ex10_40.htm


  
    
Exhibit 10.40

       

      LOAN
AGREEMENT

       

      THIS LOAN
AGREEMENT (this “Agreement”) is dated as of
December 30, 2009, 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 June 29, 2007, in the original principal amount of $30,000,000.00
(the “Original
Note”).  The Original Note was issued pursuant to a Loan
Agreement dated as of June 29, 2007, among  Borrower, Guarantor and
Bank (the “Original Loan
Agreement”) and was secured by among other things that certain Guaranty
dated as of June 29, 2007 from Guarantor in favor of Bank (the “Original
Guaranty”).

       

      WHEREAS,
Bank and Borrower have agreed to restructure the debt evidenced by the Original
Note pursuant to that certain Promissory Note (Term Loan) 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 loan in the original principal amount of $22,750,000.00
(hereinafter referred to as the “Loan”).

       

      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.

       

      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 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.  Notwithstanding the foregoing, ordinary and
necessary quantities of any materials or substances used by Borrower in the
normal course of its research or manufacturing operations in compliance with
Environmental Laws shall not be “Hazardous Materials” and shall not be or cause
a breach of this Agreement.

       

      “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,
collectively, the Mortgage dated as of August 25, 2006, as amended by the First
Amendment to Mortgage dated as of June 29, 2007, and as further amended by the
Second Amendment to Mortgage dated of even date herewith, 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 (Term Note) of even date herewith in the principal amount of
$22,750,000.00, executed by the Borrower, payable to Lender and consented to by
the Guarantor to evidence the Loan, as amended, supplemented, restated, replaced
or modified from time to time.

       

       “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 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 or voting stock 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 Twenty-Two Million Seven Hundred Fifty Thousand and No/100
Dollars ($22,750,000.00).

       

      2.02 Repayment of
Loan.  The Borrower shall repay the Loan, together with
interest accrued thereon, in accordance with the terms of the Note.

       

      2.03 Fee. As of the date
hereof, the Borrower has paid to the Bank an aggregate commitment fee in the
amount of $45,500.00 (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) a
certificate 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;

       

      (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) 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) with
respect to all other advances, fees payable to the Bank, including reasonable
legal fees, commitment fees, administration fees, etc.;

       

      (xv) 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

       

      (xvi) 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 (as hereinafter defined) 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 be 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.

       

      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 65% 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, as to itself, and the
Guarantor, as to itself, represent, warrant and agree as of the date hereof and
continuing so long as any obligation of the Borrower and/or the Guarantor exists
to the Bank under the Loan Documents 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 other than those previously
disclosed to the Bank in writing.

       

      4.02 Mergers and
Consolidations. Except as previously disclosed to the Bank in writing, 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 in writing, 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 (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
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 Nos. TRO-06-100063
and TRO-06-100064 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 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, 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 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.  Maintain their executive offices and
their records at their current locations. The Bank shall be entitled to rely
upon the foregoing unless it receives fourteen (14) days advance written notice
of a change in such executive offices or in such office where such 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 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 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.  Borrower
hereby discloses to Bank that an underground storage tank (“UST”) was installed on the
Property prior to or during the Property’s ownership by the State of Michigan
(the “State”), which
owned the Property prior to the Borrower.  The UST was subsequently
removed by the State prior to the ownership of the Property by
Borrower.  The State conducted environmental testing on the Property,
and acknowledged responsibility for any issues associated with the
UST.

       

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

       

      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 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, the Guarantor, Emergent
Commercial Operations Baltimore LLC, a Delaware limited liability company
(“Emergent
Baltimore”), or Emergent Product Development Gaithersburg Inc., a
Delaware corporation (“Emergent
Gaithersburg”) is an obligor, or (ii) any other agreement between the
Borrower, the Guarantor, Emergent Baltimore or Emergent Gaithersburg 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.

       

      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 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
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)

      1800 Tysons Boulevard, Suite
50

      McLean,
Virginia  22102

      Attention:  Jaron R.
Campbell, Vice President

      Facsimile Number: (917)
229-0937

      


      With a
simultaneous copy
to:           
McGuireWoods LLP

      1750 Tysons Boulevard, Suite
1800

      McLean, Virginia
22102-3915

      Attention: E. Kristen Moye,
Esquire

      Facsimile Number:  (703)
712-5238

      


      
        	
                 
      

              	
                Borrower
      and

              


      

      
        	
                 
      

              	
                Guarantor:

              


      

                     
Emergent BioSolutions Inc.

      2273 Research Boulevard, Suite
400

      Rockville,
Maryland  20850

      Attn: Don Elsey, CFO, Finance
Department

      Attn: Denise Esposito, General Counsel,
Legal Department

      Facsimile Number: (301)
944-0173

      


      With a
simultaneous copy
to:            Emergent
BioDefense Operations Lansing Inc.

      3500 N. Martin Luther King, Jr.
Blvd.

      Building One, Third Floor

      Lansing,
MI  48906

      Attn:  Finance
Department

      Facsimile
Number:  517-327-1560

      


      
        	
                With
      a simultaneous copy to:

              	
                Dickinson
      Wright PLLC

              


      

      
        	
                 
      

              	
                301
      E. Liberty Street, Suite 500

              


      

      
        	
                 
      

              	
                Ann
      Arbor, MI  48104-2266

              


      

      
        	
                 
      

              	
                Attn:  Colleen
      M. Shevnock, Esquire

              


      

      Facsimile
Number:  (734) 623-1625

      


      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 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 Maryland, 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 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 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 June 29, 2007 (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)

       


      
        
           


        

        
           


           


        

        
           


        

      


      IN
WITNESS WHEREOF, each of the parties hereto has 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

      


      


      /s/Kimberly S.
Ridgely                                                         By:/s/R. Don
Elsey(SEAL)

      Name: R.Don
Elsey

      Title:Treasurer

      GUARANTOR:

      


      ATTEST:                                                                EMERGENT
BIOSOLUTIONS INC.,

      a Delaware corporation

      


      /s/Kimberly S.
Ridgely                                                         By:/s/R. Don
Elsey(SEAL)

      Name: R.Don
Elsey

      Title:Treasurer

      


      BANK:

      


      HSBC REALTY CREDIT CORPORATION
(USA),

      a Delaware corporation

      


      


      By:/s/Jaron R.
Campbell(SEAL)

      Name: Jaron R.
Campbell

      Title:Vice
President