Exhibit 10.1

 

AMENDED AND RESTATED BUSINESS LOAN AGREEMENT

 

Borrower:

 

Advanced Life Sciences, Inc.

 

Lender:

 

The Leaders Bank

 

 

1440 Davey Road

 

 

 

2001 York Road, Suite 150

 

 

Woodridge, IL 60517

 

 

 

Oak Brook, IL 60523

 

THIS AMENDED AND RESTATED BUSINESS LOAN AGREEMENT, dated October 23, 2008, is
made and executed by and between ADVANCED LIFE SCIENCES, INC., an Illinois
corporation (“Borrower”) and THE LEADERS BANK (“Lender”).

 

RECITALS

 

This Amended and Restated Loan and Security Agreement amends and restates in its
entirety that certain Business Loan Agreement, dated April 18, 2006, by and
between the Borrower and the Lender.  Borrower has received prior commercial
loans from Lender or has applied to Lender for a commercial loan or loans or
other financial accommodations, including those which may be described on any
exhibit or schedule attached to this Agreement.  Borrower understands and agrees
that: (A) in granting, renewing, or extending any Loan, Lender is relying upon
Borrower’s representations, warranties, and agreements as set forth in this
Agreement; (B) the granting, renewing, or extending of any Loan by Lender at all
times shall be subject to Lender’s sole judgment and discretion; and (C) all
such Loans shall be and remain subject to the terms and conditions of this
Agreement.

 

ACCORDINGLY, in consideration of the mutual covenants and agreements herein
contained, Borrower and Lender hereby agree as follows:

 

AGREEMENT

 

TERM.  This Agreement shall be effective as of October 23, 2008, and shall
continue in full force and effect until such time as all of Borrower’s Loans in
favor of Lender have been paid in full, including principal, interest, costs,
expenses, attorneys’ fees, and other fees and charges, or until such time as the
parties may agree in writing to terminate this Agreement.

 

ADVANCE AUTHORITY.  The following persons currently are authorized to request
Advances and authorize payments under the line of credit until Lender receives
from Borrower, at Lender’s address shown above, written notice of revocation of
their authority: John L. Flavin, Michael T. Flavin, and Michael J. Cogan.

 

CONDITIONS PRECEDENT TO EACH ADVANCE.  Lender’s obligation to make the initial
Advance and each subsequent Advance under this Agreement shall be subject to the
fulfillment to Lender’s satisfaction of all of the conditions set forth in this
Agreement and in the Related Documents.

 

Loan Documents.  Borrower shall provide to Lender the following documents for
the Loan and such documents shall be in full force and effect:  (1) the Note;
(2); Parent’s Guaranty (3) Borrower’s Security Agreement; (4) Parent’s Security
Agreement; (5) Parent’s Pledge Agreement; (6) ALS Pledge Agreement;
(7) Borrower’s Collateral Assignment of Patents; (8) Flavin’s Personal
Undertaking; (9) Landlord’s Estoppel Certificate; (10) Borrower’s Agreement to
Provide Insurance; (11) Parent’s Agreement to Provide Insurance; (12) financing
statements and all other documents perfecting Lender’s Security Interests; and
(13) evidence of insurance as required below; together with all such Related
Documents as Lender may require for the Loan; all in form and substance
satisfactory to Lender and Lender’s counsel.

 

Borrower’s Authorization.  Borrower shall have provided in form and substance
satisfactory to Lender properly certified resolutions, duly authorizing the
execution and delivery of this Agreement, the Note and the Related Documents. In
addition, Borrower shall have provided such other resolutions, authorizations,
documents and instruments as Lender or its counsel, may require.  Borrower shall
have caused its counsel and counsel to its Parent to deliver an opinion letter
with respect to the transactions contemplated herein, in form and substance
satisfactory to Lender and Lender’s counsel.

 

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Payment of Fees and Expenses.  Borrower shall have paid to Lender all fees,
charges, and other expenses which are then due and payable as specified in this
Agreement or any Related Document.  Borrower shall cause Parent to issue to
Lender or its designee warrants representing 65,000 shares of Parent’s common
stock, in form and substance satisfactory to Lender and Lender’s counsel.

 

Representations and Warranties.  The representations and warranties set forth in
this Agreement, in the Related Documents, and in any document or certificate
delivered to Lender under this Agreement are true and correct.

 

No Event of Default.  There shall not exist at the time of any Advance a
condition which would constitute an Event of Default under this Agreement or
under any Related Document.

 

REPRESENTATIONS AND WARRANTIES.  Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of loan
proceeds, as of the date of any renewal, extension or modification of any Loan
and at all times any Indebtedness exists:

 

Organization.  Borrower is a corporation for profit which is, and at all times
shall be, duly organized, validly existing and in good standing under and by
virtue of the laws of the State of Illinois.  Borrower is duly authorized to
transact business in all other states in which Borrower is doing business,
having obtained all necessary filings, governmental licenses and approvals for
each state in which Borrower is doing business.  Specifically, Borrower is, and
at all times shall be, duly qualified as a foreign corporation in all states in
which the failure to so qualify would have a material adverse effect on its
business or financial condition.  Borrower has the full power and authority to
own its properties and to transact the business in which it is presently engaged
or presently proposes to engage.  Borrower maintains an office at 1440 Davey
Drive, Woodridge, IL 60517 (the “Principal Office”).  Unless Borrower has
designated otherwise in writing, the Principal Office is the office at which
Borrower keeps its books and records, including its records concerning the
Collateral.  Borrower will notify Lender prior to any change in the location of
Borrower’s state of organization or any change in Borrower’s name.  Borrower
shall do all things necessary to preserve and to keep in full force and effect
its existence, rights and privileges, and shall comply with all regulations,
rules, ordinances, statutes, orders and decrees of any governmental or
quasi-governmental authority or court applicable to Borrower and Borrower’s
business activities.

