**Exhibit 10.1**

 

**AMENDEDAND 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 BUSINESSLOAN AGREEMENT, dated October 23, 2008, is made and executed by andbetween ADVANCED LIFE SCIENCES, INC., an Illinois corporation (“Borrower”) andTHE LEADERS BANK (“Lender”).**

 

**RECITALS**

 

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

 

ACCORDINGLY, in consideration of themutual covenants and agreements herein contained, Borrower and Lender herebyagree 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 ofBorrower’s Loans in favor of Lender have been paid in full, includingprincipal, interest, costs, expenses, attorneys’ fees, and other fees andcharges, or until such time as the parties may agree in writing to terminatethis Agreement.

 

**ADVANCE AUTHORITY.**  The following persons currently areauthorized to request Advances and authorize payments under the line of credituntil Lender receives from Borrower, at Lender’s address shown above, writtennotice of revocation of their authority: John L. Flavin, Michael T. Flavin, andMichael J. Cogan.

 

**CONDITIONS PRECEDENT TO EACHADVANCE.**  Lender’sobligation to make the initial Advance and each subsequent Advance under thisAgreement shall be subject to the fulfillment to Lender’s satisfaction of allof the conditions set forth in this Agreement and in the Related Documents.

 

**LoanDocuments.**  Borrowershall provide to Lender the following documents for the Loan and such documentsshall be in full force and effect:  (1) theNote; (2); Parent’s Guaranty (3) Borrower’s Security Agreement; (4) Parent’sSecurity Agreement; (5) Parent’s Pledge Agreement; (6) ALS PledgeAgreement; (7) Borrower’s Collateral Assignment of Patents; (8) Flavin’sPersonal Undertaking; (9) Landlord’s Estoppel Certificate; (10) Borrower’sAgreement to Provide Insurance; (11) Parent’s Agreement to Provide Insurance;(12) financing statements and all other documents perfecting Lender’s SecurityInterests; and (13) evidence of insurance as required below; together withall such Related Documents as Lender may require for the Loan; all in form andsubstance satisfactory to Lender and Lender’s counsel.

 

**Borrower’sAuthorization.** Borrower shall have provided in form and substance satisfactory to Lenderproperly certified resolutions, duly authorizing the execution and delivery ofthis Agreement, the Note and the Related Documents. In addition, Borrower shallhave provided such other resolutions, authorizations, documents and instrumentsas Lender or its counsel, may require. Borrower shall have caused its counsel and counsel to its Parent todeliver 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 ofFees and Expenses.** Borrower shall have paid to Lender all fees, charges, and other expenseswhich are then due and payable as specified in this Agreement or any RelatedDocument.  Borrower shall cause Parent toissue to Lender or its designee warrants representing 65,000 shares of Parent’scommon stock, in form and substance satisfactory to Lender and Lender’scounsel.

 

**Representationsand Warranties.**  Therepresentations and warranties set forth in this Agreement, in the RelatedDocuments, and in any document or certificate delivered to Lender under thisAgreement are true and correct.

 

**No Eventof Default.**  Thereshall not exist at the time of any Advance a condition which would constitutean 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 loanproceeds, as of the date of any renewal, extension or modification of any Loanand at all times any Indebtedness exists:

 

**Organization.**  Borrower is a corporation for profit whichis, and at all times shall be, duly organized, validly existing and in goodstanding under and by virtue of the laws of the State of Illinois.  Borrower is duly authorized to transactbusiness in all other states in which Borrower is doing business, havingobtained all necessary filings, governmental licenses and approvals for eachstate in which Borrower is doing business. Specifically, Borrower is, and at all times shall be, duly qualified asa foreign corporation in all states in which the failure to so qualify wouldhave a material adverse effect on its business or financial condition.  Borrower has the full power and authority toown its properties and to transact the business in which it is presentlyengaged or presently proposes to engage. Borrower maintains an office at 1440 Davey Drive, Woodridge, IL 60517(the “Principal Office”).  UnlessBorrower has designated otherwise in writing, the Principal Office is theoffice at which Borrower keeps its books and records, including its recordsconcerning the Collateral.  Borrower willnotify Lender prior to any change in the location of Borrower’s state oforganization or any change in Borrower’s name. Borrower shall do all things necessary to preserve and to keep in fullforce and effect its existence, rights and privileges, and shall comply withall regulations, rules, ordinances, statutes, orders and decrees of anygovernmental or quasi-governmental authority or court applicable to Borrowerand Borrower’s business activities.

