations of Borrower to Lender
with respect to any covenants, representations or warranties herein or in the other Loan
Documents, with respect to the principal of and interest on the Note(s), and all other
present and future fixed and/or contingent obligations of Borrower to Lender hereunder,
under the other Loan Documents, and otherwise relating to the Loan, including, without
limitation, obligations with respect to interest accruing (or which would accrue but for
§502 of the Bankruptcy Code) after the date of any filing by Borrower of any petition in
Bankruptcy or the commencement of any Bankruptcy, insolvency or similar proceedings with
respect to Borrower.




“Person” shall mean an individual, a corporation, a partnership, a limited liability
company, a joint venture, a trust or unincorporated organization, a joint stock company or
other similar organization, a government or any political subdivision thereof, or any other
legal entity.




“Prime Rate” (sometimes called “Wall Street Journal Prime Rate”) shall mean the
interest rate per annum announced or published from time to time in various business
journals and publications such as the Wall Street Journal, Eastern Edition, or its successor
publication as the “Prime Rate.” If the Wall Street Journal or its successor publication
ceases to publish a rate or rates of interest as the Base Rate, the term “Prime Rate” shall
mean the rate which Lender establishes as its “Prime Rate” whether or not published. If
Lender has more than one Prime Rate in effect simultaneously, “Prime Rate” shall mean the
highest of such prime rates then simultaneously in effect. The utilization of “Prime Rate”
herein is solely for the purpose of defining the rate of interest applicable hereunder. Its
utilization shall in no way preclude or limit Lender from lending to certain borrowers, from
time to time, at a rate of interest less than the “Prime Rate” as defined hereunder.




“Real Property” shall mean the real estate located at 250 Cross Farm Lane, Conewago
Township, York County, Pennsylvania.




“Regulatory Change” shall mean (a) any change on or after the date of this Agreement in
United States federal, state, or any foreign, laws or regulations (including Regulation D of
the Board of Governors of the Federal Reserve System) applying to the class of Lenders
including Lender or (b) the adoption or making on or after such date of any interpretations,
directives or requests applying to a class of Lenders including Lender of or under any
United States federal or state, or any foreign, laws or regulations (whether or not having
the force of law) by any court or governmental or monetary Borrower charged with the
interpretation or administration thereof.




“Release” shall mean any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, or dumping.




“Remedial Actions” shall mean:




(a) clean-up or removal of Hazardous Substances;


 


 









 






(b) such actions as may be necessary to monitor, assess, or evaluate the Release or
threatened Release of Hazardous Substances;




(c) proper disposal or removal of Hazardous Substances;




(d) the taking of such other actions as may be necessary to prevent, minimize, or
mitigate the damages caused by a Release or threatened Release of Hazardous Substances to
the public health or welfare or to the environment; and




(e) the providing of emergency assistance after a Release.




Remedial Actions include, but are not limited to, such actions at the location of a Release
as: storage; confinement; perimeter protection using dikes, trenches, or ditches; clay
cover; neutralization; clean-up of Hazardous Substances or contaminated materials; recycling
or reuse; diversion; destruction; segregation of reactive wastes; dredging or excavations;
repair or replacement of leaking containers; collection of leachate and runoff; onsite
treatment or incineration; providing alternative water supplies; and any monitoring
reasonably required to assure that such actions protect the public health and welfare and
the environment.




“Security Documents” shall mean, individually and collectively, this Agreement, the
Mortgages, the Security Agreements, the Assignment of Rents and Leases, any UCC financing
statements, and any other instruments now or hereafter executed and delivered to Lender to
secure, or to assure, payment or performance, of the Obligations, and any future amendments,
restatements, modifications or supplements thereof or thereto.




“UCC” shall mean the Uniform Commercial Code as in effect in the Commonwealth of
Pennsylvania, as amended from time to time.




“USDA” shall mean the United States Department of Agriculture.




SECTION 2. AMOUNT AND TERMS OF NOTES; AND SECURITY AGREEMENT.




2.1 The Notes.




(a) Facility A. Lender has made a term loan to Borrower, in the principal amount of
Fourteen Million Two Hundred Fifty Thousand Dollars ($14,250,000.00) and Borrower has
executed and delivered to Lender that certain Term Note (the “Facility A Note”). The
Facility A Note shall be secured by the Loan Documents. The principal balance of the
Facility A Note shall be payable at maturity in twenty (20) years from the completion of the
Construction Period (the “Facility A Maturity Date”). The interest rate shall be a
fluctuating rate at the Prime Rate plus one and one half of one percent (1.5%) per annum, to
be adjusted not more than quarterly, with a floor of four and one half of one percent (4.5%)
per annum, during the Construction Period, followed by a fixed rate at the five (5) year
T-bill plus three hundred (300) basis points per annum, with a floor of six percent (6%) per
annum, for a period of
five (5) years, followed by a fluctuating rate at the Prime Rate plus one percent (1%)
per annum, to be adjusted not more than quarterly, with a floor to be determined unless a
new fixed rate has been negotiated. Interest only, at the Applicable Rate of interest, as
adjusted from time to time, shall be payable monthly during the Construction Period.
Thereafter, principal and interest, at the Applicable Rate of interest, as adjusted from
time to time, shall be payable monthly in consecutive level payments calculated by assuming
a twenty (20) year amortization until the Facility A Maturity Date, at which time all
remaining principal and accrued interest shall be payable in full. Lender shall have the
absolute right to adjust the monthly payments quarterly during any fluctuating rate period
to allow the Loan to amortize over the term to maturity and shall provide to Borrower a copy
of its analysis thereof.


 


 









 






(b) Facility B. Lender has made a term loan to Borrower, in the principal amount of
Three Million Seven Hundred Fifty Thousand Dollars ($3,750,000.00) and Borrower has executed
and delivered to Lender that certain Term Note (the “Facility B Note”). The Facility B Note
shall be secured by the Loan Documents. The principal balance of the Facility B Note shall
be payable at maturity in ten (10) years from the date of the Facility B Note (the “Facility
B Maturity Date”). The interest rate shall be a fluctuating rate at the Prime Rate plus one
and one half of one percent (1.5%) per annum, to be adjusted not more than quarterly, with a
floor of four and one half of one percent (4.5%) per annum, during the Construction Period,
followed by a fixed rate at the five (5) year T-bill plus three hundred (300) basis points
per annum, with a floor of six percent (6%) per annum, for a period of five (5) years,
followed by a fluctuating rate at the Prime Rate plus one percent (1%) per annum, to be
adjusted not more than quarterly, with a floor to be determined unless a new fixed rate has
been negotiated. Principal and interest, at the Applicable Rate of interest, as adjusted
from time to time, shall be payable monthly in consecutive level payments calculated by
assuming a ten (10) year amortization until the Facility B Maturity Date, at which time all
remaining principal and accrued interest shall be payable in full. Lender shall have the
absolute right to adjust the monthly payments quarterly during any fluctuating rate period
to allow the Loan to amortize over the term to maturity and shall provide to Borrower a copy
of its analysis thereof.



2.2 Purpose. The proceeds from the Notes shall be used for the construction and
permanent financing of a new 165,000 square foot manufacturing facility located within the
Greenspring Industrial Park located at 250 Cross Farm Lane, Conewago Township, York County,
Pennsylvania.



2.3 Computation of Interest. Interest shall be calculated on the basis of a 360-day
year for actual days elapsed. Any change in the interest rate on the Notes resulting from a change
in the Prime Rate shall become effective immediately and automatically with each such change in the
Prime Rate without further action by Lender and without notice to Borrower; provided, Lender will
notify Borrower of any change in the amount of Borrower’s monthly payment as a result of a change
in the Prime Rate.



2.4 Payments. All payments (including prepayments) by Borrower hereunder shall be
made at any office of Lender, or such other place or places as Lender may
direct, prior to 10:00 A.M. on the date of payment, in lawful money of the United States of
America, and in immediately available funds, and, when due or upon instruction from Borrower, may
be made by debit to any of Borrower’s general accounts with Lender.