 

Ownership.  Borrower owns all of the Borrower’s Collateral clear of all liens,
claims, interests and encumbrances (except for Permitted Liens).  Borrower is
the owner of all of the Patents and such Patents are all of the patents that are
part of Borrower’s business.  Parent does not have any ownership interest in nor
contractual or other right to such Patents or any other patents.  Parent owns
one hundred percent (100%) of the equity interests of Borrower, and Borrower has
not and will not issue any additional capital stock whether pursuant to
warrants, options or otherwise.

 

Assumed Business Names.  Borrower has filed or recorded all documents or filings
required by law relating to all assumed business names used by Borrower. 
Excluding the name of Borrower, the following is a complete list of all assumed
business names under which Borrower does business: None.

 

Authorization.  Borrower’s execution, delivery, and performance of this
Agreement and all the Related Documents have been duly authorized by all
necessary action by Borrower and do not conflict with, result in a violation of,
or constitute a default under (1) any provision of Borrower’s articles of
incorporation, bylaws or any agreement or other instrument binding upon
Borrower, or (2) any law, governmental regulation, court decree, or order
applicable to Borrower or to Borrower’s properties.

 

Financial Information.  Each of Borrower’s financial statements supplied to
Lender truly and completely disclosed Borrower’s financial condition as of the
date of the statement, and there has been no material adverse change in
Borrower’s financial condition subsequent to the date of the most recent
financial statement supplied to Lender.  Borrower has no material contingent
obligations except as disclosed in such financial statements.

 

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Legal Effect.  This Agreement constitutes, and any instrument or agreement
Borrower is required to give under this Agreement when delivered will
constitute, a legal, valid, and binding obligation of Borrower enforceable
against Borrower in accordance with their respective terms.

 

Properties.  Except as contemplated by this Agreement or as previously disclosed
in Borrower’s financial statements or in writing to Lender and as accepted by
Lender, and except for properly tax liens for taxes not presently due and
payable, Borrower owns and has good title to all of Borrower’s properties free
and clear of all Security Interests, and has not executed any security documents
or financing statements relating to such properties.  All of Borrower’s
properties are titled in Borrower’s legal name, and Borrower has not used or
filed a financing statement under any other name for at least the last five
(5) years.

 

Hazardous Substances.  Except as disclosed to and acknowledged by Lender in
writing, Borrower represents and warrants that:  (1) During the period of
Borrower’s ownership of the Collateral, there has been no use, generation,
manufacture, storage, treatment, disposal, release or threatened release of any
Hazardous Substance by any person on, under, about or from any of the
Collateral; (2) Borrower has no knowledge of, or reason to believe that there
has been (a) any breach or violation of any Environmental Laws, (b) any use,
generation, manufacture, storage, treatment, disposal, release or threatened
release of any Hazardous Substance on, under, about or from the Collateral by
any prior owners or occupants of any of the Collateral, or (c) any actual or
threatened litigation or claims of any kind by any person relating to such
matters; and (3) Neither Borrower nor any tenant, contractor, agent or other
authorized user of any of the Collateral shall use, generate, manufacture,
store, treat, dispose of or release any Hazardous Substance on, under, about or
from any of the Collateral, and any such activity shall be conducted in
compliance with all applicable federal, state, and local laws, regulations, and
ordinances, including without limitation all, Environmental Laws.  Borrower
authorizes Lender and its agents to enter upon the Collateral to make such
inspections and tests as Lender may reasonably deem appropriate to determine
compliance of the Collateral with this section of the, Agreement.  Any
inspections or tests made by Lender shall be at Borrower’s expense and for
Lender’s purposes only and shall not be construed to create any responsibility
or liability on the part of Lender to Borrower or to any other person. The
representations and warranty contained herein are based on Borrower’s due
diligence in investigating the Collateral for hazardous waste and Hazardous
Substances.  Borrower hereby (i) releases and waives any future claims against
Lender for indemnity or contribution in the event Borrower becomes liable for
cleanup or other costs under any such laws, and (ii) agrees to indemnify and
hold harmless Lender against any and all claims, losses, liabilities, damages,
penalties, and expenses which Lender may directly or indirectly sustain or
suffer resulting from a breach of this section of the Agreement or as a
consequence of any use, generation, manufacture, storage, disposal, release or
threatened release of a hazardous waste or substance on the Collateral.  The
provisions of this section of the Agreement, including the obligation to
indemnify, shall survive the payment of the Indebtedness and the termination,
expiration or satisfaction of this Agreement and shall not be affected by
Lender’s acquisition of any interest in any of the Collateral, whether by
foreclosure or otherwise.

 

Litigation and Claims.  No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against Borrower
is pending or threatened, and no other event has occurred which may materially
adversely affect Borrower’s financial condition or properties, other than
litigation, claims, or other events, if any, that have been disclosed to and
acknowledged by Lender in writing.

 

Taxes.  To the best of Borrower’s knowledge, all of Borrower’s tax returns and
reports that are or were required to be filed, have been filed, and all taxes,
assessments and other governmental charges have been paid in full, except those
presently being or to be contested by Borrower in good faith in the ordinary
course of business and for which adequate reserves have been provided,

 

Lien Priority.  Unless otherwise previously disclosed to Lender in writing,
Borrower has not entered into or granted any Security Agreements, or permitted
the filing or attachment of any Security interests on or affecting any of the
Collateral directly or indirectly securing repayment of Borrower’s Loan and
Note, that would be prior or that may in any way be superior to Lender’s
Security Interests and rights in and to such Collateral.   Borrower will not
cause nor permit any lien, claim, interest or encumbrance on the Collateral that
would adversely affect or take priority over the Lender’s Security Interests. 
At all times, Borrower

 

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shall take all actions necessary to ensure that Lender will have a first
priority Security Interest on the Collateral.