 

**Ownership**.  Borrower owns all of the Borrower’sCollateral clear of all liens, claims, interests and encumbrances (except forPermitted Liens).  Borrower is the ownerof all of the Patents and such Patents are all of the patents that are part ofBorrower’s business.  Parent does nothave any ownership interest in nor contractual or other right to such Patentsor any other patents.  Parent owns onehundred percent (100%) of the equity interests of Borrower, and Borrower hasnot and will not issue any additional capital stock whether pursuant towarrants, options or otherwise.

 

**AssumedBusiness Names**. Borrower has filed or recorded all documents or filings required by lawrelating to all assumed business names used by Borrower.  Excluding the name of Borrower, the followingis a complete list of all assumed business names under which Borrower doesbusiness: None.

 

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

 

**FinancialInformation.**  Each ofBorrower’s financial statements supplied to Lender truly and completelydisclosed Borrower’s financial condition as of the date of the statement, andthere has been no material adverse change in Borrower’s financial conditionsubsequent to the date of the most recent financial statement supplied toLender.  Borrower has no materialcontingent obligations except as disclosed in such financial statements.

 

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**LegalEffect.**  This Agreementconstitutes, and any instrument or agreement Borrower is required to give underthis Agreement when delivered will constitute, a legal, valid, and bindingobligation of Borrower enforceable against Borrower in accordance with theirrespective terms.

 

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

 

**HazardousSubstances.**  Except asdisclosed to and acknowledged by Lender in writing, Borrower represents andwarrants that:  (1) During theperiod of Borrower’s ownership of the Collateral, there has been no use,generation, manufacture, storage, treatment, disposal, release or threatenedrelease of any Hazardous Substance by any person on, under, about or from anyof the Collateral; (2) Borrower has no knowledge of, or reason to believethat 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 orfrom 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 anyperson 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 HazardousSubstance on, under, about or from any of the Collateral, and any such activityshall be conducted in compliance with all applicable federal, state, and locallaws, regulations, and ordinances, including without limitation all,Environmental Laws.  Borrower authorizesLender and its agents to enter upon the Collateral to make such inspections andtests as Lender may reasonably deem appropriate to determine compliance of theCollateral with this section of the, Agreement. Any inspections or tests made by Lender shall be at Borrower’s expenseand for Lender’s purposes only and shall not be construed to create anyresponsibility or liability on the part of Lender to Borrower or to any otherperson. The representations and warranty contained herein are based onBorrower’s due diligence in investigating the Collateral for hazardous wasteand Hazardous Substances.  Borrowerhereby (i) releases and waives any future claims against Lender forindemnity or contribution in the event Borrower becomes liable for cleanup orother costs under any such laws, and (ii) agrees to indemnify and holdharmless Lender against any and all claims, losses, liabilities, damages,penalties, and expenses which Lender may directly or indirectly sustain orsuffer resulting from a breach of this section of the Agreement or as aconsequence of any use, generation, manufacture, storage, disposal, release orthreatened release of a hazardous waste or substance on the Collateral.  The provisions of this section of theAgreement, including the obligation to indemnify, shall survive the payment ofthe Indebtedness and the termination, expiration or satisfaction of thisAgreement and shall not be affected by Lender’s acquisition of any interest inany of the Collateral, whether by foreclosure or otherwise.

 

**Litigationand Claims.**  Nolitigation, 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 affectBorrower’s financial condition or properties, other than litigation, claims, orother events, if any, that have been disclosed to and acknowledged by Lender inwriting.

 

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

 

**LienPriority.**  Unlessotherwise previously disclosed to Lender in writing, Borrower has not enteredinto or granted any Security Agreements, or permitted the filing or attachmentof any Security interests on or affecting any of the Collateral directly orindirectly securing repayment of Borrower’s Loan and Note, that would be prioror that may in any way be superior to Lender’s Security Interests and rights inand to such Collateral.   Borrower willnot cause nor permit any lien, claim, interest or encumbrance on the Collateralthat would adversely affect or take priority over the Lender’s SecurityInterests.  At all times, Borrower 

 

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shall take all actionsnecessary to ensure that Lender will have a first priority Security Interest onthe Collateral.

