Exhibit 10.3


 


COMMERCIAL
PLEDGE 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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Grantor:

  	
   

  	
  Advanced Life Sciences
  Holdings, Inc.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1440 Davey Road

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Woodridge, IL 60517

  	
   

  	
   

  	
   

  	
   

  



 


THIS COMMERCIAL PLEDGE AGREEMENT
dated October 23, 2008, is made and executed by and among Advanced Life
Sciences Holdings, Inc., a Delaware corporation (“Grantor”), Advanced Life
Sciences, Inc., an Illinois corporation (“Borrower”), and THE LEADERS BANK
(“Lender”).  This Agreement is entered
into pursuant to that certain Amended and Restated Business Loan Agreement,
dated as of even date herewith, by and between the Borrower and the Lender
(“Loan Agreement”), whereby the Lender has agreed to lend Ten Million and
00/100 Dollars to the Borrower subject to the terms and conditions of the Loan
Agreement.


 


GRANT OF SECURITY INTEREST.  For valuable consideration, Grantor grants to
Lender a security interest in the Collateral to secure the Indebtedness and
agrees that Lender shall have the rights stated in this Agreement with respect
to the Collateral in addition to all other rights which Lender may have by law.


 


COLLATERAL DESCRIPTION.  The word “Collateral” as used in this
Agreement means all of Grantor’s property (however owned if more than one), in
the possession of Lender (or in the possession of a third party subject to the
control of Lender), whether existing now or later and whether tangible or intangible
in character, including without limitation, the following:


 


1,000,000
shares of common stock and 7,500,000 shares of preferred stock of Advanced Life
Sciences, Inc., an Illinois corporation, together with any and all other
stock or interest that Grantor may own or hold in Advanced Life Sciences, Inc.,
now or in the future.


 


In addition, the word
“Collateral” includes all of Grantor’s property (however owned), in the
possession of Lender (or in the possession of a third party subject to the
control of Lender), whether now or hereafter existing and whether tangible or
intangible in character, including, without limitation, each of the following:


 


(A) All property to
which Lender acquires title or documents of title.


 


(B) All property
assigned to Lender.


 


(C) All promissory
notes, bills of exchange, stock certificates, bonds, savings passbooks, time
certificates of deposit, insurance policies, and all other Instruments and
evidences of an obligation.


 


(D) All records
relating to any of the property described in this COLLATERAL DESCRIPTION
section, whether in the form of a writing, microfilm, microfiche, or electronic
media.


 


(E) All Income and
Proceeds (including dividends) from the Collateral as defined herein.


 


GRANTOR’S REPRESENTATIONS AND
WARRANTIES.  Grantor
warrants that: (A) this Agreement is executed at Borrower’s request and
not at the request of Lender; (B) Grantor has the full right, power and
authority to enter into this Agreement and to pledge the Collateral to Lender; (C) Grantor
has established adequate means of obtaining from Borrower on a continuing basis
information about Borrower’s financial condition; and (D) Lender has made
no representation to Grantor about Borrower or Borrower’s creditworthiness.


 


GRANTOR’S WAIVERS.  Grantor waives all requirements of
presentment, protest, demand, and notice of 


 

















 


dishonor or non-payment
to Borrower or Grantor, or any other party to the Indebtedness or the
Collateral.  Lender may do any of the
following with respect to any obligation of Borrower, without first obtaining
the consent of Grantor: (A) grant any extension of time for any payment, (B) grant
any renewal, (C) permit any modification of payment terms or other terms,
or (D) exchange or release any Collateral or other security.  No such act or failure to act shall affect
Lender’s rights against Grantor or the Collateral.


 


RIGHT OF SETOFF.  To the extent permitted by applicable law,
Lender reserves a right of setoff in all Grantor’s accounts with Lender
(whether checking, savings, or some other account).  This includes all accounts Grantor holds
jointly with someone else and all accounts Grantor 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.  Grantor 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 RIGHT OF SETOFF section.