 

Binding Effect.  This Agreement, the Note, all Security Agreements (if any) and
all Related Documents are binding upon the signers thereof, as well as upon
their successors, representatives and assigns, and are legally enforceable in
accordance with their respective terms.

 

Key Contracts and SEDA.  Borrower has provided to Lender true, correct and
complete copies of Borrower’s Key Contracts and the SEDA and, if executed in the
future, Borrower will provided to Lender true, correct and complete copies of
any amendments, modifications or other changes thereto.  Borrower’s Key
Contracts and the SEDA currently are and at all times shall be in full force and
effect and Borrower is not in default thereunder.  The funds and proceeds
received by the Borrower and/or Parent pursuant to the SEDA may be used to repay
the Loans, and such repayment is permitted without restriction or limitation
under the terms and conditions of the SEDA.

 

SEC Reporting.  All of the information and reports filed by the Parent with the
United States Securities and Exchange Commission and/or any other governmental
authority shall be true and accurate and shall not be misleading in any material
respect.  The Parent shall comply with all applicable securities laws and rules.

 

AFFIRMATIVE COVENANTS.  Borrower covenants and agrees with Lender that, so long
as this Agreement remains in effect, Borrower will:

 

Notices of Claims and Litigation.  Promptly inform Lender in writing of (1) all
material adverse changes in Borrower’s or Parent’s financial condition, and
(2) all existing and all threatened litigation, claims, investigations,
administrative proceedings or similar actions affecting Borrower, Parent or any
Guarantor which could materially affect the financial condition of Borrower, the
financial condition of Parent or the financial condition of Guarantor.

 

Financial Records.  Maintain its books and records in accordance with GAAP,
applied on a consistent basis, and permit Lender to examine and audit Borrower’s
books and records at all reasonable times.

 

Financial Statements.  Furnish Lender with such financial statements and other
related information at such frequencies and in such detail as Lender may
reasonably request.

 

Additional information.  Furnish such additional information and statements, as
Lender may request from time to time.

 

Insurance.  Maintain fire and other risk insurance, public liability insurance
and such other insurance as Lender may require with respect to Borrower’s and/or
Parent’s properties and operations, in form, amounts, coverages and with
insurance companies, acceptable to Lender.  Borrower, upon request of Lender,
will deliver to Lender from time to time the policies or certificates of
insurance in form reasonably satisfactory to Lender, including stipulations that
coverages will not be cancelled or diminished without at least thirty (30) days
prior written notice to Lender.  Each insurance policy also shall include an
endorsement providing that coverage in favor of Lender will not be impaired in
any way by any act, omission or default of Borrower or Parent or any other
person. In connection with all policies covering assets in which Lender holds or
is offered a Security Interest for the Loans, Borrower will provide Lender with
such lender’s loss payable or other endorsements as Lender may require.

 

Insurance Reports.  Furnish to Lender, upon request of Lender, reports on each
existing insurance policy showing such information as Lender may reasonably
request, including without limitation the following: (1) the name of the
insurer; (2) the risks insured; (3) the amount of the policy; (4) the properties
insured; (5) the then current property values on the basis of which insurance
has been obtained, and the manner of determining those values; and (6) the
expiration date of the policy.  In addition, upon request of Lender (however not
more often than annually), Borrower will have an independent appraiser
satisfactory to Lender determine, as applicable, the actual cash value or
replacement cost of any Collateral.  The cost of

 

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such appraisal shall be paid by Borrower.

 

Other Agreements.  Comply with all terms and conditions of all other agreements
in all material respects, whether now or hereafter existing, between Borrower
and any other party and notify Lender immediately in writing of any default in
connection with any other such agreements.

 

Loan Proceeds.  Use all Loan proceeds solely for Borrower’s business operations,
unless specifically consented to the contrary by Lender in writing.

 

Taxes, Charges and Liens.  Pay and discharge when due all of its indebtedness
and obligations, including without limitation all assessments, taxes,
governmental charges, levies and liens, of every kind and nature, imposed upon
Borrower or its properties, income, or profits, prior to the date on which
penalties would attach, and all lawful claims that, if unpaid, might become a
lien or charge upon any of Borrower’s properties, income, or profits.

 

Performance.  Perform and comply, in a timely manner, with all terms,
conditions, and provisions set forth in this Agreement, in the Related
Documents, and in all other instruments and agreements between Borrower and
Lender.  Borrower shall notify Lender immediately in writing of any default in
connection with any agreement.

 

Operations.  Maintain executive and management personnel with substantially the
same qualifications and experience as the present executive and management
personnel, provide written notice to Lender of any change in executive and
management personnel, and conduct its business affairs in a reasonable and
prudent manner.

 

Environmental Studies.  Promptly conduct and complete, at Borrower’s expense,
all such investigations, studies, samplings and testings as may be requested by
any governmental authority relative to any substance, or any waste or by-product
of any substance defined as toxic or a hazardous substance under applicable
federal, state, or local law, rule, regulation, order or directive, at or
affecting any property or any facility owned, leased or used by Borrower.

 

Compliance with Governmental Requirements.  Comply with all laws, ordinances,
and regulations, now or hereafter in effect, of all governmental authorities
applicable to the conduct of Borrower’s properties, businesses and operations,
and to the use or occupancy of the Collateral, including without limitation, the
Americans with Disabilities Act of 1990.  Borrower may contest in good faith any
such law, ordinance, or regulation and withhold compliance during any
proceeding, including appropriate appeals, so long as Borrower has notified
Lender in writing prior to doing so and so long as, in Lender’s sale opinion,
Lender’s interests in the Collateral are not jeopardized.  Lender may require
Borrower to post adequate security or a surety bond, reasonably satisfactory to
Lender, to protect Lender’s interest.