 


 









 





2.5 Late Payment Charges. If Borrower shall fail to pay any installment of interest
due under the Notes or any other sum due to Lender under any of the Loan Documents within ten (10)
days of the date it is due, Borrower shall pay to the order of Lender, immediately, without notice
or demand, a late charge equal to five percent (5%) of the amount overdue to defray part of the
additional expense incurred by Lender in connection with the delinquency and collection of the
overdue amount. The provision for such late charge shall not be construed to permit Borrower to
make any payment after its due date, obligate Lender to accept any overdue installment, or affect
Lender’s rights and remedies upon the occurrence of an Event of Default.



2.6 Default Rate. Notwithstanding anything to the contrary herein or in any of the
other Loan Documents, on the occurrence of any Default or Event of Default, the interest rate
otherwise applicable to any Notes outstanding shall automatically increase by four percent (4%) per
annum above the Applicable Rate (the “Default Rate”). Borrower recognizes and acknowledges that:
(i) this Section 2.6 is a material inducement for Lender to extend credit to Borrower; (ii) Lender
would not have extended credit to Borrower in the absence of the provisions of this Section 2.6;
(iii) amounts required to be paid by Borrower under this Section 2.6 represents compensation for
increased risk to Lender that the Debt evidenced hereby will not be repaid; and (iv) amounts
required to be paid by Borrower under this Section 2.6 is not a penalty and represents a reasonable
estimate of (x) the cost to Lender in allocating its resources (both personnel and financial) to
the on-going review, monitoring, administration, and collection of the Debt evidenced hereby, and
(y) compensation to Lender for losses that are difficult to ascertain.



2.7 Prepayment Penalty. If Borrower makes prepayments to the Loan, Lender is entitled
to collect and Borrower shall pay a prepayment penalty in the amount of two percent (2%) during the
first three (3) years of any fixed rate period.



2.8 Right to Inspect. Lender (through any of its officers, employees, or agents)
shall have the right, upon reasonable prior notice, from time to time during Borrower’s usual
business hours to inspect Borrower’s Books applicable to its business and to make copies thereof
and to check, test, and appraise the Collateral in order to verify Borrower’s financial condition
or the amount, condition of, or any other matter relating to, the Collateral.




SECTION 3. REPRESENTATIONS AND WARRANTIES.



To induce Lender to enter into this Agreement and to make the Loan, Borrower represents and
warrants to Lender that:



3.1 Organization and Qualification. Borrower is a Delaware Limited Liability Company
and is in good standing under the laws of the State of Delaware. Unilife Medical Solutions, Inc. is
a Delaware Corporation and is in good standing under the laws of the State of Delaware. Unilife
Medical Solutions, Ltd. is an Australian Corporation and is in good
standing under the laws of Australia. Unilife Corporation is a Delaware Corporation and is in
good standing under the laws of the State of Delaware.


 


 









 





3.2 Power and Borrower. Borrower has the power to execute, deliver and perform its
obligations under the Loan Documents, to borrow under this Agreement and to create, or cause the
creation of, the collateral security interests for which the Security Documents provide, and has
taken all necessary action to authorize the borrowings hereunder on the terms and conditions of
this Agreement and the execution and delivery of, and performance under, the Loan Documents. No
consent, license, approval or authorization of, or registration or declaration with, any
governmental Borrower, bureau, agency or other Person, is required in connection with the
execution, delivery, performance, validity or enforceability of the Loan Documents



3.3 Enforceability. The Loan Documents, when executed and delivered to Lender
pursuant to the provisions of this Agreement, will constitute valid obligations of Borrower legally
binding upon Borrower and enforceable in accordance with their respective terms, except as
enforceability of the foregoing may be limited by Bankruptcy, insolvency or other laws of general
application relating to or affecting the enforcement of creditors’ rights.



3.4 Conflict with Other Instruments. The execution and delivery of, and performance
under, the Loan Documents by Borrower will not violate or contravene any provision of any existing
law or regulation or decree of any court, governmental authority, bureau or agency having
jurisdiction in the Collateral or of the organizational documents of Borrower or of any mortgage,
indenture, security agreement, contract, undertaking or other agreement to which Borrower is a
party or which purports to be binding upon Borrower or any of its properties or assets, and will
not result in the creation or imposition of any lien, charge, encumbrance on, or security interest
in, any of its properties or assets pursuant to the provisions of any such mortgage, indenture,
security agreement, contract, undertaking or other agreement other than the first priority lien in
the Collateral in favor of Lender provided for herein.



3.5 Litigation. No actions, suits or proceedings before any court or governmental
department or agency (whether or not purportedly on behalf of Borrower) are pending or, to the
knowledge of Borrower, threatened (a) with respect to any of the transactions contemplated by this
Agreement or (b) against or affecting Borrower or any of its properties that, if adversely
determined, could reasonably be expected to have a material adverse effect upon the financial
condition or operations of Borrower, or Borrower’s ability to perform any of its obligations under
the Loan Documents.



3.6 Default. Borrower is not in default under any material existing agreement, and no
Default or Event of Default hereunder has occurred and is continuing.



3.7 Taxes. Borrower has filed or caused to be filed all tax returns (including,
without limitation, those relating to federal and state income taxes) required to be filed and has
paid all taxes shown to be due and payable on said returns or on any assessments made against it
(other than those being contested in good faith by appropriate proceedings for which adequate
reserves have been provided on its books). No tax liens have been filed against Borrower, or
against any of the Collateral of Borrower, and no claims are being asserted with
respect to taxes which could have a material adverse effect upon the financial condition,
business or operations of Borrower.


 


 









 





3.8 Financial Condition. All balance sheets, profit and loss statements, and other
financial statements of Borrower in each case which have heretofore been delivered to Lender, and
all financial statements and data of Borrower which will hereafter be furnished to Lender, are or
will be (when furnished) true and correct and do or will (when furnished) present fairly,
accurately and completely the financial position of Borrower and the results of Borrower’s
operations in each case as of the dates and for the periods for which the same are furnished. All
such financial statements have been prepared in accordance with Generally Accepted Accounting
Principles applied on a consistent basis. Except as set forth on Schedule 3.9, Borrower does not
possess any “loss contingency” (as that term is defined in Financial Accounting Standards Board,
Statement of Financial Accounting Standards No. 5 — “FASB 5”) which is not accrued, reflected, or
reserved against in its balance sheet or disclosed in the footnote to such balance sheet. There
has been no material adverse change in the business, properties, operations or condition (financial
or otherwise) of Borrower since the date of the financial statements which were most recently
furnished by Borrower to Lender. No event has occurred that could reasonably be expected to
interfere substantially with the normal business operations of Borrower, except as disclosed in
writing to Lender heretofore or concurrently herewith.



3.9 Use of Proceeds. The proceeds of the Notes shall be used solely for the purposes
set forth in Section 2.2



3.10 Regulation U. Borrower is not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System), and no part of the proceeds of the loan will be used
to purchase or carry any margin stock or to reduce or retire any indebtedness incurred for such
purpose or to extend credit to others for such purpose.



3.11 No Notices; No Violations. Except as disclosed in writing to Lender heretofore
or concurrently herewith, Borrower has not received any notice from any federal, state or local
authority or any insurance or inspection body to the effect that the fails to comply with any
applicable law, ordinance, regulation, building or zoning law, judicial or administrative
determination, or any other requirements of any such authority or body, and, to its knowledge, the
Real Property is in full compliance with all such laws, ordinances, determinations, regulations and
requirements.




3.12 Environmental Matters.



The Real Property is not being, and except as disclosed in writing to Lender heretofore or
concurrently herewith, to Borrower’s knowledge have not been, used to make, store, handle, treat,
dispose of, generate, or transport Hazardous Substances in violation of any applicable law. To
Borrower’s knowledge, there has never been a Release of Hazardous Substances on, from, or near the
Real Property or any other property owned or used by Borrower in violation of any applicable law or
that caused or might cause Contamination, and no Contamination exists on any such property.