 


REPRESENTATIONS AND WARRANTIES
WITH RESPECT TO THE COLLATERAL.  Grantor represents and warrants to Lender
that:


 


Ownership.  Grantor is the lawful owner of the Collateral
free and clear of all security interests, liens, encumbrances and claims of
others except as disclosed to and accepted by Lender in writing prior to
execution of this Agreement.  Grantor
owns one hundred percent (100%) of the equity interests of the Borrower, and
the Borrower has not issued any additional capital stock, including warrants
and options to purchase stock, to any other person or entity.


 


Right to
Pledge.  Grantor has
the full right, power and authority to enter into this Agreement and to pledge
the Collateral.


 


Authority;
Binding Effect. 
Grantor has the full right, power and authority to enter into this
Agreement and to grant a security interest in the Collateral to Lender.  This Agreement is binding upon Grantor as
well as Grantor’s successors and assigns, and is legally enforceable in
accordance with its terms.  The foregoing
representations and warranties, and all other representations and warranties
contained in this Agreement, are and shall be continuing in nature and shall
remain in full force and effect until such time as this Agreement is terminated
or cancelled as provided herein.


 


No
Further Assignment. 
Grantor has not, and shall not, sell, assign, transfer, encumber or
otherwise dispose of any of Grantor’s rights in the Collateral except as
provided in this Agreement.


 


No
Defaults.  There are no
defaults existing under the Collateral, and there are no offsets or
counterclaims to the same.  Grantor will
strictly and promptly perform each of the terms, conditions, covenants and
agreements, if any, contained in the Collateral which are to be performed by
Grantor.


 


No
Violation.  The
execution and delivery of this Agreement will not violate any law or agreement
governing Grantor or to which Grantor is a party, and its membership agreement
does not prohibit any term or condition of this Agreement.


 


Financing
Statements.  Grantor
authorizes Lender to file a UCC financing statement, or alternatively, a copy
of this Agreement to perfect Lender’s security interest.  At Lender’s request, Grantor additionally
agrees to sign all other documents that are necessary to perfect, protect, and
continue Lender’s security interest in the Property.  Grantor will pay all filing fees, title
transfer fees, and other fees and costs involved unless prohibited by law or
unless Lender is required by law to pay such fees and costs.  Grantor irrevocably appoints Lender to
execute documents necessary to transfer title if there is a default.  Lender may file a copy of this Agreement as a
financing statement.  If Grantor changes
Grantor’s name or address, or the name or address of any person granting a
security interest under this Agreement changes, Grantor will promptly notify
the Lender of such change.


 


LENDER’S RIGHTS AND OBLIGATIONS
WITH RESPECT TO THE COLLATERAL.  Lender may hold the Collateral until all
indebtedness has been paid and satisfied. 
Thereafter, Lender may deliver the Collateral to 


 


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Grantor or to any other
owner of the Collateral.  Lender shall
have the following rights in addition to all other rights Lender may have by
law:


 


Maintenance
and Protection of Collateral. 
Lender may, but shall not be obligated to, take such steps as it deems
necessary or desirable to protect, maintain, insure, store, or care for the
Collateral, including paying any liens or claims against the Collateral.  This may include such things as hiring other
people, such as attorneys, appraisers or other experts.  Lender may charge Grantor for any cost
incurred in so doing.  When applicable
law provides more than one method of perfection of Lender’s security interest,
Lender may choose the method(s) to be used.  If the Collateral consists of stock, bonds or
other Investment Property for which no certificate has been issued, Grantor
agrees, at Lender’s request, either to request issuance of an appropriate
certificate or to give instructions on Lender’s forms to the issuer, transfer
agent, mutual fund company, or broker, as the case may be, to record on its
books or records Lender’s security interest in the Collateral.  Grantor also agrees to execute any additional
documents, including but not limited to, a control agreement or any other
documents necessary to perfect Lender’s security interest as Lender may desire.


 


Income
and Proceeds from the Collateral.  Lender may receive all Income and Proceeds
(including dividends) and add it to the Collateral.  Grantor agrees to deliver to Lender
immediately upon receipt, in the exact form received and without commingling
with other property, all Income and Proceeds which may be received by, paid, or
delivered to Grantor or for Grantor’s account, whether as an addition to, in
discharge of, in substitution of, or in exchange for any of the Collateral.