 

Inspection.  Permit employees or agents of Lender at any reasonable time to
inspect any and all Collateral for the Loan or Loans and Borrower’s other
properties and to examine or audit Borrower’s books, accounts, and records, and
to make copies and memoranda of Borrower’s books, accounts, and records.  If
Borrower now or at any time hereafter maintains any records (including without
limitation computer generated records and computer software programs for the
generation of such records) in the possession of a third party, Borrower, upon
request of Lender shall notify such party to permit Lender free access to such
records at all reasonable times and to provide Lender with copies of any records
it may request, all at Borrower’s expense.

 

Environmental Compliance and Reports.  (1) Comply in all respects with any and
all Environmental Laws; (2) not cause or permit to exist, as a result of an
intentional or unintentional action or omission on Borrower’s part or on the
part of any third party, on property owned and/or occupied by Borrower, any
environmental activity in violation of any environmental law, unless such
environmental activity is pursuant to and in compliance with the conditions of a
permit issued by the appropriate federal, state or local governmental
authorities; and (3) furnish to Lender promptly and in any event within thirty
(30) days after receipt thereof a copy of any notice, summons, lien, citation,
directive, letter or other communication

 

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from any governmental agency or instrumentality concerning any intentional or
unintentional action or omission on Borrower’s part in connection with any
environmental activity whether or not there is damage to tile environment and/or
other natural resources.

 

Key Contracts and SEDA.  Will perform its obligations under its Key Contracts,
and will promptly notify Lender of any default thereunder whether by Borrower or
any other party thereto; and will cause Parent to perform its obligations under
the SEDA and will promptly notify Lender of any default thereunder whether by
Parent or any other party thereto.

 

SEC Reporting.  Will cause all of the information and reports filed by the
Parent with the United States Securities and Exchange Commission and/or any
other governmental authority to be true and accurate and not misleading in any
material respect; and will cause the Parent to comply with all applicable
securities laws and rules.

 

Patents.  Will keep in full force and effect its Patents, and will use
commercially reasonable efforts to prosecute and defend its rights therender

 

Additional Assurances.  Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, Security Agreements, assignments, financing
statements, instruments, documents and other agreements as Lender or its
attorneys may reasonably request to evidence and secure the Loans and to perfect
all Security Interests, including but not limited to filings required to be made
in foreign jurisdictions with respect to the Patents.

 

LENDER’S EXPENDITURES.  If any action or proceeding is commenced that would
materially affect Lender’s Interest in the Collateral or if Borrower falls to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Borrower’s failure to discharge or pay when due any amounts
Borrower is required to discharge or pay under this Agreement or any Related
Documents, Lender on Borrower’s behalf may (but shall not be obligated to) take
any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, Security Interests, encumbrances and
other claims, at any time levied or placed on any Collateral and paying all
costs for insuring, maintaining and preserving any Collateral.  All such
expenditures incurred or paid by Lender for such purposes will then bear
interest at the rate charged under the Note from the date incurred or paid by
Lender to the date of repayment by Borrower.  All such expenses will become a
part of the Indebtedness and, at Lender’s option, will (1) be payable on demand;
(2) be added to the balance of the Note and be apportioned among and be payable
with any installment payments to become due during either (A) the term of any
applicable insurance policy or (B) the remaining term of the Note; or (3) be
treated as a balloon payment which will be due and payable at the Note’s
maturity.

 

NEGATIVE COVENANTS.  Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:

 

Indebtedness and Liens.  (1) Except for trade debt incurred in the normal course
of business and indebtedness to Lender contemplated by this Agreement, create,
incur or assume additional indebtedness for borrowed money, including capital
leases, in excess of the aggregate amount of $200,000.00, (2) sell, transfer,
mortgage; assign, pledge, lease, grant a Security Interest in, or encumber any
of Borrower’s property or assets (except as allowed as Permitted Liens)
including but not limited the Key Contracts and Patents, or (3) sell with
recourse any of Borrower’s accounts, except to Lender.

 

Continuity of Operations.  (1) Engage in any business activities substantially
different than those in which Borrower is presently engaged, (2) cease
operations, liquidate, merge, transfer, acquire or consolidate with any other
entity, change its name, dissolve or transfer or sell Collateral out of the
ordinary course of business, or (3) pay any dividends on Borrower’s stock (other
than dividends payable in its stock); provided, however, that notwithstanding
the foregoing, but only so long as no Event of Default has occurred and is
continuing or would result from the payment of dividends, if Borrower is a
“Subchapter S Corporation” (as defined in the Internal Revenue Code of 1986, as
amended), Borrower may pay cash dividends on its stock to its shareholders from
time to time in amounts necessary to enable the shareholders to pay income taxes
and make estimated income tax payments to satisfy their liabilities under
federal and

 

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state law which arise solely from their status as Shareholders of a Subchapter S
Corporation because of their ownership of shares of Borrower’s stock, or
purchase or retire any of Borrower’s outstanding shares or alter or amend
Borrower’s capital structure.

 

Loans, Acquisitions and Guaranties.  (1) Loan, invest in or advance money or
assets to any other person, enterprise or entity, (2) purchase, create or
acquire any interest in any other enterprise or entity, or (3) incur any
obligation as surety or guarantor other than in the ordinary course of business.

 

Agreements.  Borrower will not enter into any agreement containing any
provisions which would be violated or breached by the performance of Borrower’s
obligations under this Agreement or in connection herewith.

 

Key Contracts.  Borrower will not amend, modify, or change in any material
respect, or terminate, any Key Contract without the prior written notice to
Lender.  In no event shall Borrower assign, transfer, or convey to any party any
right, title or interest in the Key Contracts, including any collateral
assignment thereof.

 

SEDA.  Borrower will not amend, modify, or change in any material respect, or
terminate the SEDA, nor shall Borrower permit the Parent to draw down more than
$9 million in aggregate funds under the SEDA (it being understood that this is
intended to maintain availability of at least $6 million under the SEDA at all
times).

 

Distributions and Dividends.  Borrower shall not make distributions and/or
dividends to its Parent, nor make other payments to its Parent outside the
ordinary course of business.