 


 









 





Borrower has never received any notification, citation, complaint, violation or notice of any
kind from any Person relating or pertaining to the making, storing, handling, treating, disposing,
generating, transporting or Release of any Hazardous Substances, and neither Borrower nor any
property owned or used by Borrower is under any investigation with respect to any such matters.



There are no underground storage tanks on the Real Property except as disclosed in the
Environmental Questionnaire executed by Borrower and delivered to Lender.



3.13 Title to Collateral. Borrower is the owner of the Real Property and all
improvements thereon, or to be constructed thereon, which real property is free and clear of all
liens and encumbrances of any kind except as set forth on Schedule 3.13 hereto.



SECTION 4. CONDITIONS OF CLOSING AND BORROWING.



4.1 Closing. As a condition precedent to Lender’s obligation to close, the following
conditions shall all be satisfied:




(a) Loan Documents. Borrower shall have delivered or caused to be delivered to Lender
duly executed copies of each of the Loan Documents.




(b) Borrower’s Authorizations.




(i) Borrower shall have delivered to Lender:




(A) a copy, certified by the Members of Borrower, of the minutes or resolutions of
Borrower authorizing and approving the execution and delivery of and performance under this
Agreement and the other Loan Documents to which Borrower is a party, the borrowings provided
for hereunder and the creation of the collateral security interests for which the Security
Documents provide;




(B) a copy of Borrower’s Operating Agreement and all supplements and amendments
thereto;




(C) a copy of Borrower’s Certificate of Formation, filed with the State of Delaware and
certified by all parties thereto;




(D) Tax Lien Certificates evidencing no tax liens against Borrower or Guarantors; and




(E) a current incumbency certificate, setting forth the names and titles of the
incumbent members of Borrower.




(ii) Borrower shall have delivered to Lender on behalf the Guarantors:




(A) a copy, certified by the Secretary of each Guarantor, of the minutes or resolutions
of each Guarantor authorizing and approving the execution
and delivery of and performance under this Agreement and the other Loan Documents by
each Guarantor, the borrowings provided for hereunder and the creation of the collateral
security interests for which the Security Documents provide;


 


 









 






(B) a copy of each Guarantor’s Articles of Incorporation and any amendments filed with
the State of Delaware and certified copies of each Guarantor’s Bylaws;




(C) Tax Lien Certificates evidencing no tax liens against each Guarantor; and




(D) current incumbency certificates, setting forth the names and titles of the
incumbent officers of each Guarantor.




(iii) Borrower shall have delivered to Lender on behalf Unilife Medical
Solutions, Ltd.: a copy of Unilife Medical Solutions, Ltd.’s Articles of
Incorporation, or the Austrialian equivalent, and a certified copy of Unilife
Medical Solutions, Ltd.’s Bylaws, or the Austrialian equivalent.




(c) Legal Opinions. Counsel for Borrower shall have delivered to Lender a favorable
opinion, dated the date of this Agreement, addressed to Lender, and satisfactory in form and
substance to Lender, addressing such matters as Lender shall require.




(d) Representations. The representations and warranties contained in Section 3 hereof
shall be true and correct on and as of the date hereof and no Event of Default or Default
shall be in existence on the date of this Agreement or shall occur as a result of Borrower’s
execution and delivery of this Agreement.




(e) Lien Searches and Title Insurance. Lender shall have received such title searches,
title commitments on the Real Property, secured transaction, judgment and docket searches as
it deems appropriate and as required by the Commitment Letters.




(f) Insurance. Lender shall have received certificates or policies evidencing the
insurance coverage required under Subsection 5.6 hereof.




(g) Legal Matters. All legal matters incident to the transactions contemplated by this
Agreement shall be satisfactory to Smigel, Anderson & Sacks, LLP, counsel for Lender.




(h) Compliance with Law; Litigation; Material Adverse Change. Lender shall have
received evidence satisfactory to Lender in its sole reasonable discretion that: (i) the
Real Property has been maintained and will be improved in compliance with applicable state
and municipal statutes, regulations, codes and ordinances, including but not limited to,
requirements related to building permits and approvals of federal and state environmental
protection agencies; (ii) there is no action or proceeding pending or threatened against or
affecting Borrower or the Guarantors which, if adversely determined, would impair the
validity or enforceability of the Loan
Documents or have a material adverse effect on the financial condition of Borrower;
(iii) there has not been any material adverse change in the value of the Collateral, the
financial condition of Borrower or the Guarantors or in the actual or prospective operating
condition of Borrower or the Guarantors, between the date of the Commitment Letters and the
Closing Date.


 


 









 






(i) Financial Statements. Borrower shall have provided to Lender the annual
consolidated financial statements of Unilife Corporation (or its predecessor), meeting the
requirements of Section 5.1 herein, for the last two (2) fiscal years preceding the date of
this Agreement.




(j) Phase I Environmental Audit. Borrower shall have delivered to Lender a
professionally structured Phase I Environmental Audit on the Real Property, in a format and
type satisfactory to Lender and USDA. Lender reserves the right to approve the
qualifications of the environmental consultant.




(k) Appraisal. Borrower shall have delivered to Lender a professionally structured
appraisal, in a format and type satisfactory to Lender, indicating a value of not less
Nineteen Million Dollars ($19,000,000.00) on the Real Property. Lender reserves the right to
approve the qualifications of the appraiser.




(l) USDA Guaranty. Lender shall have received a full and acceptable USDA guaranty. In
the event that the USDA guaranty has not been obtained by the Closing Date, each loan
advance shall be further secured by sixty percent (60%) cash until such time that the USDA
guaranty is sufficiently placed.




(m) Existing Bank Debt. Lender shall have received a reaffirmation of the USDA guaranty
on Borrower’s existing debt with Lender.




(n) Redomiciliation of Unilife Medical Solutions, Ltd. and its Subsidiaries. Borrower
shall deliver to Lender evidence of the completion of the schemes of arrangement pursuant to
which Unilife Medical Solutions, Ltd. and its subsidiaries redomiciled into the State of
Delaware and Unilife Corporation became the parent company of Unilife Medical Solutions,
Ltd. and its subsidiaries. 




(o) Exclusivity/Industrialization Agreement with Pharmaceutical Companies. Borrower
shall deliver to Lender full, complete and unredacted copies of its
Exclusivity/Industrialization Agreements with Sanofi-Aventis, and any amendments,
restatements, modifications or supplements thereof or thereto.




(p) Miscellaneous. Borrower shall have delivered to Lender:




(i) a copy of the approved final land development plan (the “Land Development
Plan”) for the Real Property;




(ii) a copy of the approved building plans (the “Building Plans”) for the Real
Property; and


 


 









 






(iii) copies of all required governmental permits and approvals.



4.2 Approval of Construction Management Firm. All construction advances and
inspections of the Real Property may be managed by a third party construction management firm,
provided, however, that the third party construction management firm shall be approved by Lender.



4.3 Approval of and Contract with General Contractor. Borrower shall enter into a
guaranteed maximum price or fixed price contract with a general contractor (“Contract with General
Contractor”) that is acceptable to and approved by Lender and shall assign such guaranteed maximum
price or fixed price contract to Lender. Borrower shall require the General Contractor to provide a
performance bond in favor of Lender through a bonding company that is acceptable to and approved by
Lender.




SECTION 5. AFFIRMATIVE COVENANTS.