 


Application
of Cash.  At Lender’s
option, Lender may apply any cash, whether included in the Collateral or
received as Income and Proceeds or through liquidation, sale, or retirement, of
the Collateral, to the satisfaction of the indebtedness or such portion thereof
as Lender shall choose, whether or not matured.


 


Transactions
with Others.  Lender
may (A) extend time for payment or other performance, (B) grant a
renewal or change in terms or conditions, or (C) compromise, compound or
release any obligation, with anyone or more Obligors, endorsers, or guarantors
of the indebtedness as Lender deems advisable, without obtaining the prior
written consent of Grantor, and no such act or failure to act shall affect
Lender’s rights against Grantor or the Collateral.


 


All
Collateral Secures Indebtedness.  All Collateral shall be security for the
indebtedness, whether the Collateral is located at one or more offices or
branches of Lender.  This will be the
case whether or not the office or branch where Borrower obtained Borrower’s
loan knows about the Collateral or relies upon the Collateral as security.


 


Collection
of Collateral.  Lender,
at Lender’s option, may, but need not, collect the Income and Proceeds directly
from the Obligors.  Grantor authorizes
and directs the Obligors, if Lender decides to collect the Income and Proceeds,
to pay and deliver to Lender all Income and Proceeds from the Collateral and to
accept Lender’s receipt for the payments.


 


Power of
Attorney.  Grantor
irrevocably appoints Lender as Grantor’s attorney-in-fact, with full power of
substitution, (A) to demand, collect, receive, receipt for, sue and
recover all Income and Proceeds and other sums of money and other property
which may now or hereafter become due, owing or payable from the Obligors in
accordance with the terms of the Collateral; (B) to execute, sign and
endorse any and all instruments, receipts, checks, drafts and warrants issued
in payment for the Collateral; (C) to settle or compromise any and all
claims arising under the Collateral, and in the place and stead of Grantor,
execute and deliver Grantor’s release and acquittance for Grantor; (D) to
file any claim or claims or to take any action or institute or take part in any
proceedings, either in Lender’s own name or in the name of Grantor, or
otherwise, which in the discretion of Lender may seem to be necessary or
advisable; and (E) to execute in Grantor’s name and to deliver to the
Obligors on Grantor’s behalf, at the time and in the manner specified by the
Collateral, any necessary instruments or documents.


 


Perfection
of Security Interest.  Upon
Lender’s request, Grantor will deliver to Lender any and all of the documents
evidencing or constituting the Collateral. 
When applicable law provides more than one method 


 


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of perfection of Lender’s
security interest, Lender may choose the method(s) to be used.  Upon Lender’s request, Grantor will sign and
deliver any writings necessary to perfect Lender’s security interest.  If any of the Collateral consists of
securities for which no certificate has been issued, Grantor agrees, at
Lender’s option, either to request issuance of an appropriate certificate or to
execute appropriate instructions on Lender’s forms instructing the issuer,
transfer agent, mutual fund company, or broker, as the case may be, to record
on its books or records, by book-entry or otherwise, Lender’s security interest
in the Collateral.  Grantor hereby
appoints Lender as Grantor’s irrevocable attorney-in-fact for the purpose of executing
any documents necessary to perfect, amend, or to continue the security interest
granted in this Agreement or to demand termination of filings of other secured
parties.  This is a continuing Security
Agreement and will continue in effect even though all or any part of the
Indebtedness is paid in full and even though for a period of time Borrower may
not be indebted to Lender.


 


LENDER’S EXPENDITURES.  If any action or proceeding
is commenced that would materially affect Lender’s interest in the Collateral
or if Grantor fails to comply with any provision of this Agreement or any
Related Documents, including but not limited to Grantor’s failure to discharge
or pay when due any amounts Grantor is required to discharge or pay under this
Agreement or any Related Documents, Lender on Grantor’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 the Collateral and
paying all costs for insuring, maintaining and preserving the 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
Grantor.  All such expenses will become a
part of the Indebtedness and, at Lender’s option, will (A) be payable on
demand; (B) be added to the balance of the Note and be apportioned among
and be payable with any installment payments to become due during either (1) the
term of any applicable insurance policy or (2) the remaining term of the
Note; or (C) be treated as a balloon payment which will be due and payable
at the Note’s maturity.  The Agreement
also will secure payment of these amounts. 
Such rights shall be in addition to all other rights and remedies to
which Lender may be entitled upon Default.