 

CESSATION OF ADVANCES.  If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make any Advances or to disburse Loan proceeds if:
(1) an Event of Default has occurred or the Borrower, Parent or any Guarantor is
otherwise in default under the terms of this Agreement, any of the Related
Documents or any other agreement that Borrower or any Guarantor has with Lender;
(2) Borrower, Parent or any Guarantor dies, becomes incompetent, or becomes
insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged
a bankrupt; or (3) there occurs a material adverse change in Borrower’s
financial condition, in the financial condition of Parent or any Guarantor, or
in the value of any Collateral securing any loan.

 

RIGHT OF SETOFF.  To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrower’s accounts with Lender (whether checking,
savings, or some other account).  This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future;
provided, however, this does not include any IRA or Keogh accounts, or any trust
accounts for which setoff would be prohibited by law.  Borrower authorizes
Lender, to the extent permitted by applicable law, to charge or setoff all sums
owing on the Indebtedness against any and all such accounts, and, at Lender’s
option, to administratively freeze all such accounts to allow Lender to protect
Lender’s charge and setoff rights provided in this paragraph.

 

DEFAULT.  Each of the following shall constitute an Event of Default under this
Agreement:

 

Payment Default.  Borrower fails to make any payment when due under the Loan.

 

Note Default.  Any Event of Default under the Note or any Related Document.

 

Other Defaults.  Borrower fails to comply with or to perform any other term,
obligation, covenant or condition contained in this Agreement or in any of the
Related Documents or to comply with or to perform any term, obligation, covenant
or condition contained in any other agreement between Lender and Borrower, and
such failure shall continue for a period of fifteen (15) days.

 

Default in Favor of Third Parties.  Borrower, Parent or any Grantor defaults
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person that
may materially affect any of Borrower’s, Parent’s or any Grantor’s property or

 

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Borrower’s, Parent’s or any Grantor’s ability to repay the Loans or perform
their respective obligations under this Agreement or any of the Related
Documents.

 

False Statements.  Any warranty, representation or statement made or furnished
to Lender by Borrower or on Borrower’s behalf under this Agreement or the
Related Documents is false or misleading in any material respect, either now or
at the time made or furnished, or becomes false or misleading at any time
thereafter.

 

Insolvency.  The dissolution or termination of Borrower’s existence as a going
business, the insolvency of Borrower, the appointment of a receiver for any part
of Borrower’s property, any assignment for the benefit of creditors, any type of
creditor workout, or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against Borrower.

 

Defective Collateralization.  This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any collateral
document to create a valid and perfected Security Interest or lien) at any time
and for any reason.

 

Creditor or Forfeiture Proceedings.  The commencement of foreclosure or
forfeiture proceedings against any collateral securing the Loan, whether by
judicial proceeding, self-help, repossession or any other method, by any
creditor of Borrower or by any governmental agency.  This includes a garnishment
of any of Borrower’s accounts, including deposit accounts, with Lender. 
However, this Event of Default shall not apply if there is a good faith dispute
by Borrower as to the validity or reasonableness of the claim which is the basis
of the creditor or forfeiture proceeding and if Borrower gives Lender written
notice of the creditor or forfeiture proceeding and deposits with Lender monies
or a surety bond for the creditor or forfeiture proceeding, in an amount
determined by Lender, in its sole discretion, as being an adequate reserve or
bond for the dispute.

 

Events Affecting Guarantor.  Any of the preceding events occurs with respect to
Guarantor of any of the Indebtedness, or Guarantor revokes or disputes the
validity of, or liability under, the Guaranty.

 

Change in Ownership.  Any change in ownership of fifty-one percent (51%) or more
of the common stock of Borrower or Parent, or any other change in control
transaction involving the Borrower or Parent. DISCUSS

 

Adverse Change.  A material adverse change occurs in Borrower’s or Parent’s
financial condition.

 

Key Contracts.  Any default or material breach by any party to a Key Contract,
or any amendment, modification or change in any material respect to, or
termination of, any Key Contract effectuated without the prior consent of Lender
(which consent may be withheld in Lender’s sole and absolute discretion).

 

SEDA.  Any default or material breach by any party to the SEDA, or any
amendment, modification or change to or termination of the SEDA effectuated
without the prior consent of Lender (which consent may be withheld in Lender’s
sole and absolute discretion).

 

Flavin’s Personal Undertaking.  Any revocation, termination, invalidity or
breach of Flavin’s Personal Undertaking.

 

EFFECT OF AN EVENT OF DEFAULT.  If any Event of Default shall occur, except
where otherwise provided in this Agreement or the Related Documents, all
commitments and obligations of lender under this Agreement, the Related
Documents or any other agreement immediately will terminate (including any
obligation to make further Loan Advances or disbursements), and, at Lender’s
option, all Indebtedness immediately will become due and payable, all without
notice of any kind to Borrower; provided, however, that in the case of an Event
of Default of the type described in the “Insolvency” subsection above, such
acceleration shall be automatic and not optional.  In addition, Lender shall
have all the rights and remedies provided in the Related Documents or available
at law, in equity, or otherwise.  Except as may be prohibited by applicable law,
all of Lender’s rights and remedies shall be cumulative and may be exercised
singularly or concurrently.  Election by Lender to pursue any remedy shall not

 

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exclude pursuit of any other remedy, and an election to make expenditures or to
take action to perform an obligation of Borrower or of any Grantor shall not
affect Lender’s right to declare a default and to exercise its rights and
remedies.

 

MISCELLANEOUS PROVISIONS.  The following miscellaneous provisions are a part of
this Agreement:

 

Amendments.  This Agreement, together with any Related Documents, constitutes
the entire understanding and agreement of the parties as to the matters set
forth in this Agreement.  No alteration of or amendment to this Agreement shall
be effective unless given in writing and signed by the party or parties sought
to be charged or bound by the alteration or amendment.