Borrower covenants and agrees that from and after the effective date of this Agreement and so
long as any of the Obligations remain outstanding and unpaid, in whole or in part, Borrower will
observe the following covenants, unless Lender shall otherwise consent in writing:




5.1 Financial Statements and Tax Returns. Borrower will furnish to Lender:




(a) Annual Consolidating Financial Statements and Tax Returns of Unilife Corporation:
as soon as available, but in any event not later than one hundred twenty (120) days after
the close of each fiscal year of Unilife Corporation, audited consolidating financial
statements and federal income tax returns prepared by an independent certified public
accountant, reasonably satisfactory to Lender, in such detail as Lender may require,
prepared in accordance with Generally Accepted Accounting Principles applied on a consistent
basis. Lender reserves the right to request financial statements at more frequent intervals;




(b) Monthly Financial Statements of Guarantors: as soon as available, but in any event
not later than the thirtieth (30th) day of each month’s end, internally prepared financial
statements reasonably satisfactory to Lender, in such detail as Lender may require, prepared
in accordance with Generally Accepted Accounting Principles applied on a consistent basis to
include a balance sheet, a profit and loss statement and a cash flow statement; and




(c) Other Information: from time to time, such additional financial and other
information as Lender may reasonably request.



5.2 Liabilities. Borrower will pay and discharge, at or before their maturity, all
its obligations and liabilities (including, without limitation, tax liabilities and all employee
wages as provided in the Fair Labor Standards Act, 29 U.S.C. §§206-207 and any successor statute),
except those which may be contested in good faith, and maintain adequate reserves for any of the
same in accordance with Generally Accepted Accounting Principles.
Upon Borrower’s failure to pay such wages, or cause such wages to be paid, Lender shall have
the right, but not the duty, at any time and from time to time, to pay all or part of such wages
directly or indirectly on behalf of and for the account of Borrower. Borrower’s obligations with
respect to such advance shall be evidenced by the Notes and shall be secured and guaranteed, as the
case may be, by the Security Documents.


 


 









 





5.3 Notices. Borrower will promptly give notice in writing to Lender, of the
occurrence of any of the following:




(a) any Event of Default or Default under this Agreement, or any event of default or
similar occurrence under any instrument or other agreement of Borrower entitling any Person
to accelerate the maturity of any obligation of Borrower or to exercise any other remedy
against Borrower;




(b) any strike, lock-out, boycott or any other labor trouble;




(c) the commencement of any litigation, proceeding or dispute affecting the Collateral,
or any dispute between Borrower and any Person, if such litigation, proceeding or dispute
might interfere with the normal business operations of Borrower, or, if resolved other than
in the favor of Borrower, such litigation, proceeding or dispute would have a material
adverse effect on the financial condition of the Collateral; or




(d) any material and adverse change in the financial position, operations, business or
prospects of Borrower.




5.4 Environmental Matters; Compliance with Laws.




(a) Borrower shall:




(i) immediately notify Lender (and any other person that Borrower is required
to notify pursuant to any applicable laws) once it is aware of a Release or
threatened Release of Hazardous Substances on or from the Real Property that might
cause Contamination;




(ii) immediately notify Lender once an environmental investigation or clean-up
proceeding is instituted by any Person in connection with the Real Property;




(iii) fully comply with and assist any such environmental investigation and
clean-up proceeding;




(iv) promptly execute and complete any Remedial Actions necessary to ensure
that such properties are in compliance with all applicable laws and free from
Contamination, and to ensure that no environmental liens or encumbrances are levied
against or exist with respect to the Real Property, and provide Lender with a
certification from each agency having jurisdiction that such Remedial Actions have
been completed to all such agencies’ satisfaction;


 


 









 






(v) immediately notify Lender of any citation, notification, complaint, or
violation which Borrower receives from any Person which relates to or pertains to
the making, storing, handling, treating, disposing, generating, transporting or
Release of any Hazardous Substances;




(vi) promptly upon the written request of Lender if there is a change in
circumstances regarding the Real Property which Lender reasonably believes requires
further environmental site assessments or reports, provide Lender, from time to
time, with an environmental site assessment or report, in form and substance
satisfactory to Lender, or at Lender’s option, permit Lender, its agents,
contractors and other representatives, to enter into the Real Property in order to
make such report or assessment, and at such other times and as often as Lender may
reasonably request, Borrower will make available at its offices to Lender or its
representatives such historical and operational information (including the results
of all samples sent for analysis), correspondence with official bodies, and
environmental reviews conducted prior to and after the date of this Agreement
regarding the Real Property as are within the possession, custody or control of
Borrower or which are reasonably available to it, and will make appropriate
personnel employed by Borrower having knowledge of such matters available for
meetings with Lender or its representatives; and




(vii) comply, and cause the Real Property to comply, with all applicable
federal, state, local and other environmental, zoning, occupational safety, health,
employment, discrimination, labor and other laws and regulations.




(b) If Lender acquires equitable or legal title to any of the Real Property hereunder
or under the Loan Documents, Lender does not accept and shall not bear (nor shall any
assignee or transferee of Lender accept or bear) any responsibility for any Hazardous
Substances in or about the Real Property or for the actual or threatened Release thereof
from the Real Property. No provisions of the Loan Documents shall be interpreted to absolve
or release Borrower from any liability or responsibility which it may have to any Person,
under any local, state or federal statute or regulation, for Remedial Actions with respect
to any such Hazardous Substances or for the actual or threatened Release of any such
Hazardous Substances.




(c) If any action or claim is brought by the Environmental Protection Agency or any
other regulatory agency against Borrower arising from the presence in, or about the Real
Property, of Hazardous Substances or from the actual or threatened Release of such Hazardous
Substances, Borrower shall immediately provide Lender, as Lender deems necessary, with a
bond, in form and substance satisfactory to Lender, against any and all damages or
liabilities that may arise from any such action or claim.




(d) Borrower shall defend, indemnify Lender and hold Lender harmless from and against
all loss, liability, damage, cost, and expense, including without limitation, reasonable
attorneys’ fees, fines, or other civil and criminal penalties or payments, for failure of
the Real Property to comply in all respects with all environmental and other laws, caused,
in whole or in part, regardless of fault, by
Borrower, or by any past, present or future owner, occupier, tenant, subtenant,
licensee, guest or other person. The provisions of this Paragraph 5.5(e) shall survive
payoff, release, foreclosure, or other disposition of this Agreement, the Real Property, the
Collateral, or such other properties hereunder or otherwise. Borrower shall remain liable
hereunder regardless of any other provisions hereof which may limit Borrower’s liability.


 


 









 






(e) All sums advanced or paid by Lender under this Subsection 5.4, including sums so
advanced or paid in connection with any judicial or administrative investigation or
proceeding relating thereto, and including, without limitation, reasonable attorneys’ fees,
fines, or other penalties or payments, and all of Borrower’s obligations to defend,
indemnify and hold harmless Lender, shall be deemed to be advances under the Notes and shall
be at once repayable. Borrower’s obligations with respect thereto shall be evidenced by,
and shall bear interest at the default rate provided in, the Notes and shall be secured and
guaranteed, as the case may be, by the Security Documents.



5.5 Existence; Properties. Borrower will notify Lender at least thirty (30) days
before any change of name of Borrower and will maintain:




(a) its limited liability company existence and its qualification to do business and
good standing in each jurisdiction in which qualification is necessary for the proper
conduct of its businesses;




(b) all licenses, permits and other authorizations necessary for the ownership and
operation of the Real Property; and




(c) the Real Property in good repair, working order and condition and will make all
necessary or appropriate repairs, renewals, replacements and substitutions, so that the
value and efficiency of all such Collateral shall at all times be properly preserved and
maintained.




5.6 Insurance.




(a) The Borrower shall continuously maintain the following insurance:




(i) General liability, hazard, casualty, and fire insurance on all of the Real
Property;




(ii) Business interruption insurance and, whenever any of the Real Property are
being leased, loss of “rental value” insurance for a period of at least twelve (12)
months;




(iii) Workers’ compensation insurance (including employer’s liability
insurance, if required by Lender) for all employees of the Borrower in an amount
equal to the higher of the amounts required by Lender or the amounts required by
law;




(iv) During the course of any construction or repair of Improvements, builder’s
completed value risk insurance against “all risks of
physical loss,” including collapse and transit coverage in non-reporting form,
covering the total value of work performed and equipment, supplies and materials
furnished. If required by Lender, any policy of such insurance shall contain a
“permission to occupy upon completion of work or occupancy” endorsement; and


 


 









 






(v) Flood insurance, if the Real Property is in an area designated as a flood
risk area by the United States Department of Housing and Urban Development.