 


LIMITATIONS ON OBLIGATIONS OF
LENDER.  Lender shall
use ordinary reasonable care in the physical preservation and custody of the
Collateral in Lender’s possession, but shall have no other obligation to
protect the Collateral or its value.  In
particular, but without limitation, Lender shall have no responsibility for (A) any
depreciation in value of the Collateral or for the collection or protection of
any Income and Proceeds from the Collateral, (B) preservation of rights
against parties to the Collateral or against third persons, (C) ascertaining
any maturities, calls, conversions, exchanges, offers, tenders, or similar
matters relating to any of the Collateral, or (D) informing Grantor about
any of the above, whether or not Lender has or is deemed to have knowledge of
such matters.  Except as provided above,
Lender shall have no liability for depreciation or deterioration of the Collateral.


 


REINSTATEMENT OF SECURITY
INTEREST.  If payment
is made by Borrower, whether voluntarily or otherwise, or by guarantor or by
any third party, on the Indebtedness and thereafter Lender is forced to remit
the amount of that payment (A) to Borrower’s trustee in bankruptcy or to
any similar person under any federal or state bankruptcy law or law for the
relief of debtors, (B) by reason of any judgment, decree or order of any
court or administrative body having jurisdiction over Lender or any of Lender’s
property, or (C) by reason of any settlement or compromise of any claim
made by Lender with any claimant (including without limitation, Borrower), the
Indebtedness shall be considered unpaid for the purpose of enforcement of this
Agreement and this Agreement shall continue to be effective or shall be
reinstated, as the case may be, notwithstanding any cancellation of this
Agreement or of any note or other instrument or agreement evidencing the
Indebtedness and the Collateral will continue to secure the amount repaid or
recovered to the same extent as if that amount never had been originally
received by Lender, and Grantor shall be bound by any judgment, decree, order,
settlement or compromise relating to the Indebtedness or to this Agreement.


 


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


 


Payment
Default.  Borrower
falls to make any payment when due under the Indebtedness.


 


Note
Default.  The
occurrence of an Event of Default under the Note.


 


Loan
Agreement Default.  The
occurrence of an Event of Default under the Loan Agreement or any other 


 


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Loan Document (as defined
in the Loan Agreement).


 


Other
Defaults.  Borrower or
Grantor 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 or Grantor.


 


Default
In Favor of Third Parties.  Should
Borrower, Grantor or any guarantor, endorser, surety, or accommodation party of
any of the Indebtedness default 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 property
or Borrower’s or any Grantor’s ability to repay the Indebtedness 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 Grantor or on Borrower’s or Grantor’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.


 


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.


 


Insolvency.  The dissolution or
termination of Borrower’s or Grantor’s existence as a going business, the
Insolvency of Borrower or Grantor, the appointment of a receiver for any part
of Borrower’s or Grantor’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 or Grantor.


 


Creditor
or Forfeiture Proceedings.  Commencement
of foreclosure or forfeiture proceedings, whether by judicial proceeding,
self-help, repossession or any other method, by any creditor of Borrower or
Grantor or by any governmental agency against any collateral securing the
Indebtedness.  This includes garnishment
of any of Borrower’s or Grantor’s accounts, including deposit accounts, with
Lender.  However, this Event of Default
shall not apply if (A) there is a good faith dispute by Borrower or
Grantor as to the validity or reasonableness of the claim which is the basis of
the creditor or forfeiture proceeding, and (B) if Borrower or Grantor
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 sale discretion, as being
an adequate reserve or bond for the dispute.