 

Attorneys’ Fees; Expenses.  Borrower agrees to pay upon demand all of Lender’s
costs and expenses, including Lender’s reasonable attorneys’ fees and Lender’s
legal expenses, incurred in connection with the enforcement of this Agreement
upon any Event of Default.  Lender may hire or pay someone else to help enforce
this Agreement, and Borrower shall pay the costs and expenses of such
enforcement.  Costs and expenses include Lender’s reasonable attorneys’ fees and
legal expenses whether or not there is a lawsuit, including attorneys’ fees and
legal expenses for bankruptcy proceedings (including efforts to modify or vacate
any automatic stay or injunction), appeals, and any anticipated post-judgment
collection services.  Borrower also shall pay all court costs and such
additional fees as may be directed by the court.

 

Caption Headings.  Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions of
this Agreement.

 

Consent to Loan Participation.  Borrower agrees and consents to Lender’s sale or
transfer, whether now or later, of one or more participation interests in the
loan to one or more purchasers, whether related or unrelated to Lender.  Lender
may provide, subject to a confidentiality agreement acceptable to Borrower, to
anyone or more purchasers, or potential purchasers, any information or knowledge
Lender may have about Borrower or about any other matter relating to the Loan,
and Borrower hereby waives any rights to privacy Borrower may have with respect
to such matters.  Borrower additionally waives any and all notices of sale of
participation interests, as well as all notices of any repurchase of such
participation interests.  Borrower also agrees that the purchasers of any such
participation interests will be considered as the absolute owners of such
interests in the Loan and will have all the rights granted under the
participation agreement or agreements governing the sale of such participation
interests (each, a “Participation Agreement”).  Borrower further waives all
rights of offset or counterclaim that it may have now or later against Lender or
against any purchaser of such a participation interest and unconditionally
agrees that either Lender or such purchaser may enforce Borrower’s obligation
under the Loan, subject to the terms and conditions of any Participation
Agreement, irrespective of the failure or insolvency of any holder of any
interest in the Loan.  Borrower further agrees that the purchaser of any such
participation interests may enforce any additional rights that Lender may have
against Borrower, subject to the terms of any Participation Agreement.

 

Governing Law.  This Agreement will be governed by federal law applicable to
Lender and, to the extent not preempted by federal law, the laws of the State of
Illinois without regard to its conflicts of law provisions.  This Agreement has
been accepted by Lender in the State of Illinois.

 

Choice of Venue.  If there is a lawsuit, Borrower agrees upon Lender’s request
to submit to the jurisdiction of the courts of DuPage County, State of Illinois.

 

No Waiver by Lender.  Lender shall not be deemed to have waived any rights under
this Agreement unless such waiver is given in writing and signed by Lender.  No
delay or omission on the part of Lender in exercising any right shall operate as
a waiver of such right or any other right.  A waiver by Lender of a provision of
this Agreement shall not prejudice or constitute a waiver of Lender’s right
otherwise to demand strict compliance with that provision or any other provision
of this Agreement.  No prior waiver by Lender, nor any course of dealing between
Lender and Borrower, or between Lender and any Grantor, shall constitute a
waiver of any of Lender’s rights or of any of Borrower’s or any Grantor’s
obligations as to any future transactions.  Whenever the consent of Lender is
required under this Agreement, the granting of

 

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such consent by Lender in any instance shall not constitute continuing consent
to subsequent instances where such consent is required and in all cases such
consent may be granted or withheld in the sole discretion of Lender.

 

Notices.  Any notice required to be given under this Agreement shall be given in
writing, and shall be effective when actually delivered, when actually received
by facsimile (unless otherwise required by law), when deposited with a
nationally recognized overnight courier, or, if mailed, when deposited in the
United States mail, as first class, certified or registered mail postage
prepaid, directed to the addresses shown near the beginning of this Agreement. 
Any party may change its address for notices under this Agreement by giving
formal written notice to the other parties, specifying that the purpose of the
notice is to change the party’s address.  For notice purposes, Borrower agrees
to keep Lender informed at all times of Borrower’s current address.  Unless
otherwise provided or required by law, if there is more than one Borrower, any
notice given by Lender to any Borrower is deemed to be notice given to all
Borrowers.

 

Severability.  If a court of competent jurisdiction finds any provision of this
Agreement to be illegal, invalid, or unenforceable as to any circumstance, that
finding shall not make the offending provision illegal, invalid, or
unenforceable as to any other circumstance.  If feasible, the offending
provision shall be considered modified so that it becomes legal, valid and
enforceable.  If the offending provision cannot be so modified, it shall be
considered deleted from this Agreement.  Unless otherwise required by law, the
illegality, invalidity, or unenforceability of any provision of this Agreement
shall not affect the legality, validity or enforceability of any other provision
of this Agreement.

 

Subsidiaries and Affiliates of Borrower.  To the extent the context of any
provisions of this Agreement makes it appropriate, including without limitation
any representation, warranty or covenant, the word “Borrower” as used in this
Agreement shall include all of Borrower’s subsidiaries and affiliates. 
Notwithstanding the foregoing however, under no circumstances shall this
Agreement be construed to require Lender to make any Loan or other financial
accommodation to any of Borrower’s subsidiaries or affiliates.

 

Successors and Assigns.  All covenants and agreements by or on behalf of
Borrower contained in this Agreement or any Related Documents shall bind
Borrower’s successors and assigns and shall inure to the benefit of Lender and
its successors and, assigns.  Borrower shall not, however, have the right to
assign Borrower’s rights under this Agreement or any interest therein, without
the prior written consent of Lender.

