UNIF U and I Financial Corporation (QX)

Unilife Medical Solutions Limited (Unilife Australia or the Company) (ASX: UNI) (PINKSHEETS: UNIFF) today announced that it entered into a Merger Implementation Agreement with Unilife Corporation (Unilife USA), a wholly owned subsidiary of Unilife Australia. The purpose of the Merger Implementation Agreement is to facilitate the proposed redomiciliation of the Unilife group to the United States of America (Proposed Transaction).

The Proposed Transaction will be implemented by the establishment of a new corporate structure under which Unilife USA, a company incorporated in Delaware, United States of America, will become the ultimate parent company of the Unilife group (Group). As a result, shareholders and optionholders of Unilife Australia (Security Holders) will exchange their existing interests in Unilife Australia for equivalent interests in Unilife USA.

The Group's business, operations, management and employees will not materially change as a result of the Proposed Transaction. Upon implementation of the Proposed Transaction, the Board of Unilife USA will be restructured to reflect the Group's domicile in the US.

In connection with the Proposed Transaction, Unilife USA will replace Unilife Australia as the entity which is listed on the ASX. To achieve this, Unilife Australia shareholders will receive common stock or CHESS Depositary Interests (CDIs) in Unilife USA. The CDIs will trade on ASX. Each CDI will, in general terms, be equivalent to two existing ordinary share(s) in Unilife Australia. Unilife USA will also seek a new listing on NASDAQ in conjunction with the Proposed Transaction and, if successful, the common stock of Unilife USA will be quoted on NASDAQ.

The United States represents the largest single target market of the Group. Given that Unilife Australia already has the majority of its operational base located in the United States, the Board believes that redomiciliation represents a natural evolution and opportunity for the Group.

The Proposed Transaction is subject to approval by the Australian Federal Court as well as approval of Unilife Australia Security Holders. It is designed to make Unilife Australia a more attractive investment for local and international shareholders by creating a structure which the Board believes will provide an increased opportunity to broaden the potential scope, liquidity and depth of the Company's shareholder base, while maintaining strong ties with Australian investors.

The Proposed Transaction

In order to implement the Proposed Transaction, Unilife Australia proposes to enter into two schemes of arrangement under section 411 of the Corporations Act 2001 between Unilife Australia and its shareholders and optionholders as follows:

--  Share Scheme -- Under the proposed scheme of arrangement between
    Unilife Australia and its shareholders, Unilife USA will acquire all
    existing ordinary shares in Unilife Australia (Shares) from shareholders
    with the result that Unilife Australia will become a wholly owned
    subsidiary of Unilife USA. As consideration for acquiring the existing
    ordinary shares in Unilife Australia, Unilife USA will issue to
    shareholders shares in Unilife USA.

    Unilife Australia shareholders will be entitled to elect to receive
    their Unilife USA shares either in the form of common stock or CDIs.
    The CDIs will be tradeable on ASX. However, unless and until common
    stock is quoted on NASDAQ, there will not be any public market for the
    common stock. Shareholders who receive CDIs can exchange them for
    common stock at any time (and vice versa).

--  Option Scheme -- All existing options in Unilife Australia issued
    under its Employee Share Option Plan (Options) will be cancelled and
    Unilife USA will issue replacement options under the proposed option scheme
    of arrangement between Unilife Australia and its option holders.
    

In order to exceed minimum price requirements for the proposed NASDAQ listing and to satisfy expected investor requirements in the United States, the Proposed Transaction will be implemented so as to effectively consolidate or effect a reverse split of Unilife Australia's issued capital, adopting a ratio of 1:12. In simple terms, Unilife USA will issue to shareholders one share of common stock in Unilife USA for every 12 ordinary shares held in Unilife Australia or, subject to rounding, one CDI (listed on the ASX) for every 2 ordinary shares held in Unilife Australia. Each share of Unilife USA common stock is equivalent to six CDIs and CDIs will be able to be converted into shares of Unilife USA common stock and vice versa on a 6:1 basis at any time after the redomiciliation.