 


Insufficient
Market Value of Securities.  [Intentionally
Omitted]


 


Events
Affecting Guarantor.  Any
of the preceding events occurs with respect to any guarantor, endorser, surety,
or accommodation party of any of the Indebtedness or guarantor, endorser,
surety, or accommodation party dies or becomes incompetent or revokes or
disputes the validity of, or liability under, any Guaranty of the Indebtedness.


 


Adverse
Change.  A material
adverse change occurs in Borrower’s or Grantor’s financial condition, or Lender
believes the prospect of payment or performance of the Indebtedness is
impaired.


 


Insecurity.   Lender, in good faith,
believes itself insecure.


 


RIGHTS AND REMEDIES ON
DEFAULT.  If an Event
of Default occurs under this Agreement, at any time thereafter, Lender may
exercise anyone or more of the following rights and remedies:


 


Accelerate
Indebtedness.  Declare
all Indebtedness, including any prepayment penalty which Borrower would be
required to pay, immediately due and payable, without notice of any kind to
Borrower or Grantor.


 


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Collect
the Collateral.  Collect
any of the Collateral and, at Lender’s option and to the extent permitted by
applicable law, retain possession of the Collateral while suing on the
Indebtedness.


 


Sell the
Collateral.  Sell the
Collateral, at Lender’s discretion, as a unit or in parcels, at one or more
public or private sales.  Unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market, Lender shall give or mail to
Grantor, and other persons as required by law, notice at least ten (10) days
in advance of the time and place of any public sale, or of the time after which
any private sale may be made; provided, however, no notice need
be provided to any person who, after an Event of Default occurs, enters into
and authenticates an agreement waiving that person’s right to notification of
sale.  Grantor agrees that any
requirement of reasonable notice as to Grantor is satisfied if Lender malls
notice by ordinary mall addressed to Grantor at the last address Grantor has
given Lender in writing.  If a public
sale is held, there shall be sufficient compliance with all requirements of
notice to the public by a single publication in any newspaper of general
circulation in the county where the Collateral is located, setting forth the
time and place of sale and a brief description of the property to be sold.  Lender may be a purchaser at any public sale.


 


Sell
Securities.  Sell any
securities included in the Collateral in a manner consistent with applicable
federal and state securities laws.  If,
because of restrictions under such laws, Lender is unable or believes it is
unable to sell the securities in an open market transaction, Grantor agrees
that (A) Lender will have no obligation to delay sale until the securities
can be registered, and (B) Lender may make a private sale to one or more
persons or to a restricted group of persons, even though such sale may result
in a price that is less favorable than might be obtained in an open market
transaction.  Such a sale will be considered
commercially reasonable.  If any
securities held as Collateral are “restricted securities” as defined in the Rules of
the Securities and Exchange Commission (such as Regulation D or Rule 144)
or the rules of state securities departments under state “Blue Sky” laws,
or if Grantor or any other owner of the Collateral is an affiliate of the
issuer of the securities, Grantor agrees that neither Grantor, nor any member
of Grantor’s family, nor any other person signing this Agreement will sell or
dispose of any securities of such Issuer without obtaining Lender’s prior
written consent.


 


Rights
and Remedies with Respect to Investment Property, Financial Assets and Related
Collateral.  In
addition to other rights and remedies granted under this Agreement and under
applicable law, Lender may exercise any or all of the following rights and
remedies: (A) register with any issuer or broker or other securities
intermediary any of the Collateral consisting of investment property or
financial assets (collectively, “Investment Property”) in Lender’s sole name or
in the name of Lender’s broker, agent or nominee; (B) cause any issuer,
broker or other securities intermediary to deliver to Lender any of the
Collateral consisting of securities or Investment Property capable of being
delivered; (C) enter into a control agreement or power of attorney with
any issuer or securities intermediary with respect to any Collateral consisting
of investment property, on such terms as Lender may deem appropriate, in its
sole discretion, including without limitation, an agreement granting to Lender
any of the rights provided hereunder without further notice to or consent by
Grantor; (D) execute any such control agreement on Grantor’s behalf and in
Grantor’s name, and Grantor hereby irrevocably appoints Lender as agent and
attorney-in-fact, coupled with an interest, for the purpose of executing such
control agreement on Grantor’s behalf; (E) exercise any and all rights of
Lender under any such control agreement or power of attorney; (F) exercise
any voting, conversion, registration, purchase, option, or other rights with
respect to any Collateral; (G) collect, with or without legal action, and
issue receipts concerning any notes, checks, drafts, remittances or
distributions that are paid or payable with respect to any Collateral
consisting of Investment Property.  Any
control agreement entered with respect to any Investment Property shall contain
the following provisions:


 


(1)   At Lender’s discretion, Lender
shall be authorized to instruct the issuer, broker or other securities
intermediary to take or to refrain from taking such actions with respect to the
Investment Property as Lender may instruct, without further notice to or
consent by Grantor.  Such actions may
include without limitation the issuance of entitlement orders, account
instructions, general trading or buy or sell orders, transfer and redemption
orders, and stop loss orders.


 


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(2)   Lender shall be further
entitled to instruct the issuer, broker or securities intermediary to sell or
to liquidate any Investment Property, or to pay the cash surrender or account
termination value with respect to any and all Investment Property, and to
deliver all such payments and liquidation proceeds to Lender.


 


Additionally, any such
control agreement shall contain such authorizations as are necessary to place
Lender in “control” of such investment collateral, as contemplated under the
provisions of the Uniform Commercial Code of the State of Illinois (the “UCC”),
and shall fully authorize Lender to issue “entitlement orders” concerning the
transfer, redemption, liquidation or disposition of investment collateral, in
conformance with the provisions of the UCC.


 


Foreclosure.  Maintain a judicial suit
for foreclosure and sale of the Collateral.


 


Transfer
Title.  Effect transfer
of title upon sale of all or part of the Collateral.  For this purpose, Grantor irrevocably
appoints Lender as Grantor’s attorney-in-fact to execute endorsements,
assignments and instruments in the name of Grantor and each of them (if more
than one) as shall be necessary or reasonable.


 


Other
Rights and Remedies.  Have
and exercise any or all of the rights and remedies of a secured creditor under
the provisions of the UCC, at law, in equity, or otherwise.


 


Application
of Proceeds.  Apply any
cash which is part of the Collateral, or which is received from the collection
or sale of the Collateral, to reimbursement of any expenses, including any
costs for registration of securities, commissions incurred in connection with a
sale, attorneys’ fees and court costs, whether or not there is a lawsuit and
including any fees on appeal, incurred by Lender in connection with the
collection and sale of such Collateral and to the payment of the indebtedness
of Borrower to Lender, with any excess funds to be paid to Grantor as the
interests of Grantor may appear. 
Borrower agrees, to the extent permitted by law, to pay any deficiency
after application of the proceeds of the Collateral to the indebtedness.


 


Election
of Remedies.  Except as
may be prohibited by applicable law, all of Lender’s rights and remedies,
whether evidenced by this Agreement, the Related Documents, or by any other
writing, shall be cumulative and may be exercised singularly or concurrently.  Election by Lender to pursue any remedy shall
not exclude pursuit of any other remedy, and an election to make expenditures
or to take action to perform an obligation of Grantor under this Agreement,
after Grantor’s failure to perform, shall not affect Lender’s right to declare
a default and exercise its 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.  Grantor
agrees to pay upon demand all of Lender’s costs and expenses, Including
Lender’s 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 Grantor shall pay the costs and expenses of such
enforcement.  Costs and expenses include
Lender’s 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.  Grantor 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.


 


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Governing
Law.  This Agreement
will be governed by federal 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, Grantor agrees upon Lender’s request to submit to the jurisdiction of
the courts of DuPage County, State of Illinois.


 


Joint and
Several Liability.  All
obligations of Borrower and Grantor under this Agreement shall be joint and
several, and all references to Grantor shall mean each and every Grantor, and
all references to Borrower shall mean each and every Borrower.  This means that each Borrower and Grantor
signing below is responsible for all obligations in this Agreement.  Where any one or more of the parties is a
corporation, partnership, limited liability company or similar entity, it is
not necessary for Lender to inquire into the powers of any of the officers,
directors, partners, members, or other agents acting or purporting to act on
the entity’s behalf, and any obligations made or created in reliance upon the
professed exercise of such powers shall be guaranteed under this Agreement.