(b) The full amount of any casualty and/or flood insurance, as applicable, carried on
the Real Property shall be made payable to the Lender under the standard mortgagee clause or
loss payee clause or additional insurance clause, as applicable.




(c) All policies shall be written in such forms, in such amounts and with such
companies as are satisfactory to Lender, including, without limitation as to coverage limits
and deductibles, and the insurer must agree to provide at least thirty (30) days’ prior
notice to Lender of (i) cancellation, (ii) decision not to renew, and (iii) any modification
reducing the amount or type of coverage. The amounts of the insurance policies shall at all
times satisfy any coinsurance requirements thereof. If said insurance or any part thereof
shall expire, be withdrawn, become void by breach of any condition thereof by Borrower or
become void or unsafe by reason of the failure or impairment of the capital of any insurer,
or if for any other reason whatsoever said insurance shall become unsatisfactory to Lender,
Borrower shall immediately obtain new or additional insurance satisfactory to Lender.
Borrower shall pay as they become due all premiums for such insurance, shall renew or
replace each policy, shall deliver to Lender evidence of the payment of the full premium
therefore at least fifteen (15) days prior to the expiration date of each policy, and shall
deliver to Lender all original policies marked “premium paid.”




(d) Borrower shall deliver to Lender, at the time of each renewal of the policy (but at
least once every two years), a statement satisfactory to Lender as to the then replacement
and insurable values of the Collateral as determined by the underwriter of its insurance on
the Collateral or, if such underwriter will not act, by a qualified appraiser satisfactory
to Lender.




(e) Borrower shall promptly comply with and conform to (i) all provisions of each such
insurance policy and (ii) all requirements of the insurers thereunder, applicable to
Borrower or any of the Collateral or to the use, manner of use, occupancy, possession,
operation, maintenance, alteration or repair of any of the Collateral, even if such
compliance necessitates structural changes or improvements or results in interference with
the use or enjoyment of any of the Collateral. Borrower shall not use any of the Collateral
in any manner which would permit the insurer to cancel or increase the premium for any
insurance policy.



5.7 Books and Records. Borrower will maintain accurate and complete records and books
of account in accordance with Generally Accepted Accounting
Principles, and will permit officers or representatives of Lender to examine and make excerpts
from such books and records and to visit and inspect its properties, both real and personal, at all
reasonable times upon reasonable prior notice.


 


 









 





5.8 Location of Business. Borrower will notify Lender in advance of any change in the
location of any place of business of Borrower, whether the establishment of a new place of business
or the discontinuance of a present place of business.




5.9 Construction.




(a) Borrower warrants that all work performed on the Real Property shall be performed
in a good and workmanlike manner utilizing materials which are free from material defects.
Borrower shall proceed with the construction in accordance with the approved Final Land
Development plans and the approved Building Plans.




(b) Upon written reasonable notice from Lender, Borrower shall proceed with due
diligence, at Borrower’s own expense, properly to replace or cause the replacement of any
defective material and the performance of any labor necessary to correct any material defect
in the work.




(c) Facility A and Facility B shall be repaid in full by the maturity date
thereof irrespective of delays caused by governmental restrictions, weather conditions,
defaults by contractors or sub-contractors, strikes or other labor disputes, shortages of
labor or materials or for any other reasons, time being of the essence.




(d) The construction shall be performed strictly in accordance with an approved Land
Development Plan and approved Building Plans, and all applicable statutes, laws and
ordinances, and in accordance with the rules, regulations and requirements of all regulatory
authorities having jurisdiction over the geographic areas in which the Real Property is
situated, or any other body now or hereafter constituted exercising similar functions;
provided, in the event of any material conflict between the Land Development Plan and the
Building Plans and the provisions of any statute, law, ordinance, rule, regulation or
requirement as aforesaid, and any material departure from the Land Development Plan
by reason thereof, Borrower shall use its best efforts obtain the approval of Lender to any
necessary revisions in the Land Development Plan and Building Plans.




(e) The improvements when erected will be wholly within the building restriction lines,
however established, and will not violate applicable use or other restrictions contained in
prior conveyances, zoning laws or regulations and shall not encroach upon or overhang any
easements, rights-of-way, or land of others.




(f) Borrower shall comply with or cause the applicable party to comply with all of its
or their obligations for construction and installation of certain on-site and/or off-site
facilities, and Borrower shall promptly deliver to Lender copies of all notices given to, or
received from, the other party or parties to any such agreements.


 


 









 






(g) Borrower shall use the Loan proceeds solely for the payment of costs contained in
the Contract with General Contractor or as permitted by Section 5.10(b) below, as the same
may be amended from time to time with the prior written consent of Lender or as otherwise
permitted by the Lender.




(h) Borrower shall promptly notify Lender of any material change in any fact or
circumstances represented or warranted by Borrower in this Agreement or in any other Loan
Document and of any other material adverse change in the business or operations of Borrower.




(i) Borrower agrees to provide and cause to be provided to Lender and its authorized
agents, at all times, facilities commonly made available by responsible general contractors
for the inspection of the Real Property and the improvements, and to afford full and free
access to Lender and its authorized agents to all plans, drawings and records with respect
to the construction. Borrower further agrees to send monthly to Lender a copy of all
construction inspection reports made by any architect or engineer employed by Borrower.
Lender reserves the right to request such construction inspection reports at more frequent
intervals. Borrower acknowledges that Lender will inspect construction periodically as it
progresses relative to the completion and quality of the work completed and the materials
suitably stored on site, and the amount of construction funds eligible for disbursements of
the Loan.




5.10 Disbursement of Loan Proceeds — Facility A.




(a) All advances made hereunder shall be disbursed by Lender from time to time as the
work progresses upon written application of, and pursuant to requests for advances
(“Vouchers”) in the form attached hereto as Exhibit “_____” signed by, the person or persons
specified as Borrower’s authorized representatives. Advances shall be disbursed no more than
twice each month. Each such Voucher shall specify the amount of the Loan disbursement
requested, the percentage of construction completed and the date on which such percentage
was completed. Each Voucher shall be subject to the approval of Lender but the approval of
such Voucher by Lender shall not constitute an approval or acceptance of the work or
materials, nor be binding upon Lender, except to the extent that the facts actually are as
so represented when so approved, nor shall such approval give rise to, any liability or
responsibility relating to (i) the quality of the work, the quantity of the work, the rate
of progress in completion of the work, or the sufficiency of materials or labor being
supplied in connection therewith, or (ii) any errors, omissions, inconsistencies or other
defects of any nature in the Land Development Plan and the Building Plans. Any inspection
of the work that Lender may choose to make, whether during the progress of the work shall be
solely for Lender’s information and under no circumstances will they be deemed to have been
made for the purpose of supervising or superintending the work, or for the information or
protection of any right or interest of any person or entity other than Lender.


 


 









 






(b) At option of Lender but after reasonable notice to Borrower, disbursements may be
made directly by Lender to Borrower, Borrower’s contractor, sub-contractors, and/or
materialmen, or by way of a co-pay treasurer’s check to Borrower, and/or to any architect or
any engineer engaged by Borrower to superintend or supervise the work
or any part thereof, any contractor or sub-contractors and materialmen, or some or any
of them, as Lender may elect from time to time. At discretion of Lender, such payments may
be made to governmental bodies pursuant to an arrangement securing obligations of the
Borrower with such entities. It is understood that this provision shall not create any
privity of contract or any trustee, beneficiary or guarantor relationship of any kind
between said parties and the Lender. Anything to the contrary in this Agreement
notwithstanding, Lender shall have the right, at its option, not to make any advance after
its initial advance unless it is furnished (i) an endorsement by the title company insuring
the lien of the Mortgage, that the amount of the advance in question is insured as being
secured by the Mortgage with no exceptions for mechanics liens or any other exceptions other
than those reasonably agreed to by Lender and/or (ii) a full or partial release of liens for
all work performed or materials furnished through the date of the Voucher from any and all
contractors, subcontractors, materialmen, architects, engineers or others who may be
entitled to a lien on the Real Estate or Improvements. Borrower shall, on request of Lender,
deliver this title endorsement and releases to Lender each time that funds are requested in
accordance with the terms of this Agreement.