 

**BindingEffect.**  ThisAgreement, the Note, all Security Agreements (if any) and all Related Documentsare binding upon the signers thereof, as well as upon their successors,representatives and assigns, and are legally enforceable in accordance withtheir respective terms.

 

**KeyContracts and SEDA.** Borrower has provided to Lender true, correct and complete copies of Borrower’sKey Contracts and the SEDA and, if executed in the future, Borrower willprovided 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 timesshall be in full force and effect and Borrower is not in defaultthereunder.  The funds and proceedsreceived by the Borrower and/or Parent pursuant to the SEDA may be used torepay the Loans, and such repayment is permitted without restriction or limitationunder the terms and conditions of the SEDA.

 

**SECReporting**.  All of theinformation and reports filed by the Parent with the United States Securitiesand Exchange Commission and/or any other governmental authority shall be trueand accurate and shall not be misleading in any material respect.  The Parent shall comply with all applicablesecurities laws and rules.

 

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

 

**Noticesof Claims and Litigation.** Promptly inform Lender in writing of (1) all material adversechanges in Borrower’s or Parent’s financial condition, and (2) allexisting and all threatened litigation, claims, investigations, administrativeproceedings or similar actions affecting Borrower, Parent or any Guarantorwhich could materially affect the financial condition of Borrower, thefinancial condition of Parent or the financial condition of Guarantor.

 

**FinancialRecords.**  Maintain itsbooks and records in accordance with GAAP, applied on a consistent basis, andpermit Lender to examine and audit Borrower’s books and records at allreasonable times.

 

**FinancialStatements.**  FurnishLender with such financial statements and other related information at such frequenciesand in such detail as Lender may reasonably request.

 

**Additionalinformation.**  Furnishsuch additional information and statements, as Lender may request from time totime.

 

**Insurance.**  Maintain fire and other risk insurance,public liability insurance and such other insurance as Lender may require withrespect 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, willdeliver to Lender from time to time the policies or certificates of insurancein form reasonably satisfactory to Lender, including stipulations thatcoverages will not be cancelled or diminished without at least thirty (30) daysprior written notice to Lender.  Each insurancepolicy also shall include an endorsement providing that coverage in favor ofLender will not be impaired in any way by any act, omission or default ofBorrower or Parent or any other person. In connection with all policiescovering assets in which Lender holds or is offered a Security Interest for theLoans, Borrower will provide Lender with such lender’s loss payable or otherendorsements as Lender may require.

 

**InsuranceReports.**  Furnish toLender, upon request of Lender, reports on each existing insurance policyshowing such information as Lender may reasonably request, including withoutlimitation the following: (1) the name of the insurer; (2) the risksinsured; (3) the amount of the policy; (4) the properties insured; (5) thethen current property values on the basis of which insurance has been obtained,and the manner of determining those values; and (6) the expiration date ofthe policy.  In addition, upon request ofLender (however not more often than annually), Borrower will have an independentappraiser satisfactory to Lender determine, as applicable, the actual cashvalue or replacement cost of any Collateral. The cost of 

 

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such appraisal shall bepaid by Borrower.

 

**OtherAgreements.**  Complywith all terms and conditions of all other agreements in all material respects,whether now or hereafter existing, between Borrower and any other party andnotify Lender immediately in writing of any default in connection with anyother such agreements.

 

**LoanProceeds.**  Use all Loanproceeds solely for Borrower’s business operations, unless specificallyconsented to the contrary by Lender in writing.

 

**Taxes,Charges and Liens.**  Payand discharge when due all of its indebtedness and obligations, includingwithout limitation all assessments, taxes, governmental charges, levies andliens, of every kind and nature, imposed upon Borrower or its properties,income, or profits, prior to the date on which penalties would attach, and alllawful claims that, if unpaid, might become a lien or charge upon any ofBorrower’s properties, income, or profits.

 

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

 

**Operations.**  Maintain executive and management personnelwith substantially the same qualifications and experience as the presentexecutive and management personnel, provide written notice to Lender of anychange in executive and management personnel, and conduct its business affairsin a reasonable and prudent manner.