The same consolidation mechanism will also apply equally to all options in Unilife Australia.

In connection with the Share Scheme and the Option Scheme (collectively the Schemes), Unilife Australia and Unilife USA will replace the existing options that were issued in Unilife Australia outside its Employee Share Option Plan with new options in Unilife USA.

To assist Security Holders, Unilife Australia and Unilife USA will be distributing an information memorandum setting out details of the Proposed Transaction including details of how to vote at the meetings at which approval of the Proposed Transaction will be proposed (Information Memorandum). The Information Memorandum will be circulated to Security Holders following the conclusion of the Australian Securities and Investments Commission's (ASIC) review of the documentation.

Benefits of the Proposed Transaction

The Board of Directors of Unilife Australia believe that some of the key potential benefits of the Proposed Transaction are to:

--  Enhance the ability of the Company to co-ordinate the implementation
    of its strategic business plan which is focused on the attainment of global
    leader status in the design, development and supply of innovative safety
    medical devices for use in key pharmaceutical and healthcare markets;

--  Increase demand for the Company's securities in the United States,
    particularly amongst institutional investment groups that have expressed a
    strong interest in the Company's strategic business plan;

--  Optimize the Company's capacity to attract and retain employees with
    strong medical device and pharmaceutical industry experience.
    

Unilife Australia Chairman, Mr Jim Bosnjak OAM, commented:

"The US represents the world's largest and most mature market for safety medical devices. Since Unilife completed the transition of key commercial and operational functions to our Central Pennsylvania facilities earlier this year, we have received significant interest from global pharmaceutical and healthcare companies as well as major USA-based investment groups. The proposed redomiciliation of Unilife to the USA and its listing on NASDAQ is a natural progression of our business expansion plan to establish our Company as a sustainable global business with the necessary expertise and operational capabilities to service the needs of our customer network.

"The completion of this proposed redomiciliation and NASDAQ listing will help us build relationships with US-based anchor institutions that have a firm understanding of global pharmaceutical and healthcare markets. Furthermore, we believe these proposed steps will better align our corporate structure to the strengths of our management team and operational capabilities. As a result, we hope to further harness the full commercial value of the significant business opportunities that we have generated as an emerging global medical device supplier."

Merger Implementation Agreement

Unilife Australia and Unilife USA have entered into a Merger Implementation Agreement which governs the Proposed Transaction.

Implementation of the Proposed Transaction is conditional upon the satisfaction of certain conditions including, but not limited to:

--  approval by Security Holders of the Schemes;

--  approval of the Schemes by the Federal Court of Australia;

--  obtaining the appropriate regulatory approvals; and

--  an independent expert's report concluding that the Proposed
    Transaction is fair, reasonable and in the best interests of Security
    Holders.
    

A summary of the key terms of the Merger Implementation Agreement is included in Attachment A to this announcement.

Indicative timetable

It is expected that the Information Memorandum will be sent to Security Holders in late October 2009 and, assuming approval of the Schemes, the Group will be re-domiciled in the USA by the end of 2009 or early 2010. The Information Memorandum will outline the full details of the Proposed Transaction and the Scheme process, as well as the independent expert's conclusions.

About Unilife

Unilife Australia is an ASX listed company that trades under the symbol "UNI."

Unilife Australia is an ISO 13485 certified medical device company specializing in the design, development and supply of innovative safety medical devices for use in pharmaceutical and healthcare markets. The global headquarters and FDA-registered manufacturing facilities of the Group are located in Central Pennsylvania, and the Group employs approximately 85 staff worldwide. The Group's primary focus is the development, production and sale of a proprietary range of safety syringes to pharmaceutical customers such as sanofi-aventis, as well as healthcare facilities and patients that self-administer prescription medication.

Shareholder Information

Further information on the Proposed Transaction will be lodged with ASX and included on Unilife Australia's website at www.unilife.com

Shareholder / Analyst Enquiries: Australia Jeff Carter Phone: + 61 2 8346 6500 United States Stuart Fine Phone: + 1 908 469 1788