Document:

exv10w40

 

Exhibit 10.40

LOAN AGREEMENT

     THIS LOAN AGREEMENT (this “Agreement”) is dated as of August 25, 2006, by and among 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, the Borrower has applied to the Bank for a Term Loan of Ten Million and No/100
Dollars ($10,000,000.00) (the “Term Loan”); and

     WHEREAS, the Borrower has also applied to the Bank for a revolving credit loan of Five Million
and No/100 Dollars ($5,000,000.00) (the “Revolving Credit Loan”, together with the Term Loan, the
“Loans”); and

     WHEREAS, the Loans will be of benefit to the Guarantor and the Guarantor desires to induce the
Bank to make the Loans by guaranteeing the payment of the Loans; and

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

     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 have 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 $10,000,000.00 evidenced by that certain
Amended and Restated Loan Agreement dated July 29, 2005 by and between the Borrower and Fifth Third
Bank, a Michigan banking corporation, as amended, and that certain Amended and Restated Security
Agreement dated July 29, 2005 by and between the Borrower and Fifth Third Bank, as amended, (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 Document”), 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

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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 ft. 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.

     “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 the date hereof.

     “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
Notes.

     “Loan Documents” shall mean the Notes, this Agreement, the Guaranty, the Mortgage, the
Security Agreement and any other agreement or document referred to herein or now or

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hereafter delivered and executed by the Borrower and/or the Guarantor and/or the Bank in
connection with the Loan contemplated hereby, together with any and all revisions, amendments,
restatements and modifications to, replacements of and substitutions for, any of the foregoing.

     “Mortgage” shall mean the Mortgage, of even date herewith, made and executed by the Borrower
for the benefit of the Bank, as amended, supplemented, restated or modified from time to time, to
secure the Notes, which Mortgage, when recorded, shall create a first lien on the Property.

     “Notes” shall mean the Term Loan Note and Revolving Credit Note each of even date herewith
executed by the Borrower 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 Commitment
for Title Insurance 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 the Fifth Third Loan, including any
extension, amendment or renewal of such Liens; and (l) the liens listed on Schedule 1.1
attached hereto.

     “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.

     “Revolving Credit Note” shall mean that certain Promissory Note (Revolving Credit Loan) of
even date herewith in the maximum principal amount of $5,000,000.00 from the Borrower payable to
the order of the Bank.

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

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

     “Term Note” shall mean that certain Promissory Note (Term Loan) of even date herewith in the
principal amount of $10,000,000.00 from the Borrower payable to the order of the Bank.

     “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 Terns. 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 Term Loan. Subject to the terms and conditions set forth herein and in the Term
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 Ten Million and No/100 Dollars ($10,000,000.00). The Term Note shall be payable
on the 1st day of each month in monthly installments of accrued interest only for the
first six months from the date hereof beginning October 1, 2006. Thereafter the Term Note shall be
payable on the 1st day of each month in monthly installments of principal in the amount
of $83,334.00, calculated using a 10 year amortization, plus accrued interest. All accrued
interest and outstanding principal on the Term Loan shall be due and payable in a final balloon
payment on August 25, 2011 (the “Term Loan Maturity Date”).

     Upon the Borrower’s request, to be made no sooner than 90 days prior to the Term Loan Maturity
Date, and provided no Event of Default shall exist under the Loan Documents, the Bank in its sole
discretion may agree to extend the Term Loan Maturity Date for five (5) additional years until
August 25, 2016 (the “Extension Term”) upon the payment to the Bank of an extension fee in the
amount of 100 basis points. During the Extension Term, the Term Note shall be payable on the
1st day of each month in monthly installments of principal in the amount of $83,334.00,
plus accrued interest. If the Term Loan is extended as provided herein, all accrued interest and
outstanding principal on the Term Loan shall be due and payable on August 25, 2016.

