FORM AND SUBSTANCE ACCEPTABLE TO LENDERS, ON THE EARLIER OF (X) THE CONSUMMATION
OF THE ACQUISITION (DEFINED HEREIN), (Y) PAYMENT OF ANY PORTION OF THE PURCHASE
PRICE AS SET FORTH IN SECTION B.2 BELOW, AND (Z) MARCH 28, 2008.
4
THE LOAN AGREEMENT SHALL BE AMENDED
BY INSERTING
THE FOLLOWING TEXT AT THE END OF THE DEFINITION OF "MATERIAL
ADVERSE CHANGE" APPEARING IN SECTION 13.1 THEREOF:
"(D) AGENT DETERMINES, BASED
UPON INFORMATION AVAILABLE TO IT AND IN ITS REASONABLE JUDGMENT, THAT THERE IS A
REASONABLE LIKELIHOOD THAT BORROWER SHALL FAIL TO COMPLY WITH ONE OR MORE OF THE
FINANCIAL COVENANTS IN SECTION 6 DURING THE NEXT SUCCEEDING FINANCIAL REPORTING
PERIOD".
B.
CONSENT TO LOAN AGREEMENT.
1.
BORROWER HAS NOTIFIED LENDERS THAT BORROWER AND ITS WHOLLY OWNED
SUBSIDIARY, PHARMATHENE UK LIMITED ("UK SUBSIDIARY) INTENDS TO ACQUIRE CERTAIN
ASSETS OF AVECIA BIOLOGICS LIMITED AND AVECIA BIOLOGICS INC. (THE
ACQUISITION").
BORROWER HAS REQUESTED THAT LENDERS CONSENT TO THE ACQUISITION.
2.
PURSUANT TO SECTION 7.3 (RELATIVE TO
MERGERS AND ACQUISITIONS), 7.4 (RELATIVE TO INDEBTEDNESS) OF THE LOAN AGREEMENT,
AND 7.7 (RELATIVE TO INVESTMENTS) THE LENDERS HEREBY CONSENT TO THE ACQUISITION
(AS DEFINED ABOVE), PROVIDED THAT: (I) THE BORROWER OR UK SUBSIDIARY IS THE
SURVIVING LEGAL ENTITY, (II) THE TOTAL CASH CONSIDERATION (INCLUSIVE OF THE
ASSUMPTION OF INDEBTEDNESS) FOR THE ACQUISITION DOES NOT EXCEED ELEVEN MILLION
DOLLARS ($11,000,000) AT THE CONSUMMATION OF THE ACQUISITION AND SUCH OTHER
ADDITIONAL PAYMENTS IN ACCORDANCE WITH THE LETTER OF INTENT DATED FEBRUARY 18,
2008, (III) THE CONSUMMATION OF THE ACQUISITION WILL NOT OTHERWISE RESULT IN AN
EVENT OF DEFAULT, AS DEFINED IN THE LOAN AGREEMENT, AFTER GIVING EFFECT TO SUCH
ACQUISITION, AND (IV) WITHIN THIRTY (30) DAYS OF THE CONSUMMATION OF THE
ACQUISITION, BORROWER SHALL CAUSE UK SUBSIDIARY TO BECOME A CO-BORROWER OR A
SECURED GUARANTOR UNDER THE LOAN AGREEMENT, PURSUANT TO DOCUMENTATION ACCEPTABLE
TO AGENT IN IT SOLE DISCRETION, GRANTING THE LENDERS A FIRST PERFECTED LIEN IN
ITS ASSETS INCLUDING ALL ASSETS WHICH ARE THE SUBJECT OF THE ACQUISITION.
C.
WAIVER.
1
BANK HEREBY WAIVES BORROWER'S
EXISTING DEFAULTS, AS LISTED BELOW, UNDER THE LOAN AGREEMENT BY VIRTUE OF
BORROWER'S FAILURE TO TIMELY COMPLY WITH THE: (I) FINANCIAL REPORTING
REQUIREMENT SET FORTH IN SECTION 6.2(A)(I) THEREOF AS OF THE MONTHS ENDED
SEPTEMBER 30, 2007, OCTOBER 31, 2007, NOVEMBER 30, 2007, DECEMBER 31, 2007, AND
JANUARY 31, 2008, AND (II) OPERATING ACCOUNT COVENANT SET FORTH IN
SECTION 6.6(B) WITH RESPECT TO M&T BANK ONLY (PROVIDED BORROWER COMPLIES WITH
THE TERMS OF SECTION A.3 HEREIN).
BANK'S WAIVER OF BORROWER'S COMPLIANCE OF
SAID AFFIRMATIVE COVENANTS SHALL APPLY ONLY TO THE FOREGOING SPECIFIC PERIODS.
4.
FEES.
BORROWER SHALL REIMBURSE LENDERS FOR ALL LEGAL FEES AND
EXPENSES INCURRED IN CONNECTION WITH THIS AMENDMENT TO THE EXISTING LOAN
DOCUMENTS.
5.
CONSISTENT CHANGES.
THE EXISTING LOAN DOCUMENTS ARE HEREBY
AMENDED WHEREVER NECESSARY TO REFLECT THE CHANGES DESCRIBED ABOVE.
6.
RATIFICATION OF LOAN DOCUMENTS.
BORROWER HEREBY RATIFIES,
CONFIRMS, AND REAFFIRMS ALL TERMS AND CONDITIONS OF ALL SECURITY OR OTHER
COLLATERAL GRANTED TO THE AGENT FOR THE