(c) Vouchers (and, if Lender so requests, certificates of Borrower’s engineer or
architect in support thereof, and in such form as Lender may reasonably specify) shall be
delivered to Lender from time to time as the work progresses, specifying the work and
materials for which costs were incurred for payment of which an advance is requested. Such
Vouchers shall be issued only for work completed and materials, free of any chattel
mortgage, conditional sale, security interest or any other lien or encumbrance, physically
incorporated into the construction. Each such Voucher, when approved by the person(s) named
as Borrower’s authorized representatives shall constitute a representation, with respect to
the work and materials for which payment is requested, that (i) they have been physically
incorporated into the construction free of liens and encumbrances as aforesaid, that the
value is as estimated, (ii) that they have been performed or installed in a good and
workmanlike manner, (iii) that the work and materials conform to the Land Development Plans
and the Building Plans and to all applicable statutes, laws or ordinances, administrative
rules, regulations and requirements, and (iv) that all improvements are wholly with the
building restrictions (however established) of the Real Property.




(d) Upon approval of each Voucher by Lender, Lender shall make disbursements of the
amount called for by Voucher, at Lender’s option either (i) by its check in the requisite
amount to the person entitled thereto, pursuant to the Voucher or (ii) by depositing such
sum in an account of Borrower maintained with Lender or to such other bank account
designated by Borrower at a bank approved, in writing, by Lender, or (iii) by depositing
such sum with the title insurance company insuring the lien of the Mortgage and acting as
disbursing agent for the Loan proceeds.




(e) No payment shall be due pursuant to the Voucher unless in the reasonable judgment
of Lender, whose decision shall be final in such matters, all work usually done and all
materials usually furnished at the stage of construction when the payment is to be made has
been done and furnished in accordance with this Agreement.


 


 









 






(f) No disbursements on account of the Loan shall be made by Lender at any time when
Borrower is not entitled thereto hereunder.




(g) Lender shall have the right to apply any funds which it agrees to advance hereunder
to bring the completion of the improvements or to the payment of any taxes, special
assessments or any other charges which could be a lien on the Real Property, or any interest
on the Loan, or any premium on any insurance policy required hereunder affecting the Real
Property or the improvements, and if such funds so agreed to be advanced are insufficient,
Borrower agrees to deliver and pay to Lender, such sum(s) of money as Lender may demand from
time to time for the purpose of completing the improvements or of paying any of the
aforesaid charges or premiums, or any other charge or expense which may have been incurred
or assumed by Lender under or in performance of this Agreement. In making disbursements,
Lender shall draw first upon such additional deposits made by Borrower until such funds have
been exhausted, and then upon the Loan.




(h) Borrower agrees that by making a request for an advance hereunder, Borrower shall
be deemed to be reconfirming to Lender that all representations and warranties of Borrower
set forth in Section 3 of this Agreement and all related instruments, agreements and
documents remain true and correct in all material respects as of the date of each
request.



5.11 Compliance with Laws. Borrower shall comply with the laws of the Commonwealth of
Pennsylvania and the ordinances, regulations, rules, and directions of any federal or state agency
and of any municipal or public entity, which apply to or affect Borrower, and Borrower shall save
Lender harmless from all annoyances and fines and shall give the proper authorities all requisite
notice relative to the work and shall procure and pay for all necessary licenses and permits with
respect thereto.



5.12 Financial Covenants. Borrower and Guarantors shall maintain the Financial
Covenants measured annually beginning June 30, 2011; provided, however, if Borrower and Lender are
unable to agree on revised Financial Covenants by September 30, 2011, the Debt Service Reserve
Account shall remain in place until such time the Financial Covenants are agreed upon by the
parties. Lender may, at its sole discretion, postpone the date on which Borrower and Guarantors
must comply with the Financial Covenants.



5.13 Deposit Accounts. Borrower and Guarantors shall maintain their primary deposit
relationships with Lender.



5.14 Debt Service Reserve Account. Borrower shall establish a debt service reserve
account with Lender in the amount of $2,400,000.00. Borrower shall assign such debt service reserve
account to Lender. Borrower shall be permitted to use such debt service reserve account for debt
payments, provided however, that Borrower shall replenish such debt service reserve account every
six (6) months to equal twelve (12) months of debt payments. The balance in such debt service
reserve account shall in no event be less than $1,600,000.00. In the event that a reasonably
satisfactory supply agreement is established with a pharmaceutical company, such debt service
reserve account shall be released provided, however, that Section
5.12 has been satisfied. Lender, at its sole discretion, shall annually establish the cash
flow threshold of such debt service reserve account.


 


 









 





5.15 IFIP Grants. In the event that Borrower obtains an IFIP grant, all grant funds
shall be released to Lender by IFIP through the York County Industrial Redevelopment Authority and
Lender shall reimburse Borrower up to $200,000 per year for such grant funds.



5.16 USDA Loan Guaranty. Borrower shall at all times during the loan hereunder comply
with all terms, conditions and requirements to keep the USDA Loan Guaranty in effect.



5.17 Regulator Approval and Compliance of RTF Syringe. Upon notice to Borrower of the
regulator approval and compliance of the RTF Syringe, Borrower shall immediately provide a copy of
such approval and compliance to Lender.




SECTION 6. NEGATIVE COVENANTS.



Borrower covenants and agrees that from and after the effective date of this Agreement and so
long as any of the Obligations remain outstanding and unpaid, in whole or in part, Borrower will
observe the following covenants unless Lender shall otherwise consent in writing:



6.1  Mergers, Consolidations. Borrower will not enter into any transaction of merger
or consolidation or sell of dispose of any significant portion of its assets or sell, assign,
redeem, or dispose of the Borrower’s membership interest or the Borrower’s ownership interest in
any entity without the prior written approval of Lender.



6.2 Liens. Borrower will not create, assume, or suffer to exist, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind upon the Collateral without the prior
written consent of the Lender, which will not be unreasonably withheld, except:




(a) the liens and security interests created or permitted by the Security Documents;




(b) liens for taxes not yet payable or being contested in good faith by appropriate
proceedings and for which adequate reserves have been provided on the books of Borrower;




(c) mechanics’, materialmen’s, warehousemen’s, carriers’ or other like liens arising in
the ordinary course of business of Borrower, if any, arising with respect to obligations
which are not overdue for a period longer than thirty (30) days or which are being contested
in good faith by appropriate proceedings and for which adequate reserves have been provided
on the books of Borrower;




(d) deposits or pledges to secure the performance of bids, tenders, contracts, leases,
public or statutory obligations, surety or appeal bonds or other deposits
or pledges for purposes of a like general nature or given in the ordinary course of
business by Borrower.


 


 









 





6.3 Disposition of Assets. Borrower will not liquidate or dissolve (or suffer any
liquidation or dissolution), or convey, sell, lease, pledge, or otherwise transfer or dispose of
all or any substantial part of the Collateral.



6.4 Handling of Hazardous Substances. Borrower will not permit the use of, nor use,
nor produce as a result or as a by-product of its business or operations, nor store or hold at its
premises, any Hazardous Substance unless Borrower strictly and fully complies with all requirements
of any applicable law, regulation, decision or edict relating to the special handling, collection,
storage, treatment, disposal, or transportation of such Hazardous Substance. Borrower will not
permit the Release or threatened Release of any Hazardous Substance on, from, or near its premises
that would cause Contamination.