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     2.02 Revolving Credit Loan. Subject to the terms and conditions set forth herein and
in the Revolving Credit Note, the Bank agrees to provide the Borrower with a twelve (12) month
revolving credit facility in the amount of Five Million and No/100 Dollars ($5,000,000.00). The
Revolving Credit Note shall be payable in monthly payments of interest only on the principal amount
outstanding, in arrears, on the 1st day of each month beginning on October 1, 2006 and
continuing on the first day of each month thereafter until October 1, 2007 (the “Conversion Date”).
The outstanding principal balance of the Revolving Credit Note on the Conversion Date shall be
converted to a four (4) year term loan, with monthly payments on the 1st day of each
month, in the amount of principal required to fully amortize the Revolving Credit Note in four (4)
years, plus monthly accrued interest. Unless sooner paid, all outstanding principal and any
accrued and unpaid interest on the Revolving Credit Note shall be due and payable in full on August
25, 2011.

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

     2.04 Fees. As of the date hereof, the Borrower has paid to the Bank an aggregate
commitment fee in the amount of One Hundred Thousand and No/100 Dollars ($100,000.00) (the
“Commitment Fee”) for the Loan. In addition, the Borrower shall pay to the Bank, quarterly in
arrears as billed by the Bank, an un-used fee in an amount equal to one half percent (.5%) of the
average daily difference between $5,000,000.00 and the amount outstanding on the Revolving Credit
Note.

SECTION 3. CONDITIONS PRECEDENT.

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

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

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

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

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

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               (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 Notes 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) with respect to the initial advance of the Loans, 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.

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               (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 and no event which, upon notice
or lapse of time or both, would constitute an Event of Default.

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

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

     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 75% of the fair market value
of the Property, and being otherwise satisfactory in form and substance to the Bank.

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

SECTION 4. REPRESENTATIONS AND WARRANTIES

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

     4.02 Mergers and Consolidations. 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, no
entity has sold substantially all of its assets to the Borrower or sold assets to the Borrower

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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 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 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

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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 result 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 reflected therein. 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 the Commitment for Title
Insurance Nos. TRO-06-100063 and TRO-06-100064 issued by Lawyers Title Insurance Corporation, 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.

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     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)

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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. Except as disclosed in Schedule 4.15 attached hereto,
no franchises, licenses, trademarks, trade names, copyrights or patents are owned or licensed by,
or registered in the name of, or have been applied for by, the Borrower, and no such rights or
agreements are necessary to the conduct of the present business of the Borrower. The Borrower has
no 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, Name Changes. 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.
The Borrower shall provide prior written notice to the Bank of any anticipated name change and will
executed any additional Loan Documents necessary to confirm and re-affirm the obligations of the
Loan Documents in connection with any such name change.

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

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     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 thirty (30) 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

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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 licenses and permits necessary to the proper conduct
of the Borrower’s and the Guarantor’s business.

     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

14

 

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 Materials
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 Hazardous Materials. The Borrower shall immediately
notify the Bank of any remedial action taken by the Borrower with respect to the Property or the
business operations of the Borrower.

     5.11 Access Onto Property and to the UCC Collateral. Allow the appropriate agents and
contractors of the Bank to enter upon the Property and to have 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,

15

 

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 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 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
those Hazardous Materials used in compliance with all Environmental Laws; and deliver to the Bank
copies of all reports prepared by any governmental authority, any environmental auditor or
engineer, or any other person, relating to or in connection with the Borrower’s compliance with 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 and
equipment that has become obsolete, damaged, unsuitable or unnecessary for its business.

16

 

     5.21 Loans. 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, 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.

     5.24 Affiliate Transactions. Not engage in any transaction with an Affiliate on terms
that are less favorable than could be obtained in an arm’s length 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.

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

     (a) Minimum Tangible Net Worth. Maintain a minimum tangible net worth of (i)
not less than 85% of the most recently completed fiscal year end tangible net worth, plus
(ii) 25% of the current net operating profit after taxes, all as determined by generally
accepted accounting principles. Minimum tangible net worth shall be tested annually by the
Bank for the Guarantor’s most recently completed fiscal year, with the first such test to be
performed for the fiscal year ending December 31, 2006.