 

Survival of Representations and Warranties.  Borrower understands and agrees
that in extending Loan Advances, Lender is relying on all representations,
warranties, and covenants made by Borrower in this Agreement or in any
certificate or other instrument delivered by Borrower to Lender under this
Agreement or the Related Documents.  Borrower further agrees that regardless of
any investigation made by Lender, all such representations, warranties and
covenants will survive the extension of Loan Advances and delivery to Lender of
the Related Documents, shall be continuing in nature, shall be deemed made and
redated by Borrower at the lime each Loan Advance is made, and shall remain in
full force and effect until such time as Borrower’s Indebtedness shall be paid
in full, or until this Agreement shall be terminated in the manner provided
above, whichever is the last to occur.

 

Time is of the Essence.  Time is of the essence in the performance of this
Agreement.

 

Waive Jury.  All parties to this Agreement hereby waive the right to any Jury
trial in any action, proceeding, or counterclaim brought by any party against
any other party.

 

DEFINITIONS.  The following capitalized words and terms shall have the following
meanings when used in this Agreement.  Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America.  Words and terms used in the singular shall
include the plural, and the plural shall include the singular, as the context
may require.  Words and terms not otherwise defined in this Agreement shall have
the meanings attributed to such terms in the Uniform Commercial Code of the
State of Illinois.  Accounting words and terms not otherwise defined in this
Agreement shall have the meanings assigned to them in accordance with generally
accepted accounting principles as in effect on the date of this Agreement:

 

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Abbott License Agreement.  The words “Abbott License Agreement” shall mean that
certain License Agreement, dated as of December 13, 2004, by and between Abbott
Labs and Borrower, as amended and modified from time to time.

 

Advance.  The word “Advance” means a disbursement of Loan funds made, or to be
made, to Borrower or on Borrower’s behalf on a line of credit or multiple
advance basis under the terms and conditions of this Agreement.

 

Agreement.  The word “Agreement” means this Amended and Restated Business Loan
Agreement, as this Amended and Restated Business Loan Agreement may be amended
or modified from time to time, together with all exhibits and schedules attached
to this Amended and Restated Business Loan Agreement from time to time.

 

ALS Pledge Agreement.  The words “ALS Pledge Agreement” mean that certain
amended and restated commercial pledge agreement dated as of the date hereof by
and between ALS Ventures, LLC and Lender, as amended or modified from time to
time.

 

Borrower.  The word “Borrower” has the meaning set forth in the Preamble to this
Agreement.

 

Borrower’s Agreement to Provide Insurance.  The words “Agreement to Provide
Insurance” mean that certain agreement to provide insurance dated as of the date
hereof by and between Borrower and Lender, as amended and restated from time to
time

 

Borrower’s Collateral Assignment of Key Contracts.  The words “Borrower’s
Collateral Assignment of Key Contracts” mean that certain collateral assignment
of key contracts dated as of the date hereof by and between Borrower and Lender,
as amended or modified from time to time.

 

Borrower’s Collateral Assignment of Patents.  The words “Borrower’s Collateral
Assignment of Patents” mean that certain collateral assignment of patents dated
as of the date hereof by and between Borrower and Lender, as amended or modified
from time to time.

 

Borrower’s Security Agreement.  The words “Borrower Security Agreement” mean
that certain amended and restated commercial security agreement dated as of the
date hereof by and between Borrower and Lender, as amended or modified from time
to time.

 

Collateral.  The word “Collateral” means all property and assets granted as
collateral security for a Loan, whether real or personal property, whether
granted directly or indirectly, whether granted now or in the future, and
whether granted in the form of a Security Interest, mortgage, collateral
mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage,
collateral chattel mortgage, chattel trust, factor’s lien, equipment trust,
conditional sale, trust receipt, lien, charge, lien or title retention contract,
lease or consignment intended as a security device, or any other security or
lien interest whatsoever, whether created by law, contract, or otherwise.

 

Environmental Laws.  The words “Environmental Laws” mean any and all state,
federal and local statutes, regulations and ordinances relating to the
protection ,of human health or the environment, including without limitation the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, 42 U.S.C. Section 9601, et seq., the Superfund Amendments and
Reauthorization Act of 1986, Pub. L. No. 99-499, the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable state or
federal laws, rules, or regulations adopted pursuant thereto.

 

Event of Default.  The words “Event of Default” mean any of the events of
default set forth in this Agreement in the DEFAULT section of this Agreement.

 

Flavin’s Personal Undertaking.  The words “Flavin’s Personal Undertaking” mean
that certain personal undertaking of Dr. Michael Flavin dated as of the date
hereof with respect to the SEDA and the

 

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maintenance of available funds.

 

GAAP.  The word “GAAP” means generally accepted accounting principles in effect
from time to time in the United States, consistently applied.

 

Grantor.  The word “Grantor” means each and all of the persons or entities
granting a Security Interest in any Collateral for the Loan, including without
limitation all Borrowers granting such a Security Interest.

 

Guarantor.  The word “Guarantor” shall mean the Parent pursuant to the Parent’s
Guaranty as well as any other party that guarantees the Indebtedness of the
Borrower.

 

Hazardous Substances.  The words “Hazardous Substances” mean materials that,
because of their quantity, concentration or physical, chemical or infectious
characteristics, may cause or pose a present a potential hazard to human health
or the environment when improperly used, treated, stored. disposed of,
generated, manufactured, transported or otherwise handled.  The words “Hazardous
Substances” are used in their very broadest sense and include without limitation
any and all hazardous or toxic substances, materials or waste as defined by or
listed under the Environmental Laws.  The term “Hazardous Substances” also
includes, without limitation, petroleum and petroleum by-products or any
fraction thereof and asbestos.

 

Indebtedness.  The word “Indebtedness” means the indebtedness evidenced by the
Note or Related Documents, including all principal and interest together with
all other indebtedness and costs and expenses for which Borrower is responsible
under this Agreement or under any of the Related Documents.

 

Key Contracts.  The words “Key Contracts” mean the Abbott License Agreement, the
Wyeth License Agreement, and the Office Lease.