6.5 Use of Proceeds. Borrower will not directly or indirectly apply any part of the
proceeds of the Loan to the purchasing or carrying of any “margin stock” within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System, or any regulations,
interpretations or rulings thereunder.




SECTION 7. EVENTS OF DEFAULT, REMEDIES.




7.1 Events of Default. The following shall constitute Events of Default:




(a) Non-Payment. (i) Failure by Borrower to pay the principal of or accrued interest
on either of the Notes or any other instrument evidencing the Obligations to Lender within
ten (10) days of when due, or (ii) the failure of Borrower to pay any other amount payable
to Lender, whether under this Agreement or otherwise, within, in each case, ten (10) days
after notice by Lender thereof.




(b) Falsity of Representations and Warranties. Any representation or warranty made by
Borrower in this Agreement or in any other Loan Document or in any certificate, financial or
other statement furnished at any time under or in connection with this Agreement or any
other Loan Document shall be false or misleading in any material respect.




(c) Failure to Perform Certain Covenants. Failure by Borrower to observe or perform
any other covenants, conditions or provisions contained in this Agreement or in any other
Loan Document, provided that, except with respect to a violation of the covenants contained
in Subsection 6.1 which shall be an immediate Event of Default, such failure shall continue
for a period of thirty (30) days after written notice thereof from Lender to Borrower.




(d) Voluntary Bankruptcy, Etc. The commencement by Borrower of a voluntary case under
the Bankruptcy Code, as now constituted or hereafter amended, or any other applicable
federal or state Bankruptcy, insolvency, reorganization, rehabilitation or other similar
law, or the consent by Borrower to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator
(or other similar official) of Borrower for the Collateral or the making by Borrower of any
assignment for the benefit of creditors, or the failure of Borrower generally to pay its or
his debts as such debts become due, or the taking of action by Borrower in furtherance of
any of the foregoing.


 


 









 






(e) Involuntary Bankruptcy, Etc. The entry of a decree or order for relief by a court
in respect of Borrower in an involuntary case under the Bankruptcy Code, as now or hereafter
constituted, or any other applicable federal or state Bankruptcy, insolvency or other
similar law, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of Borrower for the Collateral, or ordering the
winding-up or liquidation of Borrower’s affairs and the continuance of any such decree or
order unstayed and in effect for a period of sixty (60) days.




(f) Default Under Other Documents. An “Event of Default” or similar event shall have
occurred and be continuing under any other Loan Document.




(g) Judgments. One or more judgments are entered against Borrower with respect to the
Collateral or claims involving the Collateral in the aggregate amount of Fifty Thousand
Dollars ($50,000) or more, and Borrower shall not obtain the satisfaction, release, stay or
dismissal thereof within sixty (60) days thereof.




(h) Cross-Collateral/Cross-Default. Any Event of Default under the Loan Documents or
an event of Default under any other loan with Lender shall constitute a default under all
loans to Borrower, and further, the Collateral for the loan to Borrower shall serve as
Collateral for all loans to Borrower.



7.2 Acceleration. Upon the occurrence of an Event of Default specified in Subsection
7.1, Lender may, by written notice to Borrower, terminate immediately and irrevocably any
obligation of Lender to make any advances to or for the account of Borrower, and declare the Notes
and all other instruments evidencing the Obligations to be due and payable, whereupon the principal
amount of the Notes and all outstanding Obligations, together with accrued interest thereon and all
other amounts payable thereunder, shall become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly waived, anything
contained herein or in the documents evidencing the same to the contrary notwithstanding.



7.3 Right of Setoff. Upon the occurrence of a Default or an Event of Default, Lender
shall have the right, in addition to all other rights and remedies available to it, to set off
against the unpaid balance of the Notes, and any other Obligations, any debt owing to Borrower by
Lender and any funds in any deposit account maintained by Borrower with Lender.



7.4 No Marshalling, Etc., Required. If an Event of Default shall have occurred and be
continuing, Lender shall not be required to marshal any present or future security for, or
guarantees of, the Obligations or to resort to any such security or guarantee in any particular
order and Borrower waives, to the fullest extent that it lawfully can, (a) any right it might have
to require Lender to pursue any particular remedy before proceeding against it, and
(b) any right to the benefit of, or to direct the application of the proceeds of, any
Collateral until the Obligations have been paid in full.


 


 









 





7.5 Site Assessments. In connection with Lender’s consideration of enforcement or
preservation of rights under any Loan Document, if an Event of Default shall occur if there is a
change in circumstances regarding the Real Property which Lender reasonably believes requires
further environmental site assessments or reports, Borrower shall permit such persons (“Site
Reviewers”) as Lender may select to visit the Real Property and perform such environmental and
other site investigations and assessments thereof (“Site Assessments”) for the purpose of
determining whether the Real Property is subject to any Contamination or other condition which
could result in any liability, cost or expense to the owner or occupier thereof relating to
Hazardous Substances or otherwise. Such Site Assessments may include both above-and
below-the-ground sampling and/or testing for Contamination and such other tests as may be necessary
in the opinion of the Site Reviewers. Borrower shall supply to the Site Reviewers such historical
and operational information, including the results of all samples sent for analysis, correspondence
with official bodies and previous environmental audits or environmental reviews regarding its
properties as are within its possession, custody or control or which are reasonably available to
it, and will make available for meetings with the Site Reviewers appropriate personnel employed by
Borrower having knowledge of such matters. The cost of performing all Site Assessments shall be
paid by Borrower within ten (10) days after demand by Lender, together with interest thereon at the
default rate specified in the Notes from and after such tenth day until paid. The provisions of
this Subsection 7.5 are in addition to all rights of Lender under this Agreement and the other Loan
Documents. Copies of all reports shall be promptly provided to Borrower at Borrower’s request.




SECTION 8. MISCELLANEOUS.



8.1 No Waiver; Cumulative Remedies. No failure or delay on the part of Lender in
exercising any right, power or privilege hereunder or under the other Loan Documents shall operate
as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege
hereunder or thereunder preclude or require any other or further exercise thereof or the exercise
of any other right, power or privilege. Lender shall not be deemed, by any act of omission or
commission, to have waived any of its rights or remedies hereunder unless such waiver is in writing
and signed by Lender, and then only to the extent specifically set forth in writing. A waiver with
respect to one event shall not be construed as continuing or as a bar to or a waiver of any right
or remedy with respect to a subsequent event. The rights and remedies herein provided are
cumulative and not exclusive of any rights or remedies provided by law.



8.2 Notices. All notices, requests, demands and other communications hereunder shall
be in writing and shall be deemed to have been duly given (a) when delivered, if delivered by hand
and receipted for by the party to whom said notice or other communication shall have been directed,
(b) three business days after mailing, if mailed by certified or registered mail with postage
prepaid, (c) on the next business day after dispatch, if delivered by Federal Express or other
reputable overnight mail service, or (d) on the date transmitted (if transmitted before 5:00 p.m.,
prevailing time at the recipient’s location, otherwise on the next business day), if telecopied and
followed by written confirmation thereof addressed as follows or to such other address as may be
hereafter designated in writing by the respective parties hereto:



	 	 	 
	Lender:

	 	Metro Bank

3801 Paxton Street

Harrisburg, PA 17111

Facsimile: 717-909-0589


Attn: Michael J. Bunn, Vice President, Commercial Loan Officer






 


 









 





	 	 	 
	with a copy to:

	 	Smigel, Anderson & Sacks, LLP

4431 North Front Street

Harrisburg, PA 17110

Facsimile: 717-234-3611


Attn: Stuart J. Magdule, Esquire
	 
	 	 
	Borrower:

	 	Unilife Cross Farm LLC

633 Lowther Road

Lewisberry, PA 17339


Attn: Alan D. Shortall, CEO


After December 31, 2010

250 Cross Farm Lane

York, PA 17406
	 
	 	 
	with a copy to:

	 	McNees Wallace & Nurick LLC

100 Pine Street, PO Box 1166

Harrisburg, Pennsylvania 17108-1166

Facsimile: 717-260-1687


Attn: Shaun Eisenhauer, Esquire






8.3 Reimbursement of Lender. Borrower hereby agrees to reimburse Lender for its
out-of-pocket expenses, including, without limitation, reasonable counsel fees, incurred by Lender
in connection with the development, preparation, execution and enforcement of this Agreement and
all the Loan Documents, including, without limitation, all counsel fees in connection with any
Bankruptcy or insolvency proceeding involving Borrower, this Agreement or any of the other Loan
Documents. Such expenses and counsel fees shall be paid simultaneously with the execution of this
Agreement and all such expenses hereafter incurred shall be paid within ten (10) days after notice
by Lender.