     (b) Debt Coverage Ratio. Maintain a debt coverage ratio of no less than 1.25
to 1.00. The debt coverage ratio shall be calculated as follows: (i) earnings before
interest, taxes, depreciation and amortization for the most recent four (4) quarters; (ii)
divided by the sum of current obligations under capital leases and principal obligations and
interest expenses for borrowed monies, in each case due and payable for the following four
(4) quarters. The debt coverage ratio shall be tested on a quarterly basis by the Bank with
the first such test to be performed on the results of the fourth quarter of 2006.

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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, 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 not already subject to a grace or cure period, 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 Attachment. The issuance of any attachment or garnishment against the Borrower
or the Guarantor, which is not released, terminated or set aside within thirty (30) days.

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

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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; (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

19

 

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

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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)

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

Washington, D. C. 20036

Attention: Jeffrey M. Henry, Vice President

Facsimile Number: (202) 496-8758

21

 

	 	 	 	 	 
	With a simultaneous copy to:	 	McGuireWoods LLP

1750 Tysons Boulevard, Suite 1800

McLean, Virginia 22102-3915

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

Facsimile Number: 703-712-5238
	 
	 	 	 	 
	 

	 	Borrower and
Guarantor:	 	 
	 

	 	 	 	Emergent BioSolutions Inc.

300 Professional Drive, Suite 100

Gaithersburg, MD 20879

Attn: Finance Department

Attn: Legal Department

Facsimile Number: (301) 944-0173

	 
	 	 	 	 
	With a simultaneous copy to:	 	BioPort Corporation

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:	 	Thelen Reid & Priest LLP

701 Eighth Street, N.W.

Washington, DC 20001

Attn: Carl A. Valenstein, Esq.

Facsimile Number: 202-654-1836

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

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

22

 

     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 unreasonable 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 subsidiary or affiliate of the Bank, to any
fiduciary institution or to any banking institution, credit union or savings and loan association
organized under the laws of any state, and hereby authorizes all 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

23

 

obtained in connection with this Agreement, the Note and any of the other Loan Documents or
otherwise.

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

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

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

24

 

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.

25

 

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.

(Signature Page Follows)

26

 

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

	 	 	 	 	 	 	 
	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 
	ATTEST:	 	BIOPORT CORPORATION,

a Michigan corporation	 	 
	 
	 	 	 	 	 	 
	/s/
José Ochoa

	 	By:
	 	/s/ R. Don Elsey	 	(SEAL)
	 

	 	 	 	 	 	 
	José
Ochoa

	 	Name:	 	R. Don Elsey	 	 
	 

	 	Title:	 	Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	GUARANTOR:	 	 
	 
	 	 	 	 	 	 
	ATTEST:	 	EMERGENT BIOSOLUTIONS INC.,

a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	/s/
José Ochoa

	 	By:
	 	/s/ Fuad El-Hibri	 	(SEAL)
	 

	 	 	 	 	 	 
	José
Ochoa

	 	Name:	 	Fuad El-Hibri	 	 
	 

	 	Title:	 	President & CEO	 	 
	 
	 	 	 	 	 	 
	 	 	BANK:	 	 
	 
	 	 	 	 	 	 
	 	 	HSBC REALTY CREDIT CORPORATION (USA),

a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jeffrey M. Henry	 	(SEAL)
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Jeffrey M. Henry	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Vice President	 	 
	 

	 	 	 	 	 	 

27exv10w41

 

Exhibit 10.41

PROMISSORY NOTE

(Term Note)