 

**EnvironmentalStudies.**  Promptlyconduct and complete, at Borrower’s expense, all such investigations, studies,samplings and testings as may be requested by any governmental authorityrelative to any substance, or any waste or by-product of any substance definedas toxic or a hazardous substance under applicable federal, state, or locallaw, rule, regulation, order or directive, at or affecting any property or anyfacility owned, leased or used by Borrower.

 

**Compliancewith Governmental Requirements.**  Comply with all laws, ordinances, andregulations, now or hereafter in effect, of all governmental authoritiesapplicable 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, orregulation and withhold compliance during any proceeding, including appropriateappeals, so long as Borrower has notified Lender in writing prior to doing soand so long as, in Lender’s sale opinion, Lender’s interests in the Collateralare not jeopardized.  Lender may requireBorrower to post adequate security or a surety bond, reasonably satisfactory toLender, to protect Lender’s interest.

 

**Inspection.**  Permit employees or agents of Lender at anyreasonable time to inspect any and all Collateral for the Loan or Loans andBorrower’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 anytime hereafter maintains any records (including without limitation computergenerated records and computer software programs for the generation of suchrecords) in the possession of a third party, Borrower, upon request of Lendershall notify such party to permit Lender free access to such records at allreasonable times and to provide Lender with copies of any records it mayrequest, all at Borrower’s expense.

 

**EnvironmentalCompliance and Reports.** (1) Comply in all respects with any and all Environmental Laws; (2) notcause or permit to exist, as a result of an intentional or unintentional actionor omission on Borrower’s part or on the part of any third party, on propertyowned and/or occupied by Borrower, any environmental activity in violation ofany environmental law, unless such environmental activity is pursuant to and incompliance with the conditions of a permit issued by the appropriate federal,state or local governmental authorities; and (3) furnish to Lenderpromptly and in any event within thirty (30) days after receipt thereof a copyof any notice, summons, lien, citation, directive, letter or othercommunication 

 

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from any governmentalagency or instrumentality concerning any intentional or unintentional action oromission on Borrower’s part in connection with any environmental activitywhether or not there is damage to tile environment and/or other naturalresources.

 

**KeyContracts and SEDA**.  Will perform its obligations under its KeyContracts, and will promptly notify Lender of any default thereunder whether byBorrower or any other party thereto; and will cause Parent to perform itsobligations under the SEDA and will promptly notify Lender of any defaultthereunder whether by Parent or any other party thereto.

 

**SECReporting.**  Will causeall of the information and reports filed by the Parent with the United StatesSecurities and Exchange Commission and/or any other governmental authority tobe true and accurate and not misleading in any material respect; and will causethe Parent to comply with all applicable securities laws and rules.

 

**Patents.**  Will keep in full force and effect itsPatents, and will use commercially reasonable efforts to prosecute and defendits rights therender

 

**AdditionalAssurances.**  Make,execute and deliver to Lender such promissory notes, mortgages, deeds of trust,Security Agreements, assignments, financing statements, instruments, documentsand other agreements as Lender or its attorneys may reasonably request toevidence and secure the Loans and to perfect all Security Interests, includingbut not limited to filings required to be made in foreign jurisdictions withrespect to the Patents.

 

**LENDER’S EXPENDITURES.**  If any action or proceeding is commenced thatwould materially affect Lender’s Interest in the Collateral or if Borrowerfalls 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 dueany amounts Borrower is required to discharge or pay under this Agreement orany Related Documents, Lender on Borrower’s behalf may (but shall not beobligated to) take any action that Lender deems appropriate, including but notlimited to discharging or paying all taxes, liens, Security Interests,encumbrances and other claims, at any time levied or placed on any Collateraland paying all costs for insuring, maintaining and preserving anyCollateral.  All such expendituresincurred or paid by Lender for such purposes will then bear interest at therate charged under the Note from the date incurred or paid by Lender to thedate of repayment by Borrower.  All suchexpenses will become a part of the Indebtedness and, at Lender’s option, will (1) bepayable on demand; (2) be added to the balance of the Note and beapportioned among and be payable with any installment payments to become dueduring either (A) the term of any applicable insurance policy or (B) theremaining term of the Note; or (3) be treated as a balloon payment whichwill be due and payable at the Note’s maturity.