 

Landlord.  The word “Landlord” means BioStart Property Group, LLC.

 

Landlord’s Estoppel Certificate.  The words “Landlord’s Estoppel Certificate”
means that certain estoppel certificate dated as of the date hereof executed by
the Landlord with respect to the Office Property.

 

Landlord’s SNDA.  The words “Landlord’s SNDA” mean that certain subordination
and non-disturbance agreement dated as of the dated hereof by and between the
Landlord, Borrower and Lender.

 

Lender.  The word “Lender” has the meaning set forth in the Preamble to this
Agreement.

 

Loan.  The word “Loan” means any and all loans and financial accommodations from
Lender to Borrower whether now or hereafter existing, and however evidenced,
including without limitation those loans and financial accommodations described
herein or described on any exhibit or schedule attached to this Agreement from
time to time.

 

Loan Advance or Advance.  The words “Loan Advance” or “Advance” mean any Advance
on any Loan.

 

Note.  The word “Note” means that certain Amended and Restated Promissory Note,
dated as of even date herewith executed by Borrower in favor of Lender in the
principal amount of $10,000,000.00, together with all renewals of, extensions
of, modifications of, refinancings of, consolidations of, and substitutions for
the Note.

 

Office Lease.  The words “Office Lease” mean that certain lease dated as of
July 7, 2003 by and between Landlord and Borrower with respect to the Office
Property, as amended or modified from time to time.

 

Office Property.  The words “Office Property” mean the Borrower’s offices
located at 1440 Davey Road, Woodridge, Illinois 60517

 

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Parent.  The word “Parent” means Advance Life Sciences Holdings, Inc., a
Delaware corporation and its successors in interest.

 

Parent’s Agreement to Provide Insurance.  The words “Parent’s Agreement to
Provide Insurance” means that certain agreement to provided insurance dated as
of the date hereof by the between the Parent and Lender, as amended or modified
from time to time.

 

Parent’s Guaranty.  The words “Parent’s Guaranty” mean that certain commercial
guaranty dated as of the date hereof issued by the Parent in favor of the
Lender, as amended or modified from time to time.

 

Patents.  The word “Patents” means any patent or patent application of Borrower
including those patents reference on Schedule A attached hereto.

 

Parent’s Pledge Agreement.  The words “Parent’s Pledge Agreement” means that
certain commercial pledge agreement dated as of the date hereof by and among the
Parent, Borrower and Lender, as amended or modified from time to time.

 

Parent’s Security Agreement.  The words “Parent’s Security Agreement” mean that
certain commercial security agreement dated as of the date hereof by and between
Parent and Lender, as amended or modified from time to time.

 

Participation Agreement.  The words “Participation Agreement” have the meaning
set forth in the “Consent to Loan Participation” section of this Agreement.

 

Permitted Liens.  The words “Permitted Liens” mean (1) liens and Security
Interests securing Indebtedness owed by Borrower to Lender; (2) liens for taxes,
assessments, or similar charges either not yet due or being contested in good
faith; (3) liens of materialmen, mechanics, warehousemen, or carriers, or other
like liens arising in the ordinary course of business and securing obligations
which are not yet delinquent; (4) purchase money liens or purchase money
Security Interests upon or in any property acquired or held by Borrower in the
ordinary course of business to secure indebtedness outstanding on the date of
this Agreement or permitted to be incurred under the paragraph of this Agreement
titled “Indebtedness and Liens”; (5) liens and Security Interests which, as of
the date of this Agreement, have been disclosed to and approved by the Lender in
writing; and (6) those liens and Security Interests which in the aggregate
constitute an immaterial and insignificant monetary amount with respect to the
net value of Borrower’s assets.

 

Principal Office.  The words “Principal Office” has the meaning set forth in the
“Organization” section of this Agreement.

 

Related Documents.  The words “Related Documents” mean all promissory notes,
credit agreements, loan agreements, environmental agreements, guaranties,
security agreements, mortgages, deeds of trust, security deeds, collateral
mortgages, and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the Loan.

 

Security Agreement.  The words “Security Agreement” mean and include without
limitation any agreements, promises, covenants, arrangements, understandings or
other agreements, whether created by law, contract, or otherwise, evidencing,
governing, representing, or creating a Security Interest.

 

Security Interest.  The words “Security Interest” mean, without limitation, any
and all types of collateral security, present and future, whether in the form of
a lien, charge, encumbrance, mortgage, deed of trust, security deed, assignment,
pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel
trust, factor’s lien, equipment trust, conditional sale, trust receipt, lien or
title retention contract, lease or consignment intended as a security device, or
any other security or lien interest whatsoever whether created by law, contract,
or otherwise.

 

SEDA.  The word “SEDA” means that certain Standby Equity Distribution Agreement
dated as of

 

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September 29, 2008 by and between Parent and YA Global Investments, L.P.

 

Warrants.  The word “Warrants” means those certain warrants to be issued by
Parent to Lender or its designee.

 

Wyeth License Agreement.  The words “Wyeth License Agreement” mean that certain
license agreement dated as of September 29, 2008 by and between Wyeth Labs and
Borrower, as amended and restated form time to time.

 

YA Global Investment’s Consent.  The words “YA Global Investment’s Consent and
Acknowledgement” means that certain consent and acknowledgement dated as of the
date hereof by YA Global Investments, L.P. with respect to the Borrower’s
obligation to maintain excess borrowings under the SEDA.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Amended and Restated
Loan Agreement to be executed by their respective authorized officers as of the
date first written above.

 

BORROWER:

 

 

 

ADVANCED LIFE SCIENCES, INC.

 

 

 

By:

/s/ John L. Flavin

 

 

John L. Flavin, President

 

 

 

LENDER:

 

 

 

THE LEADERS BANK

 

 

 

By:

/s/ John Prosia

 

 

John Prosia, Executive Vice President

 

 

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