			
	$10,000,000.00
	 	August 25, 2006

     FOR VALUE RECEIVED, BIOPORT CORPORATION, a Michigan corporation (the “Borrower”) promises to
pay to the order of HSBC REALTY CREDIT CORPORATION (USA), a Delaware corporation (hereinafter
referred to as the “Bank”) at its office at 1130 Connecticut Avenue, N.W., 12th Floor,
Washington, D. C. 20036, or at such other place as the Bank may from time to time direct, the sum
of TEN MILLION AND NO/100 DOLLARS ($10,000,000.00), with interest computed daily on the unpaid
principal balance at the Interest Rate (as such term is hereinafter defined), and payable according
to the repayment terms set forth herein (the “Loan”). The Loan is made pursuant to a Loan Agreement
of even date herewith (the “Loan Agreement”) among the Borrower, the Bank and Emergent BioSolutions
Inc. (the “Guarantor”). The Loan is guaranteed by a Guaranty of even date herewith from the
Guarantor to the Bank (the “Guaranty”). The Loan is secured by, among other things, a Mortgage of
even date herewith from the Borrower to the Bank (the “Mortgage”) and a Security Agreement of even
date herewith from the Borrower to the Bank (the “Security Agreement”). This Note, the Loan
Agreement, the Guaranty, the Mortgage, the Security Agreement and any other documents entered into
in connection with the Loan are referred to as the “Loan Documents”).

      Interest Rate and Payment Terms

     This Note shall bear interest at a rate per annum (the “Interest Rate”) equal to LIBOR plus
three and 75/100 percent (3.75%). “LIBOR” means the daily fluctuating rate of interest (rounded
upwards, if necessary to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor
page) as the 3-month London interbank offered rate for deposits in United States Dollars at
approximately 11:00 a.m. (London time) on the second preceding Business Day, as adjusted from time
to time in the Bank’s sole discretion for then-applicable reserve requirements, deposit insurance
assessment rates and other regulatory costs (the “Index”). If for any reason such rate is not
available, the term “LIBOR” shall mean the fluctuating rate of interest equal to the rate of
interest (rounded upwards, if necessary to the nearest 1/100 of 1%) appearing on Reuters Screen
LIBO Page as the 3-month London interbank offered rate for deposits in United States Dollars at
approximately 11:00 a.m. (London time) on the second preceding day, as adjusted from time to time
in the Bank’s sole discretion for then-applicable reserve requirements, deposit insurance
assessment rates and other regulatory costs; provided, however, if more than one rate is specified
on Reuters Screen LIBO page, the applicable rate shall be the arithmetic mean of all such rates.
Any change in the rate will take effect on the date of such change in the Index as indicated on
Telerate Page 3750. Interest will accrue on any non-banking day at the rate in effect on the
immediately preceding banking day.

     This Note shall be payable on the 1st day of each month in monthly installments of
accrued interest only for the first six months from the date hereof beginning October 1, 2006.
Thereafter this Note shall be payable on the 1st day of each month in monthly
installments of principal in the amount of $83,334 (calculated using a 10 year amortization) plus
accrued

 

 

interest. All accrued interest and outstanding principal shall be due and payable in a final
balloon payment on August 25, 2011 (the “Maturity Date”).

     Upon the Borrower’s request, to be made no sooner than 90 days prior to the Maturity Date, and
provided no Event of Default shall exist under the Loan Documents, the Bank in its sole discretion
may agree to extend the Maturity Date for five (5) additional years until August 25, 2016 (the
“Extension Term”) upon the payment to the Bank of an extension fee in the amount of 100 basis
points. During the Extension Term, this Note shall continue to be payable on the 1st
day of each month in monthly installments of principal in the amount of $83,334, plus accrued
interest. If the Maturity Date is extended as provided herein, all accrued interest and
outstanding principal on this Note shall be due and payable on August 25, 2016.

     The Interest Rate on this Note: (a) will not exceed applicable legal limits, and in the event
a payment is made by the Borrower or received by the Bank in excess of the applicable legal limits,
such excess payment shall be credited as a payment of principal; and (b) shall be computed on the
basis of 360-day year and charged for the actual number of days elapsed in each interest
calculation period.