 

**NEGATIVE COVENANTS.**  Borrower covenants and agrees with Lenderthat while this Agreement is in effect, Borrower shall not, without the priorwritten consent of Lender:

 

**Indebtednessand Liens.**  (1) Exceptfor trade debt incurred in the normal course of business and indebtedness toLender contemplated by this Agreement, create, incur or assume additionalindebtedness for borrowed money, including capital leases, in excess of theaggregate amount of $200,000.00, (2) sell, transfer, mortgage; assign,pledge, lease, grant a Security Interest in, or encumber any of Borrower’sproperty or assets (except as allowed as Permitted Liens) including but notlimited the Key Contracts and Patents, or (3) sell with recourse any ofBorrower’s accounts, except to Lender.

 

**Continuityof Operations.**  (1) Engagein any business activities substantially different than those in which Borroweris presently engaged, (2) cease operations, liquidate, merge, transfer,acquire or consolidate with any other entity, change its name, dissolve ortransfer or sell Collateral out of the ordinary course of business, or (3) payany dividends on Borrower’s stock (other than dividends payable in its stock); provided,however, that notwithstanding the foregoing, but only so long as noEvent of Default has occurred and is continuing or would result from thepayment of dividends, if Borrower is a “Subchapter S Corporation” (as definedin the Internal Revenue Code of 1986, as amended), Borrower may pay cashdividends on its stock to its shareholders from time to time in amountsnecessary to enable the shareholders to pay income taxes and make estimatedincome tax payments to satisfy their liabilities under federal and 

 

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state law which arisesolely from their status as Shareholders of a Subchapter S Corporation becauseof their ownership of shares of Borrower’s stock, or purchase or retire any ofBorrower’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 anyother enterprise or entity, or (3) incur any obligation as surety orguarantor other than in the ordinary course of business.

 

**Agreements.**  Borrower will not enter into any agreementcontaining any provisions which would be violated or breached by theperformance of Borrower’s obligations under this Agreement or in connectionherewith.

 

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

 

**Distributionsand 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 anyLoan to Borrower, whether under this Agreement or under any other agreement,Lender shall have no obligation to make any Advances or to disburse Loanproceeds if: (1) an Event of Default has occurred or the Borrower, Parentor any Guarantor is otherwise in default under the terms of this Agreement, anyof the Related Documents or any other agreement that Borrower or any Guarantorhas with Lender; (2) Borrower, Parent or any Guarantor dies, becomesincompetent, or becomes insolvent, files a petition in bankruptcy or similarproceedings, or is adjudged a bankrupt; or (3) there occurs a materialadverse change in Borrower’s financial condition, in the financial condition ofParent 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 holdsjointly 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 trustaccounts for which setoff would be prohibited by law.  Borrower authorizes Lender, to the extentpermitted by applicable law, to charge or setoff all sums owing on theIndebtedness against any and all such accounts, and, at Lender’s option, toadministratively freeze all such accounts to allow Lender to protect Lender’scharge and setoff rights provided in this paragraph.

 

**DEFAULT.**  Each of the following shall constitute anEvent of Default under this Agreement:

 

**PaymentDefault.**  Borrowerfails to make any payment when due under the Loan.

 

**NoteDefault.**  Any Event ofDefault under the Note or any Related Document.

 

**OtherDefaults.**  Borrowerfails to comply with or to perform any other term, obligation, covenant orcondition contained in this Agreement or in any of the Related Documents or tocomply with or to perform any term, obligation, covenant or condition containedin any other agreement between Lender and Borrower, and such failure shall continuefor a period of fifteen (15) days.

 

**Defaultin Favor of Third Parties.** Borrower, Parent or any Grantor defaults under any loan, extension ofcredit, security agreement, purchase or sales agreement, or any otheragreement, in favor of any other creditor or person that may materially affectany of Borrower’s, Parent’s or any Grantor’s property or 

 

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

 

**FalseStatements.**  Anywarranty, representation or statement made or furnished to Lender by Borroweror on Borrower’s behalf under this Agreement or the Related Documents is falseor misleading in any material respect, either now or at the time made orfurnished, or becomes false or misleading at any time thereafter.

 

**Insolvency.**  The dissolution or termination of Borrower’sexistence as a going business, the insolvency of Borrower, the appointment of areceiver for any part of Borrower’s property, any assignment for the benefit ofcreditors, any type of creditor workout, or the commencement of any proceedingunder any bankruptcy or insolvency laws by or against Borrower.

