Exhibit 10.1


 


AMENDED
AND RESTATED BUSINESS LOAN AGREEMENT


 


	
  Borrower:

  	
   

  	
  Advanced Life
  Sciences, Inc.

  	
   

  	
  Lender:

  	
   

  	
  The Leaders Bank

  
	
   

  	
   

  	
  1440 Davey Road

  	
   

  	
   

  	
   

  	
  2001 York Road,
  Suite 150

  
	
   

  	
   

  	
  Woodridge, IL 60517

  	
   

  	
   

  	
   

  	
  Oak Brook, IL 60523

  



 


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


 


RECITALS


 


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


 


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


 


AGREEMENT


 


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


 


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


 


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


 


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


 


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


 

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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such appraisal shall be
paid by Borrower.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


8

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


9

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


10
















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


11

















 


maintenance of available
funds.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


12

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


13

















 


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


 


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


 


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


 


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


 


[SIGNATURE
PAGE FOLLOWS]


 


14

















 


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


 


	
  BORROWER:

  	
   

  
	
   

  	
   

  
	
  ADVANCED LIFE SCIENCES,
  INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  John L. Flavin

  	
   

  
	
   

  	
  John L. Flavin,
  President

  	
   

  
	
   

  	
   

  
	
  LENDER:

  	
   

  
	
   

  	
   

  
	
  THE LEADERS BANK

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  John Prosia

  	
   

  
	
   

  	
  John Prosia, Executive
  Vice President