     In the event that the Bank shall determine that by reason of circumstances affecting the
interbank Eurodollar market, adequate and reasonable means do not exist for determining LIBOR, or
Eurodollar deposits in the relevant amount and for the relevant maturity are not available to the
Bank in the interbank Eurodollar market, the Bank shall give the Borrower prompt notice of such
determination. If such notice is given, and until such notice is withdrawn, the Interest Rate on
this Note shall be a rate per annum equal to the Prime Rate plus 0.25%. “Prime Rate” means the rate
per annum from time to time established by the Bank as the Prime Rate and made available by the
Bank at its main office or, in the discretion of the Bank, the base, reference or other rate then
designated by the Bank for general commercial loan reference purposes, it being understood that
such rate is a reference rate, not necessarily the lowest, established from time to time, which
serves as the basis upon which effective interest rates are calculated for loans making reference
thereto. If, after the date of this Note, any applicable law, treaty, regulation or directive, or
any change therein or in the interpretation or application thereof, shall make it unlawful for the
Bank to make or maintain any LIBOR loan, the Interest Rate on this Note shall be a rate per annum
equal to the Prime Rate plus 0.25%, for so long as such illegality exists.

     Prepayment

     Upon five (5) business days’ written notice from the Borrower to the Bank, the Borrower may
prepay, without penalty or premium (except as described below), the outstanding principal balance
of this Note, in whole or in part, subject to the following terms and conditions:

     (a) any prepayment must be made on an interest payment date or scheduled principal and
interest payment date;

     (b) must include payment of all interest accrued and unpaid on the amount so prepaid as of the
date of such prepayment;

2

 

     (c) partial prepayment shall not postpone the due date of any subsequent payment, nor shall it
change the amount of any monthly payment otherwise required to be made under this Note, unless the
Bank otherwise agrees in writing and in advance of receipt of such partial prepayment; and

     (d) if the Interest Rate at the time of prepayment has been converted to a fixed rate pursuant
to an ISDA Master Agreement or other interest rate protection agreement or product provided by the
Bank to fix the interest rate (“Master Agreement”), the Borrower shall pay any breakage fees, make
whole provisions or other costs and expenses related to such Master Agreement.

     Fixing Interest Rate

     At any time, the Borrower may enter into a Master Agreement with the Bank to convert the
Interest Rate to a fixed rate for a period of up to, but no longer thank, the final maturity date
on this Note, on such terms as may be agreed to be by the Bank and the Borrower.

     Late Charge

     In the event the Borrower fails to make a payment of principal and/or interest in fully
collected funds within fifteen (15) days after such payment is due, the Borrower shall pay a late
charge to the Bank in an amount equal to five percent (5%) of the overdue installment.

     Default Interest

     Upon an Event of Default (as such term is hereinafter defined) and until such Event of Default
is cured or this Note is paid in full, this Note shall bear interest at a rate equal to three
percent (3%) per annum above the Interest Rate in effect on the date of such Event of Default.

     Events of Default and Remedies

     Subject to any applicable notice and cure periods contained in the Loan Documents, each of the
following shall constitute a default (“Event of Default”) under this Note:

     (a) A failure to make a payment of any sum within ten (10) days of when due under this Note.

     (b) A failure to perform or observe any of the covenants, conditions or terms of this Note or
any other Loan Document.

     (c) Upon the occurrence of an Event of Default or failure to pay the balance hereof when
otherwise due, and notwithstanding the payment of any late charges: (i) all remaining payments
under this Note shall become due and payable together with interest accrued to the date of payment
without notice, at the option of the Bank; (ii) the Borrower shall reimburse the Bank for any
reasonable expenses, costs and attorneys’ fees which the Bank may incur in connection with the
collection of any monies due under this Note or in connection with the enforcement of any right
under this Note or under any of the Loan Documents; and (iii) the Bank

3

 

may exercise any or all of the other rights, powers and remedies provided for in any of the Loan
Documents, or now or hereafter existing at law or in equity or by statute or otherwise.

     Miscellaneous

     The Borrower hereby waives demand, presentment for payment, protest, and notice of dishonor,
and agrees that at any time and from time to time and with or without consideration, the Bank may,
without notice to or further consent of the Borrower and without in any manner releasing, lessening
or affecting the obligations of the Borrower: (a) release, surrender, waive, substitute, settle,
exchange, compromise, modify, extend or grant indulgences with respect to: (i) this Note; and (ii)
all or any part of any collateral or security for this Note; or (b) grant any extension or other
postponements of the time of payment hereof.