 

**DefectiveCollateralization.**  This Agreement or any of the Related Documentsceases to be in full force and effect (including failure of any collateraldocument to create a valid and perfected Security Interest or lien) at any timeand for any reason.

 

**Creditoror Forfeiture Proceedings.** The commencement of foreclosure or forfeiture proceedings against anycollateral securing the Loan, whether by judicial proceeding, self-help,repossession or any other method, by any creditor of Borrower or by anygovernmental agency.  This includes agarnishment of any of Borrower’s accounts, including deposit accounts, withLender.  However, this Event of Defaultshall not apply if there is a good faith dispute by Borrower as to the validityor reasonableness of the claim which is the basis of the creditor or forfeitureproceeding and if Borrower gives Lender written notice of the creditor orforfeiture proceeding and deposits with Lender monies or a surety bond for thecreditor or forfeiture proceeding, in an amount determined by Lender, in its solediscretion, as being an adequate reserve or bond for the dispute.

 

**EventsAffecting Guarantor. **Anyof the preceding events occurs with respect to Guarantor of any of theIndebtedness, or Guarantor revokes or disputes the validity of, or liabilityunder, the Guaranty.

 

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

 

**AdverseChange.**  A material adversechange occurs in Borrower’s or Parent’s financial condition.

 

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

 

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

 

**Flavin’sPersonal Undertaking**. Any revocation, termination, invalidity or breach of Flavin’s PersonalUndertaking.

 

**EFFECT OF AN EVENT OF DEFAULT.**  If any Event of Default shall occur, exceptwhere otherwise provided in this Agreement or the Related Documents, allcommitments and obligations of lender under this Agreement, the RelatedDocuments or any other agreement immediately will terminate (including anyobligation to make further Loan Advances or disbursements), and, at Lender’soption, all Indebtedness immediately will become due and payable, all withoutnotice of any kind to Borrower; provided, however, that in thecase 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 rightsand remedies provided in the Related Documents or available at law, in equity,or otherwise.  Except as may beprohibited by applicable law, all of Lender’s rights and remedies shall becumulative and may be exercised singularly or concurrently.  Election by Lender to pursue any remedy shallnot 

 

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

 

**MISCELLANEOUS PROVISIONS.**  The following miscellaneous provisions are apart of this Agreement:

 

**Amendments.**  This Agreement, together with any RelatedDocuments, constitutes the entire understanding and agreement of the parties asto the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effectiveunless given in writing and signed by the party or parties sought to be chargedor 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 ofDefault.  Lender may hire or pay someoneelse to help enforce this Agreement, and Borrower shall pay the costs andexpenses of such enforcement.  Costs andexpenses include Lender’s reasonable attorneys’ fees and legal expenses whetheror not there is a lawsuit, including attorneys’ fees and legal expenses forbankruptcy proceedings (including efforts to modify or vacate any automaticstay or injunction), appeals, and any anticipated post-judgment collectionservices.  Borrower also shall pay allcourt costs and such additional fees as may be directed by the court.

 

**CaptionHeadings.**  Captionheadings in this Agreement are for convenience purposes only and are not to beused to interpret or define the provisions of this Agreement.

 

**Consentto Loan Participation.** Borrower agrees and consents to Lender’s sale or transfer, whether nowor later, of one or more participation interests in the loan to one or morepurchasers, whether related or unrelated to Lender.  Lender may provide, subject to aconfidentiality agreement acceptable to Borrower, to anyone or more purchasers,or potential purchasers, any information or knowledge Lender may have aboutBorrower or about any other matter relating to the Loan, and Borrower herebywaives any rights to privacy Borrower may have with respect to such matters.  Borrower additionally waives any and allnotices of sale of participation interests, as well as all notices of anyrepurchase of such participation interests. Borrower also agrees that the purchasers of any such participation interestswill be considered as the absolute owners of such interests in the Loan andwill have all the rights granted under the participation agreement oragreements governing the sale of such participation interests (each, a“Participation Agreement”).  Borrowerfurther waives all rights of offset or counterclaim that it may have now orlater against Lender or against any purchaser of such a participation interestand unconditionally agrees that either Lender or such purchaser may enforceBorrower’s obligation under the Loan, subject to the terms and conditions ofany Participation Agreement, irrespective of the failure or insolvency of anyholder of any interest in the Loan. Borrower further agrees that the purchaser of any such participationinterests may enforce any additional rights that Lender may have againstBorrower, subject to the terms of any Participation Agreement.