 


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 Grantor, shall
constitute a waiver of any of Lender’s rights or of any of Grantor’s
obligations as to any future transactions. 
Whenever the consent of Lender is required under this Agreement, the
granting of 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 man, 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, Grantor agrees to keep Lender informed at all times
of Grantor’s currant address.  Unless
otherwise provided or required by law, if there are more than one Grantor, any
notice given by lender to any Grantor is deemed to be notice given to all
Grantors.


 


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.


 


Successors
and Assigns.  Subject
to any limitations stated in this Agreement on transfer of Grantor’s interest,
this Agreement shall be binding upon and inure to the benefit of the parties,
their successors and assigns.  If
ownership of the Collateral becomes vested in a person other than Grantor,
Lender, without notice to Grantor, may deal with Grantor’s successors with
reference to this Agreement and the indebtedness by way of forbearance or
extension without releasing Grantor from the obligations of this Agreement or
liability under the indebtedness.


 


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.


 


8

















 


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 UCC:


 


Agreement.  The word “Agreement” means
this Commercial Pledge Agreement, as this Commercial Pledge Agreement may be
amended or modified from time to time, together with all exhibits and
schedule’s attached to this Commercial Pledge Agreement from time to time.


 


Borrower.  The word “Borrower” means
Advanced Life Sciences, Inc. and includes all co-signers and co-makers
signing the Note and all their successors and assigns.


 


Collateral:  The word “Collateral” means
all of Grantor’s right, title and interest in and to all the Collateral as
described in the Collateral Description section of this Agreement.


 


Default:  The word “Default” means
the Default set forth in the DEFAULT section of this Agreement.


 


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.


 


Grantor.  The word “Grantor” means
Advanced Life Sciences Holdings, Inc.


 


Guaranty.  The word “Guaranty” means
the guaranty from any guarantor, endorser, surety, or accommodation party to
Lender, including without limitation a guaranty of all or part of the Note.


 


Income
and Proceeds.  The
words “Income and Proceeds” mean all present and future income, proceeds,
earnings, increases, and substitutions from or for the Collateral of every kind
and nature, including without limitation all payments, interest, profits,
distributions, benefits, rights, options, warrants, dividends, stock dividends,
stock splits, stock rights, regulatory dividends, subscriptions, monies, claims
for money due and to become due, proceeds of any insurance on the Collateral,
shares of stock of different par value or no par value issued in substitution
or exchange for shares included in the Collateral, and all other property
Grantor is entitled to receive on account of such Collateral, including
accounts, documents, instruments, chattel paper, and general intangibles.


 


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.


 


Lender.  The word “Lender” means THE
LEADERS BANK, Its successors and assigns.


 


Note.  The word “Note” means that
certain Amended and Restated Note, dated as of even date herewith, executed by
Borrower in favor of the Lender in the principal amount of Ten Million and
00/100 Dollars ($10,000,000.00), together with all renewals of, extensions of,
modifications of, refinancings of, consolidations of, and substitutions for the
Note.


 


Obligor.  The word “Obligor” means,
without limitation, any and all persons obligated to pay money or to perform
some other act under the Collateral.


 


Property.  The word “Property” means
all of Grantor’s right, title and interest in and to all the property as
described in the COLLATERAL DESCRIPTION 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 


 


9

















 


hereafter existing,
executed In connection with the Indebtedness.


 


UCC.  The word “UCC” means the Uniform Commercial
Code of the State of Illinois, as amended.


 


[SIGNATURE
PAGE FOLLOWS]


 


10

















 


BORROWER AND GRANTOR HAVE
READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL PLEDGE AGREEMENT AND
AGREE TO ITS TERMS.


 


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


 


 


	
  GRANTOR:

  	
   

  
	
   

  	
   

  
	
  ADVANCED LIFE SCIENCES
  HOLDINGS, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  John L. Flavin

  	
   

  
	
   

  	
  John
  L. Flavin, President

  	
   

  
	
   

  	
   

  
	
  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