     Each right, power and remedy of the Bank as provided for in this Note, 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 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 of such other rights, powers or remedies.

     No failure or delay by the Bank to insist upon the strict performance of any term, condition
or covenant of this Note, or to exercise any right, power or remedy upon a breach hereof, shall
constitute a waiver of any such term, condition or covenant or of any such breach, nor shall it
preclude the Bank from exercising any such right, power or remedy at any later time or times,
unless such waiver is in writing signed by an authorized representative of the Bank. If the Bank
accepts any payment after its due date, this does not constitute a waiver of the Bank’s right to
receive timely payment of all other subsequent amounts or to declare a default for the failure to
make any other subsequent payment when due.

     Any payment on this Note coming due on a day on which the Bank is not open to conduct full
banking business shall be due on the next succeeding business day. Each payment hereunder may be
applied to pay interest, principal, late fees or costs as the Bank, in its sole discretion, may
determine.

     All notices under this Note shall be given as provided in the Loan Agreement.

     The Borrower authorizes the Bank to disburse funds represented by this Note to the Borrower
and agrees that such disbursement shall be deemed to be full and absolute consideration for the
undertaking to make payment hereunder. The Borrower hereby authorizes the Bank to disclose to any
subsidiary or affiliate of the Bank, to any fiduciary institution or to any banking institution,
credit union or savings and loan association organized under the laws of any State, and hereby
authorizes all subsidiaries and affiliates of the Bank, to disclose to the Bank, the financial
record of the Borrower.

     THE BORROWER 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 EITHER PARTY AGAINST
THE OTHER ARISING OUT OF, UNDER OR IN

4

 

CONNECTION WITH THIS NOTE AND THE TRANSACTIONS CONTEMPLATED HEREIN. THE BORROWER ACKNOWLEDGES THAT
IT HAS 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 HEREBY CERTIFIES 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 ACKNOWLEDGES THAT IT HAS CONSULTED WITH AN
ATTORNEY AND FULLY UNDERSTANDS THE LEGAL EFFECT OF THE PROVISIONS OF THIS PARAGRAPH.

     This Note shall be governed by and construed under and in accordance with the laws of the
State of New York (but not including the choice of law rules thereof). The Borrower hereby submits
to the non-exclusive jurisdiction of any State of New York court or Federal court sitting in the
State of New York in any action or proceeding arising out of or relating to this Note, and hereby
waives any objection it may have to the laying of venue of any such action or proceeding in any of
said courts and any claim that it may have that any such action or proceeding has been brought in
an inconvenient forum. A final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by
law.

     Whenever used herein, the word “Borrower” or “Bank” shall be deemed to include, as
appropriate, its/his/her respective heirs, personal representatives, successors and assigns. All
words used herein shall be deemed to refer to the singular, plural, masculine, feminine or neuter
as the identity of the person or entity or the context may require.

(Signature Page Follows)

5

 

     IN WITNESS WHEREOF, the Borrower has duly executed this Note under seal as of the date and
year first hereinabove set forth. This instrument may be signed in multiple counterparts.

	 	 	 	 	 
	 	BIOPORT CORPORATION,
a Michigan corporation
 	 
	 	By: 	/s/
R. Don Elsey	(SEAL)
	 	 	Name:  	R. Don
Elsey
	 	 	Title:  	Treasurer
	 	 	 	 
	 	 	 	 

6

 

	 	 	 	 	 

CONSENT OF THE GUARANTOR

The undersigned Guarantor hereby consents to the terms of this Note and acknowledges it has
guaranteed this Note pursuant to the terms of that certain Guaranty executed by the undersigned of
even date herewith.

	 	 	 	 	 
	 	EMERGENT BIOSOLUTIONS INC.,
a Delaware corporation
 	 
	 	By:  	/s/
Fuad El-Hibri	(SEAL)
	 	 	Name:  	Fuad El-Hibri
	 	 	Title:  	President & CEO
	 	 	 	 
	 	 	 	 
	 

7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}]]