 

**GoverningLaw.**  This Agreementwill be governed by federal law applicable to Lender and, to the extent notpreempted by federal law, the laws of the State of Illinois without regard toits conflicts of law provisions.  ThisAgreement has been accepted by Lender in the State of Illinois.

 

**Choice ofVenue.**  If there is alawsuit, Borrower agrees upon Lender’s request to submit to the jurisdiction ofthe courts of DuPage County, State of Illinois.

 

**No Waiverby Lender.**  Lendershall not be deemed to have waived any rights under this Agreement unless suchwaiver is given in writing and signed by Lender.  No delay or omission on the part of Lender inexercising any right shall operate as a waiver of such right or any otherright.  A waiver by Lender of a provisionof this Agreement shall not prejudice or constitute a waiver of Lender’s rightotherwise to demand strict compliance with that provision or any otherprovision of this Agreement.  No priorwaiver by Lender, nor any course of dealing between Lender and Borrower, orbetween Lender and any Grantor, shall constitute a waiver of any of Lender’srights or of any of Borrower’s or any Grantor’s obligations as to any futuretransactions.  Whenever the consent ofLender is required under this Agreement, the granting of 

 

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such consent by Lender inany instance shall not constitute continuing consent to subsequent instanceswhere such consent is required and in all cases such consent may be granted orwithheld in the sole discretion of Lender.

 

**Notices.**  Any notice required to be given under thisAgreement shall be given in writing, and shall be effective when actuallydelivered, when actually received by facsimile (unless otherwise required bylaw), when deposited with a nationally recognized overnight courier, or, ifmailed, when deposited in the United States mail, as first class, certified orregistered mail postage prepaid, directed to the addresses shown near thebeginning of this Agreement.  Any partymay change its address for notices under this Agreement by giving formalwritten notice to the other parties, specifying that the purpose of the noticeis to change the party’s address.  Fornotice purposes, Borrower agrees to keep Lender informed at all times ofBorrower’s current address.  Unlessotherwise provided or required by law, if there is more than one Borrower, anynotice given by Lender to any Borrower is deemed to be notice given to allBorrowers.

 

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

 

**Subsidiariesand Affiliates of Borrower.** To the extent the context of any provisions of this Agreement makes itappropriate, including without limitation any representation, warranty orcovenant, the word “Borrower” as used in this Agreement shall include all ofBorrower’s subsidiaries and affiliates. Notwithstanding the foregoing however, under no circumstances shall thisAgreement be construed to require Lender to make any Loan or other financialaccommodation to any of Borrower’s subsidiaries or affiliates.

 

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

 

**Survivalof Representations and Warranties.**  Borrower understands and agrees that inextending Loan Advances, Lender is relying on all representations, warranties,and covenants made by Borrower in this Agreement or in any certificate or otherinstrument delivered by Borrower to Lender under this Agreement or the RelatedDocuments.  Borrower further agrees thatregardless of any investigation made by Lender, all such representations,warranties and covenants will survive the extension of Loan Advances anddelivery 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 ismade, and shall remain in full force and effect until such time as Borrower’sIndebtedness shall be paid in full, or until this Agreement shall be terminatedin the manner provided above, whichever is the last to occur.

 

**Time isof the Essence.**  Timeis of the essence in the performance of this Agreement.

 

**WaiveJury.**  All parties tothis 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 termsshall 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 theUnited States of America.  Words andterms used in the singular shall include the plural, and the plural shallinclude the singular, as the context may require.  Words and terms not otherwise defined in thisAgreement shall have the meanings attributed to such terms in the UniformCommercial Code of the State of Illinois. Accounting words and terms not otherwise defined in this Agreement shallhave the meanings assigned to them in accordance with generally acceptedaccounting principles as in effect on the date of this Agreement:

 

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**AbbottLicense Agreement. **Thewords “Abbott License Agreement” shall mean that certain License Agreement,dated as of December 13, 2004, by and between Abbott Labs and Borrower, asamended and modified from time to time.