 


 









 





8.4 Payment of Expenses and Taxes. In addition to payment of the expenses and counsel
fees provided for in Section 8.3, Borrower agrees to pay, and to save
Lender harmless from any delay in paying, stamp and other similar taxes, if any, including,
without limitation, all levies, impositions, duties, charges or withholdings, together with any
penalties, fines or interest thereon or other additions thereto, which may be payable or determined
to be payable in connection with the execution and delivery of this Agreement and the other Loan
Documents or any modification of any thereof or any waiver or consent under or in respect of any
thereof.



8.5 Survival of Representations and Warranties. All representations, warranties,
covenants and agreements made in this Agreement and all other Loan Documents shall survive the
execution and delivery of the Loan Documents and the making of the Loan hereunder. The provisions
of Subsections 5.4(e), 7.5, 8.3, 8.4, 8.5, 8.8, 8.9, and 8.10 hereof shall survive payment of the
Obligations.



8.6 Successors. This Agreement shall be binding upon and inure to the benefit of
Borrower and Lender and their respective successors and assigns, except that Borrower may not
assign or transfer its rights hereunder without the prior written consent of Lender.



8.7 Construction. This Agreement, and the rights and obligations of the parties
hereunder and thereunder shall be governed by, and construed and interpreted in accordance with,
the domestic internal laws of the Commonwealth of Pennsylvania without regard to its rules
pertaining to conflict of laws. The Section headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of this Agreement.



8.8 Severability. Any provision contained in this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.



8.9 Indemnity. Borrower hereby agrees, whether or not any of the transactions
contemplated in the Loan Documents shall be consummated, to pay, assume liability for, and
indemnify, protect, defend, save and keep harmless Lender from and against, any and all
liabilities, obligations, losses, damages, settlements, claims, actions, suits, penalties, costs
and expenses (including, but not limited to, legal and investigative fees and expenses) of
whatsoever kind and nature, including, but not limited to claims based upon negligence, strict or
absolute liability, liability in tort, latent and other defects (whether or not discoverable), and
any claim for patent, trademark or copyright infringement which may from time to time be imposed
on, incurred by or asserted against Lender (whether or not any such claim is also indemnified or
insured against by any other person) in any way relating to or resulting from this Agreement or any
other Loan Document, or any of the transactions contemplated herein or therein, except if claim is
the result of the gross negligence or willful misconduct of Lender. The provisions of this
subsection shall survive the payoff, release, foreclosure or other disposition, as applicable, of
this Agreement, the Obligations or the Collateral.


 


 









 






8.10 Waiver of Trial by Jury; Jurisdiction.



(a) Each party to this Agreement agrees that any suit, action, or proceeding, whether claim or
counterclaim, brought or instituted by either party hereto or any successor or assign of any party
on or with respect to this Agreement or any other Loan Document or which in any way relates,
directly or indirectly, to the Loans or any event, transaction, or occurrence arising out of or in
any way connection with the Loans, or the dealings of the parties with respect thereto, shall be
tried only by a court and not by a jury. EACH PARTY HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL
BY JURY IN ANY SUCH SUIT, ACTION, OR PROCEEDING. BORROWER ACKNOWLEDGES AND AGREES THAT THIS
SUBSECTION 8.10 IS A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT BETWEEN THE PARTIES AND THAT
LENDER WOULD NOT EXTEND THE LOANS TO BORROWER IF THIS WAIVER OF JURY TRIAL SECTION WERE NOT A PART
OF THIS AGREEMENT.



(b) For the purpose of any suit, action or proceeding arising out of or relating to this
Agreement, the Notes or the Loans, Borrower hereby irrevocably consents and submits to the
jurisdiction and venue of any of the following: the Court of Common Pleas of Dauphin County or the
Federal District Court for the Middle District of Pennsylvania. Borrower irrevocably waives any
objection which it may now or hereinafter have to the laying of the venue of any suit, action or
proceeding brought in such court and any claim that such suit, action or proceeding brought in such
a court has been brought in an inconvenient forum. The provisions of this Paragraph 8.10(b) shall
not limit or otherwise affect the right of Lender to institute and conduct action in any other
appropriate manner, jurisdiction or court.




8.11 Actions Against Lender; Release.



(a) Any action brought by Borrower against Lender which is based, directly or indirectly, or
on this Agreement or any other Loan Document or any matter in or related to this Agreement or any
other Loan Document, including but not limited to the making of the Loan or the administration or
collection thereof, shall be brought only in the courts of the Commonwealth of Pennsylvania.
Borrower may not file a counterclaim against Lender in a suit brought by Lender against Borrower in
a state other than the Commonwealth of Pennsylvania unless under the rules of procedure of the
court in which Lender brought the action the counterclaim is mandatory and will be considered
waived unless filed as a counterclaim in the action instituted by Lender.



(b) Upon full payment and satisfaction of the Loan and the interest thereon, as provided in
Section 2 hereof, the parties shall thereupon automatically each be fully, finally, and forever
released and discharged from any further claim, liability or obligation in connection with the
Loans except as expressly set forth herein, except to the extent an payment received by Lender is
determined to be a preference or similar voidable transfer.


 


 









 





8.12 Performance by Lender. If Borrower shall fail to observe or perform any of the
terms, agreements or covenants contained in this Agreement, or in any other Loan Document, Lender
may, in its discretion, but without any obligation or duty to do so, and without waiving any
Default, or Event of Default, perform any of such terms, agreements or
covenants, in part or in whole, and any money advanced or expended by Lender in or toward the
fulfillment of such terms, agreements or covenants, shall be due on demand and become a part of and
be added to the indebtedness due under the Notes and secured as herein provided with interest
thereon at the rate specified in such Notes from the date of the respective advance or expenditure.
Lender’s rights contained in this Subsection 8.12 shall be in addition to all of Lender’s rights
under any other provision of this Agreement, and Lender may, at its sole election, exercise any one
or more, or all, of such rights alternatively or concurrently.



8.13 Further Actions. Borrower shall execute and deliver such documents and
instruments, and take such other actions, as Lender deems necessary to consummate the transactions
described in this Agreement, even if such actions shall be required after the Closing Date.



8.14 Entire Agreement. This Agreement and the Loan Documents represent the entire
agreement between Lender and Borrower with respect to the financing transactions to which they
relate, and cannot be changed or amended except by an agreement in writing signed by the party
against whom enforcement of the change or amendment is sought.



[Remainder of Page Intentionally Left Blank]




[Signature Page to Follow]




 


 









 







IN WITNESS WHEREOF the parties have caused this Agreement to be duly executed and delivered by
their proper and duly authorized officers as of the day and year first above written



	 	 	 	 	 	 	 	 	 
	WITNESS/ATTEST:	 	 	 	UNILIFE CROSS FARM LLC	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ J. Christopher Naftzger 

	 	 	 	By:	 	/s/ R. Richard Wieland 	 	 
	 

J. Christopher Naftzger, Corporate Secretary

	 	 	 	 	 	 

R. Richard Wieland, Executive Vice
	 	 
	 
	 	 	 	 	 	President and Treasurer	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	METRO BANK	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/ Michael J. Bunn 	 	 
	 


	 	 	 	 	 	 

Michael J. Bunn, Vice President,
	 	 
	 

	 	 	 	 	 	Commercial Loan Officer