 

**Advance.**  The word “Advance” means a disbursement ofLoan funds made, or to be made, to Borrower or on Borrower’s behalf on a lineof credit or multiple advance basis under the terms and conditions of thisAgreement.

 

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

 

**ALSPledge Agreement. **Thewords “ALS Pledge Agreement” mean that certain amended and restated commercialpledge agreement dated as of the date hereof by and between ALS Ventures, LLCand Lender, as amended or modified from time to time.

 

**Borrower.**  The word “Borrower” has the meaning set forthin the Preamble to this Agreement.

 

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

 

**Borrower’sCollateral Assignment of Key Contracts. **Thewords “Borrower’s Collateral Assignment of Key Contracts” mean that certaincollateral assignment of key contracts dated as of the date hereof by and betweenBorrower and Lender, as amended or modified from time to time.

 

**Borrower’sCollateral Assignment of Patents. **Thewords “Borrower’s Collateral Assignment of Patents” mean that certaincollateral assignment of patents dated as of the date hereof by and betweenBorrower and Lender, as amended or modified from time to time.

 

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

 

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

 

**EnvironmentalLaws.**  The words“Environmental Laws” mean any and all state, federal and local statutes,regulations and ordinances relating to the protection ,of human health or theenvironment, including without limitation the Comprehensive EnvironmentalResponse, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601,*et seq*., the Superfund Amendments andReauthorization Act of 1986, Pub. L. No. 99-499, the Hazardous MaterialsTransportation 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 ofDefault.**  The words“Event of Default” mean any of the events of default set forth in thisAgreement in the DEFAULT section of this Agreement.

 

**Flavin’sPersonal Undertaking.** The words “Flavin’s Personal Undertaking” mean that certain personalundertaking of Dr. Michael Flavin dated as of the date hereof with respectto the SEDA and the 

 

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maintenance of availablefunds.

 

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

 

**Grantor.**  The word “Grantor” means each and all of thepersons or entities granting a Security Interest in any Collateral for theLoan, including without limitation all Borrowers granting such a SecurityInterest.

 

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

 

**HazardousSubstances.**  The words“Hazardous Substances” mean materials that, because of their quantity,concentration or physical, chemical or infectious characteristics, may cause orpose a present a potential hazard to human health or the environment whenimproperly used, treated, stored. disposed of, generated, manufactured,transported or otherwise handled.  Thewords “Hazardous Substances” are used in their very broadest sense and includewithout limitation any and all hazardous or toxic substances, materials orwaste as defined by or listed under the Environmental Laws.  The term “Hazardous Substances” alsoincludes, without limitation, petroleum and petroleum by-products or anyfraction thereof and asbestos.

 

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

 

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

 

**Landlord.**  The word “Landlord” means BioStart PropertyGroup, LLC.

 

**Landlord’sEstoppel Certificate.** The words “Landlord’s Estoppel Certificate” means that certain estoppelcertificate dated as of the date hereof executed by the Landlord with respectto the Office Property.

 

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

 

**Lender.**  The word “Lender” has the meaning set forthin the Preamble to this Agreement.

 

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

 

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

 

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

 

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

 

**OfficeProperty**.  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 SciencesHoldings, Inc., a Delaware corporation and its successors in interest.

 

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

 

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

 

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

 

**Parent’sPledge Agreement. **Thewords “Parent’s Pledge Agreement” means that certain commercial pledgeagreement dated as of the date hereof by and among the Parent, Borrower andLender, as amended or modified from time to time.

 

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

 

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

 

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

 

**PrincipalOffice.**  The words“Principal Office” has the meaning set forth in the “Organization” section ofthis Agreement.

 

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

 

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

 

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

 

**SEDA.**  The word “SEDA” means that certain StandbyEquity Distribution Agreement dated as of 

 

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

 

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

 

**WyethLicense Agreement.** Thewords “Wyeth License Agreement” mean that certain license agreement dated as ofSeptember 29, 2008 by and between Wyeth Labs and Borrower, as amended andrestated form time to time.

 

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

 

**[SIGNATUREPAGE FOLLOWS]**

 

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IN WITNESS WHEREOF, theParties hereto have caused this Amended and Restated Loan Agreement to beexecuted by their respective authorized officers as of the date first writtenabove.

 
| 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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